MonitorsPublished on May 22, 2023
Energy News Monitor I Volume VIII, Issue 49
Petrol Price Hike: Right Decision, Wrong Execution

Lydia Powell, Observer Research Foundation


he hike in the price of petrol and other petroleum products was long overdue. The price of petrol was officially deregulated in 2010 but oil companies were informally obliged to seek Government approval for changing retail prices. For a while the Government perhaps thought that it had got best of both worlds: it could control prices indirectly and also withdraw compensation generally offered to oil companies because petrol price was officially de-controlled.  Sellers of petrol revolted and the Government had to give in. The decision was correct but the manner in which it was implemented was not. 

Going by press reports, it appears that the Government looked at the issue only from a narrow tactical perspective. The Government apparently gave the go-ahead for an increase in the price of petrol when the Minister for Petroleum & Natural Gas was away in a foreign country so that ‘the Government could distance itself from the decision’. Given that every man on the street could see the Government’s visible hand in the recent decision, its execution failed to meet even the low standard the Government had set itself.  

The price of energy is an issue of critical global importance from an economic, social and ecological perspective and any Government which seeks to ‘distance itself’ from the issue can only be called ‘uninformed’. The Government should have prepared the people with a clear communication strategy to explain how energy prices are determined, where most of the energy comes from, why energy prices cannot be kept down indefinitely and what would happen if energy prices are not right. Instead the Government allowed television channels and news papers to interpret the issue as they saw fit. The result was the usual cacophony of confusion. There were also hypocritical sympathy expressed by the articulate middle class which cried with concern for the poor. The poor do not buy or use petrol nor will the increase in price feed into their consumption basket. Even if it does, affordability cannot be a criterion in setting petroleum product prices as most of the petroleum used in the country must be imported at a price set by the global markets over which the Government has no control. The middle class as always was only crying over the increase in cost of their driving pleasures. 

Three features of energy differentiate it from other commodities and justify considered understanding of its price by the people and by the Government. First, most energy is derived from non-renewable mineral sources which means that the markets may not optimize their production over time. Second, energy use results in negative externalities such as pollution. Again the market may not be the best means to optimize energy use and minimize pollution. Third, energy is a key input for production on the same lines as labour, land and capital. This has important implications for the macro-economy because changes in energy prices particularly oil prices against which all energy prices are bench marked can affect aggregate output, employment, interest rates and price of other products. 

India cannot be accused of ‘subsidising’ consumption of petroleum products because the average Indian pays more than what even a European pays per unit of fuel, especially when measured on a purchasing power parity basis. What the Government does do is that it curtails price pass through proportional to changes in international oil prices. The Government and publicly owned oil companies absorb increase in energy prices to protect the domestic economy from volatility in international oil prices and to provide clean commercial energy, technically a merit good to all households. The situation today exposes the fact that such an arrangement cannot work indefinitely especially in a regime of rising global crude prices and falling economic output without an impact on the fiscal stability of the economy. The choice before the government today is (1) continue to restrict pass through of global increase in oil prices and destroy the balance sheets of oil companies and the national economy and (2) allow phased pass through of increase in international oil prices and live with the resulting inflation and some loss of output.  The former will mean that the India’s global economic power status will be seriously dented by a ‘junk’ tag apart from the fact that public sector oil companies will be driven to ruin.  The latter is probably lesser of the two evils as it would force the country to adopt measures that would make it more resilient to energy price shocks. 

The media also did not correctly distinguish between taxes and subsidies.  India does impose heavy taxes on certain petroleum products to raise revenue. As a general principle there is no distinct fiscal rationale for a tax on energy as a source of revenue or for deficit reduction.  However given that consumption of petroleum products is price inelastic in the short term, tax on petroleum is a dependable source for the Government whose gross tax to GDP ratio is a meager 10.36. The contribution of the petroleum sector to the exchequer of both the Central and State Governments was 2.8 percent of GDP in 2009-10 with more than 60 percent going to the Centre. The Government also offers cross subsidies to products such as Kerosene but this is a fraction of its revenue from the sector. In 2009-10, the total revenue expenditure on petroleum was less than 0.4 percent of GDP and 0.55 percent of GDP is oil bonds are included. Despite the fact that the tax take is much larger than the subsidy outgo, it would be wrong to argue that tax should be cut or subsidies should be sustained. Tax serves a different purpose and subsidies serve a different purpose. Apart from serving redistributive objectives, taxes on petroleum also indirectly serve the purpose of curbing their unrestrained use which is a good thing as there are limits to its availability and its use causes pollution. The question people should be asking the Government is not about withdrawal of taxes on petroleum products but about what the Government is doing with the tax revenue? Is it just using it to bridge fiscal deficit or is it splurging it on social sector projects to ensure its re-election? How is it delivering energy access to the poor? How has it improved over the years? It is not too late.  Deregulation of the price of LPG and diesel must be confronted soon and the Government must prepare the people with honest, transparent and rational arguments. 



Coal shortage cannot be used as an excuse for the power cuts

Ashish Gupta, Observer Research Foundation


s summer is approaching its peak and the temperature is rising day by day, with two months to go, the power sector is looking vulnerable as power cuts are also rising throughout the country. After a brief period of stability, power cuts are once again becoming a regular feature. Rather than increasing productivity and finding solutions, power sector players are playing the blaming game. India has no record of meeting peak power demand and load shedding is seen as most appropriate mechanism to deal with shortages. This means that Discoms do not have to buy power from costly sources. This is not justifiable as consumer’s bills are adjusted for fuel costs. Ironically, the consumers are paying high prices and still facing power cuts.

We are always said to be short of coal and every now and then we can see reports that power plants are struggling because of coal unavailability. Such excuses are becoming the part of the system and will prevail in the future years as well. In other words they are making consumers used to this rather than bridging the shortfall.  Budget 2012 has given a wide range of relief to the power sector in terms of tax benefits and other financial benefits but still the situation remains grim. We always talk about increasing capacity but never keen on monitoring the power distributing efficiency of the states or the companies. The companies themselves are blaming each other rather than taking responsibility. Needless to say, we are very efficient in passing our own inefficiency to the other to other.

Coming to the coal front, yes there is a coal shortage but can we cannot deny the fact that power sector is struggling because of several other reasons not merely coal shortage. Coal is just one of the reasons and interestingly there is a data sheet on thermal power plants in the CEA website that gives a list of power plants that have missed their generation targets by 100 Million Units which shows that less then 30 percent of the slippage was on account of coal shortage. Yes they have mentioned coal shortage as one of the reasons but most of the power losses are due to commercial & technical reasons. Reports claiming that only coal shortages are the reason behind power cuts are seeing only one aspect of the issue whereas the ground reality is some what different.

The private sector was introduced in the distribution sector to bring in more transparency and to reduce the power sector T& C losses by infusing technology. For some years they were showing improvements but after that the situation is returning to square one. The government initiative of implementing Accelerated Power Development Programme which came into force in February 2000 to reduce T & C losses is almost a failure. Old worn out & poor distribution networks continue to result in shortages.  Theft & unmetered supply and lack of accountability in the distribution set up of SEB’s are showing no sign of change. Coal shortage is probably real but it cannot hide all other problems in the sector. 


CDM Slipping Through the Cracks of Economic Crisis

Sonali Mittra, Observer Research Foundation


llusionary fits of exhilaration is often experienced by the global carbon market looking at the surging number of projects registered under ‘Clean Development Mechanisms’. Since the signing of Kyoto Protocol in 2003, United Nations has so far issued 938 million CER certificates to 4150 CDM registered projects. However, whether this upward trend is going to continue or is uncertain now that the economic crisis has exposed cracks in the system.

Clean Development Mechanism allows developed countries to invest in emission reductions in emerging economies to meet part of their caps using ‘Certified Emission Reduction’ certificates. These certificates can be transferred as carbon credits in the emission trading markets. This global carbon market grew exponentially from $11 billion in 2005 to $144 bn in 2009. However, in 2010, the market started a downward spiral, when the total value fell to $142 bn.

Contrasting news reports and analysis by the industry experts have painted a very blurred picture of the future of the carbon credit market. On one hand, reports such as by Barclays Capital, suggest that the price of carbon credits is likely to double this year, due to a recovery in demand from the European Union and on the other hand, concerns by giant global consultants like Ernst & Youngare shown for the sliding prices of the CERs to an extent that some of the trading firms have already shutdown.

With RIO +20 fast approaching, the effectiveness and sustainability of carbon emission trading is being questioned. Primarily initiated as a market mechanism to reduce carbon emissions under the prescribed guidelines set by Kyoto Protocol, carbon trading is heavily dependent on the health of the economic condition of the Annex I,II countries (developed and industrialized nations). This in fact is highly evident now with the drop in the demand from EU, the biggest buyer in the carbon market, due its economic crisis.

Sewing the economics and climate change negotiations together, it can be argued that carbon trading may not be successful under the conditions of sustrained economic recession.Historically, the industrialization and urbanization that have been held liablefor causing global climate change are also responsible for the economic growth in the developed nations. Unless there is stability in the economies of these countries, the efforts for the carbon reduction using the market mechanism would dip down. This directly proportional relationship obviously has been veiled behind the ‘ethical fantasy’ of the world. Climate change slips in importance when compared to issues like economic growth, unemployment and national security.

Given the situation, its timing and the undercurrent of economic and political dynamics, it is imperative to question the implications for India. Being the second biggest seller of the CERs in Asia Pacific bagging 48.49% share in the total registered CDM projects, India can’t reasonably expect it to be a source of finance for renewable energy or energy efficiency projects. Although the opportunistic buying of cheap CERs from India has given a boost to the different sectors and industries in the country to register under CDM, but the global drop in demand has discouraged implementing such projects. India’s domestic challenge now is to reduce dependence on the CDM mechanism to implement renewable energy and energy efficiency projects. 


Petrol Prices in Major Cities & Recent Increase including State Taxes

Akhilesh Sati, Observer Research Foundation





(in `/Ltr.)



(in `/Ltr.)

Net increase

[ ` 6.28/Litre basic increase

+ state taxes ]





























































































Port Blair
































Source: PPAC, Indian Oil &                                 *revised in April 2012







RIL, BP, Niko consortium give up D4 O&G block

May 22, 2012. Reliance Industries and partners BP and Canada's Niko Resources have abandoned the D4 oil and gas block off east coast, Niko said, underlining the production problems in the region. The D4 block, situated in the Mahanadi basin, lies north of Reliance's main D6 block in the neighbouring Krishna-Godavari basin, where gas output has declined sharply, marring growth outlook for the Indian energy major and forcing the government to hold back approvals. Niko said its decision and that of its partners stemmed from the current geological assessment related to the size of the trapping mechanism and the commercial environment currently prevailing in India. Niko was required to conduct seismic work and drill three exploration wells until June 2013 on the block, which is spread over 17,000 square kilometers. Calgary, Alberta-based Niko has a 15 percent interest in the D4 block, while BP holds 30 percent. Reliance owns the rest and is also the operator of the block. Niko initially estimated the D4 block could potentially be twice as large as the flagship D6 block in the Krishna-Godavari basin and may hold as much as 100 trillion cubic feet (tcf) of gas. However, analysts currently estimate the D4 block's reserves at a small fraction of that number. Reliance cut estimates for proven gas reserves in its Indian blocks by 7 percent to 3.67 trillion cubic feet (tcf), blaming low pressure and uneconomic volumes for the lower-than-expected volumes. Niko holds a 10 percent stake in the D6 block, which is estimated to hold probable reseves of more than 9 tcf of gas. Reliance sold a 30 percent stake in 21 oil and gas blocks - including in KGD6 and D4, to BP, in a $7.2 billion deal.

ONGC Cauvery Asset meets production target

May 18, 2012. ONGC Cauvery Asset has met its production target at 1.50 mms of oil and oil equivalent of gas for the last fiscal of 2011-12. Presently, the oil production from its various fields in the Cauvery basin stood at 750 tonnes per day and gas at 3.54 million cubic meters per day, with major portion of gas being utilised for power generation. ONGC Cauvery Asset has been engaged in exploration and exploitation of hydrocarbons in the two states of Puducherry and Tamil Nadu, with its exploration projects spread over Nagapattinam, Tiruvarur, Cuddalore, Thanjavur and Ramnad districts and Karaikal. The exploration area of ONGC Cauvery Asset is spread over 27,850 onshore and 30,000 sq. km. offshore and extends from Puducherry in the north to Ramnad in the south and Thanjavur in the West to Karaikal in the east.

Gas from KG-D6 drops to about 32 mmscmd: RIL

May 16, 2012. Reliance Industries (RIL) has reported that natural gas production from its eastern offshore KG-D6 fields has dropped to about 32.66 million standard cubic meters per day. Gas output from KG-D6 in the week ended May 6 dropped to 32.66 mmscmd from 33.89 mmscmd in April, according to a status report filed by the company with the Oil Ministry. KG-D6, where water and sand ingress coupled with drop in pressure has led a drastic fall in per-well output, had produced 34.62 mmscmd in the beginning of March. Production from Dhirubhai-1 and 3, the largest among the 19 oil and gas finds RIL has made in the KG-DWN-98/3 or KG-D6 block, slipped to 26.51 mmscmd during April 30 to May 6. Together with 6.15 mmscmd output from MA oilfield in the same block, KG-D6 produced 32.66 mmsmcd during the week ending May 6. The KG-D6 output has fallen since hitting peak of 61.5 mmscmd in March 2010 as RIL shut wells after water and sand ingress. 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 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. The report said two out of the six wells on MA field had to be shut due to water loading. The field produced an average of 9,759 barrels per day of oil in the week and 1,759 barrels per day of condensate. Of the 32.66 mmscmd of production, 14.38 mmscmd was sold to fertiliser plants at government approved rate of $ 4.20 per million British thermal unit. Another 15.01 mmscmd was sold to power plants and the remaining 3.27 mmscmd was consumed by sectors such as LPG. RIL projected an output of 32.4 mmscmd.


RIL selects Phillips 66 technology for Jamnagar plants

May 22, 2012. Reliance Industries said it has selected Houston-based Phillips 66's technology for its planned gasification plants at Jamnagar. The synthesis gas will be used as feedstock for a new chemical complex and will fuel the refinery's existing gas turbine power generation units. Phillips 66 will license its E-Gas Technology to RIL and provide process engineering design and technical support relating to the gasification technology process area.

Vizag refinery capacity expansion by 2015-16: HPCL

May 21, 2012. Hindustan Petroleum Corporation Limited (HPCL) expects to expand the Vizag refinery plant to 15 million tons by 2015-16. According to HPCL, Engineers India has been appointed as consultants for the project and they are expected to submit report on that. HPCL operates two major refineries producing a wide variety of petroleum fuels and specialties, one in Mumbai (West Coast) of 6.5 Million metric ton per annum (MMTPA) capacity and the other in Vishakhapatnam, (East Coast) with a capacity of 8.3 MMTPA. The project, which was scheduled to take off in 2013, could not be taken forward for variety of reasons such as environmental issues and partnership with others.

BPCL beating refiners on Africa exploration

May 18, 2012. Bharat Petroleum Corp. (BPCL) is the best- performing energy stock on the MSCI AC Asia Pacific Index and analysts say its foray into exploration in Africa to counter refining losses may mean there’s more growth to come. India’s second-biggest state refiner holds a 10 percent stake in a block off Mozambique, the site of the biggest natural gas discoveries in a decade.

Transportation / Trade

Essar Oil - L&T sign MoU for bitumen supply

May 21, 2012. Essar Oil, amongst India's top private sector refiners, and Larsen & Toubro (L&T), amongst India's top engineering and construction companies, have signed a Memorandum of Understanding (MoU) for supplies of high quality bitumen for key infrastructure projects in Gujarat undertaken by the engineering giant. The initial supply agreement is for a quantity of 15,000 metric tonnes over the course of the project and is likely to be extended to other projects in and around the state. Essar Oil will provide supplies for the Kandla - Mundra Road Project (KMRP) and the Samakhaiyali - Gandhidham Road Project (SGRP), both in the state of Gujarat from its state-of-the-art refinery in Vadinar. This cooperation will soon be extended to projects like the Kishangarh - Udaipur - Ahmedabad Road Project, among others. Essar Oil has existing relationship with L&T under which it supplied about 60,000 metric tonnes of high quality bitumen over the last 18 months for L&T's various road projects. The new MoA is over and above that quantity. Essar Oil will ensure availability of quality product for the projects and the relationship with L&T will open up avenues for sales of its refinery product.

MRPL gets oil cargo insured with Iran, may do more

May 21, 2012. India's MRPL has got a crude cargo insured by an Iranian firm, the first state refiner to do so, after local firms refused cover even before European Union sanctions barring such deals start in July. The United States and European Union are trying to squeeze the revenues Iran makes from its oil exports to force it to halt a nuclear programme they fear will be used to make weapons. Tehran says it needs the technology for power generation. China, Japan, South Korea and India are the main buyers of Iran's 2.2 million barrels per day (bpd) of exports. All have made steep cuts in imports against a backdrop of rising international pressure on Tehran. MRPL is one of the major Indian clients of Iran's oil and its insurance policy with New India Assurance Co Ltd for cargoes lapsed.

India asks U.S. to supply liquid shale gas

May 16, 2012. India has asked the U.S. to supply it with liquid shale gas, a government source said, as it continues to reduce dependence on oil imports from Iran, which are targeted by sanctions from Washington due to its nuclear ambitions. The United States wants allies to cut oil imports from Iran substantially or face financial sanctions from end-June. It has already granted a waiver to 10 European countries and Japan, but India and China, Tehran's biggest clients, remain at risk. U.S. Secretary of State Hillary Clinton said on a visit earlier this month the United States was helping in the search for alternative supplies of crude and has now sent energy envoy Carlos Pascual for talks on a range of energy issues. India has pledged to continue reducing imports from Iran, which used to be its No. 2 supplier after Saudi Arabia, but no specific target was set in talks with Pascual. Refiners cut oil shipments from Iran by a third in April from March, while annual deals in effect from April 1 are likely to be at least 15-20 percent below the previous year's volumes. India, the world's fourth-largest oil importer, ships in about 80 percent of its oil needs. It relies mostly on coal and oil for its energy demands with about a third coming from nuclear, alternative energy supplies and natural gas.

Policy / Performance

Oil Minister S Jaipal Reddy says 'immediate' need to hike fuel prices

May 22, 2012. With rupee depreciation leading to jump in oil import bill, Petroleum Minister S Jaipal Reddy said there is an immediate need to raise fuel prices, but refused to say when the hike will actually take place. The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14 per cent and 7 per cent fall in value of rupee against the US dollar. Price of diesel, kerosene and cooking gas were raised in June last year. State-owned oil firms, who had in the fiscal ending March 31, 2012 lost ` 4,860 crore on petrol sales, are currently losing ` 6.28 per litre on petrol. After including 20 per cent VAT, the desired increase in petrol price in Delhi comes to ` 7.53 a litre.

Have power to frame CNG tariff rules: PNGRB tells court

May 22, 2012. The Petroleum and Natural Gas Regulatory Board (PNGRB) told the Delhi High Court that it has the power to frame tariff regulations for Indraprastha Gas Limited (IGL) that distributes compressed natural gas (CNG) and piped gas in Delhi and adjoining region. IGL had moved court contending that the regulatory board did not give it a hearing and calculated the tariff, announced April 9, on the basis of the 2008 price levels for various inputs and charges.

April fuel sales up 0.2 pc y/y - Govt

May 22, 2012. India's local oil products sale in April edged up 0.2 per cent from a year ago, the slowest pace since September 2010, on weak demand for auto and commercial fuels, indicating industrial output may have remained sluggish. Local oil product sales, a proxy for domestic oil demand in Asia's third-largest oil consumer, rose to 12.66 million tonnes in April. Consumption of petrol and diesel in April grew at the slowest pace in three months as high inflation - including for food items - squeezed consumer spending on fuel. India's petrol consumption in April rose 3.7 per cent to 1.25 million tonnes and that of diesel was up 8 per cent to 5.9 million tonnes, as high interest rates and increased excise duty on the vehicles had moderated automobile sales.

Jaipal Reddy in Turkmenistan to seal GSPA

May 21, 2012. India is expected to sign an agreement with Turkmenistan that will secure 38 million standard cubic meters per day gas supply from the Central Asian country at around $11.5/unit. Oil minister Jaipal Reddy is visiting Turkmenistan to sign the gas sale purchase agreement (GSPA). The GSPA would pave way for construction of $7.5 billion trans-national pipeline, which would also supply gas to Afghanistan and Pakistan. Turkmen gas would be significantly cheaper than liquefied natural gas (LNG) sold in spot market. Gas-starved India pays a spot price of about $16 a unit for LNG. 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 $10-11 per unit.

Montek Ahluwalia feels govt should raise petroleum prices

May 21, 2012. Dismissing the perception of policy paralysis surrounding the union government, Planning Commission Deputy Chairman Montek Singh Ahluwalia feels the government should raise petroleum prices as part of tough decisions and to attract international investment. He feels people must be educated on the importance of raising fuel prices so that petroleum sector does not go bankrupt. He was asked whether the government would be willing to take tough decisions to put its economy on the path of high growth. He underlined the need for restoration of fiscal credibility, action on the underpriced petroleum products and taking care of implementation bottlenecks in infrastructure projects as being measures that should be very high on the government's agenda. Ahluwalia said the view in the Planning Commission on fuel subsidies is very clear that "fuel prices just have to be adjusted. Ahluwalia said people must be educated on the importance of raising fuel prices.

Offshore cos attack ONGC policy on chartering vessels

May 21, 2012. Indian offshore companies have come out in the open against ONGC's allegedly flawed policy on chartering vessels to support rigs for drilling. The companies allege that ONGC, the country's biggest public sector oil company, often selects age-old vessels as they offer low charter rates at the cost of safety. In the absence of a stringent policy on age, ONGC chooses the lowest bidder. Leading global oil and gas exploration firms have strict laws on the age of the offshore vessels in line with international safety norms. Even in India, oil and gas majors such as Reliance Industries (RIL), Cairn and Gujarat State Petroleum (GSPC) have adopted global norms prescribing age limits. For instance, GSPC's policy says vessels older than seven years should not be allowed, while RIL maintains that vessels over 15 years cannot be used. Such vessels, which are used for offshore support, fall in the category of platform supply vessels (PSV) and anchor handling tug supply vessels (AHTSV).

RIL seeks $1 bn loan to fund petrochemicals, telecom expansion

May 21, 2012. Reliance Industries is seeking a loan of about $1 billion to fund its petrochemicals and telecom expansion. RIL has approached banks for the five-year loan. RIL has lined up a $ 12 billion expansion of its petrochemical business, the largest since completing its second oil refinery in 2008. The company had raised $ 2 billion as loan from German banks. RIL is investing over $ 12 billion over next 4-5 years in the refining and petrochemical industries. It is setting up an $ 4 billion petroleum coke gasification project that will produce synthetic natural gas that will replace expensive LNG as fuel. Also, it is spending $ 8 billion on adding capacities of PFY, PET, polyester and intermediate chemicals such as PTA and paraxylene, besides adding new products such as carbon black and rubber.

CCI clears state oil cos of cartelisation charges

May 20, 2012. Anti-trust regulator Competition Commission of India (CCI) has cleared state-owned oil marketing firms - BPCL, HPCL, and IOC - of charges that they formed a cartel and fixed the price of bio-diesel, saying that they have not violated provisions of the competition law. After considering a complaint from Royal Energy that the OMCs had collectively decided to procure bio-diesel at a lower price, the CCI said it found that since the price of diesel was under the control of the government, PSU OMCs were not allowed to fix, determine and enhance the retail selling price of diesel on their own. Royal Energy had alleged that since its product was causing a threat to diesel supplied by IOC, BPCL and HPCL, they started informing their clients that they would be supplying bio-diesel blended petro-diesel to them directly.

Law ministry sees no legal hurdle in raising RIL's D6 gas price

May 18, 2012. The law ministry sees no legal hurdle in raising the price of gas produced from Reliance Industries' D6 block, but the oil ministry is expected to oppose the move and is focusing its attention on the gas pipeline from Turkmenistan, which the cabinet approved.

Government said the decision would be taken by the Empowered Group of Ministers (EGoM) based on the advice of the attorney general and views of the ministers. The oil minister, Jaipal Reddy, was likely to oppose the proposal to raise prices despite the legal advice from Attorney General Goolam Vahanvati. The oil ministry says that an EGoM decision had approved the current price of $4.2 per unit until 2014 and prices cannot be raised before that. It is also concerned that higher prices would increase subsidy. But Reliance is seeking market-linked prices, which it has argued is prescribed in its production sharing contract (PSC) and is necessary to make new fields commercially viable. The EGoM is expected to meet again to take a decision.

Oil Ministry regulates sale of raw petroleum coke

May 18, 2012. The oil ministry has directed state refiners to auction raw petroleum coke or RPC and give preference to local consumers due to growing demand of RPC by aluminum and cement manufacturers. The ministry has directed Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), to auction RPC. For equitable distribution of RPC, refiners have been told to restrict its sale to local industrial units. The ministry has directed companies to auction RPC in two months and thereafter invite tenders frequently. In order to ensure that consumers are not indulging in black-marketing, oil companies have asked not to supply them RPC in access to their installed capacity. RPC, the "bottom of the barrel" product of refinery is sold only ex refineries as oil companies do not have storage or sales points for these products.

India making progress in reducing oil imports from Iran: Robert Blake

May 17, 2012. India has made a considerable progress in reducing its dependence on Iranian oil, a top Obama administration official has said. "Progress is being made," on India reducing its dependence on Iranian oil, Assistant Secretary of State for South and Central Asia, Robert Blake told lawmakers during a Congressional hearing. Responding to the questions from Congressmen, Blake said

India is making progress in this regard not because of any pressure from the US, but because of "financial and commercial considerations". As a result of the US sanctions on Iran, it is becoming tough for countries to do business with Iran. Many Indian companies have pulled out of Iran because of market considerations. So percentage of Indian import of oil from Iran is going down, Blake said, adding that the United States welcomes this.

First India shale gas seen in 4 yrs, China output nears

May 17, 2012. Oil & Natural Gas Corp. (ONGC) of India and competitors may drill for at least four years before producing the first commercial shale gas in the nation as China expects to commence output next month and Australia boosts reserves. ONGC, India’s biggest explorer, is studying data for shale- gas deposits and awaiting a government policy on commercial drilling for gas trapped in shale rock. China Petrochemical Corp. will start pumping the nation’s first shale gas from a project in Sichuan province next month.

Companies from France’s Total SA to Australian mining giant BHP Billion Ltd. began shale-gas projects around the world after a surge of production in the U.S. turned that fuel-importing nation into the world’s biggest producer of natural gas. The U.S. produced 96 billion cubic meters in 2009, overtaking Russia as the largest provider of the fuel. Australia’s energy minister Martin Ferguson said that nation is likely to possess enough shale gas to double its total gas resources and add to 184 years of output, while China is estimated to hold the world’s largest deposit of the unconventional fuel. India holds 6.1 trillion cubic feet of technically recoverable shale gas reserves in three basins. That was less than 10 percent of the 63 trillion cubic feet estimate made the previous year, in April.

ONGC found shale gas at a well in India’s West Bengal state. The company signed an agreement with ConocoPhillips (COP) for developing shale resources in India and North America. India has started mapping its shale resources and will have exploration rules in place by 2013, Prime Minister Manmohan Singh said. Blocks will be auctioned next year after the policy is published.

India cannot afford import of large quantities of crude oil: FM

May 16, 2012. Amid rising global crude oil prices, Finance Minister (FM) Pranab Mukherjee warned of 'disastrous consequences' if corrective steps are not taken to deal with the problem as India cannot afford import of large quantities at high prices. Mukherjee said he has asked oil experts and Chairman of Prime Minister's Economic Advisory Council (PMEAC) to find out if the country can reduce its oil import requirement. India imports about 170 million tonnes, while domestic production is about 37-38 million tonnes.

Rupee-hit power producers seek stable gas prices

May 16, 2012. Indian power producers have asked the oil ministry to ensure stability in natural gas prices so that plants generating electricity from the fuel remain viable. The Association of Power Producers, which represents top companies including Tata Power and Reliance Power, has taken up the issue with Petroleum Minister Jaipal Reddy and argued that gas prices have already soared because of the rupee's depreciation as gas is priced in dollars.

Reliance Industries and its partner BP are seeking higher prices of natural gas to justify investments in deep-sea fields but the oil ministry has so far maintained that gas prices cannot be revised before 2014, as per the decision of an Empowered Group of Ministers.



Aryan villages in Ladakh getting two power houses

May 22, 2012. For a historic first, J&K government's fully owned State Power Development Corporation is setting up two small power projects in Dah and Hanu, the twin hamlet of Kargil that is home to "pure Aryans" in the region. Of the six companies that bid for setting up the two projects of 9-MW each, a Chandigarh based firm ha actually bagged the contract. The project envisaging tapping local streams to fed the turbines down the hills, the same mountain range that witnessed bloody battles during the 1999 Kargil skirmishes. The company that bagged the contract is a registered power producer in the state and I operating a 7.5 MW unit at Brewar in Budgam.

BHEL bags contract for Solapur power project

May 21 2012. State-owned BHEL said it has bagged a contract for supplying equipment at Solapur Super Thermal Power Project in Maharashtra. BHEL has won a contract for supply and installation of Electrostatic Precipitator (ESP) package for 2x660 MW (1,320 MW) Solapur Supercritical Thermal Power Project, the company said. BHEL's scope of work in the contract involves design, engineering, manufacture, supply, and erection and commissioning of the complete ESP package. The ESP shall be manufactured at BHEL's Ranipet plant, while the High Voltage Rectifier Transformers will be supplied by the company's Jhansi plant. BHEL's Power Sector – Western Region will be responsible for erection and commissioning of the ESP. The company won an order worth ` 380 crore from Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL) for setting up a 160 MW gas-based plant in Rajasthan.

CESC acquires hydroelectric projects in AP

May 16, 2012. CESC Ltd, an RP-Sanjiv Goenka Group company, announced that it has acquired two hydroelectric power projects of India Bulls group totaling 146 MW in Arunachal Pradesh (AP) for an undisclosed sum. The company has confirmed that it has entered into agreements to take over two hydroelectric power projects of India Bulls. CESC has acquired the entire equity shares of Pachi Hydro Power Projects Ltd and Papu Hydro Power Projects Ltd, both belonging to India Bulls Group. Pachi Hydro is a special-purpose vehicle established to undertake the 56 MW Phangchung Hydro Electricity Project in East Kameng district of Arunachal Pradesh. The 90 MW Papu Hydro Electricity Power Project is also located in East Kameng district, Arunachal Pradesh.

Transmission / Distribution / Trade

Demand-supply gap between power generation; demand touched 8.2 pc in April according to CEA

May 22, 2012. Demand supply gap between electricity generation and demand touched 8.2% in April 2012 according to the Central Electricity Authority (CEA). This is marginally higher by 0.2% during the previous corresponding period and lower by 2% in March 2012. According to CEA total generation shortfall during 2011-12 was 8.5% with demand touching 9,37,199 million units and generation lagging at 8,57,886 million units. The absolute shortfall was 79,313 million units during the year.

Expect Bhutan’s winter time import of power from India to increase till 2016

May 21, 2012. Hydropower major Bhutan's winter time import of power from India is expected to increase significantly till 2016. Water resources rich Himalayan country Bhutan itself needs power from outside to meet its domestic demand during lean winter season due to shortage of water flow. The total import of power by Bhutan from India between October 2011 to March 2012 has been calculated as worth Nu 30 Million (Eqv. INR 30 lakh), much higher than the previous year.

Power supply demand likely to rise by nearly 10 pc in Delhi

May 21, 2012. The city's power sector officials are ready to tackle a peak demand of over 5,500 MW - that is nearly 10 per cent more than the staggering record of 5,100 MW last summer. The claim comes with a disclaimer as was demonstrated when the mercury soared to a stifling 41 degree Celsius and the demand for power rose to 4,278 MW. The city failed miserably to meet the demand. There was a shortfall of 700 MW to 900 MW, triggering intermittent outages across neighbourhoods. Delhi generates 1,054 MW on its own and draws approximately 2,900 MW from the Northern Grid on an average day. When demand peaks the city buys extra power from the grid and sometimes directly from sources such as Dadri II, Chamera and Tehri plants.

Tough times for consumers; power deficit touches 11 GW in April

May 21, 2012. In signs of worsening power supply situation for consumers, the shortfall in electricity generation during peak hours stood at nearly 11,000 MW in April as fuel scarcity hurt performance of thermal plants. The country's peak power deficit - shortfall in generation capacity during the time when the electricity consumption is the maximum - touched 10,876 MW in April. The significant deficit implies non-availability of enough electricity to meet the needs of consumers. Many states, especially in south India, are already grappling with load shedding and power cuts.

CIL asked to sign supply pact with NTPC for 750 MW Assam project

May 21, 2012. Coal India has been asked to sign fuel supply agreement with NTPC for 750 MW power plant in Assam, Minister of State for Coal Pratik Prakashbapu Patil has said. The minister also said that one unit of the power project of NTPC of a capacity of 250 MW was likely to be commissioned next fiscal, which the other two units in 2014-15 and 2015-16. According to NTPC, its ` 5,000 crore project is located in Salakati district of Assam. The coal linkage to the project will be provided by both Eastern Coalfields, a CIL subsidiary, and North Eastern Coalfields Ltd. The government has recently asked Coal India to sign long-term fuel supply agreements with power producers. However, some power producers, including NTPC, had refused to sign agreements with Coal India as they have reservations about clauses, including those related to penalty, in the revised fuel supply agreement. Also, CIL said it would not restrict the supply of fuel to NTPC in the current financial year even if the FSAs are not signed.

Adanis dedicates to nation 1,000-km power transmission system

May 18, 2012. The Adani Group dedicated to the nation India’s first private sector high voltage direct current (HVDC) power transmission system, providing coal-fired thermal electricity generated at Adani Power Ltd’s (APL) Mundra facility in Gujarat to Mohindergarh in Haryana, a distance of 1,000 km. APL said it has commissioned the 500 kiloVolt (kV) system that has a 2,500 megawatt (MW) of transmission capacity. The transmission line, completed in 24 months, passes through Gujarat, Rajasthan and Haryana and will start power supply to Haryana soon. APL will evacuate thermal electricity via a 400 kV, 430-km-long transmission line, the longest dedicated transmission line developed by India’s private sector, from Mundra to Dehgam (Gujarat), from where power will be transmitted via the HVDC double circuit transmission line to Mohindergarh. APL is also developing a dedicated 50-km 400 kV Mohindergarh-Bhivani transmission line for supply of power to the Haryana Power Generation Corporation Ltd (HPGCL).

Essar Energy signs long-term power purchase agreement with Noida Power

May 17, 2012. Essar Energy plc, the India-focused integrated energy company has signed a power purchase agreement (PPA) with Noida Power Company for 240 megawatts (MW) of contracted capacity from Essar Energy's 600MW coal-fired Tori II power station which is under construction in Jharkhand. The binding PPA has been signed by the Noida Power Company with Essar Energy's subsidiary Essar Power Jharkhand Limited (EPJL) and has a 25 year duration. The PPA was secured following a competitive bidding process, with supply of power under the terms of the PPA being due to commence from April 2014.

Policy / Performance

Rating system for discoms likely to be operational: Power Ministry

May 22, 2012. Amid rising concerns over losses of power distribution companies, a rating system to assess their overall performance is expected to be operational by early next year, the Power Ministry said. The system would look into various aspects related to utilities, including tariff hikes and steps taken to reduce transmission losses. The Power Ministry has written to the Power Finance Corp about the same and PFC would soon appoint an agency in the next two-three months to carry out the rating of utilities. The first rating and ranking report for utilities would be ready by March 2013. There are about 73 power distribution utilities in the country. The Power Ministry is also working on restructuring the debt liabilities of discoms.

Coal India has signed FSA with around 18 power plants: Govt

May 22, 2012. The government said Coal India has so far signed pacts with 18 power plants for supply of the fuel, amid electricity producers' reservations about certain clauses of the fuel supply agreement. Most of the power producers have reservations about certain clauses, including those related to penalty, in the revised fuel supply agreement (FSA) put forward by CIL. State-owned NTPC is among the companies that have refused to sign FSA. Coal India has entered into fuel supply pacts with Reliance Power for its Rosa Power project, Lanco Anpara Power, Bajaj Hindustan and CESC, among others.

Power plant to shut down if gas supplies dwindle: Lanco

May 21, 2012. Sounding a warning bell, private power producer Lanco has told the government that any further reduction in natural gas supplies from Reliance Industries' KG-D6 gas fields would lead to shutting down of power plants. With KG-D6 field output dropping from 61.5 million cubic meters per day to 32.66 mmcmd over two years, the government has made a pro-rata cut in gas supplies to 25 power plants who were allocated gas from Krishna Godavari basin fields. The plants, which are currently operating at less than 38 per cent of their capacity because of the supply reduction, may face further cuts in fuel as government squeezes-in Delhi's Pragati Power Plant and others as KG-D6 customers.

NTPC will get coal even without FSA for 2012-13

May 21, 2012. NTPC's reservation in signing the Fuel Supply Agreement (FSA) with Coal India will not impact the country's largest power producer as CIL will not restrict supply of fuel in the current financial year 2012-13 even if the agreements are not signed. CIL in the previous year had supplied 36 million tonne of coal to NTPC and in the current fiscal the projected requirement was 90 million tonne based on 80 per cent supply.

Discounted sale of inferior coal to Adani project by UCM Coal prompts recent policy change

May 19, 2012. An agreement between three state-owned companies and Adani Enterprises over the terms of supply as well as the price of an inferior variety of coal slated to be used to fire a power plant being set up by the Ahmedabad-based group has been criticised by industry experts and may have prompted a recent policy change. In 2010, a consortium led by Adani Enterprises was awarded what is called the mine developer & operator (MDO) contract by UCM Coal, a three-way joint venture formed for developing coal blocks allotted to it in Odisha. UCM Coal's three shareholders are Uttar Pradesh Rajya Vidyut Utpadan Nigam, Chhattisgarh Mineral Development Corp and Maharashtra State Power Generation, or MahaGenco. The agreement had a clause stipulating that 'coal rejects', or coal of inferior grade - which usually refer to the residue left after washing - will be given to Adani for use in a power plant to be set up nearby. This will be free of cost, the agreement said, a provision that was later changed to a price of ` 21 per tonne.

Coal India to not make any changes to new fuel supply agreement

May 19, 2012. Coal India is in no mood to make any changes to its new fuel supply agreement because it has not received any such direction from the coal ministry. The company is yet to receive any directive or communication from the coal ministry for changing the fuel supply agreements to make it acceptable to power producers. Companies such as NTPC, Reliance Power and Tata Power, however, want to sign the old fuel supply agreement with 80% trigger level and have refrained from approaching CIL for signing FSAs.

KKNPP to start commercial operation by August

May 18, 2012. The first unit of the controversy- hit Kudankulam Nuclear Power Plant (KKNPP), with a capacity to produce 1,000 MW, is expected to start commercial operations in August. The first unit has attained 99.3 per cent of physical progress as on April and commercial operation is likely by August, the Nuclear Power Corporation of India Limited (NPCIL) said. NPCIL said it has fixed a target of March next year for the commercial operation of the second unit, where 94.7 per cent of the physical work has been completed. The KNPP moved one step closer to its commissioning with Atomic Energy Regulatory Board (AERB) giving clearances required ahead of filling of the real fuel in the reactor. AERB permitted KNPP to open the Reactor Pressure Vessel (RPV) Top Head, Dummy Fuel Assembly removal and the RPV inspection for unit 1, one step short of filling enriched uranium.

NTPC plans nearly ` 210 bn investment this fiscal

May 18, 2012. Country's largest power producer NTPC expects to almost double investments for expansion activities at ` 21,000 crore in the current fiscal. The state-run company had spent about ` 11,000 crore in 2011-12. NTPC, which has an installed generation capacity of 37,514 MW, is looking to increase the capacity in the coming years, especially with thermal power projects. Against the backdrop of acute coal shortages impacting the power sector, NTPC might have reduce capacity addition target for the 12th Five-Year Plan to little more than 50,000 MW from earlier target of 65,000 MW.

MERC gives BEST nod for new electricity fare hike

May 18, 2012. The Maharashtra Electricity Regulatory Commission (MERC) has given its approval to BEST for the new electricity fare hike for year 2011-2012. The new fare hike would come into effect from June 1, 2012. The Commission has also given its nod for the recovery of ` 659 crore revenue deficit of the last three financial years (2009-10, 2010-2011 and 2011-12). The recovery would be done from June 1, 2012 from the new fare rates. The Commission on an average has increased the electricity rates by 27.6 per cent. Due to the new fare hike it is likely that there will be an additional revenue of ` 761 crore.

Reliance Power asks CAG to drop audit note on 'undue benefits'

May 18, 2012. Reliance Power has requested the Comptroller and Auditor General (CAG) that the audit report on coal blocks should not refer to 'undue benefits' to the company due to surplus coal from Sasan and Tilaiya power projects as a panel of ministers had already reviewed the matter based on the advice of the Attorney General. Leaked draft reports of the CAG had mentioned that the government's decision to allow Reliance Power to use surplus coal from mines attached to ultra mega power projects (UMPPs) at Sasan and Tilaiya had given undue gains for the company.

Govt may award only one UMPP in FY13

May 17, 2012. The government may at best be able to award only one ultra mega power project (UMPP) in the current fiscal to March. India faces a peak power deficit of around 10%. The government had launched ultra mega power projects of 4,000 megawatts each, which would be developed by the private sector on a build-own-operate basis, to fill the growing gap between power demand and supply.

World Bank to give ` 130 bn for power generation in North East: Power Grid

May 17, 2012. World Bank would give ` 13,000 crore for infrastructural development of power generation facilities in the North East which would be executed by Power Grid Corporation of India (PGCIL), the company said. PGCIL said the company was keen to improve the power scenario in the region had executed several long-term and short-term projects in it. The PGCIL is building an 800 KV substation in Arunachal Pradesh and another substation at Byrnihat in Meghalaya, which is nearing completion.

UP to get additional 500 MW of power as two units to be commissioned in June

May 17, 2012. The state reeling under acute power shortage would find some relief with fresh capacity of 500 MW expected to be added by the end of June. The board meeting of state government undertakings, Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (UPRVUNL) and Uttar Pradesh Jal Vidyut Nigam Ltd was held. It was informed that two new thermal power generation units- Unit 9 of 250 MW at Harduaganj power station and Unit 5 of 250 MW at Parichha power station will start generation in June. UPRVUNL said net power generation by state owned power stations stood at 18,537.94 million unit (MU), against which an amount of ` 5112.47 crores of revenue was realized in the 2011-12 fiscal year. According to estimates, revenue of ` 7,326.52 crores is expected in the 2012-13 fiscal against net power generation of 24,491 MU. Total expenditure for the year 2011-12 was ` 4,515.79 crores and ` 6,078.32 crores outgo is expected in the year 2012-13. After deducting total revenue expenditure, Gross Operating Surplus for the year 2011-12 was ` 631.69 crores, whereas, an amount of Rs 1280.20 crores is estimated for the year 2012-13. The Board of UP Jal Vidyut Nigam Ltd (UP Hydro Power Corporation Ltd) was informed that as against the target of 924 MU the corporation achieved generation of 1431.51 MU of hydropower during 2011-12 fiscal. The board approved the proposal for preparation of bid document by Alternate Hydro Energy Centre (AHEC), IIT, Roorkee for project execution on turn-key basis through EPC (Engineering, Procurement, Construction) contract for the 1500 KW Khara small hydro power project in Uttar Pradesh.

PFC relaxes loan norms to boost sector

May 17, 2012. Power Finance Corporation has eased certain eligibility conditions for loan disbursals to power projects in an effort to revive a sector starved of funds as developers are finding it tough to meet some stringent loan conditions. PFC had set strict pre-conditions for loan disbursals to reduce its risks on loans that were already sanctioned. Since April 2011, the state-run lender had been disbursing loans to only those power projects that had signed power purchase agreements with procurers and also had assured fuel supply for the plant in place.

Giving up nuclear power harmful: PM

May 16, 2012. Making a strong pitch for nuclear energy, Prime Minister (PM) Manmohan Singh said it would be "harmful" if the country gave up the option of additional source of electricity. Singh was replying to a question by Anant Geete (Shiv Sena) on the Prime Minister's views on giving up nuclear power like Japan which has put safety issues ahead of its need for electricity. At the same time, the Prime Minister said there would be no compromise on the issue of nuclear safety. He said that as far as the present policies with regard to nuclear power were concerned, the government was of the view that when it comes to questions of safety, there should be no compromise whatsoever.




Iran finds its first Caspian Sea oil for more than a century

May 20, 2012. Iran has discovered oil in its Caspian Sea waters for the first time in more than a century. The deposit was found at a depth of 2.5 kilometers (1.5 miles) during drilling on a natural-gas field and may contain 10 billion barrels of crude. That’s equal to 7 percent of Iran’s known reserves. While Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, most existing fields are in the south and the Persian Gulf. Hampered by sanctions over nuclear ambitions, it doesn’t yet extract crude in the Caspian, where nations including Azerbaijan are tapping deposits and demarcation lines over territory are disputed. The oil strike is Iran’s first in the Caspian Sea for 104 years. Iran has proven reserves of 151 billion barrels. The maximum estimated deposit at the Caspian Sea site would be slightly less than in the whole of Algeria, with 12.2 billion. The Caspian basin may hold 17 billion to 33 billion barrels of oil, compared with the North Sea’s 17 billion. It may also hold 8,000 billion cubic meters of gas. International oil and gas companies such as Royal Dutch Shell Plc and Total SA have exited Iran to comply with U.S. sanctions over its nuclear program, forcing the Islamic state to rely on its own technology for exploration and production.

Saudi Arabia edges Russia as biggest oil producer, JODI says

May 20, 2012. Saudi Arabia boosted crude production close to a 31-year high in March, overtaking Russia as the world’s largest oil producer for the first time in six years, according to the Joint Organization Data Initiative (JODI). Saudi crude exports rose 3 percent in March, reaching the highest level in five years as Iran cut shipments. Saudi Arabia, OPEC’s largest producer, increased daily output to 9.923 million barrels in March, up 0.7 percent to the second-highest level since at least 1980, according to the initiative. That topped output from Russia, which pumped 9.920 million barrels a day, for the first time since February 2006, according to the data.

Australia seen a decade away from large-scale shale production

May 18, 2012. Australian shale explorers may be a decade away from producing oil and gas on a large scale because of obstacles ranging from a lack of drilling equipment to higher labor and infrastructure costs. Projects focusing on higher-priced oil and liquids may earn better returns and reach production faster. In the U.S., the largest producer of the fuel, a supply glut has caused gas prices to slump and forced companies including BHP Billiton Ltd. and Royal Dutch Shell Plc to focus on extracting petroleum liquids.

RusPetro on target to beat 10,000 barrels per day in Siberia

May 17, 2012. West Siberia-focused RusPetro said that it is confident that it will deliver on its target of 24 wells to be drilled by the end of this year, and will achieve its 2012 year-end production target of 10,400 barrels of oil per day – compared to a year-to-date average production of 4,000 bpd. The reason for RusPetro's confidence, it said, was that because it is now drilling wells at a significantly faster pace than during the first quarter of the year and already has four rigs in operation on its license areas in the Khanty-Mansiysk region of the West Siberian basin. Key highlights from RusPetro's update included a 10-percent increase in proved oil reserves from 157 million to 173 million barrels and a 7.5-percent increase in proved and probable reserves from 1,437 million barrels to 1,545 million barrels.

Fifth Tanzanian gas discovery for BG Group

May 16, 2012. UK-based energy giant BG Group announced its fifth consecutive Tanzanian gas discovery with the Mzia-1 exploration well located in Block 1, offshore southern Tanzania. Mzia-1 is BG Group's first discovery within the deeper Cretaceous section and opens an extensive new play fairway within the Group's offshore acreage in Blocks 1, 3 and 4, to complement the now proven Tertiary fairway.

Norwegian O&G production down in April

May 16, 2012. The Norwegian Petroleum Directorate (NPD) has announced figures for oil and gas production for April 2012. The NPD said that preliminary production figures for April 2012 indicate an average daily production of about 2,030,000 barrels of oil, NGL and condensate. This is 11,000 barrels less than for March 2012. Total gas sales were about 9.4 billion standard cubic meters, which is 1.6 billion cubic meters less than the previous month. The average daily liquid production in April was: 1,633,000 barrels of oil, 310,000 barrels of NGL and 87,000 barrels of condensate.

Chesapeake oil asset may fetch an extra billion

May 16, 2012. Chesapeake Energy Corp. may receive $1.8 billion more than estimated for a group of oil fields slated for sale, disposals needed to relieve a cash crunch at the second-largest U.S. natural-gas producer. Chesapeake’s 1.5 million acres in the Permian Basin may be worth $6.82 billion, based on the price Concho Resources Inc. agreed to pay for oil fields in the same area. Chesapeake Chief Executive Officer Aubrey McClendon estimated the value at $5 billion. The potential for an extra billion dollars from what McClendon calls “the world’s hottest acquisition” comes after Chesapeake shelved a $1 billion sale of future production meant to help plug a cash-flow shortfall. The company risks a $16 billion funding gap. Chesapeake has said it may run out of money. Chesapeake signed a $3 billion loan from Goldman Sachs Group Inc. and Jefferies Group Inc. that McClendon called a “bridge” as it waits for asset sales to raise cash. Chesapeake increased the size of the loan to $4 billion.


Dubai investor readies new oil refinery

May 21, 2012. After earlier hinting that foreign oil firms were keen to set up refineries in the country, the Energy department confirmed that an agreement has been signed for a regional refinery hub. The Philippine National Oil Co.-Alternative Fuels Corp. (PNOC-AFC) will be leasing out a 100-hectare property in Bataan to the firm. The firm is not expected to partner with a local firm for its operations. The agreement between PNOC-AFC and the Dubai firm will not extend to a joint venture. The country can expect to buy processed oil from the refineries.

PetroSA, Sinopec partner to build new refinery

May 21, 2012. South Africa's national oil company PetroSA and China Petroleum and Chemical Corp., known as Sinopec, will build a refinery that could process several hundred thousand barrels of oil a day and cost several billion dollars to construct.

PetroSA said that by teaming up with the Chinese company it would enable the national oil company to complete the "mega" project, which has been in discussion since 2008 but has struggled to find sufficient funding. China's resource companies are driving much of the country's foreign investment on the continent. In 2011, Standard Bank estimates merger-and-acquisition activity from China on the continent totaled $5 billion. China has also become Africa's biggest trading partner and the new refinery could play a role in helping China's ambition to expand global resource trading by being a destination for crude oil.

Transportation / Trade

Iraqi Kurdistan to push ahead with oil export plan

May 20, 2012. Iraq's autonomous Kurdistan region said it expects to start exporting its crude oil along a new pipeline to the Turkish border by August 2013, defying Baghdad in a long-running dispute over who controls the country's oil sales. The Kurdistan region, which has its own government and armed forces, has already clashed with Iraq's central government over autonomy and oil rights, and halted its crude exports in April after accusing Baghdad of not making due payments. The first stage of the pipeline would be completed by October this year to carry crude from the Taq Taq oilfield. The second phase would connect to the Kirkuk-Ceyhan pipeline with a capacity of 1 million barrels per day by August next year though Turkey's port. Kurdistan was also developing plans to build a separate pipeline that could connect to a refinery in Turkey's Ceyhan port by 2014.

Macquarie-led consortium acquires E.ON's gas distribution network for $4 bn

May 17, 2012. A consortium led by Macquarie Group has acquired the gas distribution network Open Grid Europe (OGE) from Europe's largest privately-owned provider of energy services E.ON, for €3.2 billion ($4 billion). The consortium comprising Macquarie's European Infrastructure Fund 4, Infinity Investments, British Columbia Investment Management Corporation and Munich Re's asset management unit MEAG, outbid three other groups led by France's GDF Suez, Germany's Allianz and Belgium's Fluxys.

Policy / Performance

U.S. won’t ease oil sanctions at Iran nuclear talks

May 22, 2012. Negotiators headed to Baghdad for a second round of talks on Iran’s nuclear program won’t be giving Iran the relief it’s seeking from oil and financial sanctions. At the same time, the U.S. and the five other major powers that will participate in talks with Iran -- the U.K., France, Germany, China and Russia -- have agreed on confidence- building measures they may offer in response to Iranian concessions. U.S. and European Union sanctions aimed at the No. 2 producer in the Organization of Petroleum Exporting Countries are crippling Iran’s ability to export and get paid for crude oil, its leading revenue source. The U.S. and EU are in no hurry to ease the pressure before a deal is done, Obama administration officials and Western diplomats said.

Oil demand in China edges higher in April

May 21, 2012. China's apparent oil demand in April edged up just 0.3 percent year on year to 38.32 million metric tons (mt), or an average 9.36 million barrels per day (bpd). This is the lowest year-on-year monthly growth in oil demand since June 2011, when it fell 8.2 percent to 9.02 million bpd, from a high base in the same month of the previous year. April demand was dragged down by low refining levels, with total runs falling 0.3 percent on year to 36.96 million mt, or an average 9.03 million bpd. April's crude oil processing volumes were also the lowest so far this year on a barrels-per-day basis compared with 9.07 million bpd in March, 9.32 million bpd in February and 9.38 million bpd in January.

Iranian Minister predicts oil price rise with sanctions

May 20, 2012. Iranian Economy Minister Shamseddin Hosseini said international oil prices will rise under sanctions designed to persuade the Persian Gulf nation to abandon its nuclear program. Oil prices might go as high as $160 per barrel if the European Union goes ahead with a July 1 embargo. Group of Eight nations gathered a summit at the U.S. presidential retreat at Camp David, Maryland, discussed containing Iran’s nuclear ambitions.

G-8 leaders to discuss oil market as Iran embargo nears

May 18, 2012. The impact on oil prices from sanctions on Iran will be on the agenda when President Barack Obama meets with other leaders of the Group of Eight nations, National Security Adviser Tom Donilon said. Strategic oil reserves also will be part of a “broad discussion” about energy markets at the summit, Donilon said at a briefing, refusing to say whether the U.S. will advance any decision about tapping supplies. The G-8 meeting begins at the at the Camp David presidential retreat in rural Maryland. The U.S. and its European allies have been discussing world oil markets and the use of strategic reserves both for the impact of crude prices on the global economy and potential supply shortfalls when a European Union ban on Iranian imports begins July 1. Under a law signed by Obama Dec. 31, 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 by June 28 and countries can avoid the sanctions if they take steps by then. The president didn’t set targets for reductions.

Vale said to hire Citigroup, Scotiabank for oil assets sale

May 18, 2012. Vale SA, the world’s largest iron-ore producer, hired Bank of Nova Scotia and Citigroup Inc. to sell its oil and natural gas assets in Brazil as it focuses on metals production. The Rio de Janeiro-based company’s stakes in the oil fields, located both within Brazil and offshore, may be worth as much as $1 billion. The company expected to finish by the end of June a study on whether to sell its oil and gas unit. The company won’t take part in any new oil block auctions in Brazil or elsewhere. Vale entered the hydrocarbon exploration business in Brazil in 2007 and has stakes in both onshore and offshore blocks. Vale said in 2010 that it certified oil and natural gas resources equivalent to 210 million barrels of oil, with potential to produce 58,000 barrels a day in 2017.

Japan to invest $4.4 bn in Chevron LNG project

May 17, 2012. A Japanese consortium comprising utility giant Tokyo Electric Power Company Ltd (Tepco), state-controlled Japan Oil, Gas and Metals National Corp, multinational conglomerate Mitsubishi and shipping giant Nippon Yusen KK is reported to be in talks to acquire a ¥350 billion ($4.4-billion) stake in the US oil and gas major Chevron's Wheatstone liquefied natural gas (LNG) project in Pilbara region of Western Australia. The Japanese government has teamed up with the public-private consortium for the venture. It is believed that the consortium is interested in acquiring a 10-per cent stake in the gas field development and 8-per cent stake in the LNG processing facilities.

Pakistan ECC body fails to develop consensus on LNG import

May 17, 2012. The Economic Coordination Committee (ECC) of the Cabinet's Sub-Committee failed to develop consensus on liquefied natural gas (LNG) import project due to reservations of the Finance Ministry and some other stakeholders. Sources aware with latest development informed this scribe that a high-powered committee failed to develop consensus on government backed LNG integrated import project due to concerns of different stakeholders. The meeting was informed that LNG suppliers wanted sovereign guarantees and it is not possible to go ahead with the project without taking this step. The committee decided to go ahead with the LNG import project through competitive bidding with a focus to ensure availability and use of LNG to be distributed to the power sector.

Japan said to seek sovereign cover for Iran tankers

May 17, 2012. Japan may seek approval from parliament to provide sovereign insurance to tanker operators that import Iranian crude as European sanctions block access to private providers. The cabinet will make a proposal to the DIET, or national parliament. The government wants to provide as much as $7.6 billion in cover. The Japan Ship Owners’ Mutual P&I Association, the body that covers owners against the risk of oil spills and tanker collisions, is likely to lose access to Europe’s reinsurance market after the sanctions come into force July 1.

China doubling gas use makes ex-clothing retailer target

May 16, 2012. China Gas Holdings Ltd., the utility that began life as an online retailer, has become the industry’s hottest property as China plans to double use of natural gas and replace coal in the biggest-polluting nation. The company, a seller of subsidized gas in canisters and pipelines to 151 cities, gained 38 percent since receiving a hostile bid in December, valuing it at HK$15.3 billion ($2 billion). Some of its biggest Chinese and Korean stockholders increased their stakes after the offer, pushing its market value up to HK$17 billion and creating a contest for control of a utility that was mired in an embezzlement scandal and a decade ago sold clothing on the web.

The emergence of China Gas shows how some of Asia’s largest energy companies plan to exploit China’s goal to double the share of gas in its energy mix by 2015, and possibly let prices of the commodity rise toward a market level. While China Gas trails peers in profitability by returning 2.3 percent on assets, its pipeline grid serves more cities than any other.



Myanmar to build power plants with U.S., Japan, S. Korea

May 22, 2012. Myanmar has planned to build more power plants with companies of the United States, Japan and South Korea in an effort to cope with electricity shortage in the country, especially in the summer season. These companies which Myanmar's Ministry of Electric Power-2 is to cooperate in building power plants are General Electric Co. and Caterpillar Co. of the United States, J Power Co. of Japan and BKB Co. of South Korea. Without disclosing the projects to be implemented with the two U.S. companies, the report said a 600-MW coal-fired plant near Yangon on a joint venture basis with J Power Co of Japan, while another 500-MW gas-fired power plant be carried out in collaboration with BKB Co of South Korea. There are 18 hydropower, one coal-fired and 10 gas-fired power stations totalling 29 in Myanmar, generating a maximum of about 1, 610 MW in monsoon and 1,340 MW in summer. Of the 1,610 MW, 1,270 MW is generated by hydropower when a full storage capacity of water is available in monsoon.

Bangladesh textile engineers urge funding for power plants

May 21, 2012. Textile engineers in Bangladesh have requested the Government to sanction adequate amount of funds in the forthcoming Budget for fiscal 2012-13 for establishment of coal-based power plants to resolve the power crisis being faced by the country’s textile and garment sector. Production in the country’s readymade garment sector is being affected owing to shortage of power and gas situation. It was necessary to set up coal-based electricity generation plants to meet the current shortage in supply of power.

Iraq considers bids for $1 bn power plant

May 19, 2012. Iraq announced the names of foreign companies bidding to build a 1,500 megawatt (MW) power plant with a value of around $1 billion in western Iraq, part of a drive to improve creaking infrastructure hit by sanctions and war. The bids were from South Korea's Hyundai Engineering & Construction, Italy's Saipem, Greek power plant builder Metka, Turkey's Gama, and a consortium of Turkey's Calik Enerji and Italy's Techint, Salam Qazaz, deputy minister of electricity said. The plant will consist of six units: four gas units and two thermal units, Qazaz said. It is due to be completed in 33 months, the ministry said. Iraq needs investment in most of its industries after years of war and economic decline during sanctions against former dictator Saddam Hussein. In a country where temperatures can top 50 degrees Celsius in summer, power generation is crucial. The national grid supplies only a few hours of power a day to Iraqis, forcing many to rely heavily on private generators. Sporadic electricity supply, one of the public's top complaints, was at the heart of anti-government protests. The ministry said it plans to double its electricity supply to 12,330 MW by 2013 as it brings new sources of power online. Total power supply, currently at 6,000 MW, is expected to reach 9,000 MW in July and 9,600 MW in August, the electricity ministry said. By December, it aims for capacity up at around 10,400 MW and to 12,330 MW in April 2013.

Seoul to build 29 hydrogen fuel cell power plants by 2014

May 16, 2012. The Seoul municipal government said it will build 29 hydrogen fuel cell power plants by 2014 to ensure a smooth supply of electricity even in emergency situations. Hydrogen fuel cells mix hydrogen and oxygen in the air to release energy through an electrochemical reaction. They produce little noise and no pollutants, leading to their use in various sectors, including in transport, power generation and homes. The city government said it plans to attract the investment of electricity firms and private capital to build the plants and also to install 102 hydrogen fuel cells in buildings by the same year. Under the plan, the city will produce 230 megawatts of electricity from hydrogen fuel cells by 2014 and continuously supply it to about 400,000 households. The power plants will be built across the city to hedge against sudden power cuts in the subway or water supply systems, the municipal government said.

Transmission / Distribution / Trade

Private sector to build transmission lines in Nepal

May 19, 2012. A Nepal Electricity Authority (NEA)-commissioned report has recommended that the government allow private developers to construct transmission lines through on Build, Own, Operate and Transfer (BOOT) and Build and Transfer (BT) models. The report, prepared by a committee led by NEA’s grid construction department manager, was commissioned to recommend on appropriate modalities for setting up of transmission lines for under-construction hydro power projects.

Pakistan inks $1 bn deal to import power

May 19, 2012. Pakistan, Afghanistan, Tajikistan and Kyrgyzstan signed a deal estimated at $1 billion (Dh3.7 billion) to construct a dedicated cross-border electricity transmission line. The tetra partners and donors have been pursuing the development of electricity trade through the establishment of a Central Asia-South Asia Regional Electricity Market (Casarem) from 2008. Under the Central Asia, South Asia (Casa-1000) electricity trade, the construction of the link is essentially aimed at supplying 1,300 megawatts of surplus hydropower available during the summer months from Kyrgyzstan and Tajikistan to Pakistan and Afghanistan. Pakistan will import 1000MW of surplus electricity while Afghanistan will import 300 MW. The total length of the transmission line is around 1,000 kilometres and the project is planned to be on a public-private partnership basis with the support of the World Bank, USAID, Islamic Development Bank, Asian Development Bank, International Fin-ance Corporation and the Arab Bank.

Alliant unit buys Wisconsin power plant from Calpine

May 18, 2012. Wisconsin Power and Light Co (WPL), a unit of Wisconsin power company Alliant Energy Corp, said it exercised an option to buy the 600-megawatt Riverside power plant for about $392 million from U.S. generator Calpine Corp. Riverside is a natural gas-fired combined cycle plant in Beloit, about 50 miles (80 kilometers) southeast of Madison, Wisconsin, the state capital. It began operation in 2004. At $392 million, WPL is paying about $650,000 per megawatt, which is less than the estimated $1 million per megawatt cost of building a new combined cycle power plant. WPL currently has a purchase power agreement for about 500 MW from Riverside. Under that agreement, WPL has the option to buy the plant if it exercises the option on or before May 31, 2012. Wisconsin regulators approved the purchase last month. The purchase is subject to approval from the U.S. Federal Energy Regulatory Commission (FERC) and under the Hart-Scott-Rodino Act. WPL expects to close the purchase by the end of the year. WPL supplies power to about 459,000 customers in Wisconsin. Calpine operates power plants in 20 U.S. states and Canada capable of producing about 28,000 MW of electricity.

Nigeria, France sign N3.14 bn MoU on power transmission

May 16, 2012. The Federal Government has entered into agreements with two French companies for the expansion of Nigeria’s transmission network, valued at about $200 million or N3.14 billion. Under the agreements, which is said to have the blessing of the French Government, the companies will first undertake the feasibility studies for the transmission upgrade, and thereafter, select and construct a high voltage transmission line and substations.

World Bank to help Zesco improve its power transmission in southern province

May 16, 2012. The World Bank approved a US$60 million IDA credit to reinforce the existing electricity transmission network and increase Zesco’s power transfer capacity to Kafue town and the Southern Province. The development objective of the project is to improve the reliability of Zesco’s regional power trade transmission network infrastructure along the Kafue Town – Muzuma – Victoria Falls corridor. The project will have three components. The first phase will focus on replacing the existing 220kV transmission line with a new 330 kV transmission line from Kafue to Livingstone. The upgrade will increase the power transmission capacity to satisfy the growing domestic power demands not only in the Southern Province but also across the border to Namibia and Zimbabwe. Complementing these improvements, the second phase involves constructing a new 330/220kV substation in Livingstone and upgrading the two substations at Kafue town and Muzumato. According to The World Bank, this will create a functioning transmission system which will provide a high level of security and an enhanced quality of supply for the regional power trade. Moreover, the improved system configurations will allow Zesco the capacity to satisfy increased demands at Kafue town. The third component will focus on project management, training, and environmental and social mitigation.

Policy / Performance

Turkey asks Pakistan to go easy on rental power plant

May 22, 2012. The government has turned down a request by Turkey seeking relief for a Turkish Rental Power Plant, Karkey Karadeniz, whose accounts have been frozen following Supreme Court’s judgment that cancelled all rental power projects. The visiting Turkish Economy Minister Zafer Caglyan made the request during a meeting with Commerce Minister Makhdoom Amin Fahim. He said Turkey sought a resolution of the dispute involving the Turkish firm. However, Fahim showed his government’s inability in settling the dispute while arguing that since the apex court had already given its judgment against all rental power plant projects, thus, the government cannot do much.

Japanese govt to nationalise operator of Fukushima nuclear power plant

May 22, 2012. The Japanese government will inject one trillion yen (about 12.6 billion U.S. dollar) into Tokyo Electric Power CO., the operator of the Fukushima No.1 nuclear power plant, on July 25 to nationalize the company. The government will get 50.11 percent of TEPCO's voting rights by buying the preferred shares. The government could choose the board members with more than half of voting rights, and then to raise the figure up to 75.84 percent, stronger the control of TEPCO. The government-based Nuclear Damage Liability Facilitation Found will pay the massive bill to help TEPCO deal with the huge cleaning up and compensation costs. The move is part of a restructuring plan of TEPCO following the country's worst nuclear disaster in March last year. Earlier, TEPCO has named new president and announced its new management and pledged to cut more than 3.37 trillion yen in costs over 10 years through fiscal 2021.

Iran gives UN atomic inspectors access before talks

May 22, 2012. United Nations atomic inspectors and Iran broke a five-year stalemate with an agreement that gives the International Atomic Energy Agency access to the Persian Gulf nation’s disputed Parchin military complex. IAEA head Yukiya Amano announced the breakthrough after he returned from a surprise visit to Tehran, saying the two sides agreed to create a document outlining the steps necessary for Iran to clear suspicions over its atomic program. It’s the first time since June 2007 that the IAEA and Iran have agreed on methods to give inspectors greater access to facilities including Parchin, where work may have taken place on the trigger for a nuclear weapon, according to the agency.

Britain ends liberalised power prices

May 22, 2012. Britain has ended liberalised power market pricing, in a broad strategy announcement that poses questions over how qualified government ministers are to choose between energy technologies and to set prices. Wholesale power and carbon markets have failed to find a clearing price for low-carbon power generation, recalling a comment by British economist Nick Stern in 2006 that climate change was the "greatest and widest-ranging market failure ever seen".

Germany urged to ban power-plant shutdowns

May 21, 2012. Germany has been urged to stop utilities including EON AG from closing unprofitable gas-fired power plants to safeguard supplies. While the government can legally force utilities to keep plants online, operators must be compensated for doing so. Germany has been urged create “capacity markets” by identifying the generators needed and paying those companies that can build or operate them at the lowest cost.

FG provided N60 bn subsidy on power tariff in 2012 in Nigeria

May 21, 2012. Following the misunderstanding surrounding the Multi-Year Tariff Order, the Minister of State for Power, Mr Darius Ishaku, has revealed that the Federal Government, in the 2012 budget, provided N60 billion subsidy for the new electricity tariff. Ishaku made this known during a one-day workshop on understanding the multi-year tariff order, organised by the National Orientation Agency (NOA), in Abuja. The minister also added that the Federal Government had also provided N50 billion subsidy in the 2013 budget. Ishaku said the tariff order, which would be effective from June 1, would make rural dwellers to pay N4 per kilowatt hour instead of N7, stressing that they would no longer pay meter maintenance.

China may approve nuclear plan next month

May 17, 2012. China’s state council, or Cabinet, will probably hold a meeting before the end of June to approve safety and development plans for the nuclear industry. The government can resume approval of new nuclear plants after the plans are passed. The plan was rejected earlier and amendments are being made to some “minor” details, without elaborating. China suspended new nuclear projects after last year’s earthquake and tsunami in Japan crippled the Fukushima Dai-Ichi plant and prompted a global review of atomic energy plants. The policy has hurt China’s major nuclear power equipment makers, including Shanghai Electric Group Co., Dongfang Electric Corp. and Harbin Electric Co., which had long-term contracts frozen. Construction hasn’t started on four nuclear reactors that were approved prior to the Fukushima disaster. The reactors are Yangjiang Nos. 4, 5 and 6, and Fuqing No. 4. Two new reactors will begin operations by the end of the year.

Australia's uranium supply to India will be demand based: Energy Minister Martin Ferguson

May 17, 2012. Australia's uranium supply to India will be demand based once the approvals for the yellow cake exports to New Delhi are finalised, Energy Minister Martin Ferguson has said. Australia's uranium reserves are the world's largest, with 23 per cent of the total. He said that Australian uranium industry was growing and the amount to be sold to countries like India would be based on demand and between the buyers and sellers. Ferguson, a strong supporter of the uranium industry, had been lobbying within the government for Labor to re-instate the Howard policy of selling uranium to India.



Haryana to invest ` 2.3 bn in 5 biomass power projects

May 22, 2012. The Haryana Government would set up five biomass projects costing ` 230 crore to generate about 51 MW of power for which it has signed Memorandum of Understanding with four companies. Two of these projects would soon be completed. The State Government had set up four Micro-Hydro power projects which have started generation. These included a six MW power project in Dadupur, district Yamuna Nagar costing ` 58 crore, a 2 MW project in Gogripur, Karnal at a cost of ` 22 crore, a ` 16 crore project at Musapur, Karnal to generate 1.4 MW power and another project of 1.4 MW at Khukhni in district Karnal.

Farooq praises BJP-ruled Gujarat for use of solar power

May 21, 2012. In a rare compliment from a UPA Minister for the BJP government in Gujarat, New and Renewable Energy Minister Farooq Abdullah said the solar power plant atop a water canal in the state has shown the nation the way and it will be replicated by Damodar Valley Corporation. The Gujarat project virtually eliminates the requirement to acquire vast tract of land and limits evaporation of water from the 750 meter long canal. Abdullah said DVC has over 2000 km of canal network on which it wants to mount solar panels that can generated up to 1,000 MW electricity. Abdullah also lauded Rajasthan Chief Minister Ashok Gehlot for the vast network of renewable energy sources including solar and wind power set up in the state. He said over 979 MW of solar power capacity has been set up in the country, of which 654.8 MW is in Gujarat, 197.5 MW in Rajasthan and 20 MW in Maharashtra. The tariff has come down from ` 18 per unit to about ` 7 a unit, he said adding it will further come down when the second phase of projects come up.

Suzlon expects to raise $300 mn to pay bondholders

May 19, 2012. Suzlon Energy Ltd. (SUEL) expects to raise as much as $300 million in time to pay bondholders, quelling concerns that India’s biggest wind-turbine maker may be headed for default. A group of about 20 banks, including SBI Capital Markets Ltd., IDBI Bank Ltd. (IDBI) and Bank of Baroda (BOB) have agreed in principle to extend a dollar-denominated term loan. SBI said the lender is “extremely confident” of closing the deal in time to ensure Suzlon meets its June bond repayments in full. Suzlon has $358 million of dollar-denominated convertible notes maturing on June 12. Bondholders are supportive of a 45- day extension Suzlon has requested in case of procedural delays, which won’t result in any penalties. The new loan combined with internal cash and $40 million Suzlon got from selling two wind farms in April should allow it to safely meet its obligations. In October, another $200 million of convertible bonds mature.

Welspun wins solar photovoltaic project in MP

May 16, 2012. Welspun Group, the country's largest solar power developer, has won a 125 MW solar photovoltaic project in Madhya Pradesh (MP). After the formal award of the project, Welspun Solar Madhya Pradesh Pvt Ltd will put up one solar photovoltaic project of 100 MW and another of 25 MW capacity. The project will cost about $225 million and will be set up on barren tract of land in Mandsaur and Neemuch district of Madhya Pradesh in 18 months.

MBI plans to revamp loans, bonds amid solar glut

May 16, 2012. Moser Baer India Ltd. (MBI), the nation’s biggest solar manufacturer, plans to restructure $738 million of loans and bonds as it jostles to survive a supply glut that has claimed at least 10 U.S., German and French panel makers. The company expects to reach an agreement with banks to restructure ` 35 billion ($646 million) of secured debt by August and may sell new five-year bonds to pay off dollar- convertible notes maturing in June. Its 2013 zero-coupon bond is trading at 35 cents on the dollar. Solar panel prices have plunged 48 percent in the past year amid overproduction led by Chinese manufacturers and dwindling demand in Europe, the largest market for the equipment. Moser Baer and Indian peers such as Indosolar Ltd. are producing at 20 percent of capacity as sales sputter and industry margins collapse globally.

National Electric Mobility Mission likely to launched by July

May 16, 2012. Minister of Heavy Industries and Public Enterprises Praful Patel said the National Electric Mobility Mission Plan 2020, which is aimed at promoting electric and hybrid vehicles, is likely to be launched by July, 2012. The National Mission for Electric Mobility was launched to promote electric mobility and manufacturing of electric vehicles in India.


Canadian Solar interested in Gulf amid Saudi’s $109 bn plan

May 22, 2012. Canadian Solar Inc., a panel producer generating almost 90 percent of its revenue from Europe and the Americas, is interested in expanding in the Middle East amid a $109 billion plan by Saudi Arabia to develop renewable capacity. Saudi Arabia is seeking investors for its plan to create a solar industry generating a third of its electricity by 2032. The largest crude-oil exporter plans 41,000 megawatts of solar capacity in 20 years. At the same time Germany, the largest solar market, is cutting industry subsidies. Saudi Arabia has about 3 megawatts of solar installations, trailing Egypt, Morocco, Tunisia, Algeria and the United Arab Emirates. Canadian Solar got 88 percent of first-quarter sales from the Americas and Europe.

U.K. proposes energy overhaul to lure spending on nuclear, wind

May 22, 2012. The British government proposed an overhaul of the country’s electricity market in a bid to lure the 110 billion pounds ($174 billion) of investment needed to replace aging power plants and expand renewable energy. The draft law, lays out plans to guarantee prices for low-carbon electricity and pay producers for providing back-up supply when wind power falls short. It’s aimed at securing commitments from utilities to fund new atomic reactors and clean-power projects, curbing reliance on gas-fed plants.

Denmark aims low with green energy policy

May 22, 2012. The Danish minister got very drunk, but the Norwegian managed to stay sober. As a result, Norway carved out a jagged shape that included Ekofisk, which has proved to be a major field, and Denmark was left with the dregs. Regarded as a model of how to spend oil and gas wealth wisely, Norway has stashed away surplus revenues from exports while hydropower caters for the bulk of its domestic electricity needs. But Denmark has also found its own path to energy pragmatism, supplementing its relatively few oil rigs with wind turbines and a deep commitment to energy saving.

South Africa approves $8.8 bn clean energy plan

May 21, 2012. South Africa approved 19 wind, solar and hydropower proposals in a second bidding round, increasing the cost of renewable-energy projects given the go-ahead to 73 billion rand ($8.8 billion) as the nation boosts cleaner energy. The Department of Energy got 79 bids for 3,255 megawatts in the round and 51 met the qualification criteria, Minister Dipuo Peters said. Among the winners were Tata Power Co. and Exxaro Resources Ltd. (EXX)’s Cennergi venture, as well as a group including Acciona SA and Aveng Ltd. Total capacity on offer in the round was 1,275 megawatts, Peters said. That on top of the 1,416 megawatts, costing 45 billion rand, approved in the first round in December.

Bahrain, US firm ink solar power station deal

May 21, 2012. Bahrain has signed a deal with US-based Petra Solar, a provider of smart energy solutions to the electric supply industry, towards setting up a 5MW solar energy power station in the kingdom in the next nine months. It could lead to Bahrain building a factory to manufacture solar energy equipment in the country, said Energy Minister Dr Abdulhussain Mirza.

Merkel losing green battle to cheap coal

May 20 2012. To reach its strict climate targets and fulfill Chancellor Angela Merkel's nuclear exit plans, Germany needs to avoid coal and build a stack of gas power plants to secure clean energy supplies beyond 2020. Yet the challenge facing Merkel's new environment minister Peter Altmaier, his predecessor fired following a disastrous state election defeat, is finding a way to make gas an attractive option while coal remains the more profitable way to produce electricity for Europe's biggest economy.

U.K. climate plan set to curb impact of oil shocks, report shows

May 18, 2012. U.K. efforts to switch to low-carbon power sources may lessen the negative impact of an oil-price shock, a study found before the government publishes its plans to attract investors in clean-energy generation. The country’s proposed climate policies would reduce the effect of jumps in energy prices on disposable household income by half by 2050, research group Oxford Economics said in a government-commissioned report. They’d also mitigate the impact on business investment, inflation and unemployment, it said. Britain, seeking an 80 percent cut in greenhouse-gas levels by 2050, will publish a draft energy bill setting out reforms to the electricity market as it seeks funds to replace aging power plants, upgrade grids and expand renewable energy. Oil and gas price gains can push up consumer prices, squeezing incomes while boosting costs for energy-intensive industries.

House panel backs measure to delay U.S. EPA gasoline rules

May 18, 2012. The U.S. House Energy and Commerce Committee approved legislation to study and delay Environmental Protection Agency rules that would affect the price of gasoline. The committee voted 28-13 for the bill that would prohibit the EPA from requiring reductions in greenhouse-gas emissions from refineries or use of lower polluting sulfur in gasoline while a government panel studies the effect of regulations on prices. The EPA hasn’t proposed either regulation, and Democrats said it didn’t make sense that rules yet to be issued were already pushing prices higher.

China cries foul after U.S. sets tariffs on solar imports

May 18, 2012. The United States imposed punitive tariffs on solar panel imports from China, the latest in a series of trade disputes between the world's two biggest economies and sparking accusations by Beijing of protectionism. The new tariffs of 30 percent, much bigger than had been expected, were set by the U.S. Commerce Department after it ruled in favour of local firms which said the Chinese exporters were dumping cut-price solar panels on their market. The size of the tariffs is larger than Chinese companies had expected and some analysts said it might prompt them to manufacture elsewhere or look for alternative markets. However, Beijing stopped short of threatening immediate retaliation. The tariffs apply to most top Chinese exporters, including Suntech Power Holdings Co Ltd and Trina Solar Ltd, at about 31 percent. The ruling follows a complaint filed last October by the U.S. subsidiary of Germany's SolarWorld AG, and six other U.S. companies that alleged unfair competition and had sought duties well above 100 percent. China's solar companies hold more than 60 percent of the global market. The U.S. market alone accounts for about 20 percent of sales of China's largest solar panel manufacturers. Their heavy reliance on subsidised U.S. and European markets has prompted criticism that loans from Chinese state-run banks and low prices gave the companies an unfair advantage. Under the decision, 59 Chinese solar companies that petitioned Washington in the case will also face an import duty of about 31 percent, including Yingli Green Energy, LDK Solar, Canadian Solar, Hanwha solar One, JA Solar Holding and Jinko Solar. Other Chinese companies could now face a 250 percent tariff, although those levels could be altered before the final ruling is issued by the Commerce Department in the coming months. The U.S. ruling, retroactive to cover imports dating back 90 days, comes two months after Washington set more modest tariffs of less than 5 percent on imports from China because of what it deemed Beijing's unfair support for its solar industry. Suntech, the world's largest manufacturer of solar panels, which also operates a panel plant in Arizona, denied it sold below its cost of production. Yingli Energy and Trina Solar said they would actively defend their position in administrative proceedings.

Apple to use only green power for main data center

May 18, 2012. Apple Inc plans to power its main U.S. data center entirely with renewable energy by the end of this year, taking steps to address longstanding environmental concerns about the rapid expansion of high-consuming computer server farms. The maker of the iPhone and iPad said it was buying equipment from SunPower Corp and startup Bloom Energy to build two solar array installations in and around Maiden, North Carolina, near its core data center. Once up, the solar farm will supply 84 million kWh of energy annually. The sites will employ high-efficiency solar cells and an advanced solar tracking system.

Japan solar-device shipments to exceed 2.5 GW in year

May 17, 2012. Japan’s domestic shipments of solar-power devices will exceed 2.5 gigawatts in the year ending March 2013. The increase in cells and modules follows a decision by Japan to start preferential rate payments for electricity generated from renewable sources in July to encourage investment in clean energy. Producers of solar power will receive 42 yen (52 U.S. cents) a kilowatt-hour for 20 years, or three times the 13.65 yen charged to industrial and commercial users, according to the Ministry of Economy, Trade and Industry. The government projects total capacity of solar power will increase 42 percent to about 6.8 gigawatts for the year ending March 31, 2013, which is enough to power about 1.65 million Japanese homes.

Door to 2 degree temperature limit is closing - IEA

May 16, 2012. The chance of limiting the rise in global temperatures to 2 degrees Celsius this century is getting slimmer and slimmer, the head of the International Energy Agency warned. The IEA said that around 80 percent of total energy-related carbon emissions permissible by 2035 to limit warming were already accounted for by existing power plants, buildings and factories, leaving little room for more. In 2010, countries agreed that deep emissions cuts had to be made to keep an increase in global average temperature below 2 degrees Celsius above pre-industrial levels this century.

Small wind farms to grow as U.S. tax incentives expand

May 16, 2012. Installations of wind farms with less than 20 megawatts of capacity may rise to a record this year if lawmakers expand a federal tax credit. At least 44 wind farms were built last year to serve individual U.S. communities, often with financial support from local residents. They made up 6.7 percent of the total capacity installed, up from 5.6 percent in 2010 and the most to date, according to data compiled by the American Wind Energy Association (AWEA). Community wind farms generally have no more than 20 megawatts of capacity. Local residents often are involved in the development and are typically offered the opportunity to invest in the projects, according to AWEA. Projects as large as 100 megawatts may also be considered community wind farms if local residents own at least 33 percent.

Solar power prices more competitive than thought

May 16, 2012. Power from solar panels is much closer to price competitiveness with fossil fuel-generated electricity than many policy-makers and investors realize. Many decision-makers have yet to catch up with the improvements in the economics of solar power from recent reductions in the cost of the technology, a working paper released by the London-based research firm said. Global solar installations surged four-fold the past three years, driven by subsidies and lower technology costs. Average panel prices have dropped almost 75 percent in the period, making sun power competitive with daytime retail prices in at least five major economies including Germany, the paper said. This competitiveness is often underestimated because inadequate metrics are used to compare the costs of different energy sources. It has major implications for policy and investment decision-makers, the report’s authors from seven organizations and companies said.

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