Published on Mar 10, 2009
Energy News Monitor |Volume V, Issue 38
Sustainable Development of the Indian Coal Sector

Ananth P. Chikkatur a,*, Ambuj D. Sagar b, T. L. Sankar c

 

1. Introduction

E

conomic development as well as realization of basic human needs is increasingly dependent on the availability of modern energy services. India’s low levels of per-capita energy supply—the per-capita total primary energy supply (TPES) in the country was only 0.51 ton of oil equivalent (toe) in 2006, which is about one-ninth of the average for Organization for Economic Cooperation and Development(OECD) countries, just over a quarter of the global average, and about one-third that of China [1]—makes it quite clear that the country has to increase its energy availability for raising the living standards of its citizens.

Electric-power is intimately intertwined with modern energy services (such as lighting, refrigeration, and space cooling) and other services, such as water treatment, communications and many aspects of transportation. The statistics for electric power availability in India are even more stark than those for TPES: per-capita electricity consumption in the country was only 503 kWh in 2006, which was about one-fourth that of China and just over one-sixteenth that of the OECD average [1]. Also, India has long suffered from an insufficient supply of electricity in relation to the demand —in 2007–08, the total shortage of energy was estimated to be 9.9%, and the peak shortages were as high as 16.6% [2].1

The quality of power supply in the country is also very poor, with unstable voltages and routine frequency excursions. In fact, the lack of adequate and reliable supply of power is often cited as a critical constraint to industrial development [3]. Furthermore, reducing the use of biomass and combustible renewables, which still account for over a third of the country’s total primary energy supply, and bringing modern energy services (and therefore electricity) to rural areas remain key priorities for the country. Thus, the need to sustain the continued and rapid enhancement of the availability, reliability, and affordability of electric power is seen as the most critical energy issue in India (as in many other developing countries).

At present, the power sector in India is dominated by coal. Coal currently accounts for more than 50% of total primary commercial energy supply in the country and for about 70% of total electricity generation. Coal is likely to remain a key energy source for India, for at least the next 30–40 years, as India has significant domestic coal resources (relative to other fossil fuels) and a large set of existing installed base of coal-based electricity capacity, although recent experiences have thrown into sharp relief the uncertainties and concerns regarding the adequacy of coal supplies to satisfy the growing hunger for power. At the same time, with the growth of the coal-based power, local environmental and social challenges relating to coal mining, processing, and use are becoming more pressing.

Thus, sustainable development of the Indian coal sector will involve paying attention to two themes: the ability to sustain the increased production of coal in the country and to do so in an environmentally and socially sustainable manner. These are major challenges, yet the substantial institutional changes that the country’s coal and power sectors are currently undergoing and the availability of new and cleaner technologies offer an opportunity to guide the development of these sectors towards greater sustainability.

It is with this perspective that this paper briefly reviews the Indian coal sector and discusses key challenges for its sustainable development, and proposes policy approaches and suggestions to move it in the right direction.

2. Sustaining the growth of coal supply

2.1. Coal supply: past and future

Coal has been mined in India for more than 230 years. Most of the coal mines were in the private sector, prior to their nationalization in the early1970s. The nationalization was aimed to bring about a coordinated, rational and scientific development of the coal sector, and to rapidly increase coal production to meet the needs of consumers [4]. Since nationalization, coal production has increased more than 5-fold with the production in 2004–05 at 377 million metric tons (MT) (see Fig. 1). Nearly all of the production has come from the seven state-owned collieries of Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL)—about 95% of coal production currently is from CIL and SCCL.

Starting in the 1970s, coal-based thermal power plants were installed rapidly, and demand for non-coking, thermal coal increased (see Fig. 1). In 1970, electricity generation consumed about 13 MT (less than 20% of total coal consumption); this number had risen to about 280MT in 2003 (nearly 75% of total coal consumption); see Fig. 1. Other consumers for coal include the iron and steel industry, cement manufacturers, and industries such as fertilizers, textiles, paper, brick-making, etc. The railways, which entirely dominated coal consumption in the second half of the nineteenth century, only accounted for about 20% of consumption in 1970, and direct coal consumption by the railways ended by the mid-1990s, as the railways became entirely based on electricity and diesel [5].

The iron and steel industry, which primarily consumes coking coal and some high-grade non-coking coal, is the second largest consumer of domestic coal. Domestic coking coal supply has reduced since the mid-1990s, as coking coal reserves in the country are quite limited; hence, the steel industry accounts for much of India’s coal imports.

Fig. 1 Coal production in India (1950–2004). Hard coal production excludes lignite production.

Source: Ministry of Coal Annual Reports [6–8].

Fig. 2 Projected future demand for coal in India. Coal demand based on various scenario projections from the Integrated Energy Policy (IEP) report are shown above (open triangles) along with projections from other sources, assuming coal calorific value of 16.75 MJ/kg. Note that projections from international energy agencies (IEA and EIA) are lower than Indian agencies as the Indian agencies assume high average GDP growth (8%) and the IEA and EIA assume lower average GDP growth (5.2%—EIA; 4.6%—IEA).

Source: Integrated Energy Policy Report [10].

Demand for coal is expected to remain high in the country, especially from the power generation sector. Recent scenario-based projections of coal demand indicate that coal consumption in the power sector could be in the range of 380–500 MT by 2012 [9]. Longer term scenarios from the Planning Commission have indicated that annual coal consumption by the power sector might range between 1 and 2 billion metric tons (BT) by 2031–32, with the total coal demand vary ingany where between 1.5 and 2.5 BT (assuming coal calorific value of 16.75 MJ/kg and 8% GDP growth) [10].2 Coal demand projections by various other agencies are also indicated in Fig. 2. It is the considered opinion of the Integrated Energy Policy (IEP) Committee that the annual coal demand will be about 2 BT by 2030 [11].

It is likely that not all of the coal demand will be met by domestic production. The Planning Commission expects domestic production of coal and lignite to be about 1.4 BT by 2031–32, assuming an annual growth rate of 5.5% [10]. Already, coal demand – driven primarily by demand in coal power plants–has been outstripping supply. Over the two decades, demand for coal has increased at an average annual rate of 5.7%, while production has only increased at 5.1% [12].  Hence, there already is a gap with between coal demand and supply—a shortfall that is projected to increase in the short term [11].3 Although this gap is likely to be met by increasing coal imports,4 it is essential for the domestic coal industry in India to increase production and maintain its recent growth to minimize such a gap for the future (or at least keep it at manageable levels).

There are, however, several challenges that need to be addressed in the domestic coal industry, including better understanding of coal resources, improving coal extraction technology, increasing coal beneficiation to improve quality, and governance and regulation issues.

Notes:

* Corresponding author. Presently at ICF International, 9300 Lee Highway, Fairfax, VA 22031 USA. Tel.: +16173087941.     E-mail addresses: [email protected] (A.P. Chikkatur), [email protected] (A.D. Sagar), [email protected] (T.L. Sankar). 0360-5442/$-seefrontmatter & 2009 Elsevier Ltd. All rights reserved. doi:10.1016/j.energy.2008.12.014

a Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University, 79 J.F. Kennedy Street, Cambridge, MA 02138, USA

b Department of Humanities and Social Sciences, Indian Institute of Technology, Delhi, Hauz Khas, New Delhi 110016, India

c Administrative Staff College of India, Bella Vista, Raj Bhavan Road, Khairatabad, Hyderabad 500082, India

1 http://powermin.nic.in/indian_electricity_scenario/ policy_initiatives.htm, accessed Nov.22, 2008.

2 Coal demand of 2.5 BT occurs in a scenario where coal is the dominant fuel of choice; a demand of 1.5 BT occurs in a scenario where nuclear, hydroelectricity, gas, and renewables resources are promoted aggressively and demand-side management, coal use efficiency, transport efficiency are all increased [10].

3 In recent years, coal supply shortages and critically low coal stock levels have affected many power plants, including National Thermal Power Corporation (NTPC) plants. NTPC had a loss of 3.6TWh in 2004–05 – much of it in their Eastern Region plants– because of coal shortages [13].

4 Import of coal is likely to increase significantly over the next 20–25 years– Any where between 11% and 45% of total coal demand (i.e., coal imports of 70–450 Mtoe) [10] – in order to meet the projected demand. This is a significant deviation from the current situation, where imported coal is only about 6% of consumption.

References:

[1] IEA. Energy balances of non-OECD countries2005–2006. International Energy Agency; 2008.

[2] Ministry of Power. Annual report 2005–06. Ministry of Power, Editor, Government of India, 2006. <http://powermin.nic.in/reports/pdf/ar05_06.pdf>.

[3] UNDP. World energy assessment. In: Johansson JGTB, editor. Overview update 2004. NewYork: United Nations Development Program (UNDP); 2004.

[4] Gupta AB. Whithercoal. New Delhi: Vision Books Private Limited; 1979.

[5] Chikkatur AP, Sagar AD. Cleaner power in India: towards a clean-coal-technology roadmap. In: BCSIA discussion paper series. Cambridge, MA: Belfer Center for Science and International Affairs, Harvard University; 2007.

[6] Ministry of Coal. Annual report 1999–00. Ministry of Coal, Editor, Government of India, 2000. <http://coal.nic.in/content.htm>.

[7] Ministry of Coal.  Annual report 2003–04. Ministry ofCoal, Editor, Government of India, 2004. <http://coal.nic.in/content0304.htm>.

[8] Ministry of Coal. Annual report 2005–06. Ministry of Coal, Editor, Government of India,2006. <http://coal.nic.in/annrep0506.pdf>.

[9] CEA. Draftreport on National Electricity Plan (vol. I). Central Electricity Authority, Editor, Government of India, 2004. <http://cea.nic.in/planning/ NEP-WEB.pdf>.

[10] Planning Commission. Integrated Energy Policy: report of the expert committee. Planning Commission, Editor, Government of India, 2006.  <http://planningcommission.nic.in/reports/genrep/rep_intengy.pdf>.

[11] Ministry of Coal. Report (Part-I) of the expert committee on road map for coal sector reforms. Ministry of Coal, Editor, Government of India, 2005. <http:// coal.nic.in/expertreport.pdf>.

[12] Planning Commission. Tenth five-year plan. Planning Commission, Editor, Government of India, 2002.

[13] CEA. Performance review of thermal power stations 2004–05. Central Electricity Authority, Editor, 2005.

 

to be continued

 

Courtesy: Energy Journal (2009), doi:10.1016/j.energy.2008.12.014 reprinted with the permission of the author

Sustainable Hydro Power Policy for Himalayan States (part – III)

Shankar Sharma, Consultant to Electricity Industry

 

Continued from Volume V, Issue No. 37…

2.2 Social, cultural and heritage impacts

S

ince a large number of human settlements in India, as elsewhere in the world, have prospered in the river valleys any change in the natural characteristics of a river would adversely impact these people.  Such changes will have social, cultural and heritage impacts.  Some of the major issues in this regard are:

·    Probably the most affected community from Himalayan dams is the tribal community, who live in isolated places in a small number with distinct identity, language and culture.  The influx of migrant workers from other parts of the country for construction can devastate their community life. (Ref.2)

·    Tribal populations normally have close ties with rivers, forests, hillocks and animals. With submergence of their sacred elements they will undergo extreme deprivation.

·    Influx of migrant workers will result in threat to the culture and identity of the locals. Large influx of migrant workers from other parts of he country to be engaged in dam building activities will put the local communities under severe pressure due to social and economic issues; competition for natural resources such as land and water; increase in price and shortage in availability of construction materials; pressure on language and culture etc.

·    A large number of people in Himalayan rural areas depend a lot on the rivers and streams. Hourly, daily and seasonal change in the river flow, due to the construction of dams, will impact them massively. Sharavathy tail race project in Karnataka is a glaring example. Being the fourth hydro electric project on the river Sharavathy, conditional approval was given to run it as a run-of-river scheme, but it has been operating as a peak load station severely affecting the ability of the downstream people to cope up with the sudden gushing of water during the peak hours of the day.  Another example is that of Narmada valley project where a number of people were reported to have been washed away due to sudden discharge of water from one of the reservoirs. 

·    Various impacts of such large dams extend upto the river deltas; in case of Bhagirathi river it will affect the flow in Ganga and hence will affect the deltas in Bangladesh.

·    As per an independent report the Tehri Dam Project has affected around 125 villages including the old Tehri town. Tehri Township along with 39 villages will be fully affected and another 86 villages (number may possibly increase) would be partially affected. It is very difficult to visualize how so many families can be rehabilitated effectively. It is highly probable that a considerable number of these people may become destitute for various reasons. Not only it will be very difficult emotionally to justify the displacement of so many families, but it will also be difficult to visualize the improvement in economic and social wellbeing of the state consequent to such large scale displacements.

·    Karnataka’s experience in two river valleys of Sharavathy and Kali has been very sad. The PAFs have been displaced 2 or 3 times within a short span of 20-30 years; initially due to the construction of cascaded dams, and finally to declare the areas as reserve forests. The socio-economic impacts of such repeated displacements have been disastrous to the PAFs.

·    The river valleys in India have been human habitats with social, cultural, religious and heritage importance for thousands of years. Many of the old temples and other religious institutions, which have been a source of spiritual inspiration for centuries, face permanent destruction from dams. 

·    The vastly reduced amounts of silts in rivers obstructed by dams would have serious impact on the nature and area of river deltas. They are known to have resulted in ingress of sea inlands affecting the water quality. There are reports that in Gangetic delta such erosions have resulted in considerable reduction in the size of delta, and hence there can be an issue of territorial integrity.

Though it is impossible to put a tangible economic value to the losses suffered by our society due to such social, cultural, religious and heritage impacts, it will suffice to say that the combined losses can be very huge, and is difficult to express in words or numbers. It will be not be an exaggeration to suggest that such losses in case of a single large dam, such as Tehri, can be more than the combined financial benefits of few dams. 

Table 4 Hydel Projects in Uttarakhand (In various stages of survey, investigation, planning and construction)

 

Project Capacity

Number

1

Up to 5 MW

65

2

>5 MW and < 25 MW

36

3

>25 MW and < 100 MW

24

4

>100 MW and < 250 MW

11

5

>250 MW

21

Source: Various independent studies

2.3 Environmental Impacts

In addition to economic and social issues the construction of dams has been known to adversely impact the local and global environment. Some of the major issues in this regard are:

·    A major issue with dams is that the quantity, quality and pattern of water flow in the rivers get impacted with the result that biodiversity dependent on river flow is severely affected (Ref.3).

·    A large number of hydel projects, about 150 in number of varying capacities (from 1 MW to 500 MW as in table 4 ), are reported to be in various stages of survey and investigation, planning and construction in the state of Uttarakhand alone.  A major concern with a number of dams planned for Uttarakhand has been the combined impact of cascaded dams on environment, flora and fauna. More than 10 dams are reported to be planned / being constructed on river Bhagirathi and its tributaries alone.                                      

·    With much of water stored in different stretches of the same river (in case of cascaded dams), there will be very few stretches of free flowing river. The health of a river is known to be affected seriously when its natural flow is obstructed. With many dams on the same river there will be pools of stagnant water as compared to a free flowing river, and towards the tail end a mighty river may become an unrecognizable stream.  Rivers Sharavathy and Kali in Karnataka, where multiple dams have been constructed have many stretches of stagnant water.

·    Past experience of incomplete or incorrect Environmental Impact Assessment (EIA) in various projects have severely dented people’s confidence in the effectiveness of EIA and Environmental Management Plan.

·    Whereas the National Forest Policy has recommended a target of forest /tree cover of 33% of the land area, the national average is less than 20%. If fortunate states like Uttarakhand, with more than 33% of forest /tree cover, take a decision to reduce it the region and the country as a whole will be affected ecologically.

·    The proponents of dam based hydel project seem to put forth an argument that dams are benign as far as Green House Gas (GHG) emissions are concerned. But this argument conveniently forgets the fact that the massive vegetation which gets drowned by dam waters can emit Methane Gas (CH4}, which is a much higher potent GHG than CO2. One estimate indicates that the total GHG emissions from the dams in India are about 18% of all GHGs in India.

·    Many of the hydel projects are asking for project approval on the basis that they are run-of-river type; meaning that they do not affect the natural flow of river to any considerable extent.  But in reality most of them may end up functioning as peak demand power stations generating electricity on an average for only few hours of the day and storing water for the remaining duration of the day. Such projects will generate power during the peak demand hours, probably for 2 to 4 hours once in the morning and once in the evening.  Such a practice, as experienced in Sharavathy tail race project in Karnakata, will be against the original claim of ensuring natural river flows. Such diurnal changes in water flow of a river will adversely impact the people, flora and fauna dependent on the riverine ecosystem.

2.3.1 Impact on biodiversity

Being one of the earliest civilizations, our society has attached a great cultural and spiritual value to rivers and the rich biodiversity associated with them. However, since independence our treatment of rivers and the rich biodiversity associated with them has been one of grossly callous in nature.

·    A river is known to be most beneficial to the flora, fauna and humans only if its water is fresh and flowing continuously. One or more dams on a river will severely affect this characteristic of a river, and hence will deprive us of all the associated benefits.

·    It is very disturbing to note that there are no legally mandatory norms in our country which stipulates the minimum fresh water flow in a river with or without hydro electric dams.  Authorities seem to consider the water flowing to sea as a waste, without appreciating the need for such a flow to conserve the ecosystem. Such ‘Environment Flows’ are required to maintain the ecological integrity of a river and its associated ecosystems, and of the goods and services provided by them. (Ref. Himamshu Thakkar of SANDRP).

·    In view of the fact that many hydro electric projects involve diversion of river water through tunnels of many kM in length, if there is no minimum ‘Environment Flows’ the stretch of the river between the dam and the point where the water passing through the hydro turbines reenter the main course of the river will become dry. In many cases this stretch of a river can be few kM, and the river ecosystem in such a stretch could be destroyed.

·    Dams prevent the silt from flowing down the river and seriously affect the availability of rich nutrients to the bio-diversity down stream.(Ref. 3)

·    The Himalayas are not only recognized as bio-diversity hotspots but also as fragile ecosystems with many species of flora and fauna amongst the endemic types.  Dam building activities like digging, blasting, excavation, dumping of debris etc. are likely to severely damage the Himalayan ecology.

·    Dams are known to have reduced populations of migratory fishes or caused extirpation of genetically distinct populations, as well as diminishing estuarine fishes in most continents. In North America studies have revealed that fresh water extinctions are five times as high as those on land. (Ref.3)

World Charter for Nature was adopted by consensus by UN General Assembly in 1982. It has provided some guiding principles for protecting biodiversity. Some key principles are: (Ref 3)

·    Activities which are likely to cause irreversible damage to nature should be avoided.

·    Activities which are likely to pose significant risk to nature shall be preceded by an exhaustive examination; their proponents shall demonstrate that the expected  benefits outweigh potential damage to nature, and where potential adverse effects are not fully understood, the activities should not proceed.

·    Environmental Impact Assessment should be thorough, be given sufficient time, and be carried out in an open and transparent fashion.

As a society do we have the necessary commitment and means of following these guidelines in an objective sense?

If we take all these issues into objective account the aggregate cost to the society of big dam based power projects is much higher than the cumulative benefits. Unfortunately, it has been a practice where the direct and indirect costs are not objectively considered and benefits are exaggerated in a cost V/S benefit analysis to get the project approval.

2.3.2 Value of bio-diversity

At the global scale the value of ecological functions as well as resources of the environment (both terrestrial and aquatic) has been estimated to be about $33 trillion per year, which is almost twice the global domestic product. Fresh water ecosystems are considered to be ecologically more valuable than the terrestrial ones (Ref.3).

How much is the potential value of ecological services associated with forests and fresh water resources of Uttarakhand? Bio-diversity has many kinds of values and potential benefits for the humans and the world as a whole.  It will be a wise policy to apply Precautionary Principle and take necessary action to conserve Bio-diversity before components of it are permanently lost. This approach is advocated by the Convention on Biological Diversity (Ref.3).

All these environmental impacts, some of which have many intangible benefits to the society, put together can amount to a huge loss / benefit depending on how they are treated. The international community has attached so much importance to the forests that the main outcome of the recently concluded UNFCC at Poznan was the decision to set in motion consultations on ‘Reducing Emissions From Deforestation and Forest Degradation’ (REDD).

 

to be continued

 

Views are those of the author                    

Author can be contacted at [email protected]

 

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

ONGC defends strategy, cites sound cash flow at OVL

March 9, 2009. State-owned ONGC responded to the Goldman Sachs criticism over growth prospects saying pointing out its achievements: acquired 43 overseas oil and gas assets in lands in just six years. It acquired properties abroad through its foreign arm OVL. OVL had only one property in 2003. Investments in some of the properties have been paid back much before the evaluated pay back period. Pointing at the cash flow of its wholly-owned subsidiary, ONGC said OVL has already paid back a loan amount of Rs 11,820 crore. The parent company has extended total Rs 25,684 crore to OVL as loans.

The percentage of overseas production to total production of ONGC group has moved from 7.23% in 2002-2003 to 15.42% in 2007-08. The company added 255.01 mtoe oil of reserves through acquisition of overseas properties since 2003-04. Despite subsidy discounts, ONGC’s retention price has steadily increased. Subsidy discounts to public sector oil marketing companies is a practice of the government since 2003-04. Subsidy discounts are applicable to crude produced from nominated blocks only, where there is no production sharing or profit oil sharing with the government. The company had disclosed the risk related to subsidy to the potential shareholders in its initial public offer (IPO) document in March 2004 and these facts are well known to investors.    

RIL hits green barrier in CBM projects

March 9, 2009.  Reliance Industries Ltd appears to be in a spot over efforts to unlock gas trapped in layers of coal, or CBM (coal bed methane) projects in two acreages. In the absence of statutory state clearances, the company faces the prospect of being fined for failure to stick to the promised timelines for exploration unless the Centre allows its request for more time. The company has sought time extension from the Centre for one acreage each in Rajasthan and Chhattisgarh.

In the Rajasthan acreage, identified as Block BS (II) CBM 2003, it is unable to start the second phase of work as the Rajasthan Pollution Control Board (RPCB) is dragging its feet in renewing clearance. The company faces a similar situation in the MP acreage, Sonhat, which also spans some areas in Chhattisgarh. In both cases, RIL has asked time extensions from the Centre for the second phase of work on excusable grounds. In the Rajasthan acreage, the company’s clearance expired in January 2008. In the meantime the company completed the first phase but is unable to start the second phase, due from September 2008, as fresh permits are yet to be granted. RIL has limited its first phase work only in the Madhya Pradesh part. The oil ministry and the exploration regulator have asked RIL for details of its correspondence with state authorities. This is being done to determine the facts of the company’s claim for more time under excusable delays. RIL had also faced problem in Rajasthan over its move to seek a reconnaissance permit for lignite in Barmer. State-owned Neyveli Lignite Corporation opposed the move saying the area proposed by RIL overlaps acreage marked for Centre’s special scheme for government-run companies. 

ONGC board approves renewal and developmental projects

March 6, 2009. ONGC Board in its 189th Board Meeting on 5th March 2009 approved sanctions for following investment proposals:

1. Renewal of Lakwa and Lakhmani Surface Facilities in Assam: The project aims to re-engineer and revamp the Surface facilities, which are more than 30-40 years old. ONGC Board approved first phase of investment of Rs. 2465.15 Crore for Group A project for Surface Installation (GGS,GCP,CTF,ETP,WIP& CPP) and Associated pipeline network of Lakwa and Lakhmani Fields and Moran CTF. The Project will sustain production and uninterrupted exploitation for next 25 years and will maintain high standards of safety and environment. The revamping and renewal of surface facilities in the other producing Assets in Assam will also be taken up in phased manner.

2. Project Hydra under Panna-Mukta JV

Development of PK & South West Panna (SWP) Areas under Panna Mukta Joint Venture was approved by ONGC Board for US$ 131.60 million (i.e 40% share of ONGC of total expenditure of US$ 329 million). The project involves installation of 2 well head platforms associated pipelines and drilling of nine wells. These additional facilities will give recovery of 14.50 MMbbls of oil and 21.39 BCF of gas from PK and SWP areas of Panna Field over period of 11 years. The ONGC share from these projects is 5.80 MMbbls of oil and  8.56 BCF of gas.

3. Development Plan of PL Area under Panna-Mukta JV

The project involves development of un-drained area “PL” in Southern part of main field. The estimated cost of the project, including pre-development cost is UD$ 186.41 mn (ONGC share of US$ 74.6 mn). Incremental recovery of the order of 8.26 mn bbls of Oil and 12.25 BCF of gas (ONGC share of 3.30 mn bbls of oil and 4.90 bcf of gas) has been envisaged in this plan. Panna-Mukta field is being operated by Joint Venture consortium of ONGC (40%), RIL (30%) and British Gas Exploration and Production India Ltd (BGEPIL) (30%).

ONGC to delist Imperial Energy from LSE

March 4, 2009. ONGC is said to delist Imperial Energy Plc at the London Stock Exchange on March 9 and also plans to consolidate the company's operations in western Siberia, Russia. OVL, paid US$2.1bn to acquire UK-listed Imperial Energy Corp Plc. OVL Managing Director and R S Butola, OVL Managing Director and CEO will be the new Chairman of Imperial, which has oil fields in western Siberia.

‘$60 right price for upstream oil buys’: RIL

March 4, 2009. According to Reliance Industries, $60 a barrel is the right price for valuing potential oil exploration acquisitions as prices are expected to rise 50 per cent in next few years. For the current scenario, $40 is a fair price for valuing a producing property but for long-term, meaning four to five years, $60 is the right price (for exploration assets). While Reliance is best known for operating the world's biggest oil refining complex on India's west coast, it has more recently stepped up efforts to balance its portfolio with upstream assets, focusing recently on buying into oil and gas fields already in production rather than exploration deals. This is a thinking reflected in Reliance's overseas exploration assets portfolio that include three blocks in Yemen, two each in Oman, Kurdistan and Colombia, and one each in East Timor and Australia. On the downstream side there has been a demand destruction due to recession and demand growth is now negative. Global oil demand is expected to fall sharply in 2009, following a slight contraction last year. World oil consumption last fell in the early 1980s. High costs of services are proving detrimental to investment in exploration and development of new and existing assets, particularly in difficult areas such as Canadian tar sands and ultra deepwater blocks. The cost of production (because of services cost) would be very high compared to current realisation. The cost of services has come down but the pace is low compared to the one seen in the global crude oil price. Oil prices are now trading range-bound as a deteriorating global economic outlook continued to weigh on the market. Crude prices have fallen more than $100 a barrel from peaks reached last July as the worsening economic crisis curbed oil demand. The International Energy Agency also fears that an expected recovery in oil demand from 2010 and oil project cancellations due to low crude prices as well as the credit crisis will mean no spare oil capacity at the end of 2013. The Paris-based agency said global oil demand is now expected to fall by 980,000 barrels per day (bpd) in 2009 to 84.7 mn bpd. The IEA's previous forecast was for demand to contract by 500,000 bpd this year.

Downstream

Oil, IT companies ahead in CISF priority list

March 10, 2009. Oil refineries, information technology, power plants, airports and seaports will get preference over other sectors of the economy in getting the security cover of the elite Central Industrial Security Force (CISF), which has been authorised to extend security to the private sector. Already 52 private companies, including Essar Oil and Reliance Industries-owned refineries at Jamnagar and Kakinada, have asked for CISF cover. The sectors which would get priority in getting security from CISF are apparently those which are considered vital for economic development of the country.

GAIL gets 9 pc equity in OPaL's Dahej project

March 7, 2009. GAIL has acquired nine per cent equity stake in a petrochemical plant project of ONGC Petro additions Ltd (OPaL), coming up at Dahej in Gujarat. GAIL had sought 19 per cent equity in OPaL as it already had a presence in petrochemical business. Commissioning of the project is largely dependant on the setting up of cracker unit. OPaL will use C2-C3 (ethane and propane) compounds extracted from imported liquefied natural gas (LNG) to make polymers at the proposed plant.

Reliance Industries commences petrol sales from new refinery

March 6, 2009. Reliance Industries sold its first non-oxygenated gasoline cargo from its new refinery for end-March loading. The 95-octane parcel was sold to an undisclosed oil major at US$1/barrel discount to Singapore spot rates, on a free-on-board (FOB) basis. Reliance's crude distillation unit (CDU) was up since end-December, and they have been combining the autofuel coming out of its new and older refinery in their exports for a while. Few analyst were expecting Reliance to start its oil products exports from its new 580,000 barrels per day refinery from April, but it went against expectations and started exporting naphtha for January lifting from the plant.

IOC plans to shut key units from April

March 6, 2009. State-run Indian Oil Corp is planning maintenance work at its key plants during April-September, including a full shutdown from late June of its 160,000 bpd Mathura refinery for about a month. In April, IOC plans to first shut a 50,000 bpd crude unit and attached downstream units for about a month at its 120,000 bpd Barauni plant in eastern Bihar state. Maintenance work at Barauni will begin mid-April, while that at the firm's Gujarat plant at Koyali will be carried out in two stages. At Koyali, work will be carried out in two batches. First in May-June and second in August-September. Each shutdown will be of 25-30 days duration. IOC directly owns seven refineries with combined capacity of 947,000 bpd.

Essar Oil plans shutdown of Jamnagar refinery

March 6, 2009. Essar Oil will shut down of the refinery at Jamnagar from April 13 for a period of 18 days for planned maintenance and inspection of various process units. This is the first planned shutdown since commissioning and commencement of commercial production in May 2008. During the shutdown it is proposed to take up certain jobs as part of ongoing refinery expansion program requiring refinery shutdown.

January oil refining output drops 2.6 pc yoy

March 5, 2009. According to the Government data, crude oil processing by India's oil refiners, led by IOC, decreased by 2.6% in January. Refiners turned 13.31mn metric tons of crude oil into fuels compared with 13.67 mtpa earlier. RIL reported a 12.1% fall in its refinery output at 2.8 mt. The company started another 580,000 barrels per day (BPD) refinery at Jamnagar, adjacent to its existing 660,000 bpd unit on December 25. India, Asia's third-biggest energy consumer, produced 8% less crude oil in January. Companies, including ONGC pumped 2.66 mmt of crude oil in the month compared with 2.89 mmt produced in the same month a year earlier. Crude output at ONGC's Bombay High fields fell 6.2% to 1.43 mt. The fields account for more than half of India’s annual oil production. Crude oil production by private explorers, including Cairn Energy Plc, fell 11% to 388,000 tons, according to the Petroleum Ministry. India’s natural gas output declined 4% to 2.59 bcm.

RIL to lease out fuel stations to HPCL

March 5, 2009. RIL is in talks to lease out its closed retail petrol pumps to HPCL. The public sector oil marketing company has issued a limited tender to five merchant bankers to advise it on the deal.

Transportation / Trade

RIL likely to change gas sale agreements

March 10, 2009. Reliance Industries Ltd, which had sent draft gas sales purchase agreements to its fertiliser consumers, is likely to tweak some of the major clauses in the agreement to address the concerns raised by these companies. But, the sales agreements with individual companies, necessary to begin gas supplies, are unlikely to be ready before mid-April. Fertiliser companies including IFFCO, Kribhco, Indo-Gulf, Nagarjuna Feriilser, Zuari Agro, Chambal Fertilisers and Oswal Fertilisers, who have been in discussions with Reliance Industries for gas supplies from the Krishna Godavari basin, had raised some serious objections to the clauses put forth in the draft agreement. The main objections raised by the fertiliser companies refer to the take or pay clause and the penalties they have to bear in case they fail to buy the committed amount of gas. According to the draft agreement, while the fertiliser companies are liable to pay such penalties, RIL as a gas supplier has no such obligation even if there is a shortfall in gas supplies. After a meeting of member companies here last week to discuss the concerns, Fertiliser Association of India (FAI) DG Satish Chandra wrote to the fertiliser secretary that the take or pay clause should be imposed on both the supplier and the consumers equally. Or else, fertiliser companies could be exempted from paying these penalties if RIL manages to sell that gas without incurring a loss, that is, by selling the gas to other consumers.  RIL is said to have agreed to tweak this clause and redress this issue. RIL proposes to adjust the payments against actual consumptions. It will work like a refund, adjusted against actual billing. RIL’s argument against a penalty on itself as the supplier stems from the fact that it was not given either the marketing or the pricing freedom for the gas, even though this was provided under the government’s own policy on exploration. The other issue raised by the FAI was to do with multiple agreements. Fertiliser companies had said they were willing to sign only one agreement (or agreements with the transporters Reliance Gas and Transportation Infrastructure Ltd and GAIL and gas supplier RIL that could be read as a single agreement, kicking off at same time over the same period) with the fuel supplier instead of multiple agreements with fuel supplier and transporter. RIL had suggested two agreements, one, with itself as the gas supplier and two, with its pipeline company RGTIL. RIL, however, may not have an option in this case as the regulator has insisted on separate companies for marketing and production in the gas sector.  

‘Pak to go ahead with IPI project even without India’: Zardari

March 10, 2009. Pakistan has expressed its readiness to go ahead with the $7.5 bn gas pipeline with Iran even if India, which has security and other concerns, opts out of the trilateral project. The 2,600-km pipeline, to be built at a cost of $7.5 bn, was mooted in 1994 but has been delayed by differences between the three countries on the pricing of gas and transit fees. It has also been held up with New Delhi seeking firm assurances of uninterrupted supplies. Since the proposed pipeline will go through Pakistan, there are concerns of supplies getting affected in the event of relations between India and Pakistan turning sour.

KPTL to lay 550 km of pipeline for HMEL, bags Rs 385 crore order

March 10, 2009. Gandhinagar based Kalpataru Power Transmission Limited (KPTL) has bagged contract of Rs 385 crore for laying 550 km of pipeline as Part A of Mundra-Bhatinda pipeline project for transportation of crude oil from Mundra to Guru Govind Singh Refinery at Bhatinda. The project is being set up by Hindustan Mittal Energy Limited (HMEL), a joint venture of Hindustan Petroleum Corporation Limited (HPCL) and LN Mittal Group. Part A of the Mundra-Bhatinda pipeline project also has in its scope one pumping as well as intermediate pigging (IP) station at Dhansa, two IP stations, 17 SV stations and one dispatch station at Kota which involves all civil, electrical, piping, mechanical and instrumentation work. The pipeline scope starts at Kota near Mundra in Gujarat and ends at Jhanwar in Rajasthan. The project has to be executed in three spreads and is to be completed in 18 months from the date of award. State government sources meanwhile said that HMEL is also planning to set up a single point mooring (SPM) in Mundra region for an estimated investment of Rs 650 crore. The company has approached the state's maritime regulator, Gujarat Maritime Board (GMB) for necessary clearances for the project. The company has identified Luni region in east of Mundra. HMEL has been using Adani's SPM or Single Buoying Mooring as its crude receipt facility. The capacity of Adani's SPM is nine mmtpa. The capacity of HMEL's proposed SPM is 18 mmtpa. The depth at Luni is about 28-30 meters, which is ideal for setting up an SPM. HPCL, Gujarat State Petroleum Corporation, Geoglobal Resources and Jubilant Group had discovered oil reserves in a well Miroli 1 at an offshore block in the Cambay basin. In the recent NELP-VII bidding, a consortia of HPCL- Mittal Energy, OIL and HOEC had emerged winners for the Rajasthan block. Government officials say there will be an additional eight SPMs including the one being proposed by HMEL installed along Gujarat's coast taking the total tally to 15. Players like Reliance, Essar, Adani, Bharat Oman Refinery among others are setting up SPMs along Gujarat coast.

Ravva gas: GAIL told to use D6 price as reference

March 9, 2009. The Petroleum Ministry has asked GAIL (India) Ltd to keep Reliance Industries’ eastern offshore fields (D6 block) gas price, as one of the benchmarks, while negotiating the revised price for the Cairn India-operated Ravva/Ravva Satellite field. The negotiations are still going on with the Ravva joint venture. The Ministry has asked GAIL to keep D6 price of $ 4.2/mBtu (at the delivery point) decided by an Empowered Group of Ministers, as one of the reference prices. According to industry sources, considering D6 price as a benchmark may not be a viable option either for the joint venture or the Government. While gas from Ravva field is sold at $3.5/mBtu, the price of gas from Ravva Satellite is $4.3/mBtu. If the D6 price is taken as a reference point then there is a little scope of revising gas price from Ravva Satellite, but price from Ravva fields can be increased. Though the price from Ravva Satellite field was already market determined, it was still lower than the price that the joint venture partners of Panna-Mukta-Tapti (PMT) fields sell their gas at. Gas price from PMT fields averages at $5.7/mBtu, a benchmark which any seller would look at. The Ravva joint venture is also looking at the PMT price, as anything lower would be lesser revenues and lower profit petroleum to the Government. Besides, the production sharing contract (PSC) as well as the gas sale contract provides that price formula be benchmarked with the imported price of fuel oil, for a period of 12 months average, which is equivalent to $12/mBtu gas price currently. Current rates from Ravva/ Ravva Satellite fields expired on November 30, 2008, and new rates were applicable from December 1, according to the PSC. The PSC provides for price revision after completion of five years of gas supply. Before taking a decision on the price, the interest of all beneficiaries (customers) is required to be kept in mind. Some customers were opposing any upward revision. Till a final decision on revised price is not taken, the current price will prevail. GAIL buys 1 mscmd of gas from Ravva field and 0.9 mscmd from Ravva Satellite. Cairn’s partners in the fields that are off the Andhra Pradesh coast are ONGC, Videocon Industries, and Ravva Oil.

Petronet LNG to resume imports of spot cargos

March 6, 2009. Petronet LNG Ltd., has reportedly resumed imports of the fuel on the spot market after a two-month abatement to meet demand. Accroding to reports, Seri Angkasa, a 145,100 cubic-meter LNG tanker, is expected to arrive at the terminal in Dahej on the west coast of India on March 11 carrying a cargo from the Atlantic Ocean area. Petronet is resuming LNG imports as higher naphtha prices encourage use of gas as a substitute. Petronet buys about 6.5 mtpa of LNG from Qatar under multiyear contracts.

Policy / Performance

‘Oil auction suffer due to income tax break’: Deora

Mar 6, 2009. According to Murli Deora, the lack of an income tax break on gas production is hurting interest for the nation’s next auction of oil areas. There are plans to promote the auction in Europe.

‘Low prices may hamper NELP VIII’: Reliance

March 4, 2009. The forthcoming auction of oil and gas assets may not be very attractive for investors, as the explorers are finding it difficult to meet their existing work commitments amid the global credit crunch and falling crude prices. The Petroleum Ministry is aiming to launch the eighth round of the New Exploration Licensing Policy (NELP) in April. The major problem seen in NELP rounds is that people had been bidding as it were the real estate business.

POWER

Generation

BHEL wins order for Tirora thermal power project

March 9, 2009. BHEL has won a major contract for the manufacture and supply of generator transformers against stiff competition from European MNCs and Indian companies. Valued at Rs810mn, the order has been placed on BHEL by Powergen Infrastructure for the upcoming 1,980 MW (3x660 MW) Tirora Thermal Power Project of Adani Power Maharashtra Ltd. (APML). This is the second order won by BHEL in a gap of one month, for generator transformers for 660 MW supercritical sets. In February, the company had bagged an order for the supply of 7 single-phase generator transformers from NTPC Ltd. for its Barh Thermal Power Project. The present order envisages design, engineering, manufacture, supply and installation of 10 numbers 270 MVA, 400 kV single-phase generator transformers, which will be manufactured at the company’s Bhopal plant. Supplies will commence in December 2010 and the contract will be completed by December 2011.

Financial closure for Sasan UMPP by March end

March 8, 2009. Anil Ambani Group's Reliance Power Ltd is likely to achieve financial closure for the Rs 19,000- crore Sasan ultra mega power project in Madhya Pradesh by this month-end. For the 4,000-MW project, which is to be funded in a 75:25 debt-equity ratio, the company has tied up with different banks to raise Rs 12,000 crore and the financial closure will be achieved by March-end. The company in late January had said it would achieve the financial closure in a month's time. However, government officials said the entire land for the project has not yet been acquired and financial closure for the project cannot be achieved unless 3,285 acres is completely acquired. According to the project appraisal done on January 28 this year, only 275 acres had been acquired. The land for ash pond and township is left to be acquired. The Sasan project would be funded by a consortium of 10-12 banks, led by the State Bank of India, and includes domestic financial institutions such as the Power Finance Corp and the Rural Electrification Corp. Reliance Power had recently announced that the financial closure for its imported coal-based 4,000 MW Krishnapatnam UMPP is likely to be done by the end of June.

Officials worried whether hydel power can pull through summer

March 8, 2009. Hardly a week after implementing the Government Order to increase the hydel power generation to resolve the state’s power crisis, the officials at Karnataka Power Corporation Limited (KPCL) are now praying for early rainfall, considering the depleting water level at the major hydel reservoirs. The State Government might have found a solution to power woes by directing to increase Hydel power generation to meet the growing demand, but the KPCL officials and experts in Power department are worried whether the hydel power can pull through the summer as the State is drawing nearly 40 million units per day from them and this has led to the decrease in reservoir level. At Sharavathi, the biggest reservoir in the State, there was a good inflow in 2008 during monsoon, but as the monsoon ended soon, it decreased drastically. The water here now stands at 1782.6 feet against its capacity of 1.52 lakh million cubic feet and it is not much different with the other hydel reservoirs. The hydel power is usually utilised to meet the peak load demand, but considering the scarcity, the hydel power plants are contributing almost double its normal generation, but if it drops down there will severe scarcity and lead to the collapse of the state grid. On 5 March, 2009 the three hydel projects have contributed 43 million units of power and again on March 7 the contribution is 38 million units. Though the newly established Bellary Thermal Power Station was expected to bail out the state from darkness, the unit according to the KPCL needs to be seasoned.

Koodankulam N-power project to start supply by December

March 7, 2009. The Koodankulam Nuclear Power Project (KKNPP) is most likely to start supply of power by December 2009. More than 95 per cent of the works in the first unit had been completed and generation of electricity would most likely start from December 2009. Of the six reactors, of 1,000 MW each at the site, 900 MW of electricity generated from the first two units would go to Tamil Nadu and the remaining quantum would be shared by other southern States. Also, the number of reactors is likely to go up to eight instead of six as originally envisaged. NPCIL was planning for massive expansion programmes in the existing as well as new sites. NPCIL operates 17 units across the country with a total installed capacity of 4,120 MWe and is currently building five units with a total installed capacity of 2,660 MWe. At Jaitapur in Maharastra, six French nuclear reactors each with a capacity of 1,650 MW have been planned. Based on Indo-French agreement, NPCIL would have technical collaboration with Areva of France as a supplier and set up Areva-built European Pressurised Reactors with lifetime fuel supply at Jaitapur.

NTPC to invest Rs177bn in FY10

March 4, 2009. NTPC Ltd. is reportedly planning to invest Rs177bn for adding 750 MW of capacity by the end of this month. The state-owned power utility giant may borrow 70% of the amount it plans to spend. NTPC plans to add 750 MW of capacity by the end of this month.

Sahara to build mega power plant in Orissa

March 4, 2009. Sahara India Power Corporation Ltd., the subsidiary of Sahara India Pariwar’s real estate company Sahara Prime City Limited signed Memorandum of Understanding (MOU) with the Government of Orissa for setting up a 1320 MW (2 x 660) Coal Based Thermal Power Plant in Turla Tehsil of Balangir District, Orissa at an investment of about Rs56.04bn. To be built on an area of 1,500 acres, the Sahara Power’s Turla plant is planned to commission its first Unit of 660 MW by February 2013 while the second unit of 660 MW is expected to be commissioned within 6 to 8 months thereafter. The plant is planned to be set up through Joint Venture Participation with Power Companies from different parts of the world. Sahara India Power Corporation Limited will develop fuel based or non conventional power plants using the latest and emerging technologies. Sahara Power will set up a 5 MW Grid Interactive Solar Photo Voltaic Power Plant in Dhenkanal District of Orissa at an estimated investment of about Rs1.25bn. The Company has already received an in-principle approval from the Government of Orissa through Orissa Renewable Energy Development Agency (OREDA). Sahara Power has tied up with Solar Integrated Technologies Inc. (SIT) USA, as its strategic partner for supply and installation of the required plant and equipment. In addition to this, Sahara Power is also planning to set up 25 MW of Wind Power projects in Orissa through a reputed Wind Energy Company which has already set up wind masts at 7 locations. The company plans to proceed with the project once it receives data, gathered by the masts in next 6 to 9 months. Sahara India Power Corporation Limited has also proposed to set up a 2000 MW Coal based power plants in Jharkhand and Chhattisgarh at an estimated investment of Rs 80bn each. Sahara India Pariwar, considered as one of the most socially responsible corporates of the country, has plans, along with the setting up of the Mega Power Plant, to contribute to the welfare of the people of the Balangir district. The group with the aim of improving the quality of life of the local populace will develop pucca roads in the projects vicinity, make provision for potable drinking water and will also set up primary health and education centre. The Power Plant and its related infrastructure shall further attract investment in the region by Corporate Houses and Entrepreneurs in the Manufacturing, Real Estate, Service Sectors etc. by setting up of establishments, amenities and facilities, including Ancillaries and SMEs.

Transmission / Distribution / Trade

RPTL signs agreement with Western Region power utilities

March 9, 2009. Reliance Power Transmission Limited (RPTL), a wholly owned subsidiary Company of a Mumbai-based Reliance Infrastructure Limited (Reliance Infra), through its two SPVs, has signed Power Transmission Agreements (PTA) with eight beneficiaries from the Western Region for two Inter-State Power Transmission Projects, viz. Project B & C, under the Western Region System Strengthening Scheme – II (WRSSS – II). On the directive of Central Electricity Regulatory Commission (CERC), the Power Grid Corporation of India Limited (PGCIL), as the bid process coordinator, had invited tariff based competitive bids way back in year 2005 for establishing 400kV Double Circuit Transmission Lines of around 1500 Kms under WRSSS – II, in the Western Region, prominently in the States of Maharashtra (1000 Kms.) and Gujarat (500 Kms.), where the renowned players like Tata Power, Lanco, GMR, L&T, etc. had also participated in the bid.  On winning the project as the lowest bidder, RPTL, a wholly owned subsidiary company of Reliance Infra, obtained transmission license from the Central Electricity Regulatory Commission (CERC) and was entrusted to establish the transmission lines under the scheme. After prolonged deliberations with the Western Region beneficiaries, PTA has been signed now. With this RPTL will become the first ever private transmission utility to build these first ever 100% privately owned inter state transmission projects in the country and on completion of the projects as scheduled by the end of December 2010, they would facilitate the smooth flow of surplus power in Eastern and Northern Regions of the country to Western Region. Reliance Infra, which has been entrusted to carry EPC works for the project, has already commissioned its process to beat the deadline by marching ahead with the detailed engineering, designing and tower testing. Other required compliance activities to obtain necessary statutory clearances from various authorities are being undertaken by the project companies so as to facilitate Reliance Infra to commence with the actual construction work for the projects. These projects, once completed and commissioned successfully, will benefit Western Region constituents, which include, the Maharashtra State Electricity Distribution Company Limited, (MSETCL), Madhya Pradesh Power Trading Company Limited (MPPTCL), Gujarat Urja Vikas Nigam Limited (GUVNL), Chhattisgarh State Power Distribution Co. Limited (CSPDCL), Madhya Pradesh Audyogik Kendra Vikas Nigam Limited (MPAKVNL), Electricity Department, Govt. of Goa; Electricity Department, Administration of Daman & Diu and the Electricity Department, Administration of Dadra & Nagar Haveli.

Save energy, appeals power supply company

March 9, 2009. Power shortage worsening, the Chamundeswari Electricity Supply Company (Chescom) has now turned to the consumers in Mysore with a call to save electricity. Chescom made this appeal in the background of the need to improve power supply to students, who are affected badly from preparing for their approaching annual examinations, and to industries to maintain their wheels moving. In an appeal to the public, Chescom called on consumers to cut down power consumption wherever possible. The company’s officials have suggested using minimum number of lights in places of electrical installations, use of less power consuming CLF lamps, use power-efficient pumps, and keep open windows to allow natural light to enter in instead of using electricity. According to Chescom one unit saved is two units generated and a unit thus saved would help in accumulating power to meet the requirements of the much-hit student community. It could also help improving power supply to other hard hit sections in Mysore.

Diamond Power bags order for rural electrification works

March 9, 2009. Diamond Power Infrastructure Ltd. (formerly Diamond Cables Ltd.) informed about the receipt of Letter of Award for supply of equipment, materials and erection of Rural Electrification works under Diyungbra, Harangago, Jatinga Valley and Diyung Valley blocks in North Cachar hills District of Assam. This is one of the largest Rural Electrification Programmes in the country. This project is on build and transfer basis.

Transco spending Rs. 25 crore per day to purchase power

March 9, 2009. The unrestricted power demand in the State touched an all-time high of 230 million units (mu). Pooling power from all sources, APTransco could supply only 212 mu. As a result, Transco and distribution companies resorted to load shedding on industries wherever dedicated feeders were available, even while continuing a six-hour cut daily in rural areas. These measures saved 18 mu. The daily demand is likely to reach 248 mu towards March-end when agriculture load will go up as will domestic consumption. A sum of Rs. 25 crore was being spent everyday on purchases from the market. Transco stepped up hydel generation from Srisailam. As a result, hydro-electric stations, overall, contributed 33 mu. Following a directive to reduce the load, the discoms began consulting industries whether they wanted a two-day power holiday in a week or a load-shedding of three to four hours daily.

Power Grid to invest Rs12bn in telecom biz in 3 years

March 9, 2009. Power Grid Corp of India Ltd. (PGCIL) plans to invest around Rs12bn over the next three years in its telecom business. The company is in advanced talks with a couple of television channels for providing its network for video streaming facilities. The company will be providing its fibre-optic network mounted over its overhead transmission network to provide the required bandwidth to television companies to air their video content. PGCIL currently offers end-to-end leasing of bandwidth to telecom operators, through its overhead transmission infrastructure. It currently has a fibre-optic network length of 20,000 km and will take it up another 5,000 km by the end of the next financial year. By the end of the XIth Plan period (2012), the company is likely to have a network length of close to 30,000 km. PGCIL connects 128 cities in India including some remote areas in Jammu & Kashmir, Himachal Pradesh and the Northeast such as Assam, Manipur, Meghalaya, Nagaland and Tripura with 80% of these are overhead cables mounted on the company's existing power transmission towers.

KEC Intl bags two orders worth Rs3.65 bn

March 6, 2009. KEC International Ltd has bagged two orders worth Rs3.40bn from Power Grid Corporation of India Limited (PGCIL) and one order worth Rs 250mn from Central Organization for Railway Electrification (CORE), Allahabad. The first order worth Rs 1.85bn from PGCIL is for the Supply & Construction of 400 kV D/C (Twin) Kameng – Balipara & 400 kV d/C (Quad) Balipara – Bongaigaon Line (Part-I) associated with North East – Northern / Western Interconnector-I.  The line is to be constructed in the state of Assam 90% and Arunachal Pradesh 10%. The total length of lines is 127 Kms and the project is scheduled to be completed by November 2011. The second order worth Rs 1.55bn from PGCIL is for the Supply & Construction of 400 kV D/C Gandhar–Navasari Line, LILO of 220 kV D/C Kawas – Navasari & 400 kV D/c Navasari – Navi Mumbai Line (Part-I) associated with ATS Mundra Regional System for WR. The line is to be constructed in the state of Gujarat 90% and Maharashtra 10%. The total length of line is 251 Kms and the project is scheduled to be completed by December 2011. The order worth Rs 250mn from CORE, Allahabad is for Design, Supply, Erection, Testing & Commissioning of 25 kV A.C. Single Phase, 50 Hz. Traction Overhead Equipments, Switching Stations, Booster Transformer Stations and L.T. Supply Transformer Stations including foundations, structures and all ancillary equipments for Pathankot (Excl.) Jammutawi (Incl.) station of Ferozepur Division of Northern Railway under RE Project, Ambala. The total length of line is 100 RKM / 243 TKMs and the project is scheduled to be completed by September 2010.

Power consumption in Kerala at record level

March 5, 2009. Power consumption in Kerala is climbing to record levels despite the 30-minute daily load-shedding that has been in force for some time. According to officials in the Kerala State Electricity Board (KSEB), daily consumption touched 47.98 million units from an average of 42 million units recorded till February 22. The board is expecting the consumption to cross the 50-million unit mark when the load-shedding is lifted for nearly three weeks in connection with the SSLC examinations this month. The board had planned to reduce generation from hydro-electric power stations till June when the south-west monsoon is expected to set in. The cutback in generation was warranted by low water levels in the hydel reservoirs. The situation demands that KSEB will have to depend more on the national power exchange system than anticipated earlier to cater to the surging demand. Here again, the scenario is grim with other power-starved States also increasingly looking up to the system to meet their demand.

Kalpataru Power bags Rs3.73bn order from Power Grid

March 4, 2009. Kalpataru Power Transmission Ltd (KPTL) has announced that the Company has bagged orders worth Rs3.73bn from Power Grid Corporation of India Ltd (PGCIL) for supplying power transmission equipment. The company would be supplying and erecting transmission towers for 413 Kms and would also provide 765 KV S/C transmission lines associated with Sasan Ultra Mega Power Project for Silwar-Satna and Satna-Bina section. The work on the orders secured from PGCIL will commence from March 2009 and the project is scheduled to be completed within 27 months. The company has enhanced its installed manufacturing capacity from 54,000 MT p.a. in 2001 to 84,000 MT in 2005 and then to 108,000 MT p.a. in 2008. KPTL’s new capacity has been operational from September 2008 onwards.

Policy / Performance

OERC fixes new tariff for CPP power

March 10, 2009. To enable Grid Corporation of Orissa (Gridco), the bulk supplier of power in the state to source power from the Captive Power Plants (CPPs) and the cogeneration plants, the Orissa Electricity Regulatory Commission (OERC) has come out with a new tariff order for purchase of power. The Commission has fixed the price for procurement of power by Gridco from the CPPs at Rs 3 per unit while the tariff for purchase of power from the cogeneration plants Like Nilachal Ispat Nigam Limited and Aarti Steel has been pegged at Rs 3.10 per unit. The power procured by Gridco from CPPs and the cogeneration plants is meant for sale to the distribution companies in the state. For procurement of surplus power meant for power trading, OERC has set an indicative rate of Rs 3.50 per unit. However Gridco and the individual CPPs or the cogeneration plants can enter into further negotiations for an agreed price above this indicative rate on the condition that the price would not unduly vary from the indicative rate fixed by the Commission. The price of power purchase from the CPPs and the cogeneration plants declared by OERC would be effective from March 1 this year. The tariff for power purchase was fixed by the Commission earlier this month. OERC’s move to come out with the procurement price of power comes in response to Gridco’s plan to purchase 400-500 MW of power from the CPPs and the cogeneration plants to tide over any possible deficit of power in the state and ensure uninterrupted supply of power over the next four months. The current peak power requirement of power in the state is 2,800-3,000 MW while the non-peak demand stands at around 2,500 MW.

Govt. making all efforts to purchase power

March 10, 2009. The BJP government in Karnataka has been making all efforts to purchase power from available sources including Gujarat and Chhattisgarh to tide over the shortage. In the last two-and-a half months, the government has expended Rs 1,335 crore on power purchase from various sources. The state, which has been getting 200 MW from Jindal plant is expected to get another 200 MW by next month as the firm is commissioning its second unit. The daily demand for power has surged to 142 million units as against the supply of 133.3 million units. Karnataka has been witnessing unscheduled load shedding since about a month in the wake of shortage of power, and the opposition Congress and JD(S) are likely to focus on this issue against the ruling party in the Lok Sabha polls.

Eleventh Plan power capacity target unlikely to be met

March 9, 2009. The power generation capacity addition target of 78,700 MW set for the Eleventh Plan period is unlikely to be met.  It is believed that 40,000 MW is certainly achievable, 60,000 MW is a possible target but 78,000 MW looks a bit difficult.  Under the 11th Plan period, 59,693 MW is slated to come from thermal projects, whereas hydro and nuclear projects are expected to generate 15,267 MW and 3,380 MW, respectively. At present, the country has an installed capacity of 1,47,402.81 MW, including 93,392 MW from thermal, 36,647,76 MW from hydro, 4,120 MW from nuclear and 13,242 MW from renewable energy sources. Ensuring energy security is one of the biggest challenges that the country faces, especially in light of the volatility that the international energy market is currently experiencing.

Bigger Bench to decode electricity tribunal powers

March 9, 2009. A constitution Bench of the Supreme Court will consider whether the Appellate Tribunal for Electricity has the jurisdiction to deal with the validity of regulations framed by the Central Electricity Regulatory Commission. The Bench was hearing a case filed by power trading firm PTC India. The company had challenged a decision by the tribunal that it was not empowered to look into the validity of the regulations framed by the CERC. PTC had challenged CERC’s regulations that fixed trading margin in 2006. The tribunal had cited an earlier apex court judgement while expressing its inability to hear PTC’s plea against CERC.

The apex court had earlier held in the West Bengal Electricity Regulatory Commission case that the tribunal, which is a creature of statute, cannot question the provisions under which it functions. Considering the importance of the matter, it was necessary to refer the matter to a larger Bench to consider whether the West Bengal Electricity case can have application to the cases coming under the 2003 Act (Electricity Act, 2003), where the parties go before the tribunal in terms of Section 121 of the 2003 Act. The order of the apex court in the West Bengal Electricity Regulatory Commission case pertained to the Electricity Regulatory Commission Act, 1998. However, the issue of power trading margin falls under the Act of 2003. There was a conceptual difference between the provisions contained in the Acts of 1998 and 2003, PTC had said. It said that Section 121 of 2003 Act gives ample powers to the tribunal to deal with the matter. 

Tatas, Anil out of DPSC stake race

March 9, 2009. Speculation is already rife that three prominent bidders, Tata Power, Reliance Infrastructure and Torrent Power, are no longer proposition. None of them took part in the last bidders’ meeting of DPSC. The next bidders’ conference would be held.   Reliance Infrastructure and Tata Power are the top companies among private sector power utilities in India. Sixteen companies, which also include RPG Group flagship CESC, Coal India, JSW Energy, Srei Infrastructure Finance, Quippo Infrastructure Equipment, Jai Balaji, Patton and Karvy Stock Broking, had originally expressed interest in the DPSC stake.

Incidentally, JSW already has 32.6% of DPSC’s shares pledged to it by Descon, which happens to be DPSC’s single-largest shareholder. The consortium partner of Quippo, Environ Energy, holds around 6% stake in the power utility. It is not possible to specify the number of companies who will submit bids.  All 16 companies have been invited to attend the meeting on March 10. Some of the reservations about DPSC also arise from concerns about its future.

DPSC has a plan to add 500 MW (2x250 MW) in the next few years at a cost of Rs 2000 crore. Although it has identified the 200 acres necessary for this purpose, it has not yet acquired the 140 acres which it needs to buy since about 60 acres are there with it. Even the coal linkage is not there till date. Moreover, the distribution license of DPSC, the company’s most lucrative asset, is set to expire on December 2012. The state electricity regulator would then have to decide on the fate of the company. Besides, pollution control authorities and the regulator have directed DPSC to close down a 10 MW power plant, which the firm plans to do by June-July. Once that happens, DPSC’s effective capacity would become 30 MW.

Devoid of electricity, villagers threaten poll boycott in UP

March 7, 2009. The residents of a village in Uttar Pradesh have threatened to boycott the coming Lok Sabha polls if electricity is not provided in their area. Even 13 years after being inducted into Uttar Pradesh government’s Ambedkar Village development scheme, the Dalit dominated Khanpur Madho in Muhammadpur Deomal Block has not been provided with electricity as yet.

Ambedkar Village development scheme is a state government initiative that puts development on the fast track in select villages. These select villages, known as Ambedkar villages, benefit from every scheme announced by the state and central governments. The scheme was relaunched by Uttar Pradesh Chief Minister Mayawati last year after renaming it as Bhimrao Ambedkar Rural Integrated Development Programme.

Fresh twist to RIL, NTPC gas supply pact

March 7, 2009. Reliance Industries is reportedly willing to supply gas to NTPC at the Government-fixed rate of $4.20 an mmbtu. However, if this was to happen, NTPC must withdraw the pending case in the Bombay High Court and arrive at a court-administered settlement. NTPC and RIL are locked in a legal issue in the Bombay High Court over the implementation of a gas supply contract between them. NTPC wants RIL to supply the contracted quantum of gas mentioned in the letter of intent, which was signed by both companies in 2005. As per NTPC, RIL should fulfil its contractual obligation of supplying 12 mmscmd of natural gas.

NTPC is of the view that even if it wins the case against RIL and gets a binding contract, it will not be able to get the Centre to approve of the earlier contracted price of $2.34 an mmBtu. It fears that it will, instead, insist upon the Empowered Group of Minster’s decided price of $4.20 an mmBtu. RIL was also likely to amend its written statement filed in the RIL vs. NTPC case. Since this is at the trial stage, an amendment to the written statement could further delay the case and consequently the gas supplies to NTPC. The public sector major had approached RIL for gas supply when the injunction on gas supply was lifted by the court in February. This was, however, turned down by the latter. RIL took a view that due to the ongoing case, it was not bound to make any supply at the Government-approved rate of $4.20 an mmBtu.

CIL may join Ircon-Rites in rail project

March 6, 2009. As part of its product evacuation plan from Mozambique, Coal India is considering a proposal to join the Ircon International and Rites-led consortium constructing and rehabilitating the civil war ravaged rail system in Mozambique. Both Rites and Ircon are subsidiaries of Indian Railways. According to sources, the Rites-Ircon have recently approached CIL to pick up participatory stake in the Beira Railroad Company engaged in rehabilitating, operating and upgrade 850 km long rail line in central Mozambique, including Beira Port, to carry 12 million tonnes of coal annually at an estimated cost of $440 million. The Rites-Ircon duo holds 51 per cent controlling stake in the consortium. The rail system would be of immense importance for evacuation of coal from Mozambique to India. The official, however, stressed that a decision in this regard was still awaited. Efforts to secure comments from Ircon in this regard, remained unsuccessful.

Power firms head to Indonesia for coal

March 5, 2009. The enactment of a new, more liberal, mining legislation in Indonesia is drawing coal-starved Indian power utilities and coal firms to the island-nation in droves. Coal India Ltd (CIL), through its joint venture with NTPC Ltd, Steel Authority of India Ltd (SAIL) and NMDC, as well as trading major PTC India Ltd, are among utilities that are firming up plans for picking up stakes in Indonesian coal blocks. This comes in the wake of the new legislation, which proposes to open up a regime for foreign direct investment in coal mining in that country. Besides, Indian firms are hopeful of striking better valuations by taking advantage of the current slump in coal prices. Coal India Ltd, through its joint venture company International Coal Ventures Ltd (ICVL) and its internal Coal Videsh division, intends to acquire coal assets in Indonesia due to a combination of factors like availability of reserves, possibility of low cost opencast mining and cheaper ocean freight to India. The recent enactment of New Mining Law in Indonesia has also opened up a new regime for foreign direct investment in coal mining in Indonesia. The implications of New Mining Law are under examination by CIL prior to taking any investment decision. PTC India Ltd is also eyeing the opportunity to acquire coal mines in Indonesia. The new mining laws in Indonesia are favourable for foreign companies and coal prices have also stabilised from the levels seen last year, thereby opening opportunities to buy coal assets. Indonesia has reserves of coking coal and low-ash non-coking coal. Hitherto, foreign companies could pick up stakes in Indonesian companies that own mining assets and then work out coal evacuation arrangements from these mines. Indications are that the New Mining Law, the regulations for which are still to be formally announced, could permit direct participation by foreign companies in mines in Indonesia. ICVL, a special purpose vehicle floated by CIL, SAIL, NTPC, NMDC and Rashtriya Ispat Nigam (RINL), has been scouting for coal properties abroad for the last one year. The SPV has a paid-up equity of Rs 3,500 crore, out of which SAIL and CIL have contributed Rs 1,000 crore each, while the other three PSUs have contributed Rs 500 crore each.

Govt. allots coal block in orissa to Jindal Steel & Power

March 4, 2009. Jindal Steel & Power Ltd has announced that Government of India has allotted Ramchandi Promotional Coal Block in Orissa to Jindal Steel & Power Ltd. on February 27, 2009 for the proposed Coal to Liquid (CTL) project. The CTL project is yet another feather in JSPL's cap. The project will produce 80000 barrels per day (4.0 mmtpa) crude using environment friendly Indirect Coal Liquification technology developed by M/S Lurgi of Germany for the first time in India. This project, when completed, will enhance energy security by reducing dependence on imported crude. This project will require 30 MTPA washed coal for 80,000 barrels per day and the middlings & rejects will be used for generating 1350 MW power. The entire project cost is estimated to be around Rs 42000 crores including CTL plant, coal mining and power plant. This project will be based on Fixed Bed Dry Bottom Technology of Lurgi, which is best suited for Indian coal having high ash. It is worth mentioning that Lurgi, Germany has designed all Syngas production units for all currently operating FT plants all over the world. This is the only commercially proven technology for use of high ash coal worldwide and high ash fusion temperature of Indian coal is uniquely suitable to this technology. Also, this project will maximise diesel (upto 60-70%) production by using low temperature Fischer Tropsch (FT) process. JSPL is in advance stage of implementation of 6 MTPA mega steel plant at Angul and capacity of this plant is going to be increased to 12.5 MTPA. JSPL is the first Company to bring coal gasification technology to India for this proposed steel plant. Orders for 2 gasifier units on Lurgi for the upcoming steel plants in Orissa and Chattisgarh have been placed. The proposed CTL plant will be located in Tehsil Kishore Nagar, Dist. Angul, Orissa. The site has been selected keeping in mind availability of land, water, rail & road connectivity and is around 70 kms from Ramchandi Promotional Block. The proposed technology is extremely environment friendly as the crude produced by the process will have very low Polyaromatics. C02 will be captured and used in fertilizer industries / for inert purposes. 100% recycling of water is planned. Ash generated will be used for road building, brick making, cement manufacturing and back filling of mines. The technology involves almost 100% recovery of sulphur as elemental Sulphur which will be used in fertilizer industry.

State demands 8 battalions SF to protect projects

March 4 2009. Manipur government has demanded provision of altogether eight battalions of Central security forces for deployment in project areas of Tipaimukh Hydro Electricity Project and Jiribam-Imphal Rail Line in the North Eastern Council Steering Committee. In the meeting which chair by the Union Home Secretary Madhukar Gupta, state additional chief secretary, (planning and home) DS Poonia represent the state. Joint secretary MHA (Border Management) Jarnail Singh also took part. Deployment of at least four battalions each at the two projects sites above the presently stationing security forces was proposed by the state stressing the needs of flashing out militants operating in the areas where the projects are taking up. As per the government assessment reports, the area where the Tipaimukh project located is dominated by militant outfits, Hmar People Convention-Democratic (HPC-D) and Hmar National Army (HNA). Besides UNLF, NSCN(K), NSCN(IM) etc. are also actively operating. The controversial Tipaimukh Hydro Electricity Project located within Manipur bordering with Mizoram state under Purbung sub-division of Churachandpur district at the confluence of Tuivai and Barak River.

INTERNATIONAL

OIL & GAS

Upstream

Bangladesh approves Chevron gas investment plan

March 9, 2009. The state-run Bangladesh Oil, Gas and Mineral Corporation or Petrobangla approved an investment plan of U.S. energy firm Chevron to explore natural gas. The firm, which alone supplies almost 40 percent of total gas consumed by the country, will conduct a two-dimensional survey at block-7 that covers both onshore and offshore areas including world's largest mangrove forest Sundarbans. Of total daily gas production totalling nearly 1,825 mmcf, international oil firms supply about 920 mmcf while the rest is produced by domestic firms. The investment plan was approved after a continuing severe gas crisis halted operations of at least 300 manufacturing firms in southern Chittagong areas despite investment of more than $1 bn.

Maurel & Prom starts production from Onal in Gabon

March 9, 2009. Maurel & Prom reported that production at the Onal field began on March 9, 2009 with the opening of the first 11 wells on platforms PF-500, PF-700 and PF-900, at an initial provisional rate of 10,000 barrels per day at 100%. Oil processing and storage commenced at the Onal facilities on February 23, following the start-up of the Omko field (production of 3,000 bbl/d at 100%). The export pipeline (120 km) between Onal and the Coucal delivery point is currently being filled. The first oil is expected to arrive at Coucal before the end of the week.

Oselvar field development plan submitted to Norwegian authorities

March 9, 2009. Norwegian Energy Company ASA (Noreco) reports that the development plan for Oselvar has been submitted to Norwegian authorities. Noreco owns 15% of the field, and will book an additional 7.8 mn barrels of oil equivalents, a 24% increase in the company's 2P reserves. The field is expected to start producing in the fourth quarter of 2011, and will increase Noreco's production by 2,700 boepd. The reserves of the development are 52 mn boe. Noreco's share is 7.8 mn barrels (3.7 mn barrels of oil and 4.1 mn boe of gas), and these will be added to Noreco's proven and probable reserves (2P) at the end of Q1 2009. This excludes any contribution from the Ipswich discovery, which has significant add-on potential. There is also further exploration potential from identified prospects in the license. The total cost of the development is estimated to be NOK 4.7 bn, of which Noreco's share amounts to NOK 0.7 bn. The bulk of the capital investments will come in late 2010 and 2011. The investments in 2009 are limited, and are included in the guidance Noreco provided on 19 February 2009. The Oselvar field is located on the Norwegian continental shelf, close to the English border and 23 kilometers from the Ula Field.

OMV acheives first gas from Latif field in Pakistan

March 9, 2009. OMV, the leading energy group in the European growth belt, has announced along with its joint venture partners ENI and PPL the start of the extended well test of Latif-1 located in the Latif Block, about 100 kilometers from Sukkur in southern Pakistan's province of Sindh. OMV's current production in Pakistan amounts to approximately 17,000 boe/d. As part of the fast track development, the gas is routed via a 23-kilometer-long pipeline to the Kadanwari gas plant which is operated by OMV Pakistan and has sufficient gas processing capacity left for this additional gas. The local utility company SSGCL as a gas buyer will distribute the additional gas from Latif to the southern Sindh province. The new Latif gas reserves are the result of continuous successful exploration efforts of OMV together with its JV partners in Pakistan to enhance domestic gas production in Pakistan.

StatoilHydro makes North Sea discovery at Katla

March 9, 2009. Oil and gas have been encountered by StatoilHydro in the Katla prospect, which lies 11 kilometers southwest of the Oseberg South platform operated by the group in the Norwegian North Sea. Proven recoverable volumes are 50-80 million barrels of oil equivalent, with the bulk of the resources occupying the Tarbert formation in the upper Brent group. Oil and gas were found in this structure, while gas was also proven in Upper Jurassic reservoir rocks belonging to the Heather formation. The find will probably be developed and produced through a tie-in to one of the existing subsea installations in this part of the North Sea. Given that it lies close to an existing field and can quickly be brought on stream, this is a very interesting volume. Although the discovery has not been tested, extensive data gathering and coring have been carried out. Discoveries like this are important for maximizing the recovery of resources from the NCS, because they help to extend the production life of installations. Apart from StatoilHydro as operator with 49.3%, licensees in production license 104 are ConocoPhillips with 2.4%, ExxonMobil with 4.7%, Petoro with 33.6% and Total with 10%.

Nicaragua inks new offshore exploration deal

March 6, 2009. The government of Nicaragua signed an exploration and production agreement with Infinity Energy Resources on March 5, 2009. The contract is for the exploration of two separate licenses 40 miles off of the east coast of Nicaragua in the Caribbean Sea. According to the agreement, Infinity will invest $30 mn in exploration projects. The company will have exploration rights for six years, and if Infinity strikes oil, it will earn 30 years of production rights. Currently with no oil production, Nicaragua is dependent on fuel imports. Despite this, the exploration agreement was stalled by, but ultimately overcame, legal objections from local indigenous groups. According to Infinity's website, the Texas-based company was awarded the Caribbean concession in May 2003; and in May 2005, the company completed a development and production contract. Additionally, seismic interpretation to determine future exploration on the 1.4 million acre license commenced in 2007.

Lukoil says proven reserves fall to 19.3 bn barrels

March 6, 2009. According to Lukoil proven hydrocarbon reserves fell to 19.3 bn barrels of oil equivalent (boe) in 2008, but Russia's No. 2 oil producer more than replaced its annual production with new reserves. Its proven hydrocarbon reserves as of January 1, 2009 included 14.5 bn barrels of oil and 29.3 tcf of gas. Total hydrocarbon reserves fell from 20.4 bn boe a year earlier. Lukoil recorded an 875 mn boe increment in proven reserves last year, equivalent to 107 percent of annual production. The increase comprised 601 mn boe from geological exploration and production drilling and 274 mn boe from acquisitions. The evaluation was in compliance with PRMS (Petroleum Resources Management System) requirements. A drop in the Urals oil price to $34.8 per barrel as of December 31, 2008 from $93.7 per barrel a year earlier affected the economic feasibility of a portion of the company's reserves.

Downstream

Sinochem's Quanzhou refinery gets govt. approval

March 9, 2009. Sinochem Corporation has been approved to build a 12 mtpa oil refinery in Quanzhou, a coastal city in southeast Fujian province. The refinery, including a 12 mtpa distillation unit, a 1.4 mtpa coking unit and a 2.4 mtpa catalytic cracking unit, will start construction in June of this year and come on stream in 2012. The Quanzhou refinery would feed on crude oil imported from Saudi Arabia and Kuwait. The state-owned Sinochem, formerly a trading company, has been seeking opportunities to build itself into an integrated petrochemical firm. Close to Sinopec's 10-mln-t/y Fujian refinery and PetroChina's Jieyang refinery in Guangdong, Sinochem's Quanzhou refinery is expected to fuel competition in the southeast region. Sinochem's refinery would also shake the monopolistic status of Sinopec and PetroChina, China's largest refiners, in the wholesale of oil products, as Sinochem, which has no self-owned petrol stations, has no other choice but supply all of its refining products to the local private-run petrol stations.

Total to cut runs at European refineries

March 9, 2009. French oil major Total will reduce runs at its refineries operating in France by about 20 percent due to poor margins. The company will also cut runs by about 15 percent at its German refinery and by about 10 percent in its Dutch refinery. The run cuts would take place shortly, but did not say when they would start or how long it would last.  Total operates six refineries in France with total capacity to process more than 1 million barrels of crude oil a day. Its German Leuna refinery has about 227,000 barrels per day capacity and its Dutch Vlissingen refinery about 153,000 bpd. European oil refining margins sharply weakened last week due to falling demand for middle distillate products. Heating oil consumption has peaked after winter passed and overall demand for transport fuel such as diesel and jet fuel has been hit by weak amid due to global economic downturn. Total is looking at reorganising its refinery operations in Europe. It plans to announce a plan for 2011-2013 when it meets with unions.

China refining capacity to surge in next two years

March 6, 2009. China is to see crude refining capacity surge more than 50 mt in the coming two years.  China's oil products supply largely surpassed demands after Beijing 2008 Olympic Games, and some completed refining projects had to postponed production. For example, a 12 mt refinery of China National Offshore Oil Corporation (CNOOC) in Huizhou City of Guangdong Province will not start production until March 2009. Other projects to be put into production in 2009 and 2010 include a 10 mt refinery of PetroChina Company Limited in Qinzhou City of Guangxi Autonomous Region. Meanwhile, Sinopec Changling Company in Yueyang City of Hunan Province will expand its refining capacity. So will the Fujian, Wuhan, and Tianjin branches of Sinopec, and Fushun and Dushanzi branches of PetroChina situated in Liaoning Province and Xinjiang Autonomous Region respectively.

Work on Malaysian oil refinery complex to start in July

March 5, 2009. Work on a crude oil refinery complex, part of the Sungai Limau Hydrocarbon Hub (SULIHH) project off Yan will start in July. The project that would take three years to complete include a 320 km crude oil pipeline from Yan, Kedah to Bachok, Kelantan. Sungai Limau Hydrocarbon Hub (SULIHH) was formerly known as the Yan Petroleum Industry Zone (ZIPY). The Kedah population will gain from the offshore project as it will create artificial reef good for fish breeding. SULIHH would start operation after three years generating revenue of RM297 mn (US $ 80 mn) annually to the Kedah state government. The mega project is supported by two large oil companies namely Merapoh Resources Sdn Bhd (oil refinery) and Hijaz Refinery Sdn Bhd (oil storage). Investments in SULIHH was expected to reach some RM83 billion capable of offering numerous job opportunities to people in Kedah. The oil refinery project involves the construction of a 50 km pipeline to transport crude oil from Kuala Jerlun to Bukit Kayu Hitam.

Products of Vietnam's first oil refinery enjoy no cost advantage

March 4, 2009. Petrol products from Vietnam's first oil refinery will not be cheaper than imports due to the plant's high input costs. The first problem is that crude oil from Vietnam's major oil field, Bach Ho, is sold to the Dung Quat refinery at the same price as imports. The bigger problem is the distance from Bach Ho, located off the coast of the southern province of Ba Ria-Vung Tau, to the refinery in the central province of Quang Ngai. The two localities are separated by five provinces. Then from Quang Ngai, the oil has to travel half way up or down the country to reach the nation's major markets in Hanoi and Ho Chi Minh City. This trip is not much shorter than that between Vietnam and Singapore, where Vietnam gets 90 percent of its petrol products, so transport costs do not change either. The refinery opened late last month. At full capacity, daily output is expected to reach 6.5 mt, or 148,000 barrels per day. Its main products will include: LPG, unleaded gasoline, kerosene, jet fuel, feedstock for propylene plants, diesel and other petrochemicals like naphtha. The refinery is expected to meet only 25-26 percent of the country's needs. State-owned PetroVietnam, or Vietnam Oil & Gas Group, financed the refinery and will operate it.

Transportation / Trade

CNPC begins preliminary work on third West-East pipeline

March 9, 2009. China National Petroleum Corp. plans to invest more than CNY100 bn ($14.6 bn) in a third West-East natural gas pipeline. Preliminary work has already started on the pipelines, which will likely have an annual transmission capacity of 20 bn - 30 bcm of gas sourced from Central Asia. The pipeline will start in the northwestern region of Xinjiang and run parallel with the second West-East pipeline as far as Jiangxi province in eastern China. It will then take a different route to its final destination, mostly likely the coastal province of Shandong, although this has yet to be decided. It wouldn't terminate in Beijing as the capital is already well-served by three pipelines running from the gas-rich province of Shaanxi. CNPC's plans reflect China's desire to boost the share of natural gas in its energy mix and reduce its reliance on coal and crude oil, which are more polluting. The country's first West-East pipeline runs from Xinjiang in northwestern China to Shanghai. This was followed by a pipeline running more than 7,000 kilometers from Xinjiang to Guangdong province and Shanghai, transporting natural gas from Turkmenistan. The pipeline is due to be completed by 2011. In total, oil and gas pipelines operated by CNPC span more than 47,000 kilometers, and the company plans to almost double that figure by 2020. In addition to cross-border pipelines, China is building a string of liquefied natural gas receiving terminals along its coastline to receive term cargoes from Australia, Qatar and Malaysia as well as spot supplies. CNPC's unit PetroChina Co. (PTR) is close to a deal with Exxon Mobil Corp. (XOM) to buy 2 mmtpa of LNG from Australia's huge Gorgon gas field. CNPC plans to begin preliminary work on a cross-border gas pipeline from Myanmar to China in the fourth quarter of this year. Initial plans for the oil pipeline are for it to run from Myanmar's western port of Sittwe to Kunming city in Yunnan. Its initial capacity will be 20 million metric tons a year, equivalent to around 400,000 barrels a day. It will allow China to import oil from the Middle East or Africa without having to pass through the potential choke point of the Strait of Malacca. It would also mean big savings on shipping costs. However, it has proved difficult to source crude oil for the pipeline, and CNPC wants to press ahead with the natural gas pipeline first.

CNOOC to invest in S. China petchem plants, pipelines

March 6, 2009. China offshore oil specialist CNOOC will invest more than 300 bn yuan ($43.86 bn) in China's southern Guangdong province in the next five years. The investment would go mainly toward South China Sea exploration, Huizhou petrochemical projects and a natural gas pipeline. CNOOC would step up deepwater exploration in the South China Sea from 2009 and to invest 200 bn yuan ($29.24 bn) until the end of the next decade.

Oil thieves sabotage Chevron pipeline in Nigeria

March 6, 2009. Oil thieves sabotaged a Chevron-operated pipeline in the restive Niger Delta but no oil production was affected. Troops discovered oil spillages from a burst oil pipeline near the border of Bayelsa and Delta states in southern Nigeria. The spillages in these communities were an act of sabotage. Evidence around the spillage area showed that illegal oil bunkerers were again in operation. Nigeria is the world's eighth biggest exporter of crude oil but thieves take a sizeable proportion of its output by drilling into pipelines or hijacking barges loaded with oil, theft known locally as bunkering. Some estimates say 100,000 barrels of crude are stolen from the Niger Delta each day, about five percent of the country's production and equivalent to around $4 mn daily or $1.5 bn a year at current prices.

Spectra signs customer agreements for BC pipeline expansion

March 4, 2009. Spectra Energy Corp has executed firm Service Agreements with customers related to the proposed expansion of the company's Transportation North (T North) natural gas transmission facilities in northeastern British Columbia (BC). The T North expansion project will increase eastbound transportation capacity by 153 MMcf/d from Spectra Energy's McMahon Plant in Taylor, BC, to interconnections with TransCanada Pipeline and Alliance Pipeline near Gordondale, Alberta. The project also will increase westbound capacity by 112 MMcf/d from the McMahon Plant to Compressor Station 2 at the interconnection with the company's Transmission South system, near Chetwynd, BC.

Sakhalin II inks full-scale LNG deal with Osaka Gas

March 4, 2009. Sakhalin Energy Investment Company signed a sale and purchase agreement (SPA) for liquefied natural gas (LNG) supply to the Japanese company Osaka Gas. The deal calls for the supply of approximately 0.2 mtpa of LNG for a period of more than 20 years. As the second largest gas company in Japan, Osaka Gas manages over 56,000 km of gas transmission pipelines, serving nearly 7 mn gas customers in the Kansai region. With the conclusion of this deal, Sakhalin Energy finalizes the long-term sale and purchase agreements for trains 1 and 2 volumes. Signing of the SPA follows an earlier heads of agreement (HoA) that was signed with Osaka Gas in 2007. The Sakhalin Energy LNG plant inauguration ceremony was held on February 18, 2009. Approximately two thirds of all Sakhalin LNG will be exported to nine buyers in Japan, the world's largest LNG market. The remaining volume will go to South Korea and North America. The signing of this agreement and Sakhalin LNG deliveries under the deal fortify the trading and commercial relationship between Russia and Japan.

Gassco gets thumbs up to operate Kvitebjorn gas pipeline

March 4, 2009. Gassco AS has received consent from Norway's Petroleum Safety Authority for use of the Kvitebjorn gas pipeline. On July 2, 2004 Statoil ASA received the Petroleum Safety Authority Norway's consent to use the Kvitebjorn gas pipeline and Kvitebjorn oil pipeline. The background for the new consent is that Gassco now is the operator of the gas pipeline.

Palin unveils plan for $4 bn bullet line

March 4, 2009. Alaska Governor Sarah Palin unveiled a plan to encourage development of a $4 bn in-state natural gas pipeline that would precede the massive project that state officials hope will deliver North Slope natural gas to North American markets. It would be 24 inches in diameter and ship 500 mcf a day starting in 2015. But for the in-state project to be economically viable, Alaska's tiny in-state market must be much expanded beyond what exists in the cities along the urban corridor running between Fairbanks and the Kenai Peninsula. Such big users might include a revived Agrium Inc fertilizer plant in Kenai. Agrium closed the plant in 2007 for lack of natural gas feedstock. Palin has introduced two bills that she said would provide regulatory flexibility needed for the project. One would expand the mission of the Alaska Natural Gas Development Authority, a state agency that currently has a mandate of promoting a liquefied natural gas project that would deliver to a tidewater port, and the other would make changes to state right-of-way rules. The in-state project differs from the long-discussed North Slope gas pipeline that would deliver four bcf a day to an existing Canadian pipeline hub. Two groups are currently drafting plans for the big project, which experts say would cost about $30 bn. TransCanada Corp holds an exclusive state license that entitles it to up to $500 mn in state subsidies and an agreement that the state not negotiate with any other potential project sponsors. BP and ConocoPhillips, two of the three major North Slope oil producers, have teamed up to form a company called Denali that is pursuing a competing gas pipeline plan. Both groups envision having their lines in service around 2018.

Policy / Performance

OPEC members 80 pc compliant with cut

March 9, 2009. OPEC members had complied 80 percent with September's 4.2 mn barrel per day quota cut. Compliance would be higher once existing contracts had run their course. Another 1-mn barrel per day production cut would push the price of oil above $50 per barrel by the third quarter of the year. Public comments by OPEC oil ministers on whether a new round of production cuts would be announced after a meeting in Vienna have been contradictory.

Indonesia teams up with South Korea to boost energy activity

March 6, 2009. Indonesian President and his South Korean counterpart agreed to expand cooperation in the oil and gas sector, and revisions were made to benefit both countries. The agreement includes the contract to develop the oil block in West Madura in the East Java province, Indonesia, which involved firms from the South Korea and Indonesia. The Southeast Asia's largest economy has encouraged investment for oil-and-gas exploration by providing incentives to boost energy production to meet its rising demand for oil and gas. The growing population and booming economic activity in Indonesia has led to the rise of oil consumption, and the country has become a net oil importer since 2003 after it failed to find new blocks. Indonesia oil production has decreased to less than one million barrel per day since February 2008.

PetroChina held talks on Aruba refinery

March 6, 2009. PetroChina Co. Ltd. officials have met with Aruban Prime Minister to discuss a potential purchase of Valero Energy Corp.'s refinery on the island. The interest exhibited by PetroChina, the publicly traded arm of state-owned China National Petroleum Corp., is the latest example of China's eagerness to pursue energy assets overseas despite the country's contracting oil demand and the recent plunge in prices. Valero Energy, the largest oil refiner in the U.S., operates Aruba's sole refinery, which has the ability to process 252,000 barrels of crude oil a day. The refinery has been on the block for 16 months. The island is located 15 miles off the coast of Venezuela, and the refinery is geared toward processing low-quality crude oil from the South American nation. PetroChina has invested in crude oil exploration and production in Venezuela, which could give it access to crude that's well-suited for the refinery. Valero itself has stepped back from an aggressive plan to divest assets and currently has only its Aruba refinery on the block. Valero purchased the refinery for $495 mn in 2004 and has invested nearly $500 mn in it. However, it's difficult to determine a precise asking price for the plant.

POWER

Generation

Philippine hydropower project gets P860 - mn loan

March 5, 2009. The estimated P860-million mini-hydro electric power plant projects in Solong, Kapipian and Hitoma in the province of Catanduanes is now 65 percent complete. This swift accomplishment was carried out eventhough Suweco stalled its bank loan and waited for the interest to come down before it availed of the loan since the April 2008 Department of Energy (DoE) approval of its operating contract. Investments and construction came first prior to any funding and financial closing from banks, civil works had been done at a very early time and all electro-mechanical items have already been purchased and ready for shipment anytime. All these were carried out from the company’s own internally generated funds. Suweco’s previous plan was to complete the project using its own funds but due to the present decrease of interest rates, it opted to avail of the financing from the Philippine National Bank (PNB) in order to suffice the necessary financial requirements of as well as the other MHP with a total capacity of 107 (MW). With Suweco’s very strong commitment being an affiliate of Sunwest Group of Companies, the PNB on February 27, 2009 approved the loan on project financing which was based solely on the project’s profitability and project viability. It can be noted that the operating contract of the 3 MHPs in Catanduanes was signed by the DoE on April 2008 and was recently approved by the Energy Regulatory Commission.

Transmission / Distribution / Trade

Dubai electricity bills soar 66 pc in a year

March 4, 2009. Commercial and residential property owners and tenants in Dubai who failed to take energy saving measures a year ago will have seen their electricity bills soar by up to 66 per cent. On March 1, 2008 Dubai Electricity and Water Authority (DEWA) introduced a new tariff structure known as the slab system. It was aimed at encouraging energy consumers to use less by charging more. Average individual electricity usage at the time was said by DEWA to be 20,000 kilowatt hours per annum and 130 gallons of water daily, placing Dubai among cities with the highest per person consumption in the world. However, consumers, whether commercial, educational or residential, who did not introduce measures to reduce consumption will have seen electricity bills in some cases, soar in the past year by over Dh1 mn. Energy saving initiatives will play a leading role as companies seek to cut costs in a tight market. The survey shows a Dubai office tower of around 35,000 square metres on Shaikh Zayed Road, which had a previous annual electricity bill of Dh2.5 mn, has an increase over the past year of 65 per cent to Dh4.12 mn. Similarly, a hotel of around 20,000 square metres in the New Dubai area which had previous annual energy costs of Dh1.5 mn, has seen a rise of 66 per cent to Dh2.48 mn.

Treasury warns of big electricity hike in Cape Town

March 4, 2009. The Treasury has advised municipalities to budget for a substantial 25% increase in bulk electricity tariffs when preparing their budgets pending a ruling by the National Electricity Regulator of SA (Nersa) on the 2009-10 electricity tariff hike. The recommendation was made because it was unlikely that Nersa would be in a position to approve a revised electricity pricing structure before March 15 in order for the new tariff to be implemented from July 1 the start of the municipal financial year as required by the Municipal Finance Management Act. The Treasury stressed in a municipal budget circular for the 2009-10 medium-term revenue and expenditure framework that its recommendation was not an attempt to preempt the Nersa ruling.

Hawaii Island residents face electricity rate hike

March 4, 2009. Kauai’s electric utility plans to raise its base rates this year but is still calculating how much the increases will be. The Kauai Island Utility Cooperative filed a notice with the Hawaii Public Utilities Commission of its intent to seek a general rate increase. A base rate increase may be needed at this time to provide KIUC with financial stability during these difficult times and meet various challenges on the horizon. The utility plans to file a formal application with the PUC in May. The utility is still reviewing rate studies and it’s too early to say how much the base rate will change for its 29,000 customers. The utility is studying how to determine a rate structure that will assist it in shifting its reliance away from fossil fuels, continuing to promote energy efficiency, investing in renewable energy, and fulfilling the objectives and goals of the Hawaii Clean Energy Initiative. Kauai residential customers pay a base monthly rate of $9.72 and an additional 23 cents per kilowatt-hour. The county’s residential rate has fallen by more than half since reaching a high of 49.2 cents in August 2008. By comparison, on Oahu, Hawaiian Electric Co. customers pay 18.3 cents per kilowatt-hour.

Policy / Performance

Arab role needed to solve Iran nuclear issue

March 10, 2009. Experts felt that the stand-off over the disputed Iranian nuclear programme cannot be resolved without the engagement of Iran's Arab neighbours. U.S. policy turnabout towards direct talks with Iran has boosted chances of a peaceful solution but the involvement of Arab states was crucial. Arabs have historically mistrusted Iran but are split over how to deal with it. Iran says its nuclear programme is to generate electricity.

How N65 bn electricity subsidy will be shared in Nigeria

March 6, 2009. The federal government explained how it intends to share N65 bn electricity subsidy it approved under the Multi-Year Tariff Order (MYTO) for operators in the industry. The MYTO is the new tariff regime for the electricity industry which was approved for implementation from July 1, 2008.

The N65 bn is for the 2008/2009 period. Eight months after, no money has been released under the scheme to any operator in the industry, but sources confirmed that the money is now available at the Central Bank of Nigeria. The money will be shared among the Generation Companies both Governments owned and IPPs; the Transmission Company of Nigeria, TCN, that is responsible for wheeling electricity from generators to distributors and the 11 Distribution companies that are responsible for delivering electricity to consumers and revenue collection and administrative and Regulatory Agencies including PHCN and NERC.

Lagos to produce electricity accessories in Nigeria

March 5, 2009. The Lagos State government has concluded arrangements to begin manufacturing of electricity accessories towards boosting power supply in the state. The accessories would include transformers, meters, poles and cables needed to take electric to various homes across the state. The state government had entered a new partnership agreement with the private sector to commence the manufacturing of the accessories this September. Currently, quite a number of the transformers are imported and this ought not to be so.

Plunderers of power sector funds to stand trial in Bangladesh

March 4, 2009. The prime minister of Bangladesh, Sheikh Hasina said that the people who had spent Taka 20,000 crore in the name of power generation but did not generate a single megawatt of electricity during the regime of the BNP-led government must be tried for plunder of the money. The company owned by the former prime minister’s family installed only electric poles during her tenure but could not produce a single megawatt of power and the people who looted the money will be put on trial. Her government was considering whether electricity could be imported from neighbouring countries like Nepal and Bhutan under regional cooperation.

Electricity revenue shock for cities in South Africa

March 4, 2009. More than 10 years since restructuring of the electricity industry was mooted and after many delays in implementation, the government would amend the constitution to force the establishment of six regional electricity distributors (REDs). Electricity distribution is fragmented, with 187 muni-cipalities and Eskom providing supply.

The greatest concern for me is the backlog in infrastructure investment of about R27bn. Participation in the re- structuring, entailing transferring assets from municipalities and Eskom to the RED s, is voluntary, but municipalities are reluctant to give up electricity distribution assets as they are a big source of revenue. Because of this reluctance, the government was resorting to a constitutional amendment. The government would amend the constitution to speed up the process. The finalisation of the REDs Establishment Bill and the pending constitutional amendment are central in the restructuring of the electricity distribution industry.

Renewable Energy Trends

National

Astonfield plans to invest $ 2 bn on solar projects

March 8, 2009. US-based Astonfield Renewable Resources is planning to invest two bn dollars (nearly Rs 10,000 crore) in the next five years, and a major portion of it would be used for setting up solar power projects in India. Astonfield Renewable Resources Ltd (ARRL) has opened its offices in New Delhi, Mumbai and Kolkata making its Indian operations a prime focus in its global framework. ARRL is also looking at setting up similar solar projects in countries such as Kenya, Tanzania and Uganda over the next next 3-4 years. The company is currently developing two renewable energy projects in West Bengal a 10MW biomass plant at Gangarampur and a 5MW solar photo-voltaic plant at Bankura. The projects at Gangarampur and Bankura would require an investment of approximately $15 mn and $20 mn, respectively. ARRL is approaching all the major financial institutions for mobilising project financing. 

Solar energy at a Nascent stage in India

March 7, 2009. As per a report released by Netscribes (India) Pvt. Ltd. the demand for alternate sources of energy like solar has surged worldwide due to global warming and shortage of conventional sources. Solar energy accounts for less than a fraction of the total renewable energy installed capacity in India and is less affordable compared to other conventional and alternative energy sources.

However, due to tropical location and the government initiatives, India has the potential to become a solar hub. The report provides a snapshot of the solar power market in India, including the installed capacity, growth and value chain analysis.

Both, solar photovoltaic and solar thermal methods are covered in the report. Key trends and drivers in the solar power market are highlighted and a brief analysis of the major issues/challenges hindering growth is also included. Competitive landscape identifies the key players and highlights the investments proposed by each in solar energy.

eSolar to build 1,000 MW of solar power plants in India

March 6, 2009. eSolar, a producer of modular, scalable solar thermal power plants, has announced an exclusive licensing agreement with the ACME Group to build up to 1,000MW of solar thermal power plants in India over the next 10 years.

eSolar names ACME as a master licensee of its modular, scalable technology and grants the company the exclusive right to represent eSolar in India developing its own utility-scale solar thermal projects and working with other companies that want to build solar thermal power plants in India using eSolar technology. The agreement combines both companies' resources to enable complete project capabilities, ranging from technology development and component manufacturing to power plant construction and operation. Additionally, ACME will make a $30 million equity investment in eSolar. As a master licensee, ACME will build, own and operate solar thermal plants in India using eSolar's modular and scalable design and will work with other companies to build solar thermal power plants in India using eSolar technology. ACME has already signed power purchase memoranda of understanding for 250MW. Construction will start later in 2009 on the first 100MW of eSolar power plants.

Spanish wind turbine makers keen to supply components

March 4, 2009. In the light of global downturn squeezing demand in Europe, a delegation of 15 component manufacturing companies from Spain were in Chennai, to explore the possibility of supplying components to the Indian wind turbine manufacturing sector. Facilitated by the Spanish chamber of commerce, the delegation held a meeting with the Indian wind turbine manufacturers association (IWTMA).

Spain hosts the third largest wind energy industry in the world with a power output of 16000 MW. That translates into an industry size Rs.96000 crore in Rupee terms. Global giants like GE and Axiona source their components from Spain. The industry is looking at sourcing mainly critical components like hydraulics, bearings, gearboxes and switch systems from Spain. It also sees possibilities of engaging Spanish consultants in wind forecasting to predict power generation in a span of 48-72 hours. The Spanish companies, which are mainly mid-sized automobile component manufacturers, are also looking at setting up manufacturing units in India. As Indian manufacturers are not looking at localising their components in the near future, Spanish manufacturers setting up shop here would save them freight and duty costs.

Global

Qinghai to build world’s large solar power station

March 10, 2009. China is to build in the Qaidam Basin of Qinghai province the world largest solar power station at a cost of one billion Yuan. The first phase of the project will have a generation capacity of 30 MW, using amorphous silicon thin film and crystalline silicon technologies.

Greek solar project expanded from 1.6 MW to 10 MW

March 10, 2009. U.S. based SolFocus announced an agreement which dramatically expands its installation of solar Concentrator Photovoltaic (CPV) technology in the country of Greece. Originally announced in November 2008 as a 1.6MWp1 deployment between SolFocus and Samaras Group, this new agreement increases the size of the project to 10MWp in recognition of the distinct financial and energy generation advantages for CPV in the geographic region. This expanded agreement involves a joint effort between SolFocus, Samaras Group, and its engineering company Concept. The SolFocus CPV design employs a system of reflective optics to concentrate sunlight 500 times onto small, highly efficient solar cells. The SolFocus 1100S uses approximately 1/1,000th of the active, expensive solar cell material used by traditional PV panels. In addition, the cells used in SolFocus CPV systems have over twice the efficiency of traditional silicon cells. In a solar-rich country like Greece, such efficiency can accelerate the trajectory for solar energy to reach cost parity with fossil fuels.

TECO plans 25 MW solar power plant in Florida

March 10, 2009. Tampa Electric, has entered a partnership to build one of the largest solar power plants in the nation in Polk County. The plant will be built near Mulberry and will generate 25 MW of solar power, enough for more than 3,400 homes. The project will create about 200 jobs during construction. Once complete, the plant will employ 20 people. The utility's decision stems from new clean-air standards adopted by the state and plans to require the use of more renewable power in Florida.  Florida lawmakers are expected to pass legislation this session requiring electric utilities to generate a certain amount of power from renewable resources. The Florida Public Service Commission has recommended the state's utilities generate 20 percent of their power from renewable resources by 2020.

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