MonitorsPublished on Jan 02, 2018
Energy News Monitor | Volume XIV; Issue 29
Power reforms to Power Elections

Power News Commentary: November – December 2017


All the villages of Bihar would be electrified by the end of this month. By May 2018, electricity would reach 10,000 human habitations (“tola”) and not a single of these habitations would remain without electricity. This is part of the work on installing separate feeders for irrigation under the Centre’s Deen Dayal Upadhyaya Gram Jyoti Yojana, at an estimated cost of ₹ 60 billion.

The government had set a deadline of January 2019 for bringing down power losses due to theft and unmetered supply to 15 percent of the total generation in the country. The deadline was fixed at a meeting of Power Ministers of all states as some states had more losses than others. UP suffered a loss of 21 percent. The main reason for power losses were theft and unmetered supply of power. In ideal world, the power losses should be down to 5-6 percent.

Moody’s Investors Service and its Indian affiliate, ICRA said that their stable outlook for the power sector in India over the next 12-18 months reflects their expectation of generally stable industry conditions and government policy initiatives. Improvements in the financial position of state-owned electricity distribution companies are likely to be seen in this period. The Indian government’s debt restructuring of the financially weak distribution utilities under the Ujwal Discom Assurance Yojana (UDAY) will gradually improve the financial conditions of state-owned distribution companies, thereby alleviating off-taker risk, which is a key negative factor for the credit quality of power generators, Moody’s said.

Power ministry may ask discoms to accept the revised tariffs quoted by power plants to win coal contracts in auctions without waiting for the regulator’s nod. Under the scheme, power plants have to amend PPAs with distribution companies to factor in the discount in tariffs offered by them during the auction. As per the scheme, state-run miner CIL has to issue letters of intent to the power companies within 15 days of conclusion of the auction and the companies have 45 days to amend the PPAs and get approval of Electricity Regulatory Commission. CIL will have 30 days to convert the letters of intent into fuel supply agreements. The move is being planned in the backdrop of a three-month delay in approval of the bids by CIL’s board that led to worry that some plants might have to shut down in absence of coal supply. The board approved the winning bids of a bunch of power producers including Adani Power, GMR Energy and KSK Energy that quoted PPA the highest discount in electricity tariffs to receive coal from CIL.

In order to add pace to the Prime Minister’s Saubhagya scheme to electrify over four billion households across the country in one year, UP has decided to set up committees in each district and encourage competition among them to emerge as the best performer on set parameters. Out of the 41.2 million un-electrified households to be covered under the scheme by December 2018, 15.6 million households are in UP. Electricity is a major issue in UP and ‘Saubhagya’ is seen similar to the electrical success as Gujarat Chief Minister by bringing 24X7 power in Gujarat villages. UP has 52% electrification, only better than Bihar (48%) and Jharkhand (45%). The maximum un-electrified households in UP are in Azamgarh (521 000), Bahraich (489,000), Lakhimpur Kheri (430,000), Ghazipur (429,000) and Jaunpur (403,000). Districts like Sonbhadra, Saharanpur, Jalaun, Jhansi and Lalitpur are the least electrified ones in UP. Under the Saubhagya scheme, poor families in both urban and rural areas are to be provided metered electricity connections free-of-cost while above-poverty-line families in rural areas are to be charged ₹ 50 per month for 10 months for the same.

Punjab reiterated the Congress government’s commitment to providing electricity to the state industry at ₹ 5/kWh claiming the required modalities to implement it were being worked out. Without elaborating on the reasons behind the delay in issuance of the notification to bring down the cost of power for the industry from existing ₹ 6.12-₹ 7.39/kWh to ₹ 5/kWh the government said it is keen on implementing the proposal. According to the Punjab State Power Corp Ltd (PSPCL), offering electricity at ₹ 5/kWh to the industry, along with other subsidies being offered in the state, would increase the annual subsidy bill of the government to over ₹ 13,000 billion. The subsidy to be given to the industrialists would add around ₹ 28 billion to this bill.

In a bid to end the bane of power outages even at a time of surplus production, the government will bring in a law to penalise discoms in the event of their indulging in “gratuitous load-shedding”. Such penalties are part of a road map being prepared by the government to fulfil its vision of providing uninterrupted electricity for all. Ethical obligation of the discom as the sole license holder to provide uninterrupted power would now be made into an enforceable service obligation by introducing in the Electricity Act, 2003, such a penalty for outages without good reason. To gear up to meet the demand of uninterrupted power for all, the system needs to be strengthened on all sides. Changes were being proposed to the Act to remove human interface in billing, metering and collections by introducing prepaid systems that would help poor consumers and smart metering, as well as cap the permissible limit for factoring in discom losses in the tariff policy.

State Power Minsters have resolved to prepare a plan to reduce cross-subsidies by March 2018 as per the guidelines in the tariff policy, which would reduce the power rates for commercial and industrial consumers. The resolution to adopt an action plan to realise the changes made last year to the Electricity Act providing for a lower cross subsidy level of 20 percent was one among other reforms agreed on at the states’ Power Ministers meeting. Cross subsidy, which currently can be as high as 200 percent in some cases, is the mechanism by which industrial and commercial consumers pay higher tariffs that subsidise the lower charges paid by domestic, agricultural and other users. The power ministry advocated standardising electricity tariffs across the country. Many states have agreed to reduce the number of slabs for selling power.  Cross subsidies in the tariff policy will be phased out to bring it down to 20 percent in the first phase.  Power will be made available to industry at a reasonable cost to ensure the success of the ‘Make in India’ programme. The states resolved to clear all government dues of discoms for the current year along with 25 percent of arrears so that all previous dues are paid off by March 2019. The power sector accounts for a major chunk of the non-performing assets, or bad loans, in the Indian banking system that have crossed a staggering ₹ 8 trillion.

The government has set up a high-level committee headed by NITI Aayog CEO to address the problem of stressed assets in India’s power sector. NPAs in power generation accounted for around 5.9% of the banking sector’s total outstanding advances of ₹ 4.73 trillion, according to the second volume of the Economic Survey 2016-17 released in August. Tackling the issues that afflict the so-called stranded power assets will provide much-needed relief for Indian banks weighed down by bad loans. A total of 34 coal-fuelled power projects, with an estimated debt of ₹ 1.77 trillion, have been reviewed by the government after being identified by the department of financial services. Issues faced by these projects include paucity of funds, lack of PPAs and absence of fuel security. Experts said that PPAs hold the key to solving the problem of 60 GW of stressed assets across fuel sources. Of India’s installed power generation capacity of 331,118 MW, 58%, or around 193,426 MW, is fuelled by coal. Gas-based and hydropower projects account for 25,150 MW and 44,765 MW, respectively. The recently launched Saubhagya programme, which aims to provide electricity connections to more than 40 million families by December 2018 is expected to boost underutilized power plants.

Consumers will be able to change their power suppliers just like telecom services, after proposed amendment to the existing Electricity Act is approved. The power ministry will push Electricity Amendment Bill in forthcoming Budget session, which provides for segregating the distribution network business and the electricity supply business. The separation will pave the way for introducing a new system where consumers will have option to choose from multiple electricity service providers in their areas, similar to that of telecom services. Amendments would also provide for stricter enforcement of RPO. Besides, the bill will also provide for making tariff policy mandatory to keep cross subsidy below 20 percent. It means that difference between highest and lowest tariff rates should not be more than 20 percent. This will help to make industrial tariff reasonable which is unsustainable at present. The bill would also provide direct benefit transfer of subsidy to farmers to improve efficiency in power consumption. It also seeks service obligation on part discoms (distribution companies) to ensure reliable power supply service by March, 2019. The per capita consumption in the country will also increase in future. It is 1,075 kWh in India as against 5,000-6,000 units in Europe and around 1,1000 units in the United States. Village electrification in Jammu & Kashmir will start in March or April. And in Arunachal Pradesh, it will be completed by January or February next year, excluding areas affected due to snow fall. The power ministry has identified some states where leakages or losses are more than 21 percent and written a letter to them for reduction of these losses. AT&C loses should not be more than 5 to 7 percent otherwise it can be construed that there is theft of power, Singh said. In order to deal with this issue, the government is promoting pre-paid and smart meters. The power ministry has asked the states to reduce their AT&C losses below 15 percent by 2019.

The government may allow power plants to pass on their investments in equipment to meet stringent environmental norms to consumers, and such costs will not be included during preparation of dispatch order to ensure these plants remain competitive. The government is expected to soon issue an advisory in consultation with the Central Electricity Regulatory Commission towards this. Power producers had sought a clarification from the ministry and the regulator to incur the costs for meeting the environment norms. The projects would require an estimated ₹ 700,000 to ₹ 1,000,000/MW capital expenditure to meet the norms and the clarification was required to comfort lenders, the producers had told the ministry. The capital expenditure is estimated to raise the tariff by about 0.20-0.30/kWh.

The Congress party has alleged the BJP Gujarat government “squandered ₹ 260 billion of the public exchequer” by purchasing electricity from four private companies at “unimaginably high rates”. The companies in question Adani, Essar, Tata and China Light & Power. None of the companies responded to the allegations, made in Ahmedabad. The reported payments are ₹ 108.96 billion to Adani, ₹ 42.82 billion to Essar, ₹ 84.91 billion to Tata and ₹ 19.66 billion to China Light, over 2013-16. State-owned power plants had a capacity to generate 8,641 MW but were operated at a mere 33-38 percent capacity in those three years. Power was bought from these private companies at ₹ 24.67/kWh many times more than what was charged by the government-owned NTPC.

Reliance Power said it has completed signing of agreements to execute first phase of its $1 billion power project in Bangladesh. It said the integrated project entails an investment outlay of over $1 billion, which represents the largest FDI in Bangladesh and the largest investment in Bangladesh’s energy sector. Reliance Power will relocate one module of world-class equipment procured from internationally reputed original equipment manufacturers for its 2,250 MW combined cycle power project at Samalkot in Andhra Pradesh for the Phase-1 project in Bangladesh. Reliance project will give a tremendous boost to the economic and industrial growth of Bangladesh and will enhance the energy security of the country with clean, green and reliable LNG based power.

The Adani Group dismissed Congress’ allegation of charging exorbitant electricity tariff in Gujarat, saying it sold power to the state at a “very attractive” price of ₹ 2.65/kWh over the last four years. Adani Power Ltd sells electricity to Gujarat under long-term power purchase agreements, entered through competitive bidding and duly approved by Regulatory Commission. Adani Power offers one of the cheapest power supplies, and went on to list the price charged in last four years — ₹ 2.71/kWh in 2013-14, ₹ 2.64 in 2014-15, ₹ 2.57 in 2015-16 and ₹ 2.67 a unit in 2016-17.

UP energy watchdog has spared the industrial sector from power tariff hike for 2017-18 even as it announced a 12 percent increase in the average tariff payable by the sector across board. The exemption in power tariff not only provides relief to the industrial sector, but it also places the government on a better footing right ahead of the global investors’ meet that is slated to take place on February 21 and 22 in 2018. The two-day mega event is expected to attract investments into the state. However, the recent average hike has been the steepest over the past three years. In the preceding financial years- FY16 and FY17- the average increase stood at 5.47 percent and 3.18 percent respectively. The UPERC has also approved a power tariff hike of 63 percent and 67 percent for the unmetered rural domestic and commercial consumers. The move is expected to encourage customers to migrate to the metered segment, offering a lower tariff hike of 57 percent and 43 percent respectively. The ‘Power for All’ pact signed between the state government and the Centre aims at providing power supply to every household in UP. This seems to be a mammoth of a challenge, given the total number of power consumers in the state is estimated to burgeon from existing 18 million to 40 million by 2019-20. Meanwhile, urban consumers would bear a power tariff hike of 8.49 percent (domestic) and 9.89 percent (commercial). Likewise, the Commission has also increased the fixed charges on power connection to partially remunerate the beleaguered discoms in UP. Giving relief to the social sector, the energy watchdog has exempted shelter homes, orphanages, old age homes and similar institutions from commercial tariffs- a move that would effectively reduce their power bills. The new tariffs would be effective after seven days of issuing a public notice on the matter by the UPPCL. At present, the UPERC approves new power tariffs based on the aggregate revenue requirement (ARR) filed by power utilities that has details on estimated income, expenditure, power demand and supply, among other relevant data. Last year, domestic power consumers were spared from a power tariff hike. Tariffs remained unchanged for the large and heavy industries as well. However, the small and medium enterprises (SMEs) had witnessed their tariffs rise by almost 4 percent.

The UPERC has adopted ₹ 7.02/kWh as the solar tariff for the year 2015-16 for nine bidding companies who have already commissioned their projects for 12 years. For the remaining six bidders, whose projects have not been commissioned, and which the UPPCL wants to terminate, the commission said that since these companies had filed petitions against the pre-termination notices and the matter is under its consideration, it will pass necessary orders on them separately. Of the nine companies who have commissioned their projects, Essel Infraprojects is set to gain as it was the lowest bidder at ₹ 7.02/kWh, while Adani Green Energy was among the highest at ₹ 8.44/kWh.

As part of the ongoing process to deal with the issue of massive stressed assets in the sector NTPC has floated a tender to acquire commissioned stressed coal-fired thermal power plants. Of the 40 GW stressed thermal power generation capacity, around 12 GW capacity worth around ₹ 500 billion commissioned after April 1, 2014 is eligible under this tender. NTPC will shortlist the suitable operational domestic power assets located for possible acquisition. As per the tender, each plant size should be at least 500 MW. The power sector accounts for a substantial chunk of the NPAs, or bad loans, in the Indian banking sector, which have reached a staggering level of over ₹ 8000 billion.

The Indian Railways will start tendering 8,000 km of rail lines for electrification every year, starting next financial year, to complete the network electrification target in the next five years. In a first, the contract size that will be awarded on the government-funded EPC model, will be mostly in the range of 1,500-2,000 km to achieve faster completion. The railways, which currently has a fuel bill of ₹ 265 billion, will save ₹ 105 billion in fuel bill annually by electrifying its entire route. The cost for electrifying would be around ₹ 300-350 billion. Railways is aiming to cut project cost by at least 20% by offering large contracts. Railways to invite tenders for electrifying 8,000 km every year from next fiscal. To raise the required funds, railways would deploy funds raised from Life Insurance Corp of India and Indian Railway Finance Corp towards electrification. The national transporter could also go for borrowings from Rural Electrification Corp.

Rest of the World

Scottish and Southern Electricity Networks is taking to the skies to improve the resilience of its electricity networks. Working with NM Group, SSEN is using innovative aerial 3D laser scanning technology (LiDAR) to survey its entire overhead electricity network and is using this data to carry out preventative works designed to minimise the risk of tree-related power cuts to customers. Using a fleet of specially equipped aircraft, the LiDAR system uses light sensors to create extremely accurate and detailed maps, revealing the exact distance – to as little as 2cm accuracy – that trees and other vegetation are positioned next to SSEN’s overhead electricity lines in the north of Scotland and central southern England. In central southern England, SSEN has now flown 99% of its network and processed this data to directly inform its tree-cutting programmes and improve the resilience of the electricity network.

Tanzania’s power utility said it had started to restore electricity to parts of the country after the East African nation was hit by a country-wide blackout. TANESCO apologised for the power outage, but did not explain what caused a “technical glitch” in the national power grid that left the region’s No. 3 economy in a blackout that lasted more than 12 hours. TANESCO said it had also restored electricity in the administrative capital Dodoma, as well as Iringa region in the centre and Tanga in the northeast. Tanzania’s energy infrastructure has suffered from decades of underinvestment, neglect and corruption allegations, and investors have long complained the lack of reliable power hurts business there. Tanzania aims to boost power generation capacity to 10,000 MW over the next decade by also using some of its vast natural gas and coal reserves.

The Brazilian government is looking at all options, including large batteries, to help northern Roraima state with power supplies after a series of blackouts in recent months largely related to its dependency on cash-strapped neighbour Venezuela. Roraima is the only Brazilian state not connected to the national power grid. Its capital, Boa Vista, and most other cities in the state are supplied by power produced in Venezuela and transmitted through a line that was opened in 2001. Documents produced by a Brazilian government committee monitoring the power sector show the state suffered 17 large-scale power outages since August. The documents said only one instance was not related to Venezuela. The situation underscores how Venezuela’s economic collapse is affecting its neighbours The government plans to award a new license early next year for the construction of a power line to connect Roraima to the grid.

French consumers could save as much as €2.5 billion ($3 billion) a year if the government stopped setting electricity prices, France’s association of independent power producers Anode said. A decade after liberalisation, former monopoly EDF retains an 84 percent share of the retail power market, with the vast majority of its customers on regulated tariffs. A study commissioned by Anode said that if all retail customers on regulated tariffs were to switch to the most competitive market offer, their combined gain in purchasing power would add up to €2.5 billion. Anode proposes scrapping regulated tariffs for new contracts from next July and ending them completely by mid-2022. In Britain, the government has said it plans to impose a price cap on the energy market to help millions of households. EDF is also one of the “big six” energy providers in the British market. Anode has also filed a claim to overturn power tariffs with the State Council, but the court has yet to rule on that.


Essar Oilfields starts drilling in Mercator’s Cambay wells

December 26, 2017. Essar Oilfields Services (India) Ltd (EOSIL) announced that it has started work on a contract awarded by hydrocarbons explorer Mercator Petroleum to drill two firm oil wells plus one optional oil well in Gujarat’s Cambay Basin. EOSIL said that with the company commencing a few other drilling contracts during the current fiscal, EOSIL is expecting to clock revenues of $48 million in this fiscal. Mercator Petroleum owns two oil and gas blocks in the Cambay basin and also operates offshore oil blocks. According to the company, the newest land rig in company’s fleet, the ‘Essar Rig MR01 (1000 HP) has started drilling the first well for Mercator’. In addition to its 15 land rigs, EOSIL also operates an offshore rig that is semi-submersible and capable of drilling in water depths of up to 1,600 feet and drilling depths of up to 25,000 feet, which is currently deployed on a three-year contract with state-run explorer ONGC.

Source: Business Standard

PM Modi asks people to use public transport, save fuel costs

December 25 2017. Prime Minister (PM) Narendra Modi advocated the use of public transport to save on fuel and costs associated with the import of petroleum, saying travelling on a metro train should be a “prestige issue”. Launching a 12 km stretch of Delhi Metro’s Magenta Line here, he said governments incur a lot of cost in creating infrastructure but when it is ready it benefits generations to come. Addressing a public meeting, Modi said, by 2022, when India celebrates its 75 years of Independence, he wants to cut down on imported petroleum products. He said a multi-modal transportation system will ensure that use of fuel is cut down, which will help the common man save money and also be useful for the environment.

Source: Livemint

OMCs are seeking transfer of all central minimum pay cases to apex court

December 23, 2017. Given that some fuel retail outlet owners have approached the judiciary to appeal against the rule set by oil marketing companies (OMCs) to pay central minimum wages to outlet attendants, the OMCs have moved the Supreme Court seeking to transfer all such petitions to the apex court in New Delhi. OMCs increased dealer margins in August and a part of the margin was meant to ensure minimum wages for attendants. Commissions were increased by up to 55% through a formula allocating higher commission per litre to outlets having low sales volume. The revised commission was meant to pay central minimum wages unlike the earlier practice wherein an average of wages fixed by the states was paid and was lower than central pay. However, some fuel retail owners contended that they cannot be forced to pay central minimum pay to attendants under marketing discipline guidelines (MDGs). As per the person quoted above, about 10-12 high courts were approached across the country. The courts have directed not to take any coercive action against the petitioners which means OMCs cannot act against these individuals. The cases filed with the High Courts of Madhya Pradesh, Jammu and Kashmir, and Orissa have been petitioned to be moved to the apex court.

Source: The Financial Express

Green tribunal dismisses plea against IOC’s LPG terminal at Puthuvypeen

December 22, 2017. The National Green Tribunal dismissed the application of the LPG (liquefied petroleum gas) Virudha Samara Samithi against Indian Oil Corp (IOC)’s LPG import terminal at Puthuvypeen. In the application, the leaders of the Samara Samithi, wanted the tribunal to direct IOC not to implement the project. However, the tribunal refused to countenance the demand. The tribunal found no substance in the allegation that the project posed safety threats to the residents of the area. The tribunal upheld Indian Oil’s contention that storage of LPG is a permitted activity at the seashore under the CRZ norms and hence the project does not in any way offend those norms. However, the tribunal has observed that the company may undertake sea protection measures to arrest erosion at the project site. With this, IOC has overcome all the legal hurdles to the project. Earlier, the tribunal had also dismissed the Samara Samithi’s appeal against the extension of environmental clearance to the project. Samara Samithi preferred an appeal before the apex court against this. The Supreme Court, however, dismissed the appeal even without admitting the same. Though there was no stay against developing the project, the Samara Samithi had been obstructing the development of the project for more than 10 months now. IOC is stated to have suffered a loss of ₹ 1 crore per day on account of the delay. The project was conceived to meet the increasing demand for LPG in the country. For now, the oil major is transporting LPG by road in bulk LPG carrier trucks from a similar facility at Mangaluru.

Source: The Hindu Business Line

After a three-year dream run, Modi’s luck may slip on oil next year

December 22, 2017. In less than a year of Narendra Modi becoming the Prime Minister in May 2014, the price of the Indian basket of crude oil crashed from $113 per barrel to $50 by January. That was a bonanza for a government struggling to manage fiscal deficit and planning large social-sector spends. When prices came down, opponents attributed it to Modi’s luck and not his performance. Modi’s run of luck went on, and the oil prices tumbled to $29 by January 2016. After a three-year lucky run, he is running out of it. Tightened by OPEC-led production cuts, oil is sensitive to all kinds of shocks. Prices have already touched the above-$65 mark. India’s import bill has gone up and so has the current account deficit. 2018 could be an unlucky year for Modi so far as oil is concerned. His vanishing oil luck will hit overall economic prospects too. India is heavily dependent on imports for a large chunk of the crude oil that it consumes. In 2016-17, around 82.1 percent of the oil consumed in India, was imported. The rising oil prices in the global markets have caused the oil import bill to grow 15% in the second quarter ending September 2017 to $23.7 billion from $20.5 billion in the same period. A bigger oil import bill contributed to India’s current account deficit doubling to 1.2% of GDP (Gross Domestic Product) or $7.2 billion in the September quarter from 0.6% of GDP or $3.5 billion in the same period in 2016. The current account deficit is expected to widen and end the fiscal year at 1.7-2.0% of GDP.

Source: The Economic Times

To fuel Mauritius, stay lifted on exports from ONGC Mangalore refinery

December 20, 2017. The Karnataka High Court allowed a ship loaded with petroleum products to set sail, averting an energy crisis in Mauritius. The island nation recently lost a Singapore arbitration award to local shipping company Betamax worth $120 million. Betamax sought to attach the fuel worth nearly $40 million from Oil and Natural Gas Corp (ONGC)’s Mangalore refinery meant to be shipped to Mauritius to recover its dues. Betamax, which primarily ships oil from Mangalore to Mauritius, got its contract under the previous regime in Mauritius. The deal was cancelled when the regime changed. The company challenged the cancellation and won the $120 million award. Betamax then filed suit in India to attach the petroleum products, which belong to the Mauritius State Trading Corporation from the time they are loaded onto the ship. Since India is a signatory to the New York convention of arbitration, the immediate response was to stay the shipment and grant Betamax recovery rights. Mauritius depends entirely on India for oil products and only has a reserve of about 30 days, said an expert. It has a tie-up with ONGC subsidiary Mangalore Refinery and Petrochemicals Ltd for fuel supplies.

Source: The Economic Times


GEECL aims to raise production with Rs 25 bn investment

December 26, 2017. Great Eastern Energy Corp Ltd (GEECL), India’s first producer of natural gas from coal seams, will invest up to Rs 2,500 crore over the next three to four years to raise output, its CEO (Chief Executive Officer) Prashant Modi said. The planned capex of Rs 2,000-2,500 crore will be for “drilling 144 new wells and laying internal pipelines” in GEECL’s Raniganj block in West Bengal, he said  GEECL, the first to start coal-bed methane (CBM) production in India in 2007, produces 0.57 million standard cubic metres of gas a day at the Raniganj block. The company has so far drilled 156 wells on the block which has gas reserves of 2.6 trillion cubic feet in place, he said. The government has so far awarded 33 blocks for extracting CBM but only three have started production so far. While GEECL has been producing CBM for 10 years now, Essar Oil last year produced about 9,00,000 cubic metres a day from another block in Raniganj, RG(E)-CBM-2001/1. Reliance Industries Ltd (RIL) began gas production from its Sohagpur CBM blocks in Madhya Pradesh after winning extraction rights in 2002. Oil and Natural Gas Corp (ONGC) has entered development phase in its four blocks including Raniganj (North). GEECL produces CBM from Raniganj (South) licence area, which covers 210 square kilometres, with 2.62 trillion cubic feet of gas reserves in place.

Source: Business Standard

Gujarat Gas hikes natural gas rates for industry

December 24, 2017. Gujarat Gas Ltd (GGL) has increased the prices of natural gas supplied to its industrial consumers in the state. The public sector company has hiked natural gas prices — from Rs 2.50 to Rs 2.57 per standard cubic meter (scm) following a steep rise in prices of natural gas in the international market. GGL, which provides piped natural gas (PNG) to over 3,000 industrial consumers across the state, has increased PNG prices for industrial units in Morbi by Rs 2.50 per scm (from Rs 24.87/SCM to Rs 27.37/scm). For industrial consumers other than those in Morbi, the prices have been raised by Rs2.57/scm from Rs 26.59 per scm to Rs 29.17 per scm. The new rates are effective from December 23 this year. The state-run gas company confirmed the price hike and stated that around 40% increase in liquefied natural gas (LNG) prices in the global market necessitated the price rise for end consumers in the state.

Source: The Times of India

Natural gas may come under GST in 2018

December 24, 2017. It literally took the country by storm six months back when dozens of taxes and levies were rolled into one, but as the new Goods and Services Tax (GST) stabilises, its ambit is now likely to be increased by including natural gas in next couple of months. On July 1, when the new national sales tax was implemented, it was decried as technologically tedious and expensive and had potential to torpedo political prospects of the ruling Bharatiya Janata Party (BJP). However, the government made numerous changes, including easing the tax filing process and reducing rates on over 200 items, to save the day for the party in Prime Minister Narendra Modi’s home state Gujarat. While GST transformed India into ‘one nation, one market’ at the “stroke of midnight” on June 30, real estate as well as crude oil, jet fuel or ATF, natural gas, diesel and petrol were kept out of its purview. This meant that the products continued to attract duties like central excise and Value Added Tax (VAT). That may well change in 2018, at least for natural gas. The revenue department said as the Centre and states are assured of revenue flows, natural gas can be the next big item to be included. A 5 percent GST, equivalent to that being charged on coal, will benefit states in reducing price of compressed natural gas (CNG) as well as cooking gas piped into kitchens. The Centre may try to bring up inclusion of natural gas at the next GST Council meeting in January. But doing so for other petroleum items could be difficult because the states and the Centre both get quite a bit of revenue from those items. The roll out of biggest tax reform since independence on July 1 was without undue disruption. The ‘one nation, one tax’ united at least 17 different central and state indirect taxes under one umbrella to cut tax evasions and reduce corruption.

Source: The Times of India


Power ministry seeks faster coal supply to Shakti auction winners

December 26, 2017. The power ministry has asked the coal ministry to issue directions to Coal India Ltd (CIL) to start coal supply to the winners of coal contracts auctions without waiting for approval from the power regulator Central Electricity Regulatory Commission (CERC). In a meeting held by the power ministry, representatives from banks expressed concerns about delay in issue of coal allocation letters to auctions conducted by CIL for PPA (power purchase agreement) holders under Shakti, the office memorandum said. Signing of firm coal supply agreements may take 2-3 months after issue of the coal allocation letters as the requirement of PPA and approval of the appropriate commission may take time, it said. CIL’s board had approved the winning bids of a bunch of power producers including Adani Power, GMR Energy and KSK Energy who had quoted the highest discount in electricity tariffs to receive coal from the state-run miner.

Source: The Economic Times

Tata Power gains after arm wins coal mine in Russia

December 26, 2017. Tata Power rose 1.07% on BSE after the company said its Russian subsidiary bagged the mining licence of a thermal coal mine in Kamchatka province in Far East Russia. Tata Power announced that its Russian subsidiary, Far Eastern Natural Resources LLC, has been awarded the mining license of a thermal coal mine in Kamchatka province in Far East Russia. The subsidiary participated in financial auction process at Petropavlovsk, Kamchatka, on 22 December 2017 and was awarded the license at approximately $4.7 million. The Kamchatka project site has been declared as a Special Economic Zone and will qualify for various concessions including protection against change of laws. The coal mine has high quality thermal coal reserves of over 380 million tonnes, which the company aims to deploy for its facilities in Mundra and Trombay; as also sell in Far East Asian markets.

Source: Business Standard

Government looks to award coal blocks on production or revenue sharing model

December 25, 2017. The system of coal blocks allocation could undergo an overhaul, with New Delhi leaning towards the oil-and-gas industry model that involves sharing production or revenue instead of the existing practice of auctions. The coal ministry has set up an expert committee to examine challenges facing the current bidding system and to suggest changes to the process for conducting future auctions of coalmines. The formation of the committee follows an advisory by a government department to the coal ministry, pointing out the annulment of the last two tranches of coalmine auctions due to tepid response from the industry. The fourth and fifth rounds of coalmine auctions to non-power firms have been shelved as companies were not too keen. The present coalmine auction mechanism has become provided under the Coal Mines Special Provisions Act and the amended Mines and Minerals Development and Regulation Act.

Source: The Economic Times

Coal block defaulters to face penalties

December 22, 2017. The coal ministry is devising methods to penalise coal block operators falling behind targeted production and revenue payment to states. According to the coal ministry, of the 34 auctioned or allotted mines, vesting order has been issued for 29. Of these, 15 have started production of close to 15.32 million tonnes. Coal production from the auctioned 29 mines stood at 15.32 million tonnes during 2016-17. This, the government said, was close to the production by these mines in 2014-15 when they were re-allocated. Cumulative production was 15.8 million tonnes then. Of the eight power companies that were allocated coal blocks, five have moved court to challenge the government’s decision to disallow pass-through of quoted discount on coal cost on the final power tariff. The Jharkhand government started marking forest and non-forest land for ease of doing business. But the process is far from over, thereby putting in soup a lot of coal mine owners who received the mine in the 2014-15 auction but haven’t started any work yet. After the Supreme Court cancelled all coal blocks allocation of the past two decades in August 2014, the ministry of coal started re-allocation reserves via transparent e-auctions. It allocated 34 operational coalmines to private companies through auctions and to states through allotment — for power and non-power sectors. The revenue estimated to be collected was ` 2.85 crore over 30 years for mine-bearing states. In the first e-auction of coal blocks during 2014, 34 coal blocks went to private companies, including Hindalco, Balco, Jindal, JSW, Adani, GMR and Essar.

Source: Business Standard

CIL looking to buy stakes in overseas coking coal mines

December 20, 2017. The government said Coal India Ltd (CIL) is hunting potential avenues for buying stakes in coking coal blocks overseas. Coal Minister Piyush Goyal said though the CIL board had last year advised the company to explore the opportunities of acquiring coal assets overseas, very few prospective blocks in foreign nations have come up for sale. Coking coal is used mainly in steelmaking. Goyal said Indian consumers import metallurgical coal mainly from Australia. Six coking coalmines are going to be auctioned, he said. During April-September of the ongoing fiscal, 22.6 million tonne (mt) (provisional) of coking coal was imported. While in the last fiscal, 41.6 mt coking coal was imported, in 2015-16, the import was 43.5 mt.

Source: Business Standard


Delhi power discoms seek to shift peak hours

December 26, 2017. From the next financial year, power bills will depend on electricity consumed at specified peak and non-peak hours. Power discoms (distribution companies) BSES Rajdhani, BSES Yamuna and Tata Power Delhi have sent their proposals to the Delhi Electricity Regulatory Commission (DERC) for tariffs and peak/non peak time slots for time of day (ToD) metering that will be implemented from FY 2018-19. At present, the ToD time slots are applicable from May to September with peak hours between 1pm to 5pm and 9pm to midnight. The existing non-peak hours are 3am to 9am. This is mandatory for those with a sanctioned load of over 25 kW and optional for others (other than domestic). The regulator is now in the process of revising these for the new tariff due to be announced next year. The objective of ToD metering is to encourage more people to shift their power consumption to off-peak hours in order to get incentives of reduced tariff and reduce power consumption in peak hours. Discoms have sent their revisions alongwith the surcharge they will impose on peak hours and rebates during off-peak hours. For south Delhi discom BSES Rajdhani, peak hours will be 1pm to 6 pm and 7pm to midnight from April to October — the surcharge levied for consuming power in these time slots is ` 3.20/unit. Rebate of ` 1.83/unit will be offered for power consumption between 3am to 9am. Then from November to March, peak hours will be 9am to 2pm with a heavy surcharge of ` 5.75/unit while rebate of ` 1.60/unit for power consumed between midnight and 7 am in these five winter months.

Source: The Economic Times

45 lakh families to get power supply in Madhya Pradesh under Saubhagya

December 26, 2017. Rural Electricity Corp (REC) said that Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) was launched in Madhya Pradesh to provide electricity connections to about 45 lakh families. According to the REC, a total of approximately 45 lakh un-electrified households of Madhya Pradesh are proposed to be included under the present DDUGJY (Deen Dayal Upadhyaya Gram Jyoti Yojana) and Saubhagya Schemes. With the launch of the scheme, 5,000 new electricity connections were released in Rewa district. The Saubhagya scheme was launched in September to achieve universal household electrification in all parts of the country at a cost of ` 16,320 crore including Gross Budgetary Support (GBS) of ` 12,320 crore from Government of India. All states and Union territories of the country are required to complete household electrification in their respective jurisdiction by March 31, 2019. The REC has been appointed as the nodal agency for coordinating the implementation of the scheme. The prospective beneficiary households for free electricity connections under the scheme will be identified using Socio Economic and Caste Census (SECC), 2011 data.

Source: Business Standard

Load shedding will soon invite penalty: Power Minister

December 25, 2017. The Central government is committed to provide electricity to all and that too round the clock. It will soon bring a law whereby any power distribution company doing load shedding after a specified date will be penalized by centre. This was revealed by Power Minister R K Singh. However, he did not specify the date after which the law will come into effect. The Minister was in the city to launch the Saubhagya Yojana which aims to provide an electricity connection to all households. Singh said that his ministry would promote pre-paid meters in a big way. Prime Minister Narendra Modi has given a target to Union power ministry to provide power connections to all households by March 2019.

Source: The Economic Times

Punjab looks for ways to cut Rs 650 bn fixed charges promised to pvt power firms

December 24, 2017. Even as Punjab hopes to sell its surplus power to Pakistan and Nepal, the state government is searching for means to avoid paying ` 65,000 crore ‘extra’ over 25 years under the long-term power purchase agreements (PPAs). The PPAs signed with the independent power producers (IPPs) have varying fixed charges the state has committed to pay even when it is not buying power from them. As per the PPAs, the Talwandi Sabo thermal plant is charging a fixed cost of ` 1.23 per unit of its installed capacity. The government is paying ` 2.20 as fixed charges to Goindwal Sahib thermal plant, while ` 1.43 per unit of installed capacity is being paid to the Rajpura thermal power plant. On the other hand, a fixed cost of only ` 0.16 is being charged by Sasan thermal power plant and other IPPs where the state has a fixed share. All this adds up to ` 65,000 crore over a period of 25 years under the current PPAs. As of today, the state pays fixed charges of around ` 3,000 crore to the IPPs annually. These charges are paid even when there is no demand for power in the state. The power demand during most of the year floats around 6,000 to 8,000 MW other than the paddy season when it rises above 11,500 MW. During other times of the year, the state has a surplus power of 1,500-3,000 MW on which the Punjab State Power Corp Ltd (PSPCL) pays the fixed charges and suffers losses.

Source: The Economic Times

RInfra sells power unit to Adani Transmission

December 21, 2017. India’s Reliance Infrastructure (RInfra), part of Reliance Group, said it has agreed to sell its Mumbai power generation, transmission and distribution business to a unit of Adani Enterprises for around ` 188 billion ($2.93 billion). The deal will provide Reliance Group controlled by billionaire Anil Ambani with a ` 30 billion cash surplus, RInfra said. Reliance Group has previously announced plans to invest an undisclosed amount in its recently started aerospace defence manufacturing business as well as in its engineering, procurement and construction businesses. Adani Transmission Ltd, the power distribution arm of Adani Enterprises, will pay an initial ` 132.51 billion for Reliance’s Mumbai power business and ` 55.50 billion at a later date based on certain approvals.

Source: Reuters



Suzlon commissions offshore Met station in Arabian Sea

December 26, 2017. Renewable energy solutions provider Suzlon Group said it has commissioned its first operational offshore meteorological station in the Arabian Sea to collect wind data for two years. The Group said it was working on offshore wind energy technology and has initiated techno-commercial feasibility study. Suzlon, along with its associates, under the guidance from the National Institute of Ocean Technology (NIOT), Chennai, and approvals through the National Institute of Wind Energy (NIWE), Chennai, had installed its first Operational Offshore LiDAR (Light Detection and Ranging)-based wind measurement station in the Arabian Sea, southwest of Jakhau Port in Kutch, Gujarat. The offshore wind data collection platform has been installed at about 16 km from the shore in the territorial waters of Gujarat. The unmanned met station will be powered by solar energy and will be remotely monitored for maintenance needs.

Source: Business Standard

Researchers propose green energy plan for offshore oil platforms

December 25, 2017. A team from Cochin University of Science and Technology (CUSAT) proposes green energy generation for offshore platforms like oil rigs using piezoelectric crystals. The findings were presented at the international conference on ships and offshore technology held at the IIT Kharagpur in association with Royal Institute of Naval Architects (RINA), UK titled ‘Use of Piezoelectric Crystals on Offshore Platforms’, by Pratap Chittalngia and Sivaprasad K of the department of ship technology. The paper said that these vibrations are usually technical obstacles for naval architects and marine engineers, but in this case, it can be used productively for probably the first time in maritime history. The idea is that wind mills and solar energy can be trapped in the vertical top platforms.

Source: The Economic Times

CPCB likely to go for new devices to study Delhi air quality

December 25, 2017. A top Central Pollution Control Board (CPCB) scientist said that the agency may consider using advanced LiDAR (Light Detection and Ranging) devices to vertically monitor the air quality of Delhi-NCR. CPCB’s air lab Chief Dipankar Saha said the agency is currently focussing on strengthening its surface-level monitoring network, however, in “later stages”, vertical monitoring will also be taken up. He was reacting to a report that the CPCB’s plans to use the LiDAR technology, using which laser beams are projected in the sky to study the composition of pollutants present in the upper layers, has hit a financial roadblock. LiDAR is a monitoring system for mapping and modelling in micro-topography, forestry, agriculture, meteorology and environmental pollution. Elastic Backscatter LiDAR and Raman LiDAR are used in monitoring air pollutants vertically.

Source: The Hindu Business Line

Government starts safeguard duty probe on solar cells

December 25, 2017. India has started a probe to determine imposition of safeguard duty on surging imports of solar cells with a view to protect domestic manufacturers. Domestic manufacturers have approached the Directorate General of Safeguards (DGS) with a complaint that their market share has remained stagnant despite rapid expansion in demand for solar cells in the country. India is targeting to 100 GW solar capacity by 2022. The current installed capacity is about 15 GW. The government has planned to auction 20 GW capacities by March 2018, and 30 GW each in next two fiscals. Solar cells, electrical devices that convert sunlight directly into electricity, are imported primarily from China, Malaysia, Singapore and Taiwan. The application for imposition of the import restrictive duty has been filed by the Indian Solar Manufacturer’s Association (ISMA) on behalf of five Indian producers – Mundra Solar PV, Indosolar, Jupiter Solar Power, Websol Energy Systems and Helios Photo Voltaic. They want safeguard duty on ‘solar cells whether or not assembled in modules or panels’ immediately for four years. The domestic industry also asked the DGS for imposition of provisional safeguard duty in view of steep deterioration in the performance of the local players as a result of increased imports of the solar cells.

Source: Business Standard

RIL aims to become big clean energy provider

December 24, 2017. Reliance Industries Ltd (RIL) will become a major provider of clean energy in the country, Chairman Mukesh Ambani said, as the South Asian nation transitions to renewable energy sources from fossil fuels. India is one of the world’s biggest users of coal, and renewable energy such as solar power is a priority for Prime Minister Narendra Modi’s government. RIL, owner of the world’s biggest refining complex and also a leading petrochemicals player, expanded its tie-up with BP earlier this year to meet India’s rising fuel and renewable energy demand. RIL can also be a global producer of innovative materials and among the top 20 companies in the world, Ambani said.

Source: Reuters

Uttar Pradesh taps solar-rich Rajasthan, gets second-lowest tariffs for 500 MW

December 23, 2017. Despite the increase in prices of solar panels in recent months and the GST (Goods and Services Tax) burden, Hero Solar Energy Pvt Ltd and SBE Four Ltd bagged 500 MW offering to sell solar power to Uttar Pradesh government at ` 2.47 and ` 2.48 per kilowatt hour (KWh), respectively. This is slightly higher than the record lowest rate of ` 2.44 that ACME Solar Holdings Pvt Ltd had bid for the 200 MW project in Rajasthan in May this year. The power will be drawn by Uttar Pradesh from Power Grid Corp of India’s national network for no extra cost. In April this year, Delhi Metro Rail Corp (DMRC) had signed a power purchase agreement with Rewa Ultra Mega Solar Ltd in Madhya Pradesh to procure close to 200 MW solar power as inter-state open access consumer at ` 2.97 per KWh. In the reverse auction carried out by Solar Energy Corp of India for Uttar Pradesh government for 500 MW, Hero Solar Energy Pvt Ltd won 300 MW offering a tariff of ` 2.47 per KWh while SBE Four Ltd bagged the rest 200 MW at ` 2.48 per KWh.

Source: The Economic Times

JIPMER proposes to set up solar plant for ` 76.3 mn

December 22, 2017. Jawaharlal Institute of Postgraduate Medical Education and Research (JIPMER) has proposed to set up a 1,500 kW solar power plant at a cost of ` 7.63 crore by March next year. The solar plant will meet 10% to 15% of the power requirement of the institute saving roughly ` 1.5 crore every year. The institute will cover the rooftops of all the buildings with solar panels. The standing finance committee of JIPMER accorded clearance for the project. The institute has also proposed to explore the feasibility of equipping its kitchen and laundry with solar-based steam generation technologies and to establish a solar-based air-conditioning facility at the women and children hospital. It proposes to establish a biogas plant to process the biodegradable waste and generate biogas for cooking in its canteen. The institute proposes to conduct an energy audit. The institute replaced old streetlights with LED lights. Similarly, the institute ensured that all the new electrical installations including refrigerators and air-conditioners are of highest energy efficiency rating. The institute also plans to install rooftop solar grid-connected power generation units at its campuses in Karaikal and rural health centre at Ramanathapuram in Puducherry. JIPMER, which has embarked on an array of energy conservation and renewable energy generation projects, is one of the largest energy consumers in the Union territory. JIPMER campus at Gorimedu has an electricity requirement of 5MW.

Source: The Times of India

Replacing coal plants with renewables will help save Rs 540 bn: Greenpeace

December 22, 2017. The country can save up to Rs 54,000 crore in power costs and reduce air pollution by replacing expensive coal plants with renewables, according to a new analysis by Greenpeace India. The analysis compared 2015-2016 tariff data published by the Central Electricity Authority with an “assumed” renewable energy tariff of Rs 3/kWh, it claimed. New tariff bids for solar energy and onshore wind have dropped well below ` 3/kWh, with solar power reaching a record low of 2.44 and wind reaching a record low of 2.64, it said. Greenpeace campaigner Ashish Fernandes said that it is now widely accepted that new coal power plants are not financially competitive with new renewables in India. Fernandes said that the NGO’s analysis shows that significant cost-savings can accrue to the country and to cash-strapped discoms through a planned phase out of the most expensive coal power plants already in operation and their replacement with cheaper renewable energy.

Source: The Economic Times

6 companies win tender to supply 500 MW wind power

December 22, 2017. Six companies won bids to supply 500 MW of wind power to Gujarat Urja Vikas Nigam Ltd (GUVNL) through competitive bidding. The reverse auction, conducted after several delays, also reached the country’s lowest wind tariff of Rs 2.43 per kilowatt hour (kWh). The lowest bidders include Sprng Energy Private Limited, KP Energy Ltd, Verdant Renewables Pvt Ltd, Betam Wind Energy Pvt Ltd, Powerica Ltd and ReNew Power Ventures Pvt Ltd. Sprng Energy and KP Energy emerged as the L1 bidders, who quoted of Rs 2.43 per kWh (or per unit) tariff for the supply of 197.50 MW and 30 MW respectively. The price quoted by the two companies is the lowest wind tariff reached so far through auction in the country. Previously, Solar Energy Corp of India’s in a 1,000 MW auction in October this year had seen the lowest rate of Rs 2.64 per unit. Verdant Renewables, Betam Wind Energy and Powerica quoted Rs 2.44 per unit for 100 MW, 29.90MW and 50MW, respectively. Around 18 wind power developers were in fray to supply wind power to GUVNL, which had floated a 500 MW tender in June this year. The wind auction by GUVNL was deferred a number of times as Indian Wind Energy Association (IWEA) first approached the Gujarat high court and then the Supreme Court opposing the bidding process on the ground that the central government had only issued draft guidelines for governing such wind energy auction, and it had not finalized any such guidelines.

Source: The Times of India

MP CM lays foundation for ‘world’s largest’ solar power plant

December 22, 2017. Madhya Pradesh (MP) Chief Minister (CM) Shivraj Singh Chouhan laid the foundation stone for the “world’s largest” ultra mega solar power plant at Gurh tehsil in the district. The green energy generated at this station will be provided to Delhi Metro Rail Corp (DMRC) to run its trains in the national capital. The solar plant will generate 750 MW electricity and is being established with at an investment of ` 4,500 crore. It will spread in an area of nearly 1,600 hectares land. Chouhan said that in the past, electricity was generated in Vindhya region using coal and water, but now it will be produced through solar energy and waste material. The Solar Energy Corp of India and Madhya Pradesh Urja Vikas Nigam (MPUVN) have joined hands and are facilitating the work of setting up the plant with the help of private players.

Source: Business Standard

Maharashtra plans to generate 25 GW through solar energy: Energy Minister

December 22, 2017. Maharashtra Energy Minister Chandrashekhar Bawankule informed the state Legislative Council that the government has set the target of producing 25,000 MW electricity using solar power. The government will particularly focus on electricity generation from renewable sources between 2021 and 2030, Bawankule said. Similarly, work orders for about 4,000 MW solar energy projects will be given between March and December 2019, he said. He said that the state government was keen on generating power through atomic energy only if the Centre proposes it in Maharashtra.

Source: Business Standard

Government confident of achieving target of 100 GW solar power by 2022: Singh

December 21, 2017. The government is confident of achieving the target of 100 GW of solar power capacity by 2022, Power and Renewable Energy Minister R K Singh said. As against the target of installing 100 GW of solar power capacity as on December 15, a capacity of 16,676 MW has been installed with another 6,500 MW capacity under installation, he said. The trajectory of bidding of the rest of solar power capacity has been finalised as 20,000 MW in 2017-18, 30,000 MW in 2018-19 and 30,000 MW in 2019-20. Since the country does not have enough manufacturing capacity at present for solar cells and modules to meet the full demand, “both imported and indigenous solar cells and modules are being utilised for achieving the targets,” he said.

Source: Business Standard

Centrum invests Rs 1 bn in solar power firm Waaree Energies

December 21, 2017. Waaree Energies Ltd, an integrated solar power solutions company has raised Rs 100 crore through a structured financing deal from Centrum Financial Services Ltd, as the Mumbai-based alternate energy equipments firm intends to expand capacity. Waaree manufactures and supplies Solar Photovoltaic modules and provides EPC solutions for setting up of solar power plants including on-grid, off-grid and rooftop applications. Set up in 1989 and headquartered in Mumbai, Waaree has a 500 MW module manufacturing plant at Surat in Gujarat. The cumulative installed solar capacity in India is nearly 16 GW with an aspirational target of reaching 100 GW by 2022 set by the central government.

Source: The Economic Times

Environment ministry’s panel clears 800 MW Bursar hydroelectric project in J&K

December 20, 2017. An expert panel of the union environment ministry has cleared the 800 MW Bursar hydroelectric project in Jammu and Kashmir (J&K), reversing its stand that the power project was to be located in a rich biodiversity area and could only be cleared after a site visit by a sub-committee. The project, permitted under the Indus Water Treaty (IWT), is strategically important for India and its clearance is in line with the Indian government’s decision to step up exploitation of India’s share of water in the IWT. At a meeting in October, the environment ministry’s Expert Appraisal Committee (EAC) for River Valley and Hydroelectric Projects deferred granting clearance to the Bursar project in the absence of a site visit. However, in the first week of December, the panel went ahead and cleared the project without a site visit, saying that a visit was not possible before June 2018 due to poor weather conditions, which would delay the project. The estimated cost of the project is ` 24,589.38 crore. The EAC then said it would reconsider the project for environmental clearance after seeing the sub-committee’s report. However, in its subsequent meeting on 5 December, the EAC recommended environment clearance without a site visit. Once the EAC recommends or denies environmental clearance for a project, the environment ministry takes the final call but rarely overturns the EAC’s recommendation.

Source: Livemint


US regulator proposes scaling back offshore drilling safety rules

December 26, 2017. A US (United States) regulator has proposed rolling back safety measures put in place after the 2010 Deepwater Horizon oil spill, which would reduce the role of government in offshore oil production. The Bureau of Safety and Environmental Enforcement (BSEE), which regulates offshore oil and gas drilling, proposes relaxing requirements to stream real-time data on oil production operators to facilities onshore, where they are available for review by regulators. The BSEE has also proposed cutting a provision requiring that third-party inspectors of critical equipment – such as the blowout preventer that failed in the Deepwater Horizon case – be certified by the BSEE. The Deepwater Horizon rig explosion in the Gulf of Mexico left 11 dead and led to the largest oil spill in US history. Oil company BP paid out around $60 billion in fines and clean-up costs.

Source: Reuters

Russia holds steady as China’s largest crude supplier for ninth month

December 26, 2017. Russia held on as China’s largest crude oil supplier for the ninth month in a row in November, also topping Saudi Arabia for the year so far, China’s General Administration of Customs data showed. Shipments from Russia in November reached 5.12 million tonnes, or 1.26 million barrels per day (bpd), up 11 percent from a year ago, according to detailed commodity trade data for last month from China’s General Administration of Customs. That compared to October’s 1.095 million bpd in Russian oil imports, and a record set in September at 1.545 million bpd. Saudi Arabia came in second, with November imports from there dropping 7.8 percent from a year ago to 1.056 million bpd. For the first 11 months of the year, Russian supplies expanded 15.5 percent on the year to 54.77 million tonnes, or 1.2 million bpd, overtaking Saudi Arabia by 159,000 bpd. The boost in Russian supplies was supported in part by robust demand from China’s independent refineries, and also by increases in supplies via a trans-Siberia pipeline. Iraq supplies ranked third in November with shipments at 4.21 million tonnes, or 1.023 million bpd. Year-to-date Iraq supplied 5.5 percent more oil than a year earlier at 762,900 bpd, the data showed. China’s total crude oil imports rebounded to the second highest on record last month to 9.01 million bpd, with imports partially driven by a new additional batch of import quotas released to independent refiners.

Source: Reuters

Iraq has not reached agreement with Exxon on southern oilfields: Oil Minister

December 25, 2017. Iraq has not yet reached an agreement with Exxon Mobil on a multibillion-dollar project to boost output from several southern oilfields, Oil Minister Jabar al-Luaibi said. If no agreement is reached by February, Luaibi said, the project would be offered to other companies. Luaibi had said in October that Iraq was in final talks with Exxon Mobil on developing the project, which consists of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf into reservoirs to improve production.

Source: Reuters

Ineos starts testing United Kingdom’s Forties North Sea oil pipeline after repairs

December 25, 2017. Britain’s Forties oil and gas pipeline, one of the biggest in the North Sea, is being tested following repairs and full flows should resume in early January, its operator Ineos said. The closure of the pipeline since December 11 has pushed oil prices above $65 a barrel in recent weeks, their highest level since mid-2015. Forties plays an important role in the global market as it is the biggest of the five North Sea crude streams underpinning Brent, a benchmark for oil trading in Europe, the Middle East, Africa and Asia. The system, which carries about 450,000 barrels per day of crude to Britain, along with a third of the country’s total offshore natural gas output, was shut down after a crack was found. Ineos said the oil and gas processing facility Kinneil should restart in the next 24 hours.

Source: Reuters

Oil firms to step up exploration off Norway next year after poor 2017

December 22, 2017. Efforts to find new oil off Norway are expected to double next year, preliminary company plans show, with activity rising in more mature areas after this year’s disappointing Arctic campaign. The pressure to deliver is growing as this year’s poor exploration results were partly to blame for a drop in interest in Norway’s latest licensing round. Around 45-50 exploration wells, including wells to delineate previously made discoveries, could be drilled next year on the Norwegian Continental Shelf (NCS), up from around 26 wells this year. Higher oil prices and lower drilling costs are driving appetite for exploration and supporting a recovery of the offshore drilling market. Statoil alone plans 25-30 wells, including six wells in the Barents Sea, up from around 16 wells in 2017. Statoil announced a deal costing up to $2.9 billion to boost its presence in Brazil as it seeks to add new barrels which are becoming more difficult to obtain closer to home. Out of 26 exploration wells drilled of Norway this year, only eight proved oil and gas, and all were fairly minor discoveries, BMI Research, a Fitch Group Company, said.

Source: Reuters

Mexico oil regulator gives Trafigura contract for crude trading

December 22, 2017. Mexico’s oil regulator said it had assigned trader Trafigura a three-year contract to commercialize crude oil the government obtains from the new scheme of contracts derived from an energy reform. Until now, PMI, the commercial arm of Mexican state oil firm Pemex, has been the only company that commercializes the government’s hydrocarbons. But the 2014 energy reform mandated that, starting next year, companies should compete to commercialize the oil and gas that the state obtains under new production-sharing contracts. Swiss-based Trafigura will commercialize petroleum and the state-run Federal Commission of Electricity will commercialize gas, the National Hydrocarbons Commission said. Trafigura offered to do the work for 18 cents per barrel, compared with 21 cents per barrel for PMI, the regulator said. The regulator said it assigned the contract to Trafigura directly because the Swiss firm and PMI were the only firms that participated in the previous tender. The regulator estimates that 8.017 million barrels of crude from the state will be commercialized next year, along with 4.068 billion cubic feet of gas.

Source: Reuters

OPEC starts working on oil supply cut exit strategy

December 21, 2017. OPEC (Organization of the Petroleum Exporting Countries) has started working on plans for an exit strategy from its deal to cut supplies with non-member producers. OPEC, Russia and other non-OPEC producers on November 30 extended an oil output-cutting deal until the end of 2018 to finish clearing a glut. But the market is increasingly interested in how producers will exit the deal once the excess is cleared. Oil prices have rallied this year and are trading near $64 a barrel, close to the highest since 2015, supported by the OPEC-led effort. This is above the $60 floor that sources say OPEC would like to see in 2018. Publicly, OPEC Ministers said it is too early to talk of an exit strategy. But OPEC has said producers want to continue working together beyond the end of 2018, including on supply management. While oil prices have risen to levels seen as favorable by OPEC, the stated goal of the supply cut is to reduce inventories in developed economies, which built up after a supply glut emerged in 2014, to the level of the five-year average. Non-OPEC Russia, which has been the biggest contributor to cuts from outside the group, has been suggesting a review of the deal as early as June. However, its biggest producer Rosneft said the cuts could last into 2019.

Source: Reuters

Iraq’s oil ministry starts taking over Majnoon oilfield operations

December 21, 2017. Iraq’s oil ministry said it had started to take over operations of Majnoon oilfield from Royal Dutch Shell and planned to lift output in future. The ministry said it had formed a management team to handle production after Shell exits the field by the end of June. Iraq plans to increase output from Majnoon to 400,000 barrels per day (bpd) in the “coming years”, the ministry said. Production is now about 235,000 bpd. A letter signed by the Oil Minister Jabar al-Luaibi and gave approval for the Anglo-Dutch firm to quit Majnoon, a major oilfield near Basra which started production in 2014. Shell said it would focus its efforts on developing and expanding Basra Gas Company in Iraq after handing over operations of Majnoon to the Iraqi government.

Source: Reuters

Russian President, Saudi King agree to continue cooperation to keep oil prices stable

December 21, 2017. Saudi Arabia’s King Salman and Russian President Vladimir Putin held a telephone conversation during which they agreed to continue close cooperation to ensure stability on global hydrocarbon markets, the Kremlin said. During the call, the Saudi leader voiced his concern about a missile attack on Riyadh by a Yemen-based rebel group on December 19. The Kremlin said that Putin had condemned the attack and spoken of the need for a thorough investigation into it.

Source: Reuters

BP and Kosmos partner on five Ivory Coast offshore oil blocks

December 20, 2017. Ivory Coast has awarded partners BP and Kosmos Energy five new offshore oil blocks under an agreement with state oil company Petroci. Petroci will maintain a 10 percent stake in blocks CI-526, CI-602, CI-603, CI-707 and CI-708. Kone did not give a breakdown of Kosmos’ and BP’s stakes. Elsewhere in West Africa, BP and New York-listed Kosmos are partners on oil and gas blocks off the coast of Senegal and Mauritania. Natural gas discoveries there contain sufficient reserves to warrant two LNG projects.

Source: Reuters


China probes 17 gas firms in anti-monopoly investigation

December 26, 2017. China’s National Development and Reform Commission (NDRC) said it launched an anti-monopoly investigation into 17 natural gas suppliers on December 20. NDRC said it was investigating whether the companies might have broken anti-trust laws amid surging gas prices driven by Beijing’s efforts to switch millions of household from burning coal to using gas for heating this winter in an ambitious drive to cut pollution. NDRC said PetroChina gas sales unit Qaqing was one of the companies under investigation, without identifying the others. NDRC said it had already punished four Chinese utilities for overcharging on heating fees and gas prices. Heilongjiang Zhongxin Power Heating Co, Zhejiang Haiyan Gas Co, Xuanhan Hexin Natural Gas Co and Shangdong Hengyuan Gas Station were fined a total 540,000 yuan ($82,430.16) for lifting gas prices without approval from central government, the NDRC said.

Source: Reuters

China becomes world’s second-biggest LNG importer in 2017, behind Japan

December 26, 2017. China will become the world’s second-biggest importer of liquefied natural gas (LNG) this year as it overtakes South Korea, shipping data showed. Data shows that China’s imports of LNG will have risen by more than 50 percent in 2017 compared with the previous year to around 38 million tonnes. Comparatively, import-dependent Japan and South Korea will have taken around 83.5 million tonnes and just over 37 million tonnes by the end of the year, respectively. Analysts said China’s LNG imports will rise further. China’s soaring LNG import demand is a result of a huge government gasification program that saw millions of households switch from using coal for household heating this year to natural gas. Beyond virtually doubling Asian spot LNG prices since June to $11.2 per million metric British thermal units (mmBtu) – their highest since November 2014 – China’s rapid growth in purchases also changed the structure of the market. Despite efforts to change the market, LNG trading has remained dominated by long-term contracts under which fixed monthly volumes are supplied at prices linked to the oil market, although within certain prices ranges. Such deals have been preferred by Japan and South Korea, which meet all their gas demand through LNG imports, as it gives them security of supply and prevents price volatility. China is different. It has significant domestic natural gas reserves and also brings in supplies via pipeline from Central Asia. Japan, China and South Korea together make up 60 percent of global LNG demand.

Source: Reuters

Ukraine and Russia both claim victory in gas dispute

December 22, 2017. Ukraine’s Naftogaz and Russia’s Gazprom both claimed victory in a long-running gas dispute, each saying a Stockholm court had ruled in its favor over a gas contract. Gazprom appealed a May ruling by the court over a ‘take-or-pay’ clause in a 2009-2019 contract between the two countries. Naftogaz said the court had again rejected Gazprom’s $56 billion claim on this issue and other points. With its claim, Naftogaz had sought a lower price for Russian gas and disputed the take-or-pay clause requiring buyers to pay for gas whether they take physical delivery or not. Gazprom, however, said the court had backed most of its claims and ruled that the main terms of the contract between Naftogaz and Gazprom were valid. Gazprom said the Stockholm court had ordered Naftogaz to pay more than $2 billion to Gazprom for gas supply arrears and that it had also ordered Naftogaz to buy 5 billion cubic meters (bcm) of gas from Gazprom annually from 2018. Pricing disputes in the past led to Russian gas supplies disruptions to Europe via Ukraine, including in 2009 and 2006. Since then Russia has been pushing for new pipeline projects via the Baltic and Black seas to bypass Ukraine. In a separate claim still pending before the Stockholm court, Naftogaz is seeking up to $16 billion from Gazprom in relation to a transit contract. A decision is expected in February 2018.

Source: Reuters

Sinopec further lift supplies in China’s gas crunch

December 22, 2017. China’s major oil and gas operator Sinopec stepped up efforts to increase domestic gas supplies as widespread shortages hit more cities. Sinopec said it will increase upstream production by 1.1 million cubic meters per day and has hired 40 trucks to deliver LNG (liquefied natural gas) from its Beihai LNG terminal in south Guangxi province to northern China regions. The latest move from Sinopec showed major producers are now in a scramble to ease the gas crunch that left residents freezing and factories shut. Wuhan, a city in central China, started curbing residential consumption of gas as the crisis deepens. Chemical companies such as Yuantianhua based in southern Yunnan province also halted production line amid the gas shortage. Sinopec said it will accelerate the construction of the key Tianjin LNG receiving terminal. The terminal is expected to provide 450 million cubic meters of LNG shipments every quarter.

Source: Reuters

TAP pipeline on course for first gas to Italy in early 2020

December 22, 2017. The Trans Adriatic Pipeline (TAP) taking gas from Azerbaijan to Europe will pump the first gas into Italy at the start of 2020 despite local protests against the 4.5 billion euro ($5.3 billion) project, the TAP President Walter Peeraer said. TAP, the end piece of the $40 billion Southern Gas Corridor, is slated to bring up to 10 billion cubic metres of gas from the giant Azeri Shah Deniz II field into the small Italian seaside town of San Foca in the southern Apulia region by 2020. Michele Emiliano, governor of the Apulia region, has called for the pipeline to be moved further north and has filed a series of legal claims that have drawn the ire of Rome. The Italian government, keen to transform Italy into a gas hub for southern Europe, considers TAP a strategic priority. Puglia has around 14,000 kilometres (8,700 miles) of high/mid/low-pressure gas pipes on its territory. EDF unit Edison and Greece’s Depa have plans to bring in Mediterranean gas through the EastMed pipeline to the Puglia resort of Otranto. Peeraer said the landfall site, which had been chosen from 20 other locations for its minimal environmental impact, would not be changed. Such a move could put the project back 4-5 years, he said. Earlier this year Gazprom’s deputy head Alexander Medvedev said the company was considering pumping gas through the link.

Source: Reuters

Portugal’s Galp offers LNG ship refueling off islands and mainland

December 21, 2017. Portugal’s Galp Energy is expanding its marine fuel offering by supplying low-emission liquefied natural gas for ships and performed the first refueling of a cruise ship on the island of Madeira, it said. The company said the refueling involving a ship running on LNG (liquefied natural gas) was the first carried out at a Portuguese port, and the first on any Atlantic island. It expects LNG use to become mainstream in ships in the future due to stricter rules on harmful emissions. According to Galp, Carnival, a pioneer in cruise ship LNG use, will deploy four vessels that only use natural gas until 2020, when more restrictive marine fuels legislation comes into force.

Source: Reuters

Rosneft starts production at Zohr gas field in Egypt

December 20, 2017. Russian energy major Rosneft said an international consortium has started production at the Zohr gas field in Egypt, in which it has a stake. Gas output at the field, the largest in the Mediterranean Sea, will total up to 28 billion cubic meters a year by 2020, the company said. Rosneft owns up to 35 percent in Zohr, Eni controls 60 percent and BP has 10 percent.

Source: Reuters

Tellurian to develop $7 bn natural gas pipeline network in US

December 20, 2017. Houston-based Tellurian has revealed its plans to develop three pipelines for nearly $7 bn, as part of a new pipeline network to provide supply alternatives to meet the rising demand for natural gas in Southwest Louisiana. Named as the Tellurian Pipeline Network, the pipeline project will include the Driftwood Pipeline, which was announced previously along with two additional pipelines in the form of Permian Global Access Pipeline and Haynesville Global Access Pipeline. The Tellurian Pipeline Network is likely to create 15,000 jobs in the US (United States) states of Texas and Louisiana. The pipeline would begin at the Waha Hub in Pecos County, Texas and would be linked to the Permian and associated shale plays around Midland, Texas. It will end near Gillis, Louisiana.

Source: Energy Business Review


China’s November coal imports from Australia slip on port congestion

December 26, 2017. Chinese imports of coal from key supplier Australia slipped in November from a year ago, China’s General Administration of Customs data showed, hit by heavy traffic congestion in Australian ports. Shipments from Australia fell 0.3 percent in November from the same month a year ago to 5.59 million tonnes, customs data showed. That compared with October’s 5.61 million tonnes. More than 300 large dry cargo ships have been waiting outside Chinese and Australian ports in a maritime traffic jam for over a month, choking supplies to the world’s second largest economy. High-grade coal from Australia, with lower pollutants such as sulphides and higher energy value, has seen increasing demand from utilities and industrial plants in China. As part of battle against air pollution, China aims to reduce consumption of low-grade bulk coal by 200 million tonnes by 2020. China is expected to import around 260 million tonnes of coal in 2017, according to data from China National Coal Association. Arrivals from Russia rose 10.9 percent from a year earlier to 1.92 million tonnes in November, while imports from Mongolia were down 17.8 percent at 2.76 million tonnes, customs data showed. Indonesian coal supplies tumbled 33.9 percent from a year ago to 3.41 million tonnes.

Source: Reuters

China urges miners to increase high-grade coal supplies for heating

December 26, 2017. China has urged coal miners to increase high-grade coal supplies to ensure heating fuel for winter, the National Development and Reform Commission (NDRC) said. The NDRC asked miners to put more high-grade coal projects into operation “as soon as possible”. Coal-fired power plants are also encouraged to increase their thermal coal stockpiles and upgrade

Source: Reuters


Serbia’s EMS starts operating power transmission line to Romania

December 21, 2017. Serbia’s government said that power system operator Elektromreza Srbije (EMS) started operating the Serbian section of a transmission line to Romania, as part of the Trans-Balkan Electricity Corridor project. EMS invested a total of €27 million ($22.8 million) in the construction of the 68 km Serbian section of the transmission line which connects Pancevo, in northern Serbia, to Romania’s Resita, the government said. The Serbian company used own financing for the construction of the line and managed to complete the project three months ahead of schedule, the government said. The entire Trans-Balkan Electricity Corridor, linking Montenegro, Bosnia and Herzegovina, Serbia and Romania via a 400 kilovolt (kV) transmission line and Montenegro and Italy via an undersea cable, is expected to come on stream in 2022.

Source: SeeNews

Vectren partners with Itron for energy grid modernization

December 20, 2017. Itron has signed a contract with Vectren Energy Delivery of Indiana – South, a subsidiary of Vectren Corp, to modernize the latter’s energy grid. Vectren provides energy delivery services to 250,000 electricity and gas customers in southwestern Indiana and will install Itron’s OpenWay Riva IoT solution throughout its South territory to support customer experience transformation efforts. Itron’s OpenWay Riva solution will give Vectren a highly secure and resilient multi-application network infrastructure and technology platform that features distributed computing power at every level of the network, including in every electric meter. With these capabilities, Vectren can deliver new services and value to its customers. The utility will virtually eliminate estimated meter reads and give customers detailed insights into daily electricity and gas usage, helping them better manage their energy consumption and costs. In addition to smart metering capabilities, Vectren’s OpenWay Riva solution will include a new distributed outage management application to improve outage detection and analysis.

Source: Energy Business Review


Egypt’s EFG Hermes looks to manage renewable energy projects

December 25, 2017. Egyptian investment bank EFG Hermes aims to manage renewable energy projects totaling 400-500 MW in the north African country in the coming three years, the bank’s energy head Bakr Abdel Wahab said. He said the projects that the bank was targeting were worth at least $250 million in investments and that the bank was looking to reach 1000 MW by 2020 with a capital of $500 million. He expected renewable energy to attract investors from the Gulf and Asia in 2018. Egypt hopes renewable energy will cover 20 percent of its annual electricity demand by 2020.

Source: Reuters

Vattenfall aims to be carbon neutral before 2050

December 24, 2017. State-owned Swedish utility Vattenfall expects it will become carbon neutral sooner than planned, its Chief Executive Officer (CEO) Magnus Hall said. The state-owned company divested its polluting lignite power plants and mines in eastern Germany last year, and said it wanted to focus its investments on renewable power.

Source: Reuters

Innogy enters US wind market with 2 GW portfolio buy

December 22, 2017. German energy group Innogy said it had signed a deal buy onshore wind power projects with more than 2 GW capacity in the United States (US), its first acquisition in the world’s second-largest wind power market. The deal is due to close in the second quarter of 2018 but needs approval from the US Committee on Foreign Investment in the US. Innogy, whose business is focused on energy networks, renewables and retail, said it was also examining opportunities for offshore wind and solar projects in the US market.

Source: Reuters

Trustpower to sell Australian hydropower business for $129.5 mn

December 22, 2017. Trustpower Ltd said it would sell its Australian hydropower generation assets operator GSP Energy to Meridian Energy, for A$168 million ($129.46 million), as the company focuses on its core New Zealand business. The company said the sale would result in a significant gain compared to the purchase price for the hydropower assets. Meridian Energy, which is buying GSP through its unit Meridian Energy Australia Pty Ltd, said that the purchase fit its plans to create a group of complementary Australian renewable energy assets to support its retail business. The deal is subject to Australian foreign investment regulator approval.

Source: Reuters

Statoil bids in Dutch subsidy-free offshore wind tender

December 21, 2017. Norway’s Statoil has submitted a bid in a Dutch offshore wind tender for up to 760 MW, the firm said. The project, which will be the world’s first subsidy-free wind park, is called Hollandse Kust Zuid and will consist of two offshore areas in the Dutch North Sea, it said.

Source: Reuters

South Korea to increase solar power generation by five times by 2030

December 20, 2017. South Korea said it plans to increase its solar-generated power by five times current amounts by 2030 to boost use of renewable sources in the nation’s energy mix. Since President Moon Jae-in came to power in May on a platform of cutting South Korea’s reliance on nuclear power, his government has torn up plans to build six more reactors in favour of “eco-friendly” energy sources. As of 2017, South Korea has 5.7 GW of generating capacity from solar power and 1.2 GW from wind power.

Source: Reuters


Coking Coal: Import & Production Scenario

India’s Coal Imports by Type 

Million Tonnes

Type of Coal Coking Non-coking Total Import
2014-15 43.72 174.07 217.78
2015-16 44.56 159.39 203.95
2016-17 (P) 41.64 149.31 190.95
2017-18 (April-September) (P) 22.61 75.05 97.66

Trends in Production of Coking Coal*

*Coking Coal Production by Public Sector

(P): Provisional

Source: Compiled from questions from Lok Sabha & Rajya Sabha

Publisher: Baljit Kapoor

Editorial Adviser: Lydia Powell

Editor: Akhilesh Sati

Content Development: Vinod Kumar Tomar

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