MonitorsPublished on Aug 17, 2022
Energy News Monitor | Volume XIX, Issue 10
Quick Notes

Petroleum Subsidies in India: Gone with the Wind?


There is no universally accepted definition of ‘energy subsidies’, or consensus on the method used to estimate subsidies.  The IISD (Institute of Sustainable Development), a non-governmental organisation, put India’s fossil fuel subsidies (producer and consumer subsidies for coal, oil & gas) at US$40 billion in 2017–19. The IEA (International Energy Agency) and the OECD (Organisation for Economic Cooperation & Development) give an estimate of about US$10-12 billion for the same period. Other agencies such as the IMF (International Monetary Fund) and WTO (World Trade Organisation) offer different estimates as they define energy subsidies according to their core mandates. Irrespective of the method used, India has always found a place among the top fossil fuel subsidisers in the world. Energy subsidies are described as hard to reform as they are rents offered to secure the support of different interest groups. India has, however, decreased petroleum subsidies substantially in the last ten years without serious political consequences.


India has used the term ‘under-recoveries’ to describe revenue foregone as full pass-through of changes in international crude prices to the retail price of petrol and diesel were not permitted. This may be counted as a form of subsidy. Price discounts offered to select petroleum products such as LPG (Liquified Petroleum Gas) and kerosene were a more direct form of subsidy expected to benefit poor households. Price discounts for LPG and kerosene were later replaced with a direct benefit transfer of the value of the discount to the households. These post-tax consumption subsidies have declined by over 98 percent from a high of over INR3.2 trillion in 2012–13 to about INR36 billion in 2020–21. As a percent of GDP (gross domestic product), petroleum subsidies have decreased by over 94 percent from 1.7 percent of GDP in 2010-11 to about 0.06 percent in 2020-21.


Tax revenue from petroleum products constitutes a large share of the revenue for the Indian government. Since 2014– 15, Central and state taxes have constituted more than half the retail price of petrol and diesel in India. The share of excise duty charged on petroleum contributed over 45 percent of India’s indirect tax revenue in 2020–21. The share of petroleum revenue as a share of total revenue receipts of the central government increased by over 93 percent from 15 percent in 2010-11 to 29 percent in 2020-21. As India heavily taxes the consumption of petroleum while also subsidising the consumption of some petroleum products, it creates a problem when narrow definitions of subsidies are used.  Many studies on fossil fuel ‘subsidies’ look only at policies that meet a strict definition of setting prices below the full cost of the energy service. Given that in 2020–21, the tax take on petroleum products was more than 100 times the petroleum subsidy-outgo, it will not be incorrect to say that consumers of petroleum products essentially ‘subsidise’ government budgets.

Subsidy Reform

Noted energy economist David Victor has argued that though energy subsidy reform, particularly fossil fuel subsidy reform, is presented as a no-regret or win-win move for developing countries (reduction in fiscal deficit and reduction of fossil fuel use leads to a reduction in carbon emissions), it is hard to carry out because subsidies are deeply rooted in political logic that is difficult to alter. Starting with the assumption that government leaders’ goal is to stay in power, Victor observes that government leaders will channel resources to interest groups that will vote or donate to their political campaign. Applied to the Indian case, petroleum product subsidies have traditionally targeted the voting population, primarily from poor and middle-class households. Since 2014–15, there is a clear shift away from these welfare provisions (universal price discounts, direct transfer of benefits to consumers). The fall in crude oil prices in the mid and late 2010s (global economic slow-down followed by the pandemic) initially opened up the space for phasing out subsidies. Though this space of low crude oil prices has closed since the early 2020s, the phasing out of subsidies has prevailed. It has in some sense initiated the creation of a ‘market for energy’ that will benefit the latter interest group of corporate donors that support the goal of the government to stay in power. The embrace of identity politics of the right by the government, and also by the media outlets controlled by corporate donors, has created a zero-sum competition between dominant and minority identities distracting attention from energy and other handouts. The move away from energy welfare politics, which includes but is not limited to phasing out petroleum subsidies without serious political or social consequences, demonstrates that the government is as powerful in its interventions in the market as it is in its withdrawal from it.

Source: Reports of the Petroleum Planning & Analysis Cell

Monthly News Commentary: NON-FOSSIL FUELS

States announce ambitious Solar Targets


RE Policy and Market Trends

The Tripura government is embarking upon a plan to provide electricity to 80 backward villages with micro solar plants at the cost of INR10 million (mn) (US$125 mn) each, Deputy Chief Minister Jishnu Dev Varma, who holds the portfolio of power, said. He claimed that the BJP-led government in Tripura in the last four-and-a-half years has modernised the power distribution system without levying any tariff burden on consumers. Moreover, to enhance the power generation infrastructure and harness the potential, the state government set up a separate company. To strengthen the power distribution system, the Tripura State Electricity Corporation Limited has already built over 50 power sub-stations in one-and-a-half years, which reduced the transmission loss and ensured quality power supply to the end users. However, since 62 percent of the state is under forest cover, it has become difficult to provide electricity to the interior locations and hence, a plan has been drawn to explore non-conventional sources of power to light up those habitations.

India’s top oil explorer Oil and Natural Gas Corporation (ONGC) and its partners will invest US$6.2 billion (INR500 bn) in green energy projects to produce carbon-free hydrogen and green ammonia as part of an ambitious decarbonization drive. ONGC has signed a pact with Greenko, one of India’s largest renewable energy companies, to form a 50:50 joint venture for green energy projects. The JV will set up 5.5–7 gigawatt (GW) of solar and wind power projects, and use electricity generated from such plants to split water in an electrolyser to produce green hydrogen, which in turn would be used for manufacturing green ammonia. ONGC, the nation’s biggest producer of crude oil and natural gas, joins the likes of Reliance Industries Ltd (RIL) and the Adani group in chasing carbon-free hydrogen. The two private groups have announced multi-billion projects as part of India’s net-zero goals.

West Bengal is aiming to take its renewable energy generation to 20 percent of the total installed capacity by 2030. At present, the renewable energy share of the total installed capacity is 5 percent, Nandini Chakravorty, the principal secretary of the Non-conventional and Renewable Energy Sources Department, said. She said rooftop solar panels have been installed in 1,954 schools of the state and work was underway to add another 1,890 schools to the list.

Tata Power would spend INR750 bn (US$9.41 bn) in the next five years to expand the capacity of its renewable energy business, Chairman N Chandrasekaran said. Chandrasekaran said Tata Power was taking a “pragmatic” approach to achieving its renewable energy targets and had added 707 megawatt (MW) of renewable capacity in 2021–22 (FY22). Tata Power is pushing its renewable energy business at a time when its rivals—the Adani group and RIL— are also ramping up their clean energy portfolio amid India’s plans to shift to green fuels from fossil fuels. Tata Power is the first company in the sector to declare a net-carbon-zero target. Tata Power Managing Director Praveer Sinha said that the company would move away from investing in coal-based power units and be net-zero in terms of carbon emissions by 2050. The company has advanced its net-zero carbon target by five years to 2045. It is aiming for 100 percent water-neutral and zero waste by 2030.

Jharkhand CM (Chief Minister) Hemant Soren unveiled the Jharkhand State Solar Policy of 2022. The CM said with climate change now knocking on our doors, Jharkhand has made an effort to replace thermal power by clean energy and ensure reduction of emission of greenhouse gasses. Under this policy, the Soren government aims to produce 4,000 MW of solar power in the next five years by providing incentives and supporting entrepreneurs who are willing to invest in utility scale solar projects, distributed solar projects and off-grid solar projects. The policy document envisages a cumulative solar power generation of 3,000 MW through solar parks, non-solar parks, floating solar power plans and canal top units. That apart, Jharkhand aims to produce 720 MW power through rooftop solar units, captive solar units, and solar power agriculture, the policy states. Under the new policy, households with annual income less than INR3 lakh will be provided subsidies to the tune of 60 percent-80 percent if they commission rooftop solar units on their residential places between 3KW and 10KW. Solar agriculture projects will draw subsidies to the tune of 30 percent of the total cost while solar pumps will be provided with subsidies up to 67 percent.

India will have to bear a steep fall in revenues from fossil fuels in its efforts to limit global warming to 1.5 degrees Celsius, but advance planning can avoid shortfalls in total revenues, according to a new report by the International Institute for Sustainable Development (IISD). India earned a revenue of US$92.9 bn from fossil fuel production and consumption in 2019 which accounted for 18 percent of its total government revenue. It could fall to around 65 percent of 2019 levels by 2050 on an energy pathway consistent with limiting global warming to 1.5 degrees Celsius, the independent think tank said.

Roof Top /Distributed Solar Projects

Prime Minister (PM) Narendra Modi, while participating in the culmination of ‘Ujjwal Bharat Ujjwal Bhavishya—Power @2047’, laid the foundation stone of a 735 MW Solar PV Project at Nokh in Jaisalmer. It is said to be India’s largest domestic content requirement-based solar project with 1000 MW at a single location, deploying high-wattage bifacial PV modules with a tracker system. The production will start in September 2023. He also launched a national solar rooftop portal which will enable online tracking of the process of installation of rooftop solar plants, starting from registering the applications to release of subsidies in residential consumers’ bank accounts after installation and inspection of the plant. He said that the energy and power sectors have a huge role to play in accelerating India’s progress in the next 25 years, addingthat the projects launched are significant steps in the direction of green energy and energy security for the county. He informed that in the last eight years, about 1,70,000 MW of electricity generation capacity has been added in the country.

Utility Scale Solar Projects

Assam Chief Minister (CM) Himanta Biswa Sarma inaugurated another 25 MW solar power plant in line with his government’s goal to meet 50 percent of the state’s electricity demand through such renewable energy source in the next four years. He had unveiled a similar plant in Udalguri and the latest facility came up at Bhalukghata in Kamrup district. The 25 MW plant was set up under the ‘build, own and operate’ model by the Assam Power Distribution Company Ltd (APDCL) and Azure Power. The project was developed under the Assam Solar Energy Policy, 2017.

India’s largest floating solar power project has become fully functional at Ramagundam in Telangana. NTPC Ltd has set up the 100 MW plant through Bharat Heavy Electricals (BHEL) under Engineering, Procurement and Construction (EPC) contract. With the commercial operation of the final part capacity of 20 MW, the plant has been fully commissioned at Ramagundam in Peddapalli district. According to the Ministry of New and Renewable Energy (MNRE), the project is divided into 40 blocks, each having 2.5 MW. Each block consists of one floating platform and an array of 11,200 solar modules. The plant is installed across the natural raw water reservoir, saving valuable land resources, and also conserves water by reducing evaporation. With innovatively engineered layouts and arrangements for the solar PV modules, electricals and floaters, the plant will ensure that the aquatic ecosystem is maintained while producing clean power.

SJVN entered into a pact with Solarworld Energy Solutions to build two solar power projects in Uttar Pradesh for INR6.9 bn (US$86.6 mn), which will have the total generation capacity of 125 MW. The contract value for a 75 MW solar project is INR4.1 bn (US$51.4 mn), while for 50 MW solar project is INR2.8 bn (US$35.1 mn). Both the projects are scheduled to be commissioned in April 2023. Presently, SJVN has the total portfolio of around 31,500 MW and has diversified into power transmission and power trading. Recent project additions are paving the way for achieving SJVN’s shared vision of 5,000 MW by 2023, 25,000 MW by 2030 and 50,000 MW installed capacity by 2040.

Hydro Power

Hydro power giant NHPC said it has inked a pact with Damoder Valley Corporation (DVC) to explore possibility of forming a joint venture firm for setting up hydro power and pump storage projects. This is in line with the national objective of Energy Transition i.e 500 GW of renewable energy by 2030 and net zero by 2070. NHPC has an installed capacity of 7071.2 MW from 24 power stations, including two projects in joint venture mode, as per its web portal. Its plants generated 24,855 million units of power in 2021–2022.

Wind Power

India’s installed capacities of wind and solar energy projects were at 40,788 MW and 57,705 MW, respectively, till June-end this year, Minister of State for New and Renewable Energy Bhagwanth Khuba informed. India has set a target of having 175 GW of renewable energy capacity, including 100 GW of solar and 60 GW of wind energy, by 2022. The cumulative installed capacity of wind power projects in the country was at 40,788 MW as of 30 June 2022, he said. He said solar power projects totalling 57,705.70 MW, including over 6,000 MW in rooftop solar installations, have been installed as of 30 June 2022. He said that as against the target of achieving 175 GW of renewable energy, excluding large hydro installed capacity by 2022, a total of 114.07 GW renewable energy capacity (excluding large hydro) has been installed in the country by June-end 2022.

Rest of the World


China built nearly 31 GW of new solar power capacity from January to June, up 137 percent from a year earlier, with full-year installations on course to hit a record high, the China Photovoltaic Industry Association said. Total solar power capacity now stands at 340 GW, up 25.8 percent compared to last year, the Association said. Total installations over the year are expected to stand at between 75 GW and 90 GW over 2022, the Association said, breaking last year’s record of 54.9 GW. China is aiming to bring total wind and solar capacity to 1,200 GW by the end of the decade, up from 635 GW at the end of last year, and is currently developing large-scale renewable energy bases in desert regions.

A surge in hydropower output in China this year, boosted by record-breaking rainfall, is helping the world’s biggest polluter meet green targets as well as cut liquefied natural gas imports (LNG) amid tight global supplies. Southern China recorded its heaviest rainfall in 60 years from March to May, topping up the region’s huge dams, and lifting hydropower generation by 18 percent in the first five months of the year compared with a year earlier. Meanwhile, thermal-power production, mostly from coal-fired utilities, dropped 4 percent in the January–May period. The jump in hydropower generation is also helping the world’s No. 2 economy avoid the power shortages it experienced last year, partly caused by drought that affected dam water levels. China currently relies on coal for about 60 percent of electricity generation, down from over 75 percent in 2010, 3–5 percent on gas, and the rest on renewables. Hydropower output in May jumped 27 percent on year to 121.7 billion kilowatt-hours (kWh), a record for this period. Abundant rain also allows reservoirs to store more water for hydro generation in coming months. China added about 23 GW of new hydropower capacity in 2021, bringing total hydro capacity to 16 percent of the power mix. Solar, though much smaller, is growing more rapidly. In the first five months this year, solar power output increased by 13 percent on year, accounting for 2.7 percent of total electricity production, a record high.

Countries need to expand manufacturing of solar panels from their current concentrated base in China to ensure secure supply and meet targets for cutting planet-warming carbon emissions, the International Energy Agency (IEA) said. The world needs to double its current capacity to produce the “key building blocks” of solar panels: polysilicon, ingots, wafers, cells and modules by 2030, the IEA said in a new report. Partly thanks to Chinese investment, solar photovoltaic technology, which converts sunlight into electricity, has become the cheapest way to generate power in many parts of the world. In 2021, China was home to 79 percent of manufacturing capacity for polysilicon, the IEA said. A full 42 percent of that is located in the province of Xinjiang, where the country’s largest plant accounts on its own for 14 percent of global capacity. European countries have the potential to manufacture these parts in ways that emit less carbon, thanks to the high shares of nuclear and renewables in their power mixes, the report said.

USA & North America

A small US (United States) solar company with no manufacturing experience announced plans to open a solar panel factory in Panama to help the American industry reduce its reliance on Chinese-made goods. Universal Solar America LLC, an Arizona company that helps solar project developers procure panels, said its planned facility will help US companies avoid tariffs, shipping delays and other challenges that have scuttled a supply chain comprised primarily of products made in Asia. About 90 percent of US solar panels are made overseas, and that reliance on imports has wreaked havoc on the US solar industry at a time when it is working to satisfy soaring demand from utilities and corporations worried about climate change. Universal Solar expects to be producing panels at the facility in a free trade zone in Colon, Panama by the end of this year. It will have an initial annual capacity of 600 MW, which it could double early next year. The company has taken orders for more than 400 MW so far from undisclosed customers and is negotiating its first round of funding.


Portugal’s EDP Renovaveis (EDPR), the world’s fourth-largest renewable energy producer, has bought 70 percent of Kronos Solar Projects for 250 mn euros (US$256 mn) to help boost its growth in Europe, EDPR said. German company Kronos has 9.4 GW of solar projects in different stages of development in Germany, France, the Netherlands, and the UK, EDPR said. Germany represents close to 50 percent of the acquired solar development portfolio. EDPR, which is the wind and solar unit of EDP-Energias de Portugal, said the deal allows it to expand its presence to 12 markets in Europe, which it said represents more than 90 percent of expected solar capacity additions in the European Union until 2030.

Wind and solar energy deployment in the European Union (EU) is not proceeding fast enough to meet global climate goals due to a slow permitting process, a report by independent climate think tank Ember showed. To reach the goal of limiting warming to 1.5 degrees Celsius, the EU will need an additional 76 GW of renewable sources by 2026, though Ember forecasts show only an additional 38 GW will be deployed over the next four years. Wind supply has grown slower than solar capacity, adding an average of 10 GW per year since 2018, and will only reach 54 percent of the growth required in 2026, Ember said.

Norwegian hydropower producers are cutting output in southern Norway this summer to save water for the winter, fearing a looming supply crunch after a prolonged period of dry weather diminished reservoir levels. There is also concern that hydropower, which accounts for around 90 percent of Norwegian electricity generation, will continue to be exported to continental Europe. The reservoirs feeding many of the plants are currently only 59 percent full, compared with a 20-year median level of 68 percent, according to data from energy regulator NVE.

Shell Plc said it would start building a renewable hydrogen plant in the Netherlands, which according to the energy giant will be Europe’s largest once it is operational in 2025. Shell said the 200 MW electrolyser, named Holland Hydrogen I, in the port of Rotterdam would produce up to 60,000 kilograms of renewable hydrogen per day. The London-based company, which aims to become a net zero greenhouse gas emissions company by 2050, has been boosting low-carbon output as it shifts away from oil and gas. Shell said it aims to produce hydrogen at the plant using electricity generated by the offshore wind park, Hollandse Kust Noord, which it partly owns. Renewable and low-carbon hydrogen is crucial in curbing emissions, but it will only account for 5 percent of the global final energy mix by 2050, falling short what is needed to meet climate goals, global energy consultancy DNV said.

News Highlights: 3 – 9 August 2022

National: Oil

Chennai Petroleum cuts crude runs by 25 percent at southern India refinery

9 August: Chennai Petroleum Corporation said it had cut crude processing by a quarter at its 201,000 barrels per day Manali refinery in southern India, following an order by the Tamil Nadu state pollution control board. Production at the refinery has been reduced on a ‘temporary basis’ and the company is confident of resolving the issue at the earliest, Chennai Petroleum, a subsidiary of the country’s top refiner Indian Oil Corporation (IOC), said.

LPG refill prices up 41 percent vs 203 percent rise in global rates since April 2020

9 August: The benchmark Saudi Contract Price for liquefied petroleum gas (LPG) rose by 203 percent from US$236 per tonne to US$725 per tonne between April 2020 and July 2022 but the price of 14.2 kg refills supplied to households for cooking increased 41.5 percent from INR744 to INR1,053 during this period, the government said. Oil Minister Hardeep Puri said the government modulates effective domestic prices of LPG. He said three refills were provided free of cost during the pandemic to households that were provided gas connection free of cost under the Ujjwala scheme for the poor. The government has started giving subsidy of INR200 per cylinder to Ujjwala connection holders. The subsidy will be available on 12 refills bought during the current fiscal. According to the Minister, the number of LPG connections have risen from 140 mn in 2014 to over 300 mn in 2022, including 93 mn connections given under the Ujjwala scheme.

IOC’s INR1.6 bn LPG plant in Agartala inaugurated

8 August: Indian Oil Corporation (IOC) has inaugurated its latest greenfield LPG (liquefied petroleum gas) bottling plant at Agartala, set up at an investment of INR1.69 bn. The foundation stone for the plant was laid in 2017 and the project got completed as per schedule in February 2020. The new plant will cater to all the eight districts of the Northeastern state — West Tripura, South Tripura, North Tripura, Dhalai, Unakoti, Sepahijala, Gomati and Khowai. IndianOil-AOD, IOC’s Northeast division, currently has nine operational plants spread across four Northeastern states. Assam has six units—one each in Manipur, Nagaland, and Tripura. It has a total installed capacity to bottle 52.3 mn LPG cylinders every year at its nine operational plants and the capacity utilisation stands at 51.1 mn units at present. This particular Agartala plant can alone take care of Tripura’s demand till 2040.

India diversifying its oil import sources: S&P

4 August: India is looking at pockets of opportunities for oil overseas and its decision to invest US$1.6 billion in an oil project in Brazil is part of that scheme, said credit rating agency S&P. In a report, S&P, citing sectoral experts, said India is keen to explore such opportunities in other Latin American countries. India is looking at diversifying the sources of crude oil for its needs. Prime Minister Narendra Modi’s cabinet in late July approved a proposal to invest US$1.6 billion to develop an oil block in Brazil in an attempt to procure equity oil overseas. The investment will be through Bharat Petro Resources Limited (BPRL), which holds 40 percent stake in the BM-SEAL-11 project, while the remainder is held by Brazil’s state-run Petrobras, the operator of the block. India, the world’s third-largest crude importer and consumer, sources 65 percent of its crude requirements from the Middle East. India has been stepping up cheap Russian oil purchases in recent months despite sanctions from the West to oil trade with Russia after the conflict in Ukraine. The move to deepen energy relations with Brazil comes shortly after India made its intentions clear to explore opportunities for term crude deals with Brazil.

National: Gas

GAIL faces profit hit over gas supply cut

5 August: Profit at GAIL (India) Limited will be hit as it rations gas sales after supplies are cut under its long-term deal with a former unit of Russian energy giant Gazprom amid high spot prices, its head of finance Rakesh Kumar Jain said. GAIL, India’s largest gas distributor and operator of pipelines, imports 14 million tonnes per annum (mtpa) of liquefied natural gas (LNG) under various long-term deals. Of this about 2.5 mtpa, or up to 39 LNG cargoes, were to be supplied this year by Gazprom Marketing and Trading Singapore (GMTS), now a unit of Gazprom Germania. Since the end of May, GMTS has missed delivery of eight LNG cargoes to GAIL and is not certain about future supplies as it is securing the fuel for Europe, Jain said. GAIL has cut supplies to fertiliser and industrial clients besides reducing operations at its petrochemical plant at Pata, northern India, by over 50 percent to avoid purchase of costly spot LNG (liquefied natural gas), Jain said. The firm is also advancing delivery of some of its overseas LNG cargoes through time swaps and has chartered ships to bring in some of its US (United States) LNG that it was planning to trade. GAIL has deals to import 5.8mtpa LNG from the US. Jain said GAIL is also scouting for long term LNG deals to secure supplies, although its previous tender for a 10-year 0.75 mtpa deal failed.

CNG, PNG prices to go up for fifth time this year in Mumbai

3 August: For the fifth time in 2022, prices of compressed natural gas (CNG) and domestic piped natural gas (PNG) will once again increase in Mumbai from the midnight of 2 August. CNG will now be available at INR86/kg, which is an increase of INR6 and domestic PNG will be available for INR52.50/standard cubic metre (SCM), an increase of INR4. The last hike was on 12 July.

National: Coal

Coal crisis unlikely this year: Coal India chairman

5 August: Coal stocks at power plants will be in a comfortable position post-monsoons this year and a crisis like the one experienced last August is unlikely, Coal India Limited chairman Pramod Agrawal said. The company is reorienting its strategy by accelerating its production pace from the first quarter itself. Historically, Coal India’s production is the highest during fourth and third quarters of the year. Agrawal indicated that the entire imported coal quantity tied up under two tenders is unlikely to be drawn.

Odisha to refund excess royalty on inferior coal

4 August: Odisha has become the first state in the country to retrospectively refund excess royalty collected from coal consumers if they received inferior quality coal than contracted. If adopted by other coal-producing states, coal buyers could receive significant refunds when supply quality is not up to the agreed quality. Odisha is expected to reimburse over INR3 bn royalty for coal supplied by Mahanadi Coalfields Limited (MCL), a Coal India Limited unit, between April 2015 and March 2021. Coal consumers claim refunds from Coal India subsidiaries and Singareni Collieries Company Limited in case they are delivered a lower grade of coal than paid for. These companies issue credit notes in such cases that can be adjusted in future payments. However, once submitted to the state exchequer, there are no refunds made for royalty, District Mineral Fund (DMF) and National Mineral Exploration Trust (NMET) payments. Royalty rates for coal are fixed at 14 percent of the price of coal, DMF at 30 percent on royalty, and NMET at 2 percent of royalty, adding to 18.48 percent of the cost. In contrast, if coal delivered is of a higher grade than paid for, the differential cost including royalty and other duties is charged to consumers. Odisha’s decision addresses this anomaly, permitting adjustments in royalty and other statutory dues when inferior quality coal is supplied. The Odisha directorate of mines issued an order allowing MCL to adjust royalty, DMF and NMET in credit notes for grade slippage from the current month. Refunds for the earlier period beginning 1 April 2015, will be issued after reconciliation that is already in process.

National: Power

In 5 months, Haryana struck 10 deals to buy 3 GW

9 August: In the last five months, Haryana, once a power surplus state, has entered into 10 different power purchase agreements to procure nearly 3,000 MW from different sources, including hydel and thermal. Now, the state government is planning to procure another 1,000 MW of power on a long-term basis, at least for 35 years, through bidding. Not to mention that Haryana has now entered the phase of deficit, with the shortage triggering blackouts across the state, including in Gurgaon, over the past few months and pushing the government’s attention towards purchase of power from different sources.

Electricity amendment Bill attack on constitutional rights of States: Punjab CM

8 August: Punjab Chief Minister (CM) Bhagwant Mann said the Centre introducing the Electricity (Amendment) Bill 2022 in Parliament was an attack on the Constitutional rights of the states. The Electricity (Amendment) Bill 2022 to allow non-discriminatory open access to distribution networks of power suppliers was introduced in the Lok Sabha by the Centre amid protests by the Opposition, which claimed that it seeks to take away certain rights of state governments. The Union government should have consulted the states before introducing any Bill related to the power sector, he said. He said farmers in the state are being given free electricity for agriculture purposes.

Gujarat’s power discoms get ‘A+’ rating

7 August: Four Gujarat government-owned power distribution companies (discoms)—Dakshin Gujarat Vij Company Limited, Madhya Gujarat Vij Company Limited, Uttar Gujarat Vij Company Limited, and Paschim Gujarat Vij Company Limited— secured ‘A +’ rank at the 10th Annual Integrated Rating declared by R K Singh, Union Power Minister R K Singh said. Gujarat has established that it has one of the best power distribution systems at the national level, Gujarat Energy Minister Kanu Desai said. Desai said that the benefits of public welfare are being provided to the citizens promptly by undertaking various innovative measures under which the power facilities have also been gradually increased.

National: Non-Fossil Fuels/ Climate Change Trends

MP government aims to generate extra 20 GW of green power by 2030 through renewable energy sources

8 August: Madhya Pradesh (MP) has set an ambitious target of generating an additional 20,000 megawatt (MW) of green power by 2030 through renewable energy sources, including setting up of a solar plant in the Chambal region, once infamous for dacoits, and supplying it to other states. The state currently produces 5,500 MW of green energy through various renewable power sources and a major part of it is sourced through solar power. The state government is also setting up a 1,400 MW solar energy power plant in the Chambal region in the Morena district.

Renewable energy generation accounts for 25–29 percent of total power amid high Demand: Singh

6 August: Renewable energy accounted for 25 to 29 percent of the total power generation recently amid rising demand for electricity, Union Power Minister R K Singh has said. Singh informed this during a meeting of the Parliamentary Consultative Committee of the Members of Parliament for the Ministry of Power and New and Renewable Energy. Singh informed that when power demand increased this year in recent months, renewable energy accounted for 25 to 29 percent of the total power generation and the Renewable energy is a major sector.

Southern Railway saves around INR550 mn by tapping solar, wind power

5 August: The Southern Railway said it has managed to save INR549.9 mn by harnessing alternate sources of energy in its bid to reduce carbon footprint. With a generation of 91.56 million units of wind power that lead to cumulative savings of INR485.4 mn, Southern Railway said through solar energy it managed to save INR64.5 mn by generating 16.30 million units of solar power from 2017 till July 2022. The solar power panels have been installed at various locations across the region and Southern Railway said it was working towards increasing capacity of solar plants.

Haryana only state in region to start biomass gasifier plants

5 August: Haryana is the only state in the region to have installed biomass gasifier plants with a capacity of 6,463 kWeq (kilowatt equivalent) for power generation from stubble and biomass. Though Punjab produces nearly 20 million tonnes (MT) of paddy residue each year, it does not find mention in the list of 19 states that have either installed or are in the process of installing biomass gasifier plants. Haryana produces nearly 7.5 MT paddy straw annually. As per the data presented by Union Minister of Power and New and Renewable Energy R K Singh in the Lok Sabha, the total installed capacity of gasifiers in 19 states, including Haryana, is about 1,74,244 kWeq and 1,710 kWeq is under construction. The Union Minister said in order to develop biomass supply chain infrastructure and to encourage the investors to participate in this sector, the ministry had issued a model long term contract (minimum tenure of 7 years) for biomass supply on March 2 2022. The Union ministry through its ‘Samarth Mission’ has organised 18 training and awareness programs since October last year for farmers, pellet manufacturers, entrepreneurs, and thermal power plant officers in several states across the country. As on 31 July, about 35 power plants in the country have co-fired biomass pellets in their units, he said.

World’s largest floating solar power plant to be built in this Indian state

4 August: A floating solar power plant is going to be built in Madhya Pradesh’s Khandwa. Said to be the world’s largest floating solar plant, it will generate 600 megawatt (MW) power by 2022-23. The project is estimated to be worth over INR30 bn. Renewable Energy Department said that the change in water level in the area was nominal and it thus serves as a suitable site. NTPC Limited declared commercial operation of the final part capacity of 20 MW out of 100 MW Ramagundam Floating Solar PV Project at Ramagundam, Telangana with effect from 1 July. With the operationalisation of the 100 MW Solar PV Project at Ramagundam, the total commercial operation of floating solar capacity in the Southern Region rose to 217 MW.

Adani Group, RIL to set up biogas plants at INR5–6 bn investment each

3 August: The Adani and Reliance Group are each planning to invest INR5-6 bn and set up compressed biogas (CBG) plants. Gautam Adani-led Adani New Industries (ANIL) is planning to set up 40 million tonnes per annum (mtpa) plants in Uttar Pradesh and Gujarat, while Reliance Industries Limited (RIL) is still formalising the two locations. Produced by anaerobic decomposition of agricultural waste, sugarcane press mud, and municipal waste, compressed biogas can be used as a replacement for piped natural gas for domestic usage. Adani and RIL will feed biogas into their fuel retail outlets and CGD (city gas distribution) network. The attractive price of CBG has made the segment lucrative for private players. In 2018, when the sustainable alternative towards affordable transportation scheme was envisaged, the pricing was around INR46-56 per kilogram. Now, it has increased to INR70-76 per kilogram. In October 2018, the Central government launched a scheme to boost the production and availability of CBG as an alternative and affordable clean fuel. It envisaged setting up of 5,000 CBG plants by FY 2023-24.

International: Oil

Japan intends to keep stake in Sakhalin-1 oil project: Industry Minister

8 August: Japan intends to keep a stake in the Sakhalin-1 oil and gas project in Russia, Industry Minister Koichi Hagiuda said, after Russia temporarily banned Western investors from selling shares in key energy projects. The project contributed to diversifying Japan’s energy supply, Hagiuda added. Russia has banned investors from so-called unfriendly countries from selling shares in banks and key energy projects, including Sakhalin-1, until the end of the year, stepping up pressure in a sanctions stand-off with the West. Sakhalin Oil and Gas Development, a Japanese consortium, owns 30 percent of Sakhalin-1.

Cuba gets help from Mexico, Venezuela to fight oil fire

7 August: Cuba appeared to make progress bringing under control a fire at its main oil storage facility that has killed one firefighter, drawing on help from Mexico and Venezuela to fight the raging flames. A secondary fire feeding off oil leaking from the area was also extinguished. No oil had contaminated the Matanzas Bay. Cuba has been suffering daily blackouts and fuel shortages. The loss of fuel and storage capacity is likely to aggravate the situation, which has spurred small local protests in the last few months.

Kashagan oil output down more than 80 percent due to technical issues

5 August: Output at Kazakhstan’s giant Kashagan oilfield in early August was down more than 80 percent from July’s average level due to technical issues. Kashagan output was down to just 27,230 barrels per day (bpd) as of 3 August versus a July average of 167,755 bpd. In March, output averaged 409,921 bpd, the energy ministry data showed. Kashagan had planned to boost output to 500,000 bpd after upgrades. Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, said that supplies via its system were down significantly due to Kashagan’s output suspension and planned maintenance on Tengiz, another giant oilfield. August exports of CPC Blend crude oil are seen at 5.026 million tonnes (MT), down from 5.451 MT in a preliminary plan, a loading schedule showed. That estimate may be lowered further, due to Kashagan’s output issues, two traders involved in the CPC Blend oil market said.

Brazil’s Petrobras lowers diesel prices for 1st time in more than a year

4 August: Brazilian oil company Petrobras said it will reduce refinery gate diesel prices by 3.5 percent starting, the first price cut for the fuel in more than a year. Petroleo Brasileiro SA, as the company is formally known, said that diesel prices will drop to 5.41 reais (US$1.03) per litre from the current 5.61 reais. The company said the move was in line with its fuel pricing policy, which pegs local prices to international rates including oil prices and foreign exchange. The latest move represents the first cut in diesel prices by the oil giant since May 2021—since then, they had more than doubled —and takes the fuel to its lowest level since mid-June. Petrobras has been facing intense pressure from President Jair Bolsonaro and federal lawmakers to bring down prices amid soaring inflation and ahead of a general election in October.

International: Gas

Centrica signs US$8.5 bn LNG deal with US supplier

9 August: Centrica Plc has signed a 7 billion pound (US$8.47 billion) agreement with US (United States)-based Delfin Midstream Inc to buy liquefied natural gas (LNG) from 2026, Britain’s largest energy supplier said. Countries across Europe are seeking to diversify their energy supplies following Russia’s invasion of Ukraine and a drop in gas flows from Russia to Europe. Centrica, which owns British Gas, said the 15-year deal would be worth around 7 billion pounds and involve buying 1 million tonnes (MT) of LNG per annum on a free on board (FOB) from the Delfin Deepwater Port off the coast of Louisiana from 2026. Britain is home to three of the largest LNG terminals in Europe— two terminals at Milford Haven and another at the Isle of Grain—where the super chilled fuel is converted back into gas. The US became the world’s top exporter of LNG in the first half of 2022 and is on course to exceed a pledge to provide Europe with more supplies of gas and help to break its dependence on Russian fuels. Centrica signed an agreement with Norway’s Equinor in June for an additional 1 bcm (billion cubic meters) of gas supplies, enough to heat 4.5 million homes over the next three winters.

Bulgaria to open LNG tender to ward off gas shortages

4 August: Bulgaria’s energy ministry will launch a tender for liquefied natural gas (LNG) to prevent shortages during the peak demand winter season, caretaker Prime Minister Galab Donev said. Bulgaria consumes about 3 billion cubic meters (bcm) per year of gas, one third of which goes to heating utilities. Industry uses most of the rest. At present, the country receives about 1 bcm a year from Azerbaijan and buys the remainder on spot markets, where prices have surged. State gas provider Bulgargaz in response is seeking regulatory approval for a 60 percent increase in gas prices for August to 152 euros (US$154.72) per megawatt hour. Donev set up a task force to deal with the issue of gas supplies and said his government would not need external consultants for the job. The previous government had secured seven shipments of US (United States) LNG from October to April, in total about 1 bcm of gas, but has left Donev’s government to decide by 19 August whether to confirm them.

Germany needs to slash gas use by more than any other EU state

4 August: Germany needs to reduce its gas consumption by more than any other European Union (EU) member state to achieve the bloc’s agreed savings target of 15 percent. Germany must somehow find a way to save 10 billion cubic meters (bcm) of natural gas between the beginning of August and March next year in order to reach the bloc’s target, the equivalent to the average annual gas consumption of 5 million four-person households, reveals the analysis carried out by dpa news agency using EU Commission data. Due to its high level of gas consumption, Europe’s largest economy is required to make greater savings than any other EU state, making it responsible for almost a quarter of the gas savings across the bloc. Economy Minister Robert Habeck has indicated that Germany was already on track to deliver a 14-15 percent reduction in consumption compared to the past year. However, last week Habeck also stressed that Germany would be attempting to reduce its consumption by more than the agreed 15 percent minimum.

France will have filled up its strategic gas reserves by start of November

3 August: France will have filled out 100 percent of its strategic gas reserves by 1 November, government energy transition minister Agnes Pannier-Runacher said, as European countries prepare for fewer energy supplies coming through from Russia. Brussels is urging European Union member states to save gas and store it for winter, fearing Russia will completely cut off flows in retaliation for sanctions over Russia’s invasion of Ukraine. European Union countries,bracing for further cuts in Russian gas supply,approved a weakened emergency plan to curb demand, after striking compromise deals to limit reductions for some countries. Energy Ministers agreed that all EU countries should voluntarily cut gas use by 15 percent from August to March, compared with their average annual use during 2017–2021.

International: Coal

German coal importers expect flurry of shipments from September

9 August: Germany’s hard coal importers expect more shipments from next month when generators will seek to switch to more coal burning and away from Russian gas, but fear logistics problems could hamper deliveries. Verein der Kohlenimporteure (VDKi) expects significant volumes increases in the monthly import figures from September onwards, Alexander Bethe, the chairman of the German coal importers’ group, said. September could bring a 50 percent rise over May, Bethe said, when imports had been 2.35 million tonnes (MT). Monthly coal receipts recorded last winter by VDKi members ran at 3.5-4 MT. Australia, South Africa, Indonesia, and Colombia were all cited as potential coal suppliers by the VDKi earlier this year. Germany may import 32 MT or more of steam coal for power this year, up from 27 million tonnes last year, Bethe estimated, again citing the availability of wind power and weather-driven demand.

China’s July coal imports surge 24 percent to meet peak power load

7 August: China’s coal imports in July rose by nearly a quarter from June to near the highest levels so far this year as power generators increased purchases to provide for peak summer electricity demand. Arrivals of the fuel totalled 23.52 million tonnes (MT) last month, up sharply from 18.98 MT in June but 22 percent lower than a year earlier, data issued by the General Administration of Customs showed. Over the first seven months of the year, China imported 138.52 MT of coal, down 18 percent on the same period of 2021. Daily coal consumption in major coastal regions hovered around 2.2 MT in late July, a similar level to last year, according to Shanghai Shipping Exchange. The government has vowed to avoid power rationing this year and has urged coal-burning power generators, which supply about 60 percent of the country’s electricity, to enlarge coal stocks. Data tracked by Refinitiv showed China’s seaborne coal imports from Russia would hit a record high of 7.38 MT in July. However, analysts have expected coal demand will soon begin to ease as temperatures moderate, while industrial activity remains sluggish amid COVID-19 restrictions.

Mexico races to rescue trapped coal miners

4 August: Rescuers battled to free about 10 workers believed to be trapped in a coal mine in northern Mexico, while three others were found alive, authorities said. President Andres Manuel Lopez Obrador had said nine miners were missing, but the security ministry said later that three had been rescued and taken to hospital while 10 were still believed to be inside. Coahuila, the country’s main coal-producing region, has seen a series of fatal mining accidents over the years.

International: Power

China’s State Grid to invest US$22 bn in UHV power lines

3 August: China’s State Grid plans to invest more than 150 billion yuan (US$22 billion) in the second half of 2022 in ultra high voltage (UHV) power transmission lines. Construction of eight new UHV projects is planned to connect China’s far western regions, where solar, wind, and hydropower plants are mainly located, to its big cities. As of June, State Grid had 11 UHV power transmission lines under construction involving investment of total 90 billion yuan.

International: Non-Fossil Fuels/ Climate Change Trends

France tweaks rules to keep nuclear plants running during heatwave

8 August: France’s nuclear power regulator has extended temporary waivers allowing five power stations to continue discharging hot water into rivers as the country contends with a fourth heatwave of the summer and an energy crisis. High river temperatures have in recent weeks threatened to reduce France’s already low nuclear output at a time when nearly half its reactors are offline because of corrosion problems and maintenance. French nuclear availability has been at its lowest in at least four years this summer, forcing France to import power when usually it would be exporting to neighbouring countries. On some of the hottest days, France has bought 8 to 10 gigawatt (GW), equivalent to the output from about 8 nuclear reactors.

Colombian deforestation unlikely to slow in 2022: Environmentalists

5 August: Deforestation in Colombia shows no signs of abating in 2022 versus 2021, warned environmental groups, with destruction of the country’s Amazon region increasing slightly through the end of July. Colombia’s environment ministry reported that deforestation rose 1.5 percent in 2021 compared with 2020, totalling 174,103 hectares (430,218 acres). Deforestation in the country’s Amazon rose 3.3 percent last year to 112,899 hectares, accounting for more than two thirds of total damage nationally.

This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2022 is the nineteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.

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