India’s upcoming coal auctions will have no financial or technical qualification criteria for bidders, easing entry for interested firms, but will impose penalties strict enough to prevent companies from squatting on mines. The coal ministry will soon issue draft auction rules and they will be discussed with stakeholders before finalisation. The rules will propose relaxed norms to ensure wider participation in the auctions to increase coal availability. The centre expects coal demand of 1,250 mt in 2024, which can in no way be met by CIL alone, forcing the country to move to this market-driven approach. The Mineral Laws (Amendment) Ordinance 2020 promulgated by Union Cabinet proposed removal of the requirement to auction mines to companies ‘already engaged’ in coal mining in India. The ordinance opens up the coal sector completely for commercial coal mining for all local and global firms by clearing restrictions on end-use and prior experience in auctions. The coal ministry aims to issue the Notice Inviting Tender documents before the end of the current financial year to begin the process of commercial coal mining auctions. In a bid to boost production, the Centre decided to allow private companies to mine coal for commercial use in February 2018. The Centre had also planned to begin auctioning coal mines with no end use restrictions by December 2019. But a change in law needs to be effected to allow private players sell coal in the open market. After this, coal can be commercially mined and sold in the country by all entities. The earlier timeline to begin offering blocks for 100 percent commercial coal mining was December 2019. The bidding of coal mines for commercial purposes was also delayed as issues such as base price for the auctioning of mines is yet to be finalised. Till now, coal mines were auctioned with a pre-specified end-use for the coal to be mined. These auctions are based on the price per tonne of coal that the bidders would offer to States. The base price for auctions was defined based on the CIL notified price for the particular grade of coal that dominates the geology of the mine on offer. But industry watchers said that the CIL notified price builds in the inefficiencies in production that the public sector undertaking is criticised for. After an inadequate response in bid rounds for end-use linked mining, the Centre decided to offer an added incentive and the winners have been allowed to sell up to 25 percent of the total coal produced in the open market. For mines being auctioned till now, it is still mandatory to use at least 75 percent of the total coal production for the specified end-use. Competition from an Indian state-run monopoly, which gets its coal mines free, may stymie India’s efforts to attract more investments into the sector. India opened up coal mining to all companies, amending laws that had restricted it mainly to power and metals firms. Unlike CIL new investors will have to bid for the mines. The nation is trying to increase output as new thermal power plants and steel mills boost demand at home even as the world is turning away from the polluting fuel. Last year, the government allowed 100 percent foreign direct investment in coal extraction amid surging imports and falling output at CIL.
The government has cancelled the allotment of a coal block for a power project in Jharkhand, as even after a decade of allotment no significant progress was made to operationalise it. The coal block was allotted in 2009, to Karanpura Energy Ltd — an SPV of erstwhile Jharkhand State Electricity Board. Due to long delays in development of coal block, show cause notices were served by the coal ministry to the company in December 2013, and September and October 2019. The company in its reply to the ministry in November 2019 cited non-availability of land, water and resistance from the local inhabitants as impediments in development of the coal block. As per the allocation letter, the ministry said, the mining lease of the block may be cancelled on the grounds, including unsatisfactory progress in the development of coal mining project and breach of any of the conditions of allocation. In 2009, the ministry had conveyed ‘in principle’ approval to the working of Mourya coal block, in the state of Jharkhand, for power project to be set up by Karanpura Energy Ltd. The Centre has also deallocated a coal block in Odisha allotted to a wholly-owned arm of PFC for a 4000 MW power project on account of delays in the development of the mine. The coal ministry had in 2010 allocated the coal block in Odisha for a 4000 MW power project to be set up by Sakhigopal Integrated Power Company Ltd. As per the allocation letter, one of the conditions of the allocation was that allocation/mining lease of the coal block may be cancelled on the grounds, including unsatisfactory progress in the development of coal mining project. Due to the long delay in development of the mine, show-cause notices were sent by the coal ministry in 2013 and 2019.
CIL will continue to be India’s biggest coal supplier even after the government’s decision to throw open the sector to private players through an ordinance. The coal ministry will also back the private sector, which along with CIL will help bring down coal imports to zero in four to five years. The railways would be requested to invest in infrastructure to transport coal from private mines that are not connected. The government envisions a balance between the public and private sectors in coal mining, with CIL contributing about 60 percent of India’s expanded output in the years ahead. MCL said it has achieved a “new record” in production with an output of 697,000 tonne in a day. The CIL subsidiary registered a production of 696,641 tonne and over burden removal of 590,168 cubic metres, MCL said. The “record” production will go a long way in meeting the energy demand of the nation, MCL said.
The Indian government said it will stop the “substitutable import” of coal in the next three to four years and can go for auction of 100 fully explored blocks. The statement assumes significance in view of recent developments in the sector where the government recently brought an ordinance to amend laws to open up coal mining to firms other than those in the steel and power sectors, removing restrictions on end-use of the fuel. The Cabinet recently approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015. The government is seeking comments on draft rules for coal mines auction which is in the public domain. India imported 235.2 mt of coal in 2018-19 valued at ₹1.7 tn.
Indian steel industry welcomed the government’s decision to promulgate an ordinance to open up coal mining in the country to non-coal companies. ISA said it hails the decision of the Cabinet to amend MMDR Act 1957 and Coal Mines (Special Provisions) Act 2015. The amendment, ISA said, will remove the end-user restrictions besides allowing seamless transfer of environment and forest clearance in operational mines. JSW Steel said the move will go a long way in reducing the coal imports. India has reserves for another 300 years and the time is ripe to use it. If it is not utilised now, it may be able to utilise it in future as developed countries are against coal usage. India is in talks with Mongolia for either acquiring stakes in coking coal assets or sourcing the fuel used in the steel and metallurgical industry.
Coal-belching Jharia in Jharkhand continues to be the most polluted city in India, while Delhi has made marginal improvement in reducing air pollution, according to a Greenpeace India report. Delhi is the 10th most polluted city in India. Jharkhand’s Dhanbad, known for its rich coal reserves and industries, is the second-most polluted city in India, according to the report based on analysis of PM10 data from 287 cities across the country.
Seaborne coal trade around the world grew 0.7 percent last year, helped by higher output in China and Indonesia and more export activity by Indonesia, Australia, Russia and Canada, Germany’s VDKI coal importers lobby said. Imports and exports, counted together, rose to 1.218 bt from 1.210 bt in 2018. Within the 2019 total, trade in coking coal used for steelmaking dropped by 1 percent to 287 mt as steel production declined. But trade in steam coal, used in power stations, rose by 1.2 percent to 932 mt. World demand growth was mainly led by India, where the start-up of new power plants pushed imports over by 5.3 percent to 235 mt, delivered largely from Australia, Indonesia and China, VDKI said. World coal demand is expected to remain stable until 2024, the IEA said.
China’s coal imports are likely to show an impressive bounce in January after customs delays crimped December clearances, but questions remain as to the outlook for 2020 as a whole. December imports were just 2.27 mt according to customs data, taking the full year figure to 299.7 mt, up 6.3 percent from 2018. It’s clear that most cargoes that arrived in December weren’t cleared by customs, most likely as part of efforts to limit growth in annual coal imports. Without setting a formal target, the message from officials in Beijing to the coal industry had been that they wanted 2019 imports to be much the same as the 2018’s 281.2 mt. While 2019’s imports were 18.5 mt higher, the slowing of clearances in December did mean the total for the year stayed below the big round figure of 300 mt. Nonetheless, coal imports were the highest since a record 327.2 mt in 2013. About 20.2 mt of coal arrived at Chinese ports in December, according to vessel-tracking and port data. China’s top coal producing province Shanxi, in northern China, plans to seek investors via tenders to extract coal-seam gas in thousands of coal pits that have been abandoned after years of mining. Shanxi holds about 2,052 square kilometre of depleted coal mine zones that could contain an estimated 72.6 bcm of coal-seam gas. Proper development of coal-seam gas in these areas would not only bring economic benefits, but also improve the air quality in the region.
Indonesia’s energy and mineral resources ministry has decided to keep coal domestic market obligation at 25 percent and the price cap at $70/tonne in 2020, it said. The ministry last year said the government was considering lowering the mandatory coal sales to domestic power plant operators to 20 percent since many miners struggled to fulfill the requirements.
Germany is set to become the first country to drop both nuclear and coal power under a landmark agreement to compensate workers, companies and regional governments as it switches off brown coal-fired plants by 2038. The government struck a deal worth more than €40 bn ($44.7 bn) with the premiers of Germany’s coal-mining regions. The decision marks a major turnaround for Chancellor Angela Merkel’s conservative-Social Democrat coalition. Analysts thought the impact on the coal market would be limited, since EU demand for coal has long stagnated in the face of competition from renewables and gas. Coal prices fell 40 percent last year and have barely recovered since. Germany already has plans to phase out hard coal power stations, a process that is already well under way. The new package extends that to brown coal, or lignite, of which Germany is the world’s largest producer. Brown coal generates about 19 percent of the country’s electricity, but is considered the most polluting type of coal, partly because its low energy density means more must be burned. German engineering group Siemens said it would fulfil its contractual obligations to a controversial coal mining project in Australia’s outback, attracting criticism from environmental groups. Siemens was awarded a contract last year to provide signaling technology for a railway line to transport coal from a remote coal mine run by India’s Adani Group in northern Queensland state. Environmental activists slammed the decision and pledged to continue their protests, concerned the continued use of coal will lead to higher emissions of carbon dioxide, a gas which is linked to global warming. Dutch insurer Aegon said it will gradually reduce holdings in companies generating revenue from coal-fired power plants, or coal mining, to support the transition toward a low-carbon economy. Aegon said it already excludes companies that derive more than 30 percent of sales from the exploration, mining, and refining of thermal coal. It will scale back those investments over the next decade. The Dutch insurer, with more than 300 bn in managed assets at the end of 2018, said it will cease investing in companies who own more than 10 GW of coal-fired electricity generation capacity and have plans to extend their capacity. Aegon will cease to invest in companies producing more than 20 mt of thermal coal annually, and are expanding coal-related business, it said.
One of the largest coal-fired power plants in the western US will close two of its four units as the Montana facility edges toward an eventual total shutdown. Colstrip Units 1 and 2 – built in the 1970s when massive strip mines were being developed across Montana and Wyoming – will close as soon as they run out of coal to burn. The closure of Units 1 and 2 was long anticipated as demand for US coal collapsed in recent years, and came despite vows by elected officials in Montana to find ways to keep it open. The two closing units are operated by Pennsylvania-based Talen, which co-owns them with Puget Sound Energy of Washington state. However, one of the owners, Northwestern Energy, plans for Colstrip to keep running past 2040 and announced in December that it wants to acquire part of Puget Sound Energy’s interest in Colstrip Unit 4 for $1. That would boost South Dakota-based NorthWestern’s ownership interest in the power plant to 55 percent even as many other utilities across the US have been getting out of the coal power market in recent years. Wyoming and Montana, two coal-producing western states, asked the US Supreme Court to invalidate Washington state’s decision to block on environmental grounds a coal export terminal intended as an outlet to Asian markets. Wyoming and Montana contend that Washington state’s denial of a key water permit needed to allow construction of the coal export terminal has interfered with their trade with Asia. Washington has said it has the right to protect its waterways from potential pollution. The proposed terminal would be located in Longview, Washington, at the mouth of the Columbia River, where it would ship coal transported by rail from Wyoming and Montana. The challenge is the latest legal move in a years-long battle between coastal states and coal-producing states here over the construction of proposed terminals that would enable US coal to reach markets in Asia, a source of demand for coal as American utilities burn less and less of it. The coal industry has looked at the West Coast as a gateway to the global market, with plans for as many as seven terminals on the books a decade ago. Tri-State Generation and Transmission Association said it will close its Escalante Station in New Mexico by end of 2020, and Craig Station and Colowyo Mine in northwest Colorado by 2030. The wholesale power supplier will recognize a one-time impairment loss of about $282 mn in the first quarter of 2020 due to early retirement of 253 MW, coal-fired Escalante generating station.
Russian steel and coal producer Mechel has decided not to buy back a stake in its biggest asset, the Elga coal mine in Russia’s far east, its creditor Gazprombank, which has held the stake since 2016, said. Mechel is engaged in talks with its creditors about restructuring $6 bn in loans. It sold a 49 percent stake in its Elga project, one of the world’s largest coking coal deposits with reserves of 2.2 bt to Gazprombank in 2016 as part of a debt restructuring process. Mechel said it had received an alternative offer regarding the Elga coal project, which is why it chose not buy Gazprombank’s stake.
Mining giant BHP Group said that poor air quality caused by smoke from Australia’s bushfires is hurting coal production, as authorities said a reprieve from hazardous fire conditions would end within days. The warning from the world’s biggest miner showed how an unusually long bushfire season that has scorched an area one-third the size of Germany is damaging the world’s No. 14 economy. Scores of fires were still burning on the east coast despite thunderstorms and rain in recent days. BHP said smoke and dust from bushfires had reduced air quality at its energy coal mines in New South Wales state, and if the deterioration continued “then operations could be constrained further in the second half of the year.”
| CIL: Coal India Ltd, mt: million tonnes, bt: billion tonnes, PFC: Power Finance Corp, MW: megawatt, GW: gigawatt, MCL: Mahanadi Coalfields Ltd, mn: million, bn: billion, tn: trillion, ISA: Indian Steel Association, IEA: International Energy Agency, bcm: billion cubic meters, EU: European Union, US: United States |
24 January. In a big relief to the oil sector, government may allow producers of petroleum and natural gas to claim credit for GST (Goods and Services Tax) on all inputs, input services and capital goods being paid by them even though the output petroleum products including petrol, diesel, ATF (aviation turbine fuel) remain outside the new indirect tax framework. The government is looking at an industry proposal to amend CENVAT rules that will allow petroleum producers to claim credit on all taxes paid on inputs under the GST system and get a set-off on these duties against output excise duty paid on five petroleum products that continue to remain outside GST. As of now, five petroleum products viz. petroleum crude, motor spirit (petrol), ATF, high speed diesel and natural gas are included in GST, but is governed under existing Central Excise Act as well as State VAT (Value Added Tax) and Central Sales Tax Act, till GST Council recommends the same for coverage under GST. In the absence of a consensus among states, the five products remain outside the GST fold. Accordingly, input tax credit of GST paid on procurements is not allowed against the output tax liability to the supplier of the said products and is an additional cost for the producers of oil and gas. The oil ministry has been pushing for inclusion of petroleum products in the indirect tax system for some time now as it feels that this would bring down volatility in its retail pricing that is constantly under pressure on rising global oil prices. Industry body FICCI has also pitched for provision of credit of GST against excise duty on petroleum products as a temporary measure till all products get into the indirect tax system.
Source: The Economic Times
23 January. Ghana plans to replicate India’s success at near-universal cooking gas or LPG (liquefied petroleum gas) access and has sought its expertise in doing so. Indian Oil and National Petroleum Authority of Ghana signed an initial agreement in the presence of Oil Minister Dharmendra Pradhan that would set-off cooperation between the two countries on increasing cooking gas penetration in the African nation. Ghana is aiming to increase cooking gas access to at least 50 percent of its households from the current 23 percent by 2030. Indian Oil would provide support to the National Petroleum Authority of Ghana in several areas such as development of Health, Safety, Security and Environment (HSSE) Standards, development of licensing, permit and legal framework, development of economics for LPG (liquefied petroleum gas) bottling plant, pricing structure, and communication strategy, as per the statement. Indian Oil will also assist in areas of infrastructure development for the new LPG Value chain, support for upgrading capacities of institutions along with policy development and review, it said.
Source: The Economic Times
22 January. The Anil Agarwal-led Vedanta is looking to sell a minority stake in Cairn India to a strategic partner as the diversified oil-to-metals conglomerate looks to cut its mammoth $6.6 bn (Rs465 bn) debt and revive cash flows amid economic uncertainty. Cairn is the country’s largest private sector oil and gas producer accounting for nearly a quarter of India’s total domestic crude oil production and Vedanta may look to dilute up to 25 percent to raise a minimum of $1.5-2 bn (Rs10,500-14,100) through this “value unlocking” exercise. Cairn has produced 189 kilo barrels of oil equivalent per day in the last fiscal year and has gross proved and probable resources of 1195 million barrels of oil equivalent. A large portion of the hydrocarbon production of Cairn in India comes out from the inland field in Barmer, Rajasthan, its crown jewel. The Rajasthan field had 11 developing drilling rigs at the end of March 2019, and 99 drilled wells. The production sharing contracts of Rajasthan and Ravva block have been extended for 10 years, subject to conditions.
Source: The Economic Times
22 January. Oil and gas production by Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) suffered a hit in December 2019 owing to the ongoing protests over Citizen Amendment Act (CAA) apart from technical issues, fresh data published by the oil ministry’s statistical arm Petroleum Planning and Analysis Cell (PPAC) showed. The country’s total crude oil production in December dropped 7.37 percent to 2,651 thousand metric tonne (tmt), pushing import dependence to a historic high of 86.9 percent in the month. ONGC accounts for 65 percent of the country’s domestic oil production. It recorded a marginal 1 percent decline in oil production last month at 1,749 tmt. Cumulatively, in the April-December 2019 period, the company’s oil production declined 3.28 percent to 15,387 tmt. The company’s oil production from projects in Assam and Tripura declined 5.37 percent to 81.23 tmt in December. Cumulative crude oil production from both the states declined 2.65 percent to 733 tmt during the April-December 2019 period.
Source: The Economic Times
QuIck CommentReducing GST on auto LPG may deter use of lower polluting natural gas in transportation! Ugly! |
22 January. Industry body Indian Auto LPG Coalition sought reduction of Goods and Services Tax (GST) on auto liquefied petroleum gas (LPG) as well as on conversion kits for gaseous fuels as part of measures to promote the adoption of clean automotive fuels. It said auto LPG is among the cleanest alternative fuels with a global warming potential of ‘zero’ and currently taxed at a high GST slab of 18 percent. On the other hand, the GST rates on auto LPG and CNG conversion kits stand at 28 percent. The global consumption of auto LPG has risen by over 40 percent over the past 10 years, fuelled by environmental concerns. More than 26 mn vehicles run on auto LPG globally, supported by close to 71,000 LPG filling stations with global auto LPG consumption exceeding 26 million tonnes. Emissions of harmful nitrogen oxides (NOx) and harmful particulate matter 2.5 are almost negligible for auto LPG.
Source: The Economic Times
27 January. India pressed its largest LNG (liquefied natural gas) supplier Qatar to lower price of gas supplied under long-term contract to reflect falling rates of the spot or current market, Oil Minister Dharmendra Pradhan said. Qatar supplies 8.5 million tonnes (mt) of liquefied natural annually to India at a price linked Brent crude oil. Landed price comes to $9-10 per million metric British thermal unit (mmBtu), while the same gas is available in spot market at half the rate. India has in the past used its status as Asia’s third-largest LNG buyer to renegotiate deals with Qatar, Australia, and Russia. In 2015, it renegotiated the price of the long-term deal to import 7.5 mt per year of LNG from Qatar, helping in saving Rs80 bn. In 2017, it got ExxonMobil Corp to lower the price of Gorgon LNG and a year later convinced Gazprom to lower rates also.
Source: Business Standard
27 January. The Centre wants the states to limit the Value Added Tax (VAT) rates on compressed natural gas (CNG) and liquefied natural gas (LNG) at under 5 percent. The Centre has also pitched for lowering of road taxes for vehicles running on CNG/LNG by states to make these on par with the rates charged on electric vehicles (EVs). These proposals are part of the draft policy for city gas distribution (CGD) prepared by the Ministry of Petroleum and Natural Gas (MoPNG) which, the government expects will become a template for every state to come up with their own CGD policies. Different states charge different VAT on CNG. For example, while Delhi completely exempts VAT on CNG, the same in Uttar Pradesh, Maharashtra and Gujarat is as high as 12.5 percent, 13.5 percent and 15 percent, respectively. It remains to be seen if the states agree to reduce the VAT on CNG as suggested by the MoPNG, and forego the income they earn from this source. According to experts, having a uniform tax rate for CNG will address the long-standing demand of including gas under the ambit of the Goods and Services Tax (GST). At present, the coverage of the CGD (city gas distribution) network spans across 232 geographical areas spread over 407 districts in 27 states. The present share of gas in the energy basket of the country is 6.2 percent, and the target is to take it to 15 percent by 2030. As on September 2019, there were 1,815 CNG stations and 54.2 lakh domestic connections across the country. Currently, about 76 percent of the CNG stations and 80-90 percent of the PNG (piped natural gas) connections are concentrated in Delhi, Gujarat and Maharashtra. Under the ninth and 10th rounds of bidding for CGD networks, the number of CNG stations and domestic PNG connections are expected to increase by 8,181 and 42 mn in next 8-10 years. According to Kotak Institutional Equities, CGD companies source around 15 percent of their domestic gas requirement from the Panna-Mukta-Tapti (PMT) fields. After the expiry of Panna-Mukta-Tapti (PMT)’s production sharing contract in December 2019, gas from this field is seen to the levels of $3.6 per million metric British thermal units (mmBtu), against its earlier contracted price of $5.7 per mmBtu. Kotak expects domestic gas price to decline by around $1 per mmBtu in the upcoming revision for the first half of FY21. Apart from GAIL Gas, Gujarat Gas, Indraprastha Gas, Mahanagar Gas, Indian Oil, Hindustan Petroleum and private entities such as Adani Gas and Torrent Gas have significant presence in the sector.
Source: The Financial Express
25 January. The 438 km (kilometre) Kochi-Koottanad-Mangaluru re-gasified liquefied natural gas (RLNG) pipeline that GAIL (India) Ltd is laying could be commissioned by March this year. Completion of this line will help GAIL commence RLNG supply to industries and other stakeholders. This comes after GAIL failed to meet the September 2018 deadline due to issues in laying the pipeline across the Chandragiri and Nethravathi rivers. GAIL had awarded the contract to lay the 111 km pipeline in north Kerala and Karnataka at an estimated cost of Rs1.6 bn in August 2017. Work on laying the pipeline across the Nethravathi to a length of 410 metres between Innoli and Arkula should be completed by 15 February, GAIL said. City gas distribution in Mangaluru with CNG (compressed natural gas) as auto fuel will take time as the contractor has to lay the distribution pipelines across the city. The pipeline is designed to transport 16 million cubic meters of RLNG, GAIL said.
Source: The Economic Times
24 January. Oil and Natural Gas Corp (ONGC) plans to invest Rs32 bn to drill around 115 wells across eight oil and gas fields in Tripura. The company said in an application to the environment ministry the proposed 115 development drilling locations are expected to lead to further development of Agartala Dome, Baramura, Kunjaban, Konaban, Manikyanagar, Sundalbari and Sonamura Fields in Sipahijala, West Tripura, North Tripura and Gomati districts of Tripura state. This can help meet the consumer demand in the future and thereby fulfil the energy requirement of the North-Eastern states, it said. While gas was discovered in Tripura in the 1970s and commercially viable gas reserves were found in more than 11 structures over time, poor infrastructure and absence of adequate industrial development in the region did not allow full utilisation of gas reserves in the region. The company expects Tripura asset to produce around 5 million standard cubic meter per day of natural gas and condensate of around eight tonne per day for the next 15 years. ONGC plans to transport the gas produced from Tripura asset to different Group Gathering Station of respective fields. The company’s Tripura asset has five Gas Collecting Stations (GCS) – Agartala Dome (ADB), Baramura, Konaban, Rokhia & Sonamura for processing well fluids coming from seven developed field. ONGC accounts for 75 percent of the country’s natural gas production. It had witnessed a 9 percent decline in its natural gas production at 1,998 million metric standard cubic meter (mmscm) in December 2019. In the first nine months of the current financial year, the company’s natural gas production declined 2.70 percent to 17,918 mmscm. ONGC’s gas production from Tripura increased 2.62 percent to 1,174 mmscm during the April-December period of 2019. The company had earlier voiced concerns on the country’s natural gas pricing formula for domestically produced gas saying that low prices are acting as a deterrent for monetisation of various gas fields.
Source: The Economic Times
22 January. Adani Gas Ltd (AGL) will invest up to Rs90 bn in setting up city gas distribution network over the next 10 years to retail CNG (compressed natural gas) to automobiles and piped cooking gas to households in those areas where it won licences in the recent bidding round, its CEO (Chief Executive Officer) Suresh Manglani said. AGL on its own and in a joint venture with state-owned Indian Oil Corp (IOC) has won city gas licence for 38 geographical areas spread over 71 districts in 15 states in recent bid rounds. As part of the government vision to raise the share of natural gas in the energy mix to 15 percent by 2030 from current 6.2 percent, the oil regulator PNGRB (Petroleum and Natural Gas Regulatory Board) has in last couple of years conducted two licensing rounds that have expanded the coverage of city gas network to over 400 districts covering 70 percent of the population of the country. Entities winning city gas licences have committed to supply piped natural gas to about 50 mn homes and set up 10,000 CNG dispensing stations. He said while a push is being made towards a gas-based economy with open access and gas exchange being planned, key issues such as the inclusion of natural gas in the GST (Goods and Services Tax) regime and ban on polluting fuels remain critical. At the end of September 2019, AGL had six city gas projects operational with 86 CNG stations and 0.41 mn residential customers. It supplied 1.55 mn standard cubic meters per day of gas through these. The company plans to scale up the CNG outlets to 1,550 by 2027 and connect 6 mn households with piped natural gas, he said.
Source: Business Standard
28 January. Coal India Ltd (CIL)’s foreign acquisitions plan has hit a roadblock with all top merchant bankers refusing to offer consultancy or carry out due-diligence of assets shortlisted by the firm. This is likely to delay the company’s foreign ventures since it will now have to look for second rung bankers ready to offer services to the coal sector. Last year, CIL had identified six potential coking and semi-coking coal assets, two each in Australia, Canada and Russia. According to a Memorandum of Understanding (MoU) with the coal ministry, CIL was to submit binding bids for acquiring stakes in assets in Australia and Canada by March 2020.
Source: The Economic Times
25 January. Coal India Ltd (CIL) said its coal producing subsidiaries follow environmental and sustainable standards but there could be “some stray cases” of lapses. The world’s largest coal miner is expecting to achieve a double digit growth in production for January 2020, CIL CMD (Chairman and Managing Director) A K Jha said. CIL production till November in the current fiscal has suffered due to prolonged monsoon but since December it has improved, Jha said. Jha said the miner is trying to achieve its production target of 660 million tonnes (mt) for the current fiscal.
Source: Business Standard
QuIck CommentLower entry barriers in coal mining will introduce competition in the sector! Good! |
24 January. The government is looking at reducing the entry barriers in coal mining which will have a spin effect on the GDP (Gross Domestic Product) growth and the economy, the coal ministry said. The ministry is open to all suggestions in this regard and will go to the Cabinet after the consultation series are over. Government had promulgated Mineral Laws (Amendment) Ordinance, 2020 on 10 January 2020 to enable wider participation in auction of coal mines by removing the end-use restrictions of the mining blocks. Earlier last year, Government had also allowed 100 percent Foreign Direct Investment under automatic route for coal mining activities including associated processing infrastructure.
Source: Business Standard
28 January. Union Power Minister R K Singh said a new scheme to revive the beleaguered state-owned power distribution companies (discoms) may be announced in the Union Budget. A new power sector scheme aimed at better infrastructure, smart meters and private franchisee model for improving power supply in the states is likely to be launched with an estimated capital outlay of Rs2-2.5 tn. The new scheme would replace UDAY (Ujwal Discom Assurance Yojana), an earlier scheme meant for revival of discoms, that concludes in March 2020. Singh said the Centre should have one umbrella scheme instead of multiple schemes for the power sector, and states would have to reduce the losses of discoms to get the benefits under the scheme. The government is planning to integrate electrification programmes Deendayal Upadhyaya Gram Jyoti Yojana and Integrated Power Development Scheme with the new scheme.
Source: Business Standard
26 January. The city residents can continue to avail 1 percent rebate on their electricity bills for making advance payments. The UT (Union Territory) electricity department have made the proposal in the power tariff petition submitted before the Joint Electricity Regulatory Commission (JERC) for the next financial year 2020-21. Taking JERC’s previous order as base, the UT electricity department has made similar plea for next financial year. In the petition, the UT electricity department has also not proposed any hike in power tariff for 2020-21. The UT electricity department, in its power tariff petition submitted before the JERC, had submitted that there will be total surplus of Rs72.3 mn with the department, therefore the department did not propose any power tariff hike.
Source: The Economic Times
25 January. Employees being recruited in the state’s electricity firms — Uttarakhand Power Corp Ltd (UPCL), Power Transmission Corp Ltd (PTCUL) and Uttarakhand Jal Vidyut Nigam Ltd (UJVNL) — after 1 April 2020 will not get the benefits of subsidised electricity. Besides, authorities have also decided to put a cap on subsidised electricity to employees and officers. The Uttarakhand high court had sought a reply from UPCL over the subsidised electricity given to the power department employees. As per the change, the Class IV employee would get 6,000 units of subsidised power supply, whereas the cap for others has been set for 9,000 units per annum. If usage is beyond the set cap, normal charges will be applicable for power department employees.
Source: The Economic Times
22 January. Sterlite Power said it has inked an exclusive agreement with the US (United States)-based Smart Wires to bring SmartValve to Indian market which will enable resourceful grid management. This cutting-edge technology is an intelligent ‘valve’ that will allow utilities to optimally utilise its existing transmission capacity and enhance grid flexibility, the company said. Power networks in India have been facing major transmission congestion challenges due to exponential growth in demand for power and rapid urbanisation, the company said.
Source: Business Standard
22 January. Sixteen mini power projects with a total generating capacity of 1,637 MW are being commissioned in Meghalaya to make the northeastern state self reliant in electricity, Chief Minister (CM) Conrad K Sangma said. Sangma said that of the 1,637 MW installed capacity of the 16 under construction power projects, 801 MW would be hydro-electric, 740 MW would be thermal power and 96 MW from various renewable energy sources. Expressing concern over the delay in the completion of the power projects, Sangma said that due to numerous reasons and problems, the construction of the power plants is not being completed on time. Delay in land acquisition, timely preparation of detailed project reports, hindrances in erection of transmission lines and an unfavourable working environment are some of the hurdles delaying the commissioning of these mini power plants, Sangma said. Sangma said that to minimize transmission loss and power theft, smart meters would gradually be installed in the premises of 4,50,000 consumers.
Source: The Economic Times
27 January. Rooftops of 1.4 lakh buildings have the potential to generate 2,500 MW of installed solar capacity, according to a BESCOM (Bangalore Electricity Supply Company) survey using aerial light detection and ranging technology. The survey was carried out across 1,176 square kilometre in the city. Only 205 MW capacity of SRTPV (solar rooftop photovoltaic) has been installed till July 2019 in the state, while Karnataka’s solar policy of 2014-21 set an ambitious target of 2,400 MW for grid-connected solar rooftop projects. BESCOM will soon allow third-party investors to rent rooftops of domestic consumers and set up SRTPV systems under various business models. BESCOM has proposed a capital expenditure of Rs12.75 bn for installation of hybrid solar rooftop plants with storage, with a capacity of 1060 MW.
Source: The Economic Times
26 January. Installation of solar panels at educational institutions in the state will be started soon, Haryana Deputy Chief Minister (CM) Dushyant Chautala said. He said the electricity generated by the solar plant will make the college self-sufficient in terms of energy needs, besides reducing its power bill of Rs70,000 to Rs45,000.
Source: The Economic Times
24 January. First waste to energy plant of Indian Railways has been commissioned at Carriage Repair Workshop, Mancheswar, of East Coast Railway (ECoR). It is fourth such plant in the country. The plant has a catalytic converter and it converts the waste materials into light diesel oil, gas, carbon powder and water through ‘Polycrack’ technology. The ECoR can sell light diesel oil, use gas and water in its workshop and make carbon powder into bricks. The best thing of this plant is it does not create any waste from this process.
Source: The Economic Times
23 January. Solar Energy Corp of India (SECI) recently informed that it will be organising a pre-bid meeting for the 4 MW floating solar power plant in Andaman & Nicobar Islands. It would be for the selection of solar power developer for the floating power plant with 2 MW/1 MWh (megawatt hour) battery energy storage system at Kalpong Dam in Diglipur, North Andaman. It said that a maximum of two persons from the respective bidder company are allowed to attend the meeting. SECI had invited bids for setting up the 4 MW grid-connected floating solar power plant. It said that the projects would be developed on a build-own-operate basis, and the last date for the submission of bids is 13 February 2020.
Source: The Economic Times
QuIck CommentCustoms duty on imported solar cells will reduce competitiveness of solar energy! Bad! |
22 January. The Ministry of New and Renewable Energy (MNRE) has recommended to its commerce and finance counterparts to impose basic customs duty on the imports of solar cells and modules mainly from China. The revenue department of the finance ministry had in July 2018 imposed a Safeguard Duty on solar imports based on a recommendation from the Directorate General of Trade Remedies (DGTR). That duty was imposed at 25 percent on solar cells and modules from China and Malaysia for one year beginning 30 July 2018; followed by 20 percent for the next six months and 15 percent for another six months period ending July 2020. Currently India attracts 20 percent safeguard duty and no basic customs duty on imported solar cells and modules from China, Malaysia and Vietnam. The government had launched a manufacturing-linked tender with inbuilt subsidy for solar projects in order to boost domestic production.
Source: The Economic Times
22 January. Billionaire Gautam Adani said his group is aiming to become the world’s largest solar power company by 2025 and the biggest renewable energy firm by 2030. The Adani Group said the age of renewable energy has dawned upon the world faster than most could have anticipated. In 2019, the Adani Group was ranked as the sixth largest solar player globally and as a part of this journey.
Source: The Economic Times
22 January. Union Minister Piyush Goyal said India has contributed the least to global warming but is still being very responsible on fossil fuels, while the western world is not doing enough even after accounting for more than half of the carbon emissions. Goyal said India is committed to safeguarding the interest of its people while welcoming investors from across the world by making regulations easier for them.
Source: The Economic Times
28 January. Saudi Aramco Energy Ventures has bought into blockchain-based trading platform Vakt with $5 mn in new shares, Vakt said. The Vakt platform specialises in post-trade processing. It has been live since the end of 2018 with a focus on the key North Sea crude oil grades used to set benchmark dated Brent.
Source: Reuters
28 January. Barclays said oil prices will be impacted by $2 per barrel on the potential economic fallout from the coronavirus outbreak in China. More than 100 people have died and over 4,000 cases of the new virus have been confirmed in China, leading authorities to increase preventive measures, impose travel restrictions and also extend the Lunar New Year holidays to limit the spread of the virus. The bank sees a $2 per barrel downside to their full-year Brent and WTI (West Texas Intermediate) forecasts of $62 per barrel and $57 per barrel, respectively. Compounding the effects of the spill over to economic growth from China and the region, Barclays expects transitory oil demand erosion of about 0.6-0.8 mn barrels per day (bpd) in the first quarter of this year, or 0.2 mn bpd for the full year.
Source: Reuters
27 January. Iraq’s Al-Ahdab oil field resumed production about a week after operations halted there due to protests by security guards amid unrest in one of OPEC (Organization of the Petroleum Exporting Countries)’s biggest producers. Output resumed at Al Ahdab at full capacity, or 70,000 barrel a day. The security guards had blocked access to employees into the production site on 19 January, prompting a halt in production at the field developed by China National Petroleum Corp.
Source: Rigzone
27 January. Exxon Mobil Corp raised its Guyana oil estimates by 2 bn barrels with disclosure of a new discovery, as it continues to develop one of the world’s most important new oil and gas blocks in the last decade. The new find continues an Exxon-led consortium’s long string of discoveries in Latin America’s newest crude producing nation and underscores the importance of Guyana to Exxon for increasing its future oil output. Exxon and partners Hess Corp and CNOOC (China National Offshore Oil Corp) started production at the Stabroek block ahead of schedule in December. The latest discovery, the 16th by the group, brings total recoverable oil and gas resources to more than 8 bn barrels.
Source: Reuters
27 January. Oman’s Energy Minister Mohammed bin Hamad al-Rumhy said he fully supported Saudi Arabia’s readiness to react to any impact the new coronavirus could have on the oil market. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman Al-Saud said the kingdom was closely monitoring developments in global oil markets resulting from “gloomy expectations” over the impact of the new coronavirus on the Chinese and global economy and oil market fundamentals, saying it was primarily driven by “psychological factors”.
Source: Reuters
23 January. Mexico is playing a risky game of hide and seek with the oil market. To frustrate speculators and contain an annual bill of more than $1 bn, Mexico is going to new lengths to mask its attempts to insure its revenue from oil sales against falling prices – no mean feat for a hedging program known as Wall Street’s biggest oil trade. Once an enigmatic agreement between a handful of finance industry officials and Wall Street banks, the hedge is now the most anticipated deal in the oil futures market, making it harder, and more costly, for Mexico to arrange. For its 2020 hedge, however, Mexico has adopted a different strategy than in previous years.
Source: Reuters
23 January. An Oslo appeals court approved Norway’s plans for more oil exploration in the Arctic, dismissing a lawsuit by environmentalists who had said it violated people’s right to a healthy environment. The verdict upheld a ruling made by a lower court, rejecting arguments by Greenpeace and the Nature and Youth group that a 2015-2016 oil licensing round that gave awards to Equinor and others had breached Norway’s constitution.
Source: Reuters
23 January. Brazil produced 1.018 bn barrels of oil in 2019, marking the first time the South American nation passed the bn-barrel mark for annual production, the regulator, known as the ANP, said. ANP said 2019 output increased 7.78 percent over the previous year. Brazil produced 3.106 mn barrels per day of oil in December, up 0.52 percent from the previous month and up 15.44 percent from December 2018.
Source: Reuters
27 January. Nigeria Liquefied Natural Gas (NLNG) has signed a deal with Italian energy major Eni for the supply of 1.5 million tonnes (mt) of LNG per year, the African producer said. The volumes will be supplied on both a free-on-board (FOB) and delivered ex-ship basis for 10 years from Trains 1, 2 and 3 of a six-train NLNG production facility on Bonny Island.
Source: Reuters
25 January. Iran’s Petropars will develop phase 11 of South Pars, the world’s largest gas field, after the withdrawal of French oil major Total and the China National Petroleum Corp. The offshore field, which Iran calls South Pars and Qatar calls North Field, is shared between Iran and Qatar.
Source: Reuters
24 January. Asian spot prices for liquefied natural gas (LNG) plummeted to multi-year lows, pressured by a lack of demand to consume abundant supplies. As milder-than-usual winter in both Asia and Europe is curbing demand, there were deals done below $4.00 per million metric British thermal units (mmBtu), the lowest level in more than 10 years. The average LNG price for March delivery into northeast Asia LNG-AS was estimated at around $4.00 per mmBtu, down $0.60 per mmBtu.
Source: Reuters
23 January. British wholesale gas prices fell, pressured by decreasing demand and expectations that mild weather will continue. Britain’s gas system was undersupplied by 12.4 million cubic meters (mcm), with demand forecast at 320.3 mcm and supply at 307.9 mcm/day, National Grid data showed.
Source: Reuters
23 January. China’s state-controlled Beijing Gas Group has won state approval to build a terminal to receive liquefied natural gas (LNG) in the northern Chinese city of Tianjin. The approved capacity of the terminal is for 5 million tonnes a year, giving no timeline on when the facility would be built.
Source: Reuters
23 January. South Africa’s Richards Bay Coal Terminal (RBCT) said exports fell nearly 2 percent last year to 72.15 million tonnes (mt), their lowest level since 2014, in part because the monsoon season reduced demand from top customer India. RBCT stuck to a target of exporting 77 mt for 2020, the same target as last year’s, which it did not meet. Asia was by far the top destination for South African coal, taking 91 percent of RBCT’s coal exports, while 3 percent went to Europe.
Source: Reuters
26 January. Abu Dhabi-based sovereign investor Mubadala Investment Company has inked an agreement with Uzbekistan’s Ministry of Investment and Foreign Trade, as well as JSC Thermal Power Plants of the Republic of Uzbekistan, to establish a roadmap for the implementation of a transaction, which will include the acquisition, development, financing, and operation of the Talimarjan Power Complex. The deal was inked in the presence of Sardor Umurzakov, the Uzbekistan Minister of Investments and Foreign Trade, at a ceremony held in Tashkent, Uzbekistan.
Source: Construction Week Online
23 January. Strikes by workers protesting against plans to change France’s pension system reduced power generation by more than 3 GW, including 1.8 GW at hydro power stations, data from RTE and state-controlled power group EDF showed. Electricity demand is forecast at around 81 GW due to cold weather. France was a net power importer during the morning peak demand period, the data showed.
Source: Reuters
22 January. Power cuts by state utility Eskom cost the South African economy up to 120 bn rand ($8.3 bn) last year and will probably persist for the next two to three years, the CSIR (Council for Scientific and Industrial Research) research showed. The power cuts are one of the biggest challenges facing President Cyril Ramaphosa as he tries to revive investor confidence in Africa’s most industrialised economy. Ramaphosa has promised to break up Eskom to make it more efficient and granted it a series of mammoth bailouts to stabilise its finances, but its coal-fired power plants keep breaking down after years of mismanagement. The CSIR urged the government to move swiftly to ease regulations governing “self-generation” of electricity by companies and households as a way to minimise power cuts in 2020. Other government initiatives, such as giving independent power producers the go-ahead to build new plants, could only help reduce the scale of power cuts from 2021 if procurement processes are expedited or from 2022 under normal circumstances, the research showed.
Source: Reuters
22 January. Israel’s state-owned electric company said it was ending power cuts to the occupied West Bank after the Palestinians’ main power distributor paid off a chunk of debt. Israel Electric Corp (IEC) began sporadic, three-hour power cuts on 18 December to press for payment of some $519 mn owed by the Jerusalem District Electricity Company (JDECO). Palestinians in the West Bank rely on IEC for over 95 percent of their electricity supply. The cuts led to power outages in the cities of Ramallah and Bethlehem, affecting an estimated 130,000 people, according to JDECO. JDECO buys electricity from IEC and then sells it to customers in the West Bank, territory Israel captured in the 1967 Middle East war and where the PA has limited self-rule under interim peace accords.
Source: Reuters
28 January. Canada’s Brookfield Asset Management Inc has received the go-ahead from Brazilian antitrust regulator Cade for certain solar energy projects in the country’s northeast. The solar power plants, to be built in the state of Ceará, will have total capacity to produce 278 MW of electricity, according to a description of the projects in Cade’s decision. The move underscores Brookfield’s drive to expand its presence in Brazil’s electricity sector, where it operates hydro power dams, wind farms and electricity transmission assets.
Source: Reuters
28 January. The UAE (United Arab Emirates)’s nuclear power plant’s first reactor is ready to start operating. Barakah will be the UAE’s first nuclear plant and the world’s largest when complete, with four reactors and 5,600 MW of capacity. It is being built by Korea Electric Power Corp.
Source: Reuters
23 January. China will allocate 1.5 bn yuan ($217.27 mn) to new solar power projects in 2020, its energy administration said. Of the funds, 500 mn yuan will be given to distributed power projects for residential users, and the remaining 1 bn yuan will be split between large-scaled solar stations and distributed power projects for industrial and commercial users. China has planned to scale back its total renewable power subsidy to 5.67 bn yuan in 2020 from 8.1 bn yuan last year, as Beijing believes clean energy sources are capable of competing subsidy-free with coal-fired power.
Source: The Economic Times
23 January. Portuguese oil and gas company Galp Energia will buy solar power projects from Spain’s ACS, envisaging total spending of €2.2 bn in the next four years and making Galp the leading solar power producer in Iberia. Galp said it would pay ACS €450 mn when the deal for a total of 2.9 GW of capacity, most of it yet to be built, is closed, and assume €430 mn worth of project finance debt. It expects to close the deal in the second quarter of this year. The rest will be invested in the development and construction of the projects, it said. It saw potential opportunities to bring in a partner to its renewable energy ventures.
Source: Reuters
Billion Units
| Renewables Generation Type |
Electricity Generation 2019-20 (April–November) |
| Small Hydro Power (SHP) | 6.99 |
| Wind Power | 50.45 |
| Bio-Power/Cogen. | 5.80 |
| Others | 0.25 |
| Solar Power | 30.87 |
| Total Renewables Generation | 94.36 |
All India Electricity Generation 2019-20 (April-December)
Convention Generation also includes electricity imports from Bhutan.
Source: Central Electricity Authority
|
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 2019 is the sixteenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485. Disclaimer: Information in this newsletter is for educational purposes only and has been compiled, adapted and edited from reliable sources. ORF does not accept any liability for errors therein. News material belongs to respective owners and is provided here for wider dissemination only. Opinions are those of the authors (ORF Energy Team). Publisher: Baljit Kapoor Editorial Adviser: Lydia Powell Editor: Akhilesh Sati Content Development: Vinod Kumar |
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