In April 2011, a cabinet decision was made to launch a NEMM. A three-tier apex body consisting of the national council on electric mobility (NCEM), the national board on electric mobility (NBEM) reporting to the national automotive board (NAB) was created. The NEMM plan for 2020 (NEMMP 2020) based on a survey of 7000 potential users in 25 cities envisaged a government-industry partnership to enable India to emerge as leader in the full range of electric vehicles (xEVs) that represents the full range of electric vehicles from mild hybrids to pure electric vehicles) with 6-7 mn units by 2020.
In 2015, the scheme for ‘faster adoption and manufacturing of electric vehicles’ (FAME) was launched by the Ministry of Heavy Industries & Public Enterprises. Under Phase I of the FAME scheme, ₹1.98 bn from a budget of ₹7.95 bn was allocated. 150,000 xEVs, (39,000 electric two wheelers, 93,000 mild hybrid cars, 3300 full EVs and other strong hybrids) were sold. Demand incentives for the various xEVs were based on their fuel saving potential with pure electric vehicles receiving the highest incentive per vehicle. Under FAME I, a rebate of ₹7,500 – 22,000 was offered for the purchase of 62 eligible models. About 40 percent of the eligible models were low-speed (25 km/h max) and they represented 80 percent of electric two-wheelers sales. Electric two-wheeler sales make up less than 1 percent of the vehicle market share, but purchase subsidies did simulate their uptake. Until September 2018, around 90 percent of the beneficiaries under FAME I were lead-acid battery powered low speed electric scooters.
In 2019, the Government approved Phase-II of the FAME Scheme with an outlay of ₹100 bn for 3 years. About 86 percent of fund is to be spent on demand incentives for xEVs supporting 7000 e-Buses, 500,000m e-Three Wheelers, 55000 e-Four Wheeler Passenger Cars (including Strong Hybrid) and 1 million e-Two Wheelers. As of February 2021, about 49,000 xEVs have been sold under the scheme. Buses will receive 41 percent of the incentives followed by 29 percent for three-wheelers and 23 percent for three wheelers. FAME II specifies a maximum sticker price of about ₹1,500,000 (₹15 lakhs) for cars to be eligible, making most of the available electric car models beyond the scope of the scheme. Sales of electric cars declined in 2019 and sales of electric two-wheelers also fell by 94 percent as FAME II excludes lead-acid battery driven vehicles for incentives.
The central government provides an income tax deduction of ₹150,000 for up to three years on the interest paid on loans taken to purchase an EV. All the vehicles sold at an ex-showroom price of more than ₹1 mn are eligible for a rebate of 1 per cent of that price. Goods & Services Tax based on the ex-factory price of an EV is 5 percent compared to 29–31 percent for ICE cars. Exemption from road tax and registration charges applies to all battery-enabled cars. The government of Delhi launched the ‘Switch Delhi’ in January 2021 to sensitize citizens about the benefits of switching to EVs. The goal set by the Delhi government is to have 25 percent of new vehicles to be electric by 2024. Towards this end the government of Delhi has offered a subsidy of ₹30,000 for two and three wheelers and a subsidy of ₹150,000 for four wheelers.
To facilitate uptake of EVs, the Model Building By-Laws from 2016 mandates that 20 percent of parking space within residential and non-residential complexes is provided for EV charging infrastructure. The maximum tariff that can be charged by a public charging station is set at 15 percent above the average cost of supply.
In 2019-20 there were about 156,000 electric vehicles in India excluding e-Rickshaws. Over 97 percent of these were low speed scooters that do not require registration. This is a negligibly small number compared to the ICE vehicle stock on Indian roads.
In India 85 percent of the two-wheeler (ICE) market is concentrated at less than ₹90,000 and 78 percent of the four-wheeler (ICE) market is concentrated at less than ₹1 million price points. EVs with comparable performance are not available at these price ranges. While the upfront cost of EVs is higher (2-3 times), their operating cost is significantly lower. This has led to the concept of “Total Cost of Ownership” (TCO) which is lower for EVs not only because electricity is cheaper than heavily taxed petrol and diesel but also because EVs have fewer moving parts which reduces maintenance costs. But costs that EVs eliminate in mechanics is more than made up by costs related to battery chemistry.
As in the case of mobile-phones, the battery of an EV starts to fade after a few years of use and either the battery or the car (with the battery) has to be replaced. The risk of running out of charge (range anxiety) along with the fact that a deteriorating battery quickly destroys a car’s second-hand value are among the key issues that hold up purchase of EVs. In an EV the battery is the most expensive component, representing around 30 percent of the cost of an average mid-size vehicle. Once a battery’s capacity falls below 80 percent of its starting value, it is generally thought no longer suitable for use in the vehicle. The lithium-ion (Li-ion) batteries which power electric cars age in two ways: with time and with use. Li-ion batteries could lose 2 percent of their capacity in a year (calendar aging). This means that the vehicle is half way through its useful life in about six years. Each cycle of discharge and recharge takes its toll on the battery. Use-dependent ageing is a consequence of the number of discharge-recharge cycles a battery goes through. Regular fast-charging also reduces battery life, as do overcharging and deep discharging. Driving in extremely hot or cold weather has a negative impact on the battery. Battery life diminishes if an EV is left unused. To provide buyers with some peace of mind, carmakers guarantee their batteries, typically for eight years or around 200,000 km.
If EVs were in every way as satisfactory as ICE alternatives, it would take little or no policy incentive to push the market towards EVs in India (and elsewhere). Fully electric vehicles are not yet perfect substitutes for ICE alternatives. They are more expensive, depreciate faster, and have a lower range of travel and more limited supporting infrastructure, like charging stations or properly equipped mechanics. Studies show that when EVs are good but not perfect substitutes for ICE vehicles, incentives including a ban on the production of ICE vehicles is a much less inefficient way to reduce emissions. But the degree to which EVs are good substitutes for ICE vehicles will change over time, and this will depend not only on the capabilities of EVs but also on developments such as the reduction in work related commutes and the level of automation in vehicles.
NEMM: National Electric Mobility Mission, EV: electric vehicle, mn: million, bn: billion, km: kilometre, ICE: internal combustion engine
According to CIL, the supply of coal to the consuming sectors rose 9.2 percent to 154.6 MT in the third quarter of the current financial year. CIL supplied 141.6 MT of coal in the corresponding quarter of the previous financial year. CIL produced 115 MT of coal in the previous quarter. CIL supplied 36.62 MT to non-power consumers in the October-December 2020 period, compared with 25.53 MT a year ago. Despite the tepid demand, there was a nominal growth of 1.5 percent in supplies to power plants during the third quarter of 2020-21. CIL is aiming at substituting imported dry fuel of 80-85 MT with more domestic supplies in the current fiscal. CIL has asked power plants in the coastal areas to submit proposals for a gradual increase of its supplies to these units to reduce foreign exchange outgo. The government is likely to consider proposals to offer concessions on various counts such as quality and freight to make domestic coal attractive over the imported fuel. Duties, royalty and cess account for around 62 percent of domestic coal price, for which, imports get a comparative advantage. Substituting imported coal with domestic fuel as part of initiatives towards the government’s ‘Aatmanirbhar Bharat’ goal is gaining momentum. Coal gasification-based ammonia-urea Talcher project, a first-of-its-kind in the country, would have a design capacity of 2,200 tonnes per day of ammonia and 3,850 tonnes per day of urea. The state-of-the-art plant at Odisha will produce 100 tonne per day of sulphur flakes as a saleable by-product. The plant will produce 2.38 million cubic metres per day of natural gas equivalent synthesis gas from coal.
CIL is set to diversify into non-coal mining areas as well as make major investments in clean technology in 2021 after demand for the dry fuel remained muted for most of this year amid the coronavirus pandemic impacting economic activities. Against all odds, including the slump in coal demand, the government opened up the country’s mining sector for private players by auctioning 19 blocks. Coal demand across the world is projected to fall by around five percent this year compared to 2019 while various sectoral challenges are expected to persist in 2021. In the coming year, CIL is also likely to go ahead with its agenda of achieving 1 BT of production target by 2023-24. Global coal consumption is estimated to have fallen 7 percent, or over 500 MT between 2018 and 2020. In 2019, global coal demand decreased 1.8 per cent after two years of growth as power generation from coal weakened globally, including in India. A modest rise in demand is expected in 2021 and prices are also expected to firm up. Coal demand is set to revive by 2021 in India and other Asian nations, including China, which are the major consumers of the fuel.
With surging pithead stock and a surplus scenario in the sector, CIL is in favour of tweaking its e-auction policy to broaden its customer base and maintain a steady bottomline. The government had indicated that the reform measures could be taken in the marketing of the fuel. The allocation of coal for e-auctions is “more than demand at present” even though there are signs of revival in the economic activities after the lockdown. CIL conducts five types of e-auction of the dry fuel for its customers. CIL had recently allowed its subsidiaries to fix the base price for e-auction depending on demand to improve their margins. However, CIL registered a 77 percent growth in e-auction sales under the five windows, with a booking of 68.3 MT in the April-November period in the current fiscal as compared to 38.6 MT booked during the year-ago period. In absolute term, there was a 30 MT increase in the e-auction coal booking.
CIL allocated 25.78 MT of coal in the first eight months of this fiscal under spot e-auction scheme, registering a year-on-year increase of 59.4 percent. CIL had allocated 16.17 mt of coal in the April-November period of the previous fiscal. Fuel allocation by CIL under the scheme also increased to 4.09 mt in November, from over 3.58 mt in the corresponding month of 2019. Coal distribution through e-auction was introduced to provide access to coal for such buyers who are not able to source the dry fuel through the available institutional mechanism. The purpose of e-auction is to provide equal opportunity to all intending buyers for purchasing coal through single window service. CIL accounts for over 80 percent of domestic coal output. CIL has revised its production target to 650-660 MT for the current fiscal in the wake of the disruptions caused by the Covid-19 pandemic. CIL will likely undergo a reform in marketing and sales next year. The exercise, among other improvements, will aim at doing away with multiple types of auctions of the dry fuel.
Amid reports of poor progress in the development of coal blocks, allotted to various entities long ago, the Centre has engaged a consultant to assist them to overcome challenges and make the mines productive. The government intends to conduct the next round of coal block auctions in January. Mining companies often complain about delays in getting environmental and other regulatory clearances. The government is also taking strict actions against entities for the slow progress of coal block development. Coal will remain the main source of energy for the next 30-35 years.
NTPC’s Dulanga coal mine is commercially operational from 1 October 2020. The central government has allocated nine coal blocks — Pakri-Barwadih, Chatti-Bariatu & Chatti- Bariatu (South), Kerandari, Dulanga, Talaipalli, Banai, Bhalumuda, Mandakini-B and Badam — directly to NTPC. Banhardih coal block, allocated earlier to the Jharkhand government, is now being developed by Patratu Vidyut Utapadan Nigam Ltd. NTPC is planning to produce about 103 MTPA of coal from these mines when all the mines reach the peak-rated capacity. Out of 10 blocks, three mines, Parkin-Barwadih, Dulanga and Talaipalli are in operation — about 27.2 MT of coal has been produced from these mines (till November 2020). Two mines — Chatti-Bariatu and Kerandari — are in advance stage of development.
After a wait of over two years, MAHAGENCO has finally got environmental clearance from the MoEFCC for its captive coal mine in Chhattisgarh. The mine — Gare Palma II — will supply coal to Koradi, Chandrapur and Parli power plants. The coal ministry had allocated the block, located in Raigarh district, spread across 2,583.486 hectare with geological reserves of 1,059.761 MT in August 2016 to MAHAGENCO. MAHAGENCO had appointed Adani Group as the mine developer and operator and Maharashtra Electricity Regulatory Commission (MERC) had granted approval for a coal mining agreement with it. The company is expected to launch production of 23.60 MTPA from March 2023, which will increase to 29 MTPA from the seventh year onwards. Vedanta Ltd has emerged as the highest bidder for Radhikapur west coal block located in Angul district of Odisha at a distance of about 190 km from the company’s Jharsuguda aluminium smelter. The coal block is an optimal fit for Jharsuguda smelter, given its logistical location and annual capacity. The mine has total reserves of 312 MT and an approved per annum extraction capacity of 6 MT. Jindal Power has been declared as the successful bidder for a block of Gare Palma IV/1 coal mine in Chhattisgarh.
The SC sought response from Centre and seven states on a plea challenging the decision to allocate/auction coal blocks for commercial mining in densely forested areas. The SC issued notice and tagged the matter along with other pending matters related to mining. The seven states from whom the top court has sought response include Chhattisgarh, Jharkhand, Maharashtra, Odisha, Madhya Pradesh, West Bengal and Telangana. It said that this is being done in contravention of the principles of Sustainable Development and Precautionary Principle since only 15 percent of Indian Coal Deposit lies beneath the Densely Forested Areas and remaining 85 percent can fulfill even the enhanced demand of the Coal for coming 50 to 70 years. The plea said that the decision to allot Coal and other mineral blocks in dense forest especially when less forested blocks are available is in direct contravention of the National Forest Policy 1988 as well. The plea said that the Centre did not consider the environmental aspect and went on to allot/auction many such coal blocks which were classified as No Go areas along with the Coal Blocks of the GO areas. It said that the allotment or auction of the Coal Blocks without any prior forest clearance is in contravention of the provisions of Forest Conservation Act 1980 and Environment Protection Act 1986. The petitioner sought de-allocation of all coal blocks situated in the densely forested areas which were categorized as No Go in 2010 study beside seeking a direction from the Court to Centre for proper inventory of coal and all other major mineral deposits on the basis of their environmental value.
The IWAI want more transportation of coal through waterways. National Waterway (NW-1) holds immense potential for coal movement through inland waterways but still coal movement remains scanty. However, currently most of the fly ash of power plants in West Bengal are being exported to Bangladesh through the protocol route. According to the IWAI inland waterways should get at least five per cent of the transport sector in the near future and 10 percent by 2030 from 2.5 percent now.
India will implement a CIMS that would require coal importers to submit advance information in an online system for import and obtain an automatic registration number. As per the notification, imports of anthracite coal, bituminous coal, coking coal, and steam coal will be subject to the CIMS. The government already has an import monitoring system for a number of steel items, called SIMS, that keep a tab on imports and boost domestic manufacturing. For CIMS, the automatic registration number shall remain valid for a period of 75 days and the importer would have to enter the registration number and expiry date of registration in the Bill of Entry to enable customs for clearance of consignment.
The indefinite Chinese ban on Australian coal imports will keep import prices for India volatile over the near term, according to Ind-Ra. Australia-origin coking coal import comprising 67 percent share in FY20 prices have remained subdued up to mid-December, providing respite to the spreads for domestic steel players while iron ore prices are soaring. The import prices of non-coking coal from South Africa and Indonesia (comprising 85 percent share in FY20) have seen a strong momentum up to mid-December, making imported coal more expensive and thus, hitting the margins of domestic power sector participants dependent on imported coal. Ind-Ra said coal offtake continued to improve in November to 56 MT, higher 2.6 percent m-o-m and 6.2 percent year-on-year, driven by an improving domestic power demand by 3.7 percent y-o-y. Accordingly, domestic coal production continued to improve to 56.6 mt, higher 11.6 percent m-o-m and 2.2 per cent y-o-y. The increase in prices may also provide CIL to push domestic coal over imported coal in India, subject to an improvement in price competitiveness considering the gross calorific value and applicable freight costs.
According to the IEA, global demand for coal is set to jump 2.6 percent next year after a record pandemic-led drop this year, as recovering economic activity will lift use for electricity and industrial output. Demand for thermal and metallurgical coal should rise to 7,432 MT in 2021, from 7,243 MT this year. Global coal demand fell by 5 percent this year as the impact of the pandemic curbed usage. Between 2018 and 2020, global coal demand will have fallen by an unprecedented 7 percent, or 500 MT, due to the pandemic and as countries around the world seek to shift to cleaner sources of energy. While even the United States and Europe could see their first increases in coal consumption in nearly a decade next year, demand in 2021 would still trail 2019 levels and coal use is likely to flatten out by 2025 at around 7.4 BT. The IEA will review its 2025 coal demand forecast, once the Chinese government releases its economic plans for 2021-2025, due in March.
China’s Southern provinces curiously experienced widespread power blackouts and this can be attributed to the fact that Beijing has recently banned the import of coal from Australia. In 2019, about 60 percent of China’s coal used in electricity generation came from Australia. After the ban on coal imports from Australia, coal imports from Indonesia, Russia and South Africa have been rising sharply.
Australia’s coal producers may have to start cutting output if China maintains limits on imports from them, the Australian government said, forecasting a sharp fall in coal export revenue this year. China is the second-biggest buyer of Australia’s thermal coal burned in power plants and metallurgical coal used to make steel. But Australia’s coal exports have been hit by delays at Chinese ports and prices have fallen amid a growing row between the two countries, after Australia called for an enquiry into the origins of the novel coronavirus pandemic. Metallurgical coal export revenue is expected to slump 35 percent to A$22 bn ($17 bn) in the year to June 2021 from a year earlier. The forecast is A$1 bn lower than the previous outlook in September, as prices for Australia’s metallurgical coal fell in the December quarter. Volumes are expected to fall around 5 percent. According to Australia, the shift by China away from importing high quality Australian coal is a “lose-lose” for the environment and their trading relationship. China’s top economic planner had granted approval to power plants to import coal without clearance restrictions, except for Australia. Coal is the third largest export from Australia, which is in a diplomatic row with China, its largest trading partner, which imposed trade reprisals after Canberra called for an international inquiry into the source of Covid-19. Restrictions on Australian coal may be in breach of WTO rules. Although A$4 bn of A$13 bn ($3 bn of $9.8 bn) in thermal coal exports went to China, it was not Australia’s largest customer.
Indonesia’s monthly coal benchmark price (HBA) is set at $75.84 per tonne for January, up from $59.65 a month earlier. It was the highest pricing since June 2019. Demand from China, Indonesia’s second biggest coal export destination, has helped prices recover. The US has blacklisted six companies, including several based in China, and four ships accused of illicit exports of North Korean coal. The United Nations Security Council banned North Korean coal exports in 2017. The 15-member body has unanimously boosted sanctions on North Korea since 2006 in a bid to choke off funding for Pyongyang’s nuclear and ballistic missile programs.
Anglo American will divest from its South African and Colombian thermal coal operations by mid-2023, as it sought to demonstrate to investors its commitment to a shift towards clean energy sources. A de-merger and listing on the Johannesburg Stock Exchange was the most likely route for its South African thermal coal assets. Anglo American, which produces platinum, copper, diamonds, iron ore, and thermal and metallurgical coal, highlighted its green credentials as the mining industry faces increasing scrutiny over its carbon footprint. The company planned to exit its Cerrejon thermal coal mine in Colombia within 1 1/2 to 2 years, while the South African thermal coal exit will happen within 2 1/2 years. The US electric utility AES Corp will sell its equity interest in the Mong Duong 2 coal-fired power plant in the Quang Ninh province in Vietnam to a consortium led by a US-based investor. Vietnam has been developing renewables, along with LNG-to-power and coal-based projects, as hydropower has been nearly fully tapped while oil and gas production has peaked. Plans to build nuclear power plants were scrapped in 2016.
Japan and South Korea are pushing ahead with a controversial coal plant in Vietnam and will provide $1.8 bn in loans for the project, despite having announced ambitious pledges to become carbon-neutral on their home turf. Japan indicated that it would tighten rules for investment in foreign coal-fired power stations on environmental grounds, but stopped short of promising to end government funding for projects or axe existing ones. The Global Energy Monitor watchdog said in 2019 that Japan accounted for over $4.8 bn in financing for coal power plants abroad — particularly in Indonesia, Vietnam and Bangladesh.
CIL: Coal India Ltd, MT: million tonnes, MTPA: million tonnes per annum, MAHAGENCO: Maharashtra State Power Generation Company, SC: Supreme Court, IWAI: Inland Waterways Authority of India, CIMS: Coal Import Monitoring System, Ind-Ra: India Ratings and Research, FY: Financial Year, m-o-m: month-on-month, y-o-y: year-on-year, IEA: International Energy Agency, WTO: World Trade Organisation, BT: billion tonnes, LNG: liquefied natural gas, mn: million, bn: billion, tn: trillion, US: United States
12 January. India’s overall petroleum demand in 2020 fell for the first time in more than two decades as the Covid-19 pandemic shuttered businesses and factories, crimping the appetite of one of the world’s biggest consumers. Demand for total petroleum products — including diesel, gasoline and jet fuel — slid 10.8 percent from a year earlier, the first annual contraction in data going back to 1999, according to calculations of provisional figures published by the oil ministry’s Petroleum Planning & Analysis Cell. Consumption was also at a five-year low of 193.4 million tonnes (mt). Fuel demand from Asia’s second-biggest oil importer collapsed by as much as 70 percent after it embarked on one of the world’s most stringent lockdowns in March. The drop resulted in a sharp cutback in crude processing and operations at petrochemical plants. Demand is picking up as restrictions are eased. While monthly consumption of petroleum fuels in December was about 1.8 percent lower than a year earlier, it was still at an 11-month high, according to the government data. Gasoline consumption last month rose 9.3 percent year-on-year, the highest since May 2019, on increased use of personal vehicles. Diesel demand was 2.8 percent lower than a year earlier.
Source: The Economic Times
7 January. A survey has said that 69 percent respondents want the government to cut excise duty on petrol and diesel to bring down the fuel prices that have touched record highs. As central excise is one of the two major components of the prices of fuel, moderation in the duty will provide succour to people who are facing the heat of economic slowdown and income disruption due to the Covid-19 pandemic, according to the survey conducted by Local Circles, a community social media platform. If done, it will reduce the price of petrol to ₹78 per litre and diesel to ₹68 per litre in Delhi and similarly across India where the impact to the citizens is even higher, it said, Delhi has one of the lowest prices of diesel and petrol in the country. The survey had 9,326 responses from citizens residing in 201 districts of India. Of this 71 percent respondents were men while 29 percent respondents were women. Petrol price scaled to an all-time high of ₹84.20 per litre in the national capital after state-owned fuel retailers hiked rates for the second day in a row. Of the ₹84 per litre that commoners pay at the pump, the actual value of the petrol is only ₹26 while the rest are taxes, duty and dealer’s commission, the survey said. The central government charges ₹32.98 (125 percent of the base price) as excise and the Delhi government levies ₹19 (72 percent of the base price) per litre on petrol Value-added Tax (VAT), it said, similar levies in commission and taxes are applied on diesel.
Source: The Economic Times
6 January. Indian Oil Corp (IOC), the country’s top refiner, has loaded its first cargo of Iraq’s newly introduced Basra Medium crude grade, according to ship tracking data from Refinitiv Eikon. IOC loaded the cargo onto Minerva Kalypso, a suezmax-sized vessel, which left Iraq’s southern port of Basra on 4 January, the data showed. The ship is expected to arrive at Chennai port in southeastern India for IOC’s subsidiary Chennai Petroleum Corp Ltd (CPCL) around 14 January.
Source: Reuters
11 January. After oil, India may now build strategic reserve of natural gas to further strengthen the country’s energy security and shield itself from supply disruptions and frequent price fluctuations coming from perennial political risks in the prime energy supplying countries in the Middle East and Africa. A conductive global energy market where oil and gas prices are stable had given fresh push for building strategic gas reserves in the country. An announcement in this regard may be made as early as in the Budget 2021-22. The country had already taken advantage of low oil prices in the first quarter of FY21 (April-June) to fill its existing strategic oil reserve, making big savings. And the government now feels that it’s time for similar infrastructure for gas. Spot LNG (liquefied natural gas) prices are currently at around $6 per mmBtu (million metric British thermal unit), though a little higher than early last year, still attractively priced to push the initiative on strategic reserve. For building strategic gas reserve, the plan is to inject depleted gas fields with fuel or develop storage in large salt caverns. At present, almost half of the domestic consumption of natural gas is met from imports. With the government keen on building a cleaner gas based economy, consumption is set to rise, pushing up imports of LNG. The suggestion for building strategic gas reserve has also come from Niti Aayog that is finalising a national Energy Policy. An earlier draft policy has made a case for a gas storage requirement, if consumers have to be assured of un-interrupted supplies. A panel in the petroleum and natural gas ministry has also studied various suggestions for building the gas reserve and will take a call on the matter soon after reports of experts on the issue come. It also plans to hire consultants to evaluate the options. It is expected that a natural gas reserve would rely more on the private sector to build gas storage capacity. In this regard, depleted oil and gas fields of national oil companies will be offered on competitive basis to interested gas marketeers, both for strategic and commercial storages.
Source: The Economic Times
11 January. The government should bring natural gas under the Goods and Services Tax (GST) regime to realise Prime Minister (PM) Narendra Modi’s vision for a gas-based economy and raising the share of the environment-friendly fuel in India’s energy basket, the industry has said. Natural gas is currently outside the ambit of GST, and existing legacy taxes — central excise duty, state VAT, central sales tax — continue to be applicable on the fuel. In a pre-Budget memorandum to the Finance Ministry, FIPI (Federation of Indian Petroleum Industry), which boasts of members from across the oil and gas spectrum, said the value-added tax (VAT) rate on natural gas is very high in different states — 14.5 percent in Uttar Pradesh and Andhra Pradesh, 15 percent in Gujarat, 14 percent in Madhya Pradesh. Inclusion of natural gas under the GST ambit will have a positive impact on gas-based industries, promote usage of the fuel and avoid stranding of taxes, it said. The PM has set a target of raising the share of natural gas in the country’s primary energy basket to 15 percent by 2030 from 6.2 percent currently. Greater use of natural gas will cut fuel costs as well as bring down carbon emissions, helping the nation meet its COP-21 commitments. FIPI also sought rationalization of GST rate on service of transportation of natural gas through the pipeline. Presently, GST on the service of ‘transportation of natural gas through the pipeline’ is applicable at the rate of 12 percent (with ITC benefit) and at the rate of 5 percent (without ITC benefit). Natural gas is a much cleaner source of energy than other alternatives available and is primarily used in priority sectors like power, CNG and fertilizer.
Source: The Economic Times
6 January. The 444 km (kilometre) Kochi-Mangaluru natural gas pipeline, which Prime Minister Narendra Modi commissioned, would benefit industrial, commercial entities and households in Karnataka’s coastal districts of Dakshina Kannada and Udupi, Chief Minister (CM) B S Yediyurappa said. Terming the pipeline dedication to the nation historical, he said the natural gas would cater to the growing demand for eco-friendly fuel by power and fertiliser plants across the state, spur industrial growth, and create hundreds of jobs. Noting that Karnataka would equally benefit from the inter-state project with uninterrupted supply of eco-friendly and affordable fuel in the form of piped natural gas (PNG) and compressed natural gas (CNG), GAIL (India) Ltd said a parallel pipeline from Trissur and Palakkad in north Kerala to Bengaluru via Coimbatore and Krishnagiri in Taml Nadu would cater to all users in the state.
Source: The Economic Times
11 January. India’s coal import declined by 17 percent to 137.16 million tonnes (mt) in the April-November period of the current fiscal. The country had imported 165.35 mt of coal in the year-ago period, according to provisional compilation by mjunction, based on monitoring of vessels’ positions and data received from shipping companies. Of the total imports during November, non-coking coal was at 13.77 mt, against 15.32 mt imported in the same month last year. Coking coal imports were at 4.28 mt, up from 4.09 mt in November last fiscal. During April-November period, non-coking coal import was at 91.44 mt as compared to 114.05 mt during the same period of the previous fiscal. Coking coal imports were recorded at 28.18 mt, lower than 32.72 mt imported during the same period a year ago. Coal India Ltd, which accounts for over 80 percent of domestic coal output, is aiming at substituting imported dry fuel of 80-85 mt with more domestic supplies in the current fiscal.
Source: The Economic Times
11 January. Union Home Minister Amit Shah will launch the ‘Single Window Clearance System’, an online platform to obtain clearances for smooth operationalization of coal mines. The ‘Single Window Clearance System’ will be launched at 11 am. The Ministry of Home Affairs informed about this virtual ceremony, which will be held in the presence of Union Minister of Coal Pralhad Joshi.
Source: The Economic Times
9 January. Coal India Ltd would cross the 650 million tonnes (mt) production mark during financial year 2020-21, Chairman Pramod Agrawal said. Coal India produced 405 mt coal by the third financial quarter ending 31 December 2020, which has a contribution of 101.8 mt from Odisha-based Mahanadi Coalfields Ltd (MCL). He said there is need to produce more coal as demand for dry fuel is expected to rise post-Covid-19 pandemic. He said Coal India is giving much emphasis on increasing production as it committed to fulfil the energy needs of the country.
Source: The Economic Times
12 January. The state government has bagged a lease for a coal mine in Jharkhand in the bidding conducted by the Centre. Andhra Pradesh Mineral Development Corp (APMDC), a fully-owned AP government firm, has got the licence to explore coking coal from Brahmadiha cooking coal mine block in Jharkhand. APMDC is the lone public sector firm among the 14 firms which filed bids for the lease of Brahmadiha coal mine. AP bags rights to explore coking coal in Jharkhand mine. Interestingly, this is the only block where coking coal reserves are available among the coal blocks auctioned by the Centre. PR and Mines Minister Peddireddy Ramachandra Reddy said that APMDC had emerged as the successful bidder in the auction held in November by offering nearly 41.75 percent share of in production revenue. The Minister said that coking coal is a key raw material in steel production and APMDC’s jackpot would help the state government in putting the process of setting up of steel plant in Kadapa district on fast track.
Source: The Economic Times
7 January. Encouraged by the buoyancy in its coal sales via e-auction, Coal India Ltd (CIL) is optimistic of closing the current fiscal with a booking order of 120 million tonnes (mt), the highest ever booking since coal sales entered the e-auction regime. CIL’s concentrated efforts to book increased volumes of coal under e-auction to bolster sales revenue, especially in view of the narrowed margins in add-ons during Covid pandemic period, paid off with the company scoring a strong 76.2 percent growth during April-December, 2020. Beginning October’20 of the current fiscal, CIL introduced special spot auction for coal importers, under which it had already booked 7.3 mt in three months.
Source: The Economic Times
8 January. Tata Power has taken over the management and operations of Western Electricity Supply Company of Odisha (WESCO) and SOUTHCO Utility upon completion of sale process. Now WESCO and SOUTHCO will operate under the companies named as TP Western Odisha Distribution Ltd (TPWODL) and TP Southern Odisha Distribution Ltd (TPSODL) respectively. As per order issued by the Odisha Electricity Regulatory Commission (OERC), Tata Power holds 51 percent of equity with management control and the Grid Corporation of Odisha (GRIDCO) will have the remaining 49 percent. TPWODL will be responsible for the distribution and retail supply of electricity in five circles of WESCO covering 20 lakh consumers with annual input energy of 7,520 mn units in areas of Rourkela, Burla, Bhawanipatna, Bolangir and Bargargh. TPSODL will be responsible for the distribution covering 23 lakh consumers with an average energy input of 3,470 mn units and retail supply of electricity in six circles of SOUTHCO in areas of Ganjam City, Berhampur, Aksa, Bhanjannagar, Jeypore and Rayagada.
Source: The Economic Times
7 January. Delhi’s peak power demand clocked 5,265 MW, the highest so far this winter, due to the continuing chilly weather. The peak power demand of the city has increased by over four percent since 1 January. It registered an increase of over 50 percent since 1 December and by 67 percent since 1 November 2020. BSES discoms — BRPL and BYPL — successfully met the power demand of 2,187 MW and 1,093 MW in their respective areas. Delhi’s peak power demand had crossed the 5,000 MW for the first time this winter on 1 January. On 1 December 2020, Delhi’s peak power demand was 3,504 MW. Since then, the city’s peak power demand has increased by over 50 percent.
Source: The Economic Times
12 January. States should set targets for energy conservation and reducing their emissions much like international treaties, Union Power and Renewable Energy Minister R K Singh said. Singh said that a public ranking of the states and their targets should be published, with targets coming from the states themselves. This mechanism follows the path of the Paris Agreement, which had countries list their own stated targets to achieve by 2030. The Minister reaffirmed that the country will surpass the 450 GW of operational renewable energy capacity by 2030, saying that 55 percent of all sources of power will be sustainable by then. However, he acknowledged that despite the optimism, there is scope for doing better.
Source: The Economic Times
11 January. For the first time, the Bowenpally agriculture market, the largest vegetable market in Secunderabad Cantonment, will run on electricity generated through vegetable waste. Over a hundred streetlights, 170 stalls, an administrative building and water supply network will be run on this source of energy. With the completion of a trial run recently, it is ready to launch a new power plant, built at a cost of ₹30 mn to generate electricity from vegetable waste.
Source: The Economic Times
11 January. Adani Green Energy said it has commissioned a 25 MW solar power plant at Chitrakoot, Uttar Pradesh through its step-down subsidiary, Adani Solar Energy Chitrakoot One. It said that with this the firm’s total operational renewable capacity reached 2,975 MW. The plant has a power purchase agreement with Noida Power Company at ₹3.08 per kWh (kilowatt hour). With this project Adani Green now has a total portfolio of 14,795 MW renewable energy plant capacity including 11,820 MW awarded and under implementation projects.
Source: The Economic Times
11 January. The Solar Energy Corp of India (SECI) is likely to reduce the size of its latest solar tender as well as change location specifications. The size is being brought down from 2,500 MW to 1,800 MW. While earlier the projects were to be located at the solar park in Koppal district of Karnataka, SECI has now identified three other spots in the same state where the projects, once they are auctioned, can be built. SECI is the nodal agency through which the renewable energy ministry conducts wind and solar auctions. The 2,500 MW tender was issued on 10 April 2020, but SECI has extended the deadline for bid submission six times, according to renewable energy consultancy firm Bridge to India.
Source: The Economic Times
9 January. NHPC Ltd said it has signed an agreement with the Indian Renewable Energy Development Agency (IREDA) for assistance in setting up renewable energy (RE) projects. The Memorandum of Understanding (MoU) was signed in the presence of NHPC CMD (Chairman and Managing Director) Abhay Kumar Singh and Pradip Kumar Das, CMD, IREDA and other senior officials of both the companies, NHPC said. NHPC said the company has undertaken an ambitious plan to make a significant imprint on the RE landscape of the country through development of 7.5 GW of renewable energy (solar – terrestrial and floating, and wind) projects in the next three years. Besides, 155 MW solar (terrestrial and floating) capacity is under final stages of award and another 2.9 GW of solar capacity is under various stages of development.
Source: The Economic Times
9 January. Energy Efficiency Services Ltd (EESL), a joint venture under power ministry, has signed a Memorandum of Understanding (MoU) with National Highway Authority of India (NHAI) to establish clean energy and energy efficiency projects at NHAI structures including buildings. The pact is signed for the development, maintenance, and management of national highways. for the implementation of e-mobility services, energy efficiency and renewable energy projects, the company said. As part of the pact, NHAI will avail project management contract services of EESL as on required basis.
Source: The Economic Times
8 January. Tata Power has received an order from the Kerala State Electricity Board Ltd (KSEBL) to develop a 110 MW solar power project in the state. The company received a Letter of Award from the KSEBL, Tata Power said. The energy produced will be supplied to KSEBL under a power purchase agreement (PPA), valid for a period of 25 years from scheduled commercial operation date, the company said. The project has to be commissioned within 18 months from the date of execution of the PPA, Tata Power said adding the plant is expected to generate about 274 mn units of energy per year. With the latest win, Tata Power’s renewable capacity will increase to 4,032 MW.
Source: The Economic Times
8 January. Union Environment Minister Prakash Javadekar asserted that India is the only country to keep its commitments on climate action, despite accounting for only six to seven percent of total carbon emissions in the world. Javadekar claimed that the country is not responsible for climate change, but it is working towards enhancing the generation of solar and renewable energy. Javadekar said that the country should gradually shift towards electric vehicles (EVs) to reduce pollution.
Source: The Economic Times
8 January. Sembcorp Energy India, a wholly-owned subsidiary of Sembcorp Industries, said it has won a bid for a new 400 MW solar power project in Rajasthan. It said that the bid was won through its renewables subsidiary, Sembcorp Green Infra, in an auction conducted by the Solar Energy Corp of India (SECI). The firm said that the solar project in Rajasthan is expected to be ready for commercial operation by mid-2022 and added that it will be funded through a mixture of internal funds and debt. With this win, the firm now has a renewables portfolio of over 3,000 MW in operation and under development across Singapore, China and India.
Source: The Economic Times
7 January. The government has cleared eight hydropower projects of 144 MW on the Indus river and its tributaries in Ladakh, the highest so far. At present, there are several small projects, with a collective capacity of 113 MW on Indus in Ladakh, and the new projects will have much more capacity than those constructed so far. The new projects have been cleared by the Central Water Commission as well as the Indus Commissioner after a separate Union Territory of Ladakh was announced last year. These projects will come up in Kargil and Leh districts of Ladakh. Because of its topography, it is not feasible to construct big hydropower projects in the Ladakh region.
Source: The Economic Times
6 January. The world’s largest floating 600 MW solar energy project to be constructed at Omkareshwar dam on Narmada river in Khandwa district of Madhya Pradesh will begin power generation by year 2022-23. The estimated investment in this project stands at ₹30 bn, the State’s New and Renewable Energy Minister Hardeep Singh Dang said. The primary feasibility study of the project has been completed in collaboration with the World Bank. The project is likely to begin power generation by year 2022-23, the Minister said. Tender for the study of environmental and social impact of the project area is also being issued. Madhya Pradesh Power Management Company has agreed to purchase 400 MW power from the project, he said. The project will have floating solar panels of 600 MW power generation capacity in the backwaters of Omkareshwar dam. It is estimated that in 2 years, the project will start providing cheap and good quality power. Electricity will be produced in about 2000-hectare water area by installing solar panels in the dam. Solar panels will float on the surface of the water in the reservoir.
Source: The Economic Times
6 January. The Shiromani Gurdwara Parbandhak Committee (SGPC) said it will install solar systems at historic gurdwaras to reduce the cost of electricity and a plan would be drawn for the preparation of ‘langar’ by steam. During a meeting of the interim committee held, SGPC chief Bibi Jagir Kaur said solar systems would be installed at gurdwaras and a committee of office-bearers, officials and technical experts would be constituted for its implementation.
Source: The Economic Times
11 January. Oil prices fell on renewed concerns about global fuel demand amid strict coronavirus lockdowns in Europe and new movement restrictions in China, the world’s second-largest oil user, after a jump in cases there. Mainland China saw its biggest daily increase in Covid-19 cases in more than five months, the country’s national health authority said, as new infections in Hebei province, which surrounds the capital Beijing, continued to rise. Still, the oil price losses were curbed by plans for US (United States) President-elect Joe Biden to announce trillions of dollars in new coronavirus relief bills this week, much of which will be paid for by increased borrowing. Crude prices remained supported by Saudi Arabia’s pledge for a voluntary oil output cut of 1 mn barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns.
Source: Reuters
10 January. Saudi Arabia’s voluntary oil production cut is expected to bring the oil market into deficit for most of 2021 even as new lockdowns to contain the spread of the coronavirus batter oil demand, analysts said. Saudi Arabia, the world’s biggest oil exporter, surprised the market with a voluntary output cuts of 1 mn barrels per day (bpd) in February and March. The move came as the Organization of the Petroleum Exporting Countries (OPEC) and allies – a group known as OPEC+ – agreed most producers would hold output steady in February and March, while allowing Russia and Kazakhstan to raise output by a modest amount. With coronavirus infections spreading rapidly, producers are wary of a new blows to oil demand which could lead to rising inventories.
Source: Reuters
7 January. Nigeria’s state oil firm NNPC is in talks to raise around $1 bn in a prepayment with trading firms to refurbish its largest refining complex at Port Harcourt. If the financing is concluded, the long overdue rehabilitation of the refinery should reduce Nigeria’s hefty fuel import bill. It would also mark Nigeria’s second oil-backed financing since the Covid-19 pandemic that has added to the difficulty of finding investors as fuel demand is sapped by lockdowns and renewable energy is gaining ground over fossil fuels. The money would be repaid over seven years through deliveries of Nigerian crude and products from the refinery once the refurbishment is complete.
Source: Reuters
12 January. Global natural gas output fell 3.6 percent in 2020 but still outstripped production as the pandemic hit demand and prices, consultancy Rystad Energy said. Output fell to 3,918 billion cubic metres (bcm) with North American production hardest hit, Rystad Energy estimates showed, lower than a previous estimate. Global gas demand fell 2.5 percent to an estimated 3,840 bcm, though lower prices for gas meant increased competitiveness versus coal in the power sector and helped limit the fall, Rystad Energy said. Reflecting the impact of lockdowns to curb the spread of the coronavirus, demand in Europe fell by 7 percent, or 40 bcm, while Asian demand remained relatively strong. Global imports of liquefied natural gas (LNG) bucked the downward trend and rose 3 percent to 363 million tonnes (mt), driven by demand from Asia, especially China, Rystad Energy said. Global demand, driven by Asia, is expected to grow by 26 percent over the next 20 years to 4,867 bcm, although Europe should see a decline from 2024, Rystad Energy said. LNG production is expected to jump by 79 percent to 672 mt by 2040 yet still fall short of LNG global import demand of an estimated 736 mt, Rystad Energy said. It expects liquefaction capacity to nearly double to 886 mt per year.
Source: The Economic Times
12 January. Royal Dutch Shell said that liquefied natural gas (LNG) cargoes have resumed from its Prelude floating LNG project off Australia, after being offline for nearly a year. Prelude had suspended full production since early last February following an electrical trip, with Shell facing a number of issues last year in trying to restart production. The cargo was loaded on LNG tanker Symphonic Breeze on 8 January and is bound for Japan, shiptracking data from Refinitiv Eikon showed. The shipment comes as spot prices for LNG in Asia are at a record high following a surge in demand after a colder than expected winter depleted gas inventories. The $17 bn Prelude project, centred around the world’s biggest floating liquefaction vessel, had been plagued with problems, shipping its first cargo only in 2019, more than two years behind schedule. The project is jointly owned by Shell, Japan’s Inpex Corp, Korea Gas Corp and a unit of Taiwan’s CPC Corp.
Source: The Economic Times
6 January. China’s Sinopec Corp said it had completed building the first phase of a new shale gas field, Weirong, in southwestern Sichuan province with an annual production capacity of 1 billion cubic meters (bcm) of natural gas. Weirong, located in Neijiang and Zigong cities, is the state energy giant’s second major shale gas development after Fuling, which is also located in the same Sichuan basin. With an average well depth of 3,750 meters (2.33 miles) beneath earth’s surface, Sinopec has tapped proven reserves of 124.7 bcm at the deep shale gas field. Under the first phase of development that started around late 2019, Sinopec said it had drilled 56 wells attached to eight drilling platforms. Currently, Weirong is pumping 3.5 million cubic meters of gas a day. China’s national energy producers are ramping up natural gas supplies in recent weeks of both domestic productions and imports to meet a demand surge amid a colder-than-usual winter and robust post-pandemic manufacturing activity.
Source: Reuters
12 January. China’s effective ban on imports of Australian coal is forcing a realignment of flows between the world’s two biggest importers and two largest exporters. Indonesia and Australia dominate the global seaborne coal trade, with the Southeast Asian nation tops in thermal coal, used mainly in power plants, while Australia is the biggest shipper of coking coal, used to make steel, and the number two in thermal coal. China’s major coal supplier was Australia, but this ended in the second half of last year after Beijing’s unofficial ban on imports from Australia, believed to be in retaliation for Canberra’s call for an international probe of the origins of the coronavirus pandemic. Indonesian thermal coal is generally of a lower energy value than Australian, and therefore trades at a discount to the Australian benchmark Newcastle index.
Source: Reuters
12 January. Japan’s utilities called on the public to save power as electricity generators resorted to using fuel oil, instead of coal, to meet surging demand for heating with frigid temperatures gripping much of the country. Power prices again jumped to record highs above 200 yen ($1.92) per kilowatt hour (kWh), highlighting a crunch not seen since the aftermath of the Fukushima nuclear crisis, as providers scrambled to source supplies. Japan’s utilities federation issued a statement urging users to save power as its members squeeze as much capacity as they can out of generation units and asked industrial users to help supply the grid. The government also urged the public to conserve energy. Japan’s benchmark power price hit a record high of 222.30 yen/kWh with temperatures fell below zero in parts of the country, including Tokyo in recent days.
Source: Reuters
10 January. A breakdown in Pakistan’s national power grid plunged the country into darkness. A countrywide blackout has been caused by a sudden plunge in the frequency in the power transmission system, Pakistan’s Power Minister Omar Ayub Khan said. He said efforts were underway to determine the reasons behind the situation, and asked people across the country to remain calm.
Source: Reuters
12 January. US (United States) greenhouse gas emissions fell 10.3 percent in 2020, the largest drop in emissions in the post-World War II era, as the coronavirus crippled the economy, according to the Rhodium Group report. The economic fallout from the uncontrolled spread of Covid-19 – especially in big emitting sectors like transportation, power and industry – resulted in a sharper emissions drop than the 2009 recession, when emissions slid 6.3 percent. The drop means that the US would outperform its pledge made under the Copenhagen climate accord to reduce greenhouse gas emissions 17 percent below 2005 levels by 2020. Emissions will actually drop by 21.5 percent compared with 2005. Power plant emissions saw the second largest decline, dropping 10.3 percent below 2019 levels, driven by retirements of coal-fired power plants and a general decline in electricity demand due to the economic damage from the pandemic, the report said.
Source: Reuters
8 January. Malaysia will delay the nationwide rollout of its B20 palm oil biodiesel mandate to early 2022 to prioritise an economy that has been battered by the Covid-19 pandemic, state news agency Bernama reported. The mandate to manufacture biofuel with a 20% palm oil component – known as B20 – for the transport sector was first rolled out in January last year, and was set to be fully implemented across the country by mid-June 2021. Rival and top producer Indonesia has also pushed back plans to raise the bio-content of palm oil-based biodiesel to 40 percent and instead raised export levies to finance its B30 programme after the pandemic triggered a collapse in crude oil prices. A rally in Malaysia’s benchmark crude palm oil prices to its highest in nearly a decade has also widened its premium over crude oil, making palm a less sustainable option for biodiesel feedstock.
Source: The Economic Times
7 January. Italy’s biggest utility Enel has signed a deal with the Qatar Investment Authority (QIA) to develop renewable energy projects in Sub-Saharan Africa, the two groups said. Under the deal, the Qatar sovereign wealth fund will, as a first step, buy half of Enel’s stake in 800 MW of its existing renewable capacity in South Africa and Zambia. Enel Green Power will develop new projects in the region while funding and building will be left to the joint venture. QIA, one of the world’s biggest sovereign wealth funds, has stopped investing in fossil fuel companies and is focusing increasingly on the development of green technologies.
Source: Reuters
6 January. South Africa’s state power provider Eskom will implement scheduled power blackouts, after a shutdown of its nuclear power plant prompted by a rising leak rate in one of its steam generators. Eskom said it had to shut down unit 1 of its Koeberg station, the only nuclear power plant in Africa, and another unit, earlier than planned. The power cuts were needed to recover and preserve emergency generation reserves. Eskom took Koeberg unit 1 offline for repairs after an increasing leak rate at one of three steam generators, adding that the unit is expected to return to service during May 2021.
Source: Reuters
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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