MonitorsPublished on Apr 03, 2012
Energy News Monitor I Volume VIII, Issue 42
Coal Scam: More Profitable than Coal Mining?

Lydia Powell, Observer Research Foundation


t is the season in India where it is more profitable to unearth scams than it is to unearth coal or natural gas. Real or presumed scams are changing the course of policy overnight and are therefore producing winners as well as losers at a pace much faster than the most persistent economic or lobbying activity. The current ‘coal scam’ may be seen to have originated from the suspicion that developers of Ultra Mega Power Projects (UMPP) who were allotted prime coal mines are profiting from the sale of coal outside the UMPP projects. It was probably hoped that once seen as a ‘scam’ these allotments will be cancelled at the stroke of a pen as telecommunications licenses have been in the case of the 2G scam.  But the hurry to cash in on the ‘scam rush’ has left a lot of holes in terms of information accuracy. Despite all the noise that been generated in the popular media it is not clear how the figure of about $ 195 billion (about ` 10 lakh crore) supposedly representing the loss of revenue for the government in allocating coal blocks was arrived at.  The presumed loss of revenue is large as it equals India’s total tax and non tax revenue in 2010-11 which was about $ 198 billion (` 10.1 lakh crore).

A cursory look at developments in the coal sector over the past decade does not reveal much scope for a ‘scam’ of the above proportions. The Coal Mines (Nationalisation) Amendment Act 1993 allowed Indian companies engaged in power generation and steel production to carry out coal mining for captive use. Cement users were included later through a notification in 1996. An administrative procedure was then put in place to select and allocate coal mines. Later the ‘Mines & Mineral Amendment Bill 2008’ proposed the auctioning of coal mines following cues from the Power Sector where competitive bidding for power projects was introduced.

As per the mid term appraisal of the 11th Plan, 208 blocks with reserves of about 49 billion tonnes and 657 million tonnes of production potential were allocated to private parties. However, the expectation that captive mines would contribute at least 100 million tonne production by 2011-12 was not realized. The Minutes of the Meeting of the Review Committee on Captive Coal Mining held in 2008 showed ‘delay in land acquisition’ as one of the key reasons that was holding up development of captive mines. At a discussion on issues in Captive Coal mining organized by the Observer Research Foundation and Crisil in March 2009, poor quality of mines allocated for captive mining, land acquisition, right of way issues, lack of infrastructure such as roads, inaccessibility of mines and delay in environmental clearances were revealed as reasons why captive mines were underperforming. A parliamentary committee discussion on the 2008 Mining Bill exposed deep reservations over auctioning coal blocks not just from prospective developers of captive mines but also from State Governments which did not want the auction of coal mines to result in an increase in the price of electricity.  Prospective developers would have preferred auctions to allocations if they could pass on any increase in the price of coal to the end-users. But that is unlikely to happen any time soon.  When holders of allocated captive blocks are unable to develop their supposedly priced scarce resource why would prospective bidders pay huge sums of money to acquire similar assets?

The problems of the coal sector are as old as the sector which was born during the period of Warren Hastings 200 years ago. In a paper on the ‘History of Coal Mining in India’ dated 1840, E R Gee of the Geological Survey of India cites ‘establishing agreements on a royalty basis with land owners as a result of the Government failing to claim rights over its mineral wealth’ as the biggest problem in the sector. His comment that ‘anyone acquainted with the question of ownership of land in India would realize only too well the complexities involved’ is as true today as it was about 175 years ago.  After independence things only got worse.

In 1960 small and inefficient collieries mined less than 70 million tonnes of coal and the average output in Indian coal mines was 180 tonnes per man year compared to over 4000 tonnes in the USA. Despite several technological advancements in coal output per man-year in India is currently only one eighth of that in Australia (1100 tonnes per man year compared to Australia’s 9000 tonnes). India’s 5th Plan which coincided with the first oil shock recommended increasing the share of coal as fuel for power generation. Coal use was accelerated without planning for corresponding increase in coal production. During the 5th Plan period (1974-79) the outlay for the coal sector was increased to ` 1025 crores following the recommendations of the Fuel Policy Committee formed after the first oil crisis in 1973-74.  This was a ten fold increase over the outlay during the 4th Plan period. The 6th Plan document (1979-84) recommended a strategy of ‘self reliance’ based on coal, hydropower and nuclear energy to reduce the economy’s exposure to crude oil prices. Even though the document cautioned that in per capita terms India’s coal resources were small compared to that of countries like USA, Russia and China, implementation of the strategy of ‘self-reliance’ skewed in favour of coal at the expense of hydro power. India increased its exposure to coal without at the same time planning for continues coal availability. We are now reaping the consequences with cries over coal scarcity. What is needed is a considered and well though through strategy for energy availability with or without coal. Scams – real or artificial – will never be a substitute for serious thought.


Coal Mining will not destroy Forest Cover…

Ashish Gupta, Observer Research Foundation


oal has become an issue of controversy in most parts of the world. In India too coal is criticized for many reasons including its non availability, its carbon dioxide emissions, as a bad choice as a fuel, local pollution caused by mining and so on. But as a matter of fact coal is going to remain a major source of fuel for power generation in the country which is directly linked with our economic development.

Coal mining in India is almost 220 years old and was initiated by Ms. Sumner and Heatly of East India Company in Raniganj coal field in 1774. At that time there were fewer hurdles regarding land acquisition, forests destruction, environmental impact and so on.  After independence things have changed. As our population grew the demand for power increased and the need for augmenting coal resources has also increased. The issues which were of marginal value have become major ones for the coal sector.

Coal mining is very much opposed by social activists often on the ground that the mining will destroy the forest cover. Though the statement is true at some level facts reveal otherwise.  If we study the whole situation mining does not seem to be the only reason for destroying the forests cover at least for the next fifty – sixty years.

The coal bearing land in India is 22, 40,000 ha in which 10, 20, 000 ha is explored but the area which is actually explored through proper drilling is 2, 29, 500 ha which is only 10% of the total coal bearing area. The time taken to explore the drilling area since our first five year plan is almost 61 years. Even if we assume that 40% of the total coal bearing area is forest land 50% of the land which is 11, 20, 000 ha is still in the exploration stage as only 10% has been explored. Going by the pace of our coal exploration it will take more than hundred years to explore fully unless there will be some technological break through. Even if mining is allowed only in the area of 11, 20, 000 ha which is what will remain after removing the land reserved for the forests mining will not pose a real and present danger to our forests.


Reduction of Tax-Benefits for Wind Sector: Divergent Views

Sonali Mittra, Observer Research Foundation


n the last decade, there have been many developments in the wind power sector leading to the total capacity addition of 13,066 MW (As on Dec 2010), which accounts for 70% share in the total installed capacity from the renewable energy sources. However, the wind energy sector got a set-back with the latest announcement from Income Tax department stating that the Central Board of Direct Taxes (CBDT) has amended the Income-Tax Rules, 1962, according to which, all new wind farms commissioned after April 1 can only claim a standard depreciation rate of 15%. Although, faced with serious contestation, the development might not be as disadvantageous as it’s perceived to be.

Wind farms commissioned up to Sept- 11 were allowed a tax deduction of up to 80% and in the later half of the FY -11; they were allowed 40% deduction. Accelerated depreciation has been considered as one of the major driving forces of the wind energy sector attracting more investments especially from the small, medium captive investors. Since, the bankability of most of the renewable energy projects is weak, accelerated depreciation gave a sense of assurance to the investors. With the removal of such tax benefits, a sizable section of the industry is predicting that the capacity addition from the wind power sector might drop to the range of 800-1000 MW as compared to the targeted 2000 MW. Also, as an incidental impact, the demand for wind power equipments might drop affecting the domestic market, which is still struggling to reach a level of maturity. Government of India, realizing this, have given a relief to the manufacturing industry by adding an extra 20% in the standard depreciation, making it effectively 35% of depreciation in taxes.

Nevertheless, Government cut down the taxes at the time when even the Union Budget failed to make any positive attempt at promoting renewables and instead abandoned custom duty on fossil fuels. Furthermore, Government is debating the continuation of the Generation-Based Incentives (GBI). Also, issues related to environmental, forest clearance and transmission constraints which equally affect the growth are nowhere while discussing reforms.

Ironically, what might appear to be a distinctive sense of pessimism for the wind energy might not be all that detrimental to the sector. Another set of the industry experts are referring to discarding accelerated depreciation as a realistic step towards developing renewable energy in India for varying reasons. One, it is felt that Generation-based incentive scheme is a much productive way for achieving efficiency in performance. In comparison to accelerated depreciation route, projects opting for GBI scheme accounted to only 30% of the projects. GBI provides a cash incentive of ` 0.50/unit of electricity fed into the grid, over and above the tariff given the by the state utilities. Two, Renewable Energy Certificates (REC) and Renewable Purchase Obligation (RPO) might become mainstream drivers instead of being the subsidiary benefits. Third, revenue loss saved because of tax concession could be provided as budget ‘additionality’ for achieving the aspirational goal of 45000 MW by 2022.

Wind energy sector has by far contributed the maximum to the capacity addition from the renewable energy sources, its continuation to do so with the latest development in the tax scheme have been questioned by many wind power developers while others are opting for more generation-linked business models. Whether or not a balance would be achieved, performance of wind farms would increase and the investments in the sector would remain the same, if not any less, is highly dependent on variable factors of market dynamics.


Ultra Mega Power Projects: Beneficiary States by Allocation in MW

Akhilesh Sati, Observer Research Foundation





















Uttar Pradesh












































Madhya Pradesh (M.P.)








Gujarat (Guj.)


























Tamil Nadu (T.N.)















Andhra Pradesh (A.P.)








Jharkhand (Jhar.)




















Note: figures within brackets show %

Source: Draft National Electricity Plan, Ministry of Power, CEA.







Cairn India's 2nd oil find in KG block

April 3, 2012. Cairn India said it has made an oil discovery in a Krishna Godavari basin block, the second find in the onland block. Cairn Energy India Pty Ltd, wholly-owned subsidiary of Cairn India Ltd has notified the Management Committee of an oil discovery in the Nagayalanka-SE-1 well, in the onshore block KG-ONN-2003/1, in the Krishna-Godavari Basin on the east coast of India, the company said. CEIL is the operator of the block with 24% stake while Cairn India holds 25%. The remaining 51% is with state-owned Oil and Natural Gas Corp (ONGC). The Management Committee is an oversight committee comprising representatives of upstream regulator Directorate General of Hydrocarbons and the Petroleum Ministry besides the three partners. Without giving reserves the discovery may hold, Cairn said a gross 57-meter hydrocarbon column was tested as oil bearing. It flowed 70 barrels per day of oil and 0.6 million standard cubic feet per day of gas during testing. Nagayalanka-SE is the second find in the KG-ONN-2003-1 Block. The Nagayalanka SE-1 well was spud on November 25, 2011 as an exploration well, to test the hydrocarbon potential of Cretaceous Golapalli sands. The extended second phase of exploration for the block ends on August 7 this year, it said adding the minimum work committed for the second phase has already been completed.

Oil India eyes Chesapeake's Mississippi asset

April 3, 2012. Indian oil and gas producer Oil India Ltd is looking at buying a stake in Chesapeake Energy Corp.'s Mississippi Lime formation in Oklahoma. Oil India wants to invest between $1 billion and $1.2 billion for acquiring overseas oil and gas producing assets. Chesapeake last month said it expects to strike a joint venture in this quarter for its unconventional liquid-rich Mississippi Lime play covering 2 million acres. Oil India may partner other state-run firms like Oil and Natural Gas Corp in buying a stake in the Mississippi Lime play. Oil India, whose assets in India's northeast account for its entire crude oil production and the bulk of gas production, has been aggressively scouting for overseas assets in discovered and producing areas. The US No. 2 gas producer needs money to close a funding gap. The government allowed state-run Oil India to go global in December 2005 and since then it has acquired stakes in assets in countries including Venezuela, Libya, Gabon, Iran, Egypt, Yemen, Nigeria and Sudan. India, the world's fourth-largest oil importer, imports about 80 percent of its crude needs. It is scouting for oil and gas assets abroad to meet rising local demand and to feed its expanding refining capacity. In the United States, Indian gas utility GAIL India has agreed to buy a 20 percent stake in one of Carrizo Oil & Gas Inc's shale gas assets while top private firm Reliance Industries has sealed three shale gas joint ventures.

Cairn Energy to acquire Agora O&G for $450 mn

April 3, 2012. Edinburgh-based Cairn Energy Plc said it will acquire Norwegian oil firm Agora Oil & Gas for $ 450 million. This is Cairn's first major deal after selling out majority stake in its Indian unit to London-listed mining group Vedanta Resources, and follows its strategy of reducing exposure to exploration in Greenland where most of its assets are located. The acquisition of Stavanger, Norway-based Agora, which is owned by Lord Rothschild's investment trust, would be funded through a combination of 43 per cent cash and 57 per cent Cairn shares.

RIL gas output from KG-D6 block drops to 34 mmscmd

April 3, 2012. Reliance Industries has reported a further drop in natural gas production at its eastern offshore KG-D6 block to about 34 million standard cubic meters per day (mmscmd). KG-D6 gas output in the week ended March 25 was 34.09 mmscmd as against 34.62 mmscmd in the begging of the month, according to a status report filed by the company with the Oil Ministry. Production from Dhirubhai-1 and 3, the largest among the 19 oil and gas finds made by RIL in the KG-D6 block, slipped to 27.64 mmscmd during Marh 19-25. The twin fields had produced 28.16 mmscmd in the week ending March 4. Together with 6.45 mmscmd output from MA oilfield in the same block, KG-D6 produced 34.09 mmsmcd in week ending March 25. The KG-D6 production is lower than 61.5 mmscmd rate achieved in March, 2010, as a drop in pressure in the wells and increased water ingress has led to a lower per-well gas output. The report said that of the 18 wells drilled, completed and put on production in the D1 and D3 fields, six wells had to be shut or closed due to high water cut/sanding issues. The output from KG-D6 is short of the 70.39 mmscmd-level (61.88 mmscmd from D1 and D3 and 8.5 mmscmd from the MA field) envisaged by now as per the field development plan approved in 2006. While Reliance holds 60 per cent interest in KG-D6, UK's BP Plc holds 30 per cent and Niko Resources of Canada the remaining 10 per cent.

ONGC record production in Assam in 2011-12

April 2, 2012. ONGC said it has surpassed the production targets for 2011-12 in Assam region. The company achieved production of 1.190 MMT (Million Matric Ton) of crude during the last financial year in its Assam assets, as against a target of 1.150 MMT as per its MoU with the government. The MoU target of 448.0 MMSCM (Million Metric Standard Cubic Meter) for natural gas has been overachieved by 107.7 per cent with the production 474.1 MMSCM of natural gas. The company said that Assam Asset's gas sales have improved due to certain pro-active steps during the year. The Drilling Services of the company achieved its full target by developing and exploration of 34 wells, as against the MoU target of 33 wells. ONGC said that it was able to make major progress in 2011-12 as regards the pipeline network of Lakwa oil-field, one of the main producing fields of Assam Asset.

ONGC to sign gas exploration pact with ConocoPhillips

March 30, 2012. ONGC and U.S. oil company ConocoPhillips will sign a pact to explore and develop shale gas and look for opportunities in deepwater exploration. Global energy majors have been pushing to grab a slice of India's oil and gas reserves and gain exposure to surging demand in Asia's third-largest economy. India, the world's fourth-largest oil importer, meets about 80 percent of its crude needs through overseas purchases. It is scouting for oil and gas assets abroad to meet demand in a fast-growing economy, and to feed its expanding refining capacity. ONGC, which has been investing heavily to maintain output from its old fields, has said it aims to raise its crude oil production by 15 percent to 28 million tonnes, or 560,000 barrels per day (bpd), by March 2014.

Indian exploration in Vietnam oil blocks within norms

March 30, 2012. Asserting that China's opposition to India undertaking oil exploration in Vietnamese blocks was not in accordance with UN norms, Vietnam said the blocks are well within its sovereign territory. China has been opposing India undertaking exploration in the Vietnamese blocks on the ground that the area is disputed. It is believed that China's stand is not in accordance with the United Nations Convention on the Law of the Sea.

Exploration round again dominated by state-run cos

March 28, 2012. Indian state-run companies have won operating rights for almost half of the 16 blocks awarded under the country's ninth exploration licensing round, a government statement said, with foreign firms yet again hardly in evidence. ONGC got operating rights for four blocks -- one alone and three as part of a group -- while a consortium led by Oil India won two blocks. Gail India Ltd led a consortium that was awarded one onshore block in the Cambay basin.


Increase capacity of Digboi refinery

April 3, 2012. The Mineral Oil Workers Union has urged the government to take immediate steps for augmenting the refining capacity of Digboi refinery in Assam, which is Asia's oldest oil refinery. The members of the union said lack of capacity augmentation has been making the refinery unviable and has also led to increase in cost of production. The refinery should have minimum capacity of 9 MMTPA to be commercially viable. While cost of production at Digboi refinery is ` 2,000 per tonne, which is far higher than both public and private sector refineries in other parts of the country.

MRPL raises refinery capacity by 27 pc

March 30, 2012. Mangalore Refinery and Petrochemicals Ltd (MRPL) has raised capacity of its southern India coastal refinery by about 27 per cent to 300,000 barrels per day (bpd).

Essar Oil completes Vadinar refinery expansion

March 29, 2012. Essar Oil announced completion of ` 8,300-crore expansion of its Vadinar oil refinery in Gujarat that will boost company's turnover by 30-35 per cent, besides improving margins. Vadinar Refinery is now India's second largest single- location refinery, with an annual capacity of 18 million tons (up from 14 million tons currently) and a complexity of 11.8, which also makes it among the world's most complex refineries. The capacity expansion and complexity enhancement gives the Vadinar Refinery the capability to process much heavier crude, which are cheaper.

HMEL commissions Bhatinda oil refinery

March 29, 2012. HPCL-Mittal Energy Ltd (HMEL) has commissioned the 9 million tonne capacity Bathinda refinery with an investment of $4 billion raising hope for similar joint ventures between state oil companies and the Lakshmi N Mittal group in future. HMEL is an equal joint venture between state-run Hindustan Petroleum and Mittal Energy Investment Pte Ltd, Singapore-- part of the LN Mittal group. Both partners hold 49% equity stake each in the company and balance 2% is held by Indian financial institutions. HMEL had achieved the first sale in December 2011 with dispatch of kerosene and the first solid sales in February 2012 with sale of petroleum coke.

HPCL cancels gasoil tender on low bids

March 28, 2012. Hindustan Petroleum Corp (HPCL) has cancelled a tender to sell up to 30,000 tonnes of high sulphur gasoil because there were very few bids and prices were too low. The state-run refiner had offered 25,000 to 30,000 tonnes of 1 per cent sulphur gasoil for loading from April 1-3, in a tender that closed on Mar. 25 and was valid until Mar. 26. The company does not plan to re-issue the tender. Refiners usually offer high sulphur gasoil when there are problems with desulphuriser units, but it is unclear if HPCL has any maintenance going on now. HPCL plans to shut a 60,000 barrels per day (bpd) crude unit and fluid catalytic cracker at its Vizag refinery in southern India for maintenance in April-May. The planned maintenance shutdown will last about 45 days.

Transportation / Trade

GSPL to evaluate LNG project feasibility at Sikka

March 30, 2012. GSPC Group-promoted Gujarat State Petronet Limited (GSPL) mulls liquefied natural gas (LNG) terminal at Sikka in Jamnagar district on West Coast. The move is aimed at securing supplies for its proposed 4,000 km long cross country natural gas transmission pipeline. GSPL led consortium consisting of oil marketing companies IOC, BPCL and HPCL will have to secure 100 MMSCMD of natural gas to operate proposed pipelines at full capacity. Over ` 1,000 crore GSPL is assessing possibility to commission 5 MMTPA (equivalent to 20 MMSCMD of natural gas) capacity, which can be doubled in coming years. Incidentally, Jamnagar district is base of country's two both private sector petroleum refineries of RIL and Essar that consumes sizable quantities of LNG for their process. Currently, RIL operates India's largest all-weather petroleum terminal at Sikka for export and import of crude and petroleum products through single point moorings under the jurisdiction of Gujarat Maritime Board.

India likely to pay $10 per unit for TAPI gas

March 29, 2012. Natural gas from Turkmenistan would be delivered to India at an estimated price of about $10 per unit, including $3 as transportation charges and transit fee, in the proposed 1,680-km pipeline via Afghanistan and Pakistan. Gas would be purchased at about $7 per unit at Turkmenistan but its cost would rise as it transits across two countries before reaching the Punjab border. It would be cheaper than some long-term LNG contracts. Gas-starved India pays a spot price of about $16 a unit for liquefied natural gas. Petronet LNG has recently contracted LNG import from Australia's Gorgon project at $15.8 per unit while Gail's 20-year contract with US' Sabine Pass works out to be around $10 per unit. The price of natural gas from Turkmenistan would be linked to market rates of fuel oil. India plans to import 38 million standard cubic meters per day gas from the central Asian country, which will be more than the current output of the country's biggest gas fields in the D6 block. India is negotiating transit fee and other related matters with Afghanistan and Pakistan, as the pipeline would cross their borders. Pakistan has already assured that it would charge a uniform transit fee.

Indian Oil in talks with BG, others to secure LNG supplies

March 28, 2012. Indian Oil Corp is in talks with BG Group, Qatar and Gazprom to secure long-term liquefied natural gas supplies for an import terminal it is building to feed its rising energy demand. But while it talks to potential suppliers, the company is also keeping its options open to initially import LNG through spot or shorter-term contracts on expectations that India may lift price controls on the power and fertiliser sectors and allow them to pass on feedstock costs to consumers. Indian oil is building a 5 million tonnes per year LNG terminal at Ennore in southern India, which is expected to come online by 2014. Controls on what power and fertiliser companies charge consumers have hampered their ability to pay market prices for natural gas and other feedstocks.

Policy / Performance

India seeks more oil, gas from Qatar: Jaipal Reddy

April 2, 2012. India is looking at buying more oil and gas from Qatar, Oil Minister S. Jaipal Reddy said, after a meeting with his Qatari counterpart. Indian refiners have been cutting oil imports from sanctions-hit Iran and are diversifying purchases away from the country's second-biggest supplier of crude after Saudi Arabia. Reddy said in 2010-2011, India imported 5.6 million tonnes of oil from Qatar. India also annually buys 7.5 million tonnes of liquefied natural gas (LNG) from Qatar under long term deals. Qatar is the world's largest LNG producer with a capacity of 77 million tonnes a year.

Oil firms hike auto LPG prices by ` 6 per litre

April 2, 2012. Oil firms have hiked auto LPG prices by ` 6 per litre, the third increase this year. Liquefied Petroleum Gas (LPG) used as fuel in automobiles, called Auto LPG, will cost ` 49.72 per litre as against ` 43.65 per litre price till last month, according to Indian Oil Corp, the nation's largest fuel retailer. The hike comes on back of steep rise in international oil prices. Auto LPG prices were hiked by almost ` 3 per litre on March 1 when rates were increased from ` 40.7 per litre to ` 43.65 a litre. Oil firms revise Auto LPG rates every month based on average of international benchmark prices. On LPG they sell to households as cooking gas in 14.2-kg bottles, oil firms are losing a record ` 570.50. The prices of domestic LPG were last revised in June last year and are currently priced at ` 399.26 per cylinder in Delhi.

Petrol prices in Goa slashed by ` 11, cheapest in India

April 2, 2012. Long queues were witnessed near petrol pumps throughout Goa after Manohar Parrikar government slashed the petrol prices by ` 11. The petrol pumps ran dry owing to mammoth rise in customers forcing the petroleum firms to send additional tankers at various fuel stations. The state government has brought down 22 per cent VAT on petrol to just 0.1 per cent pulling down the prices. A litre of petrol now costs ` 54.96 here as against ` 65 per litre priced. Goa Petrol Dealers Association said the scarcity of fuel was a temporary phenomenon. Chief Minister Manohar Parrikar had said he was ready to abolish entire VAT on petrol but negligent 0.1 per cent is retained to know the quantum of petrol sold in the state. Money collected from 0.1 per cent VAT will also be utilised to fund the monitoring mechanism on the borders to ensure that there is no smuggling of the fuel to neighbouring states. The BJP in its manifesto for March 3 elections had promised to slash the petrol prices. The assurance was fulfilled in the state budget presented on April 26.

India to have natural gas pipeline grid of 30,000-km by 2017: Jaipal Reddy

April 2, 2012. India will by 2017 have a natural gas pipeline grid of 30,000-km connecting consumption centres to source of fuel, Oil Minister S Jaipal Reddy said. Currently, the gas pipelines have a capacity to transport 230 mmscmd of gas. Stating that natural gas sector in India was on the verge of a takeoff, Reddy said natural gas is the fuel of choice since it is an efficient fuel for power generation, a cheaper feedstock for industries, a cleaner alternative fuel for vehicles and leads to an improvement in the quality of life. Considering its versatility and a smaller carbon footprint, the government has launched a drive to popularise the use of natural gas in the country. PNGRB has plans to roll out CGD networks in over 300 geographical areas in the country. With domestic gas produced is limited, India's dependence on imported liquefied natural gas (LNG) is projected to grow. To cater to the huge expansion in the gas market, India is also pursuing trans-national gas pipelines such as the 1800 km long Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline.

Petrol price hike: Oil firms warn of disruptions in fuel supply

April 2, 2012. Oil companies warned of disruptions in fuel supplies if they are not allowed to raise petrol price or compensated for the ` 48 crore per day loss they incur on selling fuel below cost. IOC and other oil PSUs, Bharat Petroleum and Hindustan Petroleum are losing ` 48 crore per day on sale of petrol, whose pricing was decontrolled by the government in June 2010. But the government hasn't allowed the oil companies to hike petrol price. Oil PSUs have asked government to make good the losses they incur on selling petrol if retail selling price of the fuel are not to be increased. Also, they have demanded a cut in the excise duty on petrol. Indian Oil, Hindustan Petroleum and Bharat Petroleum review retail prices at the end of every fortnight. On 30th/31st and 15th of every month, they use the average price of international benchmark and foreign exchange rate in fortnight to decide what should be the price of fuel from 1st and 16th of every month respectively.

OMCs plan to raise petrol prices by ` 5

March 31, 2012. Oil marketing companies plan to raise petrol prices by ` 5 a litre after they get an informal nod from the oil ministry. Oil companies might not be allowed to raise petrol prices considering the volatile political situation during the Budget session of Parliament. Oil-marketing companies (OMCs) Indian Oil, Hindustan Petroleum and Bharat Petroleum have been demanding that the government either allows them to raise petrol prices or compensates them for revenue losses on the de-controlled fuel.

India & China skirt Iran sanctions with ‘junk for oil’

March 30, 2012. Iran and its leading oil buyers, China and India, are finding ways to skirt U.S. and European Union financial sanctions on Iran by agreeing to trade oil for local currencies and goods including wheat, soybean meal and consumer products. India, the No. 2 importer of Iranian oil, has established a rupee account at a state-owned bank to settle as much as much as 45 percent of its bill. China, Iran’s biggest oil customer, already settles some of its Iran oil debts through barter. Iran also has sought to trade oil for wheat from Pakistan and Russia.

Govt may tweak oilfield profit-sharing formula

March 29, 2012. The government is considering changing profit-sharing mechanism for oilfield contracts before launching the next round of bidding for oil and gas blocks in line with the national auditor's view that the current system gives private operators no incentive to cut capital expenditure. The comptroller and auditor general (CAG) had strongly opposed the prevailing profit-sharing mechanism (also known as Investment Multiple or IM) as it provided "substantial incentive" to private contractors to increase capital expenditure at the beginning of the project. In blocks auctioned so far under the Nelp regime, the contract is designed in a manner that reduces government share of profit if capital expenditure increases, according to the CAG. The Ashok Chawla committee on allocation of natural resources also made a similar observation.

LPG tax hike in Maharashtra rolled back by 2 pc

March 29, 2012. Under pressure from all quarters, including ruling coalition partner Congress and even from within his own NCP, Maharashtra Finance Minister Ajit Pawar announced a rollback by 2 per cent of the 5 per cent Value Added Tax (VAT) he had proposed in Budget on LPG for domestic use. Congress legislators led by state unit president Manikrao Thakre had met Chief Minister Prithviraj Chavan and demanded withdrawal of the tax. Several NCP legislators had also demanded a rollback saying the LPG hike will pinch the common man. The 5 per cent tax would have raised the cost of a domestic LPG cylinder by approximately ` 20, and earned revenue to the tune of ` 200 to ` 250 crore. Shiv Sena executive president Uddhav Thackeray, who met Chavan, had announced that his party will hold a protest march if the tax hike is not done away with.

ONGC wins 6 blocks in NELP-IX

March 28, 2012. Oil and Natural Gas Corp (ONGC) cornered six blocks - four as operator and two as minority partner -- out of the 16 areas that the government awarded for oil and gas exploration, but saw its bids rejected for 8 areas including five deep-sea blocks. Contracts for 16 out of the 33 oil and gas blocks that were bid for in the ninth round of New Exploration Licensing Policy (NELP) were signed. The government had offered 34 areas -- eight deepwater blocks, seven shallow water blocks, 11 on-land blocks, and 8 Type-S (or small) on-land blocks, in NELP-IX. Of these, bids were received for 33 on close of auction on March 28, 2011.

India said to plan using foreign currency for Iran oil deals

March 28, 2012. India may continue paying for Iranian oil in foreign currencies until European Union sanctions take effect in July, when buyers will start using rupees. India will waive taxes on rupee-payments for crude, it said in its March 16 budget. That raised speculation refiners will start settling its oil bill with Iran in local currency to avoid international sanctions. While India could start paying for about 45 percent of the oil in rupees from next month, the countries prefer to settle trades in foreign tender such as euros.

Govt likely to appoint regulator for natural gas pricing

March 28, 2012. The Indian government may appoint a regulator to help it determine the price of natural gas that is supplied by oil and gas explorers, such as Reliance Industries Ltd (RIL), to power and fertilizer firms. An empowered group of ministers (eGoM) looking into the issue of allocating gas to fertilizer, power and some other companies has directed the oil ministry to “suggest an appropriate regulatory authority to aid and advise eGoM on the issue”. The suggestion follows a plea by RIL in 2010 to increase the price of gas midway through its five-year supply contracts with consumers on the grounds that the price it is charging is at a discount to global prices. RIL started supplying gas from its D6 fields in the Krishna-Godavari (KG) basin in April 2009 to power and fertilizer companies at a base price of $4.2 (around ` 214) per million British thermal units. The supply contracts end in 2014, after which they have to be renegotiated. To be sure, the oil and gas industry is already governed by two regulatory bodies. The Directorate General of Hydrocarbons (DGH) advises the oil ministry on technical and economic issues related to the sector. It comes under the oil ministry’s administrative control. The Petroleum and Natural Gas Regulatory Board (PNGRB) oversees transportation tariffs and other costs of petroleum commodities related to refining, processing, storage, transportation, distribution, marketing and sale. Unlike DGH, PNGRB was created by an Act of Parliament and functions independently. S. Krishnan, chairman of PNGRB, said he was not sure if the agency would be asked to regulate gas pricing. Sunjoy Joshi, director of the Observer Research Foundation, said that in all likelihood, the government would go in for a new regulatory body. The government needs an independent upstream regulator to regulate prices. So, it might go in for a new body, Joshi said. RIL is facing criticism for declining gas production from the KG-D6 basin, and is involved in a dispute with the oil ministry over the denial of $1.24 billion in costs claimed by the company for developing the D6 field. The group of ministers has also sought the advice of the law ministry and the attorney general on the issue. Prime Minister Manmohan Singh said that his government may change the gas pricing policy to offer incentives to producers of natural gas.



Bajaj Hindusthan seeks shareholders' nod for power project funds

April 3, 2012. India's largest sugar firm Bajaj Hindusthan has sought shareholders' approval for furnishing investments and corporate guarantees worth up to ` 1,240 crore to its power projects. The company said it has sought shareholders' approval for the special resolution through postal ballots. As per the postal ballot notice, shareholders' approval have been sought for infusion of up to ` 1,040 crore in Lalitpur Power Generation Company Ltd (LGPCL) and another ` 200 crore in Bajaj Energy. Bajaj has formed a Special Purpose Vehicle (SPV)-- Lalitpur Power Generation Company Ltd (LPGCL)-- to develop 1,980 MW thermal project at Lalitpur in Uttar Pradesh at a cost of ` 11,848 crore, of which ` 8,886 crore to be funded via debt. Another SPV, Bajaj Energy, has been formed to set up five power projects at five locations at a cost of ` 2,320 crore. The company has also sought approval to provide loans and/or give guarantee for the short-term loan to be taken by LGPCL up to ` 500 crore as the SPV is facing difficulty in getting term loan in absence of assured coal supply.

Reliance Power commissions fourth 300 MW unit of Rosa plant

April 2, 2012. Reliance Power said it has commissioned the fourth 300 MW unit of the Rosa plant in Uttar Pradesh, taking the project's total operational capacity to 1,200 MW. The 1,200 MW Rosa thermal power project is now fully operational and the fourth unit was commissioned on March 31, four months ahead of the schedule of July, the company said. The third 300 MW unit of the plant was commissioned in December 2011, that was also ahead of schedule. Rosa project has four units, each having 300 MW capacity. According to Reliance Power, the project is consistently operating at above 95 per cent plant load factor (PLF). Electricity generated from the plant would be supplied to Uttar Pradesh. Reliance Power said that Rosa occupies a special place in the company's portfolio as it is their first operating power plant. The company said the project would account for more than 15 per cent of Uttar Pradesh's total energy requirement and would light up about 30 lakhs households. Reliance Power had commissioned a 40 MW solar plant in Rajasthan. The project, entailing an investment of about ` 700 crore, would generate over 70 million units of clean power.

NTPC to invest ` 170 bn for implementing two power projects

March 30, 2012. The country's largest power producer NTPC said it would invest over ` 17,000 crore for implementing two thermal power projects in Maharashtra. The Board of Directors of the company have accorded investment approval of ` 17,317 crore for implementing Mouda and Solapur thermal power projects in Maharashtra, the company said. An investment not exceeding ` 7,921.47 crore has been approved for Mouda (1,320 MW) super thermal power project and ` 9,395.18 crore for the Solapur (1,320 MW). Meanwhile, the company, in order to part finance its capex, has tied up a loan of USD 100 million with the Japanese Mizuho Corporate Bank. The loan will be spent on capital expenditure for the company's ongoing as well as new projects. It would also be utilised for financing coal mining projects and renovation and modernisation of power stations. The company plans to invest ` 24,000 crore on setting up a thermal plant of 4,000 MW at Vishakhapatnam, in Andhra Pradesh. The state government will facilitate land availability and coal linkage for the project. NTPC operates plants with over 36,000 MW of capacity from all sources of energy.

NLC signs agreement with SBI for 1 GW thermal power project

March 29, 2012. Neyveli Lignite Corporation (NLC) has signed a loan agreement with State Bank of India for its proposed 1000 MW thermal power project at Neyveli. NLC plans to set up the project, replacing the five-decade old 600 MW Thermal Power Station-I. To meet part of 70 per cent debt requirement of the project, NLC signed a "Rupee Term Loan agreement" with SBI for ` 2,500 crore, NLC said. The fuel (lignite) for the project would be supplied by mines operated by NLC. The power generated from the unit would be served to the Southern states. Tamilnadu Generation and Distribution Corporation Ltd and distribution companies (DISCOMS) of other states have signed the power purchase agreements (PPA) to share the electricity generated from the unit. The first unit is expected to be commissioned in June 2015 and the second unit in December 2015. NLC currently operates lignite mines at Neyveli and one at Barsingsar, Rajasthan of total capacity of 30.60 million tonnes per annum. It also runs three thermal power stations at Neyveli and one at Barsingar with a total installed capacity of 2740 MW.

Shanghai Electric to set up plant in India

March 29, 2012. Chinese power equipment major Shanghai Electric Corp (SEC) plans to set up a manufacturing plant in India, which has a huge demand for its products, but the company is concerned about clarity of policies in the country. SEC has joined hands with France's Alstom to float a 50:50 joint venture company in India to manufacture boilers for large power plants and offer related maintenance services. The company has already made a mark in the Indian market. In 2007, SEC signed $8.3 billion contract with Reliance Power for supply of 36 coal-fired thermal power generation units. Besides Reliance Power's ultra mega power projects at Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand, SEC is also supplying equipment to other companies like Jindal Power. SEC is supplying equipment to 40,000-MW power upcoming plants in India. India proposes to impose a heavy 21% duty on import of power gears to protect domestic manufacturing companies from Chinese and Korean competition. Power generating companies are, however, resisting the move saying it will hamper their investment plans. SEC sees huge demand for supercritical equipment technology, which increases electricity generation efficiency, in India. Over 60% of upcoming power projects in next five years are expected to be based on this technology. SEC has the expertise and sees "no problems" with its partner Siemens in exporting energy efficient supercritical and ultra supercritical equipment to India. SEC has a 60:40 JV with Germany's Siemens for production of supercritical and ultra supercritical steam turbines. The company has manufactured power equipment of over 2,50,000 MW capacity and its annual manufacturing capacity is over 30,000-MW. It manufactures coal and gas-fired units, 1,000 MW class nuclear plants, wind turbines and high voltage transmission and distribution equipment.

NTPC to halt expansion of gas-based projects

March 29, 2012. State-controlled NTPC has frozen expansion of its gas-based projects due to non-availability of the fuel. The latest move also comes against the backdrop of Power Ministry advising power producers not to plan any gas-based projects till 2015-16 on account of gas shortage. The company has to stop work at these plants. The move follows a sharp drop in output at what was supposed to India's largest gas field, KG-D6 of Reliance Industries. Production at KG-D6 has dropped 40 per cent in 2011 to about 35 million standard cubic meters per day and is likely to dip further. The reduction, instead of a projected rise in output to 80 mmscmd from KG-D6 by now, has led to shortage of fuel with consumers including power generation units. NTPC currently operates seven gas-based projects in the country -- 413 MW Anta (Rajasthan), 652 MW Auraiya (Uttar Pradesh), 645 MW Kawas (Gujarat), 817 MW Dadri (Uttar Pradesh), 648 MW Jhanor-Gandhar (Gujarat), 350 MW Kayamkulam (Kerala) and 430 MW Faridabad (Haryana)-- with a total capacity of 3,955 MW. With commissioning of the 500 MW unit of its joint ventuer Vallur thermal power project, NTPC's total installed capacity has increased to 36,514 MW.

Greenko Group buys 56 MW hydro assets in India for $56.9 mn

March 28, 2012. Clean energy producer Greenko Group PLC said it had acquired two hydro assets in India for 42.7 million euros ($56.9 million), and said its business outlook continues to be favourable. The Indian company, which has been hurt by a weak market for carbon credits, said it expected revenue of about 39 million euros and core earnings of about 20 million euros for the year ending March 31. The company, which secured investments from GE and Standard Chartered, also reiterated that it was fully funded to meet its target of operating 1,000 megawatts of assets in 2015. The latest acquisitions totalling 56 MW raises Greenko's portfolio to 1.67 gigawatts, of which 214.6 MW are operational.

Hinduja group forms power sector JV with Germany's STEAG

March 28, 2012. As part of its plans to become a major player in power sector, diversified conglomerate Hinduja group said it has joined hands with German energy giant STEAG to form a joint venture for operations and maintenance of various power projects in India. As per the agreement, Hinduja group's power sector holding company Hinduja Energy India Ltd will set up the JV with STEAG Energy Services (India) Pvt Ltd, Indian subsidiary of the German major. Besides, STEAG has also acquired five per cent stake in Hinduja National Power Corporation Ltd (HNPCL) through its subsidiary STEAG Energy Services GmbH and would have the option to invest in future power projects of the group. The joint venture will operate the Visakhapatnam plant of HNPCL and would also carry out operations and maintenance activities of new power projects in India. HNPCL's 1,040 MW coal-based thermal power plant is currently in advanced stages of construction for commissioning in 2013. Hinduja group has previously announced plans to set up 10,000 megawatts of power generation capacity over the next 7-8 years with an estimated investment of about ` 12-14 billion. The group said that the new JV would back its plans to become a major power sector player in India.

Transmission / Distribution / Trade

Dues from electricity consumers top ` 60 bn in Karnataka: CAG

April 3, 2012. The dues from electricity consumers have mounted to more than ` 6,000 crore in Karnataka, a latest CAG report has revealed. Further, an amount of ` 217.61 crore was due from permanently disconnected installations. It noted that electricity supply companies (ESCOMs) are required to file expected revenue from charges with Karnataka Electricity Regulation Commission (KERC) each year 120 days before the commencement of the subsequent financial year. ESCOMs filed tariff review petitions belatedly in the years 2009-10 and 2010-11. Audit also observed various deficiencies in the functioning of the PSUs. A review of three years' audit reports of CAG showed that the PSUs' losses of ` 1,320.47 crore and infructuous investments of ` 333.27 crore were controllable with better management.

BHEL open to collaborations with Chinese cos

April 3, 2012. Bharat Heavy Electricals, which is facing stiff competition from Chinese equipment makers, said it is open for collaboration with companies from the neighbouring country. Import of cheaper Chinese power equipment are impacting state-run BHEL which posted a net profit of ` 6,868 crore for the year ended March, 2012. The government is looking at higher import duty on Chinese power gear to provide a level playing field for domestic manufacturers such as BHEL. The company is open for collaborations with the private sector. Among others, the company would be ready to offer 26 per cent equity in power projects.

Eon Electric to list energy meter business

April 2, 2012. Power equipment maker Eon Electric Ltd has announced demerger of its energy meter and power generation business into a separate entity named Advance Metering Technology Ltd (AMTL) that will soon be listed on bourses. Eon Electric, formerly known as Indo Asian Fusegear Ltd, said the demerger would come into effect retrospectively from April 1, 2011. Eon Electric Ltd will continue with its existing businesses of wires and cables, wiring accessories, energy efficient light sources, luminaries and also foray into new businesses. AMTL will engage in the business of energy meters, power generation, energy management services and related businesses and will soon be listed on the Bombay Stock Exchange and the National Stock Exchange.

$826 mn ADB loan to India for power transmission

March 30, 2012. The Asian Development Bank (ADB) offered $826 million in loans to India for improving the power transmission systems in the country. The money will be used to build transmission systems that will help transfer electricity from surplus regions to power-deficit regions efficiently. The ADB and the Indian government signed three agreements to this effect here. A $500 million sovereign-guaranteed loan and a $250 million non-sovereign corporate loan will be used to establish an over 1,300-km inter-regional transmission link to allow the bulk transfer of electricity from independent power producers in Chhattisgarh to areas of high demand in the north, including the National Capital Territory Region of Delhi. The third loan of $76 million (sovereign) will connect the western grid region to the union territories of Daman and Diu and Dadra and Nagar Haveli, the finance ministry said. The sovereign loans will have a 25-year term, including a five-year grace period with an annual interest rate determined in accordance with ADB's LIBOR-based lending facility, it said.

Policy / Performance

Nuke Iran will destabilise W. Asia, not in India's interest: Israeli experts

April 3, 2012. Since a stable West Asia is in the interest of both India and Israel, India should support efforts to prevent Iran from becoming a nuclear state, argued strategic experts from Israel at a conference on "Two Decades of India-Israel Relationship" is organised by Observer Research Foundation (ORF) along with the Institute for National Security Studies (INSS), Tel Aviv, Israel. Picking on the argument of a leading Indian strategic expert that Pakistan is using the nuclear deterrence to sponsor and abet terrorism against India, the Israeli experts said that is all the more reason, for Israel and India also, to see that Iran is prevented from becoming a nuclear state at any cost. One of the experts said the Pakistan model of the story is actually worrisome. Having the experience of Pakistan, India should help in preventing another nuclear state emerging, which also sponsors and abets terrorism, the Israeli experts argued.

Green Tribunal notice to MoEF on power project in Uttarakhand

April 1, 2012. The National Green Tribunal has issued notice to the Union environment ministry seeking its response on a plea for stay of work on the 200 MW Srinagar Hydroelectric Power Project in Uttarakhand's Garhwal region. The tribunal sought responses of Ministry of Environment and Forests (MoEF), Uttarakhand government and Alaknanda Hydro Power Co Ltd (AHPCL) by April 19, on the plea which also sought a direction to "redesign" the project on river Alaknanda.

NGT seeks replies on breach of its order on Gujarat power project

April 1, 2012. The Union environment ministry and the Gujarat government have been asked by the National Green Tribunal (NGT) to respond to the allegations that OPG Power Gujarat Pvt Ltd is violating the tribunal's order to stop work on its 300 MW thermal power plant at Mundra in the state. The NGT, while granting time to authorities, the OPG and its directors to file replies, made it clear that any construction made contrary to the environmental norms "shall be at the risk of the project proponent".

‘Himachal to generate 15 GW hydro power by 2017’

March 31, 2012. Himachal Pradesh will generate 15,000 MW of hydro power by 2017, Chief Minister Prem Kumar Dhumal said. The Chief Minister said that to address the issues of evacuation of power generated by private and public sectors projects, the Himachal Pradesh State Power Transmission Corporation will be executing a ` 2000 crore Power Evacuation Project to fed the power into Northern Grid. Dhumal said Himachal was entitled to minimum 12 per cent free power as royalty and the state expected top additional revenue of over ` 4,500 crore after the commissioning of some major projects by 2017. He said that 220 KV line from Prini to Nalagarh would be constructed at a cost of ` 70 crore while a 220 KV high capacity line from Charor to link 400 KV sub-station at Banala would also be constructed at a cost of ` 120 crore with the financial assistance from Asian Development Bank. He said that the first hydro power project, Koldam project (800 MW), taken up for execution by the National Thermal Power Corporation (NTPC) was expected to be commissioned in 2013.

Govt may force Coal India to commit supply to private companies for 20 yrs

March 31, 2012. The government plans to force Coal India to commit fuel supply to private power producers for 20 years, and has signalled its intention by sternly rebuffing UK-based hedge fund TCI which criticised the move as an "abuse" of minority shareholders. The government will first try to persuade independent directors who have opposed the directive from the prime minister's office (PMO) asking the state-run firm to agree to pay penalties if it cannot meet 80% of the committed fuel supply. The board did not approve the proposal despite three meetings because independent directors raised concerns that the company may not be able to meet its obligations and would have to pay heavy penalties that would drain its income. The government has the power to issue a presidential directive to force the issue, but this would be the last resort. The company said Coal India would have to obey such a directive. The government would have to justify how the decision is in "larger interest". The coal ministry asserted its position with a stern letter to TCI - which holds 1% equity in the company. It said that when Coal India's shares were sold, the offer documents clearly mentioned "risk factors" such as conflict of interest between the government and minority shareholders and that the company sold fuel to prices below international rates. The hedge fund has initiated arbitration against the Indian government saying its treatment of the state-run miner was in violation of treaties of Cyprus and the UK. Delay in implementation of the dictate would impact investments by companies toward setting up 28,000-MW power plants. With 90% ownership in CIL, government may invoke a clause in an agreement signed with shareholders authorising it to take decisions in public interest despite opposition by other investors. Independent directors supporting investors will be persuaded. The company would seek time from government to persuade independent directors. CIL minority shareholders and independent directors have raised concerns on CIL's capability to commit large supplies to power plants for 20 years, as non-compliance will attract penalties. The company targets production of 464 MT coal in fiscal 2013 and 615 MT in another four years. They have also questioned the company's practice of selling the fuel at up to 70% discount to international market price.

Electricity tariff hiked in Bihar

March 30, 2012. The Bihar Electricity Regulatory Commission (BERC) increased power tariff in the state by about 12.1 per cent with effect from April one. Announcing this, BERC said it would generate an additional revenue of ` 348.06 crore to the Bihar State Electricity Board (BSEB). The decision was taken on BSEB's petition for approval of Aggregate Revenue Requirement and revision of tariff for the year 2012-13.

Record power capacity added in 2011, but target not achieved

March 30, 2012. India has added a record 19,459 MW of power capacity in the current fiscal but the acute shortage of coal and gas had dampened the government's aspiration to accelerate capacity addition, power minister Sushilkumar Shinde said. Because of fuel scarcity and problems in land acquisition, the country could not meet its targets for the sector between 2007 and 2012, but 54,000 MW electricity generation capacity was added in this period, the highest in any five-year plan period, he said. Government has already advised power producers to refrain from setting up new gas-based plants until 2015-16 as fuel supply is dwindling. This has threatened the viability of 37,000 MW of existing plants and projects under construction. Gas production from Reliance Industries' KG-D6 basin is likely to go down by 15.03 mmscmd in 2012-13 and additional 3.42 mmscmd in 2013-14 against the availability of 42.67 mmscmd of gas in 2011-12. Oil ministry has not given any projections for the years 2014-15 and 2015-16. Coal deficit for power sector is expected to increase from 55 million tonnes in this year to about 300 million tonnes by 2017-18. Coal India has indicated that incremental production for power sector would be only 100 million tonnes during 2012-17, which would not even meet needs of existing projects running at sub-optimal capacity. However, Shinde said the country added more capacity in the last five years than in previous 15 years.

India sees 54 GW capacity addition in 11th Plan so far

March 29, 2012. With just about 54,000 MW capacity being added in the 11th Plan so far, the power sector is set to miss the revised capacity addition target of 62,000 MW in the current Plan period (2007-12). The capacity addition target for the 11th Plan Period ending March 31 was revised downward to 62,000 MW from the earlier target of 78,500 MW. Acute fuel shortages and high coal prices have been hurting the capacity addition plans. The Central Electricity Authority (CEA) said the capacity addition in the 11th Plan is likely to be around 55,000 MW. However, Shinde said the capacity addition of nearly 54,000 MW achieved in the 11th Plan period is much higher than 21,180 MW seen in the 10th Five-Year Plan (2002-07). According to the government, there are five projects -- having a total capacity of 1,885 MW -- are expected to be commissioned shortly. Shinde said that a total of 875 billion units of electricity generation would be achieved this financial year, which would be 8 per cent higher than 811 billion units seen in the previous fiscal. Currently, the country's installed power generation capacity is 1,92,792 MW. The capacity addition target for the 12th Five-Year Plan (2012-17) is about 76,000 MW.

UP Power Corp collects revenues of ` 178 bn so far in FY12

March 28, 2012. Uttar Pradesh Power Corporation has collected revenues of ` 17,848 crore so far this fiscal, which is ` 3,500 crore more than 2010-11. The Corporation has realised ` 17,848 crore in 2011-12, which is ` 3,500 crore more than ` 14,291 crore realised in 2010-2011, its Joint Managing Director Dheeraj Sahu said. He said in this month, by March 24, ` 712 crore has been realised which is more than the amount of ` 483 crore realised last fiscal. The corporation has directed officers to speed up process of realising revenue from defaulters and asked them to camp in districts and take support of local officers for the purpose.




PetroChina plans ‘large scale’ acquisitions to expand output

March 30, 2012. PetroChina Co., surpassing Exxon Mobil Corp. and OAO Rosneft as the world’s biggest publicly traded crude producer last year, plans to buy additional assets to ramp up output and expand into overseas markets. PetroChina plans to invest at least $60 billion this decade in global oil and natural gas assets to increase the share of overseas output to half of its total. Production outside China rose 18 percent last year, five times faster than that of domestic fields. Overseas oil and gas production reached 120.8 million barrels last year, less than a tenth of the total of 1.3 billion barrels, or 3.5 million barrels a day. Assuming daily output of 4 million barrels in six to seven years, PetroChina’s overseas fields have to account for about 2 million, equal to the production of ConocoPhillips.

BP says U.S. withholding evidence of extent of oil spill

March 30, 2012. BP Plc said the U.S. government is withholding evidence that would show the oil spill from the Macondo well in the Gulf of Mexico was smaller than claimed. BP has identified 10,000 documents, out of more than 80,000 the government sought to suppress, that relate to estimates of the April 2010 spill. The U.S. estimated in August 2010 that 4.9 million barrels of oil, plus or minus 10 percent, spilled into the Gulf after a rig exploded. BP said it would pay at least $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage and injuries. A magistrate judge in New Orleans predicted a multiphase trial over liability for the spill will still go forward.

Cnooc to start offshore fields, shale gas to expand reserves

March 29, 2012. Cnooc Ltd., China’s biggest offshore energy producer, plans to develop new fields, acquire overseas assets and develop unconventional resources such as shale gas to meet output targets. The energy explorer will start four blocks off the Chinese coast this year, Cnooc said. It is also “determined” to learn shale-gas technology from its partners and deploy it in China, holder of the world’s largest deposits of the fuel. Cnooc, which cut its 2011 production goal after spills shut its biggest field off the coast, plans to boost output by as much as 2.7 percent this year. The company has bid for about $9 billion of overseas assets in the last two years to diversify reserves, including shale-gas acreages in North America. Cnooc, which relies on reserves off the Chinese coast for 80 percent of its output, plans to start production at Weizhou 6-9/6-10, Yacheng 13-4, Panyu 4-2/5-1 and Liuhua 4-1. Outside China, the Long Lake oil- sands project in Canada and the Missan oilfield in Iraq will begin contributing to earnings this year, the company said. The unit of China National Offshore Oil Corp. targets to produce the equivalent of 330 million to 340 million barrels of oil in 2012. Overseas oil production may rise as much as 30 percent this year while domestic output will be stable.

BlackRock cuts BHP stake on Olympic Dam, shale gas concerns

March 29, 2012. BlackRock Inc.’s Catherine Raw, who helps manage the $14 billion World Mining Fund, trimmed holdings in BHP Billiton Ltd. following concerns the company’s Olympic Dam project and shale gas assets may curb returns. BHP, the biggest mining company, hasn’t decided whether to expand the Olympic Dam uranium-copper-gold mine in South Australia at a cost Deutsche Bank AG estimated in October at $27.4 billion. It spent $16.9 billion in 2011 on shale gas, buying Petrohawk Energy Corp. of the U.S. and assets from Chesapeake Energy Corp.

Total says flare poses no danger to stricken North Sea platform

March 28, 2012. Total SA said a flare on its evacuated Elgin platform in the North Sea is “faint and decreasing” and poses no danger of igniting gas that’s leaking from a damaged well. The flare is 100 meters (328 feet) away from the leak on the well-head platform. The cloud formed by the leak is at sea level, below the flare’s 180-meter tower, and the wind is blowing the gas away from the platform. The platform was evacuated after a blow-out during an operation to abandon a well. Royal Dutch Shell Plc shut the neighboring Shearwater field to guard against the risk of explosion. Total, France’s largest oil company, may need to drill an emergency well to intercept and plug the damaged well, an operation that could take six months.

Transportation / Trade

Petronas’s South African unit suspends oil imports from Iran

April 3, 2012. Petroliam Nasional Bhd.’s Engen unit, the biggest South African importer of Iranian crude, said it has suspended imports of oil from the Middle Eastern nation amid economic sanctions by the U.S. and the European Union. The company has contingency supplies in place. Engen, which operates the country’s second-biggest refinery based in Durban and with a capacity of 135,000 barrels a day, normally buys about 80 percent of its supplies from Iran. Engen is “under heavy pressure” to halt Iranian imports because of sanctions. Engen has sought alternative supplies but hasn’t yet received any.

Australia LNG boom threatened by U.S. Shale exporters

April 3, 2012. Australian liquefied-natural gas projects planned by companies from Royal Dutch Shell Plc to Woodside Petroleum Ltd. and valued at about $100 billion are at risk from rising costs and cheaper U.S. exports. Natural gas trading at a 10-year low in the U.S. and discoveries in Africa also threaten to slow the development of Australian LNG ventures following the approval of eight projects to meet surging demand from China, Japan and South Korea.

Tanker rates seen reversing rally as oil glut expands

April 3, 2012. The fastest expansion in oil cargoes since 2004 is exceeding demand and filling up storage tanks from Egypt to Japan, creating a glut that threatens to reverse the biggest gain in shipping rates in five years. Tankers will be carrying 488.8 million barrels by April 14, 3.9 percent more than the week earlier, estimates Oil Movements, which has tracked cargoes for 25 years. Rates for very large crude carriers, each holding 2 million barrels, will drop 58 percent to average $19,750 a day. Shipments accelerated as buyers sought to expand reserves on mounting concern that Middle East supply will be disrupted by conflict over Iran’s nuclear program. Rising stockpiles are coming at a time of slowing growth in China and a contraction in Europe, which together account for about 33 percent of demand. The global market is getting as much as 2 million barrels a day more than it needs, Saudi Arabian Oil Minister Ali al-Naimi said.

Enterprise seeks pricing muscle for Seaway oil pipeline

April 2, 2012. Enterprise Products Partners LP is asking federal regulators for the freedom to set rates on its Seaway pipeline to take advantage of soaring demand to ship oil from new North American fields to Gulf Coast markets. Enterprise has asked the U.S. Federal Energy Regulatory Commission to grant a flexible rate known as a market-based tariff for the pipeline. It would be a first for a crude oil line and allow Enterprise to set and change rates without FERC’s approval.

Enbridge pipelines to ease crude logjam

March 29, 2012. Enbridge Inc.’s plans to expand U.S. pipeline capacity may help generate as much as $15 billion for Canadian oil-sands producers such as Suncor Energy Inc. and boost government tax revenue as Alberta crude begins to command a higher price. Canadian crude has been backing up in the U.S. trading hub at Cushing, Oklahoma, along with oil produced in North Dakota, forcing down prices. Western Canada Select oil, a Canadian benchmark, has sold for about $42 a barrel less than world prices this year, a record gap. The differential is more than four times greater than the same period two years earlier. Two projects announced by Calgary-based Enbridge and U.S. partner Enterprise Products Partners LP would expand crude capacity to the Gulf Coast by 500,000 barrels a day by 2014, a big step toward narrowing the price gap. Reducing the gap just by half would represent $15 billion a year in additional value for Canada’s estimated 2 million barrels a day of exports to the U.S.

Policy / Performance

Petronas plans Canadian acquisition topping $5 bn

April 3, 2012. Petroliam Nasional Bhd., the Malaysian state-owned oil company, is studying a Canadian acquisition exceeding $5 billion as part of the company’s drive to supply natural gas to Asia. Petronas, as the company is known, joins Asian peers including PetroChina Co., Mitsubishi Corp. and Cnooc Ltd. in seeking production in North America, where natural gas sells for less than 15 percent of Asian benchmark prices. At more than $5 billion, a purchase would be more than double the company’s biggest deal, the $2 billion acquisition of a 40 percent stake in Santos Ltd.’s Gladstone LNG project in Australia in 2008. There were $8.7 billion in deals announced in Canada’s oil and gas industry in the first quarter, the busiest start to the year since 2009, when mergers and acquisitions in the sector there peaked at $47 billion. Since 2009, there have been 487 deals, the biggest being China Petrochemical Corp.’s $4.7 billion purchase of a stake in Syncrude Canada Ltd. from ConocoPhillips in 2010.

Kurds halt crude exports over pay dispute with Baghdad

April 2, 2012. Authorities in Iraq’s semi- autonomous Kurdish region halted crude oil exports due to a pay dispute with the central government in Baghdad. The Iraqi government has failed to pay money owed to oil producers since May 2011, according to the Kurdish Ministry of Natural Resources. The ministry has estimated the amount owed at $1.5 billion. The Kurdistan Regional Government called on foreign companies including BP Plc not to make separate agreements with Iraq’s central government to develop oil fields in and around the disputed northern city of Kirkuk. The central government has said it is talking with BP about boosting output at a field called Kirkuk, near the same city. In February Iraq produced 2.76 million barrels a day of crude, most of which comes from southern fields. The Kurds cut their production from 175,000 barrels a day to 50,000 barrels a day over the pay dispute.

Yudhoyono’s support slips as Indonesia stalls on fuel policy

April 2, 2012. Indonesian President Susilo Bambang Yudhoyono’s failure to push a fuel-price increase through parliament signals weakening support in his ruling coalition that threatens to undermine the leader’s plans to spur growth in Southeast Asia’s biggest economy. Lawmakers rejected the government’s bid for an immediate 33 percent boost in the price of subsidized fuel, instead giving it the power to raise prices only if the Indonesia Crude Price, or ICP, exceeds the budget assumption of $105 a barrel by an average 15 percent over a six-month period.

Iraq March crude exports rise to highest since 1980

April 1, 2012. Iraq’s crude oil exports in March rose to the highest level since 1980, a year after former President Saddam Hussein came to power, the Oil Ministry said. The Middle East country exported 71.827 million barrels, or 2.317 million barrels a day, in March. The exports generated $8.475 billion, with an average price of $118 a barrel. Iraq holds the world’s fifth-largest oil reserves, according to data from BP Plc that include Canadian oil sands. The Arab nation depends on crude exports for money to rebuild the economy after decades of war and sanctions. Iraq has awarded 15 licenses for oil- and gas-drilling rights to foreign companies in the post-Saddam Hussein era, and it plans a new licensing auction in May. The gain in exports came even as the semi-autonomous Kurdistan region isn’t supplying the agreed quantities, sabotage attacks targeted the northern export pipeline and bad weather slowed tanker shipments in the south.

Obama clears way for sanctions on banks in Iran oil trade

March 31, 2012. President Barack Obama cleared the way for sanctions aimed at banks in countries that import Iranian oil, the latest U.S. step to ratchet up pressure on the government in Tehran over its nuclear program. The president determined that world oil supplies are sufficient to proceed with the congressionally mandated sanctions designed to deny Iran income from oil exports. Obama cited current global economic conditions, increased production by certain countries, the level of spare capacity and the existence of strategic reserves to reach his decision. Under a law signed by Obama, banks that settle petroleum-related transactions through Iran’s central bank in any country that has failed to show a “significant reduction” in Iranian oil imports would be cut off from the U.S. banking system. The law requires reductions and countries can avoid the sanctions if they take steps by then. The president didn’t set targets for reductions.

Canada to speed up approval of big energy projects

March 30, 2012. Canada, intent on boosting development of the oil-rich tar sands, will speed up the process for approving big energy and industrial projects such as pipelines. The federal budget also said the right-of-centre Conservative government would crack down on political activity by charities, some of which have strongly criticized Ottawa’s focus on energy exports. The government, which has long complained about the complex approval system for pipelines and mines, said it would impose firm time limits on regulatory hearings, ensure that each project was only reviewed once and cut the number of environmental assessments. At stake, it said, was up to C$500 billion ($500 billion) in investment in new Canadian projects over the next decade.

U.K. has fuel shortage as drivers fill up amid strike threat

March 29, 2012. Shortages were reported at U.K. fuel stations as car owners filled up their tanks to guard against a possible strike by fuel-truck drivers. A race to buy gasoline and diesel has caused queues and scant supply in places. The group said the rush was unnecessary and the result of bad advice from the government. While fuel-truck drivers voted this week to strike over working conditions, their union has yet to set a date for action and said a walkout may be averted through talks. Prime Minister David Cameron’s government advised motorists to fill up tanks to ensure they can keep driving if supply is disrupted. About 2,000 drivers delivering fuel to 90 percent of the U.K.’s 8,706 gas stations are involved in the dispute. Seven days’ notice must be given of a strike. The U.K. has enough fuel to meet demand in the event of a strike, according to UKPIA, a petroleum industry group. U.K. Prime Minister David Cameron called on the Unite labor union and employers to hold talks on averting a strike by fuel-truck drivers as the government stepped up contingency plans to cope with any gasoline shortage.

France says agreement on emergency oil stock use is closer

March 29, 2012. France said governments are moving closer to an agreement on a release of oil from emergency stockpiles to stem gains in crude that have driven prices to the highest levels in three years. The prospects of an accord between the U.S. and Europe on tapping strategic reserves are “good” and consumers can “reasonably expect” a release. U.S. President Barack Obama and U.K. Prime Minister David Cameron discussed the move earlier this month. France will only use its oil reserve in coordination with other countries. The Paris- based IEA coordinated the release of 60 million barrels of crude and oil products in June after Libyan output was disrupted by an armed uprising against Muammar Qaddafi. The agency also made supplies available during the 1991 Persian Gulf War and when Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005.

LNG-soaked Japan burns oil as nuclear reactors sit idle

March 28, 2012. Japan is consuming the most oil in four years as it runs out of capacity to use liquefied natural gas as a stopgap for idled nuclear-power plants. Utilities are burning about 400,000 barrels a day, more than at any time since 2008, after more than doubling use of crude last year, according to Deutsche Bank AG. LNG can meet about two-thirds of Japan’s electricity needs when all its nuclear reactors are offline. Japan, turning to alternative sources of energy after last year’s Fukushima Dai-Ichi nuclear disaster, is boosting its reliance on oil at a time when supply concerns from Sudan to Iran are already roiling markets. Brent crude has jumped 16 percent to trade near a three-year high, stoking speculation governments will be forced to release oil from emergency stockpiles. Japan, the world’s biggest buyer of LNG, has imported record amounts of the fuel in response to the March 11, 2011 earthquake and tsunami that wrecked three reactors at the Fukushima plant northeast of Tokyo, triggering the worst radiation leak since Chernobyl in the 1980s. The country relied on nuclear sources for almost 30 percent of its electricity before the disaster.



Eletrobras to build hydro power plants in Nigeria

April 3, 2012. Eletrobras- Latin America’s biggest power utility company and Brazil’s major electric utilities company- plans to build hydro power stations in Nigeria. Minister of Trade and Investment, Dr. Olusegun Aganga disclosed in Abuja recently. He said following his recent meeting with the firm in Brazil, the Federal Government will soon sign a Memorandum of Understanding (MoU) with the firm on the possibility of investing in Nigeria’s power sector. He said a Brazilian team of investors were due for a scheduled investment visit to Nigeria in April to consider the feasibility of their investment plans.

SSE to build multifuel power plant in West Yorkshire

April 2, 2012. SSE, the power company formerly known as Scottish and Southern Energy, has entered into a 50:50 joint venture to develop a new 300m-pound multifuel power plant at its Ferrybridge site in West Yorkshire. The joint venture - Multifuel Energy Ltd - expects to begin construction of a 68MW facility in late 2012 and complete the project by early 2015.

Transmission / Distribution / Trade

CMP energizes new power transmission line

March 28, 2012. Central Maine Power (CMP) is set to energize a new transmission line and substation in Saco. The upgrade is to increase capacity and to improve reliability for the electric grid in the Saco Bay region. The Goosefare Substation on Industrial Park Road will be put into service. It is the first of two new substations the company is building for Biddeford, Old Orchard Beach, Saco and Scarborough.

The $30 million Saco Bay Transmission Reinforcement Project includes two, seven-mile transmission lines operating at 115,000 volts and 34,500 volts, two new substations in Saco and Old Orchard Beach, and improvements at other substations in the area. CMP and its parent company Iberdrola USA have invested more than $500 million upgrading its grid.

Policy / Performance

Brazilian envoy hints at aiding Pakistan in energy sector

April 3, 2012. Brazilian Ambassador to Pakistan Alfredo Leoni underlined the potential for greater trade and technical cooperation between Islamabad and Brasília, particularly in the field of hydel power generation and alternative energy. With a population of 192 million people, Brazil is also one of the world’s largest hydel power generating country, producing 260,000 megawatts of electricity as well as a major producer of bio-diesel. But despite being Pakistan’s largest trading partner in Latin America, trade between the two countries stands at $257 million. Distance between the two countries is cited as a major reason for the low trade. Asked if Brazil could help Pakistan with technical expertise in hydel generation and developing alternative energy including ethanol and bio-diesel, Mr Leoni said that Brazil could offer technical assistance.

Italian govt alarmed at high consumer power prices

April 1, 2012. Italian Prime Minister Mario Monti's government has reacted with concern at rising electricity and gas prices that are set to hit hard-pressed consumers already reeling from tough austerity measures and a sharp rise in the cost of living. Industry Minister Corrado Passera warned that the government would have to reconsider subsidies given to the renewable energy sector following steep price increases announced by Italy's gas and electricity authority.

Floating windmills in Japan help wind down nuclear power

March 30, 2012. Japan is preparing to bolt turbines onto barges and build the world’s largest commercial power plant using floating windmills, tackling the engineering challenges of an unproven technology to cut its reliance on atomic energy. Marubeni Corp., Mitsubishi Heavy Industries Ltd. and Nippon Steel Corp. are among developers erecting a 16-megawatt pilot plant off the coast of Fukushima, site of the nuclear accident that pushed the government to pursue cleaner energy. The project may be expanded to 1,000 megawatts, the trade ministry said, bigger than any wind farm fixed to the seabed or on land. The world’s third-biggest economy is struggling to diversify its energy mix after last year’s earthquake and tsunami crippled Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear station. A few countries including Britain, the U.S. and South Korea are testing windmills that float, a technology far more expensive than most fossil-fuel or renewable energies. Mitsubishi Heavy Industries and its partners are positioning themselves for future contracts to develop gear that so far isn’t used in commercial electricity production.

Obama power-plant rule signals demise of ‘old king coal’

March 28, 2012. President Barack Obama’s proposed carbon-dioxide rules for power plants effectively prohibit new coal power plants, buttressing a shift away from a power source that fueled the Industrial Revolution to cheap natural gas. Obama’s Environmental Protection Agency proposed the first limits on greenhouse-gas emissions from U.S. power plants, setting a standard natural-gas facilities can meet. A new coal plant would need carbon-capture technology, which industry advocates say isn’t available at competitive rates. With natural gas at decade-low prices, no new coal plants are being built, with or without the EPA rules. For critics, from mining companies and utilities to coal-country lawmakers, the rules are the latest in a string of EPA regulations they say are meant to put the fossil fuel out of business.



Govt rolls back tax incentive for wind farms

April 3, 2012. The government has ended the tax break given to wind energy projects much against the wishes of industry players who argued that without the popular incentive, capacity addition in the sector could fall to less than 1,000 MW as against the proposed 3,000 MW. The income-tax department has issued a circular stating that wind farms commissioned in financial year 2012-13 would not get accelerated depreciation benefit that allowed them to write off investments sooner. The circular states that the Central Board of Direct Taxes (CBDT) has amended the Income-Tax Rules, 1962, which means that beginning April 1, all new wind farms can only claim a standard depreciation rate of 15%. Wind energy industry, which is expected to add another 15,000 MW in the next five years, thrived even as other sectors missed targets due to incentives such as generation-based sops to independent power producers and accelerated depreciation available to captive users.

Reliance Power solar project starts in Rajasthan

April 2, 2012. Reliance Power has commissioned India's largest solar photovoltaic project in Rajasthan with a capacity of 40 MW, and will supply electricity to Reliance Infrastructure. The ` 700 crore plant in Jaisalmer was commissioned in four months and is part of the company's plan to invest total of ` 6,000 crore in solar power plants in the state of Rajasthan.

Govt says Lanco Infratech flouted norms, but not involved in scam

March 31, 2012. Lanco Infratech flouted norms of the national solar mission, but made up for it after a warning issued by the government, informed the ministry of new and renewable energy. After completing the investigation against Lanco, ministry denies any scam done by the company. The allegation against Lanco was that it had created front companies to bid for solar projects under the Jawaharlal Nehru National Solar Mission (JNNSM). According to NVVN guidelines, parent company/promoter bidding under the JNNSM needs to have a 51% stake in the bidding company and preferential shares of other partners needs to be less than 49%. Lanco, however, held more than 51% preferential shares in several companies. NTPC Vidyut Vyapar Nigam (NNVN) is the fully owned power-trading subsidiary of NTPC taking care of the sale and purchase of solar energy generated power.

Suzlon says workers on strike at SE Forge unit’s plant

March 29, 2012. About 200 workers are on strike at one of two factories run by SE Forge Ltd., a unit of Suzlon Energy Ltd. (SUEL), India’s largest wind-turbine maker. The workers, who are demanding that 25 trainees be hired as permanent employees, began a sit-in at the plant in Coimbatore, Suzlon said. The management are in discussions to resolve the situation, according to the filing. The unit, which makes metal castings and forgings used in wind turbines, also has another plant in Baroda, according to Suzlon. Suzlon needs to raise money to pay off about $700 million of debt maturing in the next 12 months. The company plans to raise $100 million selling “non-core” assets.

Suzlon ties up with China's CGN Wind to develop 800 MW projects

March 28, 2012. World's fifth largest wind turbine manufacturer Suzlon, along with China's CGN Wind Energy Co, will jointly develop 800 MW of domestic and international projects over the next three years. Suzlon group has entered into a global strategic partnership agreement for this with CGN Wind Energy Co, wholly owned subsidiary of China Guangdong Nuclear Power Group. CGN Wind Energy Co Ltd is one of the largest wind power developers in China with installed capacity of around 3,000 MW. The company said a working team has been set up to explore the most viable projects globally, covering countries such as Brazil, South Africa, India and China.


China-U.S. joint solar project

April 3, 2012. A Chinese billionaire is teaming up with the most powerful man in the U.S. Senate to build a solar plant in a dusty corner of Nevada, even as officials accuse China of driving energy companies out of business by dumping cheap components on the American market. ENN Group plans a manufacturing and generating facility worth $5 billion, more than all Chinese investment in the U.S. combined last year, in Laughlin, Nevada, a town pockmarked with foreclosed properties and the skeleton of a 14-story resort abandoned when the project went bankrupt. Company founder Wang Yusuo, one of China’s richest men, has joined with Senate Majority Leader Harry Reid to win incentives including land 113 miles (182 kilometers) southeast of Las Vegas that ENN is buying for $4.5 million, or less than one-eighth of the $38.6 million assessors say it is worth. The project has produced legal work for Reid’s son, Rory, a lawyer at a Las Vegas firm that gave the Nevada Democrat more than $40,000 in the past three election cycles.

Greece eyes jobs, growth impulse from solar energy export

April 3, 2012. Greek Prime Minister Lucas Papademos vowed to accelerate a 20-billion euro ($27 billion) solar-power project that would help the European Union’s most-indebted nation spur growth and export clean energy. Investment in renewable energy is a “national priority” for Greece, which agreed to deep spending cuts to fend off a possible financial collapse. The Helios project, named after the ancient god of the sun, would install as many as 10 gigawatts of solar panels by 2050, increasing use of Greece’s natural energy.

EU ministers to discuss CO2 market future after price slump

April 3, 2012. European Union ministers will discuss the need to improve the bloc’s emissions trading system on April 19, two weeks after carbon prices fell to a record low. The meeting of environment ministers will be hosted by Denmark, which holds the rotating presidency of the EU, and no formal decisions will be taken. Falling prices cast “some doubt” on the ability of the emissions cap-and-trade plan, known as the EU ETS, to promote investment in low-carbon technologies, according to a note written by the Danish presidency and distributed to member states.

Green investing good for world, maybe not for you

April 2, 2012. One way is to invest in environmentally focused mutual and exchange-traded funds, although you may be trading your green conscience for increased portfolio risk. People who are concerned about energy prices and climate change have put more than $3 trillion into the hands of managers who target positive environmental, social and corporate governance practices, encompassing more than 250 investment funds. Like any sector, environmental stocks are volatile. One year ethanol producers are hot, then sold off. Solar-panel manufacturers sizzle - and then fade. Green funds tend to overweight a particular sub-sector. Some managers may focus on water infrastructure, while others may hold a broader array of geothermal, biomass, solar, wind and energy-efficiency stocks. When considering actively managed funds, you always encounter higher sector risk; managers can guess wrong on which will be the next hot industry.

EU capped emissions down 2.4 pc in 2011

April 2, 2012. Carbon prices plunged to record lows after data showing emissions in the European Union's main scheme to fight greenhouse gases dropped below expectations last year. Carbon dioxide emissions in the EU's emissions trading scheme (ETS) fell by 2.4 percent in 2011 from 2010, prompting carbon prices to fall by more than 11 percent to well below 7 euros a tonne.

Solar Millennium’s U.S. units file for bankruptcy protection

April 2, 2012. U.S. units of Solar Millennium AG, the maker of solar thermal power plants undergoing insolvency proceedings in Germany, filed for bankruptcy protection from creditors and plan to sell some businesses. Solar Millennium Inc., based in Oakland, California, Solar Trust of America LLC and other units listed assets of less than $100 million and debt of as much as $500 million in Chapter 11 papers filed in U.S. Bankruptcy Court in Wilmington, Delaware. Solar Millennium is building one of the largest solar arrays in the world on 7,000 acres in Riverside County near Blythe, California. The company joins Energy Conversion Devices Inc., a U.S. solar manufacturer that suspended production last year; LSP Energy LP, the owner of a natural-gas-fired power plant in Mississippi; Ener1 Inc., maker of lithium-ion batteries for plug-in electric cars; solar-panel maker Solyndra LLC; and energy storage company Beacon Power Corp. in bankruptcy. The main case is that of Solar Trust of America LLC, 12-11136, U.S. Bankruptcy Court, District of Delaware (Wilmington).

World Bank considers renewable-energy loans for Morocco, Jordan

April 2, 2012. The World Bank’s International Finance Corp. (IFC) unit is studying renewable-energy project funding for Morocco and Jordan this year as their governments seek to reduce imports of fossil fuels. The IFC has allocated a greater share of its power- generation funding to renewables since 2008 as nations seek to meet rising demand without adding to emissions. Jordan, which relies mostly on imported energy, has suffered disruptions in natural-gas deliveries from Egypt amid pipeline attacks, while Morocco, also dependent on imported fossil fuels, is developing a plan for 2,000 megawatts of solar capacity by 2020.

GE purchases 51 pc stake in $375 mn Oklahoma wind farm

April 2, 2012. General Electric Co. (GE), the largest U.S. turbine maker, agreed to pay about $191 million for 51 percent of a wind farm under construction in northern Oklahoma that will cost about $375 million. The 235-megawatt Chisholm View project is about 85 miles (137 kilometers) north of Oklahoma City and will use 140 of GE’s 1.6-megawatt turbines. The project will sell power to Southern Co.’s Alabama Power utility under a 20-year agreement. Enel SpA’s North American unit will own the remaining 49 percent. Chisholm View is expected to be completed by the end of the year and will be eligible for the production tax credit, which provides 2.2 cents a kilowatt-hour for power produced by wind. The credit will expire Dec. 31. GE Energy Financial Services, an investment unit of the company, has invested in wind farms in five countries, with 9.6 gigawatts of capacity.

Great Lakes states agree to streamline freshwater wind projects

March 30, 2012. The White House and five of the eight states that border the Great Lakes agreed to streamline the approval process for offshore wind farms in the region. Illinois, Michigan, Minnesota, New York and Pennsylvania, will coordinate reviews of proposed projects. Not a single offshore wind turbine has been installed in the U.S., as regulatory hurdles and legal challenges made financing projects difficult. The U.S. Energy Department estimates the strong, steady breezes that cross the Great Lakes may provide as much as 742 gigawatts of power-producing capacity, or about a fifth of total potential U.S. wind energy.

Mainstream Renewable looks to China as West lends less

March 30, 2012. Mainstream Renewable Power Ltd., an Irish company developing 15 gigawatts of projects globally, is tapping China’s clean-energy drive using loans from state banks in tandem with equipment from Chinese manufacturers. Mainstream obtained loans from state-run China Development Bank Corp. to build wind farms in Chile. The financing was an option accompanying Mainstream’s wind- turbine contract with China’s Xinjiang Goldwind Science & Technology Co. Chinese state-backed banks signed billions of dollars in credit facilities to help turbine manufacturers expand overseas to combat its slowing home market. Goldwind, China’s second- largest turbine maker, agreed to a 35 billion-yuan ($5.5 billion) financing accord with China Development Bank in January. Sinovel Wind Group Co. also has a finance agreement with the bank. Solar power projects are also financed this way. The firm has been active in China for more than 15 years assisting Chinese companies in their clean-energy expansion and operations in Europe.

Carbon ‘like titanic’ sinking on EU permit glut

March 30, 2012. The plunge in European Union carbon permits is putting prices on course for their longest-ever decline and shows no sign of ending as member states wrangle over curbing a glut in the market. EU allowances for December fell 5.2 percent this year, extending a streak of quarterly losses stretching back to March 2011. Prices may drop a further 50 percent and lawmakers will probably fail to cut supply in the world’s largest emissions market through a so-called set-aside process. For First Climate AG, an asset manager that advises the European Investment Bank’s carbon funds, emissions are unlikely to recover in the next quarter.

Italy energy regulator backs carbon tax introduction

March 30, 2012. Italy's energy regulator is in favour of the introduction of a carbon tax, an environmental tax levied on the carbon content of fuels, but on certain conditions. The regulator would like to see revenues from the carbon tax channeled not only to finance renewable energy but also energy efficiency. The new tax should take into account peculiarities of Italy's power generation system. Italy's biggest utility Enel and its renewable energy unit Enel Green Power said they did not expect a negative impact on their results from the introduction of any carbon tax because it would not affect the power sector.

EU fails to resolve dispute over UN climate fund seats

March 30, 2012. European Union ambassadors failed to resolve a dispute over the allocation of seats on the United Nations' Green Climate Fund (GCF) board, possibly undermining the bloc's credibility in international climate talks. The EU envoys were meeting for the second time in a week to decide which European nations will be represented on the governing board. This has 12 seats for developing countries and another 12 for developed countries. As a result, the EU will miss a March 31 deadline for making a joint proposal on board membership, and EU governments and the bloc's executive will now have to negotiate directly with other developed countries over who gets the seats. U.N. climate talks in Durban agreed on the design of the fund, which is aimed at channelling up to $100 billion a year to help developing countries adapt to climate change. Disputes of this kind could both slow the process towards the launch of the fund in 2013 and give other countries the impression that the EU is stalling on climate finance. The fund's first board meeting is due on April 25 to 27, subject to confirmation. Despite the EU's failure to reach an agreement, it should not affect the number of seats it will be allocated on the GCF board.

Germany cuts solar aid to curb prices, panel installations

March 29, 2012. Germany’s parliament approved record cuts in aid for solar power, aiming to reduce the annual pace of installations by half in the world’s biggest market for the industry. Subsidies will be cut by as much as 29 percent starting April 1, depending on the size of the solar plant. The measure passed by 305 votes to 235 on the strength of Chancellor Angela Merkel’s coalition majority. Incentives for solar units pushed capacity past government targets, prompting Merkel to cut subsidies even as she seeks to wean Germany off nuclear power and expand alternative-energy sources for Europe’s largest economy. The government argues that subsidies have driven up electricity prices for German consumers while propping up solar-panel prices for domestic manufacturers.

Samsung buys 15 pc stake in 2Co’s carbon capture project in U.K.

March 28, 2012. Samsung Group agreed to buy a 15 percent stake in 2Co Energy Ltd.’s carbon-capture and storage project for a power plant in northern England. Samsung C&T, the construction and trading arm of Samsung Group, will build the 650-megawatt coal-fired Don Valley Power Project in South Yorkshire, London-based 2Co Energy said. The project will capture 90 percent of its carbon dioxide emissions to help in the extraction of 150 million barrels of oil from the North Sea, 2Co Energy said. Work at the plant is scheduled to begin in 2013, 2Co said on Jan. 31. It is due to start operating in 2016. The U.K. started a 1 billion-pound carbon capture and storage funding program as it seeks to meet energy demand without adding to pollution. The full process of capturing, transporting and storing CO2 hasn’t yet been successfully deployed on a commercial scale at power plants. 2Co’s project, which will cost about 3 billion pounds ($4.8 billion), has won 180 million euros ($240 million) in funding under the European Energy Programme for Recovery and is being considered for further grants from the European Commission, 2Co Energy said.

U.S. heat waves to intensify from New York to Los Angeles

March 28, 2012. Heat waves are likely to intensify and last longer from California to the U.S. East Coast as global warming takes hold, according to the United Nations’s most comprehensive report on extreme weather events. Average wind speeds of hurricanes are likely to increase, with projected sea level rises compounding the impact of surges associated with the storms, the UN’s Intergovernmental Panel on Climate Change said in a 594-page report that examines weather impacts from Alaska to Africa and Australia. Coastal areas around the world, especially large cities and small islands, are particularly vulnerable to the impact of climate change and as much as $35 trillion, or 9 percent of projected global economic output in 2070, may be exposed to climate-related hazards in ports, the panel said. That may increase the need for migration. Sea-level rise may render parts of Mumbai uninhabitable while other cities with the largest number of people threatened by coastal flooding include Kolkata, India, Rangoon in Myanmar, Miami, Shanghai, Bangkok and Ho Chi Minh City.

SolarWorld U.S. head says final China tariffs will be higher

March 28, 2012. Final U.S. tariffs for Chinese solar-energy equipment makers will be higher than the preliminary levies of as much as 4.73 percent imposed, said Gordon Brinser, president of SolarWorld AG’s U.S. unit. The U.S. International Trade Commission, acting on a complaint by SolarWorld, found in December that American companies had been harmed by Chinese subsidies and by producers from the Asian nation selling their products at below cost in the U.S., a practice known as dumping. The Commerce Department will make a preliminary determination on anti-dumping tariffs on May 17 and a final ruling on countervailing duties in June. Brinser declined to estimate the level of tariffs that will eventually be imposed.

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