LOCK-DOWN POWER BILLS SHOCK HOUSEHOLDS
Monthly Power News Commentary: June - July 2020
India
Power Bills
The AAP organised a protest against hefty June power bills in various districts across Maharashtra and submitted its memorandum to various tehsildars and collectors. It has also collected 30,000 signatures offline and plans another 100,000 signatures online through twitter and website campaign. AAP said that workers protested with slogans, placards and have demanded waiver of power bills during Lockdown months for upto 200 unit consumption. The political party has also received response from several power consumers on its newly launched website ‘hisaabdo.in’ from where it will route all complaints to the energy ministry. BJP leaders and workers held protests in Thane city against the MSEDCL and a private power supplier over the "inflated" bills to consumers. The party held the agitations in front of the district collectorate and some other locations in the city. Holding banners and placards, the protesters shouted slogans against the power companies over the hefty bills. The bills should be levied as per the actual meter readings instead of average bills according to protesters.
The Maharashtra cabinet approved a proposal to give concession in electricity duty for industrial consumers. The electricity duty will now be 7.5 percent instead of the present 9.3 percent. The state will face a revenue loss of ₹4.4 bn annually due to the decision, but the industrial consumers will get electricity at low tariff. In another decision, the Accredited Social Health Activists workers will get a pay hike of upto ₹2,000 from 1 July. The MERC has directed power companies to show transparency in their billing procedures and redress consumer complaints immediately. The power regulatory authority had issued directives to the utility firms because of a growing number of complaints. MERC had stated that if a consumer’s bill is more than double of the average for the amount charged between March and May, then the consumer would be given the option of paying it three equated monthly instalments. The reading of electricity metres has been suspended since the nationwide lockdown restrictions were enforced from 25 March to contain the spread of the coronavirus disease (Covid-19) outbreak. Consumers are being billed on the basis of an average consumption based on three months prior to March, or the winter season, when the consumption of electricity is typically low. After social media uproar over exorbitant electricity bills being received by Mumbaikars, consumers are expected to receive bills based on their actual consumption with applicable tariff slab benefits. Further, AEML assured that no electricity connection will be disconnected over non-payment of dues until the consumer’s grievances have been redressed. It said that it has prepared a video to spread awareness about the billing process among the consumers and has also provided them options to self-check their bills on the website by uploading their details and cross-verify the meter reading on the bill, consumption, and the amount payable leading to a speedy redressal to their queries. It further clarified that the bills received by the consumers contain the current reading taken, total amount payable and amendment details of March and April. It said that it has set up over 25 dedicated help desks and consumers can also reach helpline numbers. For improving the functioning in the long-run, AEML shall install more than 700,000 smart meters in the coming months.
AEML said it has waived interest on EMIs for consumers who have opted for the facility to make payment of their electricity bills. The company had offered EMI facility for three months to consumers to make payment of their bills for the month of June, as the amount was significantly higher. The company had said that it is allowing EMI facility at a rate of 9.9 percent interest as per the guidelines of the MERC. However, the company said it will offer three interest free installments. The company had said that it was able to recover overdues from 330,000 consumers out of 750,000 consumers as of 30 June. AEML, which distributes power to around 3 million consumers from Bandra to Bhayandar and Kurla to Mankhurd, had received nearly 48,000 complaints of inflated electricity bills, of which it claimed to have resolved nearly 96 percent. MSEDCL has decided to allow consumers to pay their electricity dues in instalments, a move hailed by people but amid demand for correction of bills and discounts as well in view of the economic slowdown. The state power utility has been at the receiving end of consumers ever since it delivered the bills for the month of June, with many alleging that the same were inflated and wrong. Another issue that has been raised is that the lockdown in view of the coronavirus pandemic has affected the incomes of people. MSEDCL said that consumers have failed to understand the bill in which the average units were deleted in the from of payments made for two previous months. MSEDCL has decided to accept payment of bills in three instalments to reduce the burden on consumers. Consumers are happy about the instalment facility but want the bills to be “corrected” or discounts offered at the same time.
The Bombay High Court directed the MSEDCL to give prompt hearing to complaints of high power bills and act on them at the earliest. A bench of Justices were hearing two public interest litigations filed by Mumbai businessman and a resident over high electricity bills they had received. They approached the high court on June 29, claiming that his electricity charges for the previous month were "10 times more than his usual bill". The petitioner had sought relief from having to pay the bill till the court decided the matter finally. The advocate told the court that high electricity bills during the Covid-19 lockdown would add to the suffering of citizens. Owing to the lockdown and as per the MERC guidelines, meter reading had been suspended in March-end and for December, January and February, consumers were billed as per average usage.
DMK convened a meeting of party’s district secretaries, MPs and MLAs to discuss the power tariff in Tamil Nadu. The party said that though there was no hike in power tariff as of now, the meeting would discuss the issue of people being asked to pay four months power bill at one go. People were getting higher electricity bills since they were spending more time in homes due to the Covid-19 lockdown, power distributor TANGEDCO informed the Madras High Court. Denying allegations in a PIL that it was using arbitrary and unjust methodology for calculating the power bills, the corporation told a bench of Justices that they were following the statutory regulations. Power consumption charges were collected on a bi-monthly basis in the state and calculated based on different slabs for those who consume below 100 units, 101 to 200 units, 201 to 500 units, and above 500 units. While the government provides full subsidy for the first 100 units to all consumers, every unit consumed beyond that was charged at different rates for those falling under different slabs, he said. There have been complaints from consumers that since electricity meter reading could not be taken since the Covid-19 lockdown came into force on March 24, consumers using 100 to 500 units in a billing cycle have to shell out more money.
UP government registration of FIRs against agencies engaged in generation of faulty bills. All managing directors of distribution companies will set accountability of the employees responsible for generation of faulty bills. UPPCL was still receiving complaints of power supply getting interrupted because of thunderstorms. Meanwhile, to provide relief to farmers hit by the Corona pandemic, the state power department extended the easy instalment scheme till 31 July. The scheme ended on 30 June. The scheme, started in February this year, allows farmers to pay power dues till the month of January in six instalments. The scheme has been extended in the interest of farmers who could not avail it till now. 400,000 farmers, mainly those with tubewell connections, have benefited from the scheme so far. Farmers would, however, be required to pay their bills regularly from July.
Telangana Congress president demanded that the State government waive off the electricity bills for the entire lockdown period for below poverty line families, small and medium enterprises. It demanded appropriate reduction in bill amount for the other category of consumers. It requested the State government to shift to the telescopic method of billing instead of continuing with the present non-telescopic method. The electricity bills with inflated power consumption charges were served on the consumers in June. The bills were not only inflated and exorbitant but were prepared in an erroneous manner. Of the 9.5 mn power consumers in Telangana, nearly 7.5 mn are in the domestic category and almost 80 percent of them are poor consuming below 200 units per month. The Congress would organise protest demonstrations in Telangana with black flags and badges against tariff increase.
The Himachal Pradesh State Electricity Board Ltd has started serving disconnection notices to consumers who have not paid bills during the Covid-19 lockdown period. In its notices to consumers, the board is making an emotional appeal, saying it did not levy late payment charges but was reeling under severe financial crisis due to non-payment of bills by thousands of consumers.
Demand Revival
Power demand slump has narrowed to 2.6 percent in the beginning of July from 9.6 percent in June, showing improvement in commercial and industrial activities in the country. The peak power demand had declined by about 25 percent in April and 8.82 percent in May this year due to lower commercial and industrial demand during the Covid-19 induced lockdown. The government had imposed the lockdown from 25 March. The hope is that power demand would reach normal levels by August this year. Unlock 2.0 is expected to bring economic activities to almost normal levels, which would be reflected in power demand data. The government had started easing the lockdown from 20 April 2020. According to power ministry data, peak power demand met was recorded at 170.54 GW on 2 July, which is just 2.61 percent lower than 175.12 GW in July 2019. The peak power demand met was 166.78 GW on 1 July, 168.34GW on 3 July and 160.83 GW on 4 July. The peak power demand met in June dipped 9.6 percent at 164.94 GW compared to 182.45 GW in June 2019. The Covid-19 pandemic and slowdown in demand across sectors has not eased the country’s power supply deficit situation which widened to 0.5 percent in April-June quarter of 2020, up from 0.4 percent in the same period last year. According to power supply data released by the CEA about 291.8 bn units of power was supplied in the first quarter of current financial year against a demand of 293.29 bn units. This represents a deficit of 1,484 mn units or 0.5 percent. Though power deficit has been shrinking over the last few years, the unmet supply is encountered during different times of the year. With power demand falling drastically during Covid-19 outbreak and lockdown, there was expectation that the deficit may not arise. While India’s power supply deficit has widened, the peak deficit has narrowed, an indicator that we are managing peak load a tad better this year. India’s power supply deficit stood at 0.5 percent at the end of March for the financial year 2019-20, and the peak power deficit stood at 0.7 percent, according to the CEA’s data.
India’s electricity generation recovered slightly in June, provisional government data showed, driven by increased power consumption in industrial western states. June power generation fell 9.9 percent, an analysis of daily load despatch data from federal grid operator POSOCO showed, compared with a 14.3 percent decline in May. In the second half of June, electricity generation declined 5.3 percent, compared with a 14.5 percent slide during the first fifteen days of the month. The recovery in power demand in the second half of June was largely led by higher consumption by industrial regions such as western states of Maharashtra and Gujarat, and Delhi in the north. These regions are among the most affected by the coronavirus. Power generation from coal - India’s primary source of electricity - continued to fall in June. Coal’s contribution to overall electricity generation in June fell to 61.6 percent, compared with 64.2 percent in May. India’s electricity generation during the first half of July fell at a slower pace than in June, provisional government data showed, as industries and commercial establishments opened up after further following gradual easing of lockdowns. Power generation fell 3.1 percent in the first 15 days of July compared with the same period last year, an analysis of daily load despatch data from federal grid operator POSOCO showed, compared with a 9.9 percent fall in June. In the second half of June, electricity generation declined 5.3 percent. While power use has picked up from previous months when India was under a strict lockdown, electricity demand - which is impacted by seasonal changes - is still lower when compared with the same periods from the previous year. Industries and offices account for over half of India’s annual power use. Major industrial states such as Maharashtra, Gujarat in the west and Tamil Nadu in the south continued to witness steep drops in electricity use amid higher incidence of coronavirus cases. However, many states with smaller yet significant industrial profiles saw growth in power demand for the first time since a nationwide lockdown in March. The northern state of Uttar Pradesh - India’s most populous and home to the largest number of MSMEs in the country - witnessed a 10.1 percent growth in electricity use. Other states including Bihar, Rajasthan and Madhya Pradesh - all of which are known for MSMEs - saw an uptick in power demand.
Power discom BSES said that it was geared up to ensure incident-free power supply to its over 4.4 million consumers in the national capital and issued an advisory to the public on adopting simple safety precautions during the rainy season, including maintaining "social distancing" from electricity infrastructure. The discom said that the BRPL and BSES Yamuna Power Ltd have undertaken extensive preventive maintenance works to minimise the accumulation of moisture in grids and panels. It advised customers to caution their children from playing near electricity installations, even if they are barricaded, and not play in parks that are water logged. The discom said that customers should get the entire wiring in their premises thoroughly checked by a licensed electrical contractor. Emphasising that power theft by hooking on to an electricity system poses a serious safety hazard, BSES urged customers to report incidents of power theft and convince people not to illegally draw electricity by hooking on to mainlines or roadside electrical equipment. The discom urged customers to alert BSES in case somebody comes across any fallen cable, pole, exposed wiring or digging work on the roadsides.
Maharashtra has promised free electricity to residential consumers if central government agrees to his demand of ₹100 bn grant for MSEDCL. Maharashtra Energy Minister Nitin Raut demanded low interest loans for MSEDCL as it was facing liquidity crunch due to reduced collections because of the lockdown. Raut demanded 100,000 subsidized solar agricultural pump sets for the state under Centre’s KUSUM.
To ensure seamless power supply to the world's "largest" Covid-19 care centre here in a "record time", more than 100 workers and officials of discom BRPL worked round the clock to lay 22-km-long cable underground and install 24 transformers for a load of 23 MW. The transmission chain involved laying 22-km-long cable underground and installing 24 transformers for a load of 23 MW, BRPL said. Initially, BRPL had been entrusted with providing an electricity supply load of 18 MW, but the power load was subsequently increased to 23 MW looking at the requirements, BRPL said. Also, to keep the electricity infrastructure free from waterlogging during the monsoon, four water-pumps have been installed, BRPL said. The power lines at the facility conform to the best international standards and will be remotely controlled from the Supervisory Control and Data Access centre in Kalkaji. The distribution infrastructure will also be scanned using hot-spot technology and load balancing to prevent faults, BRPL said.
In order to reduce consumption of electricity, DRM Bhopal has come up with an energy-saving plan. Bhopal railway station has implemented a system wherein 50 percent bulbs and tube lights will turn off when there is no train at the station. Light will turn on when any train arrives at the platform. The concept has been commissioned for platform no-1, which will help railways save electricity up to 35 percent to 40 percent. At present, the total consumption of electricity at platform no-1 is around 600 units for 12 hours.
Draft Electricity Amendments Act 2020
AIPEF claimed that as many as 11 states and 1 UT have opposed many provisions of the Electricity Amendment Bill 2020. According to AIPEF, the Electricity (Amendment) Bill 2020 to usher "so-called reforms" in the power sector threaten to violate long-cherished principles of federalism. The states (opposing the provisions of the bill) are Kerala, Telangana, Tamil Nadu, Andhra Pradesh, West Bengal, Jharkhand, Bihar, Maharashtra, Chhattisgarh, Rajasthan and Punjab. The UT, which opposed the bill, is Puducherry. Punjab has objected to the proposal of doing away with free power to farmers and replacing it with the direct benefit scheme.
Tamil Nadu urged the Centre not to privatise power distribution. The Tamil Nadu government wanted the Centre to release ₹200 bn sought by TANGEDCO under the PM-KUSUM scheme. The Tamil Nadu government said it would be very costly to have a separate feeder for agriculture and instead suggested solarising individual grid-connected pump sets. Tamil Nadu wants the Centre to declare the Raigarh–Pugalur-Trissur HVDC transmission corridor as strategic and of national importance.
Arunachal Pradesh government has urged the Centre for "special consideration" for the state’s power sector under the Atma Nirbhar Bharat Abhiyan. It sought consideration in the implementation of system upgradation for generation, transmission and distribution of power, saying heavy rains, landslides and snowfall in the hilly state damage the power infrastructure. While welcoming the amendments proposed in the Electricity Act, 2003, Arunachal Pradesh government said the proposed amendment should not take away the rights of the state as the matter pertains to the concurrent list. Notices have been issued to non-performing power developers undertaking 74 projects while 27 projects have been terminated.
Bihar government said is against The Electricity (Amendment) Bill, 2020. Since power is in the concurrent list of the Constitution, the states’ consent is required before making any amendments regarding policy matters. Bihar is not in the favour of privatization of power discoms. Bihar ‘One Nation, One Tariff’ policy in the country at the earliest. The issue of unavailability of prepaid smart electricity meters was raised. Electricity consumption in domestic sector was higher due to return of millions of migrant workers to Bihar.
A section of UP power department employees said it will go on protest if the Centre moves ahead with the Electricity (amendment) Bill 2020 without hearing their concerns properly. Any attempt to place the bill in a haste in Parliament without giving adequate opportunity to concerned parties would be opposed tooth and nail, UP Power Engineers Association said. The government should first disclose the basic purpose of the proposed bill.
Regulation and Governance
In a significant development aimed at executing key projects, the MSEDCL has been asked to delegate powers to all its regional offices. Accordingly, the MSEDCL’s four regional offices in Nagpur, Aurangabad, Pune and Kalyan shall be vested with all powers pertaining to quantity freezing and time limit extensions under all projects, with the joint managing directors and regional directors monitoring them for timely completion. The move comes almost five years after the four regional offices were carved out from the MSEDCL in 2016 for the very purposes of on-time execution of all projects and providing high quality services to the electricity consumers. Part of the original monolith Maharashtra State Electricity Board, the MSEDCL - or MahaDiscom as it is commonly known - is India’s biggest power distribution utility and Asia’s second largest power supplier meeting the needs of over 27.3 mn consumers including residential, commercial, industrial, agricultural and others. Maharashtra has become the first State in the country to get the go-ahead to use drones for aerial surveillance and inspection of EHV power transmission lines and towers. The Union Ministry of Home Affairs and the Director General of Civil Aviation have permitted the MSETCL to deploy drones to inspect faulty lines, reducing the risk posed to its staff. MSETCL said each of its zones will be given a drone, which will be equipped with ultra HD cameras to capture high-resolution close-up photographs and videos of EHV lines and towers. MSETCL said the drones will also help them slash maintenance costs and reduce losses from outages. MSEDCL will to chalk out plans for the electrification of remote and inaccessible tribal areas in Melghat and Gadchiroli.
UP has appealed to the MLAs and MPs to adopt 10 electricity feeders and help the state government in bringing down the line losses for better power supply. In a letter addressed to all MPs, MLAs and gram pradhans, the government underlined the need of bringing down line losses upto 15 percent in what would allow the state government to provide round the clock power supply to the respective areas. Bringing down line losses would help the UPPCL getting higher revenues which would eventually be pooled to install better power infrastructure including replacement of dilapidated electricity wires and installations of transformers of higher capacity. The state government initiatives has initiated schemes like Easy Instalment Scheme and Kisan Asaan Kisht Yojana envisaging payment of electricity arrears up to the month of June in 12 to 24 instalments with a waiver in surcharge. Uttar Pradesh power distribution utility has sought ₹209.4 bn loan from REC Ltd and PFC under the Atmanirbhar Bharat liquidity infusion package in the power sector. This is the largest loan application made so far by any state distribution company under the scheme. Tamil Nadu has asked the Centre to relax borrowing cap and has shown intent to borrow about ₹206.22 bn. The power ministry has approached the Cabinet for the relaxations and the matter is likely to be taken up soon. UP has imposed a ban on the installation of new China-made electricity meters by the state Power Department. The All India Power Engineers Federation has welcomed the decision. The association demands that equipment used in power plants be purchased from public sector company BHEL. It has been quite some time since consumers have been complaining about the working of Chinese metres and even demanding their replacement.
The Haryana government has decided against no power cuts from noon to 4pm in about 1,000 villages having less than 60 percent line loss. The decision also aims to ensure smooth power supply this summer so that people do not face any problem. Also, under the ‘Mera Gaon Jagmag Gaon Yojana’, 24-hour power supply is being provided in about 4,500 villages of the state. Complaints regarding power cut schedule were reported from several parts of the state over the last few days. Since it is paddy sowing season in the state, power cuts are scheduled as farmers need more water. There will be 24-hour power supply in 4,500 villages and no electricity cut in these 1,000 villages for four hours. Besides, there will be uninterrupted power supply in all the villages at night.
The privatisation of electricity department in Chandigargh has gained pace as the government-owned PFC has appointed private company Deloitte as a consultant. Earlier, the UT had engaged PFC to unbundle the department and transform it into a corporate. Meanwhile, the power department employees continued with their protest against the move. As Chandigarh does not have its own power generation, the state transmission utility will be responsible for ensuring smooth transmission of power in the city. State load dispatch centre will be the apex body to ensure integrated operation of the power system.
Supply
WBPDCL has started preliminary works for setting up its ₹44 bn Sagardighi super- critical plant from this month and expects to complete the construction of the unit over the next three-and-half years. The company has decided to consider 1 July as the "zero date" for the implementation of the 660 MW thermal power plant project in Murshidabad district. Usually, the project completion period is counted from the zero date. The WBPDCL has four units of 1600 MW in Sagardighi and the fifth one will increase the plant's capacity to 2,260 MW. The power producer has four more plants in Bandel, Bakreswar, Kolaghat and Santaldihi and an overall generation capacity of 3,150 MW.
Rest of the World
China
China’s electricity consumption is expected to grow 7.1 percent and 6.8 percent year-on-year, respectively, in the third quarter and fourth quarter of 2020, as the coronavirus outbreak eases and Beijing’s economic stimulus policies take effect. The world’s second-biggest economy had seen year-on-year growth in total power consumption for the first time this year in May following the relaxation of anti-coronavirus measures and the resumption of business. For the first five months of this year, however, power consumption in China fell 2.8 percent from the same period in 2019. Electricity consumption growth in the upcoming six months will be mainly driven by demand in the secondary industry and residential users, with increase rates at 5.9 percent and 10 percent respectively. China’s full-year power consumption is likely to reach 7.44 tn kWh in 2020, up 3 percent from the level in 2019. China’s NDRC said a policy to cut electricity prices by 5 percent will be extended until the year-end to aid companies struggling because of the impact of the Covid-19 pandemic. During the early stage of China’s outbreak in February, NDRC announced measures to cut electricity prices from 1 February to 30 June. NDRC said companies will continue to enjoy lower prices between 1 July and 31 December, as the government works to lower companies’ operating costs and protect jobs.
Russia
Russia’s safety watchdog ordered NTEK, a power unit of mining giant Norilsk Nickel, to suspend operations at six facilities for 90 days for violating safety rules, following a fuel spill in the Arctic. The watchdog’s decision will not affect the power supply of the region, meaning production should not be affected.
Europe & UK
Britain’s National Grid said it had started construction on Viking Link, an electricity interconnector between Britain and Denmark. Viking Link is a joint venture between National Grid Ventures, part of National Grid, and the Danish electricity system owner and operator, Energinet. The 1.4 GW high voltage electricity interconnector will be the longest in the world when completed, stretching 765 km between Lincolnshire in eastern England and South Jutland in Denmark. Siemens Energy will construct the British and Danish converter stations on both ends of the interconnector link.
Lithuania, Latvia and Estonia are considering slapping a fee on power imports from Russia and Belarus, as they move towards a full decoupling from the countries’ Soviet-era common power system by 2025. The fee for using transmission infrastructure could be as much as €8/MWh. Russia and Belarus produced about 20 percent of power consumed in the Baltic States in 2017-2019. Talks between the three countries on the future of their common power system have reached a stalemate over Vilnius’ refusal to accept electricity imports from the plant.
Africa
South Africa’s state utility Eskom cannot say how long a new round of power cuts that began will last. Eskom implemented planned power outages for the first time since March on 10 July, ending a period of unusually stable power supply thanks to reduced demand during a coronavirus lockdown. The company generates more than 90 percent of South Africa’s power but has battled to meet demand for years because of faults at its coal-fired power stations, which have interrupted power supplies, hampered economic growth and deterred investment.
The World Bank has approved a $750 mn loan for Nigeria’s power sector, the first release of funds after years of stalled talks over long-term reforms. Nigeria’s decrepit power sector has hobbled the growth of Africa’s largest economy for decades. The loan will cut tariff shortfalls, protect the poor from price adjustments, and increase power supplied to the grid. Nigeria’s low tariffs, imposed by the government, have forced the central bank to spend billions of dollars making up the difference owed by power distributors to companies generating electricity.
USA
US electricity consumption will collapse by a record 4.3 percent in 2020 due to business closures for coronavirus-linked lockdowns, the US EIA said. EIA projected total US power demand will drop to 3,730 bn kWh in 2020 from 3,896 bn kWh in 2019 before rising to 3,785 bn kWh in 2021. That compares with an all-time high of 4,003 bn kWh in 2018, according to federal data going back to 1949. If power consumption falls as expected in 2020, it would be the first time since 2012 that total demand declines for two consecutive years. EIA projected power sales to commercial and industrial consumers will drop by 7.0 percent and 5.6 percent, respectively, in 2020 from 2019 as offices close and factories run at reduced capacity for the coronavirus. Electricity sales to the residential sector will hold steady in 2019 and 2020 as mild weather reduces heating and air conditioning use even though government lockdowns are causing many people to stay home. While both the residential and commercial sectors consumed record amounts of electricity in 2018 at 1,469 bn kWh and 1,382 bn kWh, respectively, the industrial sector set its all-time high of 1,064 bn kWh in 2000.
Asia
Rio Tinto said that Mongolia would build a coal-fired plant that would supply power to its giant Oyu Tolgoi copper mine in the country, with construction set to start by this time next year. The mining giant will amend its current power supply agreement with the Mongolian government by March 2021, under which the government will begin construction of a coal-fired power plant at Tavan Tolgoi by July 2021. The notice confirms that Rio will not have to build its own 300 MW coal power plant, which it had earlier estimated could cost $924 mn. The plant is expected to come on stream within the next four years. Until then, power supply to the mine and the underground project, which is sourced from China, will continue under the current terms.
MSEDCL: Maharashtra State Electricity Distribution Company Ltd, AAP: Aam Aadmi Party, MERC: Maharashtra Electricity Regulatory Commission, AEML: Adani Electricity Mumbai Ltd, mn: million, bn: billion, tn: trillion, EMIs: equated monthly instalments, TANGEDCO: Tamil Nadu Generation and Distribution Corp Ltd, PIL: public interest litigation, UP: Uttar Pradesh, UPPCL: UP Power Corp Ltd, CEA: Central Electricity Authority, MSMEs: micro, small and medium enterprises, discom: distribution company, PM-KUSUM: Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan, BRPL: BSES Rajdhani Power Ltd, km: kilometre, AIPEF: All India Power Engineers Federation, UT: Union Territory, EHV: extra high voltage, MSETCL: Maharashtra State Electricity Transmission Company Ltd, PFC: Power Finance Corp, BHEL: Bharat Heavy Electricals Ltd, WBPDCL: West Bengal Power Development Corp Ltd, kWh: kilowatt hour, NDRC: National Development and Reform Commission, UK: United Kingdom, MWh: megawatt hour, MW: megawatt, GW: gigawatt, US: United States, EIA: Energy Information Administration |
NATIONAL: OIL
Indian refiners cut runs as fuel demand dips, margins fade
< style="color: #ffffff">QuIck Comment
< style="color: #ffffff">High price for petroleum products will curtail demand revival!
< style="color: #ffffff">Bad! |
28 July. Indian refiners are cutting crude processing and shutting units for maintenance as local fuel demand falls and global refining margins are weak. Fuel demand in Asia’s third largest economy had been rising since May from historic lows in April, when a nation-wide lockdown to stem the spread of the novel coronavirus was enforced. In July, however, local demand growth has slowed because of high fuel prices, renewed lockdown in parts of the country and as monsoon rains hit transport, industrial and construction activity. Bharat Petroleum Corp Ltd (BPCL) is operating its three refineries at about 70 percent capacity compared to about 90 percent in early June. India’s August crude processing will decrease further as the country’s top refiner Indian Oil Corp (IOC), Reliance Industries Ltd (RIL) and BPCL among others are shutting units for maintenance during this low demand period. Indian refineries’ crude throughput fell by an annual 13.6 percent in June compared with a 29 percent decline in April. In contrast China’s daily crude oil throughput in June climbed by 9 percent from a year earlier to a record high. Indian refiners are also reducing run rates as the export market is not attractive and rising fuel exports from China are likely to increase the pressure on Asian refining margins. IOC’s subsidiary Chennai Petroleum Corp, which is operating at about 50 percent capacity, said refinery runs are matched to product demand, which is fluctuating, and exports are not economically viable.
Source: Reuters
No DBT on subsidised LPG for 3 months due to favourable oil market
28 July. You may not have noticed it but the price of subsidised cooking gas or LPG (liquefied petroleum gas) rose by an average of just less than ₹10 per cylinder per month in the July-June 2019-20 period, taking the price of common man’s fuel closer to market rates. What this has done is to stop consumers receiving any subsidy in their accounts for buying domestic LPG cylinders at market rates for the past three months, believing low oil prices in the market has eliminated the need for the subsidy. But had oil companies refrained from consistently raising the price of subsidised cooking gas as well, from a level of ₹494.35 a cylinder in July last year to ₹594 now, a 14.2 kg domestic LPG cylinder price would have been more than ₹100 cheaper, providing relief to consumers during the Covid-19 pandemic. Under the direct benefit transfer scheme (DBT), the government provides subsidy on 12 cylinders a household uses in a year. While consumers buy cooking gas at market rates, the calculated subsidy amount is transferred directly into their accounts. The current price of subsidised LPG cylinder is around ₹594, the same rate as LPG cylinder prices prevailing in the market. According to an analysis done by Emkay Global, oil companies' under-recovery in case of kerosene has come to a naught since March while that for LPG has become zero from May. Due to Covid-19 pandemic, the government is providing three free LPG cylinders to all below poverty line families who are subscribers of cooking gas under Ujjwala scheme. But other customers are now paying full amount for the cylinder without getting any subsidy support from the government. The government has allocated ₹409.15 bn as petroleum subsidy for FY21, a 6 percent increase from ₹385.69 bn allocated for the last fiscal. Out of this, the allocation for LPG subsidy has been increased to ₹372.56 bn for current year. But so far, government had to draw very little from subsidy provisions. The good news is that with the developments in past few months, the government had completely eliminated the oil subsidy and spent the savings on other welfare activities. But this could mean that if there is any spike in LPG prices henceforth, the government may pass a portion of the burden on consumers by raising LPG prices.
Source: The Economic Times
Diesel price crosses ₹80 in Mumbai, Thane & Navi Mumbai
28 July. Diesel rates in Mumbai, Thane and Navi Mumbai have crossed the ₹80 mark. The price of diesel in Mumbai was ₹80.1 per litre while in Thane and Navi Mumbai it was ₹80.2 at fuel pumps. As many as 10 districts in Maharashtra have now breached the ₹80 mark for diesel, which has transporters worried about a rise in prices of vegetables, fruits and other essentials. Petrol rate in Mumbai was ₹87.2 a litre and in Thane and Navi Mumbai ₹87.3. It was nearing ₹90 in parts of the state, with the rate in Parbhani ₹89.2.
Source: The Economic Times
India’s oil bill may dip 40 percent in FY21 on Covid, low rates
28 July. At least in the oil sector, the global health emergency caused by coronavirus is coming to India’s advantage. While the severe demand squeeze due to the pandemic helped India save on oil imports, low global crude prices could help it further in reducing sharply the import bill. Declining consistently since April, India’s oil imports fell about 29 percent (year-over-year) to around 13.44 million tonnes (mt) in June, the lowest since October 2011. In value terms, the June oil imports stood at $4.93 bn (₹373.41 bn), down 55.29 percent in the dollar terms from $11.03 bn (₹765.86 bn) in June 2019. In April, it fell to 16.55 mt, a 16 percent year-over-year decline, from 17.28 mt reported earlier. In May, crude oil imports fell 22.6 percent, the biggest drop since at least 2005, to 14.61 mt against the year-ago month. If the trend continues, crude oil imports in FY21 may fall to 180 mt, 50 mt lower than 227 mt imported in FY20. At current prices, the value of this 50 mt will be around $20 bn. Moreover, India may further reduce its oil import bill with crude oil prices remaining low or range-bound around $35-45 a barrel in FY21. India has already reduced oil import bill by over 60 percent in the first quarter (April-June) of FY21. According to the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry, imports stood at around 227 mt in FY20 against 226.5 mt in FY19. The import bill last year was $101.4 bn against $111.9 bn in FY19.
Source: The Economic Times
Over 100 mn free LPG cylinders delivered as Covid-19 relief
25 July. Over 100 mn free cooking gas (LPG) or cooking gas cylinders were supplied to poor households under the government’s Covid-19 relief package between April and June, Hindustan Petroleum Corp Ltd (HPCL) said. To overcome the economic impact of the Covid-19 pandemic, the government had announced a relief package under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) comprising free ration, cooking gas, and cash to certain vulnerable sections. One of the initiatives under PMGKY was to supply three free LPG refills to the 80 mn Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries during April-June. As the Covid-19 pandemic is still continuing and normal work is taking time to resume to full capacity, the government has extended the period of availing the free LPG benefits until September.
Source: The Economic Times
Domestic crude oil production contracts 6 percent in June
25 July. Domestic crude oil production contracted 6 percent and natural gas output fell 12 percent in June from a year earlier. Crude oil production fell to 2,527 thousand metric tonnes in June as the Coronavirus pandemic compounded problems for India’s ageing fields whose output have been declining for years. Decline in output from fields operated by ONGC (Oil and Natural Gas Corp) was just 1 percent while for the fields operated by Oil India Ltd and the private sector was almost 10 percent and 16 percent, respectively. Underperformance of wells, delayed oilfield enhancement plans and general disruption caused by the pandemic contributed to a decline in oil production. Refineries processed 13.6 percent less crude in June from a year earlier. State-run refiners processed 9.2 percent less crude than last year while private refiners processed 16 percent less crude.
Source: The Economic Times
BPCL to restart 200k bpd Kochi crude unit by end-July
24 July. Bharat Petroleum Corp Ltd (BPCL) plans to restart a 200,000 barrels per day (bpd) crude unit at its 310,000 bpd Kochi refinery in southern India by end of this month after a three-week maintenance shutdown. The shutdown of the crude unit and some secondary units at Kochi started earlier this month after the company restarted a 156,000 bpd crude unit at its Bina refinery in central India. BPCL had shut the crude unit at the Bina refinery for about three weeks from the second week of June for routine maintenance, he said. Bina has only one crude unit. According to government data, BPCL’s Bina refinery operated at about 60 percent of its installed capacity in June. BPCL plans to shut a continuous catalytic reformer at its Mumbai refinery in western India for about three weeks from 1 August.
Source: Reuters
India’s June oil imports lowest in nearly 9 years
24 July. India’s oil imports fell in June, hitting their lowest since October 2011, as refiners curbed purchases due to maintenance turnarounds and weaker fuel demand, data from industry sources showed. India, the world’s third biggest oil consumer and importer, received 3.2 mn barrels per day (bpd) oil in June, a decline of 0.4 percent from May and about 28.5 percent from a year ago, the data showed. India did not import oil from Venezuela for the first time since June 2009, data showed. Refiners including Indian Oil Crop (IOC), the country’s top refiner, Reliance Industries Ltd (RIL), operator of the world’s biggest refining complex, and Bharat Petroleum Corp Ltd (BPCL) plan to shut units for maintenance. Indian fuel consumption, a proxy for oil demand, typically tapers during the four-month monsoon season from June as rains hit construction and transportation. In the first of half July, India’s fuel demand slowed compared with the previous month due to high retail prices and renewed coronavirus lockdowns in parts of the country.
Source: Reuters
Petrol and diesel prices go up in highest price rise in south
22 July. With the latest hike in fuel prices, petrol and diesel have become costlier in Andhra Pradesh compared to the other southern states. The state is among the top five with highest fuels prices in the country. The price of petrol reached ₹86.7 in the state after the latest hike in Value Added Tax (VAT) and diesel price stands at ₹82.31. While the price of petrol is the fifth-highest in the country, diesel price stands third among all states. The state government has reverted to the tax regime that was in force during 2015 to 2018. VAT on both petrol and diesel has been increased by ₹1.24 and ₹0.93 respectively. The state government is collecting 31 percent + ₹4 as VAT on petrol and 22.25 percent + ₹4 on every litre of diesel. While the percentage tax varies with the base price of the fuel, the state government is collecting ₹4 per litre on both petrol and diesel as a fixed component irrespective of the base price.
Source: The Economic Times
NATIONAL: GAS
Mahanagar Gas increases CNG prices by ₹1 to ₹48.95 per kg
26 July. Mahanagar Gas announced a marginal ₹1 per kg increase in the price of compressed natural gas (CNG) to ₹48.95 per kg (kilogram). Accordingly, revised selling price inclusive of all taxes in and around Mumbai will be ₹48.95/kg, it said. Even after the above revision, CNG offers attractive savings of about 60 percent and 39 percent compared to petrol and diesel, respectively, at the current price levels in the megapolis, it said.
Source: The Economic Times
India’s Petronet plans to cancel 10-year LNG import tender
23 July. India’s top gas importer Petronet LNG is set to cancel its offer to buy an annual 1 million tonnes (mt) of liquefied natural gas (LNG) for 10 years, as signing long-term contracts are not attractive in the current scenario. India is scouting for cheap gas for price-sensitive consumers as Prime Minister Narendra Modi wants to raise the share of natural gas in the national energy mix to 15 percent by 2030 from the current 6.2 percent to reduce pollution. Earlier this year, Petronet invited bids to buy LNG with pricing linked to Henry Hub natural gas futures in the United States (US) and Dutch TTF gas futures and shipped on a delivered ex-ship basis. Petronet has deals to annually buy 7.5 mt of LNG from Qatar. GAIL (India) Ltd and Italy’s ENI were the only two companies that qualified for Petronet’s long term LNG tender.
Source: Reuters
Unified tariff on gas pipelines from September
< style="color: #ffffff">QuIck Comment
< style="color: #ffffff">Unified tariff on gas pipelines will boost consumption!
< style="color: #ffffff">Good! |
23 July. In yet another reform initiative in the oil and gas sector, pipeline operators in the country may shift to a unified or pooled tariff regime for inter-connected cross-country gas pipelines from 1 September. A unified tariff may do away with levy of multiple tariffs on customers, ensuring equitable distribution of gas and uniform gas-based economic development across the country. The current system of tariff determination leads to multiple pipeline tariffs on customers who have contracted for gas which flows from multiple pipeline operators. The Petroleum and Natural Gas Regulatory Board (PNGRB) has finalised the draft regulation on unified tariff and would fix the tariff by August-end and implement it from the first day of September. With this, one nation, one gas grid, one pricing would be implemented across the country, bringing relief to customers in far-flung areas who were being charged extra for gas transmission but raising charges for other existing customers to bring about price equalisation. According to a report by ICICI Securities, unified tariff mechanism would boost utilisation on GAIL’s Jagdishpur-Haldia-Bokaro-Dhamra pipeline by virtue of lowering of tariff under pooling of transmission prices.
Source: The Economic Times
GAIL urges government to use diplomacy to help rework expensive US LNG deals
23 July. GAIL (India) Ltd has urged the government to use its diplomatic ties with the US (United States) to help rework the company’s expensive gas purchase deals with the American suppliers at a time the liquefied natural gas (LNG) rates in the spot markets have fallen to record lows, according to people familiar with the matter. GAIL has contracts for the purchase of 5.8 million tonnes (mt) a year of liquefied natural gas (LNG) with two US suppliers, deals that were signed between 2011 and 2014 as LNG prices roared across the world. A global price reversal since leading to a recent collapse in the spot market has made it harder for GAIL to market the expensive US gas. GAIL is banking on strengthening ties between India and the US, and hopes a government-to-government dialogue could get private US suppliers to the negotiating table. The rate for US LNG brought to Indian shores is about thrice that of the one bought in the spot market these days. Spot rates for India delivery have dived to $2 per million metric British thermal unit (mmBtu) and a global supply glut is expected to keep rates low for long.
Source: The Economic Times
NATIONAL: COAL
CIL gives hard-up power producers a much-needed breather on coal use
25 July. The power plants which had signed sale agreements with distribution companies but were unable to get enough coal from long-term contract auctions can now use the fuel meant for other plants of the same group, Coal India Ltd (CIL) said. In the past four years CIL has held three long-term supply contract auctions for these generators in which plants with a total capacity of nearly 15,000 MW participated. Each time, as part of the auction scheme CIL offered 80 percent of their requirement as calculated by the Central Electricity Authority. The scheme created a gap in supply with respect to requirement as CIL offered only 80 percent of the requirement and some plants were barred from participating for additional supplies in the second and third rounds.
Source: The Economic Times
India to reduce coal imports to zero: Shah
24 July. Union Home Minister Amit Shah said India is moving towards reducing coal imports to zero, and the central government has set an ambitious target of 1 billion tonnes in annual production of coal by 2023-24. Shah said that coal private sector units and captive miners have also launched steps to enhance production, while an investment of ₹1,250 bn is envisaged under the Infrastructure Investment Scheme during 2020-24 for which 534 projects have been identified. Shah said the coal sector is not only ready to fulfill the growing demand for coal but is equally sensitive towards environmental stability. Shah said the coal sector is an important pillar of India’s economy and will continue to retain its significance in the times to come.
Source: The Economic Times
Coal ministry withdraws Bander mine of Maharashtra from auction list of 41 coal blocks
23 July. The coal ministry has withdrawn Bander mine in Chandrapur district of Maharashtra from the list of 41 coal blocks put up for auction for commercial mining as the mine lies in the eco sensitive zone of Tadoba Andhari Tiger Reserve. Accordingly, the coal ministry has decided to withdraw the Bander coal mine from the auction process under the Coal Mines (Special Provisions) Act, 2015, it said. Prime Minister Narendra Modi launched the auction process of 41 coal blocks for commercial mining. The block having geological reserves of 126.105 million tonnes (mt) has tentative peak rated capacity of 2 mt per annum.
Source: The Economic Times
NBWL orders CIL to stop all mining activities inside Assam’s Dehing Patkai reserve
23 July. The National Board of Wildlife (NBWL) has ordered Coal India Ltd (CIL) to stop all mining activities inside the Dehing Patkai forest in Assam as the PSU (Public Sector Undertaking) major failed to submit any mine reclamation plan. At a meeting in April, the NBWL had recommended the CIL’s proposal of legalising the illegal mining, which the company was indulging from 2003 to 2019 inside the forest, for approval provided it fulfils the 28 conditions. As part of the recommendation, CIL was supposed to submit a rectified site-specific mine reclamation plan in consultation with the Assam Forest Department and a feasibility report for underground mining for the unbroken area along with a compliance report regarding fulfilment of all other conditions. At present, no mining activity is being carried out by CIL inside Dehing Patkai forest, which is termed the Amazon of the East. The Standing Committee noted that unmined or unbroken area is much larger than what CIL had originally stated in its application to grant approval for a total 98.58 hectares. The company had said 57.2 hectares were mined and 41.39 hectares were unbroken.
Source: The Economic Times
CIL may not sign new supply agreements with customers terminating existing ones
23 July. Coal India Ltd (CIL) may not sign new fuel supply agreements with customers, for a period, who renege on contracts on frivolous grounds, the firm said days after major customers walked out of deals to buy fuel. It said efforts to supply coal of better quality and larger quantity than what is committed have increased revenue. The company had made a provision of ₹13.65 bn for variation in coal quality in previous years, but it withdrew the provision in the last fiscal. CIL has a third-party sampling system and independent consultants to test quality.
Source: The Economic Times
CBI seeks Jharkhand government’s nod to prosecute Madhu Koda in coal block scam
22 July. The Jharkhand government has initiated the process to grant sanction to the Central Bureau of Investigation (CBI) to prosecute Former State Chief Minister Madhu Koda and former mines secretary Jai Shankar Tiwari for corruption in the allocation of a coal block. The CBI has sought from the Jharkhand government sanction to prosecute Koda and Tiwari in connection with the infamous scam related to the allocation of Parbatpur coal block to Electrosteel Castings. Koda has already been convicted for corruption in the allocation of Rajhara North coal block. A trial court in 2017 held him guilty of corruption and conspiracy in the allocation of the coal block in Jharkhand to Kolkata-based company Vini Iron and Steel Udyog Ltd.
Source: Hindustan Times
NATIONAL: POWER
Delhi: Discoms switch to digital mode for power complaints
26 July. This monsoon, you can report any disruptions in power supply with a missed call, WhatsApp message, SMS or mobile application. Power discoms (distribution companies) have come up with several digital solutions for consumers to register their complaints swiftly and in a hassle-free manner. TPDDL (Tata Power Delhi Distribution Ltd), which supplies electricity in north Delhi, said that the rainy season poses multiple challenges for uninterrupted power supply as the network can get damaged by heavy rains, strong winds or falling of trees on overhead power lines. TPDDL said it has strengthened its No Power Supply registration process, which now includes missed calls at 9619619124 through the registered mobile number, WhatsApp at 7303482071, through its mobile application TPDDL Connect, website and SMS Services.
Source: The Economic Times
Need to set up energy account divisions across UP: Singh
24 July. Union Power Minister R K Singh pressed for setting up of energy account divisions across the state to measure, analyse and report energy consumption during a review meeting with CM (Chief Minister) Yogi Adityanath. An energy account division should be constituted under a senior official in every distribution company and a division/circle wise energy account published to usher efficiency in power distribution, Singh said. Singh underlined the need for metering of transformers and installation of smart and pre-paid electricity meters to lower line losses, a key deterrent in wheeling round-the-clock power supply in the state.
Source: The Economic Times
Soon, even bilateral power purchases will be routed through exchanges
24 July. Soon all power transactions — including bilateral purchase and sale of power through long-term power purchase agreements — will be routed through the power exchanges. This MBED (market-based energy dispatch) of electricity is expected to deepen the power markets, bring in better price discovery. According to IEX (Indian Energy Exchange) both buyers (electricity distribution companies, such as BEST of Mumbai) and sellers (generators, like NTPC) will necessarily have to put in purchase and sell bids in a power exchange, even if they have a bilateral deal with a fixed tariff. MBED forces all players to route all transactions through the power exchanges.
Source: The Hindu Business Line
Power sector in Puducherry won’t be privatised: CM
23 July. Puducherry CM (Chief Minister) V Narayanasamy said that the legislative assembly passed a resolution that power sector in the Union Territory will not be privatised. He said that all legislators present at the assembly supported the decision.
Source: The Economic Times
Illegal power from Haryana lit 40 UP farmhouses, probe on
23 July. The vigilance wing of Dakshin Haryana Bijli Vitran Nigam (DHBVN) has unearthed an illegal electricity connection allegedly taken by an Uttar Pradesh (UP) power distribution network for supply to 40 farmhouses of influential people along the bank of river Yamuna. Preliminary investigations have hinted at involvement of some officers and employees of DHBVN in the racket and they have been put under the vigilance scanner. According to information, the electricity theft was being facilitated through a 15 kV (kilovolt) connection given to a resident of Dadasia village located on the UP-Haryana border in the trans-Yamuna area of Faridabad. When contacted, Haryana Power Minister Ranjit Singh Chautala lauded the efforts of the Faridabad team.
Source: The Economic Times
NATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS
India’s renewable energy sector should move to next stage of investment, manufacturing: RBI Governor
< style="color: #ffffff">QuIck Comment
< style="color: #ffffff">Renewable manufacturing may reduce competitiveness of the sector!
< style="color: #ffffff">Ugly! |
28 July. Reserve Bank of India (RBI) Governor Shaktikanta Das said that the country now needs to move to the next stage of investment and manufacturing in the renewable energy sector. He said that investment should be done in solar and wind energy installations, and also in creating domestic manufacturing capacity for solar panels. According to the RBI Governor, the weighted average cost of addition to renewable capacity in India was one of the lowest in the world in 2019, which has now started exerting significant downward pressures on spot prices also for electricity. He said that India’s changing pattern of energy production is in favour of renewables and India's progress in addressing the demand-supply balance has been remarkable. The share of renewable energy in the country’s total installed capacity has doubled to 23.4 percent in march 2020 from 11.8 percent in march 2015.
Source: The Economic Times
Gujarat adds highest wind power generation capacity
28 July. Continuing to attract wind power project developers, Gujarat added the highest capacity for wind power generation in 2019-20. The state had also grabbed a lion’s share of the new wind power capacity installed across India in the last fiscal. The state saw installation of new wind power generation capacity of 1,468 MW between April 2019 to March 2020, shows data compiled by Indian Wind Turbine Manufacturers Association and Indian Wind Energy Association. Gujarat was followed by Tamil Nadu and Maharashtra, which added 335 MW and 206 MW respectively. A total 2,118MW of new capacity was installed in India in fiscal 2020, of which 70 percent was in Gujarat alone, the data further shows. With new installations, Gujarat’s total wind power generation capacity has now increased to 7,542 MW, which is the second-highest installed capacity in India after Tamil Nadu (9,304 MW). The state continued to see more installations even in the first quarter ended 30 June. The state attracted 132 MW of the total 136 MW installed in India during the quarter. The remaining 4 MW were added in Karnataka, said industry sources.
Source: The Economic Times
160 subsidised solar pumps for Pilibhit farmers on first-come-first-served basis
27 July. The Pilibhit agriculture department is set to provide 160 solar pumps to farmers on subsidy, under the Pradhan Mantri Kisan Urja Suraksha Utthan Mahabhiyan scheme of the Union government. The subsidy has been fixed at 40 percent of the selling price of the solar units. The government had given the contract to supply solar pumps to two companies, based in Gujarat and Madhya Pradesh respectively. The solar pumps would be distributed on a ‘first come, first served’ basis.
Source: The Economic Times
Infertile land to be made available for solar power in Maharashtra: Energy Minister
24 July. Infertile land in Maharashtra to be made available for solar power projects, Energy Minister Nitin Raut said. He said there will be single window clearance for all clean energy and renewable power projects in Maharashtra. This will help timely completion of projects. He said that the state would implement solar power projects with an aim to reduce its dependence on thermal power.
Source: The Economic Times
NTPC sets out to acquire solar projects not running on Chinese equipment
24 July. In a major acquisition spree, country's largest power producer NTPC Ltd has invited bids to buy operational solar power projects with unspecified capacity. This is the first time that the state-owned power generator has evinced interest in acquiring operational solar projects. Earlier, the company had invited bids to procure solar power and set up projects. The acquisition plan is part of NTPC goal to add 10 GW of solar generation capacity by 2022, with an investment of around ₹500 bn. To support government’s Atmanirbhar Bharat mission and development of domestic capacities, NTPC has decided to acquire only such plants that are being operated using local equipment and not largely based on imported solar cells and modules.
Source: The Economic Times
AP government invites private participation to set up ultra-mega renewable energy power parks
23 July. With an immense potential to produce solar and wind power in the state, the Andhra Pradesh (AP) government has formulated a comprehensive policy to promote private participation in the sector. The AP Renewable Energy Export Policy, 2020, has been announced to attract private investments for establishing solar/wind/wind-solar hybrid projects on a massive scale. Under the policy, the renewable energy produced can be exported to other states without any obligation to the state discoms (distribution companies) to procure power as the discoms have already exceeded the renewable purchase obligation (RPO) as notified by the power ministry, Government of India and also AP State Electricity Regulatory Commission (APERC).
Source: The Economic Times
In 4 years, 20 percent of all C&I solar installations will be grid-connected
23 July. In the next two to four years, 20 percent of all commercial and industrial (C&I) solar installations will be connected to the grid, coupled with battery storage, according to a recent report. It said that technological innovations such as more cost reflective time-of-day tariffs, smart meters, high-efficiency modules, and battery storage would drive the growth of this market. The C&I users consume approximately 49 percent of the electricity generated in India, but only 3.5 percent of the power procured by India’s C&I segment is from renewable sources, according to the report JMK Research & Analytics and the Institute for Energy Economics and Financial Analysis.
Source: The Economic Times
INTERNATIONAL: OIL
China imports more oil from Saudi than any other country in June
26 July. China’s crude oil imports from Saudi Arabia rose 15 percent in June from a year ago, as refiners ordered record volumes of the fuel in March and April when oil prices tumbled, cementing the kingdom’s position as the top oil supplier to China. Imports from Saudi Arabia rose to 8.88 million tonnes (mt) in June, or 2.16 mn barrels per day (bpd), in June, according to data from the General Administration of Customs. The record imports follow a price war between Saudi Arabia and Russia, the world’s top oil exporters, during March and April when the coronavirus pandemic dampened demand and caused a global fuel glut. Shipments from Russia were at 7.98 million tonnes, or 1.95 mn bpd, up around 7 percent from 1.82 mn bpd in May and 1.73 mn bpd in June 2019. Saudi, however, delivered bigger oil cuts from June and raised crude prices as a plunge in oil prices weighed on the kingdom’s budget. Analysts expect China to see another record amount of crude imports in July as some May-loading cargoes are still underway while swelling oil inventory at major Chinese ports slows new arrivals.
Source: Reuters
Mexico moves to launch world’s largest oil hedge
25 July. Mexico has asked top Wall Street banks to submit quotes for its giant oil hedging program, while trading in crude oil options has increased ahead of the megadeal. Every year, Mexico buys as much as $1 bn in financial contracts, the world’s largest oil hedge program, to protect its oil revenues. The oil market crashed earlier this year, with the US (United States) crude benchmark falling to negative-$40 a barrel in April. It was trading around $43.
Source: Reuters
Oil up on strong economic data, US-China tensions cap gains
24 July. Oil prices rose, lifted by some supportive economic data, but tensions between the United States and China limited gains. So far, energy companies said there have been no evacuations of workers or shutdowns of production from offshore platforms in the northern Gulf of Mexico. Oil prices could see a near-term correction if a recovery in fuel demand slows further, especially in the United States (US), Barclays Commodities Research said. Still, the bank lowered its oil market surplus forecast for 2020 to an average of 2.5 mn barrels per day (bpd) from 3.5 mn bpd previously.
Source: Reuters
Western Canadian oil companies to restore all output cuts by year-end: Suncor
23 July. Western Canadian oil companies are moving to restore all of the production that they shut in as the novel coronavirus spread, due to improving prices, Canada’s second-biggest producer Suncor Energy said. Alberta, the main oil-producing province, curtailed some 1 mn barrels of crude per day this spring - about 20 percent of Canada’s output - as lockdowns to curb the spread of the virus crushed demand for gasoline and jet fuel.
Source: Reuters
China’s June diesel exports fall to lowest since September 2018
23 July. China’s diesel exports in June fell by 50 percent from a year earlier to the lowest since September 2018 as lockdown measures around the world to halt the coronavirus pandemic continued to curb fuel demand. China exported 1.04 million tonnes (mt) of diesel, versus 1.45 mt in May and 2.07 mt in June 2019, data from the General Administration of Customs showed. Gasoline exports were 760,000 tonnes last month, up from a 14-month low of 680,000 tonnes in May. China, the world’s second-largest oil user, has slashed refined fuel exports since May as refiners turned to the domestic market, where fuel demand has rapidly recovered because of easing coronavirus restrictions. However, with crude oil refining output rising to a record in June while gasoline and diesel consumption is plateauing, refiners will have a hard time finding markets to absorb excess oil products. The Chinese summer season, which starts in late June and ends in early September, is typically a slack time for diesel demand as construction projects slow amid heatwaves and fishing activities are suspended. China’s jet kerosene exports in June dropped 38 percent from a year earlier to 770,000 tonnes, compared to 560,000 tonnes in May, customs data showed.
Source: Reuters
INTERNATIONAL: GAS
Kuwait’s KIPIC starts operation of gas line feeding Al-Zour
28 July. Kuwait Integrated Petroleum Industries Company (KIPIC) has begun operating the gas line that will feed its long-delayed Al-Zour refinery, state news agency KUNA said. Originally planned more than a decade ago but repeatedly delayed, Al-Zour will be the largest integrated refinery and petrochemicals plant in Kuwait. Al-Zour’s production capacity is estimated at 615,000 barrels per day, increasing Kuwait’s overall refining capacity to over 1.5 mn barrels a day. KIPIC, a subsidiary of the Kuwait Petroleum Corp, appointed a unit of US multinational Honeywell International last year to provide technology and production systems for Al-Zour.
Source: Reuters
China starts building southern part of China-Russia East gas pipeline
28 July. Construction has started on the southern portion of the China-Russia East natural gas pipeline, which carries supplies from the Power of Siberia system in Russia, China Oil & Gas Piping Network Corp (PipeChina) said. This portion starts at Yongqing in China’s northern province of Hebei and ends at Shanghai in eastern China. The full China-Russia East system is a 5,111 km (3,176 mile) pipeline pumping natural gas from the Siberia region in Russia to China. Once launched in 2025, the southern part of the pipeline is expected to transmit 18.9 billion cubic meters (bcm) of natural gas to the Yangtze River delta region each year. Taking over pipeline assets from PetroChina, the newly launched PipeChina will be in charge of the investment, construction and management of the Yongqing to Shanghai pipeline. Northeastern China started consuming Russian gas via the north portion of the China-Russia East pipeline since December. Russian gas producer Gazprom is in talks to raise annual gas flows to China by 6 (bcm) to 44 bcm via the Power of Siberia pipeline.
Source: Reuters
Italy’s Italgas sees no major impact from Covid-19 on business this year
27 July. Italy’s biggest gas distributor Italgas said it did not expect Covid-19 to impact its business significantly this year after reporting first-half earnings just above forecasts. In the first six months, Italgas reported a 6.6 percent rise in core earnings to €462.7 mn ($542 mn) compared to an analyst consensus of €461 mn. Like other energy grid companies, Italgas has been spending on technology to run its grids more efficiently and offer clients services such as remote gas meter readings and gas leakage detection. In the first six months investments rose 16 percent to almost €370 mn. Italgas, which manages 73,000 km of network, said it would continue plans to expand in Italy by competing in gas distribution tenders.
Source: Reuters
Israel’s Tamar gas field to start paying taxes on profit in 2021
22 July. Delek Drilling said the partners in the Tamar natural gas site will start paying taxes on profit in early 2021, which could help Israel move forward with plans to create a sovereign wealth fund. Prime Minister Benjamin Netanyahu has said that tens of billions of dollars raised from taxing natural gas sales would be invested abroad via a sovereign wealth fund, with proceeds brought home for education, welfare and other services. The fund, aimed at preventing Israel’s currency from overheating because of the sudden influx of natural gas revenues, was due to be set up in 2018, but political turmoil and a slower stream of revenue have caused delays. Delek said it would start paying the tax in early 2021 and that by the end of 2025, the state’s income from the levy alone was expected to reach about 8 bn shekels ($2.3 bn) and some 15 bn shekels including royalties and taxes. The company said its best estimate of reserves in the field — which began supplying gas to Egypt — is 10.7 trillion cubic feet (302 billion cubic meters).
Source: Reuters
US-Vietnam JV plans to invest up to $6 bn in LNG power project
22 July. Chan May LNG, a US (United Stastes)-Vietnamese joint venture (JV), plans to invest up to $6 bn in a power project in Vietnam as it seeks to cash in on the Southeast Asian country’s rising demand for electricity. The project in Thua Thien Hue province will include a 4 GW power plant, an LNG (liquefied natural gas) terminal and storage facilities. When fully operational, the project will import around $1.2 bn worth of US LNG a year. Vietnam has been seeking to import more US goods, such as coal and LNG, to narrow the trade gap after President Donald Trump threatened tariffs on its products amid the Chinese-US trade war.
Source: Reuters
INTERNATIONAL: COAL
Mine expansion threatens German villages despite coal exit
26 July. Lost in the countryside of western Germany, the innocuously named L277 road has become a central battleground in a bitter fight over the country’s plan to ditch coal. The road is to be dug up to make way for the expansion of a neighbouring coal mine, with villages such as Kuckum next in line for demolition. Germany is officially on course to abandon coal-fired power generation by 2038, with the government finalising its fiercely disputed "coal exit law". Kuckum and neighbouring villages such as Berverath and Keyenberg sit atop untapped sources of brown coal which mine operator and energy company RWE claims will be "needed from 2024". While other mines in the region are slated to close by 2030, the coal exit law allows Garzweiler to keep operating, continuing to supply nearby power plants even as they begin to close down in the coming years.
Source: The Economic Times
Poland poised to announce major coal mine closures
26 July. Poland’s biggest coal producer, state-run PGG, is likely to announce within days deep cuts in coal output and the closure of a number mines as part of a restructuring plan that is expected to prompt protests by miners. Poland generates almost 80 percent of electricity from coal and is the only member of the European Union that has not pledged to become carbon neutral by 2050.
Source: Reuters
Coal should play no part in post-coronavirus recoveries: UN chief
24 July. Coal should play no part in any country’s post-coronavirus stimulus plan and economic recovery should align with global climate goals, UN (United Nations) Secretary General Antonio Guterres said. China is a major consumer of coal and is still developing new coal mines and power projects while also making efforts to develop green energy. China’s 2020 cap on coal-fired power capacity allows another 60 GW to go into operation, though it is also shutting small and inefficient generators.
Source: Reuters
Europe steams towards coal exit: Research
22 July. Europe’s long goodbye to coal is speeding up, in a transition smoothed by the rise of wind and solar power and energy policy that has priced the fossil fuel out of many markets, according to data released. Centuries after powering Europe’s industrial revolution, coal cannot compete with less polluting fuels to generate electricity, prompting governments and companies to close mines and plants. In Spain, coal generation fell 58 percent in the first six months of the year, even before half its remaining plants closed in June as they no longer complied with EU (European Union) emissions rules. The covid-19 outbreak depressed power demand, further reducing coal consumption, the analysts said. In Portugal, coal generation fell 95 percent in the first half of 2020. In Germany coal generation fell 39 percent, taking it for the first time below Poland, which now generates as much electricity from coal as the EU’s remaining 25 countries put together.
Source: Reuters
INTERNATIONAL: NON-FOSSIL FUELS/ CLIMATE CHANGE TRENDS
Deutsche Bank tightens fossil fuel lending policies
28 July. Deutsche Bank, said it would end business worldwide with the companies most exposed to coal mining by 2025 at the latest, as part of a revamp of its policies on financing the fossil fuel industry. The reforms follow announcements of new sustainability targets and the issuance of the bank’s first green bond. Urgewald, a non-profit environmental and human rights organisation, said the announcement was a step forward but “still too little, too late” and left the bank lagging many of its rivals in terms of ambition. Deutsche Bank said it would review all of its US (United States) and European coal power activities by the end of this year with respect to clients’ diversification plans. It will begin a similar review in Asia in 2022.
Source: Reuters
EDF-Jinko Power consortium wins deal for major solar project in Abu Dhabi
27 July. A consortium formed by French state-controlled power group EDF and its Chinese partner Jinko Power Technology has been awarded the Al Dhafra solar project in Abu Dhabi, United Arab Emirates, EDF said. EDF said the Abu Dhabi solar photovoltaic plant would have a capacity of 2 GW, which would make it the largest single-project solar plant in the world, generating the equivalent electricity to power more than 160,000 households each year.
Source: Reuters
Axpo subsidiary to build 37 new solar plants in France
24 July. Swiss utility Axpo Holding AG said its subsidiary Urbasolar would build 37 new solar plants in France. The plants will be mostly built in southern France and have a combined installed capacity of 143 MW, which is enough to cover the annual power consumption of 65,000 households. The cost of €124 mn ($144 mn) will be financed by French bank Crédit Agricole, its subsidiary Unifergie which specialises in renewable energy projects, and various regional banks, Axpo said.
Source: Reuters
Iberdrola to start construction of green hydrogen plant in Spain
24 July. Spanish utility Iberdrola said it is set to start construction on the largest green hydrogen plant for industrial use in Europe. In partnership with chemical manufacturer Fertiberia, the project will be based in Puerollano, central Spain, and consist of a 100 MW solar photovoltaic plant and hydrogen production system which will use electrolysis to convert renewable energy into hydrogen fuel. The plant should be operational by 2021 and cut 39,000 tonnes of carbon dioxide emissions a year.
Source: Reuters
China’s first-half solar panel output jumps 15.7 percent
22 July. China produced 59 GW worth of solar panels in the first half of the year, up 15.7 percent from a year ago, with the sector barely affected by the coronavirus outbreak. China Photovoltaic Industry Association vice-chairman Wang Bohua said that newly installed solar power capacity also inched up 0.9 percent in the first half, reaching 11.5 GW. The full-year increase is expected to reach 35-45 GW, he said. China has been stripping new solar power projects of subsidy after a record 53 GW capacity increase in 2017 left the state with a payment backlog now in excess of 200 bn yuan ($28.70 bn).
Source: Reuters
Britain to provide $445 mn to help industry cut carbon emissions
22 July. The British government will make 350 mn pounds ($445 mn) available to support industry efforts to cut carbon emissions and drive an economic recovery from the coronavirus crisis. The investment package will help businesses decarbonise across the heavy industry, construction, space and transport sectors, the government said. It includes funding for supporting a switch from gas to clean hydrogen for fuel-heavy industry, projects to scale up carbon capture and storage, new building techniques in the construction industry and research into more efficient electric motors. The announcement comes ahead of the launch of the first meeting of the Jet Zero Council, which will bring together government, representatives from the environmental sector and the aviation and aerospace industry to tackle aviation emissions.
Source: Reuters
US EPA to propose first-ever airplane emissions standards
22 July. The US (United States) Environmental Protection Agency (EPA) is set to announce the first proposed US emissions standards for commercial aircraft. The EPA-proposed regulation would align the US with the ICAO standards, and would apply to new type designs as of January 2020 and to in-production airplanes or those with amended type certificates starting in 2028. EPA Administrator Andrew Wheeler said the forthcoming airplane emissions proposal - along with other emissions regulations - represented “sensible, legally defendable steps to regulate greenhouse gases, while safeguarding American jobs and the economy.” Aircraft account for 12 percent of all US transportation greenhouse gas emissions and 3 percent of total such US emissions. EPA is expected to finalize the rules next spring after public comments. The Federal Aviation Administration will then issue separate rules to enforce the standards, and the agency is expected to ultimately certify emissions compliance by US manufactured airplanes. The EPA emissions proposal covers all large passenger jets, regional jets, large turboprop airplanes, and some general aviation aircraft. Smaller turboprops, helicopters and military aircraft are not covered.
Source: Reuters
DATA INSIGHT
Crude Oil Production and Imports
Year |
Production of Crude Oil
(in MMT) |
Crude Oil Import Dependency
(% of Crude Consumption) |
2016-17 |
36.01 |
81.7 |
2017-18 |
35.68 |
82.9 |
2018-19 |
34.2 |
83.8 |
2019-20 |
32.2 |
85 |
Petroleum imports/exports as percentage of India’s gross imports/exports (in value terms)
Note: Figures for 2019-20 are provisional
Source: PPAC and Rajya Sabha Questions
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 2020 is the seventeenth 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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