Energy News Monitor I Volume XI, Issue 27

CERC puts a ‘Smile’ on the face of Distribution & Transmission

 

NEWS BRIEF

OIL & GAS

December 15, 2013. Reliance Industries Ltd (RIL) has lodged a strong protest against a government move to snatch away an area containing five gas discoveries, saying the decision was a breach of contract. The Oil Ministry had ordered RIL to surrender 6,198.88 square kilometres of a 7,645 sq km area in its eastern offshore KG-D6 block, 15 per cent more than the 5,367 sq km the company had voluntarily offered to relinquish. The excess area being taken away holds five discoveries -- D-4, D-7, D-8, D-16 and D-23 -- with 0.805 trillion cubic feet of gas reserves, or about one-fourth of the restated reserves in the producing Dhirubhai 1 and 3 (D1&D3) fields in the KG-D6 block, and is worth USD 10 billion. RIL wrote to the Oil Ministry, expressing surprise at the order when the field development plan (FDP) and the application for issuance of the petroleum mining lease for the five discoveries was under consideration of the government. The five discoveries are non-associated natural gas find, which under the Production Sharing Contract (PSC), the company was entitled to retain as a discovery area. RIL submitted the proposal to declare the finds commercial within the stipulated three years and a FDP for the five finds along with four others on July 14, 2008, within the prescribed one year. RIL said the Directorate General of Hydrocarbons communicated that the discoveries are unviable at the current price of USD 4.2 only on March 31, 2009, as against the PSC stipulated timeline of deciding the issue within 180 days from the submission and 90 days from receipt of additional information. (economictimes.indiatimes.com)

December 11, 2013. Global oil giant BP Plc and its partner RIL will invest US $ 5-10 billion to quadruple natural gas production by 2020. RIL-BP, who are currently producing about 11.8 million standard cubic metres per day of gas from the flagging eastern offshore KG-D6 block, is targeting newer fields in KG-D6 block and gas discoveries in neighbouring north-east coast and Cauvery basin to raise output. An opportunity awaits the BP/RIL joint venture to quadruple production by 2020 as we rework the fields and get into the next phase of development of already discovered resources, BP India head Sashi Mukundan said at the 12^th Petro India conference organised by Observer Research Foundation along with India Energy Forum. He said RIL-BP sees more potential in the blocks that the joint venture holds. RIL-BP, he said, are focused on unlocking the next major hub for development in the East coast of India. He said the production could rise to "40 or 50 or 60 (mmscmd)" by 2020. BP, which in 2011 invested USD 7.2 billion in India, sees the new production coming from the 11 satellite discoveries in the KG-D6 block, five finds in NEC-25 and two discoveries in Cauvery block. KG-D6 has seen output drop from almost 70 mmscmd achieved in March 2010 to under 12 mmscmd currently due to water and sand ingress in wells and drop in reservoir pressure. 10 out of the 18 wells on the main D1&D3 fields have shutdown due to the same reason. RIL-BP, he said, is doing remedial work on three shut wells which will yield results in January-March quarter. (economictimes.indiatimes.com)

December 11, 2013. With its net price realisation plummeting to almost near its cost of oil production, Oil and Natural Gas Corp (ONGC) said it needs a minimum of USD 65 per barrel price to keep investing in oil and gas hunt. ONGC and Oil India make up for a part of losses fuel retailers incur on selling diesel and cooking fuel at government controlled rates. This subsidy payout is by way of discounts they offer on crude oil sold to them. Company Chairman and Managing Director Sudhir Vasudeva said the net price realised after subsidy discounts has been falling. As against a cost of production of USD 40 per barrel of oil (without considering return on investment), ONGC got a net price of USD 40.17 a barrel in Q1 of this fiscal and USD 44.84 in Q2. "This leaves us with very very small margin," he said at the 12^th Petro India conference organised by Observer Research Foundation along with India Energy Forum. With most of its oil production coming from old and ageing fields that require huge capital to raise output, many development plans become unviable at current pricing, he said. Since 2004, the company has paid ` 242,754 crore in fuel subsidy, but for which its net profit would have been higher by ` 140,299 crore that is enough to buy properties producing 10-15 million tonnes of oil per annum. ONGC says increasing burden of subsidy sharing has meant that profit after tax from crude oil from nominated blocks has already eroded by almost 50 per cent over the last three years. If the trend continues, entire oil production from nominated blocks (more than 80 percent of ONGC's production) will become unprofitable. ONGC said it needs a minimum price of USD 65 per barrel, without which the investments planned in redevelopment of old and ageing fields will not be commercially viable, he said. (economictimes.indiatimes.com)

December 16, 2013. RIL is planning to shut a crude distillation unit (CDU) at its 660,000 barrels per day (bpd) Jamnagar refinery around early February for maintenance. The maintenance would likely last around two weeks and the capacity of the unit to be shut was estimated between 320,000 and 330,000 bpd. RIL operates two refineries in Jamnagar with a total capacity of 1.24 million bpd, making this one of the world's largest refining complex in a single location. It had recently shut a desulphurizer unit for planned maintenance at its 580,000 bpd plant. (in.reuters.com)

December 16, 2013. Senior BJD leader and Lok Sabha MP, Baijayant Panda urged Union Petroleum and Natural Gas Minister M Veerappa Moily to fast-track the Petroleum, Chemicals and Petrochemical Investment Region (PCPIR) project at Paradip in Odisha. Panda, who met Moily in Delhi and discussed the matter, pointed out that the project was likely to attract an investment of over ` 2 lakh crore and generate employment (direct and indirect) locally for more than 50,000 people. Indian Oil Corporation (IOC) is the anchor tenant for the Paradip PCPIR. As anchor tenant, IOC had agreed to develop a poly-propylene unit, an ethylene derivative plant as well as a mixed feed cracker unit at Paradip. The development of the PCPIR is dependent on these plants since the output from these plants will directly serve as feedback to its downstream units. Panda urged the Union Minister to expedite the development of these. He also raised the issue of slow-down in implementation of the IOC refinery due to shortage of workers after cyclone Phailin. Moily took serious note of Panda's concern and has assured to take necessary steps to expedite the implementation/completion of the project. He has also assured Panda that the refinery will be commissioned by February-March 2014, it said. (www.business-standard.com)

December 13, 2013. Essar Oil is selling gas from coal seam (CBM) at $ 9.16 to $ 11.63 while Great Eastern Energy Corp Ltd (GEECL) sells the same at $ 8.46 to 22.01. ONGC, which is one of the three operators producing coal-bed methane (CBM), charges $ 5.71 per million British thermal unit. Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi said GEECL sold 75.51 million cubic metres of coal gas from its Raniganj South CBM block in West Bengal at $ 8.46 per mmBtu to $ 22.01 per mmBtu rate in 2012-13. Essar Oil fetched $ 9.16 to $ 11.63 per mmBtu for 8.07 mcm of gas from its Raniganj East CBM block while ONGC sold 2.95 mcm gas from its Jharia CBM block at $ 5.71 per mmBtu in 2012-13, she said. The price realised compares to $ 4.2 per mmBtu price for natural gas produced from conventional fields by ONGC and RIL. Small quantities of conventional gas from western offshore fields are also sold at $ 5.71 per mmBtu. (economictimes.indiatimes.com)

December 17, 2013. The government is considering withdrawing the 11-month-old decision to charge market price for diesel purchased in bulk by consumers such as defence, railways, industrial units and state transport corporations because purchase from petrol pumps are substantially cheaper than bulk-buying. State governments are putting pressure on the Centre to reverse the decision as the move is adversely affecting their transport companies, which run fleets of buses. State transport undertakings, which used to buy diesel in large volumes directly from oil companies' depots, are now procuring the fuel from retail outlets that saves them about 10.50 per litre. Oil minister Veerappa Moily said that the dual pricing of diesel was not working properly. The Cabinet had raised the price of diesel to market levels for consumers buying directly from oil marketing companies in January and gave limited freedom to state oil retailers to raise the fuel price by about 50 paise every month until it is aligned with market rates. (articles.economictimes.indiatimes.com)

December 16, 2013. The oil ministry may not notify the new gas price formula during Petrotech, an industry event in mid-January, after the finance ministry suggested it to examine whether allowing the new price to RIL for gas produced from its old fields against bank guarantees could weaken the ongoing arbitration proceeding. Oil minister Veerappa Moily had said that the government would formally notify the new gas pricing formula within three weeks, which would allow Reliance Industries and others to double prices from April. The four-day mega show of the oil and gas sector is starting from January 12. The oil ministry wanted to notify the new gas price before announcing the 10^th auction round of exploration blocks in the event, which attracts potential investors. The finance ministry still prefers to disallow new rates to RIL for the shortfall quantity while accepting the solution of bank guarantee as a solution. It has also asked the government to reexamine the formula, which was approved by the Cabinet. In fact, the first choice of the finance ministry is to deny new rate to Reliance until it meets the entire shortfall quantity of gas on March 31, 2014 and the ongoing arbitration is concluded. (economictimes.indiatimes.com)

December 16 2013. The Finance Ministry has strongly pitched for putting a cap or limit to which natural gas rates can be increased following a new pricing formula that will come into effect from April 1. The ministry said a ceiling on the gas price is necessary to protect the interests of government/consumers in case of an unreasonable upswing in the prices. The comments, issued with the approval of Finance Minister P Chidambaram, were in response to a draft Cabinet note from the Oil Ministry seeking to allow higher gas price to RIL if it submits a bank guarantee for the unmet supply commitment from its KG-D6 block. (www.indianexpress.com)

December 14, 2013. The Congress party, which blamed the inflation for its dramatic loss in four assembly elections, is putting pressure on the government to stop raising diesel prices every month, but Oil Minister Veerappa Moily said the price reform would continue as the country has to pay for imports. Diesel prices have risen about 50 paise a month since January, adding up to a hike of ` 6 per litre in the course of this year, leading to political pressure against the move, particularly after the Congress party was routed in four crucial assembly elections. Moily said that the Cabinet Committee on Investment had cleared five projects of ` 7,947 crore of state-run energy firms and a ` 5,200 crore project of Gujarat State Petroleum to build a terminal to import 5 million tonnes a year of LNG. While the gradual increase in diesel prices is expected to continue, Moily seen lukewarm to the recommendation of an abrupt ` 5/litre hike proposed by the Kirit Parikh panel. (economictimes.indiatimes.com)

December 12, 2013. In a significant development, the Oil Ministry has given freedom to firms, including RIL and GAIL, to fix the marketing margin they want to charge on sale of natural gas to consumers other than urea manufacturing units and LPG plants. The Ministry, which has been for past two years grappling with the issue of marketing margin charged by gas producers and sellers like Reliance Industries and GAIL India, ordered that the margin to be charged over and above the gas sale price be fixed between seller and buyers in sectors other than urea and LPG. The Ministry asked the oil regulator PNGRB to determine the marketing margin for supply of domestic gas to urea and LPG producers through its independent process. (economictimes.indiatimes.com)

December 11, 2013. The government is coming out with a new mechanism to replace the contested Production Sharing Contracts (PSCs) in the oil and gas sector. This was revealed by Aramane Giridhar, Joint Secretary (Exploration) in the Ministry of Petroleum and Natural Gas while addressing the 12^th Petro India conference organised by Observer Research Foundation along with India Energy Forum. He said the government is introducing a "simple mechanism" to replace the PSCs. "The new guidelines will come out in a few weeks", he said. He said, that the players in the field should have freedom to take appropriate decisions without waiting for approvals from regulator. He argued that there is no fair market in the natural gas because of the infrastructural deficit. (www.business-standard.com)

December 11, 2013. The hike in domestic gas price, which is expected to be implemented from April 1, 2014, may burden urea producing companies by over ` 9,000 crore. According to a report submitted by Parliamentary Standing Committee on Finance headed by Yashwant Sinha, the production cost would increase by ` 1,384 per tonne with every increase of $1 per Million British Thermal Unit (MMBTU) in gas prices. Most of the country's natural gas is currently sold at $4.20 per unit. The price of gas in April next year would be around $8.42 and over $10 in the following year. The Rangarajan-gas pricing formula would be applicable for five years. It uses long-term and spot liquid gas (LNG) import contracts as well as international trading benchmarks to arrive at a competitive price for India. The Yashwant Sinha panel said according to the information they received from the Department of Fertilisers, if gas price increases by USD1/MMBTU, then per tonne increase in production cost of urea will be ` 1,369.5 and the total production of urea by gas-based fertiliser companies is pegged at 18 million tonne. According to arithmetic, the resultant burden would be ` 9,060 crore as with the Union Cabinet's decision, the gas price would be almost $4 more than existing prices. (economictimes.indiatimes.com)

December 11, 2013. Fearing that exit of global energy majors may hit the January auction of oil and gas blocks, the Oil Ministry is desperately trying to dissuade BHP Billiton from exiting by offering partnership with ONGC. BHP Billiton Ltd, the world's largest miner, said it has exited nine out of its 10 oil and gas exploration projects in India as it could not start operations for want of defence approval. (economictimes.indiatimes.com)

December 11, 2013. The oil ministry has accused RIL of selling liquefied petroleum gas (LPG) produced in its Jamnagar, Hazira and Patalganga plants to retail customers in violation of government orders that require all domestic output to be sold to state firms for subsidised sale to consumers. The company, which sells cooking gas to 1 million customers mostly in rural areas of western and central India - where state firms have limited reach -- has strongly contested this and told the ministry that the rules do not mandate that all domestic LPG must be sold only to state firms. It also told the ministry that state firms were not ready to pay market rates for LPG, leaving it with no option. Sale of LPG by private firms, called 'parallel marketing' is allowed only if the fuel is imported, but domestic output has been sold for 15 years. But the ministry is keen to resolve the issue amicably in view of the points raised by the company and the fact that state firms themselves were selling a lot LPG at market rates. (economictimes.indiatimes.com)

December 11, 2013. Gross under-recoveries on petroleum product are likely to touch ` 1.475 lakh crore in the current fiscal on the account of fluctuations in rupee and global oil prices, according to a rating agency. India Ratings and Research said in a report the recent marginal reduction in international oil prices, due to the progress over the Iran nuclear deal, could be only temporary as other geo-political instabilities emerge from time to time. The seasonal factors like setting in of winter could possibly see a rise in global oil prices as demand increases, the report said. The agency expects total gross under-recoveries for FY14 could be around ` 1.475 lakh crore, assuming current daily GUR levels. It said there is a case for the government to consider a one-time hike in diesel prices, as suggested by the Kirit Parikh committee, but it seems unlikely. The rating agency said diesel GUR touched a high of ` 14.5 per litre in mid-September due to rupee weakening, after decreasing to around ` 3.5 per litre in May 2013, because of monthly increases in diesel prices and a fall in crude oil prices. India Rating said for the government to manage GURs, without enforcing a steep hike, it would possibly have to raise the upstream share of the subsidy burden and increase the GUR burden on oil marketing companies (OMCs). The rating agency said despite increasing GUR, its ratings on OMCs are likely to remain unchanged as they are based on the strategic importance of the sector to the sovereign. (economictimes.indiatimes.com)

POWER

December 17, 2013. Meenakshi Energy and Infrastructure Holdings Private Limited (MEPL), a part of Hyderabad-based Meenakshi Group, has sold 74 per cent of its stake in its 1,000 MW thermal power project at Krishnapatnam in Andhra Pradesh to French energy group GDF Suez. KPMG India acted as the exclusive financial advisor for Meenakshi Group on this transaction, which was completed. The company had already spent ` 3,050 crore on the ` 6,000-crore project. While a 300 MW unit, set up at a cost of ` 1,550 crore, is already operational, the remaining 700 MW capacity is under construction. Meenakshi, which will retain 26 per cent stake in the project, believes that the partnership with GDF Suez will be mutually beneficial. GDF is expected to invest an additional $ 300-400 million for completion of the project. (www.business-standard.com)

December 16, 2013. Tehri Hydro Development Corporation (THDC) said it has signed an initial agreement with Uttar Pradesh State Industrial Development Corporation (UPSIDC) for transfer of land to implement the Khurja thermal power plant. The Memorandum of Understanding (MoU) was signed on December 14 in the presence of Uttar Pradesh Chief Minister Akhilesh Yadav and R S T Sai, CMD, THDC, in Lucknow. THDC has diversified in thermal power generation with allotment of Khurja project PPA's (Power Purchase Agreement) for entire energy signed with five beneficiary states (Uttar Pradesh, Uttarakhand, Delhi, Himachal Pradesh and Rajasthan). THDC has an installed capacity of 1,400 MW with commissioning of Tehri and Koteshwar Dam projects. (www.business-standard.com)

December 16, 2013. Tata Power said the company has undertaken more than 50 initiatives for the welfare of fisherman community in and around Mundra ultra mega power project (UMPP) in Gujarat. Coastal Gujarat Power Ltd (CGPL), a wholly-owned subsidiary of Tata Power, is implementing the 4,000 MW Mundra UMPP. Tata Power said the project is benefitting villagers in Gujarat by undertaking unique initiatives for community development. (articles.economictimes.indiatimes.com)

December 14, 2013. Reliance Power said it has started electricity generation from the second 660 MW unit of the 3,960 MW Sasan ultra mega power project (UMPP) in Madhya Pradesh. With the commissioning of the Sasan UMPP second unit, the company's overall generation capacity has crossed 3,200 MW. The second unit of the project has commenced power generation in shortest time of just about a month from boiler light up, Reliance Power said. Reliance Power now has 3,205 MW power generation capacity, including 3,120 MW of thermal and 85 MW renewable energy sources. The company's overall generation capacity would touch 6,000 MW by mid-2014. Sasan UMPP is the largest integrated power plant and coal mining project in the world. (economictimes.indiatimes.com)

December 13, 2013. Ten hydro-electric projects (HEPs) of NHPC Ltd with an aggregate installed capacity of 8531 MW, which have been concurred by Central Electricity authority (CEA), are awaiting various other clearances such as Environment & Forest clearance. Three of these projects are in Uttarakhand, 3 in Arunachal Pradesh, 2 in Manipur, and 1 each in Sikkim and J&K. These include Dibang Central (3000 MW) by NHPC in Arunachal Pradesh, Tipaimukh Central (1500 MW) by NHPC in Manipur, Pakal Dul (1000 MW) under Joint Venture in J&K among others. (economictimes.indiatimes.com)

December 13, 2013. Alstom T&D India, which has invested ` 1,000 crore in India since 2007 despite sluggish demands for power equipment, is upbeat about the market as the electricity grid is being strengthened. It has orders worth ` 6,100 crore for next 20-22 months. T&D India, an arm of French firm Alstom, said it is eyeing new business opportunities of close to ` 15,000 crore in the power transmission space in India in the next 3-4 years. Grid security technology is another great opportunity coming up in the next 3-4 years. Static Var Compensators (SVCs), 1700 Phasor Measurement Unit (PMUs) are used in electricity transmission grids. 30 SVCs and 1,700 PMUs would be required by March 2017 for transmission network strengthening in the country. Government has already started the tendering process for SVCs which is a ` 3,000-4,500 crore business opportunity. In the area of providing technology for grid security the potential is about ` 3,000-4,000 crore. Alstom T&D India's share in the transmission equipment and EPC market has risen to 19 per cent from 13.5 per cent in 2007, the company said. The company's turnover 2012-13 stood at ` 3,150 crore. The company is investing ` 100 crore this year for expansion of its Vadodra (Gujarat) facility. The government's initiative of restructuring the loans of power distribution companies should happen quickly and will benefit his company. (economictimes.indiatimes.com)

December 13, 2013. The Asian Development Bank will provide USD 350 million (over ` 2,100 crore) loan for improving power transmission and distribution system in Madhya Pradesh (MP). The Madhya Pradesh Power Transmission and Distribution System improvement project would carry out physical upgrades to increase capacity and deliver power more efficiently. According to the multilateral lender, the project would build on previous ADB investments in the state's power sector totalling more than USD 1.3 billion since 2001. The project would fund about 1,800 circuit kilometres of transmission lines and over 3,100 circuit kilometres of distribution lines. Besides, it would finance building or upgrading transmission and distribution substations. (economictimes.indiatimes.com)

December 12, 2013. Lanco Infratech is in talks with Kolkata-based CESC to sell the Budhil Hydro Power Project. Deal talks are hovering around ` 750 crore for the 70 MW hyro power project in Himachal Pradesh, negotiations are still on. Macquarie is the advisor to Lanco for sale of Budhil Hydro Project. Lanco needs to sell assets and infuse cash into the company to fulfill the terms of CDR (Corporate Debt Restructuring). A consortium of lenders has given a nod to a ` 7,700 crore CDR package. (economictimes.indiatimes.com)

December 11, 2013. In little more than a year since its inception, the Union government’s ambitious Financial restructuring Plan (FRP) for the beleaguered power distribution sector is at the cusp of success. Ailing discoms in at least three states – Rajasthan, Uttar Pradesh and Tamil Nadu -- have readied plans for their break even beginning next year. Distribution companies in the three states have already issued bonds to lenders, backed by state governments’ guarantees, taking care of a half of their short-term liabilities while the other half has been rescheduled by bankers wrapping up a bulk of the liabilities. Also, Haryana has begun issuing bonds. The four states were among the seven with 75% of the total ` 1.9 lakh crore debt with discoms. The state is now focusing on meeting the “difficult” conditions laid out under the FRP scheme including reducing Aggregate Technical and Commercial (AT&C) losses by 2% every year, frequent tariff revisions and 100% metering. States have to focus on reduction of AT&C losses as they have been linked to the Transitional Finance Mechanism under the FRP. The mechanism provides liquidity support equal to the value of the additional energy saved through loss reduction. Also, the centre would also give capital reimbursement support of 25% of the principal repayments by state governments on the liabilities taken over by them. Experts say four states with large short-term debt implementing the restructuring package is encouraging as it will provide respite to their liquidity position and ensure quicker payments to suppliers. The real test for states would be to increase tariffs in subsidized categories such as agriculture and pay declared subsidy to utilities timely. The farm sector accounted for more than 22% of power distribution companies' total annual sales of 900 billion units (BUs) in 2011-12. However, the sector contributed only eight% to their total revenue, exceeding ` 3 lakh crore. The subsidy on agricultural sales, which determine the commercial losses of utilities, increased 36% - from ` 33,300 crore in 2007-08 to ` 45,500 crore in 2011-12. Seven major defaulting states have a total outstanding liability of ` 1.2 lakh crore. Half of this or ` 59,813 crore was to be taken over by state governments through bonds. This includes Tamil Nadu’s `  9,573 crore, Rajasthan’s ` 18,000 crore, Uttar Pradesh’s ` 12,967 crore, Haryana’s `  7,859 crore, Punjab’s `  5,823 crore, Andhra Pradesh’s ` ` 3,151 crore and Madhya Pradesh’s `  585 crore. The two states--Himachal Pradesh and Meghalaya--are in the process of finalising their FRP schemes while Bihar, Jharkhand and Andhra, which were unable to participate earlier, have been included after last month’s approval by Union cabinet for revised FRP. However, Madhya Pradesh and Punjab have opted out. (www.business-standard.com)

December 17, 2013. Tamil Nadu (TN) chief minister J Jayalalithaa said in the next six months the state would totally become power surplus and expects there would be no power cuts in the state. She noted, between 1991 and 1996, and between 2001 and 2006, Tamil Nadu was a power surplus state. There was no question of any power cuts at that time. The state was actually supplying power to other states and was earning revenue through that route also. Many new projects which were initiated by the AIADMK government between 2001 and 2006 and if those projects have been carried forward, if they had been completed, even Tamil Nadu would have been a power surplus state, said the chief minister. She alleged the DMK government had ignored all those schemes and did not carry forward those projects or implementing them. There was a perennial power shortage in Tamil Nadu from 2007 onwards, particularly, in 2008, 2009 and 2010 and up to May 2011 when a different government was administering the state. The state had went in for power purchase and succeeded in negotiating agreements with other power surplus states for the purchase of power. But then even though, for example, the State negotiated an agreement with Gujarat to purchase 500-Mw there was no room for us in the transmission corridor, because priority was given to other states which had already negotiated long-term agreement and therefore we were able to actually bring only about 100 or 150-Mw to Tamil Nadu. This was the situation, said the chief minister. (www.business-standard.com)

December 17, 2013. The government said it has shortlisted 14 power distribution utilities for undertaking smart grid pilot projects entailing ` 200 crore. Aimed at benefiting consumers, the smart grid utilises digital technology that allows for 2-way communication between the utility and its customers, as well as monitoring of the transmission lines for efficient use of electricity. One such project in Puducherry is under implementation. The 14 distribution Smart Grid Pilot projects are being undertaken to test Smart Grid Technologies like Advance Metering Infrastructure (AMI), latest communication and automation, Power Minister Jyotiraditya Scindia said. (timesofindia.indiatimes.com)

December 17, 2013. The new draft power rate regulations announced by the Central Electricity Regulatory Commission could dent the profit of generation and transmission companies by ` 1,400 crore, according to CRISIL However, the draft guidelines will not weaken the credit profiles of these companies, the ratings agency said. If implemented in the current form, the guidelines will reduce aggregate profits of 13 Crisil-rated power utilities by nearly 7 per cent of their profits in the last fiscal, the agency said.

The guidelines have proposed a change in the manner of reimbursement of tax, a stringent incentive structure and stricter operating norms for utilities. The adverse impact of these provisions is only marginally offset by benefits such as higher escalation rate for operation and maintenance expenses and increase in late payment charges. The ratings agency said the most important proposal in the guidelines is change in reimbursement of expense on tax relating to return on equity. This will now be linked to actual tax outflow rather than the applicable tax rates in the current norms. The guidelines propose the generators will share a fourth of their incentives with distribution companies. (www.business-standard.com)

December 17, 2013. The Uttarakhand government is likely to increase electricity charges for the industry. With the state facing four-eight million units of power shortage daily, Uttarakhand Power Corporation Limited (UPCL), the sole power distribution company in the hill state, spends about ` 9,000 crore every year to purchase power from open market at higher rates than it purchases from the state-run UJVN. Since power shortage is a big issue in the hill state, the government is forced to purchase power from open market. BJP prime ministerial nominee Narendra Modi said he favoured harnessing the potential of river water for generating power. The state government had scrapped many hydel projects on environmental and religious grounds. (www.business-standard.com)

December 16, 2013. Congress extended unconditional support to Aam Aadmi Party (AAP) as it wanted to witness "miraculous experiment" of free water and drastically reduced power rates for Delhiites as promised by Arvind Kejriwal in his party's manifesto, Union Minister Salman Khurshid said. On a two-day visit to his Parliamentary constituency, Khurshid questioned why Kejriwal was shying away from forming government even after Congress offered its unconditional support. Congress has extended unconditional support to AAP as it wants to witness the miraculous experiment of free water and power rate slashed by 30 per cent to Delhiites, he said. (www.business-standard.com)

December 15, 2013. At a time when the country's power sector is facing tough times, the World Bank will soon come out with an elaborate sectoral review report listing out challenges as well as initiatives to improve current scenario. The report would have extensive review of Electricity Act implementation, performance and governance of various power utilities, including distribution companies (discoms). The report is expected to be released early next year after incorporating comments and feedback from various ministries and departments.

The growth of Indian power sector is crucial for the overall economic prosperity and the country is expected to see a generation capacity addition of more than 80,000 MW in the current Five Year Plan (2012-17). Even though India's current generation capacity is over 2,00,000 MW, many of the projects are struggling amid acute coal and gas shortages apart from poor financial health of distribution companies (discoms). (economictimes.indiatimes.com)

December 14, 2013. Government has recognised 6,474 'Small Hydro Power (SHP)' sites with an aggregate capacity of 19,749 MW. Financial assistance to the tune of ` 150 crore is being provided to the states by the centre for the development of small hydro-power projects. The total funds released under SHP programme during 2010-11, 2011-12 and 2012-13 were ` 151.99 crores, ` 154.45 crores and ` 158.92 crores respectively. The ministry of new and renewable energy is providing 'Central Financial Assistance (CFA)' to set up small/micro hydro projects both in public and private sectors. Financial support is also given to the state government for identification of new potential sites including survey and preparation of detailed project reports, renovation and modernization of old SHP projects and water mills. So far, 985 small hydro power projects with an aggregate capacity of 3754 MW have been set up and 265 projects aggregating to 945 MW are under implementation in various states. (economictimes.indiatimes.com)

December 13, 2013. The world’s largest coal miner, Kolkata-based Coal India Ltd (CIL), is likely to see its production growing five per cent, a four-year high, in the current financial year. The increased output growth would help revive 20,000 MW power capacity stranded for want of fuel. The company would produce 475 million tonnes (mt) this financial year against last year's output of 452 mt. Work in six-seven mines with a production capacity of around 20 mt is stuck due to delays in grant of green clearances.

India’s state-owned miner produced 289.4 mt between April and November this year, five per cent below its target, as a workers’ strike over a proposed five per cent disinvestment in the company and an ongoing dispute between two worker groups in Odisha’s Talcher coalfield impacted work. India’s anti-trust watchdog Competition Commission of India had imposed a penalty of ` 1,773 crore on the miner on the basis of three petitions filed by state power generation firms of Gujarat and Maharashtra against CIL for alleged abuse of its monopoly position. CIL alone produces 82 per cent of India’s 558 mt coal production. Gujarat and Maharashtra power utilities had complained CIL forcibly charged them transportation cost for ungraded (lowest quality) coal and discriminated between public and private companies in supply pacts. (www.business-standard.com)  

December 12, 2013. Bihar will be a power sufficient state by 2015, state Energy Minister Vijayendra Yadav said. State government has also reiterated its resolution to connect every village in the state with electricity in next couple of years. While replying to his department's supplementary demand of ` 724.67 crore, the minister said that Bihar will have access to 5,300 MW of power by 2015 to meet domestic demand. The ruling Janata Dal (United) or JD (U) government is on the threshold of fulfilling Chief Minister Nitish Kumar's promise of connecting every village with electricity by the end of the second term of his government, he said the trust is now on putting in place distribution and transmission infrastructure. (www.business-standard.com)

December 12, 2013. Set to harness hydro power for augmenting supplies in rural and remote areas, Jammu and Kashmir government has floated tenders for 23 mini and micro hydro electric power projects in seven districts of State. Jammu and Kashmir Energy Development Agency (JAKEDA) has come out with Request for Qualification (RFQ) from experienced and capable companies with necessary technical competence and financial strength for developing 23 Micro and Mini Hydro projects up to a capacity of 2 MWs each as Independent power producer (IPP) for a period of 40 years. The RFQ has been floated as per the 'policy for Development of Mirco and Mini Hydro Power Projects-2011'. Twenty three Mini and Micro Hydro projects with a capacity of 35.7 MWS would come up in 7 districts. Of these projects, the highest 6 projects would be developed in Anantnag district of South Kashmir followed by 5 in Poonch district, 4 each in Ganderbal and Kishtwar district, 2 in Ramban district and one each in Baramulla and Budgam districts. As per the RFQ, aggregate capital costs must not be less than ` 0.75 crore per MW for the bidding company or consortium. (economictimes.indiatimes.com)

December 12, 2013. The peak power demand of Odisha is projected to rise to 7,023 MW by 2021-22 as against 5,237 MW in the current fiscal. To meet this projected demand, the state needs to have installed capacity of 10,505 MW, according to the 18^th Electric Power Survey (EPS) of India. On the basis of the survey, the Central Electricity Authority (CEA) has envisaged the energy requirement of the state to be 42,097 million units (mu) in 2021-22. The peak demand for 2013-14, 2014-15, 2015-16 and 2016-17 will be 5,237 MW, 5409 MW 5,594 MW and 5,786 MW respectively and the energy requirements will be 32,079 mu in 2013-14, 32,895 mu in 2014-15 and 34,683 mu in 2016-17. Similarly, the state's installed capacity required for 2013-14, 2014-15, 2015-16 and 2016-17 has been pegged at 7,833 MW, 8,091 MW, 8,367 MW and 8,655 MW respectively. For meeting the surging demand of power, the state government has signed about 29 MoUs with the independent power producers (IPPs) for setting up projects with combined installed capacity of 38,000 MW. Odisha expects to get about 6,200 MW from this generation. (www.business-standard.com)  

December 11, 2013. The government has granted exemption to ultra mega power projects (UMPPs) from a key provision of the Forests Act 1980 that requires developers to identify non-forest land for compensatory afforestation. The decision will benefit companies like Reliance Power that is implementing 3 ultra mega power projects and developers of future such projects. The Cabinet Committee on Infrastructure has approved 'central government' status for ultra mega power projects for the purpose of forestland acquisition. Unlike private projects, central government projects are neither required to identify non-forest land for compensatory afforestation nor pay any money for the purpose. The developers of ultra mega power projects however will be asked to pay for the afforestation while the host state government will identify the non forestland. Compensatory afforestation rule is one of the most important conditions stipulated by the central government under the forest conservation act while diverting forestland and requires companies to identify equal area of non-forest land in the same state.

Reliance Power bagged the 3,960 MW ultra mega power project at Tilaiya in 2009 and planned to commission the first unit by May 2015. The company has not been able to start work, as the state government has not handed over land to the company. The company has received final forest clearance for 1220 acres of forest land but is still awaiting final handover from state government.

Nearly 80% of the land required for the project and the attached coal mines falls under forest area. Reliance Power had ordered the main plant equipment for the Tilaiya project on Shanghai Electric, China but is still in discussions with domestic and international banks for financial closure. The proposal would also benefit developers of future ultra mega power projects. The government has called bids for two such projects at Bedhabahal in Orissa and Cheyyur in Tamil Nadu. (economictimes.indiatimes.com)

December 11, 2013. Coal India Ltd (CIL) said it will initiate "appropriate legal action" against Competition Commission of India's (CCI) order, slapping ` 1,773 crore penalty on it for unfair trade practices. The development comes against a backdrop of the fair trade watchdog slapping a fine of ` 1,773 crore on CIL, the first major penalty on a state-owned company by it, for allegedly abusing its dominant position in fuel supplies. The CCI said that CIL is operating independently of market forces and enjoys an undisputed dominance in the country for production and supply of non-coking coal. (economictimes.indiatimes.com)

OIL & GAS

December 16, 2013. Royal Dutch Shell Plc’s long-awaited sale of its $6.4 billion stake in Woodside Petroleum Ltd. may open the door for Asian buyers to grab a slice of Australia’s second-largest oil and gas producer, or even the whole company. Shell, which said last month it was entering “a divestment phase,” may exit its 23 percent holding in Woodside as soon as 2014 as its importance to Europe’s largest oil company fades. While Shell may opt to sell the stock back to Woodside and institutional investors, China’s Cnooc Ltd. and China Petroleum & Chemical Corp. might pursue the stake or a full takeover. Woodside, which has a market value of $28 billion, offers buyers six of Australia’s seven LNG processing plants as China-led demand for liquefied natural gas is forecast to almost double worldwide by 2030. Government opposition to a foreign takeover may have eased since Shell was blocked in 2001. The company also is more affordable after its multiple to cash flow more than halved since 2011. (www.bloomberg.com)

December 16, 2013. AWE Ltd., an explorer with shale fields in Australia and an oil project in Indonesia, rejected a A$752 million ($673 million) initial takeover proposal from Senex Energy Ltd., saying it undervalued its shares. Senex offered the equivalent of A$1.44 a share, 22 percent more than AWE’s closing price of A$1.185, Sydney-based AWE said. Brisbane-based Senex, focused on oil and gas in central Australia’s Cooper Basin, withdrew its offer. The company, which aims to double output and triple cashflow by 2017, has shale gas assets in the Perth Basin of Western Australia and an Indonesian project with partner Santos Ltd. (www.bloomberg.com)

December 12, 2013. U.S. crude production rose to the highest level in a quarter-century as a shale drilling boom in states such as Texas and North Dakota cut the need for foreign oil and pushed the country closer to energy independence. The U.S. pumped 8.075 million barrels a day in the week ended Dec. 6, a gain of 0.8 percent, or 64,000 barrels a day, the Energy Information Administration (EIA) said. It’s the most since October 1988. U.S. oil output grew 18 percent in the past 12 months, the fastest pace on record, boosting fuel exports and reducing reliance on imports, according to the EIA. The boom will make the country the world’s largest producer by 2015, five years sooner than last year’s forecast, the International Energy Agency in Paris said. (www.bloomberg.com)

December 11, 2013. Sonangol EP, Angola’s state-owned oil company, will explore five onshore blocks and tender them for development if successful, according to a decree by President Jose Eduardo dos Santos. The company will retain an unspecified share in the blocks, four of which are in the Kwanza basin near Luanda, the capital, and one in the Lower Congo basin in the country’s north, according to the decree. Angola is encouraging domestic companies to bid on the onshore blocks to increase local content in the industry, which only employs about 1 percent of Angolans while investing about $20 billion a year, according to London-based GlobalData Ltd. and Luanda-based Oilfield Support Angola. Sonangol will keep a 50 percent share in four other Kwanza basin blocks out of 10 to be auctioned in early 2014, the decree shows. Of the remaining six concessions, there are three per basin. (www.bloomberg.com)

December 17, 2013. Refinery workers at Total's French 99,000 barrel per day (bpd) Grandpuits refinery near Paris voted to end their five-day strike, leaving three plants still contesting a pay deal offered by the oil major. La Mede, Gonfreville and Feyzin, with a total refining capacity of 613,000 bpd, went into a fifth day of strike action as workers belonging to the hardline CGT union stuck to pay demands even as other unions accepted Total's offer. Some 59 percent of workers voted to end the strike. Production at the plant near Paris had only been marginally impacted although deliveries had stopped for the past five days. The stoppages at the four refineries affected about 712,000 barrels a day of output, but production at the 230,000-bpd Donges refinery near Nantes was nearing normal levels after workers there voted to end the strike. France's eight refineries have a production capacity of 1.4 million barrels per day, but focus on gasoline though French motorists mainly use diesel. France imported between 17 and 18 million tonnes of diesel in 2012, making up about half of its consumption. (www.downstreamtoday.com)

December 16, 2013. Uganda has selected six bidders for the development of its planned refinery, bringing the east African country closer to starting long-delayed crude production. The ministry of energy and mineral development said the six included a grouping led by Petrofac, one led by Marubeni Corp and another by Global Resources. Others selected to develop the 60,000 barrels a day refinery were China Petroleum Pipeline Bureau, SK Energy and a group led by Vitol. The ministry said one of the companies or consortiums would be picked to lead the project in the first half of 2014. (www.reuters.com)

December 16, 2013. Costa Rica's refining company Recope launched a tender to buy 1.53 million barrels of liquified petroleum gas (LPG), for receipt between February 2014 and February 2015. The company previously awarded a contract to U.S. firm Valero Energy in August to import up to 67 cargoes of gasoline, diesel and jet fuel during 2014 to supply Costa Rica's domestic market while the 25,000 barrel per day (bpd) Canno Limon refinery undergoes a major expansion program. (www.downstreamtoday.com)

December 17, 2013. Russia's biggest natural gas producer Gazprom has not included funding for the construction of a gas pipeline to China and the development of a gas field to supply it in its initial 2014 investment programme. Gazprom had not yet budgeted for the Power of Siberia gas pipeline and the Chayanda gas field development because the company had so far failed to reach a pricing agreement with China. The company had planned to finalise the agreement with China. The deal, under which Russia would ship 38 billion cubic metres of gas annually to China, is crucial for Gazprom, which is trying to diversify supplies away from Europe, where countries are trying to wean themselves off Russian gas. (www.brecorder.com)

December 16, 2013. A Libyan rebel leader refused to hand over control of three oil ports to the government, spurring the biggest gain in benchmark crude prices in almost two weeks as the North African nation’s exports stayed constrained. The oil export terminals of Es Sider, Ras Lanuf and Zueitina, closed since the end of July, will remain shut after the authorities rejected his conditions, including a demand to share oil revenue with his self-proclaimed government in the east. The eastern region known as Cyrenaica may sell oil without the central government’s approval. Crude output in Libya, which holds Africa’s largest proven oil reserves, fell to 210,000 barrels a day last month, the lowest level since the 2011 rebellion and NATO bombing campaign that ended Muammar Qaddafi’s 42-year rule. The country was producing an average of 1.55 million barrels a day in 2010 and had plans to raise production to 2 million barrels a day through increased exploration. Libya is currently exporting about 110,000 barrels a day from five terminals under government control. A ninth terminal, Hariga in the east, is under partial government control. (www.bloomberg.com)

December 11, 2013. Iran, once OPEC’s second-largest oil producer, will be unable to sustain an increase in crude exports that support its economy when some measures to curb those shipments are eased, the International Energy Agency (IEA) said. The European Union said that it intends to suspend a ban in December or January on insuring tankers carrying Iranian oil. The U.S. said it will stop forcing buyers to cut purchases, even if they still aren’t allowed to increase them. The concessions are in return for commitments from the Persian Gulf state to provide more information on its nuclear program, which western powers claim is intended to make weapons. Neither the EU nor the U.S. lifted sanctions on importing the nation’s oil. (www.bloomberg.com)

December 17, 2013. TAQA, the international energy company from Abu Dhabi, has received approval from the UK government for development of its Morrone field (block 9/23b) in the Central North Sea. The initial phase of development will consist of an extended reach well drilled from the TAQA-operated Harding platform which lies 5 km north of the Morrone field. Morrone is expected to initially produce over 3,000 barrels of oil equivalent per day with first oil expected in the 3^rd quarter of 2014. TAQA's interest in Morrone is 70%. Maersk Oil North Sea UK Limited has a 30% interest. (explorationanddevelopment.energy-business-review.com)

December 17, 2013. Government auditors criticized the U.S. Interior Department for considering and then delaying plans to raise the royalty rate for oil production on public lands, saying that’s resulted in “foregone revenue.” The department’s Bureau of Land Management scrapped plans in 2012 to raise the standard royalty rate on public lands to 18.75 percent from 12.5 percent, according to a U.S. Government Accountability Office report. That delay stands in contrast to Interior’s increase of royalties on offshore production in U.S. waters. (www.bloomberg.com)

December 17, 2013. Two-thirds of the UK's land will be available for fracking companies to license, a government map published shows, with new areas opened up in the Midlands, Cumbria and Wales. Ministers said major energy companies had expressed interest in new shale gas licences and up to 150 applications are expected, which could cover about 15% of the UK. Almost £1bn of financial incentives and revenues could be injected into local communities that accept fracking, according to a new assessment of the impact of a largescale shale gas industry on the UK, published the same day. The report, commissioned by the government, suggests that a major fracking effort would deliver about 25% of the UK's annual gas needs in its peak years in the 2020s and provide up to 32,000 jobs, although as few as one-fifth of these could be local. (www.theguardian.com)

December 17, 2013. Hedge funds got more bullish on natural gas, betting the most on rising prices in 11 weeks as cold weather in the U.S. diminished fuel inventories. Money managers boosted net-long positions by 44 percent in the seven days ended Dec. 10, U.S. Commodity Futures Trading Commission data show. The total was the most since Sept. 24. Gas surged 6.6 percent during the report week as forecasts showed widespread below-normal temperatures. MDA Weather Services in Gaithersburg, Maryland, predicted it would be colder than average in most of the contiguous U.S. from Dec. 23 through Dec. 27. A government report on Dec. 5 showed a weekly drop in gas supply that surpassed analysts’ estimates. (www.bloomberg.com)

December 16, 2013. The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil fields. Plagued by almost a decade of slumping output that has degraded Mexico’s take from a $100-a-barrel oil market, President Enrique Pena Nieto is seeking an end to the state monopoly over one of the biggest crude resources in the Western Hemisphere. The doubling in Mexican oil output that Citigroup Inc. said may result from inviting international explorers to drill would be equivalent to adding another Nigeria to world supply, or about 2.5 million barrels a day. That boom would augment a supply surge from U.S. and Canadian wells that Exxon Mobil Corp. predicts will vault North American production ahead of every OPEC member except Saudi Arabia within two years. With U.S. refineries already choking on more oil than they can process, producers from Exxon to ConocoPhillips are clamoring for repeal of the export restrictions that have outlawed most overseas sales of American crude for four decades. An influx of Mexican oil would contribute to a glut that is expected to lower the price of Brent crude, the benchmark for more than half the world’s crude that has averaged $108.62 a barrel this year, to as low as $88 a barrel in 2017, based on estimates from analysts in a survey. Five of the seven analysts who provided 2017 forecasts said prices would be lower than this year. (www.bloomberg.com)

December 13, 2013. Mexico’s Congress approved a bill to end a 75-year state oil monopoly and generate as much as $20 billion in additional foreign investment a year. The nation’s most significant economic reform since the North American Free Trade Agreement secured the required two-thirds majority in a 353-134 lower-house vote. The proposal must be ratified by state assemblies, the majority of which are controlled by the alliance backing the reform. The bill will change Mexico’s charter to allow companies such as Exxon Mobil Corp. and Chevron Corp. to develop the largest unexplored crude area after the Arctic Circle. Supporters say the overhaul could propel Mexico into the top five crude exporting countries while opponents say it will funnel resource wealth to foreign investors. The peso gained. Producers will be offered production-sharing contracts or licenses where they get to own the pumped oil and will be allowed to log crude reserves for accounting purposes. (www.bloomberg.com)

December 13, 2013. Japan Oil, Gas & Metals National Corp. plans to renew an agreement with Saudi Arabian Oil Co. that will allow the Middle East producer to store crude in tanks on Okinawa Island. Saudi Aramco, as the Dhahran-based company is known, will lease tanks with a capacity of about 1 million kiloliters (6.3 million barrels), 200,000 kiloliters more than the current volume, according to a draft of the agreement. Japan, which imports almost all of its crude requirements, signed a three-year contract in December 2010 with Saudi Aramco, after making a similar deal with Abu Dhabi in 2009.

In exchange for providing the storage space, Japan receives priority for buying crude in the tanks in the event of an emergency, according to a report from the Ministry of Economy, Trade and Industry. Saudi Aramco’s first cargo with about 300,000 kiloliters of crude arrived at the Okinawa terminal in February 2011, followed by another in April that year, according to the ministry report. Abu Dhabi is leasing tanks with capacity of 600,000 kiloliters in the Kiire terminal in Kagoshima prefecture, southeastern Japan, the report shows. (www.bloomberg.com)

POWER

December 17, 2013. The Colorado Public Utilities Commission (PUC) has approved a multiyear power plan from Black Hills Energy that includes building an additional $70 million turbine at its power plant east of the city. To pay for the turbine, Black Hills will need an additional 4.8 percent in revenue — an increase it doesn’t intend to pass on to rate payers until 2017. The additional turbine would replace the 40 MW of power Black Hills is losing by closing its coal-fired Canon City plant. A year ago, the PUC turned away Black Hills’ request to build a $100 million turbine that would produce 88 MW of extra power. Then, the commission said that was too much extra power and too expensive a plan for rate payers. (www.chieftain.com)

December 16, 2013. Hyundai Heavy Industries (HHI) said that it has received an around 1.5 trillion won (US$1.45 billion) order to construct a power plant in Kuwait jointly with a French company Sidem. Hyundai’s portion amounted to around US$970 million. Under the deal with the Partnerships Technical Bureau of the Kuwait government, HHI will build a power plant with a generation capacity of 1,500 MW. The plant will be built on a site located along the Persian Gulf, about 100 kilometers south of Kuwait City. The construction will start this month with aiming at completion during the second half of 2016. (www.businesskorea.co.kr)

December 17, 2013. The PJM Interconnection Board has authorized $4.6 bn in additions and upgrades to the high-voltage electric transmission grid that serves customers in 13 states and the District of Columbia, US. Over $3 bn will be spent on the upgrades to connect new generating facilities, while another $1.2 bn has been allotted to a project in northern New Jersey, that seeks to address short circuit and thermal problems in that area. PJM said the transmission system is required to keep pace with the decommissioning of over 20,000 MW of generation in the PJM region, and construction of new gas plants in various locations. (utilitiesretail.energy-business-review.com/news)

December 16, 2013. Chesf, a unit of Brazil’s state-run power utility, will receive 1.2 billion reais ($516 million) in loans from development bank BNDES to upgrade its electricity grid and build power lines in the northeast. The company will use about 44 percent of the funds to expand its network, including power lines connecting wind farms in the states of Bahia, Ceara and Rio Grande do Norte, BNDES said. (www.bloomberg.com)

December 16, 2013. The European Investment Bank (EIB) has signed an agreement with Administración Nacional de Electricidad (ANDE) to provide loan for the construction of the second high voltage power transmission line in Paraguay. The €75mn loan will finance the construction of an approximately 360km-long 500kV transmission line from the Yacyretá hydropower plant to Villa Hayes in the greater Asunción area. (utilitiesnetwork.energy-business-review.com)

December 12, 2013. Finnish energy company Fortum has agreed to sell its electricity distribution business in the country to Suomi Power Networks, owned by Keva (12.5%), LocalTapiola Pension (7.5%), First State Investments (40%) and Borealis Infrastructure (40%). Fortum is likely to complete the divestment process for a consideration of €2.55bn on a debt- and cash-free basis during the first quarter of 2014 and the transaction is subject to regulatory approvals and customary closing conditions. The divesture decision, which is part of the company's assessment of electricity distribution business' future alternatives, will not have effect on the company's around 640,000 distribution customers, which will be transferred with the business with existing terms upon completion. (utilitiesnetwork.energy-business-review.com)

December 13, 2013. Hydropower developers in Peru were awarded contracts to sell power from 240 MW of capacity in a government auction. The 19 projects planned for regions including Huanuco and Cajamarca have capacities of 4 to 20 MW, the Ministry of Mines and Energy said. They will begin operations in 2016. (www.bloomberg.com)

December 12, 2013. For a first-time lawmaker, coal promoter Ulrich Freese made the most of Chancellor Angela Merkel’s pledge to counter rising power prices. Freese, a Social Democrat former mining-union executive, won a parliamentary seat, even as Merkel’s bloc defeated his party in national elections. As the two sides negotiated a coalition government, he inserted a commitment to use lignite, one of the most polluting forms of coal, to bridge the gap in Germany’s energy mix and rein in the second-highest electricity prices in the European Union after Denmark’s. With Merkel about to be installed for a third term, the rush for influence is under way in Berlin. Her struggle to pull off the biggest shift to clean energy of any developed country is one of the core battlegrounds, allowing a newcomer like Freese to exploit her decision to phase out nuclear plants and navigate the policy contradictions that transcend party lines. (www.bloomberg.com)

December 16, 2013. Solar gas technology has great potential for India for securing its energy needs, a new study has found. The study, conducted by Australia's National Science Agency - Commonwealth Scientific and Industrial Research Organisation (CSIRO), has found that the new technology has potential of creating job, providing improved energy and food security, greater yields in fertiliser and produce solar liquid fuels for transport. Gujarat and Rajasthan were identified as key states for India for the application of the technology due to excellent solar resource, existing natural gas infrastructure and existing major industrial users of hydrogen in the petro-chemical and fertiliser industry. The technology concentrates the sun's rays to drive a reaction between water and natural gas which stores solar energy in the form of chemical bonds. (articles.economictimes.indiatimes.com)

December 16, 2013. NSL Power, which plans to invest $45 million to set up new wind farms in Maharashtra, is planning to raise around $15.75 million from the International Finance Corporation (IFC). NSL Renewable Power Private Limited is the ‘Sponsor’ for Jath Wind Energy Private Limited. IFC is an equity holder in the Sponsor, holding 7.9% on a fully diluted basis. According to company's project disclosure, NSL Power is planning to set up a 40 MW wind power plant in Vaspet, Sangli District of Maharashtra through an SPV called Jath Wind Energy Private Limited. The project company has been setup for the sole purpose of construction, operation, and maintenance of the 40 MW project and will not have any other operations. The Project is expected to be commissioned by March 31, 2014. The off-taker will be Maharashtra State Electricity Distribution Co. Ltd (MSEDCL), a state owned utility. INOX Wind Limited, a wind turbine manufacturer and project developer (and a group company of an IFC investee company Inox Renewables Ltd), will be developing the project on a turnkey basis – from design to construction to commissioning, which includes the micrositing, land acquisition, obtaining statutory approvals, WTG supply, and EPC and O&M. (www.business-standard.com)  

December 16, 2013. Solar power system will soon be installed in police stations in Odisha, where supply of electricity is important for implementation of the much talked about Crime and Criminal Tracking Network and System (CCTNS). As many as 784 police establishments, including 581 police stations in the state would be covered under the CCTNS, in which several DSPs, SDPOs, SPs, DIGs and DG police offices will be connected through computer networking. (economictimes.indiatimes.com)

December 14, 2013. The GMR Group-operated Delhi International Airport has become the first in Asia to host a mega solar power plant on its premises. A 2.14 MW solar plant has just been set up and is all set for ribbon-cutting, it is learnt. The airports of Kochi and Bhubaneswar have solar plants, but they are of 100 kW capacity each. Delhi is the first to have a megawatt scale, ground-mounted system. As a thumb rule, at latitudes such as of Delhi, a 1 MW solar plant will generate 1.5 million units of electricity. Delhi International Airport Ltd will save at least ` 2 per unit of electricity over what it pays now. An expansion of the solar plant’s capacity is on the cards. India has 136 airports, some of which are spread over vast pieces of land. For example, the Hyderabad International Airport is spread over 5,400 acres while Chennai sits over 4,000 acres. Large-scale solar plants are possible. Hyderabad, for instance, can house 25 MW. The plant has been built for Delhi International Airport Ltd by German company called Enerparc, which specialises in airport solar projects among others. (www.thehindubusinessline.com)

December 12, 2013. Eminent nuclear scientist Dr Anil Kakodkar, former chairman of the Atomic Energy Commission, said that to meet the twin objectives of controlling the current account deficit and fulfilling the energy requirements, India must take the Solar route. He said solar technology also had the potential to meet India's growing energy requirements. He asked scientists to use solar technology not only for energy, but also for converting it into heat using innovative technology. Bengal Engineering and Science University (BESU) said India must encourage a low-carbon economy in the days to come. The state university has established the Centre of Excellence for Green Energy and Sensor Systems as a seat of multi-disciplinary research and education. (economictimes.indiatimes.com)

December 11, 2013. Even as the Government of Tamil Nadu had earlier set a target of setting up 1,000 MW solar power in 2013 and implementing three per cent solar purchase obligation (SPO), the state has missed the target for the first year due to various reasons, said Tamil Nadu Electricity Regulatory Commission (TNERC). The Commission is looking at coming up with the rate fixed for solar energy soon, TNERC said.

The state government, for the first time in the country, had prescribed three per cent SPO for 2013, and six per cent from January 2014. Though it could not be achieved this year, but it was the state's ambitious plan to encourage solar power generation. There were some doubts in the minds of the consumers as well as the power generation firms about the scheme and some of the consumer organisations approached the court against the order of TNERC on this. The Commission has not yet come out with the banking arrangements, wheeling charges and transmission charges for solar energy and it would be finalising it soon. It also published the draft report on the tariff for the solar energy, and received comments. Taking the feedbacks into consideration, the TNERC would shortly be finalising the rate. (www.business-standard.com)  

December 17, 2013. Climate change will increase the number of people at risk of absolute water scarcity by 40 percent this century, according to a German institute. Ten in 100 will have less than 500 cubic meters (132,000 gallons) of water available a year, up from 1-2, should Earth warm by 3 degrees Celsius (5.4 degrees Fahrenheit) above pre-industrial levels and populations grow, according to the Potsdam Institute for Climate Impact Research (PIK). The global average is about 1,200 cubic meters, and much greater in industrialized nations, PIK said. As the world warms, the southern U.S., Mediterranean, Middle East and southern China probably will see lower water availability as southern India, western China and parts of East Africa may experience substantial increases, PIK said. About 1.3 billion of Earth’s 7 billion people already live in water-scarce regions, PIK said. With greenhouse gas emissions at a record, the UN says the world is on track to surpass a 2-degree Celsius temperature increase by 2100 that would raise sea levels and trigger more violent storms. The study was conducted by research institutes from around the world based on an analysis of 11 global hydrological models, PIK said. (www.blooberg.com)

December 17, 2013. China’s southern province of Guangdong sold 3 million metric tons of emission permits for 180 million yuan ($30 million) in its first auction. The auction, the first of its kind in China, drew an average bid of 60.71 yuan a ton, with the highest at 81 yuan, the China Emissions Exchange said. The exchange settled on a selling price of 60 yuan a ton for all the permits offered, with 28 companies bidding. Guangdong, the largest of seven carbon markets planned in China, is the first region to use auctions to allocate a portion of its emission permits instead of giving all of them away for free. The price of 60 yuan is the highest in the nation and compares with a minimum of 28 yuan a ton in Shenzhen, 25 yuan in Shanghai and 50 yuan in Beijing. China, the world’s biggest emitter of greenhouse gases linked to climate change, began carbon markets in four cities this year as the nation seeks to cut carbon intensity, a measure of pollution compared with gross domestic product. The government has said the pilot exchanges are a precursor to a national trading system to be introduced as soon as 2016. Companies in Guangdong won’t be able to buy or sell free permits accounting for 97 percent of their emission quotas until they purchase the balance at auctions, the exchange said. (www.bloomberg.com)

December 17, 2013. On a global scale, we humans are becoming more energy efficient with each passing year. Even so, we’re exploiting only a fraction of the technological opportunities to use energy more cost-effectively. There’s a lot governments can do to put this right. Worldwide, the amount of energy employed to produce a unit of gross domestic product fell by 0.4 percent a year from 2000 to 2010, according to the International Energy Agency (IEA). Last year and the year before, the annual decline accelerated to 1.5 percent. Looking ahead 20 years, though, the IEA estimates that two-thirds of the potential for energy efficiency will remain unexploited. Capturing a good part of this potential wouldn’t be technically difficult. Proven cost-effective technologies, and others in the pipeline (if you’ll forgive the expression), could reduce the expected growth in energy demand by as much as 50 percent between now and 2035. Investments would be required, but these would pay for themselves over time. And these savings could be achieved without inconveniencing consumers -- without, for instance, asking them to live with less air conditioning or heating. As a welcome byproduct, air pollution and carbon emissions would decrease. (www.bloomberg.com)

December 17, 2013. The decision by Warren Buffett’s utility company to order about $1 billion of wind turbines for projects in Iowa shows how a drop in equipment costs is making renewable energy more competitive with power from fossil fuels. Turbine prices have fallen 26 percent worldwide since the first half of 2009, bringing wind power within 5.5 percent of the cost of electricity from coal. MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., announced an order for 1,050 MW of Siemens AG wind turbines in the industry’s largest order to date for land-based gear. (www.bloomberg.com)

December 16, 2013. Fifteen states that have taken steps to reduce greenhouse gas emissions are seeking assurances that their efforts will be recognized when the U.S. Environmental Protection agency (EPA) issues new rules governing pollution from power plants. In a petition delivered to the EPA, officials from states including California, New York and Colorado say they want to make sure the agency recognizes their efforts as it crafts the federal rules, set to be released in June. The rules could force companies such as Southern Co., American Electric Power Co. and Duke Energy Corp. to shutter or idle aging coal plants. Carbon-dioxide emissions since the Industrial Revolution have led to a warming of the Earth’s temperature in the past 50 years, worsening forest fires, drought and coastal flooding, according to the U.S. Global Change Research Program. President Barack Obama directed the EPA to cap carbon dioxide from power plants, which account for 40 percent of U.S. emissions, as part of the effort to reach his goal of cutting overall greenhouse-gas emissions 17 percent by 2020 from 2005 levels. Without additional actions, U.S. emissions will fall short of that goal, as the drop is coal use is accompanied by a drop in nuclear generation, which has zero carbon emissions, the Energy Information Administration said. Obama’s first step to improve the outlook was to issue rules for new plants in September. More contentious rules for existing plants are scheduled to be announced in 2014. The 15 states said that by 2011, they had cut emissions 20 percent from 2005 levels. The states called on the EPA to issue a cap that would cut power-plant emissions by more than 17 percent, because finding reductions elsewhere “will be more difficult to achieve.” The EPA should then give states “flexibility” to achieve that reduction and minimize cost and burden. The other states that filed the petition are Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, Oregon, Rhode Island, Vermont and Washington. (www.bloomberg.com)

December 16, 2013. The European Union (EU) adopted an emergency law change to alleviate a record glut of emission permits in the region’s carbon market and help prices recover from near all-time lows. EU agriculture ministers approved an amendment to authorize the European Commission, the bloc’s regulatory arm, to postpone sales of as many as 900 million carbon allowances despite opposition from Poland. The decision taken at a meeting in Brussels was the final procedural step on the law, which will be published in the EU’s Official Journal in the coming days. (www.bloomberg.com)

December 16, 2013. The U.K. risks failing to attain the 10 GW of offshore-wind power it says is possible by 2020 unless the country does more to curb construction and financing hazards for developers. Deployment of 10 GW of offshore wind, almost triple the current installed base, is achievable by 2020, according to the government. The U.K. has shifted support to offshore wind from onshore to meet carbon and renewable-energy targets by 2020 without alienating voters opposed to turbines in rural areas. Iberdrola SA’s Scottish Power unit dropped plans to build a wind farm off the U.K. coast, citing technical challenges. RWE AG abandoned a project off the coast near Bristol because engineering hurdles made it too costly. Risks “at all project stages” may affect the payments to generators under the government’s new system of contracts-for-difference, which guarantees set rates for electricity produced in renewable power stations. The government raised proposed power prices for offshore wind at projects that start generating in 2018, while holding rates from next year. It cut payments to onshore wind and solar. It said the 10 GW figure isn’t a target. (www.bloomberg.com)

December 16, 2013. The U.K. should hold competitive auctions for most renewable power contracts to bring down technology costs and lower the impact on consumer electricity bills, an analyst linked to the ruling Conservative Party said. Biomass, onshore wind power and energy-from-waste could all compete against each other for electricity generation contracts from as early as next year, Policy Exchange said in a report. Solar power may also be able to compete, while a technology-specific auction with a fixed budget should be held for offshore wind power, it said. Energy prices have been a political flash point in Britain, with the opposition Labour party pledging to freeze bills should it win the next election in 2015. That spurred measures by the ruling Conservatives and Liberal Democrats to cut some charges. The government estimates support for renewables will add 132 pounds ($215) to typical a household’s bill by 2020. The government is trying to spur 110 billion pounds of investment to replace aging power plants by 2020, while still meeting binding emissions and renewable energy targets. To that end, Parliament passed a law reforming the electricity market and setting prices for power from different low-carbon generation technologies through 2019. (www.bloomberg.com)

December 14, 2013. Brazilian wind-farm developers won contracts to sell energy from 97 planned power projects with 2.3 GW of capacity, the most of any generating technology in a government-organized auction. Small hydro-power plants sold 700 MW of capacity and biomass plants sold 162 MW. Developers didn’t win any contracts to sell electricity from solar farms. The wind industry’s trade group had expected to sell about 1 GW of capacity. Developers need to contract about 2 GW of wind farms a year to break even on their investments. The Sao Manoel dam’s 700 MW of power was sold for 83.5 reais ($35.8) per megawatt-hour. A judge overturned an injunction barring the project from participating in the auction because it hadn’t met some environmental requirements. (www.bloomberg.com)

December 13, 2013. More Americans view the Keystone XL oil pipeline as a benefit to U.S. energy security than as an environmental risk, even as they say Canada should do more to reduce greenhouse gases in exchange for approval of the project. The poll shows support for the $5.4 billion link between Alberta’s oil sands and U.S. Gulf Coast refineries remains strong, with 56 percent of respondents viewing it as a chance to reduce dependence on oil imports from less reliable trading partners. That compares with the 35 percent who say they see it more as a potential source of damaging oil spills and harmful greenhouse gas emissions. A push by environmental groups against the project may be affecting public opinion: 58 percent of poll respondents say they want Canada to take steps to reduce carbon dioxide emissions as a condition for approval, with 32 percent opposing such a requirement. The Keystone project has become a barometer for some environmental groups on President Barack Obama’s commitment to addressing climate change. The U.S. State Department is overseeing the review of the pipeline because it crosses an international border. The agency is preparing a final version of an environmental review that will assess whether Keystone would contribute to greenhouse gas emissions, which many scientists believe are warming the planet. A draft of the report released in March found Keystone would have only a minimal impact on climate change because the oil sands would continue to be extracted even without the pipeline. Obama said that he wouldn’t approve the project if it significantly exacerbated the “problem of carbon pollution.” The final environmental impact statement starts a 90-day process by the State Department to determine if the project is in the nation’s interest. (www.bloomberg.com)

December 13, 2013. The European Union’s planned rules to monitor greenhouse gases from ships must be in line with international law to avoid conflicts with other nations, according to member states including Italy and Ireland. Draft rules to introduce monitoring, reporting and verification of carbon dioxide from ships starting in 2018 were discussed by EU environment ministers at a quarterly meeting in Brussels. The European Commission, the 28-nation bloc’s regulatory arm, proposed the law in June to encourage global curbs on maritime pollution tied to climate change. The proposal on shipping emissions followed the expansion of the EU carbon cap-and-trade program to international airlines last year, a move that spurred opposition from countries from the U.S. to China to Russia and triggered threats of a trade war. The draft law on ships doesn’t impose any pollution limits and aims to encourage the maritime industry to cut discharges by increasing transparency. The draft law, proposed after the International Maritime Organization made little progress in the past decade to agree on a global framework, would oblige the owners of ships larger than 5,000 gross tons using EU ports to report annual discharges of carbon dioxide, the main gas blamed for global warming. The measure is meant to be a “building block” for worldwide emission curbs and needs support from EU governments and the European Parliament to become a law. Global maritime transport accounts for 3 percent of international CO₂ discharges, and emissions from ships are expected to more than double by 2050, according to the commission. The proposed European system would cut pollution from the journeys covered by as much as 2 percent compared with a “business as usual” scenario and reduce net costs to ship owners by as much as 1.2 billion euros ($1.6 billion) a year in 2030, the commission has said. (www.bloomberg.com)

December 11, 2013. Solargiga Energy Holdings Ltd., a Chinese solar manufacturer, formed a joint venture to develop 200 MW of photovoltaic plants in Ghana. The company will own 90 percent of the venture with Savannah Accelerated Development Authority, which promotes green projects in the country’s north, Solargiga said. Ghana is following nations on the continent such as Nigeria and South Africa in seeking to develop large solar plants. It introduced long-term incentives to help meet a 10 percent target for generation from clean sources by 2020. U.K. developer Blue Energy Co. plans a 155 MW solar park in the country. Solargiga will initially develop projects with 40 MW of capacity. The company produces solar wafers, panels and cells, as well as building projects. (www.bloomberg.com)

• Energy
• China
• India
• ENERGY AND RESOURCES

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.