MonitorsPublished on Jun 26, 2013
Energy News Monitor I Volume X, Issue 3
Gas Prices in India: Finding the Magic Number

Lydia Powell, Observer Research Foundation

‘Energy economists want to get prices right; politicians want prices that are not obscene - they don’t how to find it but they know it is when they see it; energy traders want any price and they think that they know how to get it; outlaws want prices only when price is outlawed...’

This anonymous quote from a book on energy trade sums up the debate on natural gas pricing in India in the recent past. In the Indian context, it is the politicians who decide the price and as captured in the quote, they were looking for was a magic-number that is not ‘obscene’.  Loosely translated, this means that the price should find common minimum acceptance.  As they did not know how to arrive at this magic number, they appealed to an expert committee which offered a supposedly neutral scientific ‘formula’ to find the number. The formula was applied and the magic number was found to be $8.4/mmbtu.

The magic number seems to have failed the ‘obscenity’ test as many of the stakeholders think that it is in fact ‘obscene’. Consequently, there is much debate on whose interests the magic number $8.4/mmbtu is designed to serve. This debate is unlikely to lead to anything constructive. Even if the magic number was found to be $2.3/mmbtu or $13.8/mmbtu, the debate on whose interests are being served would have been initiated. Political decisions on complex problems will prefer certain interests over others and in the process create winners and losers. The question that we need to ask instead is what value we are trying to create and more importantly what vision do we have in mind for the evolving gas sector.  To answer these questions, the recent decision on natural gas prices needs to be put in perspective.

Let us begin with the facts. The Indian Government decided to double the price of natural gas to $8.4/mmbtu from April next year. The new price is to be applied uniformly to all producers (private and public sector) and be changed every quarter for the next five years. The price will link domestic prices to international prices as the formula on which it is based is designed to capture global and domestic gas market developments.

Now let us look at the context. In the past few years natural gas production in the country has not met expectations and government policy on pricing natural gas has been identified as the primary culprit.  This may or may not be accurate as the earlier decision on prices did not originate from within the Government. The narrative is that an increase in price will incentivise domestic production of natural gas and consequently increase energy security for the nation along with an increase in royalty and profit revenue for the Government.  As of now, this is merely a speculative view and we need to wait to see what actually materialises. Helpful suggestions from private consultancies that 150-250 million cubic meters per day of additional supply will materialise if price is further increased to $10-12/mmbtu does not help. We have heard such projections before! The statement of the Minister that 84 bcm of gas will be monetised may be correct but politically unwarranted.  People are not concerned about monetising natural resources. They are concerned about power supply in their homes and the size of their electricity bill. The honourable Minister would have been better off telling the people that they can look forward to uninterrupted power supply at affordable prices.

We must now look at the broader context. Basic economics tells us that higher prices may lead to increase in supply only if there is proportional increase in demand. Proportional demand for gas may or may not materialise.  Even if it does, it may not be as large as it is expected to be. For the fertiliser segment which is one of the anchor customers for natural gas, options are limited as petroleum based substitutes are more expensive than natural gas. On the other hand, competitive fuel substitutes are available for the power sector. Even imported coal is likely to be a cheaper substitute.  The reduction of coal use in North America has created a glut in the global market and coal is trading at one of its lowest prices. This scenario is likely to continue given the availability of surplus gas. Obama’s assault on coal based power designed to shore up his climate credentials is also likely to displace coal in North American markets.  In this light the argument offered to justify higher prices that the choice for consumers is between expensive LNG and cheaper domestic gas appears weak. There may be cheaper alternatives such as coal. Recent policy to allow price pass through for imported coal has cleared one of the key hurdles for the use of imported coal. Under the principle of merit order despatch, gas based power may be at a significant disadvantage compared to coal or hydro-power. There are other gas consuming sectors which are less ‘price sensitive’ but they are small. As Karl Polanyi noted, freedom from regulation in the sphere of production is all that industries want. Market linked prices gives them this freedom. Polanyi also pointed out that even the most ‘liberal’ of industries would consider freedom in the sphere of exchange a danger. When substitutes are available as they are in the power sector, freedom of exchange may actually not serve the interests of the gas industry as consumers are free to choose alternatives to gas. The point here is that it may be too early for the industry to start counting the chickens and for industry bashers to assume that chickens have been given away to the industry.

Now let us return to the question posed earlier: What is the broader value do we want to derive from an increase in the price of gas? More importantly what vision do we have for the evolving gas industry? Do we want to increase domestic production of gas? If so why? If the answer is that we want to increase the share of a cleaner fuel in our energy basket, we need to have much broader policy that encompasses the consumer end to achieve the goal. This approach would have avoided the current debate on whose interests are being served. Increasing the share of gas in India’s energy basket could have been portrayed as serving the broader interest of saving the world from climate change. This would have also taken care of the ‘danger’ in opening up freedom of exchange. But all this would have been possible only if India had clearly articulated priorities in its approach to energy strategy. As of now India’s energy policy goal is merely to do everything possible to secure energy. There is no clearly articulated link between cause and effect. Under this ambiguous approach almost anything can be passed off as a means to energy security. This is neither good for the gas industry nor for the consumer.

Views are those of the author                    

Author can be contacted at [email protected]



The Coal Ministry’s firm stand on MDO – Hopefully a slap on private lobbyists!

Ashish Gupta, Observer Research Foundation

India is indeed struggling with coal shortages but the irony is that after dedicating so many years on coal production policy, the country is still not able to find a feasible solution for the important industry. Year by year, the problems of the power sector are increasing; coal production targets are set for the coal giants which they promptly fail to achieve for one or the other reason.  This leads the situation of many power plants running on critical stocks. It is true that there is coal shortage but the time has come for change in the narrative.  Instead of repeatedly stressing coal shortages we must articulate what should be done to increase the coal production. When it comes to the pricing issue, the subject becomes a central issue but when it comes to resolving the obstacles it becomes the state subject. The need of the hour is that State governments’ role must be streamlined to facilitate land acquisition and Rehabilitation & Resettlement issues so that coal projects come online in a timely manner.

In all the presentations at conferences, the major emphasis is on showing coal shortages and criticizing Coal India Ltd (CIL). The fact of the matter is that all these presentations are baseless as they are made without taking into account the amount of coal lying idle at the pithead (eg. Talechar, Ib Valley, North Karanpura and Mand Raigarh etc). But who cares about ground realities? Stakeholders are more interested in highlighting shortages rather than understanding the structural impediments plaguing coal production. Is it not true that we are not structurally short in production but it is the evacuation infrastructure which is troubling us the most? When will the infrastructure be put in place so that our coal imports can be reduced considerably?  This idea is gaining momentum and even the coal ministry is shifting its focus on infrastructure development. Needless to say this shift is not digestible to pro-privatization lobby. They talk about the lack of infrastructure but only in such a way that would highlight the incapability of CIL in meeting the demands of the consuming industry. Though the private sector lobby is taking all possible measures to enter coal mining, their efforts are not producing desired results!

Having said that, it must be stated that the Ministry of Coal (MoC) has realized the criticality of the issues and is taking firm stand against the critics irrespective of opposition from the Planning Commission. The MoC is in no mood to provide a free hand to the private players in the near future and its move is very balanced; they seem to have learnt from their past mistakes. That is why the coal mines nationalization amendment bill has not seen the light of the day in the Parliament. And the good news is that there is no political consensus on denationalization of the coal sector. The ministry is looking more transparent in its approach and is open to any suggestions for increasing the coal production. The approach is in the interest of the country as all options aree kept open and evaluated giving due consideration to the legal structure of the coal sector. They are in no way opposing the role of private participation but they will be limited their role to captive mining. Though the private sector is welcome to join hands with CIL as mining specialist, they will be working in a subordinate role to CIL with no right to sell coal.

The concept of Mine Developer cum Operator (MDO) is a far better approach than completely privatizing the coal sector. The MDO concept not only reduces the chances of scams in the future but also brings in more efficiency. The MDO approach is well known and popular in many mineral rich countries and even established companies participate under this mechanism. These contract mining companies are specialised in mining operations.  They provide ample scope for maintaining heavy and expensive machineries and provide time for training the staff as the coal sector is cyclical and vulnerable to changes in demands. Apart from CIL carrying out its own operations it will in addition hire MDOs in parallel.  This will surely boost coal production. Currently seven coal blocks with 25 million ton capacity has been offered to MDOs and in the future the Ministry is looking to offer more coal blocks with large reserves to MDOs.  This is the right step towards production enhancement. Most importantly their presence will not hinder the growth of the private sector as they can continue with captive mining. The hiring of MDOs along with speedy development of the coal evacuation infrastructure is the way forward for the coal industry. Once the MDO track record is proven and the Ministry gains experience from the MDO operations and captive operators, we can identify specialized mining companies from national and international mining giants and gradually open the coal sector. But till that time private sector lobbyists must be shown the door!

Views are those of the author                    

Author can be contacted at [email protected]


Crude Oil Prices versus LNG or Natural Gas Prices - in energy equivalent terms

Akhilesh Sati, Observer Research Foundation


US$ per Barrels of Oil Equivalent

US$ per Barrels

US- Natural Gas

Japan- LNG

Indian Crude Basket


























































































Source: Petroleum Planning and Analysis Cell

RBI Handbook on Economy

BP Statistical Review, 2013






Oil India loses ` 2 bn due to hostile work environment in Assam

July 2, 2013. Oil India Limited (OIL) faced 290 days of bandhs and blockades which resulted in production losses. OIL incurred ` 200 crore loss in its major operational area of Upper Assam due to local disturbances. OIL said that crude oil production was 3.70 million metric tonnes (MMT) in 2012-13 as compared 3.884 MMT in 2011-12. In the same period gas production was 2693 million metric standard cubic metre (MMSCM) as compared to 2633 MMSCM of 2011-12. Shortfall in the crude oil production was due to environmental problems beyond the control of the company. In 12th five year plan the capital expenditure of the company is pegged at ` 19,000 crore out of which ` 12000 crore will be spend on Northeast India. (

India loses $5 bn bid for Kashagan oil field to China

July 2, 2013. India's ONGC has lost the giant Kashagan oilfield to the Chinese after Kazakhstan blocked its $5 billion deal to buy US energy major ConocoPhillips' stake in the Caspian Sea oilfield. ONGC Videsh, the overseas investment arm of Oil and Natural Gas Corp (ONGC), had struck a deal to buy ConocoPhillips' 8.4 per cent stake in Kazakhstan's biggest oilfield, Kashagan for $5 billion. As per Kazakh law, the Central Asian nation had the right of first refusal or pre-emption rights that allowed it an option to step in and buy the stake at the price agreed between the Indian firm and ConocoPhillips. India has lost at least $12.5 billion of deals to China in past years. China National Petroleum Corp (CNPC) beat India by agreeing to pay $4.18 billion in August 2005 for PetroKazakhstan, then China's biggest overseas oil deal. The Chinese firm had trailed ONGC and its partner Lakhsmi N Mittal's $4 billion bid at the close of bidding on August 15, 2005. But post-close of bidding, it was allowed to raise the offer price to $4.18 billion, which saw PetroKazakhstan, a Canadian oil firm operating in Central Asia, go to CNPC. A month later, CNPC again outbid ONGC in buying assets of Encana Corp in Ecuador for $1.42 billion. In March 2010, ONGC lost out on acquisition of oil Block 1 and 3A in Uganda oilfields to China's Cnooc who offered as much as $2.5 billion for the 50 per cent stake. In May 2011, ONGC lost a bid to buy Exxon Mobil Corp's 25 per cent stake in an Angolan oil field. ONGC had offered about $2 billion for the stake in Block 31 off Angola's coast. (

Oil India to tap overseas markets to fund Mozambique block acquisition

July 1, 2013. Oil India expects to raise 80-90 percent of the $1 billion it has agreed to pay for a stake in a Mozambique offshore gas block through overseas debt. The company has not yet decided the instruments it will tap to raise the debt. ONGC and Oil India agreed to buy a 10 percent stake in Rovuma Area 1 block off Mozambique's coast from India's Videocon Group for $2.48 billion.

Oil India will pay $1 billion for a 4 percent stake, while ONGC Videsh will hold the balance. Anadarko Petroleum Corp, the operator of Rovuma's Area 1 block, in which it holds a 36.5 percent stake, and Videocon had each launched an auction of a 10 percent stake in the block. ONGC's overseas business unit was in talks to buy Anadarko's 10 percent stake, and Oil India was not in the fray for the same. (


IOC Paradip refinery to be commissioned in Sep-Oct

June 27, 2013. Indian Oil Corporation (IOC)'s refinery at Paradip is all set to be commissioned by October this year. The refinery would be the most modern export-orientated processing unit and IOC's largest investment in a single project. IOC is committed to provide employment to displaced families on merit. Out of 143 displaced families, 95 families have been given money in lieu of jobs and at least one member each from the rest families would be given employment. The displaced persons, who are already engaged on contractual basis, will get regular service when the refinery is commissioned. The public sector had allocated ` 174.5 lakh under corporate social responsibility during 2012-13. (

Transportation / Trade

MRPL aims to resume Iran oil imports

July 1, 2013. Mangalore Refinery and Petrochemicals Ltd (MRPL) is preparing to resume oil imports from Iran, after stopping in April, having secured local reinsurance for claims of up to ` 5 billion ($84.14 million). MRPL, which was Iran's top Indian client, halted imports because local insurers said they could no longer cover plants that process Iranian crude. U.S. lawmakers are embarking this summer on a campaign to deal a deeper blow to Iran's diminishing oil exports, and analysts say the ultimate goal could be a near total cut-off. But India won a 180-day waiver from U.S. sanctions after New Delhi significantly reduced purchases of oil from Iran. In the last fiscal year to March 2013 it imported 26.5 percent less oil from Iran. The sanctions from Washington and from the European Union aim to block Tehran's oil revenue over its disputed nuclear programme, which they suspect is aimed at building weapons. Iran denies this claim. (

HC stays removal of GAIL's pipeline in Tamil Nadu

June 26, 2013. The Madras High Court (HC) has stayed a Tamil Nadu Government order directing removal of pipelines laid by Gas Authority of India Limited (GAIL) in farm lands in the state for the Kochi-Bangalore pipeline project. Passing interim orders on a petition filed by the GAIL, Justice K K Sasidharan ordered that pipelines already laid should not be removed and posted the matter to July 9. The state government had recently directed officials to remove the pipelines already laid in farm lands in Coimbatore, Tirupur, Erode, Namakkal, Salem, Dharmapuri and Krishnagiri districts. The state government has declared that GAIL needed to stop laying of pipelines through farmers' lands following opposition by farmers. (

Policy / Performance

Announcement on NELP, shale gas policy soon

July 2, 2013. The government plans to quickly roll out the shale gas policy and the long-delayed next bidding round for blocks offered under the New Exploration Licensing Policy (NELP), as it is confident of attracting investment after market friendly changes in the gas pricing regime. The government accepted the pricing formula proposed by the Rangarajan Committee, which will double gas prices from the next fiscal year to about $8.4 per unit. The revised price regime has already revealed the price for shale gas since the new regime applies to entire basket of domestic natural gas production irrespective of the source. The policy will be formally announced within 3-4 weeks. Also, the government will launch tenth bidding round for oil and gas blocks under new policy. The ministry of petroleum and natural gas was expected to place draft shale gas policy before the cabinet in March. However, it was delayed as the government decided to go ahead with uniform gas pricing policy, which was announced. (

Oil Minister asks oil firms to float tenders for ethanol

July 1, 2013. Oil Minister M Veerappa Moily asked oil firms to float tenders for remaining quantities this month and tie-up supplies at the earliest. Oil firms need 100 crore litre of ethanol to implement the 5 per cent mandatory doping in petrol but so far only 40 crore litres has been procured in tenders floated previously. Moily directed fuel retailers to expedite delivery of already procured ethanol and buy additional quantity through fresh tenders to meet 5 per cent mandatory requirement under Ethanol-Blended Programme (EBP). At a meeting of chairmen and directors in-charge of marketing at the three fuel retailers and Indian Sugar Manufacturers Association (ISMA), Moily directed the firms "to make all efforts for expediting delivery of already procured quantity of ethanol". He also asked them to expeditiously procure additional quantity of ethanol through fresh tenders to meet the EBP requirement. The Minister had called the meeting to expedite procurement the delivery of ethanol for the EBP programme as per CCEA decision taken in a meeting held on November 22, 2012. During the meeting, ISMA suggested that oil firms could procure the finalised quantity of 40 crore litres entirely in the next 3-4 months and fresh tender may be floated for the requirement of ethanol coinciding with next sugar season which starts from October 2013. The supply form for new tender could be from November. (

ATF price hiked by steep 5.8 pc

June 30, 2013. Jet fuel (ATF) prices were hiked by a steep 5.8 per cent, the second consecutive increase since June, as rupee depreciation made imports costlier. Aviation Turbine Fuel, or ATF, price at Delhi was hiked by ` 3,617.84 per kilolitre (kl), or 5.8 per cent, to ` 66,034 per kl, according to IOC. The increase comes on back of a marginal hike in rates on June 1 when prices climbed to ` 62,416.16 per kl from ` 62,649.95 previously. The two hikes follow similar number of steep reduction in rates - by 5.5 per cent (` 3884.98 per kl) on April 1 and 5.3 per cent or ` 3,545.94 per kl from May 1. ATF price in March had touched ` 70,080.87 per kl in Delhi. The current increase follows rupee depreciating to record lows of 60.70 to a US dollar, which made import of raw material (crude oil) costlier. In Mumbai, jet fuel will cost ` 68,148 per kl as against ` 64,381.15 per kl currently. Rates at different airports vary because of differential in local sales tax or VAT. Kolkata would see price hike of ` 3,737 to ` 75,994 per kl, while it will cost ` 71,851 in Chennai as against ` 67,926.43 per kl previously. (

MGL increases CNG & PNG prices on rupee depreciation

Jun 30, 2013. City gas distributor Mahanagar Gas Ltd (MGL) increased the price of compressed natural gas (CNG) -- used as fuel by almost all the taxis and autos in the metropolis -- by ` 2 per kg due to rupee depreciation. The price of domestic piped natural gas (PNG) has been increased by ` 2.19 per Standard Cubic Meter (SCM). The announcement comes within a day of oil retailers announcing increase of ` 1.82 per litre of petrol due to the slide in rupee, which has depreciated by 12 per cent since May and breached the ` 60 against the dollar mark. Accordingly, the revised price of CNG will go up to ` 35.95 per kg in Mumbai and ` 36.47 in the neighbouring suburb of Thane. Price of PNG will go up to ` 24.09 per SCM in Mumbai and ` 24.17 in Thane. (

Oil Minister says price hike to help monetise 3 Tcf of gas finds

June 30, 2013. Oil Minister M Veerappa Moily has said the move will help bring to production over 3 Trillion cubic feet (Tcf) of gas reserves that had been declared economically unviable at current rates of $4.2. Several gas discoveries of firms like ONGC and Reliance Industries have been declared unviable by the Directorate General of Hydrocarbons (DGH) as current gas price of $4.2 per million British thermal unit was inadequate to cover the cost. The reserves in these discoveries equals the remaining resource base in the currently producing Dhirubhai-1 and 3 (D1&D3) gas fields in RIL's eastern offshore KG-D6 block. The Cabinet Committee on Economic Affairs approved pricing of domestically produced gas at an average of imported LNG and international benchmarks from April 1 next year. Accordingly, the price in April would be about $8. The Minister said the option before the country was to either keep the finds in the ground and continue importing gas at $12-13 or pay much lesser price to domestic producers to bring the discoveries to production and cut foreign exchange outgo on imports. The finds whose commerciality has not approved by DGH are spread over RIL's KG basin KG-D6 block and Cauvery basin block CY-DWN-2001/2 off the Tamil Nadu coast. (

Power, CNG to get costlier as 100 pc hike in gas price cleared

June 28, 2013. The Union Cabinet decided to double the price of domestic gas to $8.4 a unit after a contentious meeting in which at least four ministers opposed the move, questioning the rationale for a hike in rates. Power, CNG and urea would become costlier from April 1, 2014 in keeping with a complex formula that will increase the price of gas from all domestic fields operated by government and private oil firms. At present, gas from ONGC and OIL's old fields as well as Reliance Industries Ltd's KG-D 6 block is priced at $4.2 per unit. If the Rangarajan panel's formula is to be applied now, gas would cost $6.7 per unit. At this price, power tariff from gas fired plants aggregating 28,000 MW could jump by ` 1.50 per unit and the government's annual fertilizer subsidy would rise by over ` 4,000 crore. The price of CNG and piped kitchen gas too would rise. (

Moody’s expects ONGC revenues to rise by $1.5-2 bn by March 2015

June 28, 2013. The Cabinet Committee on Economic Affairs' (CCEA) decision to double the natural gas price by April 2014 is credit positive for the oil and gas companies that produce and sell gas domestically under production sharing contracts with the Government of India, Moody's Investors Service said. Higher gas prices will result in higher revenues for ONGC and RIL. The higher prices should also encourage them to increase exploration and production activities in India. ONGC and RIL reported revenues of $29 billion and $73 billion respectively in FYE3/2013 and in the next few years revenues are likely to increase, as production of domestic gas increases from new discoveries. According to Moody's, every billion cubic meter of gas produced will result in incremental revenue of $150 million. The demand for natural gas in India is highly price sensitive, as key consuming sectors like power and fertilizer are only able to sell their products at government-controlled prices, limiting their ability to pass through increases in gas prices to their customers. The government estimates the total demand for natural gas in India at about 100 million tonnes in FYE 13/2014 whereas the domestic production and import of liquefied natural gas are expected to be around 25-30 million tonnes and 10-15 million tonnes. Moody's expects the gap will continue to widen as the government expects demand to increase at a compounded annual growth rate of 8 per cent over the next 10 years, whereas the domestic production has been declining. Doubling of natural gas prices from the present $4.2 mbtu to $8.4 mbtu from April 1, 2014 was slightly more than what most of the state-owned companies were expecting. (

GAIL expects $218 mn hit on profit on gas price increase

June 28, 2013. GAIL India Ltd expects a hit of 13 billion rupees ($218 million) annually on pre-tax profits on account of higher costs in its liquefied petroleum gas (LPG) and petrochemicals businesses, its finance head said. The government approved a gas price hike for the first time in three years. Indicative pricing suggests domestic gas could rise to around $8.4 per mmBtu from April 1, 2014, compared $4.2 per mmBtu currently. GAIL bore subsidy costs of about ` 27 billion in 2012/13 as part of the government's scheme to compensate state oil retailers for selling petroleum products below costs. (

Oil India expects $167 mn annual profit rise after gas price hike

June 28, 2013. Oil India expects to increase profit by ` 10 billion ($167 million) annually on account of the increase in gas prices. The government approved a gas price hike for the first time in three years. Indicative pricing suggests domestic gas could rise to around $8.4 per mmBtu from April 1, 2014, compared with $4.2 per mmBtu currently. Natural gas segment contributes about 10-12 percent of Oil India's revenues. (

Gas pricing debate to continue

June 27, 2013. Government's proposal to increase domestic gas prices to $6.77 per unit will result in 56 per cent rise in fuel cost to ` 3.41 per unit for natural gas-based power generation, leading to an additional burden on consumers and utilities, India Ratings said. The rise would translate into an increase of 9 paise per unit on the total power generation of 912 billion units, leading to an additional burden of ` 7,800 crore towards gas cost on the gas-based power generation of 65 billion units. If gas prices were to increase from the current levels, gas-based power plants would further decline in the merit order dispatch schedule, thus raising off-take risks, it said. The note for the Cabinet Committee on Economic Affairs (CCEA) has proposed new gas price between $ 6.77 and 10.84 per unit as calculated by different government departments after tweaking the Rangarajan formula. The Rangarajan panel has suggested a simple average of producers' net back price for Indian imports and world average producers' net back price, thus arriving at a price of $ 8.8 per unit. The Planning Commission, on the other hand, has suggested a price of $ 10.8 per unit. The government has also appointed a committee headed by Vijay Kelkar to work out a road map for switchover to market determined gas pricing at the end of 12th Plan. The Kelkar committee is expected to submit its report to by September. (

DBT for cooking gas touches 1 mn mark

June 26, 2013. Within weeks of its launch, the ambitious direct benefit transfer programme for cooking gas (LPG) crossed a million transactions mark with ` 41 crore of subsidy given to consumers directly. The Direct Benefit Transfer for LPG (DBTL) scheme, launched in 18 districts on June 1, has thus far been a great success with more than 1 million (10 lakh) direct cash transfers to consumers' bank accounts. A sum of ` 41 crore has been transferred in the hands of LPG Consumers in these districts. Government launched DBTL scheme in 18 high Aadhaar coverage districts benefitting 67 lakh consumers. Under the scheme launched, LPG consumers get ` 435 in their bank accounts when they book an LPG cylinder. They are then expected to use this cash subsidy to buy a LPG refill at market price which is roughly the double of ` 410 per 14.2-kg subsidised rate in Delhi. (

Oil ministry seeks settlement of PMT royalty issue in India

June 26, 2013. The Oil ministry is resisting arbitration proceedings by oil major BG and Reliance Industries over reimbursement of royalties, and taxes in the Panna, Mukta and Tapti (PMT) fields, and has argued that the matter should be settled in an Indian court. The oil ministry is locked in several disputes with private companies. It has lost some recent arbitration awards to private firms, and is also involved in another bitter dispute with Reliance Industries over reimbursement of expenditure on developing the D6 fields in the KG Basin. In the current case, the government of India has approached the Delhi High Court to challenge the claims of BG Group and Reliance for reimbursement of royalties and various taxes in the PMT fields. (



NMDC selects IL&FS Energy as JV partner for power foray

June 30, 2013. State-owned iron ore miner NMDC has decided to rope in IL&FS Energy Development Company as joint venture partner for setting up a 500 MW thermal power plant in Uttar Pradesh with an estimated investment of ` 2,000 crore. NMDC invited expressions of interest from interested parties to be part of the power project, which would mark its foray into the power sector. Three companies, including IL&FS Energy and Jindal Power, had evinced interest to be a JV partner of NMDC for the power plant. (

GMR Group in race for Malta power plant

June 30, 2013. Infrastructure major GMR Group is among 11 bidders initially shortlisted for building a 200 MW gas-fired power plant in Malta in the African continent. GMR will have to compete with other bidders such as oil major Royal Dutch Shell, Italian utility Edison and China's state-owned CPECC, who qualified in the first round. (

KCCI for transferring back three NHPC-owned power projects

June 27, 2013. The Kashmir Chamber of Commerce and Industry (KCCI) asked Prime Minister Manmohan Singh to transfer back three key power projects to Jammu and Kashmir in order to ensure economic development. The KCCI delegation, which met the Prime Minister, requested for transferring back the NHPC-controlled power houses -- Salal, Dulhasti and Uri -- to the state immediately for sustained economic development of the state. (

Transmission / Distribution / Trade

No new agreements for coal supply to power plants for 2 yrs

July 2, 2013. The government may stop accepting fresh applications from power plants seeking coal supply for the next two years in view of acute coal shortage. An inter-ministerial group that reviews coal supply to the power sector has made the recommendations to the coal minister Sriprakash Jaiswal. The group called - standing linkage committee for granting long-term linkages to power sector - last met on May 31, 2013. As on December 31, 2012, a total 1614 applications of power, sponge iron and cement plants seeking about 3,200 million tonnes per annum coal supply were pending with the ministry though coal available from Coal India Ltd (CIL) is limited. The government has already asked CIL to ensure coal supply to plants commissioned between 2009 and 2015. (

India to eclipse China as world’s coal power, buoying BHP

June 28, 2013. India is burning coal in power plants at the fastest pace in 31 years. At the same time, domestic supplies of natural gas that are the main alternative are falling at the quickest rate in Asia. Both trends run counter to those in most major economies and give India clout over global coal prices. India’s growing appetite for imported coal should benefit suppliers in the $69 billion global coal trade such as BHP Billiton Ltd. and Indonesia’s PT Adaro Energy. India is set to eclipse China as the top importer of power station coal by 2014, as China burned the fuel in 2012 at the slowest pace since 2008, and U.S. demand fell for a second year, according to Energy Aspects Ltd. As Asia’s second-biggest energy consumer, with an economy expanding 5 percent last year, India used 10.2 percent more coal from a year earlier. That was the sharpest rise since 1981 and reversed three years of slower gains. Other large economies are increasingly using more cleaner-burning natural gas to produce electricity and reduce carbon emissions. While China remains the biggest coal user, growth in use of the fuel is slowing as the government tackles pollution that’s choking Beijing and other cities. China will have a coal-production capacity of 4.3 billion metric tons by the end of this year, compared with estimated consumption of 4.1 billion tons. The nation bought 142 million tons of thermal coal from overseas in 2012, 39 percent higher than a year earlier. India imported 20 percent of its coal requirements in the year ended March 31. Imports may rise to more than 23 percent of supply by 2017. Adani Enterprises Ltd and the Tata Group were among buyers of 15.6 million metric tons of the fuel in April. The purchases drove up imports by 51 percent from a year earlier owing to lower prices ahead of summer when demand for electricity increases. (

Kalpataru Power bags ` 11.3 bn orders

June 27, 2013. Kalpataru Power Transmission Ltd (KPTL) said it has secured new orders worth over ` 1,130 crore in international and domestic markets. The global EPC (engineering, procurement and construction) player in power and infrastructure contracting sector, has bagged two projects worth ` 500 crore in Zambia, for supply and erection of 330 KV transmission line of 446 km, the company said. The company has also bagged a contract from Power Grid worth approximately ` 330 crore for supply and erection of 765 KV D/C transmission line of 140 km. The contract bagged by KPTL includes supply and erection of 400 KV Satpura - Ashta DCDS transmission line of around 240 kms, as a part of the company's 100 per cent special purpose vehicle to construct transmission line for Madhya Pradesh Transmission in Jabalpur, Madhya Pradesh, worth ` 300 crore. (

Haryana discoms supply all-time high power

June 27, 2013. Haryana power distribution companies has supplied all-time high power of 1,651 lakh units in the state. Haryana Discoms supplied 1,651 lakh units of electricity in the state which is all-time high. It was 312 lakh units more than the electricity supplied on the corresponding day last year. With demand for power increasing in view of paddy transplantation, the transmission and distribution system took highest 7767 MW load. (

CG bag contracts worth ` 2.3 bn from Power Grid

June 26, 2013. Avantha Group firm Crompton Greaves (CG) said it has bagged orders worth over ` 231 crore from Power Grid Corporation of India. The three contracts, together valued at ` 231.7 crore, is for supplying equipment to state-run Power Grid's for its Thiruvelum, Kurnool, Raipur and Wardha sub-stations. The company, part of Avantha Group, would supply seven 500 MVA single phase 765 kV auto transformers and 38 numbers of 80 MVAR and 110 MVAR single phase 765 kV reactors. (

Policy / Performance

Govt puts 23 mega power projects on fast track

July 2, 2013. The government has put 23 big-ticket power projects, which were stalled for want of fuel supply linkages and environmental clearances on fast track. These projects are estimated to generate 23,000 MW of power capacity across the country. Over 1600 km of power transmission lines in central India have also been taken up on a priority basis as part of the first set of private projects being pushed through by a special cell in the cabinet secretariat, which was set up recently by Prime Minister Manmohan Singh to expedite large investment projects and improve withering investor sentiment. (

India seeks investments from US in power sector

July 2, 2013. Inviting US investments into the power sector, India has said both countries can work towards developing hydro and thermal power stations with the possibility of technology transfer. Power Minister Jyotiraditya Scindia, who is on a visit to the country seeking investments in the power sector, said "US has expertise in large hydro projects and this is where India can benefit from it a great deal". He said there could also be cooperation on thermal projects. In the last fiscal alone, India added 20 GW of capacity, he said adding on the transmission side, the Southern Grid will be interconnected by the end of Jan 2014. He said for the first time India made the annual credit rating mandatory for all the discoms to ensure their financial viability and transparency vis-a-vis the state lending agencies and the commercial banks, he said. On financial restructuring for loss making discoms, the government has announced a scheme, wherein 50 per cent of the short term outstanding liabilities will be put on to the books of the distribution companies and the state governments. The balance 50 per cent will be rescheduled with clear caveats and provisos of areas where these discoms need to perform in terms of reduction of Aggregate Technical and Commercial (ATMC) losses and filing for tariff revision on an annual basis. (

Power tariffs rising faster than inflation: APTEL

June 29, 2013. Coal production needs to be stepped up to check the rise in power tariffs, which are 'rising faster than inflation', technical member, Appellate Tribunal for Electricity (APTEL), Rakesh Nath said. Attributing the rise in power tariffs to sharp rise in fuel prices, he said there is a need to increase coal production to check rising power tariffs. Damodar Valley Corporation chairman R N Sen also said the situation of the power sector was very grave due to coal quantity and quality related issues and the power market is very dull. He said unless coal prices ease, it would be difficult to reverse the situation. The government could also offer coal blocks to the public sector to bring down the cost, Sen said. (

Coal sector to get regulator for prescribing principles of price determination

June 28, 2013. The government has approved the setting up of a regulator for the coal sector that will prescribe principles for price determination of the fuel while pricing rights remain with state-owned monopoly Coal India. The Cabinet Committee on Economic Affairs (CCEA) gave a go-ahead to the creation of a coal regulatory authority that will specify the principle and methodology for determination of price of raw and washed coal. The regulator would determine the price of raw and washed coal and will be empowered to grant or cancel mining licences. The coal ministry said the dilution in powers of coal regulator was made after many ministries opposed surrendering control over pricing of the fuel and granting mining authorisations to the independent watchdog. The coal regulator will have a chairperson and four members representing coal, legal, technical, finance and consumer affairs ministries. The regulatory will also specify procedure for sampling and washing of coal. Appointment of chairman and other members of the regulator would be done by a selection committee headed by cabinet secretary. The authority will also adjudicate between disputing parties. It is also proposed that a member of the regulatory will be added with Appellate Tribunal for Electricity that will entertain appeals against the decisions of the authority. The Comptroller and Auditor General (CAG) will audit the accounts of the authority. (

240 MW power project between NEEPCO & Meghalaya govt

June 28, 2013. The Meghalaya government said it would set up a 240 MW power project in collaboration with the North Eastern Electric Power Corporation Ltd (NEEPCO) along the inter-state border with Assam. The project is expected to come up along the Assam-Meghalaya border in Karbi Anglong district. The project would benefit the power-starved state as it would get a major share from the joint venture project. The state electricity Regulatory Commission has approved the purchase of 2222 million units of power for the year 2013-14 both from state-owned Meghalaya Power Generation Corporation Ltd and from outside sources. (

Power advisory panel deliberates amendments to Electricity Act

June 26, 2013. The high-level advisory panel on power sector discussed possible amendments to the Electricity Act and made various suggestions, including mechanism to pass through higher fuel costs to consumers. The government-appointed committee, chaired by Power Minister Jyotiraditya Scindia, during its meeting deliberated on amendments to the Electricity Act 2003. According to them, a sub-group of the panel presented a detailed report on amendments to the Electricity Act. One of the suggestions made by the committee is to have a formula which would ensure that variation in fuel and power purchase cost is recovered by the generators. A change in the Act in this regard would help in clarifying the need for surcharge formula which at minimum covers various costs, including mix variance that are to be passed through to consumers in a reasonable time-frame. (




Fracking London stockbroker-belt looms as UK hunts oil

July 1, 2013. The rolling country south of London is called the stockbroker belt for the residents who pay 50 percent above the U.K. average to live in pristine villages. The advent of shale oil under their lawns may shatter the idyll. Two areas of Surrey and Sussex hold 700 million barrels of recoverable shale oil, or more than a year’s supply for Britain. The advent of drilling near mansions in the Wessex and Weald basins may widen the nation’s shale-energy debate, which has focused on gas in northwest England, hundreds of miles from London. (

Woodside to acquire oil, gas blocks offshore Ireland

June 28, 2013. Woodside Petroleum Ltd. said it has agreed to buy controlling stakes in about a dozen deepwater oil and gas exploration blocks off the coast of Ireland, as the Australian company expands offshore to offset slow progress on planned developments at home. Woodside, Australia's biggest oil company by output after BHP Billiton Ltd., said it has agreed to buy an 85 percent interest in seven blocks in the Porcupine Basin off Ireland's southwest coast from Petrel Resources PLC. In a separate deal, it has also agreed to buy a 90 percent interest in another six blocks in the same basin from closely-held Irish company Bluestack Energy Ltd. (

Statoil makes non-commercial gas find in Barents Sea

June 28, 2013. Norwegian oil and gas major Statoil ASA said that together with partners Eni Norge AS and Petoro AS, they have made a small gas discovery in the Nunatak prospect in the Barents Sea. Well 7220/5-2, drilled by the rig West Hercules, encountered gas but based on the present evaluation the discovery is considered non-commercial. (

US House backs bill to expand coastal oil, gas drilling

June 28, 2013. Oil and gas exploration off U.S. coasts would be expanded under legislation the U.S. House of Representatives passed over the threat of a presidential veto. The vote on the bill, H.R. 2231, was 235-186. The measure would require the Obama administration to conduct additional sales of oil and gas leases off the coasts of Virginia, South Carolina, southern California and Alaska over the next five years. It would order the administration to create a plan that would open up almost all of the nation’s coastline for exploration; a draft would be due July 15, 2014, and a final plan approved by July 15, 2015. (

Gulf Keystone to produce 40k bopd from Iraq's Shaikan Field

June 26, 2013. Gulf Keystone Petroleum Ltd. expects to start production from the Shaikan oil field in the semiautonomous region of Kurdistan in northern Iraq at 40,000 barrels a day after the completion of a production facility in the field, the Kurdistan Regional Government, or KRG, said. The KRG's ministry of natural resources has approved the field development plan for Shaikan, operated by Gulf Keystone, the ministry said. According to the plan, production from Shaikan is expected to increase gradually to reach 150,000 barrels a day within three years and to 250,000 barrels a day by 2018. Having discovered several billion barrels of oil in the Shaikan field, the company has now completed work on its first production facility and work is progressing on its second facility which is scheduled to be ready by the end of 2013. Each facility will have an initial capacity to produce 20,000 barrels a day. The 40,000 barrels a day would be reached on the completion of the second facility, Gulf Keystone said. Since 2011, a total of 1.14 million barrels have been produced from Shaikan through extended well tests. (


Shell shuts Sarnia, Ontario, refinery unit in unspecified repair

June 30, 2013. Royal Dutch Shell Plc said it is shutting a unit at its refinery near Sarnia, Ontario. The shutdown is causing increased flaring and noise. Shell won’t identify the unit being repaired, comment on the effect on production or estimate how long the shutdown will last. The complex, also called the Shell Corunna refinery, processes about 72,000 barrels of crude daily. (

Aramco, Sinopec JV refinery to start operations by end 2014

June 27, 2013. Saudi Arabian Oil Co., or Aramco, and China Petrochemical Corp. or Sinopec Group, are expected to start their joint Yanbu, Saudi Arabia-based oil refinery operations by the end of 2014. Aramco and Sinopec Group signed the deal to develop the 400,000-barrel-a-day refinery, known as Yasref, in January last year. Sinopec holds a 37.5% stake in the project, while Saudi Aramco owns 62.5%. Sinopec Group is Asia's biggest oil refiner by capacity. U.S. oil major ConocoPhillips in 2011 pulled out of the Yanbu project after deciding to cut back on refining and marketing activities. The Aramco-Sinopec deal is part of efforts by China and Saudi Arabia to strengthen energy ties. In 2011, Aramco agreed to an initial deal with PetroChina Co. to supply crude oil to a new refinery in southwest China, a move aimed at cementing Saudi Arabia's position as China's top crude supplier. China surpassed the U.S. as the biggest importer of oil from Saudi Arabia in 2009. (

Transportation / Trade

Egypt military steps up Suez patrols to secure global trade link

July 2, 2013. Egypt’s military increased patrols of the Suez Canal, securing the waterway handling about 8 percent of global maritime commerce, as protests escalate against President Mohamed Mursi’s regime. Mohab Mohamed Hussien Mameesh, the chairman of the Suez Canal Authority, is coordinating a “high-alert” military response. The army and navy stepped up patrols of the 190-kilometer canal linking the Red and Mediterranean seas about a week ago. While conflicts halted canal traffic in the 1950s and 1960s, a stoppage is unlikely now because the waterway is too important to Egypt’s economy. The army gave Mursi two days to respond to protesters, who say the president has done too little to improve their lives since taking office a year ago. The canal handles about 8 percent of seaborne trade. It carried about 4.5 percent of global trade in oil in 2011. The waterway also carries about 14 percent of liquefied natural gas cargoes. About 800,000 barrels of crude and 1.4 million barrels of refined fuels passed along the canal daily in 2011. An adjacent pipeline carried an additional 1.7 million barrels a day. (

Ship rates drop as US oil imports fall most since ’91

July 2, 2013. Growing U.S. energy independence is driving the biggest drop in crude imports in two decades and rates for the oil tankers most reliant on the shipments to the weakest in at least 16 years. Seaborne imports will decline 11 percent to 5.4 million barrels a day in 2013, the largest slide since at least 1991. Suezmaxes hauling 1 million-barrel cargoes earned $10,652 a day this year, the least since 1997. The rate is 55 percent less than Euronav NV says it needs to break even on the 22 tankers it owns. Rising oil and gas output as fracking unlocks supplies trapped in shale rocks means the U.S. is meeting the highest proportion of its energy needs since 1986. The nation will overtake Saudi Arabia as the top oil producer by 2020, according to the International Energy Agency. Suezmax shipments of West African crude to North America will average 700,000 barrels a day this year, a 30 percent drop in three years. Suezmaxes, the 900-foot ships that haul about 21 percent of all seaborne oil, will earn $14,700 a day this year, 16 percent less than in 2012. Euronav, based in Antwerp, Belgium, said in May it needs $23,600 to break even. U.S. imports, including by pipeline, fell to 7.3 million barrels a day in February, the lowest monthly rate since 1996. Daily domestic production was 7.26 million barrels in the week ended June 21, within 2 percent of the 21-year high reached in May. (

Nigerian oil union calls three-day strike

July 1, 2013. Nigeria’s manager-level oil-worker union called a “three-day warning strike” to press for improved welfare and better severance allowances for members. “All service companies to go on full-blown strike” starting July 4 and “a systematic stoppage of loading vessels for export at the oil terminals” will begin on July 5, Bayo Olowoshile, general secretary of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said. All onshore and offshore locations have been placed on red alert, he said. Pengassan also want the government to expedite passage of a new petroleum industry law, check pipeline sabotage and intervene in a tax dispute between the maritime regulator and Nigeria LNG Ltd. Nigeria is Africa’s largest oil producer and a major supplier of U.S. imports. Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA run joint ventures with the state-owned Nigerian National Petroleum Corp. that pump about 90 percent of the country’s crude. In the past, Pengassan, which represents about 24,000 oil workers, has called off strikes before they started after assurances from the government. The planned warning strike will last until the end of July 6, Olowoshile said. The blue-collar National Union of Petroleum and Natural Gas Workers, or Nupeng, walked off their jobs in a three-day strike to protest “unfair labor” practices by Shell, Chevron and Eni units. Nigeria produced about 1.83 million barrels of crude a day last month, the least since March. (

BP led Shah Deniz consortium selects TAP to supply Azerbaijani gas to Europe

July 1, 2013. BP led Shah Deniz consortium has selected the Trans Adriatic Pipeline (TAP) to supply natural gas produced from the Shah Deniz stage 2 project in Azerbaijan to customers in Greece, Italy and Southeast Europe. The Shah Deniz gas field is situated in the South Caspian Sea off the coast of Azerbaijan about 70km southeast of Baku, at a depth of 600m. It is estimated to have reserves between 1.5 billion barrels to 3 billion barrels of oil equivalent and from 50 to 100 billion cubic meters of gas. (

Gas exporters to defend pricing system as courts reject oil link

July 1, 2013. The world’s biggest natural gas exporters will seek to defend linking prices to the cost of oil even after courts ruled they overcharged customers and rising output from the U.S. to Australia challenges their dominance. Tying gas costs to oil will dominate “in the long-term” as the system provides visibility and transparency for buyers, the Gas Exporting Countries Forum said before its second summit of heads of state in Moscow. RWE AG said an arbitration court ruled that Germany’s second-largest utility had paid Russia’s OAO Gazprom too much since May 2010 and forced the group’s biggest producer to add links to market prices in its formula. (

Transneft seeks to resolve dispute at Baltic oil port

June 28, 2013. OAO Transneft, Russia’s pipeline operator, and OAO Rosneft, the nation’s biggest oil company, are trying to resolve a tug boat dispute that disrupted exports at Primorsk port. Some tankers are loading again, after a halt at the Baltic port, one of two handling Russia’s seaborne crude exports to northwest Europe, though the dispute wasn’t yet settled as of noon Moscow time. Russia plans to ship less than 1 million barrels a day of Urals crude from Primorsk port for a second month in July. The tally is little changed from June, which was the lowest loading rate in more than five years. (

Uganda, Kenya, Rwanda to build oil pipelines; South Sudan to gain access

June 27, 2013. The governments of Uganda, Kenya and Rwanda have agreed to build two oil pipelines through the three East African nations. The first oil pipeline will start from South Sudan to the port city of Lamu in Kenya, while the second one will run from Rwanda to Mombasa in Kenya. South Sudan currently exports oil via Sudan and the supplies are frequently disrupted as the two nations often disagree on the pricing and security terms. Sudan's president once again threatened South Sudan to suspend oil flow over the issue of supporting rebels. With the new pipelines, South Sudan is expected to have an alternative to export its oil. As per the agreement between the three countries, Uganda will be responsible for developing oil refinery and Kenya will spearhead the construction of oil pipelines. (

Oil imports from Iran double in Japan despite western sanctions

June 27, 2013. Japan’s crude imports from Iran more than doubled in May from a year earlier despite sanctions against the Persian Gulf country. Crude imports rose to 1.09 million kiloliters, or about 222,000 barrels a day, up from about 523,000 kiloliters in May 2012. Purchases from Iran in April of this year were about 530,000 kiloliters. The U.S. extended Japan’s exemption in March from sanctions on banks doing business with Iran for a third six-month term based on additional reductions in the volume of oil purchases from the country. Japan imported 4.77 million kiloliters of Iranian crude in the five months ended May, down about 17 percent from a year earlier. (

Sino Gas & Energy signs first gas sales agreement

June 26, 2013. Australian energy company Sino Gas & Energy Holdings Limited announced that Production Sharing Contract (PSC) operator, Sino Gas & Energy Limited (SGE), has signed its first gas sales agreement, allowing pilot production to commence as early as December 2013. The sales agreement is with China United Coalbed Methane (CUCBM), who holds a 30 percent interest in the Linxing PSC. Gas supplied under the agreement will be sold to the industrial gas market in Shanxi Province through existing pipeline infrastructure. During the first year, the contract calls for all parties to use their best efforts to supply and take a maximum quantity of gas from the pilot program. Initially seven wells are planned to be connected to a central gathering station located on the western portion of Linxing. Additional wells are expected to be put online as wells are drilled and gathering facilities are expanded. After the first year, sales volumes can increase up to 35 million standard cubic feet per day under the contract. Any incremental volumes beyond this amount are dependent upon well performance and further negotiations. An initial price of approximately $7 per thousand standard cubic feet will apply during the first year, and will be adjusted on an annual basis by reference to Shanxi Province market prices and applicable government policies. Subject to the approval of Chinese Reserve Report, Overall Development Plan and other licensing requirements for the gas production, the gas sales contract is valid over the life of the Linxing PSC. (

Policy / Performance

Kazakhstan exercises right of refusal over Conoco Kashagan stake

July 2, 2013. The Kazakh government will exercise its right of first refusal and acquire the stake held by ConocoPhillips (COP) in the nation’s biggest oil field, squeezing out Oil & Natural Gas Corp (ONGC). The Kazakh Oil and Gas Ministry has informed ConocoPhillips it will buy the U.S. oil company’s 8.4 percent interest in the Caspian Sea oil project, the Astana-based ministry said. KazMunaiGaz National Co. will carry out the purchase on behalf of the government. ConocoPhillips said it intended to sell its stake in Kashagan for about $5 billion to Oil & Natural Gas, India’s biggest energy explorer. Kazakh law allows the central Asian nation to exercise an option to step in and buy that stake in place of the Indian company. China National Petroleum Corp. will acquire an 8.33 percent holding in the Kashagan project from KazMunaiGaz for about $5 billion. (

Repsol rejects Argentina’s $5 bn YPF compensation

June 27, 2013. Repsol SA, Spain’s largest oil driller, said its board rejected an offer by the Argentine government meant as compensation for the expropriation of a 51 percent stake in YPF SA in April 2012. Repsol was offered a 47 percent stake in a joint venture in the Vaca Muerta shale formation valued by Argentina at $3.5 billion, as well as $1.5 billion toward development. YPF would hold a 51 percent stake, while Petroleos Mexicanos SA would own 2 percent in the venture. Repsol has filed numerous lawsuits including ones in Madrid and New York seeking compensation of $10.5 billion for the seizure of the Buenos Aires-based oil producer. YPF said it had informal talks with Repsol’s shareholders and denied the government sent an official compensation offer. It also said it is open to finding a negotiated solution. The offer values the Vaca Muerta formation at $42,000 per acre. Argentina holds the world’s second-largest shale gas reserves and fourth-largest shale oil reserve. (



Heirs Holdings announces $2.5 bn investment for Africa’s power sector

July 2, 2013. Nigeria-based investment company Heirs Holdings has announced to support the Power Africa initiative with an investment of $2.5 bn. The Power Africa initiative is a multi-stakeholder partnership between US, the governments of Ghana, Tanzania, Kenya, Liberia, Nigeria and Ethiopia, and the African private sector with a common goal to accelerate investment in the power sector of Africa over the next five years. Heirs Holdings said the investment is part of the company's plans to become an important player in the power sector. (

Japan, Canada investors to buy US power plant for $2 bn

July 1, 2013. A consortium including Mitsubishi Corp and Japanese and Canadian pension funds will buy a U.S. gas-fired power plant in Michigan this month for nearly 200 billion yen ($2.01 billion). Mitsubishi, Japan's Pension Fund Association, Mizuho Bank, the Japan Bank for International Cooperation (JBIC), and Canadian pension fund Omers will acquire all shares in the parent firm of the 1.63 GW power plant. (

US co gets American Samoa power plant contract

June 26, 2013. A US company, The Louis Berger Group, says it has won a $36 million contract to help rebuild the Satala Power Plant in Pago Pago, American Samoa, destroyed in the September 2009 tsunami. The contract was awarded by the American Samoa Power Authority and is part of the Federal Emergency Management Agency’s three-tiered approach to replacing the plant. (

Meralco, Philex in talks for coal power plant in Surigao

June 26, 2013. Philex Mining Corp. and Manila Electric Co. (Meralco) are in talks for the possibility of putting up an 80 MW coal-fired power plant in Surigao del Norte. The project is related to the mining firm’s operations in the province. The target for the commercial operation of the mine is 2017. Meralco PowerGen, Meralco’s power generation subsidiary, and Global Business Power Corp. of the Metrobank Group have signed an agreement for potential power projects in Mindanao. The Surigao del Norte mine involves the Silangan project, located at the northern part of the Philippines’ second-largest island of Mindanao and combines the development of the Boyongan and Bayugo deposits, which are comprised of gold, copper and silver. (

Transmission / Distribution / Trade

TransAlta receives PPA approval for Centralia coal-fired plant

June 28, 2013. Canada-based power generation company TransAlta has received regulatory approval for a 11-year power purchase agreement (PPA) for its coal-fired Centralia Power Plant in east of Centralia, Washington, US. Under the PPA, TransAlta will sell electricity generated from the power plant to Puget Sound Energy (PSE) starting from 2014 to 2025. PSE will acquire 180 MW of coal transition power in December 2014 and will increase the volume to 280 MW in the following year. From December 2016 to December 2024, the company will buy 380 MW of electricity, while in 2025 the volume will drop to 300 MW. TransAlta said PSE is the company's largest customer for Centralia coal transition power. (

Abengoa to maintain two transmission lines for Brazil’s National Electricity Agency

June 27, 2013. Spain-based multinational company Abengoa has won a contract from Brazil’s National Electricity Agency to maintain two continuous current transmission lines, which will deliver over 6,000 MW of power generated from the hydroelectric plants on the River Madeira (Santo Antonio and Girau). The power lines will form a part of the Madeira system, which run for nearly 5,000km (2,345km each line) and will be the largest continuous current energy transmission system in the world. The two transmission lines will connect the substations in Porto Velho and Araraquara and cover over 100 municipalities in the states of Rondonia, Mato Grosso, Goiás, Minas Gerais, and São Paulo. (

Mitsubishi Heavy to supply 47 MW geothermal turbine to Turkey

June 27, 2013. Mitsubishi Heavy Industries Ltd. and Mitsubishi Corp. won an order to supply a 47 MW turbine for a geothermal power station in Turkey. The turbine will be installed at the Germencik Geothermal Power Plant for Gurmat Electricity Generation Co., Mitsubishi Heavy said. The order follows the 2008 delivery of a turbine by Mitsubishi Heavy for the same plant. Mitsubishi Heavy has received orders for more than 100 units from 13 countries for geothermal power generation systems. The company’s total installed capacity of 3,110 MW accounts for about 30 percent of global geothermal power generation capacity. (

Coal crippled by supply in worst quarter in year

June 26, 2013. Coal prices in Asia are showing little sign of recovery after the biggest quarterly decline in a year amid subdued demand and increasing supply from Australia and Indonesia, the world’s largest exporters. Prices of the power-station fuel at the Australian port of Newcastle, the Asian benchmark grade, may trade between $80 and $90 a metric ton for the rest of the year, according to UBS AG, while Bank of America Corp. forecasts an average $86 a ton this year, down from an earlier estimate of $92. Coal has dropped 7.5 percent to $81.20 a ton in the second quarter, the most since the three months ended June 2012. Glencore Xstrata Plc, the world’s biggest shipper of the fuel, and Peabody (BTU) Energy Corp., the largest U.S. producer, are among miners cutting workers to cope with escalating costs and falling prices as exports from Australia, Indonesia and the U.S. climb. Supplies are forecast to rise at least 30 million tons as new mines start this year. About 15 percent of Australia’s coal is extracted at a loss when prices fall below $90 a ton. (

Policy / Performance

EDF nuclear deal in UK may take ‘a few months’

July 2, 2013. The U.K. may take “a few months” to agree the price that Electricite de France SA (EDF) will get for power from Britain’s first new nuclear power station in two decades, Energy Secretary Ed Davey suggested. The government has been in talks for months with EDF to agree a so-called strike price the French utility will get for power from a planned plant at Hinkley Point in southwest England. Davey told Parliament’s multi-party Energy and Climate Change Committee he won’t sign a contract with EDF unless it represents “value for money” for consumers. The comments signal that the decision that ministers had hoped to make by the middle of this year may not be made before Parliament rises for its summer recess on July 18. Failure to reach a deal with EDF would delay construction of new reactors in Britain, where all except for one existing atomic plants are due to close by 2023. (

Judges seen raising French power prices to rescue EDF

July 2, 2013. Tradition holds that once the French are comfortably ensconced on their summer holidays, the government quietly announces an increase in household power rates charged by the utility Electricite de France SA. This year, the ritual may take a different turn and end up before judges. A June report by regulators concluded domestic power rates, half those of neighboring Germany, should rise almost 10 percent. The government has proposed a 2 percent increase. An industry group may ask the Conseil d’Etat, France’s highest court, to intervene if the government doesn’t boost rates enough to cover costs for Paris-based EDF, the world’s biggest nuclear-plant operator. The same court last year allowed the nation’s biggest gas supplier GDF Suez SA to raise rates more than the government wanted. Higher prices would benefit EDF’s 55 billion-euro ($72 billion) spending plan to 2025 for maintaining the largest reactor fleet. At the same time it imperils Socialist President Francois Hollande’s pledge to moderate home energy costs. EDF’s power rates for 25 million retail customers in France should rise as much as 9.6 percent in 2013 to cover production and marketing costs, the Commission de Regulation de l’Energie regulator said in the report. The government immediately rejected the recommendation. The increase would have to come on top of a 7.6 percent gain needed to make up for a 1.47 billion-euro shortfall between EDF’s costs and the rates it was allowed to charge, the regulator said. Looking further ahead, power charges should gain another 3.2 percent next year and also in 2015, the regulator said. (

World Bank mulls investment in Nepal's hydropower sector

July 1, 2013. Global financial institute World Bank is mulling making an investment in hydropower sector of Nepal, contrary to its previous decision to abandon large hydro investments. At a meeting in Dubai, World Bank sustainable development director Jack Stein and World Bank South Asia Region regional integration director Salman Jaheer have informed the country officials of the Bank's interest. Confirming the World Bank's move, Nepal Ministry of Finance (MoF) joint secretary Madhu Kumar Marasini said that the institute has expressed intent to fund a large-scale hydro project in the range of 200 MW to 500 MW. The World Bank had made an investment in hydroelectric project in the country earlier in 2000 for 900 MW Arun-III hydropower project in Shankhusawa district. (

Nigeria plans to sell 10 gas-fired power plants

June 28, 2013. The Nigerian government has confirmed its plans to sell 10 gas-fired power plants throughout the country, as part of its effort to guarantee an effective and sustainable power supply for its residents. Nigeria's 10 power plants to be privatized are located in Abia State (450 MW), Edo State (451 MW), Cross River State (562 MW), Imo State (338 MW), Bayelsa State (225 MW), Kogi State (434 MW), Delta State (451 MW), Ogun State (676 MW), Rivers State (225 MW) and Ondo State (451 MW). The announcement was made at an investor relations event held in New York, US, to attract international investors. Nigeria Power Minister Chinedu Nebo said the New York event is the last stage of the international investment drive for the divestment of government stakes in the generation assets of the Niger Delta Power Holding Company (NDPHC). (

UK nuclear plan advances with $15 bn loan backing

June 28, 2013. The U.K. government’s decision to guarantee as much as 10 billion pounds ($15 billion) in debt for the first nuclear power station in two decades helps ensure Electricite de France SA will support construction of the plant. Treasury Chief Secretary Danny Alexander announced backing for the project in southwest England as the Energy Department outlined subsidised rates for wind and solar power of at least 100 pounds per megawatt hour for the next three years. EDF has indicated it needs about 95 pounds a megawatt hour to move ahead with the project. The decisions fanned speculation that Prime Minister David Cameron’s government is preparing to announce incentives strong enough to prompt EDF to build the plant. Nuclear along with offshore wind is at the heart of Cameron’s program for replacing the fifth of the nation’s power generation that’s scheduled to retire from service within 10 years. (

UK energy policies will avoid blackout risk, Minister says

June 27, 2013. The U.K. will avoid power cuts as a result of announcements to be made later on shale gas, a market for power generation capacity and renewable energy contracts, Secretary of State for Energy and Climate Change Ed Davey said. (

New Pakistan energy policy vows new power generation

June 26, 2013. Pakistan's federal government released a new energy policy that promises new investments in the power generation sector to address power outages. According to the new policy, Pakistan will increase its power generation capacity to a total of 26,800 MW over the next 3 years. The country currently can generate about 21,100 MW, mostly from fossil fuels and hydropower. At the same time, Pakistani policymakers are looking to reduce the production costs of electricity. (



Tata Power ties up funds for 95 MW wind project in South Africa

July 2, 2013. Tata Power has tied up funds for the 95 MW Tsitsikamma wind energy project, which is estimated to cost about ` 1,750 crore, in South Africa. The project is being implemented by Cennergi, an equal joint venture between Tata Power and South Africa's Exxaro Resources. Cennergi tied up entire debt requirement for the project through Nedbank. Tata Power had announced the financial closure for 135 MW Amakhala Emoyeni wind plant in South Africa. This project is being executed by Cennergi. (

AP receives 35 bids for solar power projects

July 2, 2013. The Andhra Pradesh (AP) government has received bids from 35 companies for setting up solar power projects in the state with combined installation capacity of 418 MW. The bidders have accepted solar power purchase price of ` 6.49/unit, which was recommended by a group of ministers earlier. (

India’s steelmakers threatened with fines for clean-power lapses

July 2, 2013. Steel Authority of India Ltd and Jindal Steel & Power Ltd (JSP) were threatened with fines for flouting clean-energy rules as regulators crack down on lapses that undermine the nation’s renewable-credit trading market. India’s second- and third-biggest steelmakers, under scrutiny in Chhattisgarh, failed to get the required portion of power from renewable sources in the three years through March, according to the State Electricity Regulatory Commission. The commission will waive about ` 2.9 billion ($49 million) of fines only for the first year to account for a late notification of the rules. The failure of companies to observe clean-power mandates weakens India’s market for renewable credits, which are trading at the lowest prices allowed. India requires industrial energy users to get as much as 10 percent of their electricity from wind, hydro and biomass and 0.25 percent from solar, and those failing to comply must cover the shortfall by buying credits. Jindal Steel will purchase credits to fulfill its obligations, the company said. (

Jakson Power bags two new solar infra orders worth ` 810 mn

July 2, 2013. Jakson Power Solutions announced that the company has secured two new orders aggregating to ` 81 crore for setting up infrastructure for generation of solar power. The orders include Solar Power Plant EPC and supply of Solar Inverter Substations for various Solar Photovoltaic power plants in India. Jakson recently secured an order aggregating ` 47 crore from Refex Energy Ltd, a major EPC player in the Indian market to supply 42 numbers of Solar Inverter Substations (SISS) for their various projects in Rajasthan and Andhra Pradesh. These installations are targeted to generate 60 MW of solar power and are slated to be completed by October 2013. (

ISI offers help to map climate change

June 29, 2013. The Indian Statistical Institute (ISI) has offered to help the government in mapping climatic changes in the country to develop a better understanding about the phenomena. The initiative would statistically estimate "region-wise" climate sensitivity across the country. (

India solar credits drop to floor price for first time

June 27, 2013. Indian solar-energy credits in June fell as much as 19 percent from the previous month, sinking to their floor price for the first time since trading began last year as new sun-powered plants came on line. The credits, which power-distribution companies and industrial consumers buy to meet clean-energy mandates, sold for ` 9,300 ($154), according to REConnect Energy Solutions Pvt., an Indore-based trader that records all transactions on the Indian Electricity Exchange and the Power Exchange of India. India requires companies including Coal India Ltd and Tata Power Co to get as much as 10 percent of their energy from renewables. Those unable to source enough locally may meet targets by buying credits from solar, wind, hydro and biomass plants via the two exchanges. Each credit represents 1 megawatt-hour of electricity fed into the power grid. Bids from solar utilities seeking to sell credits were four times higher than buy bids, according to REConnect. India’s solar capacity increased 79 percent to 1,686 MW in the last financial year as plants awarded through government auctions were completed and began generating power, according to data from the Ministry of New and Renewable Energy. (

Bullish on solar projects in India: US Exim Bank chief

June 26, 2013. US Exim Bank chief Fred Hochberg has said the lender is bullish on the renewable energy space here, especially the solar sector, even though there is a "slight pause" in such projects. The US Exim Bank is the largest international financier for solar power projects in the country, he said. Hochberg further said that in the past three years, his bank, which finances importers with an intent to increase jobs back home in the US, has rendered a finance of $ 350 million to solar projects. He further said that in the past decade they have financed over $ 12 billion worth of projects here and currently have a portfolio of $ 8.2-8.5 billion, which is second only to Mexico in the entire world, and is also growing very rapidly. Hochberg had said though there is more clarity in policy-making in New Delhi now but businesses are still adopting a "wait-and-see" approach in the wake of upcoming general elections. The polls are scheduled for mid-2014. (


Obama climate plan seen by environmentalists adding jobs

July 2, 2013. President Barack Obama’s plan to use regulations to curb carbon-dioxide emissions from power plants could result in the U.S. economy adding jobs -- not losing them -- as well as lower electricity rates, according to an analysis released by an environmental group that favors the rules. The Natural Resources Defense Council, which proposed a plan in December to curb greenhouse gases from power plants, said that its analysis showed that Obama can make good on his pledge to curtail the emissions blamed for global warming without harming the U.S. economy. Obama made curtailing carbon-dioxide emissions from power plants the centerpiece of a plan he unveiled June 25 to address global warming. That plan, according to Republican lawmakers and representatives of coal producers, could end up undercutting the American economy by curtailing the use of low-cost coal and increasing electricity rates. (

Saudi Arabia starts survey of renewable energy potential

July 2, 2013. Saudi Arabia started a program to assess its potential for generating renewable energy, part of an effort to lure $109 billion for building a solar industry that will free up more of its crude oil for export. King Abdullah City for Atomic and Renewable Energy (Ka-Care), the organization responsible of devising the kingdom’s strategy, will install at least 70 stations nationwide to measure the ability to produce electricity from the sun, wind, geothermal and waste sources. Ka-Care said 10 stations already have been installed. The findings will be published in a national atlas by year end, which will guide investors and researchers studying where to place generation plants. Saudi Arabia, the world’s largest crude oil exporter, will present a national policy statement on renewable and nuclear power generation as it seeks to diversify energy resources, Ka-Care, said. The kingdom has said it plans to attract about $109 billion to create a solar industry that will generate a third of its electricity by 2032, or about 41,000 MW. It’s part of a wider program to generate 54 GW from different sources including nuclear. Currently, about 3 MW of solar power plants are working in Saudi Arabia, a capacity that trails Egypt, Morocco, Tunisia, Algeria and the U.A.E. (

Sharp considering 38 MW solar power station in northern Japan

July 2, 2013. Sharp Corp., a Japanese solar panel maker, is considering building a 38 MW solar power station in northern Japan. The plant may be built in Tomakomai city, Hokkaido. The station may cost more than 10 billion yen ($100 million) and start running as early as 2015. (

Chinese makers boost polysilicon output on tariff concern

July 2, 2013. Chinese polysilicon makers led by GCL-Poly Energy Holdings Ltd. and Daqo New Energy Corp. are ramping up production as imports decline amid concerns about retroactive tariffs on the raw material for solar panels. Daqo expects to deliver almost one-third more polysilicon in the second quarter than in the first. GCL-Poly also increased production in the quarter. China, the biggest maker of solar panels, is preparing anti-dumping duties on polysilicon imports it judges to have been sold below cost. The Ministry of Commerce has said it’s determining whether penalties should be set retroactively on suppliers from the U.S., the European Union and South Korea. Imports dropped to the lowest in six months in May. (

One in 10 will live in climate hotspots by 2100: Study

July 2, 2013. One in 10 people around the world will live in a place where climate change is damaging at least two major sectors such as crop yields, water, ecosystems or health, said an international study. These so-called climate "hotspots" will be most widespread in the southern Amazon, with "severe changes" in water availability, yields and ecosystems, said the study in the Proceedings of the National Academy of Sciences, a US journal. The second largest hotspot region is southern Europe, where water shortages and crop failures would lead to hardships for the population, said the study led by Franziska Piontek of Germany's Potsdam Institute for Climate Impact Research. The study included climate impact researchers from Japan, the United States, China, Europe and beyond, and used mathematical modeling programs to project how global warming will change the livelihoods of people around the planet. Different levels of warming were analysed, with multi-sector overlap beginning to appear "robustly" at an average warming worldwide of three degrees Celsius above the 1980-2010 average. Other hotspots included tropical regions of Central America and Africa, as well as the Ethiopian highlands because of the overlapping pressures of malarial spread, suffering crops and ecosystem changes. Northern regions of south Asia were also predicted to suffer because of crop woes combined with either ecosystem changes or water availability. The analysis found no place on Earth where all four sectors would experience a severe change. Much of Africa, which might be considered a vulnerable part of the planet, did not appear as a hotspot under the model methods used. However, the case might be different if droughts and floods were included as metrics, the authors said. Researchers said the data should help nations plan for significant changes in the decades ahead, either by speeding adaptation strategies or motivating decisions to curb climate change. (

El Nino was unusually active in possible link to climate change

July 1, 2013. The El Nino weather pattern that can bring drought to Australia and rain to South America was “unusually active” at the end of the 20th century, possibly due to climate change, a University of Hawaii study found. Researchers studied 2,222 tree-ring records as proxies for temperature and rainfall over the past 700 years. The records indicate the El Nino-Southern Oscillation weather phenomenon has been increasingly active in recent decades relative to the past seven centuries. The drought associated with El Nino’s warm phase can cause smaller rice crops in Asia and cut wheat production in Australia, while the rains can cause flooding in South America and weaker cold ocean currents reduce anchovy catches off Peru. Accurately forecasting El Nino is challenging because it varies naturally over decades and centuries. (

UK 'will miss European renewable energy target'

July 1, 2013. The UK is not on track to meet its 2020 European renewables targets, according to the European Renewable Energy Council (EREC). The EREC's "Keep on Track" project, the findings rank the UK as 25th out of 27 member states for renewables contribution. Preliminary figures from the Renewable Energy Association (REA), show that the UK is the only member state in the project which did not achieve its first interim target under the directive by the end of 2011 (4.04% for 2011 to 2012). While the EREC expects Austria, Italy and Sweden to meet their 2020 targets, it has "serious doubts" as to whether Bulgaria, Germany, Greece and Portugal will be able to meet theirs and says it expects Belgium, Poland, Spain and the UK to miss their targets altogether. (

Europe set to be cooler than average this month

July 1, 2013. Most of Western Europe will stay cooler than average in July with temperatures picking up toward the end of the month, while the Nordic region will be warmer than usual, according to forecasters polled. Below-normal water temperatures in the central North Atlantic are poised to drive cooler conditions into Europe beyond the middle of the month, meteorologists at MDA Information Systems LLC said. Weather forecasters at WSI Corp. also expects lower-than-usual temperatures for the region this month. European power and gas prices typically fall in the middle of the year as increased daylight hours during the summer months boost solar generation and demand for heating drops. Germany’s plans to get 80 percent of its electricity from renewables by 2050, up from 22 percent last year, have damped prices to their lowest in eight years. (

China’s Sinovel to divest overseas units after US indictment

July 1, 2013. Sinovel Wind Group Co., China’s third-biggest wind-turbine maker, agreed to divest four units abroad after it was charged with stealing trade secrets from its former U.S. supplier. The units are in the U.S., Belgium, Italy and Canada, Sinovel said. U.S. prosecutors secured an indictment of the company and two of its executives in federal court in Madison, Wisconsin on charges of stealing source code for the turbine controllers made by American Superconductor Corp. (

Banks accepting more foreign equipment for Japan solar projects

July 1, 2013. Banks are becoming more open to financing domestic solar projects that use foreign equipment as the country’s year-old incentive program for clean energy spurs investment in renewable sources. Chinese panels with reinsurance and inverter makers such as ABB Ltd. of Switzerland and SMA Solar Technology AG of Germany are being accepted. Reinsurance helps ease lender concerns about using equipment from makers that could go bankrupt because the insurer agrees to honor the warranty. Solar tariffs in Japan are currently 37.8 yen (38 cents) per kilowatt hour for 20 years, after a 10 percent cut in April. Inverters convert power from solar panels for use on the grid. (

Solar Frontier Restarts 60 MW Panel Plant to Meet Growing Demand

July 1, 2013. Solar Frontier K.K., a unit of Japan’s Showa Shell Sekiyu K.K., restarted production at a plant in southwestern Japan amid growing demand for solar panels. The MP2 plant in Miyazaki prefecture, which had been suspended since the end of 2012, will restart making conventional thin-film modules for residential use, the company said. The company also plans to start producing a new type of panel at the plant before the end of the year, it said, without giving details of the new product. Solar Frontier, whose main production plant in Miyazaki has capacity of 900 MW, makes panels using copper, indium, gallium and selenium, known as CIGS. (

Wells Fargo to invest more than $100 mn in solar energy company SunEdison

June 28, 2013. US-based financial institution Wells Fargo & Company is set to invest more than $100 mn equity in solar energy company SunEdison during 2013 and 2014 to fund US solar photovoltaic distributed generation power projects. The new investment is in line with previous investments from Wells Fargo valuing a total of $950 mn of tax equity and construction financing since 2007. The funds facilitated over 200 utility and distributed generation solar projects. Wells Fargo is an important partner in developing company's portfolio of 400MW of distributed generation solar projects around the world. (

China plans large-scale PV solar pilot projects

June 28, 2013. The National Energy Administration (NEA) of China has been planning to set up distributed solar PV demonstration power plants across the country, it was recently announced. The plants will be operated in National Economic Development Zones and industrial parks in China with high power consumption, large numbers of industrial companies, and adequately sunny weather. The NEA requires the solar projects to be funded by a single development team with the use of a “self-generate/consume” model. They also required that the demand of the subsidies should not exceed RMB 0.45/kWh. (

Toyota seeks Prius-like success with 2015 fuel-cell model

June 27, 2013. Hydrogen fuel cells have long been seen as a potentially perfect way to power a car: They generate electricity and emit only water vapor. While a few cars have been tested, Toyota Motor Corp. is about ready to roll. The automaker that defied skeptics in the ’90s with its Prius gasoline-electric hybrid cars is looking for a fuel-cell sequel. At the Tokyo Motor Show in November, it plans to show a hydrogen-powered sedan that would be sold as a 2015 model. It could be available in U.S. dealerships as soon next year for a price comparable to a mid-size BMW or Tesla Model S. The allure of hydrogen, the most abundant element in the universe, as a clean gasoline replacement led carmakers a decade ago -- notably the former General Motors Corp. -- to predict millions of fuel cell autos would be on the road by now. While a mass-market for hydrogen cars may be a decade or more away, the enticement is undiminished. Environmental rules in the U.S., Europe and Japan encourage automakers to sell vehicles that don’t emit climate-warming gases. That has aided hybrid sales, led to lighter cars and smaller engines and convinced Tesla Motors Inc. and Nissan Motor Co. to push high-volume sales of battery cars. (

Coal-power financing minimized in World Bank energy policy

June 27, 2013. The World Bank plans to restrict its financing of coal-fired power plants to “rare circumstances,” according to a draft strategy that reflects the lender’s increased focus on mitigating the effects of climate change. The Washington-based lender will help countries find alternatives to coal. The paper, which is subject to revision, describes universal access to energy as a priority for the World Bank’s mission to help end poverty. The World Bank, which lends to the developing and emerging economies among its 188 members countries, committed $8.2 billion to finance energy projects in the 12 months through June 2012. Of that, $3.6 billion was for renewable energy. World Bank said the paper was submitted to board members ahead of discussion in July. The bank’s objectives include “universal access to electricity and safe household fuels,” doubling the share of renewable energy in the global energy mix and doubling the rate of energy-efficiency improvement. The guidelines, circulated to member countries two years after a failed attempt to limit coal financing to the poorest nations, reinforce President Jim Yong Kim’s pledge to ease the impact of climate change. The bank has not financed a major coal project since 2010, though it is studying whether to offer partial guarantees for a lignite-fired power plant in Kosovo. Efforts to mitigate the risks associated with climate change were reinforced by President Barack Obama’s plan to curb carbon emissions, which he called a central global challenge of the 21st century, in the U.S. (

UK shows offshore wind more costly than solar

June 27, 2013. Britain's new support plans for renewable energy confirm that offshore wind is the most expensive green power technology, raising the question why the country is placing so much faith in it. Offshore wind is even more expensive than solar power, which is not an energy technology where Britain has a competitive advantage, as a northern country whose climate is dominated by wet Atlantic weather. The country has one of the best wind resources in Europe, which has led to a belief by some that it makes more sense to invest in offshore wind. Such thinking is muddled because solar power is cheaper, even in Britain, and will probably remain so. Britain announced support rates for the second half of the decade which would provide offshore wind with a 20-25 percent premium to solar power. The premium was even greater compared with other low-carbon technologies including onshore wind, biomass, waste-to-energy and hydropower. That is before accounting for the astronomical grid connection cost for offshore wind - by sub-sea cable. This cost, about 10 times that for rival electricity generation technologies, is subsidised separately and is far from transparent. The evidence for higher costs is a concern for Britain's plans, confirmed, to install more offshore wind capacity than any other renewable power technology by 2020. The government says it supports offshore wind because of its potential to help generate thousands of jobs, and to improve Britain's security of energy supply with low-carbon power. (

UK set for biggest clean-power IPO in shift toward equity

June 27, 2013. The Renewables Infrastructure Group Ltd. plans the biggest initial public offering of a U.K. clean-power company as developers turn to stock investors to pay for projects because utilities have less cash for acquisitions. The green-energy fund plans to raise 300 million pounds ($460 million) via a sale of shares in London, and buy 14 wind farms and four solar parks in Britain, France and Ireland with total capacity of 276 MW. The offering, due to be completed by the end of July, would beat the 260 million pounds raised by Greencoat U.K. Wind Plc. Greencoat is up 7 percent since debuting. Renewables Infrastructure will probably raise more equity in the next year. As much as three-quarters of Renewables Infrastructure’s planned purchases of green projects are in the U.K., where the government unveiled 110 billion pounds of investments to help replace aging power stations and electricity distribution grids by 2020. The proposals include guaranteed support for low-carbon energy generation such as solar and wind power. Bluefield Partners LLP said it plans to raise 150 million pounds in an IPO to invest in U.K. solar plants. (

China should promote solar sector’s healthy expansion, NEA says

June 26, 2013. China asked local governments to study policies supporting the development of solar energy in their districts and to explore new markets for the distribution of the technology. Authorities should look closely into the guidelines for adopting the use of solar power, starting with small experimental projects before rolling them out on a bigger scale, National Energy Administration (NEA) said. China, the world’s largest solar panel maker, is seeking to boost domestic demand for the products as rising trade tensions with the European Union slow exports and governments reduce clean-energy subsidies. China and Japan are forecast to become the world’s two top solar markets this year. The European Union imposed provisional tariffs at an initial rate of 11.8 percent on imports of solar panels from China after an investigation found they were being sold in the 27-nation bloc at less than their production cost. China said that it would boost demand for solar-generated electricity on the mainland and provide easier financing to manufacturers. Solar is an important renewable energy source and an emerging industry in which China has a global competitive advantage. (

Coal at risk as Obama seeks to revive emissions progress

June 26, 2013. In his first presidential term, President Barack Obama presided over a sharp decline in U.S. carbon pollution. With the economy depressed, Americans drove less. Low natural gas prices prompted utilities to shutter carbon-heavy coal plants, and burn more gas for electricity. Solar and wind installations soared. This year, coal use and carbon emissions are up -- and forecast to grow in the years ahead, putting in doubt Obama’s 2009 pledge to cut greenhouse gases 17 percent by 2020. It’s against that backdrop that he outlined a broad swath of policies to curb the use of coal, improve the efficiency of appliances and boost clean-energy investments. Coal-related shares, such as Peabody Energy Corp. (BTU) and Arch Coal Inc. (ACI), have fallen in recent days as word of Obama’s plans leaked out. The Stowe Global Coal index of companies that produce and sell coal, including Arch, fell to its lowest level since the depths of the recent recession in March 2009. Some renewable energy companies, such as First Solar Inc., based in Tempe, Arizona, rose. The U.S. had been on a path to reaching Obama’s goal, with emissions down more than 12 percent from the peak in 2007, the steepest drop since the oil crisis of the late 1970s. Since 2006, no other country has cut its total carbon pollution by as much as the U.S., according to Obama. (

UK risks missing carbon targets without clearer signals

June 26, 2013. The U.K. risks missing targets to reduce carbon dioxide pollution unless it moves faster, the government climate-change policy adviser said. Britain has set five-year carbon budgets through 2027. While the nation has “comfortably achieved” the first budget that ended in 2012, and looks set to meet the one ending in 2017, the pace of carbon cuts isn’t enough to meet the next two, the Committee on Climate Change said in a report. The U.K. aims to cut its emissions in half by 2027 by building new nuclear and wind-power plants, slashing coal consumption and imposing energy-efficiency measures on homes and businesses. It’s pushing legislation through Parliament to stimulate 110 billion pounds ($170 billion) of investment in power plants and the electricity grid by 2020. The U.K. emitted 2,915 megatons of carbon dioxide for the five years through 2012, according to the committee. After accounting for the purchase and sale of tradable carbon permits with Europe, net emissions were 2,961 megatons. Under the first budget, it was allowed 3,018 megatons, or 604 megatons per year. (

Summit Investments plans Bakken oil & water pipeline expansion

June 26, 2013. Summit Investments, as closely held Summit Midstream Partners LLC is known, will spend $60 million to build an additional 145 miles of pipelines in the Bakken oil-shale region, the company said. The expansion, part of the Divide system, is in addition to about $200 million in capital spending planned for 2013. The project’s broadening comes after Summit said it would construct the Polar crude oil and water-gathering system for Bakken in Williams County, North Dakota. Summit announced $460 million in acquisitions in the Bakken and Marcellus fields as it plans to nearly double the amount of gas it gathers there. (

Obama’s overseas coal pledge to curb Ex-Im Bank financing

June 26, 2013. President Barack Obama pledged to end U.S. government financing of overseas coal projects, a promise that could end millions of dollars in support for power plants in nations such as Vietnam and India. As part of a “Climate Action Plan” released, Obama called for ending U.S. support of foreign coal-fired power plants, unless they are in the poorest nations or have expensive carbon-capture technology. Until now, Obama’s push to double exports of U.S. goods and services had conflicted with his environmental goal of reducing the greenhouse gases linked to climate change, as the U.S.- backed Export-Import Bank had expanded financing that, by its own accounting, led to more and more greenhouse-gas emissions. (

Plastic shopping bags may go the way of lead paint

June 26, 2013. Plastic shopping bags, a staple of the American retail experience for a half-century, may be going the way of lead paint and other banned products. Los Angeles, the second most-populous U.S. city, became the largest American metropolis to curb use of the ubiquitous bags out of concern that they clog waterways, kill marine life and litter public places. An alderman in Chicago has introduced a similar measure, and a councilman in New York said he plans to follow suit. The city of 3.9 million uses more than 2 billion plastic carryout bags a year, with most ending up as litter or in landfills, according to a Sanitation Bureau report. Officials in all three cities say their goal is a coast-to-coast ban on the bags, which some compare to the polystyrene foam sandwich containers that McDonald’s Corp. phased out in the 1990s. The plastic-bag industry is fighting the bans. The American Progressive Bag Alliance, its lobbying arm, said ordinances like Los Angeles’s threaten a business that employs 30,800 people in 349 communities that has embraced recycling and other measures to cut pollution. (

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