Three Comments & A Funeral Lydia Powell, Observer Research Foundation
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L |
ast week evolved into an eventful one for oil after a wealthy Saudi Prince pronounced the impending death of oil and OPEC oil power. This was followed by the ‘Economist’ declaring on its cover page that oil was ‘yesterday’s fuel’. Both had different reasons for pronouncing roughly the same thing, the eventual decline of oil. The concern of the Prince was Saudi Arabia’s dependence on oil revenues and the threat to this revenue from shale oil & gas production in the United States. These concerns were triggered by comments of by another Saudi Prince in May that Saudi Arabia needs to increase its production to 15 million barrels per day (mb/d) by 2020 to meet domestic consumption and export revenue requirement. A day after this comment, the Saudi oil minister Ali Al-Naimi felt the need to express concern over the comment and also felt the need to reassure the jittery oil market with the comment that he is not concerned about increasing US output from shale formations as this was not the first time OPEC faced a surge in production from outside the group. This may or may not be an honest remark but it seems to have triggered some very interesting predictions in the popular media. Predictions on oil have almost always been wrong and so this column will reserve its right to silence and not venture into endorsing or contesting the view. However it will take the liberty of commenting on the changing narratives on oil on what this could mean for India.
One can identify three broad narratives coming up though they are used interchangeably in the media. One is that the oil era will end before the world runs out of oil; the second is that Saudi Arabia will run out of oil for export; the third is that the United States will revert to being a net oil exporter. The Economist’s bold declaration that the end of oil era is neigh on its cover page is one of the most attention-grabbing in predicting the decline of oil. Its main argument is that efficiency gains in automotive technology along with the probability of gas becoming a fuel of choice for transportation would displace demand for oil. Strangely, many of the predictions on oil rely on analysis by Citibank. According to the Citybank analysis, if fuel efficiency of cars and trucks improves by an average of 2.5% a year it will be enough to constrain oil demand and limit it to a peak of 92 mb/d in the next few years. This is lower than predictions for oil demand by agencies such as the International Energy Agency (IEA) which expect global oil demand to peak much later at a higher level on account of time required for efficiency gains to filter into large growing markets like China and India. Even if we don’t agree with the quantitative figures we can all agree that efficiency gains will be made and India and China will leap frog into more efficient technologies straight-away. In theory this means lower prices and greater access which is a good thing for India and the rest of the world.
The second is the narrative on Saudi Arabia losing its power as the largest oil exporter either on account of slowing demand for oil or on account of Saudi Arabia running out of oil for export or on account of the United States displacing Saudi Arabia as the largest oil exporter. This is not exactly a new idea as far as academic world is concerned but the fact that it has crossed the species divide and made it to the popular press shows that it is no longer considered to be far-fetched. It is true that Saudi Arabian production is below its peak level of 9.6 mb/d achieved in 2005. It is currently producing roughly 8.2 mb/d. As per some studies, Saudi production will increase to about 9 mb/d by 2020 and decline terminally thereafter touching a low of 4.74 mb/d by 2030. One of the reasons is growing domestic demand. Oil accounts for 65 % of power generation in Saudi Arabia with natural gas accounting for about 27%. This means that Saudi Arabia burns 1 mb/d of oil for power generation. Current power generation capacity which stands at about 45 GW is expected to increase to 120 GW by 2030. The second main source of oil consumption is water desalination. It is estimated that Saudi Arabia consumes over 20% of oil production (1.6 mb/d) to power 27 desalination plants and this expected to increase to 40% if no alternative sources is found. If all this proves to be true then the world could be deprived of 5mb/d of oil from Saudi Arabia by 2025. If production from other regions are unable to make up for the decline, oil prices could rise to unprecedented levels which would spell disaster for countries like India.
The third narrative is that of the United States powering ahead of Saudi Arabia as a large oil producer and exporter. There is evidence of growing oil exports and declining oil imports from the United States. The US trade deficit in petroleum products is said to have fallen by over USD 2 billion and is expected to fall further. According to the IEA, oil production in the United States is expected to grow by 3.9 mb/d in the next five years accounting for two thirds of non-OPEC oil production. This is a positive development not just for India but for the oil market in general. Oil security (or energy security for that matter) is a public good and one country increasing its oil security through increased domestic production will make available equivalent quantities of oil to other markets and also reduce the pressure on oil prices. The geo-political implications are beyond the scope of this weekly but it will be very interesting. Overall this is a positive development for the oil market that was not expected even in the wildest of analysts’ dreams.
In the final analysis we can say for certain that we can expect a lot more comments on greater availability of oil from unexpected sources and if there is a funeral it would be for oil demand rather than for oil supply.
Views are those of the author
Author can be contacted at [email protected]
COAL
Diversification of Energy Basket is Certain but Direction of Diversification is Uncertain
Ashish Gupta, Observer Research Foundation
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here are projections from many think tanks, research agencies and analysts that on what would be the likely energy mix for India in 2050s. But the fact of the matter is no one is certain on the direction of change as it is very difficult to ascertain the future energy basket. There is no doubt that in the future, GDP will increase and more people will become richer. But the transition from fossil fuels to cleaner energy is not likely to be easy as far as India is concerned. India is indeed an energy starved country with 400 million people without access to electricity. Naturally India is unlikely to succumb to international obligations on mitigating carbon emissions for which we are not responsible by reducing the use of fossil fuels. Therefore international community has the obligation to answer very basic questions – who is going to be responsible for the sacrifices and who is going to enjoy comfortable lives before demanding unilateral decision on behalf of others?
The emissions statistics are clear on responsibilities - India 1.38 Giga tonnes (GT and USA alone at 19.1 GT compared to World average of 4.3 GT. One can clearly see who is responsible for large quantities of carbon emission. As per the draft report on “Low Carbon growth strategy” for India, even if India burns all its coal reserves for power generation its carbon emission are unlikely to increase above 4.5 GT or 3 tons per person which is lower than the current global average. So, why there is no discourse on bringing reforms in the life style of the western fraternity when discourses abound on how to make poor livelihoods ‘green’. The whole idea of green energy must not be enforced on the moral or social ideology of combating climate change. Like all decisions it must be based on financial economics and whether India can afford the luxury or not.
Coming back to the diversification of our energy mix. It is indeed very true that India must diversify its energy basket to reduce its dependence on imports and at the same time maintaining its energy security. But the bigger question here is that how diversification will help in our energy security. Also what time framework we will be looking at to diversify our energy mix. Will it be 20 years, 30 years, 40 years or 60 – 70 years? Currently India’s dependence on fossil fuels for energy is almost 80 percent comprising of oil, gas and coal. If we take the scenario of 20 – 40 years, it is unlikely that India will be able to diversify its energy basket though there will be small changes here and there. Apart from that can India be denied to use its indigenous coal reserves (7% of the total world reserves) on the basis of non-economic reasons? Therefore, our future energy diversification is going to be decided by our financial capability. The same holds true for other developing nations including China.
Well China and India are always criticized for burning coal but in all the analysis the key role played by coal in reducing poverty particularly in China has never been highlighted including reports by the World Bank. According to the World Bank statistics the poverty in China has been reduced from 84% to 13% between 1980 and 2008. During the same period Chinese coal consumption increased by 400% from 626 MT to 2.7 BT but it is not mentioned as a cause of poverty reduction. It is coal which built up basic infrastructure and created local enterprises throughout China. Having said that, predominance of coal in India will continue to remain for the next 20 – 40 years whether anyone likes it or not. To the question ‘why India is dependent on coal?’ the answer is very simple. It is the cheapest, easily available and robust unlike other sources of energy.
· Natural gas: marked by limited production and non-availability. Also absence of reforms on gas pricing and development of detailed regulatory framework. In addition we also lack in transport infrastructure.
· Nuclear: costly and coupled with public opposition. After having sixty odd years of experience the government is still unable to convince people about the benefits of nuclear energy.
· Hydro: absence of clear cut policies for the operator, supplier and the consumer and plagued with federal-state conflicts.
· Oil: highly dependent on imports and increasing current account deficit limiting the viability of this option.
· Solar power: good option but not all locations are suitable for solar power. In addition harnessing solar energy is still very expensive. Though the capex construction cost per mega watt has came down from USD 2 Million to USD 1.6 Million but the decease is offset by the increment in inverter prices. Inverter forms a significant component of the solar power.
Given the prevailing situation, it is very interesting to see how our energy diversification will be in the coming future. If we will follow the ‘aggressive renewable strategy’ then the scenario will be as follows:
Less coal and Higher Renewable
|
Projections for 2035 |
Coal |
Natural Gas |
Diesel |
Nuclear |
Hydro |
Renewable |
|
% Electricity supply share |
50 |
12 |
2 |
3 |
11 |
22 |
|
Electricity Generation (BU) |
2095 |
503 |
84 |
126 |
461 |
922 |
|
% Avg. Load factor |
70 |
70 |
16 |
70 |
38 |
26 |
|
Installed Capacity (GW) |
340 |
82 |
59 |
20 |
137 |
412 |
Source: IIT Mumbai Study
The table shows that even if we increase renewable installed capacity to 412 GW their contribution towards power generation will not be more than the installed capacity of other sources whose contribution will be many times more than their respective installed capacity except diesel. So even in 2035 coal will remain as the unmatched source and to produce the same amount of electricity through renewable the capacity we will have to be increased by ten to fifteen times.
But the dilemma remains that if we diversify, we will be spending a huge amount from our small investment kitty and if we do not diversify it will hamper our energy security. There is no denying the fact that we can strengthen our energy security if we acknowledge and embrace resource interdependence. But the whole value chain of the energy security is impacted especially if they cannot support investment, financial viability and consumption requirements. Diversification must be done on basis of a sound economic approach; otherwise it will have devastating effects on the country’s economy at the macro level by way of raising the import bill and at the micro level in the form of very high energy prices. Therefore anyone who claims to know the answer to what will be the India’s diversified energy basket in the future will only be making a wild guess.
Views are those of the author
Author can be contacted at [email protected]
DATA INSIGHT
India’s Coal Import Scenario
Akhilesh Sati, Observer Research Foundation
|
Year |
Quantity (Million tonnes) |
Value (US$ Billions) |
|
1999-00 |
19.7 |
1.01 |
|
2000-01 |
20.93 |
1.1 |
|
2001-02 |
20.54 |
1.14 |
|
2002-03 |
23.26 |
1.24 |
|
2003-04 |
21.68 |
1.41 |
|
2004-05 |
28.95 |
3.2 |
|
2005-06 |
38.59 |
3.87 |
|
2006-07 |
43.08 |
4.58 |
|
2007-08 |
49.79 |
6.43 |
|
2008-09 |
59 |
10.08 |
|
2009-10 |
73.26 |
8.97 |
|
2010-11 |
68.92 |
9.78 |
|
2011-12(p) |
102.85 |
17.52 |
(p)- Provisional
Percentage change in imports (value & quantity) w.r.to previous year
Source: Ministry of Coal; Ministry of Commerce and Ministry of Statistics
NEWS BRIEF
NATIONAL
OIL & GAS
Upstream
RIL, IOC, Cairn India in race for HPL
August 4, 2013. Reliance Industries Ltd (RIL), Indian Oil Corporation (IOC) and Cairn India are among six firms that may submit price bids to buy about 31 per cent stake in beleaguered Haldia Petrochemicals Ltd (HPL). RIL, IOC, Vedanta Resources through subsidiary Cairn India, ONGC, GAIL India Ltd and Jindal Steel and Power Ltd had submitted expressions of interest to buy a 31 per cent stake in HPL held by the West Bengal government. The six companies are doing due diligence and they will be asked to submit price bids in September. The Chatterjee Group (TCG), a joint promoter of HPL, will have the right of first refusal to match the highest bidder. TCG is currently in a legal battle with the state government over control of the company. The West Bengal government had sought buyers for its 39.99 per cent stake, or 67.5 crore equity shares, in HPL. The stake put on the block included 15.5 crore shares on which TCG laid claim and approached the court. The Calcutta High Court advised the state government to go ahead with the sale of the remaining stake, which is about 31 per cent. (economictimes.indiatimes.com)
RIL, ONGC, Cairn in race for Myanmar blocks
August 1, 2013. Reliance Industries Ltd (RIL), ONGC Videsh Ltd (OVL) and Cairn India are vying with global energy giants Shell, ConocoPhillips and ExxonMobil for 30 offshore oil and gas blocks that Myanmar has put on offer. In all, 61 companies have been pre-qualified to bid for 11 shallow water and 19 deepwater blocks in an international tender, according to Myanmar's Energy Ministry. The shortlisted companies from India include RIL, OVL, Oil India Ltd, Cairn India, GAIL India and Jubilant Offshore Drilling. (economictimes.indiatimes.com)
ONGC to start oil, gas production from KG basin deepsea field by Sep
July 31, 2013. Oil and Natural Gas Corp (ONGC) is likely to start oil and gas production from its first deepsea field in Krishna-Godavari basin off Andhra coast by September. ONGC plans to use temporary facilities to begin production from G-1 marginal field in the KG basin by August-end or early September. Initial production is likely to be about 1 million standard cubic metres per day from two wells. Peak output from the field was originally envisaged at 2.2 mmscmd but the company lost a well due to a gas blowout last year. The well had to be plugged and abandoned. In all, ONGC had planned to drill 4 wells to produce 2.2 mmscmd of gas. But with loss of one well, the peak output now envisaged is 1.6-1.7 mmscmd which will be achieved by June/July next year. ONGC will sell the gas to state-owned GAIL India Ltd at $4.75 per million British thermal unit. G-1 field, which will also produce some oil, was originally to be developed with a neighbouring GS-15 field. GS-15 began production in September 2011 and G-1 was to start output in July 2012 but the production was delayed. GS-15, which touched a peak of 0.19 mmscmd, has been declining and is currently producing about 100,000 cubic metres per day of gas and about 100 cubic metres of oil. The twin fields are expected to be in production till 2022-23 when output would taper to 0.029 mmscmd. ONGC envisages the production of 0.982 million tonnes of sweet or low-sulfur crude and 5.92 billion cubic metres of gas over a period of 15 years from G-1 and GS-15. G-1 is located 28 kilometres off the Amalapuram coast, in water depths ranging from 135 to 500 metres, while GS-15 is located 5 km from the coast in the KG Basin. G-1 and GS-15 are two marginal fields that were awarded to ONGC on a nomination basis. The two acreages are being developed together at an estimated cost of ` 1,200 crore. (economictimes.indiatimes.com)
Natural gas production will to go up to 183 mmscmd by FY20: ICRA
July 31, 2013. Domestic natural gas production, which has steadily declined in the last two years, is expected to increase from 111 mmscmd in FY13 to around 183 mmscmd by FY20 on the back of future discoveries, rating agency ICRA said. The report further said the demand potential for natural gas is expected to significantly rise from 250 mmscmd at present to 360 mmscmd by FY20. The report also said it sees gas demand rising to 435 mmscmd by FY25. It is to be noted that actual consumption of gas was around 140 mmscmd in FY13, which dipped over the last two years from 177 mmscmd in FY11 due to constrained gas availability. The study pointed out that despite increase in natural gas production, it is expected to be lower than the demand, which would prompt consumers to look at re-gasified liquefied natural gas (R-LNG). (economictimes.indiatimes.com)
Private refiners made ` 100 bn on flawed pricing: CAG
August 5, 2013. A draft report of Comptroller & Auditor General (CAG) has criticised oil companies for using a pricing system that helped private refiners gain ` 10,196 crore in five years. The report has also censured the oil ministry for causing a revenue loss of over ` 1,56,000 crore over the same period. The controversial formula, which also applies to retail buyers at petrol pumps, makes diesel about ` 2 per litre costlier because buyers are forced to pay additional costs that companies do not incur, such as customs duty. As a result, state firms also gain handsomely from sales to retail customers. Oil firms pay no customs duty on crude oil, and do not import diesel. But the Delhi retail price of diesel at ` 51.40 includes ` 1.21 of customs duty. Petrol is priced similarly. This is an additional benefit for state refiners when they sell to customers, and for private refiners such as Reliance Industries and Essar Oil when they sell to state firms. Since state firms dominate the retail market, their gains from charging additional money to retail customers would be enormous. CAG's draft report said companies suffered a revenue loss of ` 96,231 crore for 2009-10 and 2011-12 as kerosene and cooking gas subsidies were not restricted to the poor. The auditor also observed that the delay in charging full market rates for diesel to bulk buyers, such as the railways, led to a revenue loss of ` 59,073 crore in five years. India's top auditor is scrutinising the pricing methodology of state oil firms for 2007-12 for various petroleum products, particularly regulated fuels such as diesel, kerosene and cooking gas, and is expected to submit a final report soon. The draft also criticised state-run fuel retailers for buying petrol, diesel, cooking gas and other petroleum products from private and standalone refineries located in India on the basis of a formula that gave 80% weightage to import parity pricing (IPP) and 20% export parity pricing (EPP), also known as trade parity pricing, or TPP. The transaction helped private refineries get benefits worth ` 10,196 crore while standalone refineries made ` 9,485 crore during the five-year period, the draft report said. Standalone refineries are owned by public sector companies but do not belong to the three fuel retailers - Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp. (economictimes.indiatimes.com)
Petronet wants IOC to drop Ennore LNG terminal
August 4, 2013. With Indian Oil Corp (IOC) looking to set up two LNG terminals on the east coast, Petronet LNG Ltd has asked the state-run refiner to drop plans to duplicate infrastructure and has offered to meet all of its gas needs. While Petronet is close to starting a 5 million ton-a-year import facility at Kochi in Kerala and a similar-capacity terminal on the Andhra Pradesh coast in 2016, IOC plans to build LNG plants at Ennore in Tamil Nadu and Dhamara port in Odisha, primarily to meet the gas needs of its refineries. Petronet, the nation's biggest importer of gas in liquid form, known as liquefied natural gas or LNG, says its Kochi facility and the upcoming terminal at Gangavaram in Andhra Pradesh provide easy connectivity to meet all of IOC's gas needs at the Chennai refinery. Petronet has offered IOC as much capacity as it needs at Kochi and Gangavaram to import gas. IOC, ONGC, GAIL and BPCL each hold a 12.5 per cent stake in Petronet, a firm that was created to set up facilities to import LNG in ships to meet the country's energy needs. Also, IOC's gas requirement for the upcoming Paradip refinery can be met from the Gangavaram import terminal near Vishakhapatnam. While the Gangavaram terminal will come up in 2016, Petronet is looking at hiring a floating terminal for 3-5 years to cover the period till the terminal is completed. Petronet operates a 10 million ton-per-annum terminal at Dahej in Gujarat, which it plans to expand to 15 million tons by 2016. (economictimes.indiatimes.com)
Owners may evict petrol pumps to cash in on realty boom in big cities
August 2, 2013. Lucrative real-estate projects may soon replace many petrol pumps in big cities as land owners shy away from renewing their lease agreements with fuel retailers, particularly in Mumbai where commercial towers or malls will uproot one-third of the 227 pumps within a period of five years. Hindustan Petroleum Corp Ltd (HPCL) is currently the largest fuel retailer in Mumbai. Indian Oil Corporation's 60 petrol pumps are on the verge of closure in Bangalore, Kolkata, Chennai, Mumbai and Delhi because landlords do not want to renew the lease agreement, according to the company. IOC has been forced to shut down six pumps in Chennai (at Alwarpet, Mylapore-Mandevelli area and Kilapuk), two in Mumbai (Goregoan and Kandivli) and one in Bangalore due to the lease problem in last couple of years. It is fighting 32 court cases where landowners want the company to evict, IOC said. Petrol pumps could be treated like public amenities and the state government could reserve land in every locality for this purpose. Oil companies want that landowners of petrol pumps should not be allowed to change land use. Currently, landowners are free to change the usage of their land after lease agreements for pumps expire, according to oil companies. (economictimes.indiatimes.com)
Transportation / Trade
GAIL India plans to sell part of stake in China Gas Holdings
August 6, 2013. GAIL India plans to sell part of its 4.6 per cent stake in Hong Kong-listed city gas distribution firm China Gas Holdings. GAIL, which made a strategic investment of ` 137 crore by acquiring 210 million shares of China Gas in 2005, will sell part of the holding, Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi said. The gas utility plans to keep a small strategic interest in the company that will help it retain its board position in China Gas, the Minister said. China Gas has exclusive rights to set up gas distribution projects in 42 cities in China. GAIL picked up equity in the company as China was keen to replicate Delhi's success in using natural gas as a vehicular and domestic fuel in its cities, primarily Beijing, before the 2008 Olympics. GAIL saw synergies in city gas/CNG business. Now that the city gas distribution business is being pursued by GAIL's wholly owned subsidiary, GAIL Gas, the company feels continuation of the investment in China Gas does not appear to meet the original objectives. Also, China Gas shares are currently performing well on the Hong Kong Stock Exchange, giving the company a market capitalisation of around USD 4.4 billion. GAIL has earned only ` 16.29 crore as dividend on its investment in China Gas over seven years. As the current share price is more than seven Hong Kong dollars, GAIL believes it is a good time to sell and re-invest the earnings from the stake sale in overseas upstream assets. (economictimes.indiatimes.com)
IGL committed to providing PNG to all technically feasible areas of Delhi: Oil Minister
August 6, 2013. Oil Minister M Veerappa Moily has said that Indraprastha Gas Ltd (IGL) would provide piped natural gas or PNG connections to all feasible areas in New Delhi. He said IGL's pipeline network laying work was in progress near Samalkha crossing, two kilometers form Kapashera village. IGL is committed to providing PNG connections to all technically feasible areas of Delhi, he said. The areas not meeting safety guidelines would not be connected with PNG. (economictimes.indiatimes.com)
IOC to cut Iranian oil imports by 23 pc: Oil Minister
August 6, 2013. Indian Oil Corp (IOC) plans to cut crude oil imports from Iran by over 23 per cent in the current year, Oil Minister M Veerappa Moily said. IOC imported 1.566 million tonnes of oil from Iran in 2012-13 financial year. IOC imported 0.577 million tonnes of oil from Iran during April-June quarter of current fiscal. Moily said IOC imported oil worth USD 1.262 billion in 2012-13 from Iran. Of this, USD 653.015 million in rupee and USD 415.140 million in euros through a Turkish bank. USD 194.31 million remains to be paid from 2012-13. Of the current year purchases, IOC has paid USD 193.09 million in rupee and USD 235.99 million balance remains, he said. India slashed import of crude oil from Iran by over 26.5 per cent in the financial year ended March 31 as US and European sanctions made it difficult to ship oil from the Persian Gulf nation. The nation imported about 13.3 million tonnes of crude oil from Iran in 2012-13 fiscal, down from 18.1 million tonnes shipped in the previous financial year. (economictimes.indiatimes.com)
BG Group fails to pocket amount it projected from Gujarat Gas sale
August 5, 2013. Depreciating Rupee against dollar might be proving boon for the foreign investors but it is hurting those who are pulling out their investments from India around this time. BG Group that sold its controlling 65% stake in Gujarat Gas Company Limited to the state owned Gujarat State Petroleum Corporation (GSPC) group did not suffer only due to depreciated Rupee but contentious issue of capital gain tax too troubled it. BG that was supposed pocket $ 450 million from the divestment of country's largest city gas distribution venture in October 2012 ended up pocketing only $ 422 million due to fall in value of Rupee as the transaction took longer than expected. (economictimes.indiatimes.com)
Petroleum Ministry Joint Secy appears before Green Tribunal
August 5, 2013. Petroleum and Natural Gas Ministry Joint Secretary R K Singh appeared before the Southern Bench of the National Green Tribunal complying with its directive in connection with contamination of drinking water by oil spill from the pipeline in a northern suburb of Chennai. Joint Secretary R K Singh from the Ministry, who appeared before Justice P Jyothimani, submitted samples of the contaminated water had been sent for testing to get details of the oil spillage. The bench is hearing a petition by one V P Krishnamoorthy of Washermenpet who submitted drinking water supply in his area was contaminated following an oil spill and seeking regulatory method for the regulation of pipes supplying oil. The Tribunal had directed the appearance of any senior officer from the Ministry. Since no official turned up, it later directed an officer in the rank of Joint Secretary to appear. Singh submitted the samples of contaminated water of the oil spilled area had been sent to IIT for testing, following which the judge adjourned the matter. (economictimes.indiatimes.com)
IOC restores supply of LPG, kerosene to Bhutan
August 1, 2013. Indian Oil Corp (IOC) restored supply of subsidised cooking gas (LPG) and kerosene to Bhutan after a month long hiatus. India sells LPG, kerosene and diesel to Bhutan at subsidised rates. While the difference between the selling price and actual cost on diesel is made good from the Budget, the subsidy on LPG and kerosene is paid by Ministry of External Affairs (MEA). IOC, which is the sole supplier of LPG and kerosene to Bhutan, had stopped selling the two fuels at concessional rates from July 1 after it was told that the MEA subsidy will no longer be available. The company got a communication from the Oil Ministry asking it to restore the subsidy on kerosene and LPG supplies to Bhutan from August 1. While supply of subsidised LPG and kerosene to Bhutan had stopped from July 1, sale of diesel at concessional rates had continued as before. Normally, subsidy is released at the end of the quarter and about ` 30 crore towards LPG and kerosene subsidy for January-March quarter had not been paid. A similar amount would be due for the subsequent quarter. IOC sold 7,312 tons of LPG and 4,311 tons of kerosene to Bhutan in 2012-13. In April-June, it sold 1,791 tons of LPG and 763 tons of kerosene. While is the sole supplier of LPG and kerosene to Bhutan, diesel sales are also made by Bharat Petroleum Corp Ltd (BPCL). Of the 103,003 tons of diesel supplied in 2012-13, 60,409 tons came from BPCL and 42,594 tons was done by IOC. (economictimes.indiatimes.com)
MRPL aims to resume Iran oil imports from Aug
July 31, 2013. Mangalore Refinery and Petrochemicals Ltd (MRPL) plans to resume Iranian oil imports from August, after stopping for four months, because it has found no suitable alternatives. Resumption of shipments by MRPL, Iran's top Indian client until it stopped purchases in April, will help to revive the country's Iranian oil imports. India's intake of Iranian crude fell by 40 percent in the April-June quarter, as refiner Essar Oil became Iran's lone Indian client. HPCL and MRPL both halted their Iranian oil buys amid difficulties securing insurance for refineries processing oil from the sanctions-hit country. MRPL stepped up purchases from term suppliers including Saudi Arabia and bought Oman oil to replace the Iranian barrels. India's imports of Iranian crude more than halved in June from a year ago, dropping to 140,800 barrels a day (bpd), tanker data showed. MRPL aims to import about 80,000 bpd of oil from Iran in the current fiscal year, similar to lifting in the year ended March 31, and could ship in up to four aframax cargoes in August. MRPL said that local reinsurer General Insurance Corp would be able to settle any refinery claim up to ` 5 billion ($82.83 million) as long as India has a U.S. sanctions waiver that allows it to continue imports of crude oil from Iran. Under its current policy with a local insurer, MRPL is entitle for a permissible maximum loss of ` 70 billion. Sanctions from Washington and the European Union aim to block Tehran's oil revenue over its disputed nuclear programme, which they say is to build weapons. Iran denies this claim. India won its third 180-day waiver from the U.S. sanctions in June after significantly reducing purchases of oil from Iran. New Delhi and Tehran are trying to strengthen trade ties, partly to keep Iran's oil flowing and partly so Indian can pay for the crude with exported goods. Iran's oil minister visited India in May and offered to provide insurance for the refineries running Iranian oil, in return for stepped up purchases from the OPEC member. Iran has also made sovereign guarantees to domestic insurance companies that cover vessels carrying oil to India. An Iranian insurance delegation is expected to visit India from Aug. 12 to 16 to explore the feasibility of providing reinsurance cover to refiners. (economictimes.indiatimes.com)
Policy / Performance
CNG prices to jump by up to ` 11.72 due to gas price hike
August 6, 2013. The government decision to double natural gas prices from April next year will translate into a hike of ` 8.20-` 11.72 per kg in CNG rates in cities like Delhi and Mumbai. The government had in late June decided to price all domestically produced natural gas at an average of global hub rates and cost of imported LNG. Accordingly, gas price is expected to be in the range of USD 8.2 to 8.4 per million British thermal unit in April as against current USD 4.2. While CNG supplier in national capital Indraprastha Gas sources 70 per cent of its needs from domestic fields, Mahanagar Gas Ltd buys almost all of its gas from domestic producers. Also, CNG retailers in Gurgaon and Faridabad source almost all of their gas needs from domestic fields. For cities like Mumbai, the USD 4 per mmBtu hike in natural gas price will translate into ` 11.72 per kg increase while in Delhi the increase may be about ` 8.2 per kg. CNG or compressed natural gas in Delhi currently costs ` 41.90 per kg and the same in Mumbai is priced at 35.95. Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi said a USD 1 per mmBtu increase in gas price would result in USD 24,893 per tonne hike in urea production cost. This additional production cost would be the increase in subsidy the government paid on urea. On power, a USD 1 per mmBtu increase in gas cost would result in cost of electricity generation going up by 45 paisa per unit. (economictimes.indiatimes.com)
Oil Min asks RIL to provide records for CAG audit
August 6, 2013. With Comptroller & Auditor General of India (CAG) alleging that Reliance Industries was delaying furnishing of records for audit, the Oil Ministry has ordered the RIL to provide records "as early as possible". Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi said RIL has responded that the pending information was being collected and would be provided when it was ready. RIL was providing information sought in phases and some records sought were still pending. CAG is auditing KG-D6 spending for 2008-09 to 2011-12. It restarted the audit in April after issues like scope and extent of its scrutiny were resolved. CAG cannot contractually perform a performance audit on it and Production Sharing Contract (PSC) only provides for a government appointed auditor to verify reasonableness of all charges and credits. (economictimes.indiatimes.com)
CBI closes preliminary enquiry against VK Sibal on KG-D6 gas price issue
August 6, 2013. After probing the case for three years, CBI has closed a preliminary enquiry against former Director General Hydrocarbons V K Sibal for allegedly colluding with Reliance Industries to jack up KG-D6 gas field cost for lack of evidence. RIL had in 2004 proposed to develop the eastern offshore KG-D6 field at a cost of USD 2.39 billion to produce a peak output of 40 million standard cubic meters per day of gas. Two years later, it again approached the government seeking permission to amend the plan by raising capex to USD 8.8 billion and indicated a production of 80 mmscmd. The field has, however, not produced according to the plan and the output of gas has plummeted to under 14 mmscmd this month. CBI, at the instance of the Oil Ministry, had begun the probe in 2009. During the three years of probe, the available documents were scrutinised by the senior officials of CBI as well as legal experts of the government, after which the decision was taken. CBI had also constituted a team of experts from other ministries as well which went go into the case. An analysis of the global market was also carried out to check the pricing of gas and whether there was any overcharge by the company. (economictimes.indiatimes.com)
Madras HC reserves orders on PIL on oil pricing policy
August 6, 2013. The Madras High Court (HC) reserved orders on a PIL challenging the Centre empowering oil marketing companies to fix prices of fuel and pleading for a direction to rescind the existing pricing policy. The First Bench, comprising Acting Chief Justice R K Agrawal and Justice M Sathyanarayanan, reserved the orders on the petition filed by R Balasubramanian, an advocate. The petitioner had contended that the government should withdraw the powers given to oil marketing companies as the pricing policy being followed affected millions of people in the country. Additional Solicitor-General of India, P Wilson, pleaded with the court to dismiss the PIL and impose exemplary cost on the petitioner who has made certain defamatory remarks against various constitutional authorities in his petition. The judges reserved orders on the matter. (economictimes.indiatimes.com)
Oil Ministry plans to divert some non-priority gas to power plants
August 6, 2013. The oil ministry plans to divert some natural gas from non-priority consumers to fuel-starved power units, which will be enough to generate 240-480 MW electricity immediately and about 2,400 MW after two years. The additional gas is managed from blocks held in joint ventures between state energy firms and private companies such as the Rajasthan block and Panna, Mukta & Tapti (PMT) oil and gas fields. The empowered group of ministers (EGoM), which allocates scarce natural gas to different sectors according to the country's priority, is expected to consider the proposal soon. (economictimes.indiatimes.com)
ONGC Videsh's operations in Russia may have to pay for Sistema's Indian woes
August 1, 2013. The setback to Russian telecom giant Sistema in India may impact ONGC's operations in Russia. Sistema and ONGC signed a strategic partnership agreement when former oil minister Murli Deora visited Moscow in December 2009. ONGC Videsh Ltd (OVL) acquired Imperial Energy, an independent oil explorer that has its main assets in the Tomsk region of Western Siberia, in 2009. Imperal's oilfields produced a paltry 12,000 barrels per day last fiscal, well below the initial estimate of 80,000 bpd, which was scaled down to 35,000 bpd later. The plummeting output provoked criticism from the Comptroller and Auditor General of India. The Indian government tried to convince the Kremlin to delink Sistema's telecom issue from OVL's Imperial issue and grant it a tax holiday that exempts OVL from paying 35% mineral extraction and 50% corporate tax but to no avail. (economictimes.indiatimes.com)
Oil companies hike petrol, diesel prices on global cues
August 1, 2013. Petrol prices will go up by 88 paise per litre and diesel by 62 paise in the city. State oil firms cited rising international crude oil rates as the reason to hike prices. Oil firms have raised petrol prices five times since June while diesel rates have been raised by about 50 paise every month since January 17. Even after the current increase, revenue loss on retail diesel sale is at ` 9.29 per litre. The oil companies have been demanding a steeper diesel price hike to make up their revenue losses on the fuel, but the government decided against it. On January 17, the Cabinet had freed companies to charge market rates for bulk diesel and empowered them to raise diesel prices by 50 paise every month until pump prices are aligned with international market rates. (economictimes.indiatimes.com)
Those opposing gas price hike do not want domestic output to rise: Oil Minister
August 1, 2013. Oil Minister Veerappa Moily defended the government's decision to significantly raise natural gas prices, days after the Supreme Court sent notices following a petition against the decision, and said those opposing the cabinet's decision do not want domestic output to rise. He said some people were politicizing every bold decision taken by the government for political reasons. Leftist leader Gurudas Dasgupta has filed a petition against the government and RIL, challenging the Cabinet's decision to raise natural gas prices from $4.2 per unit to an estimated $8.4 next April.
Moily said India can't sustain high import bill, which is rising 5% per annum. He said that the government is open to reduce gas prices provided domestic output is raised substantially. Moily defended higher gas prices saying it would attract investment and make several fields viable. After inaugurating the launch of free insurance scheme Moily said Indraprashtha Gas Ltd (IGL) would pay an annual premium of ` 35 lakh to Oriental Insurance Company on behalf of auto and bus drivers in Delhi. He announced that the city gas distribution network would be expanded from currently 45 cities to 330 cities soon. (economictimes.indiatimes.com)
POWER
Generation
Work on Tuivai Hydro Electric Project to begin soon
August 6, 2013. The construction of the 210 MW Tuivai Hydro Electric Project in Mizoram would take off soon with the Centre giving a nod for the ` 1,750.6 crore project. The fund would be provided under the Viability Gap Funding (VGF) and would be taken up in the Public Private Partnership (PPP) mode. The hydro electric project was approved by the Union Finance Ministry's Empowered Institution. Mizoram was the first state to avail funding under the VGF and the first northeastern state to take up a mega project in PPP mode. (economictimes.indiatimes.com)
IL&FS Energy aims to add 10 GW of power
August 4, 2013. IL&FS Energy Development Company is executing 10,000 MW coal and gas based projects, and some of them are expected to start generation in the next one year, according to the company. The company is likely to the sign the PPA (Power Purchase Agreement) with Tamil Nadu for 15 years. IL&FS Energy has also envisaged setting up another 4,000 MW thermal plant in Gujarat and will also build a 2,000 MW gas-based plant and an LNG (Liquefied Natural Gas) terminal alongside the plant. The company is constructing a 2,000 MW gas-based project and an LNG terminal near that project. Approval processes are more or less over. The company which plans to add another 1,000 MW gas-based capacity in its kitty would do so by executing a 750 MW gas based plant in Joint Venture with ONGC in Tripura using the state-run company's gas. (economictimes.indiatimes.com)
Jindal Power may explore setting up hydro plants in Tajikstan
August 4, 2013. Jindal Power, a subsidiary of Jindal Steel & Power Ltd, may explore the possibility of setting up hydro power plants in Tajikstan. Jindal Power is currently executing three hydro power projects in the Northeastern state of Arunachal Pradesh, at Etalin, Atunnli and Kamla. Tajikstan, which has a hydro potential of 60,000 MW, is keen on Indian companies setting up plants. The company has prepared a detailed project report (DPR) for the Kamla project and will submit it to the government soon, while the DPR for the Atunnli project is under way. The Etalin project has been touted as the largest hydro power plant in the country. The company is grappling with several issues with regard to hydro projects. The company is considering buying hydro power projects of about 100 or 200 MW capacity and is in talks with some companies. Jindal Power also intends to focus on solar and wind energy projects. Jindal Power, which currently has 1,000 MW of coal-based capacity, is targeting 10,000 MW of thermal generation capacity by 2020. About 7,000 MW of the new capacity is likely to be added in India, either by setting up new plants or acquisitions, while the remainder will be developed overseas, mostly in Africa. (economictimes.indiatimes.com)
Adani Power says it may evaluate UMPP opportunities
July 31, 2013. Adani Power, which has ambitious capacity addition plans, is likely to evaluate opportunities for ultra mega power projects (UMPP) as and when bidding comes up. The leading power producer, however, has flagged problems faced by the private sector such as shortage of quality fuel and delays in land acquisition for projects. It has an operational capacity of 7,260 MW, including the 4,620 MW coal-fired Mundra plant. The government is in the process of finalising the standard bidding documents for future UMPPs and other power projects. So far, four UMPPs have been awarded to the developers and one is operational. The Prime Minister's Office had set deadlines for key infrastructure projects including two UMPPs. As per the schedule, UMPPs at Cheyyar in Tamil Nadu and Bedabahal in Odisha should be awarded by January 31, 2014. (economictimes.indiatimes.com)
Transmission / Distribution / Trade
Record power transmission lines laid in June 2013
August 5, 2013. The government said record number of high-tension power transmission lines were laid down during June this year. The length of 765 KV lines, 400 KV lines and 220 KV lines that were laid down in June 2013 was 1117 circuit km (CKM), 775 CKM and 1010 CKM respectively. These figures are much higher than the target for this month as well as the actual achievement for the last year. Transmission projects continue to be accorded a high priority in the context of the need to evacuate power from generating stations to load centres, systems strengthening and augmentation of National Grid. (economictimes.indiatimes.com)
Coal supply to power sector at 88 pc till June
August 5, 2013 Coal India Ltd (CIL) has supplied 86.39 million tonnes of coal to power sector till June 2013, which is 87.8% of commitment under the fuel supply agreements of 96.41 million tonnes, minister of state for coal Pratik Prakash Bapu Patil said. Coal stock with power stations has gone up to 19.75 million tonnes equivalent to 14 days' requirement in April 2013 and 22.02 million tonnes equivalent to 18 days' requirement as on July 29, 2013. Last April, the stock was at 14.14 million tonnes equivalent to 11 days' requirement, Patil said. (economictimes.indiatimes.com)
Power Grid ups 12th Plan capex by 10-15 pc
August 2, 2013. Power Grid Corporation has decided to revise upwards its capital expenditure for the 12th Plan period (2012-17) by 10-12 per cent to meet expansion plans. The state-run firm has also decided to sell 15 per cent stake through a follow-on public offer to raise funds but did not offer a timeline. The company plans to increase its capex plans by 10-12 per cent. Accordingly, it has anticipated a capex of ` 20,037 crore for FY13, ` 22,150 crore for FY14, ` 22,450 crore for FY15, ` 22,500 crore for FY16 and ` 22,550 crore in FY17. (economictimes.indiatimes.com)
UP clears PPP model in power transmission projects
August 1, 2013. Uttar Pradesh (UP) Cabinet cleared the proposal for public private partnership (PPP) model in power transmission projects of UP Power Transmission Corporation Limited (UPTCL). The corporation would now be able to call for competitive tariff based bidding for such projects. The decision was taken at a Cabinet meeting chaired by Chief Minister Akhilesh Yadav. In the first phase, the corporation was likely to solicit bids for projects worth about ` 2,000 crore in Agra, Mainpuri and Lalitpur districts for transmission lines of 2,000 km. (www.business-standard.com)
NTPC open to buying distressed power units
August 1, 2013. NTPC is exploring acquisition of distressed power projects to supplement its capacity growth. The company has cash of ` 18,738 crore which can be used for funding acquisitions. Many private companies like JSW Energy and Reliance Power have recently indicated their keenness to acquire distressed assets. Analysts believe that such a strategy would help these companies add capacity at a cost lower than that of setting up a new project as developers may offer projects at a discount. NTPC has planned capital expenditure of ` 20,200 crore for the financial year 2013-14 and is confident of executing it despite challenges related to land acquisition and environment clearances. The power utility added 4,170 MW in 2012-13, its highest ever capacity addition. As of July 31, total installed power generation capacity was 41,184 MW, while 20,064 MW of capacity was under construction, the company said. (economictimes.indiatimes.com)
NHPC calls private power cos to float joint ventures
July 31, 2013. NHPC Ltd has called private power companies implementing hydro power projects to form joint ventures. The company floated an expression of interest inviting independent power producers having allocated hydroelectric power plants to form joint ventures for implementing the projects. NHPC aims to tap on its expertise in implementing hydroelectric projects by assisting private companies. Private firms like Reliance Power, Jaypee Group and GMR Energy have bagged hydro power projects across various states like Arunachal Pradesh, Himachal Pradesh and Jammu and Kashmir. The last date for submission of technical bids is October 14, 2013. NHPC is currently implementing 10 hydroelectric projects totalling over 4500 MW. (economictimes.indiatimes.com)
Govt plans 88.5 GW new power generation capacity in 2012-17
August 6, 2013. The government plans to add a fresh power generating capacity of 88,537 MW in the next five years. The planned capacity comprises of 10,897 MW through hydropower plants, 72,340 MW through thermal and 5,300 through MW nuclear plants, power minister Jyotiraditya M Scindia said. Scindia said the government is taking several measures to achieve the new capacity addition target to meet the growing demand for power and providing power to all. The measures include monitoring of capacity addition of ongoing generation projects by the power minister, Planning Commission, Cabinet Secretariat, power secretary and chairperson of the Central Electricity Authority and; periodic joint review of issues related to supply of power equipment from BHEL by a group under the chairmanship of heavy industry secretary and power secretary. The Planning Commission had originally fixed the capacity addition target of 78,700 MW for the eleventh plan (2007-2012). However, during the mid-term appraisal of the eleventh plan by the Planning Commission, the target was revised to 62,374 MW. As against it, the power generation capacity addition achieved was 88% of the revised target at 54,964 MW. (economictimes.indiatimes.com)
Reliance Power seeking tariff increase for all UMPPs
August 6, 2013. Reliance Power, which bagged three of the four ultra-mega power projects (UMPPs) in the country due to aggressive bidding, is now seeking tariff increase for all of its plants. The company is learnt to have approached the Central Electricity Regulatory Commission (CERC) to revise the tariff of TilayiaUMPP in Jharkhand to ` 2.25 per unit, more than 25% increase from its original bid price of ` 1.77 per unit. The company has cited seven-fold increase in the cost of Rehabilitation and Resettlement (R&R) by ` 3,131 crore over the original pre-bid estimates. R-Power has also sought compensation from the government for the falling rupee and cost escalation due to increase in taxes and input costs for its 4,000 MW Sasan UMPP. The third plant, based on imported coal, is proposed at Krishnapatnam in Andhra Pradesh but is facing regulatory issues over rise in coal prices and water costs. R-Power has sought a revision in tariff after Indonesia increased coal prices. (economictimes.indiatimes.com)
Exploration of CIL's Mozambique mines may be completed in 2014
August 5, 2013. The government said the exploration programme of Coal India's (CIL) twin mines in Mozambique is likely to be completed by middle of next year, subsequent to which future strategies for the development of blocks will be decided. The Minister said that the first stage of drilling of the mines has been completed and the second stage is under progress. CIL is carrying out exploration programme in coal blocks of Mozambique through its wholly-owned subsidiary Coal India Africana Limitada (CIAL). CIAL had won a five-year licence for exploration and development of mines in Mozambique in August, 2009. (zeenews.india.com)
Green signal for 11 hydro projects in Uttarakhand since 2006
August 5, 2013. Eleven hydropower projects in the downstream of Gaumukh in Uttarakhand have got clearance from the Environment Ministry since 2006. Environment Minister Jayanthi Natarajan said the Ministry accords environmental clearance (EC) for hydropower projects after conducting studies and following due procedures subject to compliance of various environmental safeguard measures as stipulated in the Environment Impact Assessment (EIA) Notification, 2006. (economictimes.indiatimes.com)
Blackout remedy plan to get $1.6 bn boost: Corporate India
August 5, 2013. Power Grid Corp. of India Ltd., blamed for a network collapse that left more than half the nation’s population without electricity a year ago, will boost a $16.5 billion investment plan by 10 percent as it seeks to prevent a recurrence. A further ` 100 billion ($1.6 billion) will be spent in the five years to March 2017 to complete projects. The company, based in Gurgaon near New Delhi, plans to offer new shares to finance the additional investment after it sold ` 39.7 billion of bonds. Power Grid is doubling its transmission capacity and investing in systems to avoid the kind of outage that shuttered factories, halted transport and left about 620 million people in the dark on July 30 and July 31 last year. The company has increased penalties to discourage provinces from drawing power in excess of their allocations, a breach that had caused the northern grid to break down. More than a quarter of the electricity generated in the country is lost in transmission because of theft and dissipation through wires. Distribution utilities, unable to retrieve their costs from government-regulated tariffs, accumulate debt and losses and cut purchases. India plans to spend ` 13.73 trillion to expand and upgrade its power systems in the five years to March 2017, much of the investment coming from generators including NTPC, Tata Power Ltd and Reliance Power Ltd. The nation, which has a capacity to generate almost 226 GW, plans to add 118 GW of capacity during the period, including 30 GW of renewable energy, according to the Planning Commission. Power Grid will invest ` 22.2 billion in the year ending March 31, compared with an earlier plan of ` 20 billion. The company has so far raised ` 80 billion of debt in the year started April 1. (www.bloomberg.com)
Planning Commission seeks report on Chinese gear from Power Ministry
August 5, 2013. The Planning Commission has asked the Power Ministry to furnish the Central Electricity Authority (CEA) report on the performance of Chinese equipment being used in country's various power plants. After gathering inputs from various quarters, the Commission would take a view on the issue of performance of Chinese power equipment, Planning Commission Member B K Chaturvedi said. The move assumes significance amid clamour for hiking import duty on overseas power equipment to help the struggling domestic industry which is hurt by cheap gear. The CEA report has found that performance of Chinese equipment at local power plants has not been too well. Meanwhile, Chaturvedi said that a large number of Chinese equipment has been coming into India and the Commission would like to know the performance of these power gears. CEA has prepared the report on the basis of inputs received from various project developers. Chaturvedi said India has a large number of power plants but there are no facilities for spares and servicing which is an important issue. Chaturvedi said the Planning Commission would like to see the report only from the "angle of performance" and not other issues. (economictimes.indiatimes.com)
Nabam Tuki rules out review of the power projects in Arunachal Pradesh
August 3, 2013. Despite public uproar for review of the power projects in Arunachal Pradesh in the wake of Uttrakhand disaster, Chief Minister, Nabam Tuki has ruled out any review of the power projects in the India's frontier state. Arunachal Pradesh has inked not less than 140 MoUs for hydro-electric projects. Around 20,000 MW of power projects is in various states of clearance and implementation. The concerns of downstream states are taken into consideration. The chief minister however refused to comment on the denial of forest clearance to 3,000MW Dibang multipurpose project in Arunachal Pradesh by the Union of ministry of environment and forests recently. Prime minister, Dr Manmohan Singh along with several other ministries has recently reviewed the ongoing power projects of the Northeast India. (economictimes.indiatimes.com)
'Electricity Act needs changes; rules implementation important'
August 2, 2013. The Electricity Act, the governing framework for the power sector, needs changes but it is more important that entities comply and implement the relevant regulations, Joint Secretary at the Power Ministry, Jyoti Arora, said. The Power Ministry is discussing possible amendments to the Electricity Act that came into existence in 2003 with various stakeholders. She was speaking at a conference on '10 Years of The Electricity Act, 2003: A Critical Review' organised by industry body FICCI. The Act has brought together laws relating to generation, transmission, distribution and trading of electricity, among others. A high level advisory panel, headed by Power Minister Jyotiraditya Scindia, is also looking into possible amendments needed in the Electricity Act. The committee has already made various suggestions, including mechanism to pass through higher fuel costs to consumers. 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. Many power plants are facing issues related to rise in fuel costs, especially pricier overseas coal. (economictimes.indiatimes.com)
Power ministry to move CCEA to rejig ` 68.5 bn debt of Bihar, Jharkhand discoms
August 2, 2013. The power ministry will move cabinet committee of economic affairs (CCEA) to seek special permission for restructuring of ` 6,859 crore debt of distribution utilities of Bihar and Jharkhand that do not qualify for the Centre's rejig scheme launched last year. Only utilities with separate accounts for electricity generation, transmission, distribution and trading activities as on March 2012 qualified for the financial restructuring package launched by the government last year. Jharkhand State Electricity Board said the state has debt of ` 4,000 crore that needs to be restructured. Bihar energy department said dues in the accounts of two distribution companies stood at ` 2,869 crore. The rejig option was available for the distribution companies till July 31. So far Tamil Nadu, Uttar Pradesh, Haryana and Rajasthan have availed the debt-restructuring package. While Tamil Nadu has issued bonds to the lenders, the other three are in talks with bankers to get their debt scheduled. Kerala has not yet initiated the disintegration process. The CCEA had approved a bailout package for state power distribution companies that have accumulated losses of over ` 1.9 lakh crore. As per the scheme, the state governments will take over half of the short-term debt of their distribution companies. The distribution companies will issue long term- bonds backed by state government guarantees to the lenders. The state governments will in a span of 2-5 years buy the bonds and service the interest payment till takeover. The central government will reimburse of 25% of principal repayment made by the state governments. Incentives in the form of grant for reducing distribution losses have also been approved. The scheme envisages giving distribution companies a moratorium of three years for repaying principal of the balance 50% of the short-term loans. (economictimes.indiatimes.com)
Govt plans to make hydro power purchase mandatory for discoms: Power Minister
August 1, 2013. The government plans to promote hydro power projects by making it mandatory for distribution utilities to buy a percentage of their electricity requirement from hydel plants, power minister Jyotiraditya Scindia said. The proposal is similar to the existing renewable purchase obligations where a state has to either buy a portion of its electricity from green energy sources or buy certificates from generators of such electricity. If implemented, the move will benefit hydro power companies like NHPC, SJVNL, Jaypee Group, GMR Energy and Reliance Energy. (economictimes.indiatimes.com)
Bihar power crisis to be over by 2015, says minister
August 1, 2013. Power crisis in Bihar would be a thing of the past by 2015 as the state would have 5500 MW of power to meet domestic demand, Power Minister Bijrendra Prasad Yadav said. And by 2016-17 when all the power projects at Navi Nagar, Pirpatai, Chausa and Kajra were likely to start generation, the overall availability would reach 10,000 MW to make Bihar a power surplus state, Yadav said. Coal linkage for these proposed power projects have been approved by the Centre, he said while replying to a debate on his department's supplementary demand of ` 2136 crore under the Bihar Appropriation (No.3) Bill, 2013. The power minister denied the charge saying the coal block allocation for the power projects in Bihar was done by the Centre not on the ground of political consideration, but on account of pressure by power ministers of various states. (economictimes.indiatimes.com)
Delhi govt pulls up discoms; asks them to improve supply
July 31, 2013. Delhi Government strictly asked private power distribution companies to improve supply immediately and cautioned them of punitive action if they fail to comply with the directive. In a meeting, Power Minister Harun Yusuf told CEOs of three distribution companies to pull up their socks and rectify problems in their supply network urgently. Yusuf blamed the long outages on local faults and other technical problems in the distribution network of the discoms. The minister clearly told the discoms that the government would not hesitate to take punitive action if the companies fail to improve the supply. (economictimes.indiatimes.com)
CCI clears 2 Arunachal Pradesh hydro power projects
July 31, 2013. The Cabinet Committee on Investment (CCI) is believed to have approved setting up two hydro power projects in Arunachal Pradesh. CCI is also believed to have cleared three Railway projects. Hydro power contributes 18.6 per cent at 39,416 MW to the overall installed generation capacity of 2,11,766 MW. Arunachal Pradesh has the highest potential for hydropower generation in the country at over 50,000 MW. NHPC is constructing hydro power projects of over 4,000 MW which includes 2000 MW Subansiri project at the Assam-Arunchal Pradesh border. The company is facing stiff opposition from locals over the construction of the project. Centre has set up a committee to look into the matter and come up with a solution. The government has also denied clearance to some other hydro power projects in the North-eastern region for reasons including the disaster in Uttarakhand. (economictimes.indiatimes.com)
INTERNATIONAL
OIL & GAS
Upstream
Shale explorers outperforming international oil titans
August 6, 2013. Oil explorers focused on high-margin shale drilling from Texas to North Dakota are set to outperform Big Oil this year. EOG Resources Inc., Pioneer Natural Resources Co. and Continental Resources Inc. are poised to reap bigger returns for investors than energy titans 15 times their market values as they devote almost all their drilling capital to higher-margin, domestic crude wells. Houston-based EOG is estimated to more than triple profit in 2013 to $1.92 billion. Exxon and Shell already are lagging behind some of the dominant domestic shale explorers in delivering returns to investors. Pioneer has risen 68.8 percent this year, while Oklahoma City-based Continental has increased 32 percent. EOG, the biggest owner of drilling rights in the Eagle Ford Shale in southwest Texas, has risen 28 percent. Exxon spent $52 billion in the past three years to create a shale portfolio, though most of it has involved gas that tumbled to a 10-year low in 2012 and commands less than one-fifth the price of oil, on an energy-equivalent basis. Exxon touted its progress in ramping up output 74 percent from a year earlier to 60,000 barrels a day in the Bakken formation that sprawls beneath North Dakota and Montana. ConocoPhillips raised its full-year production estimate to as much as 1.53 million barrels a day after unexpectedly reporting an output gain. The Houston-based company is reaping 30 percent rates of return on wells in the Wolfcamp Shale. (www.bloomberg.com)
Eni finds oil, gas at Nene’ Marine exploration prospect, offshore Congo
August 5, 2013. Eni has found oil and gas in the Nene’ Marine exploration prospect located in the Marine XII block offshore Congo, about 17km from the shoreline. Volume of the discovery at the two wells so far drilled is estimated to be around 600 million barrels of oil and 700 billion cubic feet of gas in place. Eni said the structure has considerable additional upside that will be assessed with further delineation wells. The company will continue to assess the discovery, while starting the studies for the commercial exploitation of this accumulation with joint venture partners. Eni Congo operates the Marine XII block with a 65% interest, while other partners New Age and Societé Nationale des Pétroles du Congo own 25% and 10% interests, respectively. The company currently has an equity production of 110,000 barrels of oil per day in Congo. Eni's current operated production in the region is about 450,000 barrels of oil equivalent per day. (drillingandproduction.energy-business-review.com)
China fracking in quake-prone province shows zeal for gas
August 1, 2013. China won’t let earthquakes hinder its quest for energy. Companies such as Royal Dutch Shell Plc and China National Petroleum Corp. are starting to drill for gas and oil in shale rock in Sichuan, the nation’s most seismically active province, a process geologists say raises the risk of triggering quakes. China’s shale gas reserves may be almost double those of the U.S., where unlocking the commodity slashed energy costs, reduced imports and raised the prospect of energy independence. The U.S. shale boom may add as much as $690 billion a year to GDP and create 1.7 million jobs by 2020. For China, emulating the U.S. would provide greater energy security and help curtail dependence on burning coal that blankets cities in smog. Southwest China, which includes Sichuan, and the Upper Yangzi area account for 40 percent of the country’s shale gas reserves, according to the Ministry of Land and Resources. China aims to produce 6.5 billion cubic meters of shale gas by 2015 and as much as 100 billion cubic meters by 2020, from zero output this year. (www.bloomberg.com)
Transportation / Trade
OGC sets record for natural gas delivery
August 4, 2013. Oman Gas Company (OGC), the country's supplier of natural gas to industry and public utilities has achieved a new record for natural gas supply, with delivering 50.3 million standard cubic metres in a single day. The company achieved the new record with delivering 50.3 million standard cubic metres in a single day compared with 49.9 million standard cubic metres daily rate delivered in the previous year - an increase of 0.8 per cent. OGC is the main gas transportation company in Oman delivering natural gas to major consumers comprising domestic, power and desalination plants, fertilizer, methanol, petrochemical, refineries, steel and cement plants. Also, increased gas volumes demanded by Al Suwadi Power Company and Al Batinah Power Company are factors that have resulted in an increase in exports. The company's gas pipeline network is spread across the country with more than 2500 kilometres of high pressure transmission pipelines and ancillary facilities covering Fahud, Muscat, and Sohar in the north and from Saih Rawl to Salalah in the south of Oman. (economictimes.indiatimes.com)
TransCanada to proceed with $12 bn pipe to East Coast
August 2, 2013. TransCanada Corp. plans to go ahead with a C$12 billion ($11.6 billion) pipeline that will ship oil from Western Canada to the East Coast. The Energy East project would have a capacity of 1.1 million barrels a day and be in service by the end of 2017 for deliveries to Quebec and to New Brunswick in 2018, the Calgary-based company said. The project to supply East Coast refineries and export terminals involves converting a portion of 3,000 kilometers of existing 42-inch natural gas pipeline and building 1,400 kilometers of new pipeline, the company said. The new line would be in addition to the proposed $5.3 billion Keystone XL pipeline from Alberta’s oil sands to the Gulf Coast, which is pending approval from the U.S. government. The project is bigger than TransCanada’s previous estimate of 850,000 barrels a day, and the company has an agreement with Irving Oil Corp. to build a new deepwater marine terminal in Saint John, New Brunswick. (www.bloomberg.com)
Policy / Performance
UK minister sees fracking sites in southern England
August 4, 2013. Michael Fallon, the U.K. junior energy minister with responsibility for fracking, said southern England contains deposits that might produce natural gas. The counties referred to by the minister are mostly on England’s southern and southeastern coast. Hydraulic fracturing, or fracking, blasts a mixture of water, sand and chemicals underground to release oil and gas trapped in rock formations. In the U.K., fracking is associated with northwest England, where Cuadrilla Resources Ltd. has exploration licenses. Cuadrilla said test drilling started at Balcombe in West Sussex after protests caused delays. (www.bloomberg.com)
Banks replacing Enron in energy incite Congress as abuses abound
August 2, 2013. The U.S. government permitted Wall Street firms to expand in the energy industry a decade ago, when the collapse of Enron Corp. and its army of traders left a void in the market. The results aren’t pretty. JPMorgan Chase & Co. settled Federal Energy Regulatory Commission claims that employees engaged in 12 bidding schemes to wrest tens of millions of dollars from power-grid operators. A Barclays Plc trader stands accused of bragging he “totally fukked” with a Southwest energy market. Deutsche Bank AG workers, faced with losses on a contract, allegedly altered electricity flows to make it profitable instead. The FERC’s investigations are fueling a debate among lawmakers and the Federal Reserve over whether to reverse more than a decade of policy decisions that let Wall Street banks keep or build units handling commodities and energy. Senators examining the firms’ roles have said they may call bankers and watchdogs to a September hearing amid concern traders are abusing their ability to buy and sell physical products while betting on related financial instruments. JPMorgan, the largest U.S. lender, announced that it’s considering ways to exit the physical commodities business, which includes energy trading. The New York-based company, led by Chief Executive Officer Jamie Dimon, will pay a $285 million fine and disgorge $125 million in gains to settle the FERC’s case without admitting or denying wrongdoing. (www.bloomberg.com)
Russia’s oil output rises to near most since Soviet Era
August 2, 2013. Russia, the world’s biggest oil producer, increased crude and condensate production by 1 percent in July from a year earlier to 10.43 million barrels a day, near a post-Soviet record. Daily output fell 0.7 percent from June, when it set the record, according to preliminary data from the Energy Ministry’s CDU-TEK unit in Moscow. Soviet-era production in Russia peaked at 11.48 million barrels in 1987. President Vladimir Putin is promoting tax relief for offshore and low-permeability resources to keep production at more than 10 million barrels a day as Soviet-era Siberian deposits decline. He signed off on tax breaks last month for less accessible resources that could be applied to so-called tight oil deposits starting in September. The oil and natural gas industry contribute half of the nation’s revenue. (www.bloomberg.com)
Halliburton, Schlumberger accused in fracking price suit
August 2, 2013. Halliburton Co., Schlumberger Ltd and Baker Hughes Inc. were sued over claims they conspired to raise prices and crush oilfield service competitors in the booming U.S. market for hydraulic fracturing services. The allegations against units of the companies are pegged to the U.S. Justice Department’s announcement that it is investigating the “possibility of anticompetitive practices” in the hydraulic fracturing, or fracking, sector of the oilfield services industry, according to the proposed class-action, or group, suit filed in federal court in Corpus Christi, Texas. The suit seeks unspecified treble damages. The three companies are the largest publicly trading fracking service providers and jointly control about 60 percent of the U.S. market, according to the suit. Cherry Canyon sued on behalf of all customers who bought fracking services from the defendants since May 29, 2011. (www.bloomberg.com)
Platts says commodity-price transparency at risk from regulation
July 31, 2013. Increased regulation of methods used to establish commodities prices could backfire by reducing transparency as market participants may stop giving information, according to Platts, a price publisher. European antitrust authorities raided Platts’ offices, along with those of Statoil ASA, BP Plc and Royal Dutch Shell Plc, in May as part of an investigation into alleged manipulation of oil prices. Regulatory probes are expanding after banks rigged the London interbank offered rate, a benchmark for $300 trillion of global interest-rate contracts. Platts publishes prices for commodities from oil to metals. Two companies are no longer taking part in its assessments for metals. The International Organization of Securities Commissions, a Madrid-based group representing regulators from more than 100 countries, set tougher guidelines for publishing benchmarks for everything from raw materials to equities. One goal is that prices should be based on “observable” deals. For crude oil and refined fuels, Platts publishes the names of companies buying and selling, the products they are dealing, prices, delivery ports and other transaction information. Those details aren’t revealed for other commodities, Platts said. (www.bloomberg.com)
POWER
Aga Khan Fund, Blackstone seek to build East African power plant
August 6, 2013. The Aga Khan Fund for Economic Development SA said it has joined with Blackstone Group LP to bid for construction of a 147 MW hydro power plant to be shared by Rwanda, Burundi and the Democratic Republic of Congo. Industrial Promotion Services (IPS) Kenya Ltd., an affiliate of the Aga Khan Fund, and Blackstone through its Sithe Global Power LLP unit are in talks with the three governments. The $600 million project is planned to be situated on the Ruzizi River at the intersection of the borders of the three countries. Sithe and IPS jointly own Uganda’s $900 million, 250 MW Bujagali hydropower plant, which reached full capacity last year. (www.bloomberg.com)
First Gen secures federal approval for 80 MW hydro projects in Philippines
August 5, 2013. First Gen Mindanao Hydro Power, a wholly owned subsidiary of First Gen, has secured approval from the Department of Energy (DOE) to develop a portfolio of 80MW hydroelectric projects in Philippines. The five hydro projects include 8MW Tumalaong hydro plant, 8MW Bubunawan hydro project and 20MW Tagoloan hydro project in Bukidnon and 14MW Cabadbaran hydropower plant and 30MW Puyo hydropower plant in Agusan del Norte. The energy department has already approved the conversion of First Gen's projects in Bukidnon and Agusan del Norte from the pre-development stage to the development and commercial stage. The hydro project developer has planned to invest $120 mn for Puyo hydro plant in Jabonga, Agusan del Norte, $100 mn for the Bubunawan hydro project and additional $40 mn for the 10-MW Cabadbaran hydro project in Agusan del Norte. These projects are scheduled for construction within 2013. (hydro.energy-business-review.com)
Iran's electricity generation exceeds 98,000 GWh
August 3, 2013. Iran has generated 98,805 gigawatt-hours (GWh) of electricity since the beginning of the current Iranian calendar year (started March 21), marking a 3.84-percent growth year-on-year. Iran is currently exchanging electricity with Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Turkmenistan and Turkey. The Islamic Republic’s electricity exports to neighboring countries had increased by about 40 percent since the beginning of the current Iranian calendar year. Iran aims to export 1 billion megawatt-hours of electricity in the current Iranian year, and has signed several contracts with neighboring countries in this regard. (www.presstv.ir)
Pakistan plans to build 600 MW coal power plant
August 1, 2013. Sindh Engro Coal Mining Company (SECMC), a joint venture between government of Sindh and Engro Corporation plans to build a 600 MW power plant in 3.5 years and expanding it to 1,200 MW, yielding a power tariff of approximately 8 US cents/kWh. At ultimate capacity of a single mine, SECMC will be able to produce 3,600 MW in less than 10 years at a power tariff below 6 US cents /kWh, cheaper than any other conventional fuel including hydro-based power. Thar Coal Project is the key to Pakistan’s energy security and it would require continuous efforts both at federal and provincial levels to undertake this mega project. Thar is the only choice for the country to cater its energy needs on a long term and affordable basis. (www.dailytimes.com.pk)
Local firm to finish power plant in Iraq
July 31, 2013. Turkey’s Çalık Energy plans to complete its 750 MW Nainawa power plant in Mosul, Iraq, and make it operational by this September, despite difficulties in the region. The Nainawa will be the fourth biggest power plant in Iraq when it is complete. The Nainawa has six turbines. The company powered two turbines in previous months, and plans to power two more turbines in two weeks. The firm had previously built six power plants in Turkmenistan, planning three more. Power plants to complete by the end of 2014. (www.hurriyetdailynews.com)
Transmission / Distribution / Trade
Bechtel completes major power transmission project in Canada
August 5, 2013. Bechtel announced the company has completed the Hanna Region Transmission Development (HRTD) project on schedule and under budget. The project to expand and upgrade ATCO Electric’s electrical transmission system and infrastructure in Alberta included stringing 219 miles (353 kilometers) of 240 kilovolt (kV) and 144 kV transmission lines, constructing more than 1,200 new transmission towers, and building six new substations and upgrading twelve substations. About 60 per cent of the area where the transmission line was built passed through protected pasture, native grasses, and wetlands that are also popular wildlife breeding grounds. To minimize the impact, the project team used a mobile app to ensure that the field team had customized information about accessing land parcels and environmental regulations. The company is supporting ATCO Electric’s Eastern Alberta Transmission Line project. Bechtel will construct approximately 300 miles (485 kilometers) of 500-kV high voltage direct current transmission line that runs from the Gibbons-Redwater area northeast of Edmonton to the Brooks area southeast of Calgary. (www.webwire.com)
Nigeria’s Afam power plant gets buyer for US$260 mn
July 31, 2013. The privatization process of Nigeria’s power sector recorded a boost as the Afam power plant got an offer of US$260.5 million offer, the highest made by Taleveras Group, a consortium comprising Rivers State Government and three foreign companies. The Acting Director of Electric Power Department of the Bureau of Public Enterprise (BPE), Alhaji Ibrahim Babagana, made the announcement at the financial bid opening for Kaduna Electricity Distribution Company and AFAM Power Plc in Abuja. Taleveras Group and Tes Power Limited bade for the AFAM Power Plc, with the former emerging as preferred bidder and later as reserve bidder. (en.starafrica.com)
WB OKs hydro power plant in Africa's Great Lakes region
August 6, 2013. The World Bank (WB) approved $340 million (221 million pounds) for a hydro power plant in central Africa's Great Lakes region as the global development lender seeks to ramp up support for electricity in some of the continent's poorest and most conflict-prone areas. The project is part of a $1 billion aid package World Bank President Jim Yong Kim pledged during a trip to the Great Lakes. The plant will draw on the power of the Rusumo Falls between Rwanda and Tanzania, one of the headwaters of the Nile, to eventually generate 80 MW of electricity and benefit 62 million people in Burundi, Rwanda and Tanzania, the World Bank said. The money will be split evenly among the three governments. Only 4 percent of Burundi's population has access to electricity. For Rwanda that figure is 13 percent, and for Tanzania, 15 percent. The World Bank has said tackling poverty and boosting economic growth is impossible without stable electricity supplies. This is the first major hydro power project approved since the World Bank updated its energy strategy last month to increase support for hydroelectric power. In the 1990s, it had decided to abandon such projects under pressure from aid groups that warned they would displace people. (uk.reuters.com)
South Africa power plants seen at risk of coal shortfall by 2015
August 5, 2013. South Africa needs to invest as much as 90 billion rand ($9 billion) in new coal mines to supply power plants that are at risk of running short of the fuel as soon as 2015, an industry study found. Disagreement between mining companies and state utility Eskom Holdings SOC Ltd. over returns on investment has delayed new coal ventures. The fuel is needed to feed new plants being developed by Eskom, which generates almost all the nation’s electricity, and a shortage would raise the risk of power cuts. Eskom participated in the Green House study, along with Anglo American Plc, Sasol Ltd., Exxaro Resources Ltd., BHP Billiton Ltd. and the government departments of mineral resources and energy. Industries are seeking to avoid a repeat of power shortages that halted mines and factories in 2008. Eskom is spending about $50 billion revamping old plants and building new generators including Kusile and Medupi, set to be the world’s third- and fourth-largest coal-fired stations. Based on Eskom’s projections that it will need an additional 60 million metric tons of coal a year by 2020, the study estimates five to 10 new mines will have to be built at a total cost of 60 billion rand to 90 billion rand. While Eskom expected most of its power stations to run for 40 years and signed corresponding coal-supply deals, many have run at higher capacity and for longer than planned, according to the study. The utility has also resumed output at three mothballed plants whose coal supplies had been reallocated. The study outlined four scenarios, two of which envisioned increased use of coal and two outlining a greater role for nuclear and renewable energy. All options see coal being part of the energy mix beyond 2040. South Africa’s installed power capacity is likely to increase to 88,070 MW to 124,725 MW by 2040 from about 40,000 MW now, depending on how the country responds to climate change, the study found. (www.bloomberg.com)
Taiwan lawmakers brawl in parliament over nuclear plant vote
August 2, 2013. Taiwan lawmakers put each other in headlocks and wrestled on the floor of the legislature as the opposition party moved to occupy the president’s pulpit in a bid to stave off a vote on a nuclear power plant. Democratic Progressive Party (DPP) legislators, who oppose further construction of the plant in northern Taiwan, grappled with ruling party Kuomintang lawmakers. A legislative vote to decide if there should be a wider popular ballot on the project was delayed, preventing Legislative Yuan President Wang Jing-pyng from opening the session. The Kuomintang, known as the KMT, holds 65 seats compared to the DPP’s 40. Nearly 70,000 people in major cities across Taiwan protested in March, two years after Japan’s Fukushima Dai-Ichi nuclear meltdown, against Taiwan’s NT$264 billion ($8.8 billion) Longmen Nuclear Power Plant. The plant is located 25 miles east of Taiwan’s capital, Taipei. The administration of President Ma Ying-jeou has pledged to abandon atomic energy as soon as economically- and environmentally-viable alternatives can be found. The Chinese National Federation of Industries estimated alternative energy may lead to a 14 percent rise in electricity prices by 2018. The Federation represents more than 100,000 manufacturers on the island. (www.bloomberg.com)
JPMorgan to pay $410 mn in US FERC settlement
July 31, 2013. JPMorgan Chase & Co. will pay $410 million to settle U.S. Federal Energy Regulatory Commission (FERC) allegations that the bank manipulated power markets, enriching itself at the expense of consumers in California and the Midwest from 2010 to 2012.
The bank agreed to pay a U.S. civil penalty of $285 million and return $125 million in ill-gotten profits to electricity ratepayers, according to a FERC order. JPMorgan also agreed to give up claims to $262 million worth of disputed payments from California’s grid operator. (www.bloomberg.com)
RENEWABLE ENERGY / CLIMATE CHANGE TRENDS
National
Su-Kam to offer solar installations to Tata Power consumers
August 6, 2013. Power solutions provider Su-Kam said it has signed a preliminary agreement with Tata Power Delhi Distribution to offer its subscribers exclusive rates for rooftop solar power plant installations. Tata Power Delhi Distribution Limited (TDPPL) is a Tata Power and Government of Delhi joint venture company, which distributes electricity in North and North West Delhi. The move aims at reaching out to 14 lakh customers of TPDDL in Delhi. Apart from Solar Products for domestic usage, Su-Kam provides customized solar power solutions for educational institutions, petrol pumps, hospitals, industries, defence barracks, government buildings, etc. Some of the projects in India have been undertaken for Tamil Nadu Energy Development Agency, Assam State Electricity board, Madhya Pradesh Forest Department, Loyola College of Chennai, Ashok Leyland, Assam Rifles, etc. The company has also undertaken a number of solar projects in Afghanistan, Nigeria, Malawi, Gabon, etc. (economictimes.indiatimes.com)
Sanofi inks pact with Suzlon for captive power plant
August 5, 2013. Drug firm Sanofi India said it has inked a pact with Suzlon Energy for a 2.1 MW windmill installation, to generate renewable power for captive consumption at its Ankleshwar manufacturing site. The Ankleshwar site -- one of Sanofi's three GMP (Good Manufacturing Practices) compliant manufacturing units in India -- produces solid dose formulations and active pharma ingredients. Between its two facilities at Goa and Ankleshwar, Sanofi has the capacity to manufacture 8.5 billion tablets annually. (economictimes.indiatimes.com)
Suzlon reports wider loss on costs at German wind unit
August 2, 2013. Suzlon Energy Ltd., this year’s worst-performing stock in the NEX index of clean-energy shares, reported a wider quarterly loss after incurring costs from scaling back wind-turbine manufacturing in Germany. The net loss expanded to ` 10.6 billion ($173.5 million) in the quarter through June from ` 8.48 billion a year earlier, the Pune, India-based company said. Sales fell 18 percent to ` 38.9 billion. Suzlon is struggling to pay down debt accumulated through overseas acquisitions, which included Hamburg-based unit REpower Systems SE. A global supply glut reduced turbine prices by 25 percent from their peak in 2009, prompting Suzlon to close some facilities in Germany and cut staff. Those one-time costs, combined with a depreciating rupee, weighed on earnings. (www.bloomberg.com)
IEX says REC trading volume doubled in July
August 1, 2013. Leading power exchange Indian Energy Exchange (IEX) said volumes of Renewable Energy Certificates (RECs) traded doubled last month, with over 72,300 non-solar certificates changing hands. One REC is equivalent to 1 MWh of energy generated from renewable sources. For non-solar RECs, 72,321 buy bids and 16,76,875 sell bids were received, against which 72,321 were cleared at ` 1,500 per certificate. The trading session for RECs in July featured 770 market participants and out of them, 610 entities participated in the non-solar segment. (economictimes.indiatimes.com)
Welspun Energy's plan gets registered with United Nations
July 31, 2013. Welspun Energy Ltd said its clean development plan Welspun Renewable Energy Programme has been registered with the UNFCCC (United Nations Framework Convention on Climate Change). The registered programme includes a 25 MW grid connected Solar PV power project that is under implementation at Neemuch, Madhya Pradesh and is expected to avoid emissions of 37,739 metric tonnes of CO2 annually for a period of 21 years into the atmosphere. The CDM (Clean Development Mechanism) allows emission-reduction projects in developing countries like India to earn Carbon Emission Reduction credits. This programme makes it possible to register the coordinated implementation of a policy, measure or goal that leads to emission reductions. Welspun Energy is further expecting to reduce an estimated amount of 47,398 metric tonne CO2 emissions annually from its 30 MW Solar PV power plant in Gujarat which has already been submitted for registration with UNFCCC. (economictimes.indiatimes.com)
Global
Buffett-backed BYD seeks to boost US electric-bus sales
August 5, 2013. BYD Co., the Warren Buffett-backed Chinese auto-and-battery maker, is seeking to increase overseas sales of its electric bus as billionaire founder Wang Chuanfu predicts a “second takeoff” for the company this year. Shenzhen-based BYD has signed contracts this year to supply a total of 35 K9 electric buses to Long Beach and Los Angeles for use in public transportation. It also won an order in the Netherlands, and began trials in Poland and Canada. BYD is stepping up its push into overseas markets as Wang completes a three-year restructuring of the company. In that time, profit tumbled 97 percent because of losses at its photovoltaic business, a decline in global battery demand and a slump in vehicle deliveries. The company’s shares have more than doubled in the past year, as Wang cut the number of dealerships and state incentives helped narrow solar losses. (www.bloomberg.com)
European Commission approves Chinese solar-panel pact
August 3, 2013. The European Commission approved trade chief Karel De Gucht’s plan for curbs on Chinese solar panels, allowing import tariffs to be removed in three days in Europe’s largest dumping dispute. The commission, the European Union’s executive arm in Brussels, endorsed a negotiated settlement with China that sets a minimum price and a volume limit on EU imports of Chinese solar panels until the end of 2015. Chinese manufacturers that take part will be spared EU duties meant to counter below-cost sales, a practice known as dumping. (www.bloomberg.com)
US awards $22.5 mn to groups developing algae biofuels
August 2, 2013. The U.S. Energy Department awarded about $22.5 million in grants to companies and researchers seeking to produce fuel from algae and other types of biomass. Hawaii BioEnergy LLC, Sapphire Energy Inc. and New Mexico State University each will receive $5 million to develop algae-based fuel technologies. California Polytechnic State University will get $1.5 million to develop more producive algae. FDC Enterprises Inc. will get about $6 million to improve processes for collecting and distributing wood, grass and agricultural waste that’s converted into fuel. (www.bloomberg.com)
Siemens says Japan’s renewable capacity to almost double by 2030
August 2, 2013. Siemens AG, Europe’s biggest engineering company, expects Japan to almost double its capacity of renewable energy by 2030, while continuing with nuclear power generation even after the Fukushima disaster. Renewable energy may account for 35 percent of capacity in 2030, compared with 19 percent in 2011. Wind power may provide more than half of the renewable capacity. (www.bloomberg.com)
Global warming sparks fistfights and war, Researchers say
August 1, 2013. Climate change will probably trigger more human conflict, according to an article in the journal Science. An examination of 60 separate studies, including one stretching back to 10,000 B.C., found that individuals, groups and nations are “substantially” more likely to become involved in physical conflict in hot weather and heavy rain. Climate change is expected to drive up temperatures in many regions, which will “systematically increase the risk of many types of conflict” ranging from barroom brawls and rape to civil wars and international disputes, according to the article. Higher temperatures affect people through a combination of geographical, sociological and physiological factors. Harsh weather may destroy crops and cause food shortages. Heavy rainfall may induce flooding that leads to land disputes. And in one study, police officers in a simulation were more likely to unholster their guns as the training room grew warmer. The study found that the rate of interpersonal violence, including assaults and rapes, increases 4 percent for every “standard deviation change in climate toward warmer temperatures or more extreme rainfall.” Intergroup conflict rises 14 percent. One standard deviation is comparable to a 0.4-degree Celsius (0.6-degree Fahrenheit) increase in temperature in an African nation for a month, or a 3-degree C boost in a U.S. county for a month. Many areas on the planet are on pace to warm 2 to 4 standard deviations by 2050. (www.bloomberg.com)
Deepwater wins first auction for US offshore wind lease
August 1, 2013. Deepwater Wind LLC won the first auction for offshore wind-energy development in U.S. federal waters, agreeing to pay $3.8 million to lease two blocks off Massachusetts and Rhode Island. The closely held company, which is backed by the hedge fund D.E. Shaw & Co., plans to put 200 turbines in the water with total capacity of 1,000 MW. Construction could begin in 2017, and power production in 2018, the Providence, Rhode Island-based company said. The U.S. Interior Department said in the next nine months, the government will offer leases for areas off Virginia, Maryland, New Jersey and Massachusetts. The Wind Energy Area covers 164,750 acres about 9.2 nautical miles south of the Rhode Island coast, and could lead to the generation of enough power for 1 million homes, according to the Interior Department. (www.bloomberg.com)
Brazil rooftop solar power seen reaching 1.4 GW by 2022
August 1, 2013. Brazil expects to have 1,400 MW of solar panels producing power on buildings by 2022, up from about 11 MW this year, as equipment costs fall. The forecast may be included in the country’s next energy plan, which the Ministry of Mines and Energy is drafting now. The price of solar panels has fallen to 83 cents a watt from about $4 dollars in 2008 and may reach 52 cents by 2020. (www.bloomberg.com)
Ford to offer natural gas fuel systems for F-150 pickups
August 1, 2013. Ford Motor Co. (F), the second-largest U.S. automaker, plans to begin offering compressed natural gas fuel systems for its F-150 pickups to meet growing demand from business fleets and attract retail buyers. Fuel packages similar to what Ford has offered on large commercial vehicles since 2009 will be available starting this year with the 2014 F-150. The F-150 will be the only half-ton pickup capable of running on compressed natural gas, or CNG, the company said. Ford is seeking to further bolster its F-Series pickups, which have been the top-selling trucks in the U.S. for the past 36 years. Natural gas prices have fallen as U.S. production surged with horizontal drilling and hydraulic fracturing, or fracking. Ford said the average U.S. price for CNG is equal to $2.11 a gallon, compared to $3.66 for regular gasoline. The F-150 will be the eighth commercial vehicle that Ford will sell that can run on CNG. Ford said it expects to sell more than 15,000 such vehicles this year, up at least 29 percent from 11,623 in 2012. The automaker started offering CNG-enabled commercial vehicles with its E-Series vans and has since added Super Duty large pickups, Transit Connect taxis and chassis-cab trucks that are used for mail delivery. (www.bloomberg.com)
Vestas wins largest South African order from EDF
August 1, 2013. Vestas Wind Systems A/S will supply 105 MW of wind turbines to Electricite de France SA (EDF)’s Innowind unit, its biggest ever order in South Africa. The deal is to supply 35 of its V112 3 MW turbines to Innowind’s Chaba, Waainek and Grassridge sites, Aarhus, Denmark-based Vestas said. The agreement also includes a 10-year servicing contract. Vestas is chasing orders in developing nations as demand in traditional European markets and the U.S. slows. South Africa plans to add 3,725 MW of renewable energy capacity by the end of 2016 and another 3,200 MW by the end of the decade to curb reliance on coal for power. Vestas said it won a 93 MW order in South Africa from Cennergi, a joint venture between Exxaro Resources Ltd. and Tata Power Co. It said on June 11 that it won a 94 MW order from a GDF Suez SA-led project in the country. (www.bloomberg.com)
German solar subsidy to drop to third of Japan’s on installs
July 31, 2013. Germany, the biggest solar market by installed capacity, will this year reduce subsidy payments to power-plant developers to a third of Japan’s support level as installations continue to outpace government targets. Germany’s feed-in-tariff will shrink 1.8 percent a month from August through October, the Bundesnetzagentur grid regulator said. In October, it will for the first time drop to below 0.1 euros ($0.13) a kilowatt-hour for plants sized between 1 MW and 10 MW. (www.bloomberg.com)
Germany boosts energy research funding 77 pc to $938 mn
July 31, 2013. Germany increased spending on energy research 77 percent in the past seven years, benefiting mainly renewable-power and efficiency projects as the country shuts nuclear reactors. The government spent 708 million euros ($938 million) on research and development of energy technologies last year, up from 399 million euros in 2006, the Economy Ministry said. Projects included reducing noise from offshore wind power, making buildings more energy-efficient and producing electro-chemical storage units. (www.bloomberg.com)
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