MonitorsPublished on May 29, 2012
Energy News Monitor I Volume VIII, Issue 50
Moral Hazard in Bailing out SEBs

Lydia Powell, Observer Research Foundation


ith power utilities across India in financial trouble, the Planning Commission of India has come up with a plan to revive them. The plan is very similar to restructuring of the global financial sector which seeks to redistribute the burden among stakeholders which in this case include state and federal governments and banks.  As per the plan the 50 percent of the debt of power distribution companies estimated at ` 179,000 crore (USD 31 billion) before subsidies and ` 80,000 crore after subsides (USD 14 billion) is to be absorbed by the state governments in the form of state government bonds. The remaining 50 percent is to be restructured by commercial banks by extending the tenure for repayment and a possible moratorium on interest. The Planning Commission is seeking support from the Prime Minister’s office to implement the plan as it expects stiff opposition from all parties concerned.

The Plan entails many complexities. First, it will require the Ministry of Power, the Reserve Bank of India, the Ministry of Finance and State Governments to buy into the plan. Second, the plan will compromise the borrowing ability of the state utilities which means that the Ministry of Finance would have to extend some flexibility in the fiscal responsibility rules imposed on the state governments. Third, loan restructuring by banks would require the loans to utilities to be classified as non-performing assets (NPAs) which means that banks will not be able to lend more to the sector. In this case the RBI would have to offer concessions so that banks can continue to lend to the sector. While tariff increases are mentioned in the plan, the redistribution of debt burden is not strictly conditional on state Governments being made accountable for strict time bound tariff increase commitments and efficiency improvements.

A similar plan implemented ten years ago has apparently achieved nothing for it seems to have only signaled that another bailout will be extended if SEBs come to the brink again. SEB debt has increased dramatically in the last ten years.  As pointed out in the previous issue of this news letter, the issue of energy pricing is of critical importance nationally and globally.  India’s ‘collective ability to muddle through’ is unlikely to see India through in the long term.

Average electricity prices in India are not among the lowest in the world.  Average household electricity prices in India are about €cent 5/Kwh compared to €cent 7/Kwh in USA, €cent 14/Kwh in Germany and €cent 22/Kwh in Denmark.  However average industrial electricity tariff in India is about €cent 11/Kwh compared to €cent 4/Kwh in USA €cent 6/Kwh in Germany and €cent 5/Kwh in Denmark.  Even in Japan which has relatively high energy prices, industrial electricity tariff is only €cent 8/Kwh. The higher revenue recovery from industrial consumers cross subsidises retail consumers (household and agriculture) but this is an unsustainable model in the long run for three reasons.

First, in a world driven by industrial competitiveness, competitive energy prices are a critical factor that decides sustainability of the economy in general and the manufacturing sector in particular. Without a vibrant manufacturing sector the semi skilled jobs that India needs to move people out of subsistence agriculture and informal sector jobs will not materialize. Robbing industrial customers to give away to retail customers may sound like a good for those who feign interest in the poor but it is a recipe for ruin for the country and its marginalized millions. Giving free electricity to the poor is likely to trap them in a life of dependence and poverty but providing a job will give them a ladder out of poverty.

Second industrial customers may not be available to cross subsidise the retail sector in the long run.  As per figures from the 17th Power Survey of the CEA, the demand from industrial and other sectors which cross subsidize household and irrigation sectors is precariously balanced at 50:50 in 2010-11. The share of the industrial sector could decline in the future because as per the Electricity Act 2003, industrial customers have the option of migrating out of state utility supplies. Right now SEBs are holding out against the migration by imposing barriers in the form of surcharges but this too cannot be extended indefinitely.

The third is the critical issue of efficiency. There is sufficient reason to believe that colossal inefficiencies in the system are hidden under narratives of electricity subsidies. SEB losses are justified on the basis of the presumed loss of ` 0.6 in revenue realization for each unit of electricity supplied.  It is unclear how this figure was arrived at. As industrial tariff is more than twice that of retail household and agricultural tariff (on an average but tariff varies from state to state) the loss on each unit supplied to the retail customer can be more than made up by the industrial sector. The call for tariff increases without strict and measurable targets for efficiency improvement is not in the long term interest of the energy sector. As pointed out by Deepak Parikh a decade ago, the Indian electricity sector is a leaking bucket in which the holes are carefully crafted and maintained to collect rents. The leaking bucket must be fixed before we pour more water into the system.




China’s coal import plans will be crucial for Indian coal import dynamics

Ashish Gupta, Observer Research Foundation


ndustrial growth and government commitment to provide power for all ushered our dependency on fossil fuels specially coal. Coal is an obvious choice as we have good quantity of coal reserves and power production through coal is also very much cheap. Although many suggestions have come from the overseas agencies that we should move away from coal to other sources to reduce carbon emissions, it will not be possible in the current scenario financial and social limitations do not leave any choice but to exploit our own abundant indigenous fossil fuels first and then slowly move to other sources. It is also to be noted that our carbon emissions are very low as compared to other developed countries on a per capita basis. Having said this, it must be noted that many of the coal rich countries are ramping up their coal production capacity so that they will export the same to the Asia region specially China and India as both of are dependant on coal for power generation. Growing population desirous of higher standard of living will only increase demand for coal and energy.   May be import coal demand from China will be stable as they are self reliant in coal production and consumption but it is likely to increase in India as we are unable to fulfill the coal demand and are looking for import opportunities. But if we analyze our import dynamics we will find that we are very much dependant on China’s production and their import plan. If China imports too much coal imported coal will become unviable for India. 

Understanding Chinese import plans is very crucial for us especially in the short and medium term because their dominance will simply change the outlook of the import market. Our requirements too differ from China as we are importing because of deficit where as China imports for taking financial advantage. We have seen this in the past in 2009 when China became the net importer from the status of net exporter mainly to take advantage of the arbitrage opportunity that arose out of falling coal prices world wide due to the global financial crises and their proximity to coal rich countries ports. China’s entry into the global market increases global coal prices which affect Indian coal import prices. Once a largely isolated coal market, China now plays an increasingly important role in shaping global trade flows and increasing price fluctuations in world coal markets. Another very important aspect is that we need to take note of policies adopted by China for reducing their carbon emissions.  If they close down small and inefficient power plants and also to reduce their dependency from over utilized rail transport infrastructure they might decide to import more coal from the global market.  These will certainly hamper India’s import plans.

The major point in taking note of this dynamics is to be aware that our indigenous power/ coal industry which is very obsessed with imports should plan their imports taking China import strategy into account.  Issues will remain subdued if China consumes more from its internal production but the question here is does India have another plan if China continues to play its dominant role in the coal import market. How will India absorb the increase in prices? Certainly we do not have any plan B. It is possible that other countries where we are trying to acquire coal properties also amend their mining laws so that they do not export enough or even become net importers. Crucially, most of the countries are increasing their coking coal production capacity because of the price premium and not so keen to increase thermal coal production. Therefore, if China increases its imports then it will certainly create a deficit for thermal coal in global market and it will also be traded at the price premium. China will certainly be in a better position to manage this situation because of their negotiating power as a bulk consumer and they have got good foreign exchange reserves. India is lacking in both fronts.  Therefore rather than shouting out about the inevitability of imports we must stress on the financial viability of the imports and try to find out the best possible way where import requirement will be minimal and restricted to projects that were planned based upon imported coal.



South Asian Energy ring in discrete parts

Sonali Mittra, Observer Research Foundation


ndia’s challenge to meet its growing energy demands is well replicated in the other neighboring South Asian countries. Nepal, Bhutan, Pakistan, Mynmar and Srilanka face acute power shortages partly because of lack of infrastructure and partly because of financial limitations.  It is known that there is huge hydropower potential in these regions. In view of potential for regional cooperation, this has been identified as one of the core areas of collaboration and many initiatives have been taken to exploit the hydro resources.

One of the primary initiatives taken was the establishment of SARC Energy Center in Islamabad, Pakistan in 2006, approved in the 13th SAARC Summit. The objective is to facilitate and promote energy trading among South Asian countries. Several meetings and workshops have been conducted to understand the power situation in each country, survey reports on energy availability and energy demands in the coming years and to build a road-map for improving energy security in the region. As far as the success rate of the initiative goes, it has definitely opened channels for communication and enhanced understanding. But till now, the focus has been on energy conservation practices, electricity inter-connections and renewable energy resources like solar, wind and geothermal. Concrete action plans on hydropower cooperation among these countries seems to be lacking consensus as against bilateral cooperation.

BIMSTEC (Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Co-operation), South Asian Regional Initiatives (SARI), forum of Bangladesh, Bhutan, Nepal and India had proposed similar objectives for ensuring reliable supply of electricity in the regions but failed to realize. One of the major reasons was the preference of bilateral arrangements for hydropower development over multilateralism.

Some of the bilateral energy trade agreements have worked successfully in the past, further strengthening this line of thought. Recently, many more agreements have materialized between India-Bhutan and India-Nepal. For instance, India is getting power from the ` 4,124-crore Tala project in Bhutan. Uttar Pradesh, Delhi, Punjab and Jammu and Kashmir are the direct beneficiaries of the project.

Bangladesh government had decided to initiate talks with India on interconnecting the national power grid of Bangladesh with the north-eastern power grid in India based on the feasibility study of USAid, ADB and SAARI-Energy co-operation. Bangladesh could bring 200 MW of electricity from Tripura or Assam, where India has hydro-electric plants. Besides power generation, this is seen as an effective measure to remove communication bottlenecks in that region, increasing economic integration and physical connectivity.

Similarly, Myanmar is seen moving closer to India as it opens up through its internal economic and political reforms. State run NHPC along with the Bhutan government expects to finalize soon details of a joint venture company to be set up for developing 770 MW Chamkharchhu-1 hydro power projects in the neighboring nation.

Such recent developments indicate that the South Asian countries are finally speeding up the development process of originally planned: ‘Energy ring’, connecting India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives and Bhutan to minimize the acute power shortage faced by them. The only difference being, that it is being done in a discrete and bilateral form.

However, for the long-term implementation of sustainable energy connections in South Asia, it is imperative for these countries to plan strategically and holistically for consistent energy supply. The risks and social and environmental costs associated with hydropower development are not unknown. These challenges are common in most of the South Asian countries which could benefit more by planning management of these resources in an integrated manner to reduce the cumulative impact of huge hydropower projects. Therefore, planning and managing development of hydropower projects would be more effective and sustainable if it is inclusive of the wide range of micro and macro issues associated with the region as whole and not just two countries at a time.



Credible alternatives to KKNP

Shankar Sharma, Power Policy Analyst



hile a massive opposition is being sustained by the locals against Kudankulam Nuclear Power Project (KKNP), authorities have been busy getting safety certifications for the plant from anyone and from everywhere.  Authorities are also claiming that TN’s power deficit situation will be greatly improved by the 50% share it has been promised from the project.  In this scenario the state’s population seem to be in a dilemma; whether to seek the operationlisation or cancelation of the project. The Hindu of 15 Feb. 2012 has even reported a statement by the Russian Ambassador Alexander M. Kadakin, in which he criticised the “vested interests and those who were patronising and paying the protesters ….”.

A rational analysis of the possible power benefits to TN from the project may help to clear some of the doubts. The table below provides a high level estimation of the power benefits to TN taking into account the constraints of power sector in India/TN. The summary of the information in the table indicates that the power benefit to the people of TN can only be in the range of 405 to 540 MW net. This is in comparison to the deficit recorded by TN for the period April 2011 to March 2012 of 8,980 MU of annual energy and 1.855 MW of peak demand.

Different people may arrive at different figures on the net benefit to TN.  The nuclear establishment may paint a very rosy picture. But the issue for us should be the true benefits to TN power network from KKNPP is small as compared to the horrendous costs to the people of TN because of the ongoing and potentially catastrophic radiation leakage.


Net (MW: Mega Watts)


KKNP's capacity: 2 *1,000


The sanctioned capacity of 2*1,000 MW may go to 4*1,000 MW if the ongoing negotiations with Russia gets to fruition

Average annual power output possible

(@ 60 - 80% annual load factor)

1,200 to 1,600

A power plant will not produce at 100% installed capacity at all times. Average annual load factor of the plant is assumed to be 60% though the Kalpakkam power plant (MAPS) has recorded load factor of 40-50% only during last 4 years.

Net average output possible to TN power grid {(Average annual power output) – (Station auxiliary consumption)

(@ 10% of power output)}

1,080 to 1,440

10% Station auxiliary consumption assumed

TN's share in KKNP

(50% of net power output: i.e 50% of 1,080 – 1,440 MW)

540 to 720

TN’s share assumed to be 50% from the plant 

Net power available to consumers in TN

(after allowing for transmission and distribution losses of 25%)

405 to 540

T&D loss in TN assumed to be 25%, as against national level loss of 25%.

If we also take the inefficiency in end usage of about 20% into account, the net power from KKNP available for productive/welfare usage

305 to 430

As per Prayas Energy Group survey about 20% of the losses in the end usage of domestic appliances are incurred. 

The society has to objectively consider whether the meager benefit of 305 to 430 MW is worth all the credible risks associated with a nuclear power plant; especially because TN has already one nuclear power plant at Kalpakkam. The obvious question is whether there are benign alternatives to meet the legitimate demand for electricity in TN.

The table below provides a high level estimation of benefits feasible from many such benign alternatives.  It should be noted that the benefits from the existing power network in TN can come at about approximately 20% of the cost of a new power plant, and without any of the deleterious impacts associated with the nuclear power plants. Additionally, the gestation period for obtaining such benefits is very small, and the benefits to the society are huge and perpetual.

Benign alternatives available in TN

Savings feasible from the existing power network



Benefits available by replacing all incandescent lamps in TN

>> 500

Power savings feasible by replacing all incandescent lamps in the country  by CFLs is more than 10,000 MW

Savings feasible by reducing T&D losses in TN from 25% at present to about 10%


A saving of 15% of 10,500 MW (peak demand met by TN during April 2011 as per CEA report)

Savings due to loss reduction in end usage in various sectors of TN


Assumed to be about 15% of the actual power demand met, even though the potential for savings may be much higher




Benefits from Renewables



Wind power


Of the total TN potential of 5,500 MW capacity only 4,790 has been realized so far (as per TN energy department’s report).

Bio Mass


Estimated potential as per TN energy department’s report

Roof top Solar Photo Voltaic panels

(2 kW each on top of 25 lakh houses)


Assuming 25% of strong houses in TN can install solar PV panels of 2 kW each on the roof top

Roof top Solar Photo Voltaic panels on other buildings



Effectively harnessing even a small percentage of the huge potential in renewable energy sources of the state can provide huge additional power capacity effectively eliminating the real need for KKNP. The issues are similar in every nuclear power project proposed in the country, as also in case of most the large size conventional power plants such as coal based or dam based power plants.

The direct cost of solar power is expected to become competitive with coal power in two or three years.  The true cost to the society of electricity from roof top mounted solar photo voltaic panels on residences, schools, offices, industries, shops etc. is already much below the cost of grid electricity, if we objectively consider all the direct and indirect costs. Such a situation is most likely to be true in the case of wind and bio-mass power plants also in distributed mode.

A rational analysis of all the direct and indirect costs to the society of nuclear power plants as against the real benefits from many benign options available to the state can easily establish the futility of relying on nuclear power plants. TN state has a good opportunity to set a model power policy for the country.

The country has no alternative but to diligently adopt such rational analysis of the demand and supply scenario in order to minimize the deleterious impacts of not just the high risk nuclear power plants but every conventional power plants, and arrive at well informed decisions.


Views are those of the author

Author can be contacted at [email protected]


Statewise Electricity Generation Capacity by Wind

Akhilesh Sati, Observer Research Foundation


Installed Capacity

As on Mar’ 2010

Installed Capacity

As on Mar’ 2011

Electricity Generation

For year 2009-10

in MW

in MUs

Andhra Pradesh
















Madhya Pradesh












Tamil Nadu




Others including West Bengal








Source: Wind Power India







Jubilant Energy wins oil exploration block in Myanmar

May 28, 2012. Jubilant Energy has won an onland exploration block in Myanmar, the agreement for which was signed. The production sharing contract for the block was signed between Jubilant, Parami Energy Development Co and Myanmar's state-owned Myanmar Oil & Gas Enterprise. Jubilant holds 77.5 per cent participating interest in this block through its subsidiary Jubilant Oil & Gas Pvt Ltd, and will be the operator of the block. The India-focused energy company had bid for two blocks in the auction but was awarded one. Myanmar awarded 10 onshore oil and gas blocks in its biggest energy tender in years. Parami Energy Development Company Ltd holds the remaining 22.5 per cent participating interest in this block. Jubilant Energy is part of the New Delhi-based Jubilant Bhartia group that controls drugmaker Jubilant Life Sciences, agrochemicals maker Jubilant Industries and restaurant chain Jubilant FoodWorks. Jubilant Energy, which listed in London in November 2010, currently holds a portfolio of nine blocks in India and an exploration block in Australia.

Oil India eyes stake in ConocoPhillips' Canada oil sands

May 28, 2012. Oil India is looking at buying stake in ConocoPhillips' oil sand assets in Canada, as well as the Gabon assets of France's Maurel et Prom. Oil India, whose assets in India's northeast account for its entire crude oil production and the bulk of gas production, has been aggressively scouting for overseas assets in discovered and producing areas.

Despite uncertain output, DGH asked RIL to build bigger facility

May 23, 2012. Reliance Industries, which has been slapped $1 billion notice for creating over-capacity at the KG-D6 block, had been formally directed by the oil ministry's technical arm in 2006 to build an even bigger infrastructure despite uncertainty of output. The DGH's views could weaken the government's arbitration against Reliance Industry. The oil ministry has decided to withhold the recovery of about $1 billion of the company's field development cost as penalty for building surplus infrastructure, given the sharp fall in gas output. In a review of Reliance's revised development plan for two gas fields in the D6 block, in which the company wanted to double production to 80 million metric standard cubic metres a day (mmscmd) at a cost of $8.8 billion, the Directorate General of Hydrocarbons (DGH) said the company should build infrastructure to accommodate output of 120 mmscmd.


Numaligarh refinery to be fully operational in 2-3 days

May 28, 2012. India's fire-damaged 60,000 barrels-per-day (bpd) Numaligarh refinery is in the process of being restarted and is expected to be fully operational in 2-3 days. The refinery's planned maintenance was brought forward from the end of April to mid-April after a fire broke out at a 22,000 bpd hydrocracker unit at the refinery in Assam, northeast India on April 7. The shutdown was initially expected to last about 20 days but was extended to about 45 days, though the reason is unclear. The refinery has been running at an average rate of 94.2 percent this year, its highest throughput in its history, with a distillate yield of 91.52 percent. The refinery is 61.65 percent owned by Bharat Petroleum Corp Ltd (BPCL), while the government of Assam and Oil India own the rest. Numaligarh refinery itself does not import oil products, but supplies diesel to the northern parts of India. Following the refinery fire, BPCL imported 185,000 tonnes of diesel for delivery in April and May, with part of the imports to re-direct stocks to north India.

IOC to shut crude unit at Haldia plant in June

May 28, 2012. Indian Oil Corp. (IOC), the country's biggest refiner, plans to shut a crude unit and a fluid catalytic cracking unit (FCCU) at its 150,000 barrels per day (bpd) unit at Haldia plant in eastern India in June for maintenance. IOC will also shut a vacuum distillation unit (VDU) at its 274,000 bpd Gujarat refinery during June-July for maintenance.

RIL to boost refining margins

May 23, 2012. Reliance Industries Limited (RIL) will boost refining margins by $3 a barrel in three to four years from it $4-billion investment to build one of the world's largest gasification projects that will use make synthesis gas from petcoke. The project would be completed in three to four years, and recover the investment in about three years. Refining margins, or the money earned from converting crude oil into oil products, such as petrol and diesel, is a key driver of Reliance Industries profit. Asian refiners have been hit by a downturn in global refining margins, which industry experts say would be range-bound for a few quarters because of weak global demand and turmoil in Europe. Synthesis gas will replace costly LNG to cuts costs, and also be used as feedstock for other plants. It will also help raise output of high-value products from the refinery.

Transportation / Trade

MRPL to cut Iranian oil imports by 20 pc

May 29, 2012. MRPL, the nation's largest buyer of Iranian crude oil, will cut oil imports from the Persian Gulf nation by over 20 per cent this fiscal but uncertainties remain on how the oil will be shipped from July in absence of insurance cover. Oil and Natural Gas Corp (ONGC) said MRPL was increasing imports from Kuwait and Abu Dhabi to make up for shortfall from Iran. Mangalore Refinery and Petrochemicals Ltd or MRPL is a unit of ONGC. Separately, Hindustan Petroleum Corp Ltd (HPCL) said it will cut imports from Iran by 15 per cent to 1.5 million tons this fiscal. Essar Oil, the second largest user of Iranian oil in the country, too is reducing imports from 100,000 barrels per day (5 million tons) to 85,000 bpd.

India to pay $13 per unit for natural gas from TAPI Pipeline

May 28, 2012. India will pay $13 for buying natural gas through the much-celebrated TAPI gas pipeline and will take indirect responsibility for safe transit of the fuel through high security risk areas in Afghanistan and Pakistan. India signed agreement to buy natural gas from Turkmenistan at a rate equivalent to 55 per cent of crude oil price which, at $100 a barrel, translates into $9.17 per million British thermal unit. After adding transit fee and transportation charges, the gas through Turkmenistan-Afghanistan-Pakistan-India (TAPI) line would cost $12.99 per mmBtu at Indian border, three times the price paid to ONGC and Reliance Industries for producing natural gas from domestic fields. The rate agreed to flies in the face of oil ministry which has been stonewalling any increase in price to be paid to domestic producers arguing that a higher gas price would lead to an increase in power tariff and cost of fertiliser, thereby entailing higher government subsidy outgo. Besides the higher price, India has also in the Gas Sales and Purchase Agreement (GSPA) signed in Caspian Sea resort of Avaza, Turkmenistan agreed to take delivery of natural gas at Turkmen-Aghan border. GAIL India, which signed the GSPA, will then entrust the delivery of the gas to a consortium which will operate the TAPI pipeline. GAIL will be a prominent member of the consortium building and operating the 1,680-km line.

OIL in talks to buy 51 pc stake in RGTIL

May 28, 2012. Oil India Ltd said it is in talks to buy 51 per cent in RIL's privately owned firm Reliance Gas Transportation Infrastructure Ltd (RGTIL). OIL is one of the 11 firms -- five Indian and six foreign -- that have expressed interest to buy stake in RGTIL. GAIL India Ltd and NYSE-listed energy major Enbridge are among the firms interested in buying stake. RGTIL was originally a subsidiary of Reliance Industries Ltd (RIL) and was incorporated in March, 2003 to transport natural gas from eastern offshore gas fields to consumption centres. Two years later, it was transferred to RIL. It was said at that time that RIL may sell stake in the company through an initial public offering (IPO) once RIL's eastern offshore KG-D6 field hit peak volumes of 80 mmscmd. But with KG-D6 output plummeting to less than 34 mmscmd, he wants to sell the gas pipeline business. RGTIL operates a 1,396-km East-West gas pipeline. The 80 million standard cubic meters per day capacity, 48-inch pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat ferries natural gas from KG-D6 fields. Relogistics Infrastructure Ltd (Relog), a subsidiary of RGTIL, has won government authorisation to lay Kakinada- Basudebpur-Howrah pipeline, Kakinada-Chennai line, Chennai- Bangalore-Mangalore pipeline and Chennai-Tuticorin line. RIL is the operator of KG-D6 block with 60 per cent stake while UK-based BP Plc has 30 per cent interest. Canada's Niko Resources owns the remaining 10 per cent.

Policy / Performance

India has offered to build pipeline to Wagah border: Report

May 29, 2012. India has offered to build a pipeline to the Wagah land border and supply 50 million tonnes of POL products a year to meet Pakistan's requirement, according to media reports. The offer was made during talks between a visiting Indian delegation led by P Kalyanasundaram, Director (international cooperation) in the Petroleum Ministry, and a Pakistani team headed by Joint Secretary Shabbir Ahmed of the Petroleum Ministry. The Indian team also met Petroleum Minister Asim Hussain, who said Pakistan is interested in importing furnace oil and diesel. India offered to build a pipeline to the Wagah border to export oil to meet all of Pakistan’s needs if New Delhi is assured of purchases in large quantities over the long run. Pakistan can get oil supplies from India at prices that are 30 per cent cheaper because of low transportation costs. India had come up with a "surprise offer" to cater to all of Pakistan’s petroleum needs by exporting 50 million tonnes of POL products per annum. It also offered to provide POL products at prices lower than that paid by Pakistan for imports from the Gulf. The two countries were expected to sign a memorandum of understanding relating to import of oil and liquefied natural gas (LNG) from India. During the first day of technical-level talks in Islamabad, the Pakistani team expressed desire to import all petroleum products, including high-speed diesel, furnace oil, petrol and jet fuel. At the same time, Pakistan offered to export naphtha – a surplus product – to India so that it could be converted into petrol and re-exported to Pakistan. The two sides are expected to finalise prices of petroleum products and transportation charges. Besides laying an oil pipeline to the Wagah border, the two sides discussed the possibility of oil being shipped by sea to meet the demand in southern Pakistan. Though import of oil by ship was considered cheaper, the pipeline was described as the cheapest option. The two sides are also expected to discuss the import of 200 million cubic feet of liquefied natural gas a day from India. Pakistani authorities believe the import of LNG from Qatar and other countries like Malaysia would take three years, while India might start supplies in six to eight months. India has the capacity to refine 250 million tonnes of petroleum products while Pakistan’s refining capacity currently stands at 20 million tonnes a year. Pakistan consumes 6.9 million tonnes of diesel a year, of which domestic oil refineries produce 3.2 to 3.4 million tonnes with the rest being imported. Pakistan’s furnace oil demand is about nine million tonnes, of which domestic refineries produce about 2.5 million tonnes. Pakistan is working on new power plants that will increase demand for furnace oil in coming years.

Jaipal Reddy rules out differential pricing for diesel

May 29, 2012. Growing unease within the Congress and street protests by its tantrum-prone allies over the petrol price hike appear to have sapped the Manmohan Singh government's enthusiasm for pruning the subsidy bill on diesel, kerosene and LPG. Reddy was speaking after a meeting of an inter-ministerial group set up to suggest ways to bring inflation under control. The minister had made a presentation to Chief Economic Advisor Kaushik Basu on the impact of diesel prices on inflation. The EGoM on fuel pricing is meeting on June 1 to consider raising prices of diesel, kerosene and cooking gas.

Jairam Ramesh urges govt to cut fuel subsidies, allow FDI in retail

May 29, 2012. Rural Development Minister Jairam Ramesh has urged the government to cut fuel subsidies and take a quick decision on opening the retail sector to foreign investment, saying the time for pussyfooting is over. Jairam Ramesh said governance was about taking unpopular decisions and that there was never a good time for tough decisions. Rejecting the contention that the Congress was unwilling to support unpopular decisions, Ramesh claimed the party would back the government. The government has faced much criticism about its tardy way of functioning and unwillingness to take hard decisions. Oil companies raised the price of petrol by ` 7.50 per litre, but despite ballooning fuel subsidies, the government has so far not mustered the courage to hike rates of diesel and kerosene. The petroleum minister said the government had no immediate plans to raise prices of these fuels.

Shipping Minister seeks urgent steps to ease fuel shortage in Chennai

May 29, 2012. Shipping Minister G K Vasan met Petroleum Minister S Jaipal Reddy and asked him to take urgent steps to ease the current petrol and diesel shortage being witnessed in Chennai and suburban areas. Vasan said there was a 'mismatch' which led to the current shortage, putting the people to severe hardship. Reddy assured him that besides bringing petrol and diesel through ships, additional supplies would be made available by road and that the situation is expected to be streamlined, Vasan said.

CNG gets dearer, petrol cheaper in Delhi

May 29, 2012. Public transport could become costly after the 5% VAT hike on CNG. Oil companies had increased petrol prices by ` 6.28 a litre, translating into ` 7.5/litre rise in the capital after 20% VAT. Petrol will now cost ` 71.92 per litre in Delhi, lowest among all the metros. The state government, however, decided to impose a 5% VAT on Compressed Natural Gas (CNG) that will push up cost of public transportation in the city. The Chief Minister of Delhi Shiela Dikshit-led Congress government's decision to cut tax on petrol will give a leg up to the union finance ministry as it had appealed to states to reduce taxes on petrol to cushion increase in prices. While other Congress- ruled states like Uttarakhand and Kerala have already set a precedent by slashing tax rate of petrol to soften the impact on consumers, Finance Minister Pranab Mukherjee is expected to write to other states to follow suit.

Refiners could cut petrol prices from June: HPCL

May 29, 2012. Indian state-fuel retailers could cut retail prices of gasoline by about two rupees a litre from next month if global oil prices and the rupee stabilise at current levels. State-fuel retailers are slated to review retail petrol prices on May 31. Indian firms raised retail gasoline prices by ` 6.28 a litre excluding taxes, translating to a hike of ` 7.54 /litre at the retail level. To soften the blow of the steep rise, many states including the national capital Delhi have reduced local taxes on the increased component, restricting the rise to ` 6.28 a litre. HPCL plans to import 264,000 barrels per day (bpd) of crude oil in 2012/13 as against 250,000 bpd in the last fiscal. HPCL has reduced the size of its annual deal with Iran by about 15 percent to 30,000 barrels per day (bpd) for the current fiscal year and is looking at diversifying its crude import basket.

IOC hints at up to ` 1.50 a litre cut in petrol price

May 28, 2012. Days after raising petrol price by a steep ` 7.54 a litre, nation's largest oil firm Indian Oil Corp (IOC) hinted at a ` 1.25-1.50 per litre cut in rates. Oil companies revise petrol prices on 1st and 16th of every month on the basis of average international oil price and the foreign exchange rate in the previous fortnight. Gasoline price, against which petrol price has been benchmarked, has come down from $ 124 per barrel (that was taken into account for the hike implemented from May 24) to $ 116-117 a barrel. But rupee has depreciated further against the US dollar - from ` 53.17 to a dollar to ` 55.30. If the present trend continues for the remaining part of the current month, oil companies will cut petrol price by about ` 1.25.

India’s full reimbursement of fuel subsidy is credit positive for IOC: Moody’s Investors Service

May 28, 2012. The government of India announced a full reimbursement of fuel subsidies to downstream oil marketing companies in the country, with 60% borne by the government and the remaining 40% by the state-owned upstream companies. This plan is credit positive for oil marketing companies, including Indian Oil Corporation Ltd, which had limited capacity to share any subsidy burden in the fiscal year owing to a cyclical downturn in the industry's refining margins, mentioned a report from Moody's Investor Service. Moody's does not rate the other two oil marketing companies viz. BPCL and HPCL. Due to the sale of high-speed diesel, kerosene, and liquefied petroleum gas prices well below costs the oil marketing companies have incurred under-recoveries of ` 1,38,500 crore ($25.2 billion) for the fiscal year ending in March 2012.

RIL proposes new plan to develop D-6 block

May 28, 2012. Having slapped an arbitration notice on the government for not allowing it to recover $1.5 billion of investments in the Krishna-Godavrai (KG) basin, Reliance Industries (RIL) has proposed to submit a new plan that envisages an integrated development approach for the entire D-6 block. Besides D-6 , the new development plan is likely to include D-1 , D-3 , D-34 and R series fields, four satellite developments, NEC-25 and all other accumulations within the block. The new master plan has been prepared with the help of BP's technical expertise.

Portal setup by govt to monitor household LPG refills

May 28, 2012. The government is about to launch a portal that will record deliveries of cooking gas cylinders to households, a move that officials say is directed towards restricting the supply of cylinders at subsidised rates. Officials said the portal would ensure consumers pay the market rate for refills over the prescribed limit. Officials said the idea is to cap subsidised cooking gas cylinders for each household at four in a year, adding that the empowered group of ministers (EGoM) reviewing prices of diesel, kerosene and cooking gas will take the final call on the limit. At present, there is no restriction on the number of refills supplied to a household. The market rate of a cooking gas cylinder is ` 879 in Delhi, but households pay only ` 399 as the rest is subsidised by the government. The oil ministry has already written to the cabinet secretariat to convene the EGoM but no date has been fixed yet, officials said. The EGoM was to meet soon after the Budget session, but the meeting was deferred following public uproar over the unprecedented ` 7.50 per litre hike in petrol rate recently, officials said. The government's rising fuel subsidy bill is a matter of concern for the Prime Minister's Office, which has now decided to directly monitor fuel prices. It has sought daily reports on fluctuations in petrol, diesel, kerosene and cooking gas rates, officials said. The government sees restricting the supply of subsidised cooking gas cylinders as one of the measures to lighten its fuel subsidy burden. Cooking gas constitutes about a fourth of India's total fuel subsidy bill, which was ` 138,541 crore in 2011-12. Setting up of the portal is the first step towards a three-phase action plan suggested by the task force for targeted subsidy. In the first phase, the government will cap consumption of subsidized LPG. Cooking gas will be sold at market rates and the government will directly transfer subsidy to bank accounts of consumers in the second phase. In the final phase, the government will identify the poor, who would alone be eligible for cooking gas subsidy.

RIL- ministry spat forces PMO to look at oil, gas pacts

May 28, 2012. A committee headed by C Rangarajan will review terms of the contract that oil & gas companies sign with the government, after a controversy between Reliance Industries and the oil ministry over declining KG-D6 output highlighted the need for a change in the clauses. The Prime Minister's Office has taken the lead in the initiative, realising the need for a robust contract that will reduce messy disputes and attract more foreign investment in the critical sector. Headed by C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, the committee will seek to rewrite some of the terms in the production sharing contracts (PSCs) and will not affect agreements that have already been signed. The decision was taken after meetings between Prime Minister Manmohan Singh and Oil Minister Jaipal Reddy. The PSCs were first drafted under the New Exploration Licensing Policy (NELP) in 1997. They provide a framework under which private companies can recover their development costs or capital expenditure from oil & gas revenues after which the profits are shared with the government as per a specific formula.

Delhi high court reserves decision in IGL-PNGRB case

May 25, 2012. The Delhi high court reserved its judgment in the Indraprastha Gas Limited's (IGL) case against Petroleum and Natural Gas Regulatory Authority (PNGRB). The sole supplier of compressed natural gas in Delhi/NCR has appealed in the court against the regulatory board's decision to regulate its network tariff and selling price. PNGRB, in its order dated April 9, 2012, had asked IGL to cut down its network tariff by 63 per cent. In a retrospective decision, it also asked the company to refund the difference to its customers for the period from April 1, 2008 till the date of issuance of order. IGL moved high court alleging that the regulator is not entitled to regulate the price of gas sold by the company and the variables taken into account by the board to calculate the network tariff are misleading.

CERC urges govt for state-level regulator to control frequent hikes in auto gas prices

May 24, 2012. An Ahmedabad-based non-government organization working for protecting consumers' rights, Consumer Education and Research Centre (CERC) urged the central government to set up state level regulatory bodies to control frequent hike in auto gas prices. It has written a letter to the Union Minister for Petroleum and Natural Gas Jaipal Reddy stating that this kind of mechanism will not only help in controlling the prices but also make the gas utilities accountable. It may be mentioned here that Adani Gas Ltd has increased gas prices seven times in last fifteen months in Ahmedabad. CERC requested Reddy to take similar steps to constitute State Gas Regulatory Boards in order to control frequent increases in gas prices and simultaneously to protect the interests of consumers.



Reliance Power synchronises two units of 2.4 GW Samalkot project

May 27, 2012. Reliance Power has completed the synchronisation of two units of 2,400 MW gas-based Samalkot power plant in Andhra Pradesh. Synchronisation is generally the last step before commissioning of a project. The project has six gas turbines, each having a capacity of 240 MW. The ` 10,000-crore Samalkot plant would be the country's largest gas power project and is ready for generating electricity. Once commissioned, the Samalkot plant would generate more than 15 billion units of power that would be utilised in the southern region. The project would also help in easing acute electricity shortages in south, where the power deficit is as much as ten per cent. The main plant equipment has been supplied by US-based General Electric. GE has also inked a 15-year Contractual Service Agreement with Reliance Power for Samalkot project. Besides turbines from GE other equipment has been supplied by various vendors including Belgium's Hamon, South Korea's Hyundai and China's Xian Electric. Reliance Power expects to have 5,000 MW generation capacity.

NHPC to finalise JV for Chamkharchhu project in Bhutan soon

May 27, 2012. NHPC along with the Bhutan government expects to finalise soon details of a joint venture company to be set up for developing 770 MW Chamkharchhu-1 hydro power project in the neighbouring nation. NHPC would have 51 per cent shareholding in the joint venture entity while the remaining stake would be with a Bhutan government entity, the company said. According to the company, discussions have already started and finer details of the joint venture is expected to be finalised soon. At present, the Chamkharchhu-1 is expected to cost more than ` 3,500 crore and the expense could go up depending on the geological conditions.

BHEL commissions another 500 MW unit at NTPC Rihand plant

May 26, 2012. State-run Bharat Heavy Electricals Ltd (BHEL) said it has commissioned another 500 MW unit at NTPC's Rihand thermal power plant in Uttar Pradesh. The unit has been commissioned for Stage III of of the Rihand Super Thermal Power Station. Previously, BHEL had commissioned four 500 MW units at the power plant. Similar sets have been installed by the firm at NTPC's projects at Vallur, Simhadri and Mouda.

Transmission / Distribution / Trade

Haryana govt to buy power from private firms

May 29, 2012. Under fire for plunging the Millennium City into darkness, the Haryana government said it would sign short-term purchase agreements to arrange for additional electricity of 250MW to bring down the demand-supply gap. Shrugging off an in-principle ban on spot buying, the Haryana government has now decided to buy power on the open market in view of the current situation. While the entire state is facing a power crisis due to a big demand-supply gap, it's Gurgaon which is the worst hit with daily electricity cuts lasting for as many as nine hours. At present, the daily power consumption in the state is 1,300 lakh units against the available supply of 1,100 lakh units from all sources. Gurgaon faces a shortfall of 15% in supply. The power demand at present in Gurgaon is 200 lakh units while the supply is 170 lakh units.

Jindal Steel & Power Ltd buys 10 pc stake in Australian arm of Gujarat NRE

May 29, 2012. Jindal Steel & Power Ltd has entered into an agreement with Gujarat NRE Coking Coal, an Australian subsidiary of Gujarat NRE Coke, to pick up a 10 per cent strategic stake in the company. The deal is worth nearly $25 million. The Naveen Jindal-led firm already has a presence in Australia's coal sector with six exploration permits in Queensland and a 27.27 per cent stake in Rockland Richfield.

Alstom T&D bags ` 960 mn substation contract in Maharashtra

May 28, 2012. Alstom T&D India has bagged a contract worth ` 96 crore for setting up a sub station in Maharashtra. The order has been given by the Maharashtra State Electricity Transmission Co Ltd. Alstom T&D India said it would erect, test and commission a 400/200 kV gas-insulated sub station in the Hinjewadi district of Pune. The contract also includes associated civil works. Presently, the company has an order book of more than ` 5,000 crore. Alstom T&D India is a leading player in the power transmission business with various offerings for the utility, industry and infrastructure segments.

Power demand in Delhi reaches 4.8 GW, outages in several areas

May 24, 2012. The blazing heat pushed the power demand in the city to season's highest of 4,823 mega watt, resulting in massive load-shedding at several areas due to demand-supply gap and local faults in the transmission network. The previous highest power demand was recorded on May 22 when it had touched 4,717 MW. The power demand in the city had reached an all-time high of 5,028 MW last summer and it is projected to reach 5,500 MW.

Policy / Performance

CIL projects 15 pc shortfall on FSA quantity to power sector

May 28, 2012. Apprehending it would not be in a position to meet the total requirement of the power sector, Coal India (CIL) projected the shortfall at 10-15 per cent of the committed supply to firms under fuel supply agreements (FSA). The situation would arise only when all the FSAs are signed and companies lift the projected quantity. The development comes close on the heels of the PSU informing the Coal Ministry that there might be a shortfall in the supply of coal to the power producers. CIL has entered into pacts with 14 power firms only out of 49, as some of the firms, including NTPC, refused to sign FSAs due to objections to certain clauses, including a provision of 0.01 per cent penalty on the value of the coal not supplied by the PSU, which they say is almost negligible. CIL may resort to imports to meet the demand shortfall of power firms. Hypothetically, the import quantity could go up to 50-60 million tonnes assuming a shortfall of 10-15 per cent based on supply trigger quantity of 80 per cent as per the agreement.

CIL hurting the power sector: NTPC chief

May 25, 2012. The chief of NTPC, India's biggest power generator, has launched an unprecedented no-holds-barred attack on fellow state-run firm Coal India Ltd (CIL), calling it the "only company in the world where the production has gone down but the profits have gone up." Alleging that Coal India's status as the country's only coal miner was harming the power sector and the entire nation, NTPC Chairman Arup Roy Choudhury said its inability to supply adequate amount of fuel was threatening his company's expansion plans. Choudhury further said Coal India increased prices twice in 2011-12 "because they are now a listed company and want their share prices to remain high."

Coal shortage will not cause power plant shutdown: Sriprakash Jaiswal

May 25, 2012. Coal minister Sriprakash Jaiswal has said no power plant would be closed in the coming days due to coal crisis. In April, the production of Coal India, which accounts for over 80 per cent of the domestic coal production, has been has been better in comparison to the same month over the last two years, he said.

PFC to classify loans worth ` 12 bn as non-performing assets

May 25, 2012. Lenders led by Power Finance Corporation (PFC) will classify loans of ` 2,400 crore to the Shree Maheshwar Hydel Power Corporation as non-performing assets, raising new questions about the future of Maheshwar project that was conceived nearly three decades ago. The 400-megawatt Maheshwar project is yet to start generate electricity after suffering substantial cost overruns and delays because of environmental tangles, leading to defaults on payments of installments. The project had been delayed since 1998 and it defaulted on loan repayment due to the inability of promoters to infuse equity and roadblocks in rehabilitation and resettlement blamed on the NGO-Narmada Bachao Andolan. The PFC has the largest exposure to the project, at around ` 1,200 crore. The company's net NPAs rose to 0.93 per cent in FY12 from 0.20 per cent because of loans to gas-based and hydropower projects such as the Maheshwar.

NHPC to invest ` 40 bn in FY13 for hydro power projects

May 25, 2012. NHPC Ltd said it will invest ` 4,000 crore in the current fiscal to develop hydro power projects. The company said NHPC targets to commission four projects totalling about 1,200-MW in the current financial year. NHPC had invested ` 3,546 crore toward development of projects in the last financial year.




Abu Dhabi may inject CO2 in offshore fields to boost output

May 28, 2012. Abu Dhabi National Oil Co. may start injecting carbon dioxide instead of natural gas into its offshore fields to enhance oil recovery. Abu Dhabi National, or Adnoc, is looking at ways to reduce the oil industry’s use of the 5 billion cubic feet of gas produced daily in the U.A.E. so that the fuel can be used to meet soaring power and industrial demand. Gas is used to increase pressure inside reservoirs to push more crude out. Adnoc is working with Abu Dhabi’s renewable energy company Masdar to capture carbon. One plan under consideration is to build a plant next to Emirates Steel Industries PJSC to capture 800,000 metric tons of CO2 a year. Adnoc’s onshore unit, Abu Dhabi Co. for Onshore Oil Operations, has completed a pilot project to inject 1.2 million cubic feet of CO2 a day into the Rumaitha field and is now planning a further four to five pilot projects for 2013 and 2014.

First oil achieved from North Sea’s Athena field

May 28, 2012. Scotland's Ithaca Energy has achieved first oil from its Athena oil field in the North Sea, according to its partner Trap Oil Group. Athena is located in UKCS Block 14/18b with Ithaca acting as operator with a 22.5-percent interest in the block. Oil analysts at UK-based corporate finance and broking firm NPlus1 Brewin described the news of first oil as "a significant milestone for all of the partners in the Athena field" and that the start up will provide Trapoil with its "first meaningful production volumes". Trapoil estimates the Athena development area, which is located in the Outer Moray Firth off the east coast of Scotland, to contain recoverable reserves of around 14.3 million barrels.

ONGC Videsh Ltd production hit due to turmoil in Sudan and Syria

May 25, 2012. ONGC's subsidiary ONGC Videsh said that its production last fiscal was lower mainly due to problems in its Sudan and Syria assets. The company said it achieved the highest-ever total revenue of ` 22,637 crore, an increase of 21.2% as compared to the previous year. Profit after tax (PAT) for the current year increased only marginally by 1.1% from ` 2691 crore to ` 2721 crore due to certain abnormal provisioning, said the company. OVL is currently participating in 30 projects in 15 countries, out of which 10 are producing projects. The company has acquired 25% participating interest (PI) in Satpayev Block, Kazakhstan and exploration activities have started in the block. The remaining 75% PI is held by KMG, the National Oil Company of Kazakhstan, the company said. The company said a provision for impairment of ` 1953 crore ($408 Million) has been made in respect of its subsidiary, Jarpeno Ltd. as the asset is performing lower as compared to the estimated and the 'value in use' computed for the asset as on 31st March, 2012 was lower than its carrying value.

Tullow finds more oil, gas in Ngamia-1 well

May 25, 2012. Tullow Oil reported that the Ngamia-1 well has encountered oil and gas shows over a gross interval of 459 feet (140 meters) from a depth of 5,905 feet (1,800 meters) to 6,364 feet (1,940 meters). The reservoirs are similar to those previously encountered at a shallower depth. The company made the announcement to clarify a statement made at an investors meeting in Nairobi that the Ngamia-1 well was drilling into the primary target and that initial results appeared to indicate that the well had intersected further oil-bearing sands.

Statoil upgrades Brazil pre-salt discoveries to 1.24 bn barrels

May 24, 2012. Statoil ASA said it and its partners had substantially upgraded estimates for the Brazilian Campos basin pre-salt oil and gas discoveries, to a total 1.24 billion barrels of oil equivalent, and the Norwegian oil giant said this also increased its optimism for its geologically similar acreage in Angola. Statoil said the companies had updated their estimates of the Brazilian discoveries Seat, Gavea and Pao de Acucar to a total of 700 million barrels of oil and three trillion cubic feet of natural gas--which is equal to 540 million barrels of oil equivalent--after previously estimating the discoveries as "high impact," defined as more than 250 million barrels of oil equivalent, or a share of 100 million barrels for Statoil alone. Pre-salt, a geological formation off the African and Brazilian coast, is expected to contain huge amounts of oil and gas that could contribute billions of new barrels to global reserves and help Statoil fulfill its goal of increasing its daily international production to 1.1 million barrels by 2020, from about 600,000 barrels currently. But these resources are buried under a thick layer of salt at huge water depths, which means wells are much more complicated and risky to drill than conventional offshore wells.

Transportation / Trade

Iraq to cut Basrah crude exports by 15 pc in first half of June

May 29, 2012. Iraq will reduce its daily exports of Basrah Light crude from the Persian Gulf by 15 percent in the first half of June compared with shipments in the previous two weeks. The nation will ship 19 cargoes from the Basrah Oil Terminal, seven less than in the second half of May, according to the plan. Exports will total 32.1 million barrels, or 2.14 million barrels a day, compared with 2.53 million a day two weeks earlier. The June program comprises 14 consignments of 2 million barrels each, two 1 million-barrel lots, and two 600,000-barrel and one 900,000-barrel. Iraq started operating a second offshore mooring facility for crude exports from the Gulf on April 20. The new single- point unit with the capacity to handle 900,000 barrels a day is the second of four planned.

Japan gas binge ties third-biggest economy to one fuel

May 24, 2012. Japanese companies are buying natural gas assets and fields around the world, setting the nation on course to be the first of the 10 largest energy users to bet its future on a less-polluting fuel than oil or coal. Mitsubishi Corp. led purchases as trading and energy explorers bought gas properties in four countries and pledged at least $30 billion to develop deposits. They’re capturing supplies to generate power after authorities idled the nation’s 54 nuclear reactors since the Fukushima disaster. The closures, which have doubled gas’s share of Japan’s power mix to about 50 percent, and the spending plans tie the country to a single fuel more than any other major energy- consumer. While that leaves the nation vulnerable to rising prices in the years ahead, the world’s third-biggest economy is gaining an advantage trading the fastest-growing fossil fuel for electricity. Japan’s six major trading companies, which together with Mitsubishi are Mitsui & Co., Itochu Corp., Sumitomo Corp, Marubeni Corp. and Sojitz Corp., had $62 billion in cash as of March 31. Mitsubishi’s cash pile is the highest since 1995, while Mitsui’s is close to the most in at least 20 years. While the U.S. has used hydraulic fracturing to become the world’s largest producer of gas and is becoming an exporter, Japan is solidifying its position as the biggest liquefied natural gas importer.

Trans Mountain finalizes shipper commitments for pipeline expansion

May 24, 2012. Kinder Morgan Energy Partners, L.P. announced that shippers have signed binding 20-year contracts for approximately 510,000 barrels per day (bpd) of capacity in support of expanding the pipeline system. The proposed expansion will increase capacity on Trans Mountain from approximately 300,000 bpd to about 750,000 bpd at a projected cost of $4.1 billion.

Iran navy helps U.S. ship attacked by pirates in Middle East

May 23, 2012. Iran’s navy helped a U.S.-flagged cargo ship that was attacked by pirates off the United Arab Emirates, according to the vessel’s owner, Maersk Line Ltd. The Iranian navy was the first to respond to the initial distress call from the Maersk Texas. The vessel was attacked by several skiffs and armed guards on board returned fire, the company said. The incident happened at about noon northeast of Fujairah, the biggest port in the Middle East for refueling oil tankers, Maersk said. Iran’s navy provided guidance to the crew of the Maersk Texas. U.S., U.K., Chinese, French, German and Russian negotiators -- the so-called P5+1 group -- are meeting with Iranian officials in Baghdad over the Persian Gulf country’s nuclear program. The West suspects Iran’s goal is to develop a weapon, while Iran contends it is for civilian purposes.

Policy / Performance

Icahn’s Chesapeake stake puts governance before value

May 29, 2012. In 2009, investor Jeffrey Bronchick told directors of Chesapeake Energy Corp. (CHK) that he was disgusted with their leadership. Three years later, Oklahoma City-based Chesapeake is embroiled in a new controversy over directors’ close ties to McClendon, insider deals and off-the-books loans. Bronchick, however, sees things differently. The natural-gas producer is a good value investment, and the problems with the board no longer bother him, he said. The tension investors sometimes see between appropriate corporate governance and possible rewards from value have rarely been more apparent than in the case of Chesapeake. The board is drawing increased attention because billionaire investor Carl Icahn, known for pushing for change at the companies in which he invests, announced he bought a 7.65 percent stake and demanded four directors be replaced. The board was already searching for a new chairman to replace McClendon, who will remain CEO and a director of the company he co-founded 23 years ago. That search began after revelations last month about McClendon’s borrowing from firms that do business with the company. Previous to that Chesapeake had said it was confident of the board’s independence. Chesapeake is handling all requests for comment from directors.

Mexico oil hedging costs rose 44 pc last year

May 25, 2012. Mexico, the third-largest supplier of oil to the U.S., paid $1.17 billion last year to lock in prices for 2012 exports at $85 a barrel, a 44 percent increase compared to hedging costs paid the previous year. Mexico’s Central Bank used “the most notable and trusted” commodities brokerages as counterparts to hedge 211 million barrels of crude exports this year, according to a Finance Ministry. In 2010, Mexico paid $812 million to buy oil hedges for 222 million barrels for 2011. Mexico’s hedging contracts are included in annual budget discussions when government officials set an estimate for oil revenue, which accounts for about a third of the public budget. Mexico’s crude-hedging program is probably the world’s largest of its type, Miguel Messmacher, the Finance Ministry’s chief economist, said.

OPEC may keep ceiling unchanged in June

May 24, 2012. The Organization of Petroleum Exporting Countries may keep its output ceiling unchanged when it meets in June 14. The news comes despite a sharp drop in oil prices in recent weeks amid an apparent thaw between Iran and the West and mounting economic concerns in the euro zone. But the price correction has brought Brent--the most commonly used futures contract--close to $100 a barrel, a level acceptable to most OPEC members. Saudi Arabia has said for many months it wanted prices to fall to $100 a barrel after they peaked to $128 a barrel in March. But members that have previously supported high prices also think the current levels remain acceptable, making a consensus closer to reach. OPEC is producing more than a million barrels a day above its production ceiling of 30 million barrels a day.

Mozambique could become pioneering African LNG exporter

May 24, 2012. Mozambique could become the world's third-largest exporter of liquefied natural gas (LNG), an Anadarko Petroleum Corp. said. Anadarko Mozambique, said the company is working with the Mozambique's government to establish the framework and fiscal regime for LNG development "of a caliber not seen before in continental Africa." The company plans to develop two-train LNG facility associated with the Prosperidade discovery, which contains between 17 and more than 30 trillion cubic feet (Tcf) gross recoverable resources. The plant will be situated in the far northern part of the country on the southern side of Palma Bay, which provides a natural shelter from typhoons.

European fracking bans open market for U.S. gas exports

May 23, 2012. Opposition to a drilling technique known as hydraulic fracturing has slowed the development of natural gas in Europe, creating export opportunities for U.S. producers hurt by low prices and a glut of gas at home. Fracking, as the practice is known, was temporarily suspended in the United Kingdom after it was linked to a series of earthquakes. Bulgaria and France -- home of the continent’s largest estimated reserve -- outlawed it over environmental concerns. Some other countries are poised to impose moratoriums on the process, in which water, sand and chemicals are pumped underground to free gas trapped in rock. This opposition, along with a projected growth in demand driven in part by Germany’s plan to phase out nuclear power, has created opportunities for U.S. gas producers such as Exxon Mobil Corp. Imports to the European Union are projected to grow 74 percent by 2035 as Italy, Poland and Lithuania build terminals to receive tankers carrying gas in liquefied form. Europe has an estimated 639 trillion cubic feet of shale gas resources, according to the U.S. Energy Information Administration. That is more than four times the reserves of the Marcellus Shale formation from New York to Tennessee that has fueled much of the fracking boom in the U.S.

U.S. LNG exports likely to play larger role in supplying Europe vs. Asia

May 23, 2012. The U.S. will not likely become a major supplier of liquefied natural gas (LNG) to Asia due to distance, but could become a significant LNG supplier for Europe. The U.S. shale gas boom, which has depressed U.S. natural gas prices, has also transformed the United States from a market for LNG imports to a potential LNG exporter. A number of U.S. LNG export terminals are expected to come online along with projects in western Canada and Australia in the 2016-2018 time frame. Australia has advantages as an LNG exporter to Asia in terms of proximity, its long-term relationship with Asian countries and as a political stable source of LNG. Western Canadian LNG export facilities such as Kitimat offer similar advantages in terms of distance and political stability. Many U.S. LNG facilities are disadvantaged geographically as Asian sources of gas due to their locations on the Gulf of East coasts, but offer the advantage of cheaper Henry Hub gas prices. U.S. LNG exports could comprise 30-40 million tones of the 300 million tonnes of Asian energy demand in 2030.



Iran to build new nuclear power plant

May 28, 2012. Iran is to build a new nuclear power plant, alongside its sole existing one in the southern city of Bushehr, by early 2014. The current Bushehr nuclear plant was started by German engineers in the 1970s, before Iran's Islamic revolution, and was completed by Russia, which continues to help keeping it running and provides fuel for it. Inauguarated in 2010, it is due to come fully on-line in November this year. Iran has a research reactor operating in Tehran that is used to make medical isotopes for patients with cancer and other illnesses. A new Bushehr plant would boost electricity production in Iran.

Samsung signs deal to build $340 mn Bangladesh power plant

May 28, 2012. Samsung C&T Corp., the construction and trading arm of South Korea’s Samsung Group, signed an accord with Electricity Generation Co. of Bangladesh and Spain’s Isolux Ingenieria SA to build a power plant in the South Asian nation. The 335-megawatt project will be built in Siddhirganj, 20 kilometers (12 miles) southeast of the capital, Dhaka. Bangladesh is spending $10 billion over a decade to increase generation capacity in a nation where more than half of the 166 million people don’t have access to electricity. Prime Minister Sheikh Hasina Wajed is seeking to boost spending on power plants, roads and ports and lure foreign investors to the $106 billion economy. The World Bank will provide $196 million of the project’s estimated cost of $340 million. The power plant is expected to start in December 2014.

Manila Electric plans 1.5 GW power plant with Japan utility

May 28, 2012. Manila Electric Co., the power retailer that sold its plants to the Philippine government almost four decades ago, will partner with a Japanese utility to build the Southeast Asian nation’s first natural-gas fired power plant in more than 10 years to help reduce outages. The proposed 1,500-megawatt plant may be built in the southern part of Luzon island with half the project likely to be completed in late 2016. Running power plants will reduce Manila Electric’s dependence on generators for supply while helping secure electricity in a nation faced with rising demand and intermittent outages. The company, also known as Meralco, distributes electricity in an area accounting for half of the nation’s economic output.

Czechs to generate 50 pc nuclear power by 2030

May 28, 2012. The Czech Republic plans to generate 50 percent of its electricity output by nuclear reactors in 2030, a report commissioned by the Ministry of Industry and Trade says. The plan is counting on the completion of two new reactors at CEZ AS’s Temelin nuclear power station as well as one new unit at the Dukovany station, citing the report, which will serve as a basis for the government’s updated national energy strategy plan. Renewable energy sources probably won’t make up more than 15 percent of the country’s power output, according to the report.

AboitizPower commits P170 bn to grow power generation assets

May 24, 2012. AboitizPower has decided to commit P170 billion over the next five years to "beef up its portfolio" of power generation assets. P35 billion will be invested in Mindanao, said AboitizPower. The investment in Mindanao will consist of a 300-megawatt (MW) clean coal plant and 54 MW from run-of-river hydro plants. Aboitiz said it would partner with Manila Electric Co., Taiwan Cogeneration Corp., and Team Energy Philippines Corp. to add 1000 megawatts of power to Luzon. The listed power firm has attributable capacity of 2,350 MW as of end-2011. It earned P55 billion in revenues last year, but this was 9 percent down from 2010 because of weaker average selling prices in the electricity market and lower net generation levels.

AGL wins Loy Yang power approval; to raise $875 mn

May 24, 2012. Australia's AGL Energy launched a A$900 million ($875 million) share sale after winning approval from Australia's competition watchdog to take full control of Victoria state's largest power station. The A$448 million plan to take full control of Loy Yang A power station, which provides 30 percent of Victoria state's electricity, also includes Australia's largest brown coal mine. AGL will buy out Great Energy Alliance Corp, whose shareholders include troubled Tokyo Electric Power Co, which has a 32.5 percent stake, Thailand's Ratchaburi Electricity and Australian superannuation funds.

Transmission / Distribution / Trade

China's State Grid to buy Brazil assets from Spain's ACS

May 29, 2012. State Grid Corp of China STGRD.UL said that it has agreed to buy electricity transmission assets in Brazil from Spain's Actividades de Construcción y Servicios SA for $531 million and assume debt of $411 million, the latest in a series of overseas acquisitions by Chinese power companies. State Grid Corp's wholly-owned subsidiary State Grid International Development Ltd will take over seven high-voltage electricity transmission assets in Brazil from ACS. China's cashed up state power groups have been scooping up bargains, with dominant power distributor State Grid establishing a presence in the Philippines, Brazil and Portugal. The latest transaction will be State Grid's second investment in Brazil and fourth major investment outside of China. State Grid signed a deal to buy a 25 percent stake in Portuguese power grid operator Redes Energeticas Nacionais SGPS SA for about $508 million. In December 2010, it bought seven Brazilian power transmission concessions with investments totaling nearly $1 billion.

ACC votes to approve TEP Transmission Line project

May 28, 2012. The Arizona Corporation Commission (ACC) voted unanimously to allow the transmission lines to serve Rosemont Copper without any additional hearings following Rosemont receiving the major permits required for the mine itself. The ACC voted 5-0 to grant the Certificate of Environmental Compatibility for the Tucson Electric Power Transmission Line Project. The transmission line will be used to supply power to Rosemont Copper Company's proposed copper mine southeast of Tucson. Rosemont Copper applauded the ACC members for working with all parties through the issues and concerns regarding the transmission line prior to approving the CEC. The approved CEC ensures Rosemont has obtained the eight major permits required, prior to starting construction of the transmission line. To date, Rosemont has already received six of the eight major permits with the remaining expected mid year.

Policy / Performance

Obama’s pick for nuclear safety cop seen shunning confrontation

May 29, 2012. Allison Macfarlane, the geologist and expert on atomic waste picked to lead the U.S. Nuclear Regulatory Commission, is described by associates as someone who can advocate positions without offending her opponents. Such collegiality may help Macfarlane run the nuclear safety agency, replacing Gregory Jaczko, who resigned amid allegations from colleagues that he bullied staff and humiliated female employees. Jaczko, who has denied the accusations, said he will leave when a successor is confirmed by the U.S. Senate.

Negros govt sets aside funding for planned hydropower plant

May 28, 2012. The provincial government of Negros Occidental has set aside funds for the construction of a 1.36-megawatt hydropower plant in Mambukal Resort, Barangay Minoyan, Murcia town. The P260 million was included in a supplemental budget approved by the provincial board. The project is part of the plan to make the province self-sufficient in power supply. Excess output will be sold by the province as Mambukal Resort requires only 0.8 MW. The local government is preparing for the bidding process, and the goal is to complete the project between March and April next year.

Iran doubles enriched-uranium stockpile, goes beyond 20 pc

May 26, 2012. Iran increased its output of enriched uranium that world powers are concerned may eventually be used for a nuclear weapon, according to International Atomic Energy Agency inspectors. While the United Nations agency verified that Iran hasn’t diverted its declared nuclear material for weapons use, the inspectors reiterated past statements that they can’t give assurances that Iran isn’t concealing nuclear activities. Iran almost doubled its stockpile of 20 percent medium- enriched uranium, to 145 kilograms (320 pounds), from 73.7 kilograms in February, the IAEA said. Iran had tripled its production of the material in the three months ending Feb. 24.

Uganda to spend more than $1 bn on Karuma Hydropower Plant

May 24, 2012. Uganda will spend more than $1 billion on the Karuma Hydropower Project. The East African nation also plans to spend at least $13 billion on infrastructure over the next five years. Construction of the 600-megawatt Karuma plant on the Nile River in the northwest of the country is expected to start later this year, according to the Energy Ministry.

Iran nuclear talks show progress without pledges, EU says

May 24, 2012. World powers and Iran unexpectedly reconvened a meeting on the second day of talks in Baghdad after negotiators said progress was made without binding pledges to ensure the Persian Gulf nation’s nuclear work is peaceful. The European Union’s foreign policy chief, Catherine Ashton, and Iran’s top negotiator Saeed Jalili delayed a scheduled press conference to reconvene a meeting of all seven countries at the talks. The sides may meet again in Geneva in three weeks. Chinese, French, German, Russian, British and U.S. negotiators -- the so-called P5+1 group -- have been meeting with Iran to try to overcome disagreements over how to ensure the Islamic republic’s atomic work is peaceful and forestall possible military strikes. Jalili met with delegates from Russia and China before it was decided to resume negotiations. Iran and the P5+1 had the most detailed discussions since the latest round of negotiations began in February. While many differences remained, some discord was expected and didn’t derail the negotiation process.

Pakistan urged to boost energy efficiency to cut power shortages

May 24, 2012. Pakistan, the South Asian nation where persistent power shortages have sparked riots, is facing calls from the Asian Development Bank to step up energy- efficiency measures as utilities’ debts mount. Boosting efficiency is the cheapest way to narrow the power deficit. Power demand in Pakistan has long outstripped supply, causing blackouts and hampering growth. Energy companies are locked in so-called circular debt, whereby the power utilities grappling with unpaid bills delay payments to fuel suppliers, which in turn owe money to refiners and explorers. The gap between power demand and supply surged to a record 7,500 megawatts on May 10. Blackouts have triggered violent protests in several cities in Punjab province.



Petrol price hike: Environmentalists worried over the adverse impact of diesel cars on environment

May 28, 2012. Even as chief minister Sheila Dikshit hinted at marginal relief for Delhiites from the petrol price hike, environmentalists are not amused. They continue to be a worried bunch and their fears are not unfounded, for petrol getting out of reach for many people means there will be more diesel vehicles on the road in the years to come. This will have an adverse impact on the environment as diesel engine emissions are over three times more toxic than petrol. Car dealers in the city say that right after the previous hike in November 2011 the demand for diesel cars had gone up drastically. Even after the latest hike they were flooded with enquiries about diesel vehicles. This has been collated by Centre for Science and Environment's analysis of the 2010-11 car sales data, which revealed that the demand for diesel-run SUVs has gone up. Also, 85% of petrol cars sold during the period had engine sizes smaller than 1200 cc. As of now 13 cities in the country comply with Bharat stage IV norms and the rest follow Bharat stage III norms. But the fact that diesel is more fuel efficient and gives better mileage masks the down side of increase in diesel cars.

Suzlon Energy: Order backlog to power growth

May 28, 2012. Suzlon Energy's financial performance for FY12 is bound to take investors by surprise. Not only has Suzlon managed to meet its revised revenue growth guidance for the year, but has also showcased operational efficiency. The company's operating profit (Ebitda) for the year shot up by 74% YoY, resulting in a rise of over 270 basis points in its operating margins vis-a-vis FY11. This is, by far, a much better performance by the company in the past three years.

West Bengal to launch new renewable energy policy

May 26, 2012. In a bid to encourage efforts to harness the potential of renewable energy sources, the government of West Bengal is planning to come up with a new renewable energy policy. It will be a policy on cogeneration and generation of electricity by using renewable energy sources, and it has already been drafted waiting for the approval. The existing policy was framed by the erstwhile Left Front government. The proposed policy intends to encourage investment in renewable sources of energy like wind energy, solar energy, biomass, by way of granting various concessions to willing investors. At present, renewable energy accounts for 2.5 per cent of the total consumption in West Bengal.

Azure Power receives $70.4 mn long-term financing from US Exim Bank

May 25, 2012. Azure Power announced a long-term financing of $70.35 million from Export Import Bank of United States, to be utilised towards its solar powered plant in Nagaur, Rajasthan. The plant is an expansion of the company's existing 5 megawatt Nagaur photo-voltaic facility, to 40 megawatt, making it the largest solar power plant to be developed at a single location under the National Solar Mission, according to a press statement released by the company. The construction of the plant has commenced and it is expected to be operational by February 2013. Once fully operational, the solar plant is expected to reduce carbon emissions of up to 66,000 metric tonnes per year, or in other words, the equivalent of removing about 12,000 cars off Indian roads per year, according to the company. The solar photovoltaic project in Rajasthan is the first project under JNNSM Phase-1 Batch-II to tie-up financing, and the company is on track to complete investment of ` 1,000 crore in the Indian solar sector by March 2013. Azure Power received a grant of $476,670 from the United States Trade and Development Agency (USTDA) to assess the development and accelerate adoption of solar power in rural India.

MNRE constitutes industry advisory council for solar energy

May 24, 2012. Ministry of new and renewable energy has constituted 'Solar energy industry advisory council' (SEIAC) to advice the ministry on various technology related matters, attract investment across the value chain, suggest steps required to encourage R&D and drive down costs and make the Indian solar industry globally competitive. The council will also review the status of Indian solar industry from time to time and suggest measures required and a road map to accelerate the growth to achieve manufacturing level of about 4-5 GWeq per year by 2017-2020.

M&M eyes 100 MW from solar power projects in India in 2-3 yrs

May 24, 2012. Diversified business conglomerate Mahindra & Mahindra (M&M) said it is targeting to commission over 100 megawatts of solar power projects across India over the next 2-3 years along with with its partner Kiran Energy. Mahindra Solar One, which is a joint venture with Kiran Energy, is under Mahindra & Mahindra's Cleantech Ventures and is currently working on three projects to generate a total of 50 MW of photo voltaic (PV) power by the end of this fiscal. The company will bid and develop projects, which will all be generated through PV method, in many states like Rajasthan, Gujarat and some other locations in South India.

Tata Power-Exxaro JV Cennergi to develop two wind projects in South Africa

May 23, 2012. In a boost to its global ambitions, Tata Power's joint venture company Cennergi has emerged as the preferred bidder to develop in South Africa two wind power projects with a total capacity of 234 MW. Cennergi would develop 139 MW Amakhala and 95 MW Tsitsikamma wind power projects in South Africa, Tata Power said. The company's global footprint has been further augmented through the JV with Exxaro to explore electricity generation opportunities across South Africa, Botswana and Namibia. Tata Power has an installed capacity of over 5,000 MW. The bids for the two projects were submitted under the second window of the Independent Power Producer Procurement Programme floated by South Africa's Department of Energy.


Chevron may use solar in oilfield shared by Kuwait, Saudi

May 29, 2012. Chevron Corp. is considering using solar energy to produce the steam needed to pump heavy crude from an oilfield straddling Saudi Arabia and Kuwait. Chevron may start a pilot solar plant at the end of 2013. Energy from the sun would heat water to create steam, which would then be injected underground to make the heavy oil liquid enough to flow. Solar power would be used in conjunction with burning natural gas for the so-called steam-flood development at the Wafra field in the Neutral Zone, which Saudi Arabia and Kuwait share. Kuwait Gulf is responsible for managing Kuwait’s share, while Chevron operates Saudi Arabia’s interest. Chevron is assessing the use of solar energy as it seeks to free up much-needed natural gas. Kuwait buys the fuel in liquid form at international prices while Saudi Arabia burns crude in its power stations because they don’t have sufficient local supply of gas to generate electricity. A final investment decision for steam injection in the Wafra field will be made next year, with the aim of producing as much as 600,000 barrels a day of heavy oil from 2017. Saudi Arabia, the largest member in the Organization of Petroleum Exporting Countries, says it’s pumping more than 10 million barrels of oil, the highest in more than three decades. Kuwait’s output was 2.7 million barrels last month.

American companies beating Europe to first commercial CCS plant

May 29, 2012. Companies in the U.S. and Canada are likely to beat European rivals in building the first large-scale project trapping carbon dioxide to sequester underground. Air Products & Chemicals Inc., based in Allentown, Pennsylvania, and SaskPower International Inc. of Canada are the closest to building a utility-sized carbon capture and storage plant. Carbon capture and storage is one of the most promising technologies to redirect emissions from burning fossil fuel. The International Energy Agency estimates 3,400 CCS plants are needed by 2050 to meet a goal to cut carbon emissions in half.

Renewable energy investors fear UK dash for gas, says Ernst & Young

May 28, 2012. Fears the UK will use gas-fired power stations to deal with its looming energy crisis rather than turn to renewable sources have seen the country drop out of the top five most attractive countries for clean energy investment. The UK dropped to sixth out of 40 countries in Ernst & Young's quarterly report, falling back below Italy after a strong performance in offshore wind energy had raised its position. The new emissions performance standard for power plants unveiled in draft Energy Bill sparked fears of a new dash for gas if it is used as a bridge fuel while coal-fired stations are phased out. The cuts to solar feed-in tariff subsidies coming into force in August also had a negative impact, although this was exacerbated by a reweighting of the indices towards solar, which affects the UK disproportionately given its primary strength is in wind power.

Gamesa to Furnish 22 turbines for Nicaragua wind energy project

May 28, 2012. Gamesa Corp. Tecnologica SA, Spain’s biggest maker of wind turbines, will provide 44 megawatts of power equipment to Globeleq Mesoamerica Energy for a project in southwestern Nicaragua, the company said. Gamesa will install 22 of its G90 turbines in the town of Rivas and later connect the wind farm to the grid, Zamudio, Spain-based Gamesa said. Globeleq Mesoamerica Energy is owned by Globeleq Generation Ltd. and Mesoamerica Power Ltd.

Climate deadlock breaks as slow UN talks frustrate U.S., EU

May 25, 2012. Climate change envoys broke a deadlock at United Nations talks in Germany, with European, U.S. and island nations warning the slow pace of negotiations threatens the chance of reaching a deal at the end of the year. After a week of wrangling about the structure of the agenda that will guide talks leading to a new climate deal in 2015, delegates at the discussions in Bonn bridged a divide that pitted about 36 nations including China and India against the European Union, U.S. and blocs of island and developing nations. Negotiators are trying to set new emissions targets under the existing Kyoto Protocol treaty, define what countries without Kyoto targets will do to cut their greenhouse gas output, and devise a new climate deal by 2015 that will take effect by 2020.

Trade war looming as China rebukes U.S. support for solar

May 25, 2012. China’s allegation that renewable- energy subsidies in five U.S. states violate free-trade rules ratchets up a potentially costly trade war between the world’s two largest economies. Programs supporting renewable power, including wind and solar, in Washington state, New Jersey, Massachusetts, Ohio and California, violate World Trade Organization policies and trade treaties. China filed a complaint at the WTO over U.S. procedures for calculating anti-subsidy duties on imports.

UK bets on biomass in move away from coal

May 25, 2012. Britain is placing Europe's biggest bet on biomass as an alternative to polluting oil and coal and expensive gas, but reliance on imports could challenge the plan's low-carbon credentials and Britain's energy security. Burning wood, sunflower husks or animal feces offers steady so-called "baseload" power, giving biomass an advantage over intermittent renewable rivals solar and wind. It also offers an alternative to Europe's gas-fired power plants, where profits have been eroded by rising natural gas prices. One way biomass is finding a way into the UK's energy mix is through the conversion of coal-burning power plants, which saves up to 75 percent of the cost of building a new station. Britain's biomass plans are Europe's biggest, with 3 gigawatts in planning representing 20 percent of Europe's growth through 2035. It is part of the UK's aim to get 15 percent of its energy from green sources by 2020.

UN’s Ban sees industry advancing climate treaty in Rio

May 25, 2012. The United Nations will pursue partnerships with global industry leaders to help drive clean energy in Rio de Janeiro as governments struggle to find common ground on climate change, Secretary General Ban Ki- moon said. Corporate boards can implement sustainability policies faster than countries by committing to investments in renewable energy, clean water and poverty-eradication programs in a way that protects national economies, Ban said.

China says U.S. renewable subsidies violate trade rules

May 25, 2012. U.S. renewable-energy subsidies in five states violate free-trade rules, China’s Ministry of Commerce said. The ministry identified programs supporting renewable power, including wind and solar, in California, New Jersey, Massachusetts, Ohio and California that violate World Trade Organization policies and trade treaties. The finding comes after the U.S. Commerce Department announced tariffs as high as 250 percent on Chinese solar cells and is the latest salvo in a renewable-energy trade dispute.

Global CO2 price of $50 may avert climate catastrophe, MIT says

May 25, 2012. A global carbon price of $50 a metric ton may be enough to limit catastrophic climate change, according to the Massachusetts Institute of Technology (MIT). China, the world’s biggest emitter, is crucial to curbing emissions to limit temperature rises to 2 degrees Celsius (3.6 Fahrenheit). Emissions reductions elsewhere will be more expensive without having China’s participation in a global climate treaty, according to the research.

China to spend $27 bn on energy efficiency and renewables

May 25, 2012. China plans to spend $27 bn (£17bn) to promote energy conservation, emission reductions and renewable energy. The country's finance ministry said it wants to promote energy-saving products, solar and wind power and accelerate the development of renewable energy and hybrid cars. China is the world's biggest emitter of carbon dioxide, followed by the United States.

California expands net metering program for solar-power sales

May 25, 2012. California regulators expanded a program that forces utilities to buy solar electricity generated by homeowners and businesses. The practice, known as net metering, formerly was subject to a cap equivalent to 5 percent of utilities’ “aggregate customer peak demand,” according the California Public Utilities Commission. The ruling by the commission, reached in a 5-0 vote, changes the way the cap is calculated and as a result doubles the amount of eligible solar power, the commission said. The prior net metering cap in California would have been met after about 2.4 gigawatts of installations, and the decision raises it to about 5 gigawatts.

China projects skirt price floor, avoid carbon supply cuts

May 25, 2012. Chinese carbon-cutting projects are skirting around the nation’s unofficial floor price for carbon credits. That would indicate the country is less likely to show supply restraint, said a Stanford University researcher. Some Chinese projects get paid at a floor price of about 8 euros ($10.06) a metric ton and then send fees back to the buyer for consultancy services in a second transaction. EU factories, power stations and airlines can use the offsets to cut the cost of complying with the bloc’s greenhouse-gas laws by 48 percent.

German power set for record slide without carbon fix

May 24, 2012. The European Union’s failure to decide whether to curb supplies of emission permits is sending prices for electricity in Germany, Europe’s largest market, toward their biggest losing streak since at least 2006. Power for 2013 delivery has fallen as much as 8.8 percent to a record low. It may decline a further 7.1 percent by November. Adapto Advisors AB, a hedge-fund manager, forecasts an additional 5 percent slide. Electricity prices are tumbling as coal trades near its weakest level in 19 months and carbon permits, which fossil-fuel producers must buy to operate, stay near all-time lows. While that’s benefiting consumers such as Bayerische Motoren Werke AG and steelmaker ThyssenKrupp AG, it’s hurting utilities including EON AG and RWE AG, stoking calls for the EU to ease the surplus of permits caused by the economic slowdown.

Scottish carbon-capture drive to help unlock $299 bn of oil

May 23, 2012. Scotland is targeting a 3 billion- barrel increase in North Sea oil output by using carbon dioxide to push out hard-to-reach energy resources valued at 190 billion pounds ($299 billion). The Centre for North Sea Enhanced Oil Recovery With CO2, which opened, will help advance technologies to inject carbon emissions from power plants and industry into aging oilfields to force out crude, according to 2Co Energy Ltd., funding the venture with the Scottish government.

Germany’s new energy minister seeks input on energy overhaul

May 23, 2012. Peter Altmaier, installed as Germany’s environment minister, will pursue talks with industry executives about Germany’s plan to shift its energy mix to renewable sources such as solar and wind and away from nuclear power. Altmaier is seeking a “national energy consensus” that will balance the interests of consumers, environmental groups and the industrial producers that consume great quantities of power, he said. Germany, Europe’s biggest economy, is planning to shutter the country’s remaining nine nuclear reactors by 2022 and raise the share of renewables in its power mix to at least 35 percent, up from about 20 percent.

Goldman sets $40 bn clean energy investment plan

May 23, 2012. Goldman Sachs Group Inc plans to channel investments totalling $40 billion (25.49 billion pounds) over the next decade into renewable energy projects, an area the investment bank called one of the biggest profit opportunities since its economists got excited about emerging markets in 2001. Goldman said that demand for alternative energy sources will grow with global energy demand, and as big manufacturing countries, including China and Brazil, set more aggressive targets for reducing emissions. The bank plans to finance deals with clients' money and, to a lesser extent, its own funds. Goldman, which plans to announce the new target at its annual meeting, already invests in clean technology. In 2011, it helped finance $4.8 billion in clean technology companies globally, and co-invested more than $500 million in that area. The new target would average out to $4 billion a year, leading some analysts to minimize the target as more of a "charm offensive" than a new initiative. In 2005, Goldman pledged to invest and finance $1 billion of environmentally friendly projects. By the end of 2011, the company had exceeded its goal, arranging $24 billion worth of financing and investing $4 billion into such projects.

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