MonitorsPublished on May 29, 2007
Energy News Monitor |Volume III, Issue 49
Optimised Electricity Generation Planning: A case study for Karnataka


¨        Though it is true that the initial cost of these new and renewable energy sources seem to be high as compared to the conventional energy sources, it is only because the society has already invested very heavily for the infrastructure required for the development of the latter.  Also, the real cost of recurring fuel needs in case of coal, diesel or natural gas will be avoided in the case of renewable energy sources. Whereas both the capital cost and energy cost from the conventional energy sources is increasing all the time, the same is opposite in case of new and renewable energy sources. Already the cost of new and renewable energy sources has come down by many times in the last decade.  In addition, if we take the environmental costs, social costs, T&D losses and the large infrastructure required for the grid quality conventional energy sources, the distributed energy generation based on new and renewable energy sources will be much cheaper.

¨        The benefits of the new and renewable energy sources will be optimum when we consider them as distributed generation sources.  An objective analysis of all the societal costs and real benefits over the duration of the known life cycle of conventional energy sources as compared to that of new and renewable energy sources will reveal that the renewable energy sources are of much higher benefits in most situations.

9. State level co-ordination set-up:

It is also very unfortunate that there is no single agency in many of the states to take a holistic look of the integrated resource management within the state.  Unless the operation of distribution licensees, the transmission licensees and the generating companies are not coordinated well, it will be impossible to have a holistic approach to the energy needs of the entire society at the lowest societal cost. At present it seems that various agencies in each state are operating without close interaction between them; without good co-ordination of the functioning of these seven companies, it will be impossible to optimize the utilization of the resources of the state. For example: a generating company seems to practice a single corporate objective of setting up more and more additional generating capacities; the transmission company seem to be working towards expanding the transmission network and its assets; and distribution licensees seem to be interested in selling more and electrical energy.  Under such a scenario the public cannot expect optimization of a state’s resources. As has been experienced during the last few decades the investment in the electricity sector has vastly increased, but neither the power cuts have been overcome nor has the quality of supply been improved. At the same time the natural resources of the State are not being put into maximum use because of the overall inefficiency in the industry.

The experience so far indicates that the Energy Department in most of the states is found to be lacking in the required competence to handle these issues.  It is obvious that the interests of the paying public, the natural resources and the fragile environment of the state cannot be adequately protected with the existing industry structure. A state level coordinating body to consider all the relevant issues in meeting the additional demand for electricity at the lowest overall societal cost is an urgent necessity.

In this background it becomes imperative that a regulatory mechanism, preferably under the aegis of State Electricity Regulatory Commission, be put in place to ensure that any concept of such large projects, where a state has no natural resources of its own and/or which require huge spending and involves forest destruction, should go through wider public consultation process before proceeding.  Such a public consultation process could be in the form of effective deliberations of a state level apex body consisting of environmental scientists, forestry officials, few NGOs operating in such fields, people of public standing in relevant fields, representatives of pollution control board etc. Such a proposal is, anyway, consistent with the requirement of the clause 86 (4) of IE ACT which says: “ In discharge of its functions the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.”  Section 1.8 of The National Electricity Policy states: “… aims at laying guidelines for accelerated development of the power sector, providing supply of electricity to all areas and protecting interests of consumers and other stakeholders keeping in view availability of energy resources, technology available to exploit these resources, economics of generation using different resources, and energy security issues.”

Various states have promulgated Acts/regulations consistent with these provisions.  For example the KER Act1999 states among others:

“ ….. Subject to the provisions of this Act, the Commission shall be responsible to discharge amongst others, the following functions, namely: -

To regulate the assets, properties and interest in properties concerning or related to the electricity;

To coordinate with environmental regulatory agencies and to evolve policies and procedures for appropriate environmental regulations of electricity sector and utilities in the State...”

Unless the paying public and the society at large have effective participation in major decisions of the electricity companies, the natural resources and the environment of a state cannot be harnessed on a sustainable basis.  A generating company, for example, seems to be driven by a single motivation of establishing more and more of generating capacity without taking into account the socio-environmental impact of such large power projects, or the alternatives available to meet the increasing demand for electricity.  Without taking all the issues into correct perspective if large projects are embarked on, it will be the consumers and the society at large which will have to bear the consequences.

10. Recommendations:

In this regard it would be highly desirable that the State Electricity Regulatory Commissions (SERC) should consider taking a pro-active role to safeguard interests of the paying public and the resources of the state.  The Commissions should:

(i)                  Seek all the necessary information/clarifications from generating companies/developers with regard to any proposed Projects, and study the proposal to see if such projects are in the real interest of the state;

(ii)                 Consider holding a public hearing seeking the opinion of the public and of the experts in power generation on the advisability of planning fossil fuel based  power stations in a state which is not endowed with such reserves;

(iii)               Direct generating companies /developers to look for much safer, benign and socially acceptable ways of meeting the business obligations;

(iv)                Advise state owned generating companies to seek modification to their articles of association, if necessary, such that they can act as Energy Service Companies instead of just as electricity generating companies.   By doing so they can add thousands of MW of virtual power by investing effectively in Renovation, Modernisation and Upgradation of generating stations, transmission and distribution networks; by investing in renewable energy sources, and in Demand Side Management;

(v)                 Set up state level co-ordination committees to evolve policies and procedures for appropriate environmental regulations of electricity sector and utilities in the State, including the electricity generating companies.  Such co-ordination committees should be vested with the responsibility of opimising the use of natural resources of the state as far as electricity industry is concerned, and to coordinate with environmental regulatory agencies so that all issues relating to environmental impact of every power project are objectively considered to ensure the sustainable development of the state at the lowest overall societal cost;

(vi)                Such co-ordination committees shall insist that any proposal for large projects must be supported by objective cost benefit analysis of all the viable alternatives available;

(vii)              Power Purchase Agreements (PPAs), instead of being thrust on the consumers after the project gets going, should be looked into by SERC before the DPR gets finalised;

(viii)            Power Purchase Agreements of all the proposed projects, with due regards to the actual societal costs, should be thoroughly investigated.

(ix)               A detailed study of all the electricity generation projects commissioned in the past should be undertaken to verify whether the conditions laid down at the project approval stage have been fully complied with; whether the actual benefits of the project are consistent  with the claims made in the DPR; and whether social and environmental issues have been satisfactorily addressed.  Such a study will not only assist in learning from the mistakes of the past but will also help us to improve upon the project planning and execution in future.

Such a state level coordinating mechanism providing for wider consultation and scrutiny will avoid the costly mistakes similar to that of PPAs with some private generating schemes in the country.  Without such a radical change in the approach and functioning of electricity companies, the states cannot possibly hope to meet the electricity requirements of the public on a sustainable basis. The minimum these companies owe to the public is not to waste precious public money.

11. Conclusions:

To continue to invest in unsustainable and polluting power projects based on fossil fuels or large dams without first maximizing the efficiency of usage of the existing infrastructure, and without harnessing the benign renewable energy sources available in the state will amount to breach of trust of the state’s public and non-compliance of Electricity Act 2003. 

The electricity industry as a whole has the potential to be one of the biggest polluters of our environment unless it is managed responsibly.  If the society as a whole believes in taking necessary remedial measures to address the potential impacts of Global Warming and Climate Change, the ills of the electricity industry, with special emphasis on its overall inefficiency, have to be adequately addressed at the earliest.

It is also the misfortune of our society that the people in power are not considering the much benign alternatives to meet the increasing electricity demand other than simply adding to the installed capacity, never caring as to how the existing capacity is being put into productive and economic use.  The ongoing power cuts in different states were most certainly avoidable if there were to be adequate political will in optimizing the usage of the existing assets. Many of the simple measures to eliminate the deficit during the summer months have been discussed in the public forum on a number of occasions. Unfortunately, not much seem to have happened, and the public are being subjected to a lot of hardships due to power cuts. An apex body such as the one suggested above would certainly be able to avoid such an experience in future.

There is adequate mandate for SERCs under IE Act 2003 to take the above mentioned pro-active initiatives to streamline the functioning of the electricity industry such that the overall interest of the state and the electricity consumers is well protected.

(Views are personal)                                             concluded



Large investments planned in captive power



Capacity in MW


BP Energy India



Roaring 40s



Tata Power



Hindustan Zinc


Gujarat, Karnataka

Reliance Energy




Source: The Hindu Business Line, 22nd May 2007.

Energy and Agriculture in the Third World: (Part – VII)

(Published in the USA, first printing, 1975)

By Arjun Makhijani in collaboration with Alan Poole


Peipan is a village located near the Tzu River in hilly Eastern Hunan. It is a village of about 1,000 people (200 households) which has a cultivated area of 200 hectares. Peipan is part of a commune of several villages which is the basic administrative unit for the implementation of national agricultural policy. The land in the commune is owned collectively by its members, but a small amount is privately owned. The annual and long-term production goals for the commune are set by the central government, but in its day-to-day operations are locally controlled. Decisions regarding the division of labor, production, and construction schedules are made at meetings presided over by Communist Party cadrés.

In spite of the idealogical campaigns, the influence of the clan in Peipan is still strong. However, the apathy to increasing production, which was a feature of Chinese village life before the revolution, has largely been overcome. One of the instruments of this change has been the grant of small private plots to each family for raising pigs and cultivating vegetables and bamboo or fruit trees in their spare time. They barter or sell the produce at local markets.

While the existence of private plots has at times been ideologically unpalatable to the ultra-leftists of the Communist Party, the necessity for such production incentives has long been recognized (and fiercely debated) by the government as an instrument of pragmatic economic policy. Many political fortunes have been made and lost in this debate over material incentives. (Whether you won or lost depended not only what side you were on but also on the current economic and political climate.)

The produce of the commune is distributed among its members and exported to the cities. Some of the coarse grains are fed to the animals—particularly the pigs and poultry. The share of the workers is determined according to their work and productivity (the "work point" system). Most of the rest of the produce is exported to cities and towns. These exports provide the capital with which most agricultural development has been financed. Such economic self-reliance has been a major feature of Chinese agricultural development policy.


The region has a mild temperate climate and receives about 100 centimeters of yearly precipitation. A small portion of the production is often lost to spring floods; but major floods are rare due to the many flood control and water conservation projects that have been undertaken. Droughts also occur every few years, but the irrigation system in Peipan helps reduce the losses.

Farming Conditions and Practices

About 70 percent of Peipan's 200 hectares is irrigated land. The terrain being hilly, much of the land is terraced and is therefore fragmented into many small plots. Traditionally, animal labor was used for irrigation. In years of drought, it was common for the cattle population to decline substantially from overwork and undernourishment. Today, most of the irrigation and drainage is mechanized, using pumps powered by electricity, oil, and coal. Irrigation from ponds and tube wells generally provides an ample supply of water for rice, which is the main crop. Farm machinery increasingly complements the human and animal labor in the fields. A great deal of work is devoted to maintaining the terraces, in ensuring proper drainage, and in the collection and use of manure.

Partly as a result of the National Program for Agricultural Development, the population of draft animals increased by 4.3 percent a year from 1949 to 1959. While there is disagreement on the extent of the drop in livestock population during the Great Leap Forward, growth in the population of draft animals recovered in the mid-sixties. We have used data from Dawson 52 and the FAO Production Yearbook53 to arrive at the estimates shown in Table 2-6.

Sixty percent of the nitrogen fertilizer and about 80 percent of the phosphorous and potassium fertilizers come from organic sources, principally animal dung and night soil. The rest is provided by chemical fertilizers, the production of which is expected to increase several fold in this decade. The total nitrogen used is 12 metric tons per year, which averages about 60 kg/hectare of cultivated land. The use of P2O5 and K2O averages about 30 kg/hectare of cultivated land. Rice, being the favored crop, gets larger than average applications of manure and fertilizers.

Table 2-6.Livestock in Peipan


Per Capita


1. Draft cattle



2. Horses, donkeys, and mules



3. Hogs



4. Sheep and goats



5. Poultry



Sources: Notes 5,31 (refer to previous issues)

This rate of fertilizer use is quite high and is comparable to that in many industrialized countries. That most of this fertilizer comes from organic sources reflects the remarkable and careful husbanding of organic manure that has characterized Chinese agriculture for centuries.


Wood is still the principal domestic fuel and is used for cooking and heating, but we have no reliable data on the quantities used. We estimate an annual per capita use of 1.5 metric tons of wood and other vegetable matter using data on domestic fuel use from other parts of the world where non-commercial energy sources supply most of the energy.

Though irrigation and field operations in Peipan are becoming progressively mechanized, human and animal labor still play a large role in the village economy, as evidenced by the large amount of human and animal powered equipment (Table 2-7). About 75 horsepower is available from the 150 draft animals which are utilized 100 to 120 work days a year, yielding a useful energy output of about 250 million Btu. Draft animals are used primarily for transportation, ploughing, and other fieldwork.

Irrigation is mechanically powered, partly by electricity and partly by coal- and oil-driven engines. Electricity use in rural China is about 10 kwhe per capita per year and is growing at about 10 percent per year. To accelerate rural electrification decentralized stations (500 kw) are used to complement the large-scale transmission and distribution systems 54. A summary of energy use in Peipan is shown in Table 2-8.

Agricultural Production

Rice is by far the most important crop in this region. Corn, wheat, and soybeans are also grown, but they are not as important here as they are in Northern China. Potatoes and vegetables are staples grown almost solely for local consumption. Some coarse grains are fed to the pigs and cattle.

Table 2-7.Summary of Farm Equipment in Peipan

1 standard tractor (15 hp)

1 motor powered plough

1 motor powered harrow

50 horsepower of irrigation equipment

15 rubber wheel animal-driven carts

25 rubber wheel hand carts

An undetermined number of traces, yokes, ploughs, etc


Table 2-8.Energy use in Peipan (Energy in 109 Btu per Year Except Row 13)

Energy Source


Useful Energy 109 Btu/yr.

Efficiency Percentage

Gross Energy Input 109 Btu/yr.

1. Animal labor





2. Woodfuel





3. Crop residues

direct use as fuel




4. Dung




5. Subtotal: noncommercial





6. Coal, oil (irrigation and farm machinery







7. Electricity




8. Subtotal: commercial





9. Total: 5 + 8





10. Human energy





11. Chemical fertilizers





12. Total energy use: 9 + 10 + 11





13. Per capita energy use per year


2.45 million Btu


31.5 million Btu


1. See Table 2-4. (refer to issue no. 48)

2. Human food consumption taken as 8,000 Btu/day (2000 kcal/day). Useful work output per worker is taken as 200,000 Btu/yr.

3. Land cultivated per year—300 ha. Land irrigated—150 ha. (including double cropping).

4. Irrigation energy requirement (useful) is taken as 3 million Btu/ha/crop.

Crop yields vary depending on the region and the degree of implementation of the various parts of the National Plan for Agricultural Development. Table 2-9 shows figures which are probably typical of the Hunan region.


Sub-Saharan Africa has a population of about 250 million people, and an enormous area of about 25 million square kilometers. Though it is rich in all manner of resources from land, sunshine and water to copper and diamonds, the problems of development here and the poverty of its people are as stark as one may find anywhere on earth. Here as many as a quarter of all the children die before they are a year old. In remote rural areas as many as half the children die before they are 10 years old. The people are afflicted by all manner of diseases, caused principally by a combination of disease-bearing insects and malnutrition 55.

Table 2-9.Crop Production in Peipan


Summer Crop

Winter Crop



Yield kg/ha

Hectares Planted

Yield kg/ha

Hectares Planted

Total Annual Production Tons

1. Rice






2. Wheat




3. Potatoes




4. Corn, barley and miscellaneous grains





5. Soybeans




6. Vegetables and fruits






7. Fish from ponds






Sources: Notes 5, 31, and 32.(refer to previous issues)

Note: Although we show two crops per year, "a triple cropping system of winter wheat, rice and coarse grain" (corn, barley, etc.) is often adopted in this region (note 31, refer to previous issue).

Malnutrition here often takes the form of protein, vitamin, and trace mineral deficiency even though the availability of calories in the food sometimes exceeds the normal requirements. This is principally because of the predominance of cassava (2.4 percent protein content on a dry weight basis) and cereals in the diet of most people. The economic, educational, and technical problems are difficult enough, but constant political strife both within and among the nations of Africa has been and remains one of the principal obstacles to development.

The tribal structure of African society, inflamed by divide-and-rule colonialists and the inflow of weapons from the industrialized nations, has, in many African nations, given rise to a political climate which is hostile to economic and social development. The colonialists, by imposing national boundaries that were convenient to them and arbitrary with respect to the history and realities of tribal Africa56, converted many independent tribes who fought occasionally, into nation states constantly at war within and with their neighbors. The nomadic Tuareg of Mali, striken by drought and disease, have, for example, been at the mercy of the politicians for years and have often suffered a policy of apathy to their needs. Many have fled to neighboring Niger. In Nigeria the Hausa and Ibo tribes fought a long and savage civil war; in Sudan Muslims are waging a bloody struggle for domination over various other ethnic groups; in South Africa and Zimbabwe (Rhodesia) white minorities continue to suppress the majority with aid, trade, and weapons from the West. (Interestingly South Africa is classified as a "developed" country by the United Nations in spite of the fact that most South Africans are poor.) Tribal frictions and conflicts abound in tropical Africa, and, in the words of D.F. Owen, are "doubtless a serious hindrance to economic development and political stability."57

Tanzania# is one of the few nations in tropical Africa where an attempt is being made to mold the traditions of African society into an effective means for the implementation of economic development policy. The concept of communal ownership of land, which was the typical form of land tenure in traditional tribal African society, 58 has become the basis for land reform and agricultural development. President Nyerere, who symbolizes Tanzania's unity, also represents the country's determination to increase agricultural production by spending a good portion of each year working in and visiting Ujamaa ("brotherhood") villages. These Ujamaa villages, which are larger than the small isolated villages more usual in Africa, were established in order that basic services such as clean potable water, agricultural extension, medical care, education, and transportation may be made available more easily and cheaply.

In spite of this ideological commitment and the fact that the Tanzania African National Union headed by President Nyerere has succeeded in keeping Tanzania relatively free of tribal tension (Nyerere himself comes from the small Zanaki tribe59), Tanzania's agricultural progress has been erratic. Although per capita food production has increased in the last 10 years or so+, the only consistent increase in both per hectare yield and total production for a major food crop has been in cassava++, a tuber practically devoid of protein. A glance at cereal production statistics for Tanzania and many other countries in tropical Africa reveals that yields vary enormously from year to year.

There were large fluctuations in the yields of maize, millet, and sorghum, which are Africa's most important cereal crops. These yields have, on the average, not increased significantly in the past decade, although in some countries such as Kenya they have. Wheat and rice, which are the cereals next in importance in terms of acreage planted as well as production have shown fairly consistent improvement. The lack of irrigation appears to be one of the principal reaons for Africa's slow progress in agriculture. In many countries less than 10 percent of the cultivated land± is irrigated. In 1965, Nigeria had only 13,000 hectares of irrigated land out of a cultivated area of about 21 million hectares. Generally speaking, the smallness of the irrigated area is not due to a lack of water resources except perhaps in the Sahel region and the Kalahari desert. The Zaire River at its peak has several times the flow of the Mississippi River; Lake Victoria in East Africa is one of the largest bodies of fresh water in the world. There are numerous other lakes and rivers and large stores of underground water (particularly in the Zaire, Zambezi, and Niger River basins60) which could be used to irrigate tropical Africa's farms. In hilly areas dams, tanks and gravity irrigation could provide reliable sources of water. A principal roadblock appears to be a lack of investment in agriculture.

Since the relatively large investments required for irrigation and the associated power facilities cannot be expected to come from farmers who live a hand-to-mouth existence, the schemes must be initiated by government investment. This is doubly true since the rich in underdeveloped countries prefer to live and to invest their money in the cities. The provision of irrigation is only one of Africa's many agricultural development problems. Human, animal, and crop populations are regularly ravaged by disease bearing insects principal among which are the anopheles mosquito, various species of locust and grasshoppers, the tsetse fly, and many kinds of stemborers and plant suckers.@ Overgrazing by cattle is another serious problem and contributes to the spread of deserts in many areas.61

The danger of isolated development efforts is well illustrated by the attempts to control sleeping sickness in cattle. These partially successful attempts have helped increase the rate of population growth among the cattle since there have been no serious attempts at simultaneously controlling their numbers. Thus the serious problems of the overgrazed savannah regions are further aggravated. It is D.F. Owen's view that under present conditions and development programs, sleeping sickness among cattle may, in the long run; turn out to have slowed the destruction of the savannah.62

Wood is Africa's principal fuel.¶ The extensive use of wood in the Sahel region is probably one of the causes of the spread of the Sahara desert. In countries like Gambia and Tanzania where wood is plentiful, current patterns of indiscriminate wood-cutting and its inefficient use may, in the long run, cause problems similar to the ones being experienced today by the countries in the Sahel region. Yet the use of wood as an energy problem has received little attention either in national development efforts or in international assessments. Openshaw has compiled data on wood use in Gambia and Tanzania. While the bulk of the wood is only used for cooking and home heating, it is also used extensively in industry as fuel and timber, for water heating, for drying fish and cassava, etc. Per capita annual wood use amounts to about 1 metric ton (15 million Btu) in Gambia and 1.5 tons in Tanzania. Wood therefore supplies about 10 times more energy than all commercial fuelsµ in both Gambia and Tanzania.63 It is instructive to note here that in Gambia the per capita use of energy for cooking in rural areas is 6 to 7 million Btu per year, a figure comparable to cooking energy use in rural India (about 5 million Btu). In agriculture, human labor is the principal source of energy. In many parts of Tropical Africa, the introduction of draft animals is a revolutionary agricultural innovation. Crop yields in Africa are among the lowest in the world, partly because sufficient energy is not available to plough the land well, to weed thoroughly, or to harvest and thresh the grain. In Africa, as in other parts of the Third World, the peak labor problem is serious and probably encourages population growth. D.F. Owen has described the cultivation of rice in Gambia:

Sickness and pregnancy are not regarded as excuses for not cultivating rice and all women who are remotely able to work are forced to do so.

The concentration of heavy agricultural work into a restricted period of the year, together with seasonal changes in the availability of food, has a pronounced effect on the energy budget of the people. From March to May there is little or no work to do, the body weights of the people remain stationary, and their intake and expenditure of energy is low. With the onset of the rains heavy work commences and there is an increase in energy expended, which continues to increase as the rains develop and more and more heavy work becomes necessary. At this time of the year the store of food from the previous harvest is almost exhausted and a seasonal low of available energy is reached at the time when energy expenditure is greatest. This deficit results in a fall in body weight as the tissues of the body are drawn upon. Weight is regained at the beginning of the dry season when food from the harvest becomes available.64

These facts again illustrate how wasteful subsistence agriculture is of human and physical resources, and the crucial role that a proper understanding of energy flows must play in planning agricultural development. The consumption of commercial energy in tropical Africa averages about 4 million Btu per capita per year, 65 but most of this energy is consumed by a small fraction of the urban population. Rural electrification programs are not extensive and mechanical irrigation is rare. Oil is the principal form of commercial energy, and with the major exceptions of Nigeria, Angola, and Gabon, most countries in tropical Africa must import their oil. Some, like Gambia, have not developed any indigenous source of commercial energy and must depend entirely on imported oil. Oil-importing African countries have been among the hardest hit by the 1973-1974 increases in oil prices.66 Some of them had hoped to obtain oil on concessional terms by severing relations with Israel during and after the October 1973 Arab-Israeli war. So far these hopes have not been fulfilled.


* The main references for the agricultural data are Dawson, Kuo, and the Food and Agriculture Organization's Production Yearbook, (notes 31, 32, and 5, respectively, refer to previous issues).

** Mediterranean Africa (or Africa approximately north of the Tropic of Cancer) is not included in this discussion.

# Much of the discussion on Tanzania is based on conversations with Tanzanian officials.

+ It is not clear whether this observation holds for 1974 due to a drought in northern Tanzania.

++ We have used the Food and Agriculture Organization's (FAO) Production Yearbook for most crop production and land use statistics in this section. It will not be cited further in this section.

± This includes land that is temporarily fallow. The land actually harvested in any year may be half to two-thirds of the total cultivated area.

@ This short discussion of pests and cattle in Africa is based on D.F. Owen's book, Man in Tropical Africa.

¶ Statistics on wood use in Africa are based entirely on Openshaw's research in Gambia and Tanzania (see notes 6 and 7, refer to issue43).

µ To be consistent in nomenclature, we do not include wood as a commercial fuel here. In practice it is one of the main sources of energy even in the cities where it is sold for 25¢ per million Btu as wood and about $1.50/million Btu as charcoal.

52. Dawson, Communist China's Agriculture.

53. Production Yearbook 1972.

54. Dawson, Communist China's Agriculture.

55. D. F. Owen, Man in Tropical Africa (New York: Oxford University Press, 1973).

56. Ibid.

57. Ibid., p. 15.

58. Mwalimu Nyerere, The Arusha Declaration (Washington, D.C.: Embassy of Tanzania, n.d.).

59. Henry Bienen, Tanzania (Princeton, N.J.: Princeton University Press, 1970).

60. Roger Revelle et al. "Water and Land," Chapter 7 in The World Food Problem, Vol. II, U.S. Government Printing Office, Washington, D.C., 1967.

61. R. F. Dasmann, J. P. Milton, and P. H. Freeman, Ecological Principles for Economic Development (New York: John Wiley, 1973).

62. Owen, Man in Tropical Africa, p. 119.

63. World Energy Supplies 1960-1970.

64. Owen, Man in Tropical Africa, p. 37.

65. World Energy Supplies 1960-1970.

66. World Bank, "Additional Capital Requirements of Developing Countries," Washington, D. C., March 1974.

(To be continued)

Courtesy: Ford Foundation,





GSPC to tap state PSUs for funds

May 29, 2007. Chevron Corp, British Petroleum, BG and ENI of Italy, who were selected to buy a stake in GSPC’s Krishna-Godavari basin block with gas reserves in excess of 20 tcf will have to wait. The Gujarat government company has shelved the idea of selling 30% stake in the prosperous block to international giants to raise $1 bn and is instead looking to state-owned companies to raise funds for developing the block. The plan was put on hold following differences in valuation between GSPC and four identified international firms. The four international majors among 11 chosen by GSPC on technical parameters were seeking more data on the block before placing financial bids. GSPC’s claim of 20 tcf is yet to be certified by the Directorate General of Hydrocarbons (DGH), which estimates the discovery at just around 4 tcf and had asked GSPC to drill more wells to prove its claim. The corporation has so far drilled seven wells in the block and has tested five of them. It will have to drill five additional wells to prove its claim. GSPC needs immediate funds to drill more wells, since its plans to raise another $1 bn through an initial public offer is also postponed till it submits development plans with the DGH and gets approval. GSPC will be able to submit the development plan by end-2007 after drilling additional wells. GSPC is facing delay in commercial production of the block owing to technical difficulties. GSPC has now proposed to the state government that companies such as Gujarat State Fertilisers Corporation, Gujarat Narmada Valley Fertilizers Company, Gujarat Industries Development Corporation, Gujarat Alkalies and Chemicals, Gujarat Industries Power Corporation, and Gujarat Mineral Development Corporation, who are major consumers of gas will fund GSPC and would be given stake in GSPC during IPO. These companies will be given convertible debentures with the option to pick up equity in the SPV for exploration at a later stage. Besides, these companies will also get undisrupted supply of natural gas from the basin at competitive rates for long-term contracts.

ONGC may kick off Jharkhand coal-bed methane project soon

May 28, 2007. ONGC has finally kicked off the Rs 948-crore coal-bed methane exploration (CBM) and development project in Jharkhand this month. The company is expecting to spud the first development well in Central Parbatpur of Jharia block in June this year. ONGC conceived the project in 2004-05, with a target to produce the country's first CBM by March 2007. The total production was expected to be 3.5 lakh cubic metre a day. Accordingly, the project contractor, a consortium led by Mineral Exploration Corporation Ltd (MECL), has started work for civil construction in the block and the first well is likely to be spud in June. ONGC has already completed the phase-I exploration programme in Jharia and established the presence of commercially viable CBM reserve in Central Parbatpur area. The company has earmarked a total investment of Rs 519 crore (out of Rs 948 crore) for 14 horizontal wells for development of the block. ONGC holds 90 per cent interest in Jharia. Coal India Ltd holds 10 per cent participatory interest in the block awarded on a nomination basis. Apart from developing central Parbatpur area of the Jharia block, the existing project aims at an investment of Rs 392 crore for drilling and testing pilot wells in Bokaro and North Karanpura blocks. The company has completed phase-I exploration programme in both the blocks in 2005 and 2006 respectively. CBM reserve was also established in Bokaro.

IOC and OIL to pick up 35 pc in Nigerian block

May 28, 2007. IndianOil and Oil India Ltd are set to pick up a 50% equity stake in Suntera Nigeria OPL 205 Ltd with an investment of over $60 mn. The company holds 70% interest in the onland block Oil Prospecting License (OPL)-205 in the northern part of Niger delta with a hydrocarbon discovery. IOC and OIL will each get pick up 25% each in the company, promoted by Suntera Resources of Cyprus. Together, IOC and OIL will have 35% interest in the oil asset. A decision in this regard is expected to be taken by the board on May28. Besides taking equity stake, IOC and OIL would pay $7.5 mn to Suntera Nigeria 205 as loan to the JV. The JV would pay an interest of 8.5% per annum when it makes the final repayment of the principle. The repayment date likely to be December 31, 2010.

RIL begins exploratory activities in Cauvery Basin

May 26, 2007. After striking success in the Krishna-Godavari Basin, Reliance Industries Ltd (RIL) has decided to move further south towards the Cauvery Basin for hydrocarbon discoveries. The company started drilling activities in its deepwater block located in the northern part of Cauvery Basin on May 15. This would mark RIL's first venture in the Cauvery Basin. The rig to start exploration activities reached the block CY-DWN-2001/2 (CY-D5).

DGH rejects Cairn’s two oil and gas finds in Rajasthan basin

May 24, 2007. The DGH has rejected private sector exploration and production major Cairn India’s two oil and gas discoveries in the Rajasthan basin. According to the DGH, the wells were drilled after the completion of a minimum work programme for which the company received an 18-month extension until November 14, 2006. Cairn had notified DGH about Kaamaeshwari West-3 on May 9 this year and about Kaameshwari West-2 on December 16, 2006. The DGH claimed that Kaameshwari West-2 was spud on November 9, 2006 and Kaameshwari West-3 on December 12. It added that the drilling activities were undertaken by Cairn despite the regulator’s disapproval.

ONGC Mittal Energy mulls to buy stake in Azerbaijan oilfield

May 23, 2007. ONGC Mittal Energy, the joint venture between ONGC Videsh and Mittal Investment, is considering acquiring stake held by the Caspian Energy group in an Azerbaijan oilfield. The latter is contemplating offloading entire or parts of its stake in Shivranoil, the company that operates Kyurovdag oilfield in Azerbaijan. The Kyurovdag onshore oilfield was developed by the then USSR in 1955 and Shivranoil is the operator since June 1996. The field is holds in-place oil reserves of around 4.3 bn barrels of which 800 mn barrels are recoverable. The entire stake of the Caspian Energy group is reportedly valued at nearly $ 300 mn.


IOC buys Ratawi crude again

May 25, 2007. Indian Oil Corporation has bought 1 mn barrels of July-loading Neutral Zone Ratawi crude in its fourth tender this year for heavy crude. IOC bought the cargo from U.S. major Chevron. The refiner had bought Ratawi crude in its first and third tenders for heavy grades. IOC has started seeking heavier and cheaper crude as it completes a facility at Mundra in southern India that will be used to blend crude for the Panipat refinery. IOC, which has about 10 refineries spread across India for a total capacity of 1.204 million bpd, tenders several times a month to buy crude, mainly light sweet West African grades. 

Transportation / Trade

Myanmar prefers China as gas buyer as India sees red

May 28, 2007. The Myanmar government has decided to re-visit its future investment plans in Myanmar’s energy sector after the country chose to sell gas from its A1 and A3 blocks to China, and not to India. India’s interest in purchasing gas had been overlooked despite the fact that Indian oil and gas PSUs had equity in the two blocks. PetroChina, which most probably will buy most of the gas, has no stake in these two blocks. State-owned GAIL (India) Ltd and ONGC Videsh Ltd together hold 30% in the A1 and A3 blocks, the lead operator being South Korea’s Daewoo International with 60% stake. Korean Gas Company holds the balance 10%. GAIL, which individually holds 20% in the A1 and A3 blocks (gas reserves in the two blocks are estimated to be of 4.794 tcf, offered to buy the gas at $4.759 per mmbtu at a meeting called by the Myanmar energy minister earlier this month. But the minister had bluntly informed that the Myanmar government had already decided to export gas to China and hence, the Indian offer would not be considered. PetroChina actually offered a lower price of $4.279 per mmbtu (against its offer of $4.98 per mmbtu) against GAIL’s $4.759 per mmbtu. Moreover, the pipelines for bringing gas from Myanmar to China (including the offshore portion bringing gas on-land and the on-land pipeline till the Chinese border) were to be built by the consortium partners (including Daewoo, ONGC Videsh and GAIL) at a pre-decided internal rate of return (IRR) of 18%. But Myanmar is now favourably considering a Chinese proposal to pare the IRR to 12%. GAIL is already re-considering its decision on whether to invest in the A7 and other exploration blocks in Myanmar. Also, a decision on the Indian companies’ participation in laying the pipeline for evacuating gas from the A1 and A3 blocks will be taken only after the external affairs ministry gives its views. GAIL’s participation in laying the pipeline is also sensitive from the point of view that it will fund brining gas to China against India’s wishes.

IOC losing $0.6 bn a month on fuel sales

May 28, 2007. Indian Oil Corporation is losing Rs 2,500 crore ($0.6 bn) every month on selling petrol, diesel, LPG and kerosene below the imported cost. IOC is currently losing Rs 6.13 a litre on petrol, Rs 3.76 per litre on diesel, Rs 14.67 a litre on kerosene and Rs 167.14 per LPG cylinder. The government has not allowed public sector firms like IOC, Bharat Petroleum and Hindustan Petroleum to raise fuel prices in line with rise in international crude oil prices. IOC is loosing about Rs 80-85 crore a day on fuel sales, hoping the burden sharing scheme involving upstream firms like ONGC bearing a part of the under-realisation and government issuing oil bonds will continue this fiscal.

The total under realisation on fuel sale in the full 2007-08 fiscal is estimated at Rs 50,400 crore. Government compensates a third of the losses by giving fuel retailing oil bonds. ONGC, GAIL and Oil India Ltd share a similar amount and the rest is borne by the refiners. IOC’s net under-realisation on fuel sales (after taking into account the bonds and ONGC contribution) was Rs 2,190 crore in 2006-07. IOC got Rs 13,943 crore in oil bonds from the government and about Rs 11,800 crore from ONGC/GAIL.

ONGC to bring home LNG from Shell

May 27, 2007. ONGC Videsh Ltd, the overseas arm of state-run Oil and Natural Gas Corp (ONGC), plans to acquire Royal Dutch/Shell's 33 per cent stake in a deep-sea gas field off Egypt for $ 160 mn and bring the fuel in liquefied form (LNG) to India. Code-named Project Wonder, the North East Mediterranean Deepwater Concession in the Egypt Mediterranean Sea, has Shell as operator with 100 per cent stake and is estimated to hold close to 10 tcf of gas reserves. OVL will also not contribute toward the past costs ($ 300 mn) incurred by Shell till October 1, 2006. Besides carrying Shell in the development cost, OVL will also pay development bonus to Shell up to a maximum of $ 19.425 mn at the time of award of development lease by the local government and 35.343 mn dollars production bonus at the time of start of commercial production.

Reliance firms up plans for gas supply in Bengal

May 27, 2007. By 2009-10, Reliance Industries Ltd may supply to West Bengal up to 20 mscmd of natural gas from its finds in Krishna-Godavari and Mahanadi-North Eastern Coast (NEC) basin. Apart from supplies to large industrial users, Reliance has firmed up plans for city gas distribution in a number of districts in the State. RIL have finalised the size and design of the pipeline and are waiting for the formal authorisation from the Centre and once it is available, it will immediately submit the bank guarantee. This will follow the gazette notification on the competent authorities in Bengal and Orissa, who will start working towards the land acquisition for laying the pipeline. Besides, the proposed city gas distribution projects in Kolkata, Howrah, Hooghly, Midnapore and Burdwan may cost Rs 5,000 crore. The company is expecting a gas demand of 3.5 mscmd in the five locations.

HPCL plans 13.5 MT crude import

May 26, 2007. Hindustan Petroleum Corporation Ltd (HPCL) plans to import around 13.5 mt crude oil in the current financial year. Its imports will rise from 12.5 mt in 2006-07 to 13.5 mt this fiscal. Its total crude requirement is around 16 mt, of which 3 mt would be met from domestic supplies while the rest would be imported. The company plans to invest Rs 2,000 crore in capital expenditure this fiscal and process 16 mt of crude oil in 2007-06, up from 15 mt the previous year. The company would import around 11 mt under term contracts from Saudi Arabia, Iran and Iraq, while another 2 mt will be imported from the spot market.

IOC buys 2 mn barrels West African crude

May 24, 2007. Indian Oil Corporation awarded a tender to buy 2 mn barrels of West African crude in it latest spot tender for end June or July -loading. IOC bought Girassol variety at a discount of around $ 1 to dated Brent, while Escravos has been purchased at a premium of around $ 2 from Mitsui. IOC is diversifying its crude basket and trying new grades of high sulphur and heavy crudes to gain from higher margins. IOC, which has about 10 refineries spread across India with a total capacity of 1.204 mn bpd, tenders several times a month to buy crude, mainly light sweet West African grades. 

Policy / Performance

Gas emissions to drop by 25 pc by 2020

May 28, 2007. India existing energy policy would cut its greenhouse gas emissions by over 25 per cent by 2020, but warned pressure to set mandatory targets to curb global warming would hurt economic growth. Currently contributing around 3 per cent of global carbon emissions, India is already among the world's top polluters, along with the United States, China, Russia and Japan. Despite pressure from industrialised nations and environmental groups to cut emissions, India is not required under the Kyoto Protocol to reduce emissions, said to be rising annually by 2-3 per cent, presently.

Andhra Pradesh seeks regulator for gas pricing

May 28, 2007. With 20 per cent of its power coming from gas-based projects, Andhra Pradesh asked the Centre to set up a regulator for gas pricing and ensuring supply to the state. The state also requested the union government to provide fiscal benefits for use of clean technologies to address environmental concerns like carbon and ash emissions from coal-based projects which are being planned in the state. Around 2,080 MW of installed capacity in the state is without gas supply. The state is now forced to run these projects on costly naphta and have already spent Rs 1,000 crore to make good the shortage due to non-supply. The chief minister of the state urged the Centre to help the state in meeting the critical demand by asking ONGC and GAIL to honour their commitments to the state at the earliest.

RBI relaxes payment norms for oil field operators

May 24, 2007. As part of measures to boost oil and gas exploration in the country, the Reserve Bank of India (RBI) eased norms for field consortium members to make payments to the operator. RBI, in a notification issued here, allowed banks to make payment towards cash calls to the operator for oil exploration in India either in foreign currency or in Indian rupee. Cash call is the expenditure incurred by oilfield operators, which is reimbursed by the consortium as per the production sharing agreement.

As per the current practice, the operator, the lead partner of the consortium exploring for oil and gas in a particular area, initially bears all the cost and then recovers the money from partners in proportion to their shareholding. As per the earlier guidelines, the payment to operators required prior approval of the Reserve Bank. The RBI has, however, asked banks to ensure that the demand made by the operator for payment toward cash calls is as per the production sharing agreement. It also asked banks to obtain a no-objection certificate from the Income Tax department before making any such payments.

India and Iraq for enhanced co-operation in oil sector

May 23, 2007. India and Iraq are looking for enhancing co-operation in the hydrocarbon sector between the two countries. During the four-day visit of Iraq's Oil Minister, India will seek participation in oil and gas exploration & production opportunities including those in producing properties of that country. At the joint working group meeting of the two countries a range of issues will be deliberated upon. India is keen to start work on onshore Block 8, which was awarded to ONGC Videsh Ltd (OVL), the overseas arm of ONGC during the Saddam Hussein regime. The issue of stake in Tuba oil fields for a consortium of OVL, Reliance Industries Ltd and Sonatrach of Algeria is likely to be deliberated at the meeting. The consortium had been shortlisted by the Saddam Hussein regime before the US invasion of Iraq. Iraq, on the other hand, is likely to seek help in building refineries there. Iraq has sought Indian companies participation in building 8-10 mt refinery in that country. Indian Oil Corporation and Engineers India Ltd could be involved in upgrading Iraq's existing refineries and building pipelines. Iraq is world's second largest oil nation having proven reserves of 112 bn barrels. Although it has a capacity to process 6,30,000 barrels of crude a day, it currently produces 4,77,000 barrels of refined products a day while consumption is 5,44,000 barrels a day.

New gas price regime to be devised

May 23, 2007. With domestic natural gas output projected to nearly double by 2010, the government has undertaken an exercise to device a pricing regime for the fuel that will aid growth in Asia’s 4th largest economy. Reliance will start gas production from its Krishna Godavari field next year while GSPC and ONGC are to follow suit in the next couple of years, triggering a mammoth exercise to fix a right pricing regime that is beneficial to both, producers and consumers. At present, India has two regimes, administered pricing for gas produced by ONGC/OIL and free market pricing for small quantities of gas produced by joint venture fields. With 120 mmscmd output expected from Bay of Bengal fields, inputs have been called from industry for shaping the policy.



TNEB plans 1,600 MW project near Tuticorin

May 28, 2007.  The Tamil Nadu Electricity Board (TNEB) is proposing to put up a 1,600 MW coal-based power project at Udankudi, near Tuticorin. The State also proposed to augment power generation by 2,500 MW through additional generating units at existing power plants. The transmission and distribution losses in the State stood at 18 per cent, low compared to the national average of about 45 per cent. This would be further brought down to 15 per cent by the end of the 11th Plan.

Power ministry and NTPC seek MEA’s views on Lanka project site

May 28, 2007. State-run National Thermal Power Corporation (NTPC) and the power ministry have sought the intervention of the ministry of external affairs on the change in the site for the 500 MW, coal-based project in the erstwhile bastion of the LTTE. The company has expressed apprehensions about site 5 offered by the Sri Lankan government for the proposed project in the Trincomalee region. According to NTPC, it was not possible to accept the new site located in the Sampur area, since it was recently evacuated from the LTTE. The site can be accessed only with the help of boats and will require large-scale investments in infrastructure for constructing bridges and roads. Besides, NTPC is fearful that the construction of the project at the stated site can stir politically sensitivities in India. The external affairs ministry’s view is sought on whether or not NTPC should go ahead with the development of the project at the new site. However, the Sri Lankan government has assured it would provide all infrastructural facilities to NTPC for developing the new site. An agreement between NTPC and the Ceylon Electricity Board signed in December last year; the coal-based thermal plant was to be located in the Trincomalee district. However, the new site proposed in the Sampur area is far from the earlier site identified near the Indian Oil Corporation’s oil complex, close to the Trincomalee harbour.

Haryana seeks fast-track work on Jhajjar power project

May 28, 2007. The Haryana government requested the Centre to execute the 1,500 MW Jhajjar thermal power project on a fast-track basis in order to enable its commissioning before the Commonwealth Games. National Thermal Power Corporation should also set up a Centrally- funded dedicated gas-based power project in the state.

Delhi taps Chhattisgarh for power plant deal

May 28, 2007. Delhi government has expressed its interest to set up a mega power plant in Chhattisgarh with an investment of Rs 11,000 crore to meet the power demand in the national capital. The Chhattisgarh government had received a proposal from the Delhi government that had expressed its willingness to set up a power plant in the state. The parleys between the senior officials of both the governments are on before any final decision is taken in this connection. Under the proposal, the Delhi government had offered also reach into a partnership with the Chhattisgarh government in setting up 2000 MW power plant in the mineral-rich state with an investment of Rs 11,000 crore.  If the deal is finalized, this will be the biggest investment in power sector in the state. The terms and conditions of Chhattisgarh government are posing as stumbling block in giving shape to the power plant proposal of Delhi government. The latter had mooted the proposal a few months ago. But consensus could not be built between both the governments over certain conditions.  There are some differences over share proportion in the joint project, Chhattisgarh government's demand for power besides other petty issues. However, the talks have resumed between the senior officials of both the governments to resolve the impasse. The Delhi government is however deliberate to give shape to the proposal following expected increase in demand of power in the national capital over a period of next three years. Besides domestic supply, the Delhi government will be requiring additional huge power for the Commonwealths games to be held in 2010. 

SECL plans 1000 MW unit in Raigarh

May 28, 2007. South Eastern Coalfields Limited (SECL) will set up a 1000 MW power plant in Chhattisgarh. SECL is the largest coal producing company in the country and one of the eight subsidiaries of the Coal India Limited (CIL). The survey work has been completed and the company has selected a place near Raigarh district (about 220 km from the state capital) to set up 1000 MW power plant. The company is also completing the other formalities and will start the work on project very soon.

Record power addition this fiscal

May 26, 2007. The current year will see record addition to the country’s power generation capacity. As much as 17,000 MW is slated for commissioning during the year two and a half times more than the largest addition of 6,850 MW achieved last year. This represents as much as 13 per cent of the current capacity of 132,000 MW in the country. According to the Power Minister, if things move as planned, India want placement of all orders to be completed by December 2007 and the 11th Plan target of 78,577 MW seems set to be realised. 

Torrent inks MoU with GPCL for power project

May 24, 2007. Torrent Power Ltd has signed a memorandum of understanding (MoU) with Gujarat Power Corporation Ltd (GPCL) for setting up a 1,000 MW coal-based power project at Pipavav in Amreli district of Gujarat. The project is proposed to be commissioned by March 2012. The Pipavav project would be set up through a Special Purpose Vehicle. Land for the project has been identified in close proximity of the Pipavav port and a substantial portion of the land has already been acquired. Initially, the project will have a capacity of 1,000 MW, which can be subsequently increased. GPCL is the nodal agency of Gujarat to promote power projects in the state. Torrent Power presently generates 500 Mw power through its coal and gas-based power plants in Ahmedabad and is in the process of setting up a 1,130 MW gas-based combined cycle power project near Surat. 

Tata Power takes coal mine stakes in Indonesia

May 22, 2007. Tata Power, India's second-biggest utility by annual sales, will borrow $ 950 mn to fund its purchase of stakes in two Indonesian coal mines. The Mumbai-based company has hired Calyon to arrange a $600 mn loan, which will be secured by the coal mines, and a $350 mn loan, guaranteed by Tata Power. Calyon is marketing the loans to other banks. Indian power producers must secure supplies of coal, which fuels half the country's power generation, as the government aims to almost triple capacity to 193,000 MW by 2012 to meet demand in the world's second-fastest-growing major economy. Tata Power agreed to pay $ 1.3 bn to buy a 30 percent stake in Kaltim Prima Coal and Arutmin from Bumi Resources. The $600 mn loan will have a $ 400 mn five-year portion and a $200 mn seven-year portion.

Transmission / Distribution / Trade

NTPC inks deal with Nigeria for LNG import

May 24, 2007. State-run power firm NTPC Ltd has signed a memorandum of understanding with Nigeria to buy up to 3 mt of liquefied natural gas (LNG) per year on a long-term basis. NTPC has also agreed to build either on its own or through a joint venture two power projects in Nigeria after the LNG deal is sealed. The projects are a 500 MW coal-fired plant and a 700 MW gas-fired unit.

NTPC, CSEB sign agreement for Barh STPP

May 22, 2007. State-run power generation company NTPC Ltd signed an agreement with Chhattisgarh State Electricity Board to sell electricity from its Barh Super Thermal Power Station (stage II). The stage II of the power plant comprises of two 660 MW units and would benefit the states in northern, western and eastern region.

Policy / Performance

Competition needed in power sector: PM

May 28, 2007. Calling for competition in the power sector, Prime Minister asked the Centre to separate the ownership of the transmission system operation from the ownership of the transmission lines, setting an example for the states to follow. Transmission system in power comprises the management of the national grid and the load despatch centres, which monitor drawal of power by various agencies. This system is different from the lines, that is, the transmission wires. The PM’s suggestion comes at a time when the ministry has been considering separating the two operations of Power Grid. In fact, to this end, the government has already proposed setting up a 100% subsidiary of the Power Grid Corporation to perform the task of an independent system operator (ISO). This subsidiary is expected to be set up by 2008. At present Power Grid, which is designated as the central transmission utility, runs the transmission system. In other words it owns transmission systems as well as looks into the operation of the system. This arrangement where ownership and operation of grid facilities rests with one entity is known as transmission system operator (TSO). The proposed ISO, will despite being a wholly owned Power Grid subsidiary have an independent board with separate accounts. All stakeholders will be represented on the board. The Power Grid chairman may head the board of the subsidiary but will do so in a non-executive capacity. The government proposes to hive off the subsidiary into a separate entity by the end of the 11th plan.Last year, the Committee of Secretaries (CoS) examined a proposal by the power ministry to separate the task of operating the grid and managing load despatch centres from the wires business. It had been proposed that a government-owned and controlled corporation could be set up which would perform the functions of an independent system operator. The other option before the committee was to continue with the present arrangement where PowerGrid Corporation, which is designated as the central transmission utility, would continue to be both owner of transmission facilities and the system operator.

Centre should allocate power to needy states

May 28, 2007. The Himachal Pradesh government asked the Centre to directly allocate its share of over 630 MW power to northern states like Delhi, Haryana and Punjab during the summer months. The Centre should directly allocate power to needy states to avoid double transaction. The state government gets 12 per cent free power from the projects of National Hydroelectric Power Corporation and Satluj Jal Vidyut Nigam Ltd amounting to 632.4 MW. The state government has asked the Centre to allocate surplus power to needy states during April-October.

Guj. CM wants Centre to support power sector reforms

May 28, 2007. The Centre should take the responsibility for supporting efforts of states in power generation, transmission and reforms in the sector. Strongly opposing suggestions of making the states fully responsible for power reforms, Gujarat CM wants the Centre to initiate a process of building political consensus for management of overall reforms in the sector. Gujarat has planned a capacity addition of 11,000 MW power during the 11th Five-Year Plan, which is 15 per cent of the national target of 78,000 MW. He asked the Centre to help states in strengthening the transmission grids and suggested setting up a task force to study the issue. Gujarat is gearing up to facilitate the setting up of ultra mega power project at Mundra, Modi said and requested the Centre to consider reduction in freight charges for such projects. 

Ministry bats for power exchange model to meet energy needs

May 25, 2007. Although the Central Electricity Regulatory Commission (CERC) has recently issued guidelines for the establishment of power exchange in India, the power ministry has argued its model is suitable and should be adopted, considering the energy shortage of 70,000 MW, the country is facing at present. The power ministry proposes to put a price cap in such a power exchange. According to the ministry, while promoting electricity trading, distribution licensee should also pay attention to the discharge of service obligations. The regulatory commissions need to intervene effectively to see that power is not traded at the cost of reduced supply to consumers of distribution licensee, for the purpose of making profits. The ministry, in its recent note, has said the power exchange would function only if pre-identified (on a day ahead basis) transmission capacity is allotted on a priority basis to the exchange.

According to the ministry, the allocation of transmission corridor to the power exchange would be an added attraction, which would ensure liquidity. As far as unscheduled interchange charges are concerned, the power ministry holds that the present level of unscheduled interchange charges should be re-looked for revision, as there is a large tendency to overdraw from grid, instead of buying power from liquid fuel-based power stations. The power ministry has stressed on the need for strict enforcement of timely payment of unscheduled interchange charges. The defaulters should be barred from participating in the power exchange.

CEA releases user guide for CDM project developers

May 24, 2007. The Central Electricity Authority released a handbook to help those developing power projects using clean technology to calculate Certified Emission Reductions (or carbon credits) due to them. The developers would be able to sell these credits to countries with emission reduction commitments under the Kyoto protocol. Clean Development Mechanism (CDM) is vitally important for the country's power sector. There is a need for CDM, not only for cleaner fuel but also for energy security.

Around 124 Indian clean projects are already registered under the CDM Executive Board and host country approval has been granted to as many as 421 other schemes by the National CDM authority, established under the Environment and Forests Ministry. The CDM is an opportunity to introduce new and efficient technology and has a great potential in CDM projects in not only hydro, but coal as well.

Bank guarantee must for PSUs captive coal mines

May 24, 2007. Public sector utilities like NTPC, SAIL, Damodar Valley Corporation (DVC), Chhattisgarh Mineral Development Corporation will now have to provide bank guarantees equivalent to at least one year’s royalty to be awarded a captive coal mine. The government is planning to introduce new norms to weed away non serious public sector coal users who have been sitting on coal mines missing deadlines of production. At present the mandatory bank guarantee is a requirement that all private companies had to furnish to get a captive coal mine. While the new rule would apply to 27 coal blocks with a reserve of about 10 billion tonne (bt) that has recently been identified for allocation to government companies, the ministry is thinking whether the new rule could be applied with retrospective effect. The decision, once notified, would mean that government companies would have provide a bank guarantee equivalent to about Rs 10 crore for 1 mt of coal production. If the new rule is applied from retrospective effect, it would mainly cover coal blocks with government companies and PSUs that have not been brought to production within a specified period of time. About 130 blocks with total reserves of about 27 bt have already been allotted to private and public sector utilities under captive route. Another 81 blocks with reserves of 20 bt are currently under process for allocation. Out of this 27 blocks earmarked for allocation to PSUs and government companies. 

Recycle nuclear fuel

May 23, 2007. According to the chairman of the Atomic Energy Commission and secretary to the department of atomic energy, India is consistent on its stand of recycling nuclear fuel and hopes that the US would soon agree with its view to conclude negotiations on the Indo-US nuclear deal. Nuclear fuel needs to be processed and processed in a manner, which is environmentally safe and sustainable. India has adopted recycling option as it cuts down nuclear wastes and generates 60 to 80 times more energy. It has been a deal between the two sovereign countries and all the nodal agencies of the two countries involved in the deal are working on it. India’s policy on the 123 agreement (read nuclear deal) has been very consistent. India is moving aggressively to locate new uranium reserves and expects to increase its uranium reserves a few folds in the next 2-3 years. New technology for mining uranium has already been adopted.

Sasol and Tatas set riders for mega coal-to-oil investment

May 23, 2007. The Tata group is planning to set up a plant to convert coal into diesel or crude oil in partnership with South Africa’s Sasol. The South African company is the world’s largest producer of motor fuel from coal. The proposed coal-to-liquids (CTL) plant, the first of its kind in India, was likely to result in annual import substitution benefits of about $ 25 bn (about Rs 1,02,500 crore) for the country. At present, the coal ministry is studying the proposal. Since CTL is new to India, Sasol has asked the government that it be notified as an approved end-user for captive mining. It also sought clearance for rapid investigation of select coal blocks containing reserves of 1.5-2 billion tonne. The company, which produces more than 40% of South Africa’s motor fuel, has further asked the government to reserve at east two possible sites for building CTL plants. It also wants a system of incentives to promote the CTL industry.

States want eco fees on thermal plants

May 23, 2007. Although states are striving to meet the rising mismatch between demand and supply of power, some of them have made a strong pitch for the imposition of emission fees or environmental taxes on thermal power stations, to compensate their effect on the environment. However, states like Chhattisgarh and Orissa have demanded monetary benefits for allowing the development of coal-based power projects. According to states, a power-generating company should contribute to environment-managed funds and spend around 2% of its profits for local area development, as part of its corporate social responsibility. States are pursing these demands since they think thermal power stations pose a serious threat to the environment. States have cited the power ministry’s projections that by the end of 2012, the ash likely to be generated from coal/lignite thermal capacity of 1,11,000 MW would be of the order of 184.3 mtpa. Fly ash utilisation during 2005-06 was 45.32 mtpa. States had reiterated their demand for the imposition of emission fees or environmental taxes at a recent meeting with the power ministry. Despite repeated notifications by the ministry of environment and forests and directions from courts, it is still difficult to fully curb environment damages caused due to generation of ash. The ministry has already expressed reservations about the imposition of such cess or tax and also giving monetary benefits. This would infact lead to an increase in the generation cost and tariff, which goes against the recent initiatives taken to develop power projects through competitive bidding.




Statoil announces promising discovery in the Norwegian North Sea

May 29, 2007. Operator Statoil has made a promising oil discovery in the North Sea's Ermintrude prospect. Reserves are reckoned to be in the region of 50 mn barrels of recoverable reserves. Wildcat 15/6-9 S in block 15/6 lies 10 kilometres north of the Sleipner area in production licence (PL) 303. The well was drilled in a water depth of 114 metres to a total depth of 3,850 metres below sea level. Drilling was halted in rocks of Triassic age. The well was found to contain light oil in sandstones of mid-Jurassic age. A small gas find was also proven in sandstones of Tertiary age.

China Gas to pump 1.2 bn yuan into conversion plant

May 29, 2007. Mainland piped-gas distributor China Gas Holdings will invest 1.2 bn yuan (HK$1.23 billion) in a second gas liquefaction plant in the northeast of Sichuan province. Liquefaction involves converting natural gas into liquid. The company signed a pact with the local government of Xuanhang county, Dazhou city in Sichuan to produce and distribute liquefied natural gas. Construction is expected to take 24 months. The plant will have an annual capacity of 500,000 tonnes or about 700 mcm. The company forecast revenue of more than 2 bn yuan a year from gas sales.

Large-scale gas field discovered in China

May 28, 2007. A major gas field has been discovered in Southwest China's Sichuan Province, which would add to energy security and boost the development of the western region. A total of 3.8 tcm of natural gas deposits have been found in the western part of the Sichuan Basin, where the reserve is located. They include proven exploitable reserves of newly-discovered 244 bcm around four years of current production and the already-announced 356 bcm in Puguang gas field. Till the latest discovery, amounting to a total of 600 bcm of exploitable reserves, the largest gas field was in Sulige, Inner Mongolia Autonomous Region. Discovered last year, it has exploitable reserves of 533.6 bcm. A large gas field with reserves of nearly 30 bcm was discovered in Karamay, the Xinjiang Uygur Autonomous Region. China had about 2.4 tcm of economically-viable natural gas reserves at the end of 2006.

Iran and Oman to develop Hengam gas field

May 28, 2007.  Iran and Oman came up with an agreement to jointly develop the Persian Gulf’s Hengam gas field. A joint working committee will be formed within a month to put the agreement into practice, adding the committee will study the joint development of the field. Iran’s Salman gas field will export 500 mcf of gas to the United Arab Emirates (UAE) per day. Iran and Oman inked a five-article gas contract in Muscat on May 2007.

Survey finds 31 bn barrels in Venezuela heavy oil block

May 27, 2007. A survey has found 31 bn barrels of oil in block Carabobo 2 of Venezuela's Orinoco heavy crude belt, 6 bn of them recoverable. Oil services company Ryder Scott had done the survey and estimated proven reserves at about 6 bn barrels, based on a recovery rate of around 20 percent of the original oil. Venezuela is currently certifying the reserves of the vast Orinoco basin, which energy authorities say contains some 235 bn barrels of tar-like crude. According to PDVSA, engineering and construction company Stone & Webber, owned by The Shaw Group, inspected facilities of two of the projects and determined operations were continuing smoothly following the hand over. According to PDVSA, financiers of the two projects, Ameriven and Petrozuata, carried out the study to allay concerns that the transfer of operations had damaged the projects operations. The four projects, worth an estimated $ 30 bn, have outstanding financing of around $ 4 bn. Companies involved in the projects are Exxon Mobil, Conoco Phillips, BP Plc, Chevron Corp., France's Total and Norway's Statoil.

Thailand's PTT Exploration discovers natural gas off Myanmar coast

May 27, 2007. A Thai company has discovered natural gas off the coast of Myanmar, in the latest boost to the impoverished country's thriving energy sector. PTT Exploration & Production discovered a large deposit of natural gas in the Gulf of Martaban about 300 kilometers (188 miles) south of Yangon. An appraisal well is expected to produce maximum 31.5 mcf (890,000 cubic meters) of natural gas per day, which along with two earlier discoveries made the site commercially viable. PTT is also exploring for gas in a number of other areas or blocks in the Gulf of Martaban.

Iran oilfields need $ 100 bn investment

May 27, 2007. Iran's oilfields need at least $ 100 bn worth of foreign investment over the next decade to boost output by 1 mbpd to 5 mbpd. The investment projection comes at a time when the United States is seeking to squeeze Opec's second biggest producer over its nuclear programme. Washington is pressuring foreign companies to steer clear of the Islamic Republic. Other Iranian officials downplayed the need for outside help in the country that pumps about 4 mbpd. Iran was cranking out 6 mbpd before the 1979 Islamic Revolution, rates that proved unsustainable. Potential investors were prepared to strike deals with Iran, home to the world's second biggest oil and gas reserves, provided commercial terms were right and political tensions had eased. Foreign firms often complain about the terms of Iran's so-called buyback deals which they say are not particularly generous. Under the buyback scheme, companies hand over operations of fields to NIOC after development and then receive payment from oil or gas production for a few years to cover their investment.

Iran plans fund outside country for Pars gas field

May 27, 2007. Iran is planning an investment fund outside the Islamic Republic to raise finance for its huge South Pars gas field and circumvent a financial squeeze by Washington. As the US pushes for tighter UN sanctions on Iran over its atomic work, Tehran would base the fund in Bahrain or Dubai, both regional financial centres. The proposal for the fund open to all needs government approval. The cash would be assigned to development phases of the field and would ensure the government would not have to dip into its own coffers as it recently did for some other phases. Investors would be guaranteed a minimum rate of return of eight per cent by the National Iranian Oil Company. The maximum would be 15.9 per cent.

Repsol and Venezuela sign oilfield exploration accord

May 26, 2007. Venezuelan state oil company PDVSA and Spain's Repsol have signed an agreement to jointly explore the Barua Motatan oil field that could yield up to 40,000 barrels per day (bpd). The accord calls for the field to be developed by Petroquiriquire, an existing joint venture 60 percent owned by PDVSA and 40 percent owned by Repsol. Repsol is a minority partner with PDVSA in the Menegrande and Quiriquire fields and is currently certifying reserves in block Junin 7 of the Orinoco extra heavy oil belt.

Awilco Offshore extends rig contracts with Norsk Hydro

May 25, 2007. Norwegian offshore services group Awilco Offshore has won a three-year extension to rig contracts with Norsk Hydro, which now total eight years plus options and are worth $ 2 bn. Norsk Hydro increased the firm contract length for the two semi submersible rigs, WilInnovator and WilPromoter, to 8 years each plus options. The total contract value for the 8 year period is approximately $ 2 bn plus mobilisation costs. The first contract will commence mid-2009 and is for the rig WilInnovator, with scheduled delivery by end 2008. The second will start in mid-2010 and is for the WilPromoter, a rig scheduled for delivery in the fourth quarter 2009.

New reserves of oil and gas found in Pak

May 23, 2007. The Oil and Gas Development Company Ltd (OGDCL) announced a new discovery, bringing the total number of discoveries to five over the past two months. The discoveries will push OGDCL daily oil and gas output up by 1,746 barrels per day and 44.12 mcf, respectively. According to the company, the discovery was made in Thora and Thora East Mining Lease, situated in southern Sindh, which increased the company’s oil production by 100 barrels per day and gas production by 9.9 mmscfd.

Marathon discovered deepwater Cordelia on Angola block 31

May 22, 2007. Marathon Oil Corporation’s subsidiary, Marathon International Petroleum Angola Block 31 Limited, has participated in a deepwater discovery on Block 31 offshore Angola. This marks the twenty-fourth discovery in Marathon's deepwater exploration program on Blocks 31 and 32 which began in 2001. The Cordelia discovery is located approximately 160 kilometers (99 miles) off the Angolan coast in 2,308 meters (7,573 feet) of water. The Cordelia-1 discovery well was drilled in the central part of Block 31 approximately 30 kilometers (19 miles) south of the planned Northeast Development Area. Cordelia is the fifth discovery announced in the Central portion of Block 31, including Ceres, Hebe, Titania, and Miranda. The well was drilled to a total depth of 4,065 meters (13,337 feet) and was flow tested at an operationally restricted rate of 2,063 barrels of oil per day through a 20/64 inch choke. Marathon and its partners are evaluating and integrating the results of the Miranda well along with the other discoveries previously made in the central and southern part of Block 31.


Nigeria hands over privatized refineries to investors

May 28, 2007. The Nigerian government handed over three of the country's refineries to the new investors who recently acquired controlling interest in them. The Bureau of Public Enterprises, the agency responsible for privatization of state enterprises, had handed the Port Harcourt Refining Co., which comprises the Old and New Port Harcourt Refineries and the Kaduna Refining and Petrochemical Co. to Bluestar Oil Services Consortium, led by indigenous entrepreneurs. Bluestar acquired the government's 51% equity stakes in each of the refineries, while Dangote Industries acquired the Nigerian government's 43% equity in Onigbolo Cement, jointly owned with the government of Benin Republic. Nigeria has four refineries, the other one being located in Warri, with a combined capacity to refine 445,000 barrels per day of crude oil. However, the performance of the plants has been marred by equipment obsolesce and mismanagement. Nigeria currently depends 100% on imports to meet domestic requirements of gasoline, which state-run Nigerian National Petroleum Corp., puts at 30 mn liters per day.

Qatar wins $ 2 bn Tunisia contract to build refinery

May 28, 2007. Tunisia's Energy Ministry awarded Qatar-state owned Qatar Petroleum Company a $2 bn refinery deal. The Qatari company, in partnership with British Petrofac, was selected by the Tunisian ministry to build, own, manage and run the refinery for at least 30 years. The planned plant will be located in the coastal town of Skhira. Tunisia only has a refinery in the northern city of Bizerte with a capacity of 30,000 barrels per day.


MOL announces $ 420 mn in upgrades to Duna refinery

May 24, 2007. Hungarian oil and gas company MOL Nyrt has announced a US $ 420 mn investment program at its Duna refinery. The investment is aimed at increasing MOL's production of diesel oil by an additional 1.3 mtpa in order to harness growing demand for diesel. The project is scheduled for completion in 2010. Under the project, it will revamp a distillation unit, currently used for domestic crudes to increase its processing capacity of heavy and sour crudes, such as Ural and Kirkuk, to 1.3 mtpa. On the conversion level, the company will build a new treatment facility, known as vacuum gas oil (VGO) hydrocrack unit, with a capacity of 1.5 mtpa. The investment will include an upgrade to facilities that process heavy residues, adding an additional 300 kilotonnes capacity per year in this area.

Guangdong to build china's largest refinery project

May 23, 2007.  The Guangzhou branch of China Petrochemical Corporation (Sinopec) is likely to build an oil refinery with an annual output of 13-15 mt with Kuwait National Petroleum Corporation in Guangzhou. With an investment of USD 5 bn, the refinery will be China's largest joint venture project, taking the place of the USD 4.3 bn Nanhai project of CNOOC and Shell Petrochemicals Co., Ltd. The new refinery will bring huge economic benefits and ease tense oil supply. There are three large refineries in Guangdong Province, with an annual output of 12 mt. However, they only supply 5 mt of oil products to China yearly. The Guangzhou branch of China Petrochemical Corporation is also building an expansion project of a USD 4.3 bn refinery.

Saudi Arabia's Jizan refinery to cost $12 bn - $15 bn

May 22, 2007. A new refinery at Jizan, a remote Red Sea city in Saudi Arabia's southwest, is expected to cost $ 12 bn to $ 15 bn to build. Saudi Arabia, the world's biggest crude oil exporter, short-listed eight firms, including publicly listed National Industrialization Co. and Nama Chemicals Co., to develop the project. A license to build the semi/full conversion facility with capacity to process 250,000-400,000 barrel a day of crude oil would be awarded by the end of 2007. A request for proposals for the project will be issued to the qualified companies in the second quarter, with bids due to be submitted to the petroleum ministry by the beginning of the fourth quarter of 2007.

Transportation / Trade

Dominion agrees to sell Canadian E&P operations for U.S. $ 583 mn

May 30, 2007. Dominion agrees to sell Canadian E&P operations for U.S. $ 583 mn. Transaction continues previously announced strategic repositioning. Proceeds to be used for debt reduction, share buyback and business growth. These operations include approximately 267-bcf equivalent of proved natural gas and oil reserves in western Canada as of Dec. 31, 2006, with 2006 average daily production of approximately 60 mcf equivalent. Proceeds from the disposition of E&P assets as well as the planned sale of the company’s Dominion Peoples and Dominion Hope natural gas distribution businesses would position the company to reduce debt, including debt at its CNG subsidiary, repurchase common shares and grow other Dominion businesses.

CNPC to begin work on Far East pipeline in June

May 30, 2007. China National Petroleum Corporation will start constructing a pipeline section of its large-scale crude oil project, which extends from East Siberia to the Pacific coast, in June 2007. The oil pipeline starts from Taishet, East Siberia, and ends at Skovorodino, a town close to China's border, transporting 600,000-barrel crude oil every day. Then from Skovorodino, the transported crude oil will be diverted into a sub-pipeline southward to China, and will be transported by railway eastward to coasts of the Pacific. Currently, Russia exports crude oil to China mainly by railways. Thus, the establishment of this pipeline will facilitate the export business for Russia as well as meeting the growing demands of energy resources of China.

Malaysian pipeline to boost Asia's energy security

May 28, 2007. A 7-bn dollar pipeline to be laid across northern Malaysia will divert up to a third of oil now being carried through the Malacca Strait, ensuring a secure supply from the Middle East to East Asia. Under the plan, crude oil shipped from the Mideast would be refined in Kedah on the northwestern coast and pumped through the 300-kilometer pipe to Kelantan on the eastern coast. It would then be loaded onto tankers bound for Japan, China and South Korea, completely bypassing Singapore and the Malacca Strait. Work on the pipeline will begin next year and finish in 2014. The pipeline will be a substitute for the Strait of Malacca, through which half the world's oil is shipped.

Bahrain and UAE firms launch two crude oil funds worth $ 150 mn

May 27, 2007. Bahrain-based Islamic investment bank Gulf Finance House (GFH) and Abu Dhabi Investment House (ADIH) announced the launch of two Sharia-compliant crude oil funds that will enable investors to benefit from price movements of crude oil over a two-year investment period. Both GFH (as lead manager) and ADIH (as co-manager) will be investment managers and placement agents. Hetco Advisory Services UK Limited has advised on the structuring and will provide market research. Enhanced Oil Fund I, one of the two closed-end investment funds, is a $ 100 mn private placement offer that seeks to provide investors with quarterly distributions and a targeted total return of 20 per cent over a period of 24 months. This fund provides 90 per cent capital preservation. Enhanced Oil Fund II, a higher risk fund with no capital preservation, is a $ 50 mn private placement offer, which seeks to provide investors with quarterly distributions but with a targeted total return of 40 per cent over a period of 24 months. Both funds have a minimum subscription level of $ 250,000, with subsequent investments in multiples of $ 25,000.

Marathon and its partners make early LNG delivery from Bioko Island

May 24, 2007. Marathon Oil Corp. and its partners announced the delivery of the first cargo of liquefied natural gas (LNG) from their Train 1 LNG project on Bioko Island, Equatorial Guinea. The $ 1.5 bn project was completed on budget and six months ahead of the original schedule of late 2007. The first LNG cargo was delivered to the 138,000 cubic meter LNG tanker Gracilis under the terms of an agreement with BG Gas Marketing LTD (BG) to supply 3.4 mmtpa to BG for 17 years. The LNG plant is located on the northwest side of Bioko Island at Punta Europa, near Equatorial Guinea's capital city of Malabo. Approximately three trillion gross cubic feet of dry gas from the Marathon-operated Alba Field offshore Equatorial Guinea will be processed through the LNG plant. Marathon and the other EG LNG Co shareholders commenced preliminary construction of the Train 1 project in December 2003, and completed the project ahead of schedule with an outstanding safety performance of more than eight million man hours worked without a lost time incident.

Suez and GasAtacama to build LNG plant in Northern Chile

May 24, 2007. French-Belgian utility group Suez and Chilean energy company Gasatacama have decided to go ahead with construction of a regasification facility for liquefied natural gas in far northern Chile. The companies will supply the facility at Mejillones with LNG earmarked by Suez for the U.S. market. The government originally announced plans for the project last August, and reiterated the leading role of state-owned Corporacion Nacional del Cobre de Chile, or Codelco, as a consumer.

Indonesia's Setdco eyes $ 10 bn investment in Sakhalin

May 24, 2007. The Setdco Group, which is controlled by Jakarta tycoon Setiawan Djodi, is interested in expanding business to Russia to build a liquefied natural gas (LNG) plant in Sakhalin. Setdco will need to invest US $ 10 bn in the expansion plan, hopefully to start this year. Setdco has secured agreement from banks to support the implementation of the project.

Sinopec and CNOOC to jointly tap South China market

May 23, 2007. Upon China's two oil majors, Sinopec and CNOOC, inked their first strategic agreement recently. In southern China, Sinopec holds the advantages in terms of pipeline grids and end users, but its natural gas supply has been suffering from insufficiency, though Puguang gasfield was newly discovered in Sichuan province, southwest China, during last year. CNOOC, however, has been gripping abundant gas resources by importing LNG. Its first LNG terminal came on stream in Dapeng, south China province of Guangdong and the second one will be kicked off in the southeast province of Fujian by the end of this year. It is the complimentary advantages that bind the two suppliers together. Likely, they may establish a JV to operate the business related to natural gas supplies, reserves and construction of natural gas pipelines.

Russia and Austria to open gas storage facility

May 23, 2007. Russia and Austria will open a large natural gas storage facility with a holding capacity of 2.4 bcm near Salzburg, in western Austria. In September 2006, Russian energy giant Gazprom extended contracts to supply gas to Austria from 2012 to 2027. In line with concluded long-term contracts, Gazprom will ensure deliveries of about 7 bcm of gas annually until 2027, the amount Austria needs.

Bangladesh planning two undersea petroleum pipelines

May 23, 2007. Bangladesh's Energy Ministry has plans to build two undersea pipelines for intake and smooth transportation of its imported petroleum fuels across the country. Under the plan, a 60-kilometer pipeline would be built from a deep-sea point to Chittagong while another would be installed from Chittagong to either Chandpur or Fatullah in Narayanganj. The cost of the project is estimated at US $ 175 mn and the state-owned Bangladesh Petroleum Corporation (BPC) would build and operate the project. The donor agency has already agreed to provide a grant assistance to carry out a feasibility study to implement the proposed project, which would have provision for carrying both crude and refined oils. The second pipeline from the Chittagong Eastern Refinery point to Chandpur fuel depot or to Fatullah depot would be built under private venture. Presently, the BPC imports petroleum in small vessels which offload the consignments to the Eastern Refinery and then the fuels are transported to different oil depots across the country in small vessels, rail wagons and tank-lorries. But, the fuel transportation by vessels are often disrupted due to the silting of rivers and loss of the navigability of different channels. With the two pipelines built, both the hazards and cost of transportation would be reduced.

Air Products and CNOOC form Fujian JV to build Air Separation Unit

May 22, 2007.  Air Products has formed a joint venture with CNOOC Oil Base Group Ltd., which is a wholly owned subsidiary of China National Offshore Oil Corporation (CNOOC), one of the largest state-owned oil companies and the leading offshore oil and gas producer in the country. The joint venture will build and operate an air separation unit (ASU) and liquefier in Putian, Fujian Province, to produce liquid oxygen, nitrogen and argon by using cold energy from liquefied natural gas (LNG). It is the first application of LNG cold energy at an ASU plant in China. Air Products will also build and operate the associated storage and distribution operations at the ASU plant to supply the liquid products to the local market in Fujian Province, a fast growing marketplace for industrial gases. This is the first use of cold energy to make industrial gas products in China. The ASU plant in Putian, Fujian Province is expected to come on-stream in 2009.

Gazprom to export 750 mcm of gas a year to Turkey till 2021

May 22, 2007. Russian energy giant Gazprom will supply 750 mcm (million cubic metre) of gas to Turkey annually until 2021. Gazprom Export, the export division of Gazprom, and Turkish Bosphorus Gas A.S. signed a contract on Russian natural gas deliveries to Turkey May 22, following the results of a tender for the partial transfer by Turkey's oil pipeline corporation Botas of its import contract to other companies. The tender was organized as part of the process to liberalize the Turkish gas market.

BG Group at centre of $ 4 bn deal to supply Gaza gas to Israel

May 22, 2007. BG Group is poised to agree the terms of an historic $ 4 bn (£2 bn) deal to supply Palestinian gas to Israel from a discovery off the Gaza coastline. Representatives from the British energy company are scheduled next week to meet a team of negotiators chosen by the Israeli Cabinet to thrash out a 15-year contract. Despite the violence in Gaza, the Israeli Foreign Ministry has insisted that it wants to conclude a deal as soon as possible. It would enable BG Group, the former owner of British Gas, to begin to develop an offshore field that is the Palestine Authority’s only natural resource. The move would mark an unprecedented milestone in Middle East relations. There would be enough gas to provide 10 per cent of Israel’s annual energy requirement, and the Palestinians would receive total royalties of $ 1 bn. Under BG Group’s plans, gas from the field would be transported by an undersea pipeline to the seaport of Ashkelon.

EU conditionally approves new Greece-Italy gas pipeline

May 22, 2007.   The European Commission has conditionally approved a new gas pipeline between Greece and Italy. The Poseidon pipeline is being built by Italy's Edison SpA and Greece's DEPA. According to the commission the pipeline will promote more effective competition on the Italian gas market. The commission has decided to support the Greek and Italian deregulators to allow the venture but the agreement is subject to certain conditions. The pipeline is due to be completed by 2011. It will also be connected to Turkey, giving the EU access to Caspian Sea and Middle East natural gas. The initial 8 bcm of transmission capacity will be 80 percent reserved to Edison SpA and 20 percent to DEPA for 25 years.

Saipem set to construct Italian LNG terminal

May 22, 2007. Saipem SpA has agreed to build the OLT liquefied natural gas (LNG) terminal at Leghorn which is jointly controlled by Iride SpA and Endesa SA, but will take two months to assess the costs which are likely to be around 500 mn euro. The total investment to build the 3.75 bcm facility, officially known as OLT Offshore LNG Toscana, will be around 600 mn euro. Work started on the terminal in February and the owners expect the plant to be operative before the end of 2009. The ship that will be converted into the regasification unit is already in place and conversion work will begin soon. The ship, which will be anchored some 12 miles off the Leghorn coast, is owned by the Norwegian group Golar LNG Ltd, which has a 20-percent stake in the terminal. Iride and Endesa both have 25.5-percent stakes while 29 percent is in the hands of the businessman Aldo Belleli.

Policy / Performance

Pakistan and Ukraine sign protocol for oil and gas cooperation

May 26, 2007. Pakistan and Ukraine have signed a protocol of intents to cooperate in the oil and gas sector and stressed the mutual technical collaboration to explore more opportunities in this sector. The minister held significant meetings with technical experts of oil and gas state-owned related companies to explore and identify the opportunities in the field of oil and gas exploration, construction and operation of trans-national oil and gas pipeline projects, storage of liquefied gas etc. in Pakistan.

New petroleum policy in 15 days in Pakistan

May 24, 2007. According to Secretary, Ministry of Petroleum and Natural Resources, new petroleum policy will be finalized in next 15 days and is likely to be implemented from July next. The suggestions and written comments of all stakeholders will be taken into consideration before sending the draft of new policy to the Federal Cabinet for the approval. The representatives of national and international, public and private sector oil and gas companies, owners, developers and operators of licenses as well as potential investors, financial institutions and consortia participated in the workshop. The next bidding for awarding exploratory licenses will be held after the approval of the new policy. The operators will be allowed to shift from old policy to new policy, but the interest of the consumers will be protected at all costs. Attractive package of incentives would be offered to the investors in level playing field and more incentives will be offered in the new policy to the prospective investors in the oil and gas exploration and production sectors.

Talks on gas exploration set to begin

May 24, 2007. China and Japan will hold a new round of consultations to discuss the dispute over gas exploration rights in the East China Sea in Beijing. Tokyo has proposed that the two nations jointly develop natural gas in a much wider area of the East China Sea straddling the Japan-designated median line. Beijing disagrees and, instead, wants the two countries tap the northern and southern areas in the East China Sea that includes the Diaoyu Islands, a proposal that is unacceptable to Tokyo. The East China Sea covers an area of more than 700,000 square km with an average depth of 350 meters. It is estimated that about 7.2 bn tons of gas and oil resources lie untapped in the waters.



U.S.$ 750 mn Bujagali Power Project starts in Uganda

May 28, 2007. The long-awaited Bujagali power plant is on. Work on the 250 MW Bujagali power plant, which will cost in excesses of US $ 750 mn will start soon. The earlier than expected commencement of works follows a decision by both the Uganda government and the Uganda Electricity Transmission Company Limited (UETCL) to grant Bujagali Energy Limited (BEL), the developers of the power plant, a $ 90 mn loan.

AES and Turk partner to invest $600 mn in hydropower

May 25, 2007. U.S. energy firm AES Corp and its Turkish partner IC Ictas will invest $600 mn in the next four years in 18 hydropower projects in Turkey. These 18 hydropower plants will have a combined 390 MW capacity and construction of four plants will begin this year and all of them will be in operation in 2010-2011. AES operates power plants worldwide with 40,000 MW capacity and posted $12 bn turnover last year.

Transmission / Distribution / Trade

CMS utility agrees to buy Michigan gas-fired plant

May 25, 2007. CMS Corp.'s Consumers Energy utility plans to buy a natural gas-fired power plant from LS Power Group for $ 517 mn. The utility needs additional electric generation to meet the growing needs of its 1.8 mn customers. Purchase of the 946 MW plant in Zeeland, Michigan, is subject to approval from the Michigan Public Service Commission. Consumers announced this month a 20-year plan to invest in additional generation, including building a new coal-fired plant, along with renewable power and programs to lower power consumption through increased energy efficiency. Consumers Energy hopes to close the deal in 2008.

Tanjong to buy power plant in Pakistan

May 28, 2007. Malaysian power and gaming group, Tanjong Plc, agreed to buy control of another seven power plants in Egypt and Asia for $ 493 mn. According to Tanjong, its 55-per cent-owned unit, Pendekar Energy (L) Ltd, would buy the assets from Britain's CDC Group for cash. Tanjong's share of the purchase price would amount to $ 271 mn and would be funded by cash flow and debt. The seven power plants are in Egypt, where Tanjong already has two power stations, and in Bangladesh, Pakistan and Sri Lanka. The seven plants had a total effective installed capacity of 1,434 MW. The largest of the seven was at Sidi Krir, Egypt, with an installed capacity of 683 MW. Three others were in Bangladesh, one in Pakistan and two in Sri Lanka. Five are gas-fired, while the two small Sri Lankan plants are oil-fired. The plants are governed by power purchase agreements, which will expire between 2012 and 2029.

Policy / Performance

China eyes up to 20-fold nuclear power boost by end of 2030

May 28, 2007. The Chinese government plans to boost the country's nuclear power generation capability by up to 20 times its current level by the end of 2030. The National Development and Reform Commission, which administers China's energy policy, aims to increase nuclear power generation to between 120 mn and 160 mn kilowatts. At present, China has 10 nuclear reactors, which are capable of generating 8 mn kilowatts. To attain its goal under the new plan, China would need to build in excess of 100 nuclear reactors, each capable of generating 1 mn kilowatts, over 20 years. If the plan is realized, China would become the world's largest generator of nuclear power, surpassing Japan, France and the United States. China has already started stockpiling uranium for strategic purposes, and has taken other steps to secure the valuable commodity in preparation for its numerous new reactors.

Renewable Energy Trends


Railways revs up on bio-diesel

May 29, 2007. The Indian Railways is prepared to provide technology free of cost for the production of bio-diesel products.  The production capacity of the bio-diesel plant at the locomotive works in Perambur near Chennai had been enhanced to 1,000 litre per day. The Perambur unit has facilities to extract bio-diesel from the seeds of jatropha, neem and pungam plants and convert used or waste vegetable oil into bio-diesel stocks.

The technology involved is the offshoot of inhouse development and research and the Railways is prepared to share the technology with any entrepreneur without obligations. The Railways is also in the process of creating awareness among the farming community on the cultivation of jatropha and other plants used in bio-diesel extraction. In fact, the Perambur unit was currently experiencing a shortfall in procuring raw material like jatropha.

Call for national bio-diesel policy

May 28, 2007. Experts in agriculture, chemistry and bio-diesel studies have called for a national-level policy to let farmers sow their own power to meet their energy needs on and off the farm fields. They discussed strategies to make optimum use of bio-diesel to meet the energy requirements in rural areas and had come out with a set of recommendations to give a thrust to the bio-diesel programme in the country. The experts called for preparation of a national programme to promote public-private participation to encourage clusters of power generation units based on non-edible vegetable oils. To induce the farmers to take up such units, the country could evolve demonstration models of medium-sized power plants. Smaller models should also be established to cater to the needs of individual farmers not covered under cluster area approach.

The experts also recommended a large-scale programme to encourage jatropa plantations in 50 plus hectares with good management practices. The meeting had also called for setting up a task force comprising technically competent persons to take up the bio-diesel programme in a mission mode. The National Bureau of Plant Genetic Resources might be entrusted with the task of collection of relevant germplasm for bio-fuel development and such data and collection should be shared with other research institutes. The agricultural research institutions must focus on jatropha and a few more selected prospective oil-bearing crops to develop superior genotypes or hybrids.

Future Energy's SEZ may get $ 500 mn investments

May 27, 2007. Overseas manufacturers of renewable energy generation equipment are likely to invest over $500 mn (Rs 2,000 crore) in the special economic zone that is coming up near Chennai. The Rs 1,300-crore, 670-acre SEZ that is being developed by Future Energy Zone India Ltd (FEZ) received the approval of the Tamil Nadu Cabinet. It is coming up off GST-road some 45 km from Chennai city centre. FEZ has been promoted by Malavalli Power Plant Ltd and the Kamala group of Mumbai. The SEZ would have two components, viz., a technology park and an industrial park. The technology park will feature facilities for R&D, education and training, laboratories and even convention centres. The industrial park is where the manufacture of renewable power equipment will happen.

Cuba and India sign energy agreement

May 26, 2007. Cuba and India have signed a cooperation and technical assistance agreement for the development of renewable energy sources. The agreement calls for the exchange of information on renewable energy sources and the training of Cuban scientists in India. It covers wind, solar, biomass and small power plant projects during the 2007-09 period. India's state-owned Oil and Natural Gas Corporation (ONGC) is currently a partner with Spain's Repsol YPF and Norway's Norsk Hydro in six of the 59 exploration blocks in Cuba's exclusive economic zone in the Gulf of Mexico. Cuba opened its portion of the Gulf of Mexico's waters to foreign oil companies in 1999. Venezuela's PDVSA, Spain's Repsol YPF, Canada-based Sherrit, India's ONGC, Norway's Norsk Hydro and Malaysia's Petronas have signed exploration contracts with state-owned Cuba Petroleo (Cupet). Cuba produces about 80,000 bpd of high-sulphur heavy crude used mainly to generate electricity.

Wind-cum-solar units planned in 100 villages

May 24, 2007. Karnataka is planning an ambitious and innovative scheme for tapping renewable energy in villages which is said to be the first of its kind in the country. The State-run Karnataka Renewable Energy Development Limited (KREDL) has prepared a proposal for installing hybrid renewable energy system, which comprises both solar and wind energy generators, in 100 villages. The non-conventional energy unit would be dedicated exclusively for taking care of the energy requirements of streetlights in 100 select villages. This will make these villages self-reliant as far as power supply to streetlights is concerned. The scheme is being taken up as a demonstration project to create public awareness about non-conventional energy apart from helping the 100 villages. Under the scheme, each generation unit can take care of the power supply requirement of 10 streetlights for 12 hours a day. Each unit will have a total capacity of 1,300 Watts. Each unit is expected to generate 5 units of power a day, 3.8 units from the wind component and 1.2 unit from the solar component. The energy thus generated will be stored in a battery that will be connected to the generator. Each generation unit would cost about Rs. 3.70 lakh. While 75 per cent of the cost will be subsidised by the Ministry of Non-conventional Energy Sources, the State has to spend only about Rs. 92,500 on every unit.


PNOC unit, London-based firm to build bio-fuel refinery

May 23, 2007. A unit of state-run Philippine National Oil Co. has tied up with London-based NRG Chemical Engineering Pte. Ltd. for a jatropha refinery project worth over a bn dollars. PNOC-Alternative Fuels Corp. and NRG signed an agreement during the recently held Biofuels Conference. In the said agreement, NRG will invest about $ 1.3 bn to establish facilities that will process biodiesel from the jatropha plant, a proven biofuel source.

The investment for the projects, which will span five years, includes a $ 455 mn refinery, a $ 600 mn jatropha plantation covering 500,000 hectares and a $ 200 mn ethanol plant. NRG is also looking at sugar cane as a possible feedstock for the ethanol plant but will mostly use jathropa biomass to produce bioethanol. The PNOC industrial park and parts of Mindanao are being eyed as possible locations for the jatropha plantation. The facilities’ output will be sold largely to the domestic market to take advantage of the mandated blending of biodiesel and bioethanol in all engine fuels.

Dalby Bio-Refinery signs Caltex deal

May 22, 2007. A Darling Downs' ethanol project in southern Queensland has signed a landmark three-year deal with fuel giant Caltex. Dalby Bio-Refinery will supply Caltex with 30 mn litres of fuel annually. Promoter Ross Caltex is Australia's largest oil company and their off-take agreement with us represents a substantial portion of our production and it's been a great boost not only to the industry, but also to our project. The project remains on target to begin production in August 2008. The plant would produce 80 mn litres of ethanol in its first year of operation.

Long Island seeks PJM wind power, mulls wind farm

May 22, 2007. The Long Island Power Authority issued a Request for Proposals (RFP) seeking bids for 25 MW hours of land-based wind energy, transmitted to Long Island later this year via the new Neptune cable. LIPA was seeking to enter a one-year contract with a wind energy supplier for the energy from generating facilities in the Pennsylvania/New Jersey/Maryland (PJM) power market.

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