MonitorsPublished on Mar 11, 2022
Energy News Monitor | Volume XVIII, Issue 35
Economic sanctions: Negative externalities on the Indian energy consumer


In 2020, Russia was the largest net exporter of fossil fuels (coal, oil and gas). It was the second largest gas producer accounting for 17 percent of global production and the third largest oil producer accounting for about 12 percent of the global output. Russia was also among the top ten coal producers of the world accounting for over 5 percent of global output. As of 2 March 2022, the Russian energy sector was excluded from sanctions by the USA, EU, and their allies.  However, many of the traditional buyers of Russian fossil fuels shunned Russian fuels out of fear of sanctions over payment mechanisms. The removal of Russian oil, gas, and coal from international markets along with fear of further disruptions in energy supplies have driven up prices of oil, gas, and coal substantially. The increase in price of these internationally traded fuels will impose costs on ordinary people in countries that are uninvolved in the conflict.

Price increases for Globally Traded Fuels

Even before military operations began in Ukraine, global crude oil prices increased reflecting the risk of impending disruptions. Between 30 December 2021 and 11 February 2022, Brent crude prices increased by over 34 percent from US$71.61/barrel (b) to US$96.33/b.  On 2 March 2022 crude was trading at over US$112/b. The price of natural gas in the last quarter of 2021, at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas spot market in Europe, averaged US $31.5/mBtu (million British thermal units) a six fold increase compared to the same period in 2020.  It rose to over US $40/mBtu after the Russian attack of Ukraine in February 2022 and has since fallen back to around US $30/mBtu.  Asian LNG (liquid natural gas) prices, which are the more relevant benchmark for India is roughly at the same level as TTF prices, though historically Asian LNG prices have been higher than the TTF prices.  The price of globally traded high quality (6000 kilocalories /kilogram) thermal coal prices are over $250/tonne, more than twice the average price in 2021.

Price increases for Indian Consumers

The quantitative (or volume) risk of energy supply disruptions because of the sanctions on Russia is not significant.  India’s imports of Russian oil, gas and coal are small compared to the total volume of imports. The energy markets are well supplied, and it is possible to find alternatives to Russian supplies. The real challenge for India is the energy price risk. The increase in price of imported oil, natural gas, and coal reflected in retail prices of petrol, diesel, cooking fuel and possibly also electricity will hit poor Indian households hard.

The self-sufficiency ratio for petroleum products in India was 15.6 percent in 2020-21 which means India is dependent on imports for meeting about 85 percent of its petroleum product needs. The increase in international crude prices should have been passed through to the retail prices of key petroleum products such as diesel and petrol because the sector is technically deregulated. With crude prices over $110/b the increase in the retail price of petrol and diesel should have been higher by INR9-10/litre. However, since November 2021, the retail price of petrol and diesel across the country have not changed. This could be because the government wanted to avoid significant price increases for petrol and diesel during state elections. Although, it is very likely that the pent-up retail price changes of petrol and diesel will be passed through to the final consumers after the elections.

The price paid for petrol and diesel by the average retail consumer in India is comparable to highly taxed European retail prices. Petrol and diesel prices in India are the highest in South Asia and also highest among countries with comparable gross domestic product (GDP). In some of the poorer states in India, the price paid for a litre of petrol (used in two wheelers for household economic activity) could be as high as 80 percent  of daily average income. A recent survey of Indian households concluded that roughly one in two households expect a reduction in discretionary spending which could include spending on health and education when fuel prices increase. Price increases could also reduce the consumption of liquid petroleum gas (LPG) by poor households which would revert to using biomass as cooking fuel. Increase in the price of diesel used by trucks that transport most of the goods in India will translate into higher inflation that is effectively a tax on consumption by poor households. If crude prices stay at around $100/b, inflation during the current financial year could increase by 1 percent.

For natural gas and coal, the impact of increase in international prices on household energy consumption is less dramatic but it cannot be ignored. For natural gas, India’s import dependency was over 54 percent in 2020-21. Imported natural gas is used mostly by industries and by households as cooking or transportation fuel (in three and four wheelers, and in public transport). As compressed natural gas (CNG) is not taxed as heavily as petrol or diesel, it is comparatively more affordable than LPG for cooking and also more affordable than petrol for use in personal vehicles. Increase in the price of imported natural gas when passed through to the retail consumer will impact consumption.  Industrial consumers may revert to using cheaper but more polluting domestic coal as a substitute for expensive natural gas.

Coal imports (thermal and coking) accounted for over 24 percent of domestic consumption in 2020-21. Increase in the price of imported thermal coal will have a negative impact on power generation.  Media reports warn of a second wave of domestic coal supply shortages that could result in power outages across the country if imported coal proves to be too expensive to substitute for domestic coal.  For the steel, cement and other industries that require coal as feedstock, increasing product prices may be the only option if they have to import coking coal at high international prices.

In India, the regulated price of domestically produced gas is fixed at US $2.90/mBtu for the period 1 October 2021 to 31 March 2022.  This is about a tenth of the price of internationally traded gas today. The price notified by Coal India Limited (CIL) for high quality (over 6000 Kcal/kg) domestic coal is about US $20/tonne. This is about a twelfth of the price of internationally traded coal of comparable quality today. The low domestic prices for coal and gas increase as they make their way into the retail market in the form of electricity, cooking gas or fertiliser, but they are still low enough to remain affordable to low-income households. The logic behind this is that even in the absence of effort to improve incomes of poor households that will make energy affordable at any price, keeping energy prices low makes modern energy forms affordable households that are likely to remain poor.  More importantly, the political effort to keep energy prices (primarily electricity and domestic gas) low wins the votes of poor households. Though economically and politically perverse, low energy prices have been critical in increasing economic options for poor households and also in improving their quality of life.  Increase in energy prices on account of external factors completely irrelevant to poor households will threaten livelihood options and decrease quality of life for poor households.

Negative Externalities

Economic sanctions are used extensively by wealthy countries to achieve foreign policy goals as they are politically less problematic and militarily less expensive. They are seen as mild and peaceful with little or no human costs and therefore avoid political and ethical scrutiny that military operations would be subject to. However, in an increasingly integrated international economy, unilateral economic sanctions transfer the cost of economic warfare, such as a substantial increase in energy prices, on innocent, uninvolved civilians such as poor energy consumers (in India and elsewhere). Economic sanctions may be unavoidable as in the current case to avoid escalation of war, but given the negative externality of sanctions experienced by an unrelated third parties, often the most vulnerable and the least political, it is necessary to subject economic sanctions to the same moral and political scrutiny as military action.

Source: BP Statistical Review of World Energy 2021

Monthly News Commentary: Coal

Second Wave of Coal Stock Crisis Looms Large



NTPC Ltd has sought about 10 million tonnes (mt) of overseas coal since it issued its first international tender in two years in October. The reversal after years of supporting the government’s push to favour local producers underscores concern about a repeat of fuel shortages that triggered outages and power restrictions last year. The New Delhi-based company is aiming to secure cargoes starting from April, when power consumption in India typically surges on summer cooling demand. Indian power producers are returning to the seaborne coal market as they rebuild stockpiles after last year’s energy crisis, ignoring relatively high global prices and assurances that domestic miners will lift output. While that’s a setback to the government’s agenda to prioritise local production, it should help avoid any repeat of 2021’s squeeze, when reserves dwindled to just a few days’ worth of supply. NTPC has already agreed to buy 1 MT of overseas coal from Adani Enterprises and has published tenders, including one for 5.75 MT issued, for the remainder. NTPC, along with its joint ventures, has generation capacity of about 68 gigawatts (GW), of which 83 percent is fired by coal. That makes the company India’s largest consumer of the fossil fuel, burning 170 MT a year, or about a fifth of the country’s total.

Coal Block Auctions

Maharashtra has sought the coal ministry’s intervention in getting forest clearance for the Chhattisgarh government coal block allotted to its power stations in the Vidarbha region, becoming the second state to knock on the Centre’s doors over mining hurdles in a state that has the country’s third-largest coal deposits.


Coal India Ltd (CIL) arm Mahanadi Coalfields Ltd (MCL) has offered 2.25 million tonnes of coal to power consumers via the road-cum-rail mode as the stock of fossil fuel rises above 12.5 MT at the mines with a gradual increase in output in the last quarter of FY22. MCL is looking for opportunities to maximise despatch as the company’s coal stock is slated to increase further with an increase in production from its mines in Odisha. The offer of 2.25 MT coal through the road-cum-rail (RCR) mode to consumers was made after this new initiative. A coal allocation of 1.8 MT to state/ central power generation companies in November and December last year successfully helped MCL liquidate stocks. MCL had 12.2 MT of coal stock at its mines as on 1 January. The same is increasing with the gradual increase in coal production. MCL has a coal production target of 163 MT for the ongoing financial year.

Coal India Limited (CIL) said that its capex spend during the April-December period of current fiscal was INR107.17 bn (billion) (US$1.43 bn)a growth of 37.4 percent on year-on-year basis. The company’s capex during the corresponding period of last year was INR78.01 bn. Also its capex spend during the referred period marks 86.3 percent of the progressive target achievement. CIL is focusing on increasing its evacuation capacity through rail mode by an additional 330 million tonnes per annum (mtpa) by 2023-24 through strengthening of its rail infrastructure. Mainly deployed in opencast mines, the major source of the company’s coal production, these machines would help in removal of overburden and ramp up the coal output.

CIL reported a 3.3 percent rise in coal production to 60.2 MT in December. CIL had produced 58.3 MT of coal in the corresponding month of the previous fiscal. The company’s coal output increased to 413.6 MT during the April-December period from 392.8 mt in the corresponding period of the previous fiscal. Coal India Ltd. accounts for over 80 percent of domestic coal output. The country’s coal production is expected to record a “sizeable leap” in 2022 with increased output mainly from CIL and captive mines, providing an adequate firewall against any possible dry fuel shortages like the one witnessed in the latter half of this year. According to Coal Ministry, the increase in coal output would be on account of more production from CIL, captive coal blocks auctioned between 2015-2020 and commercial mines put on sale last year. In the last financial year, CIL dug out about 596 MT of coal. In the ongoing fiscal, the output is likely to be upped to 640 MT.


The government announced the launch of a portal, ‘Koyla Darpan’, to share key performance indicators related to the coal sector. The portal was launched by Coal Secretary.  As an initial step, the portal has key performance indicators like coal/ lignite production, coal/ lignite offtake, exploration data, central sector schemes, status of coal stock at thermal power plants, allocation of blocks, monitoring of major coal mines, and coal price.

Rest of the World


China’s coal output hit record highs in December and in the full year of 2021, as the government continued to encourage miners to ramp up production to ensure sufficient energy supplies in the winter heating season. As per the data from the National Bureau of Statistics, China, the world’s biggest coal miner and consumer, produced 384.67 MT of the fossil fuel last month, up 7.2 percent year-on-year. This compared with a previous record of 370.84 MT set in November. For the full year of 2021, output touched a record 4.07 billion tonnes, up 4.7 percent on the previous year. Since October, authorities have ordered coal miners to run at maximum capacity to tame red-hot coal prices and prevent a recurrence of September’s nationwide power crunch that disrupted industrial operations and added to factory gate inflation. The most-active thermal coal futures contract on the Zhengzhou Commodity Exchange, for May delivery, was up 2.82 percent at 708 yuan (US$ 111.67) per tonne. Prices have more than halved since hitting record highs in October last year. Coal traders in China shrugged off an Indonesian coal export ban as stockpiles at power plants were strong and power demand was set to weaken for the upcoming Lunar New Year holidays. According to the state planner National Development and Reform Commission, coal inventory at Chinese utilities exceeded 162 mt on 21 January, or 21 days’ usage, about 40 MT higher than the same period last year.

Rest of Asia and Asia Pacific

Indonesia has issued a new regulation aimed at ensuring coal miners sell part of their output to the domestic market, or face operational suspensions and risk mining permits being revoked, according to the regulation document. Indonesia, the world’s biggest thermal coal exporter, on 1 January imposed a month-long ban on coal exports after officials said miners had failed to fulfil their so-called Domestic Market Obligation (DMO) to sell a quarter of their output locally, with a price cap of US$70 per tonne for power generators. The ban was imposed to secure domestic supply after the state power company reported a critically low supply of the fuel at power generators. According to the regulation signed by the energy minister, coal miners must report the fulfilment of their monthly DMO requirement to the energy ministry within 10 days of the end of each month. The regulation took effect on 19 January. Companies that did not meet their DMO will be fined, while those producing coal with specifications unsuitable for domestic needs would have to make a “compensation payment”. Meanwhile, miners will not be allowed to export if they have not yet met their DMO. Exports suspensions will also be slapped on coal traders who fail to fulfil contracts with domestic buyers. Mining companies and traders that were the subject of coal export bans prior to the issuance of the new rules are also required to pay a penalty for coal distribution shortages for the January-July 2021 period, according to the regulation. As of 20 January, Indonesia has lifted a coal export ban for 139 companies.

Australia’s South32 Ltd warned of potential impact from workforce restrictions due to the coronavirus pandemic at its flagship Illawarra project in the second half, as it reported about a 15 percent drop in second-quarter coking coal output. The diversified miner follows heavyweights BHP Group and Rio Tinto in warning of disruptions from coronavirus-induced labour shortages as Australia faces a surge of Omicron cases. While it maintained its fiscal 2022 metallurgical coal output guidance of 6.3 mt, it said it will provide an update to its FY22 and FY23 forecast with its half-year results next month.

South America

Brazil will continue to use and subsidize coal as an energy source until at least 2040, according to a so-called “just energy transition” law published, which policy experts said goes against the climate and consumers. Broadly, “just transition” is a process aimed at ensuring that the benefits of a green economy shift are shared widely, while supporting those who may lose out economically, whether nations, regions, industries, communities, workers or consumers. However, Brazil’s new law – far from promoting the adoption of climate-friendly clean fuels – benefits coal producers in southern Santa Catarina state by prolonging the activities of coal-based power plants in the region for a further 18 years. Under previous policies, Brazilian subsidies for thermal coal-powered plants were supposed to end by 2027, and the authorization for three large plants in Santa Catarina to operate was meant to expire in 2025. The new law reverses that, stating the government must buy, at a set cost, energy generated by a group of thermal plants in Santa Catarina. It mandates 80 percent of the energy be produced from coal mined in the region. Nearly half of Brazil’s electricity currently comes from renewables, including wind and hydropower, with the rest from planet-heating fossil fuels, government data shows. According to Abrace, an industry group of big energy users in Brazil, the new law will cost consumers an extra 840 million reais (US$147 mn) per year because coal in the country is more expensive than clean energy like solar and wind.

North America

According to Energy Information Administration (EIA), Coal-fired plants will account for about 85 percent of total US power capacity scheduled for retirement this year with natural gas and renewables taking a greater share of the supply. US power plant operators were scheduled to retire about 12.6 gigawatt (GW) of coal-fired generating capacity in 2022 out of the total 14.9 GW capacity set to be retired. The largest coal power plant scheduled to go out of service in 2022 is the 1,305 megawatt (MW) William H. Zimmer plant in Ohio, the EIA said.

News Highlights: 26 January – 1 February 2022

National: Oil

India’s January fuel sales hit by COVID curbs

1 February: Indian state fuel retailers’ sales slowed in January from the previous month after partial lockdowns in several states to stem the spread of Coronavirus, preliminary sales data showed, indicating slower industrial activity. The state retailers sold about 5.6 million tonnes (MT) of gasoil in January, a decline of 12.75 percent from December and of 6.85 percent from a year earlier, the data showed. Gasoil accounts for about two-fifth of refined fuel consumption in India and is directly linked to industrial activity. Since the start of this year, several states in the country have imposed varying degrees of restrictions including weekend curfews to contain infections caused by the highly transmissible Omicron variant of the Coronavirus. Gasoline sales in January were at 2.2 million tonnes, declining by 12.3 percent from December and by 5.4 percent from a year earlier, the data showed. State retailers – Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp (HPCL) – control about 90 percent of India’s fuel stations.

Petroleum ministry pulls up oil firms for allocation of fewer petrol pumps

29 January: The Petroleum ministry has expressed disappointment over fewer allocation for new fuel retail outlets (petrol pumps). In a letter to Bharat Petroleum Corporation Ltd (BPCL), the industry coordinator for public sector oil companies, the ministry has asked why the draw of lots was conducted for less than half of the envisaged number of petrol pumps. According to the ministry, there is a need to set up many more fuel retail outlets due to construction of new roads, highways, e-ways, and economic corridors. It also reiterated the obligation of oil companies to set up petrol pumps at remote areas to improve accessibility to consumers. The mandate to set up fuel retailing outlets in rural and low volume areas is also on new licensees that have been allowed access to India’s growing market under liberalised terms. Five percent of the total outlets that new licensees need to set up have to be in rural areas within five years from commencing operations. The ministry has asked BPCL to submit a proposal for fresh advertisement on behalf of the industry, indicating OMC (oil marketing companies)-wise numbers of locations in the proposal. However, this is not the only front where OMCs are battling with respect to fuel retail outlets. In another communication, the ministry asked public sector OMCs to comply with a Rajasthan High Court directive, asking them to consider a revision of margins payable to fuel pump operators. The order was in context of a plea by the Rajasthan Petroleum Dealers Association, seeking a hike in dealer margins. The OMCs have been made the competent authority to decide on the revision.

HPCL expands footprint in non-fuel retailing

28 January: Hindustan Petroleum Corporation Ltd (HPCL) will set up its own chain of multi-channel retail stores at its petrol pumps as the nation’s third-largest fuel retailer looks to give a push to non-fuel retailing. As part of this, HPCL has opened two more convenience stores under the brand name ‘HaPpyShop’, the company said. The first retail store under the brand name HaPpyShop was opened at the company’s petrol pump at Nepean Sea Road in Mumbai in September 2021 and the store has been a huge hit among the residents of the locality. In addition, the online store in Madurai was also inaugurated marking the entry of HaPpyShop in purely online format. With a refreshing appearance and layout, the stores are equipped with advanced technology to provide a seamless shopping experience to customers in the nearby areas. Along with the experience of physical stores, they have the option of online shopping with a door delivery model. Customers will be able to browse and shop the merchandise on HPCL’s ‘HP Pay App’ (available on App Store and Play Store) and have goods delivered to their homes. HPCL has also started marketing branded packaged drinking water under the name ‘Paani@Club HP’ at its petrol pumps across the country adding another offering in the customer convenience.

National: Gas

Adani Total Gas wins 14 out of 52 city gas licences, IOC 8

29 January: A joint venture of billionaire Gautam Adani-run group’s gas arm and Total of France walked away with the most 14 licenses to retail CNG (compressed natural gas) to automobiles and piped cooking gas to households in the latest city gas bidding round, according Petroleum and Natural Gas Regulatory Board (PNGRB). Adani Total Gas Ltd won city gas rights in 14 out of the 52 geographical areas (GAs) for which Petroleum and Natural Gas Regulatory Board (PNGRB) declared results. Hyderabad-based Megha Engineering and Infrastructure Ltd (MEIL) won 13 GAs, while state-owned Indian Oil Corporation (IOC) was adjudged winner in 8 GAs. As many as 65 GAs were offered for bidding in the 11th city gas distribution (CGD) licensing round. Of this, bids were received for 61 GAs but results for only 52 GAs were announced. The results of the remaining 9 GAs have been withheld due to the model code of conduct being in place in Uttar Pradesh and Uttarakhand for assembly elections. PNGRB has written to the Election Commission and results of the 9 GAs which fall in the two states will be announced once its approval is received. IOC cornered high potential GAs such as Jammu and Madurai. The hotly contested GA of Nagpur went to a consortium that included HCG (KCE) Pvt Ltd and Haryana City Gas. Adani Total won three GAs each in Assam and Chhattisgarh, four in Maharashtra including Amravati, one each in Jharkhand and Odisha and two in Madhya Pradesh. IOC won city gas license for Kurnool/Guntur in Andhra Pradesh, Jammu, Beed/Jalgaon in Maharashtra, Kikar and Dharmapuri in Rajasthan, Madurai and Kanyakumari in Tamil Nadu, and Mednipore in West Bengal. Privatisation-bound Bharat Petroleum Corporation Ltd (BPCL) won license for 4 GAs.

Bring natural gas under GST for PM’s vision of gas-based economy: Industry

27 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, an industry body that represents the likes of Reliance Industries as well state-owned firms, has said. Natural gas is currently outside the ambit of GST, and existing legacy taxes — central excise duty, state VAT, and central sales tax — continue to be applicable on the fuel.

National: Coal

Coal India’s production rises seven percent in January

1 February: Coal India Ltd (CIL)’s production registered an increase of 6.7 percent to 64.5 million tonnes (MT) in January. The company’s output in the corresponding month of the previous financial year had stood at 60.4 MT, Coal India Ltd (CIL) said. CIL’s output in the April-January period of the current fiscal increased to 478.1 MT, over 453.2 MT in the year-ago period, the filing said. Its supplies to the country’s coal-fired power plants raced ahead to 441.4 million tonnes (MT) during April-January of FY22, the company said. The firm’s current coal despatch trend to the power sector indicates that by the closure of FY22, the company shall comfortably surpass the previous high of 491 MT supplied to thermal power plants in FY19, the company said. CIL is also aiming to overtake the ongoing fiscal’s offtake target of 548 MT to the power sector. During the referred period, the company supplied around 80 MT more coal to all its customers as the total offtake evinced a steep increase to 542.4 MT, registering a 17 percent year-on-year growth. CIL produced 478 MT of coal till January of the current financial year, which is a 25 MT jump compared with 453 MT same period last year, posting 5.5 percent growth. Its total coal supply for January also rose steeply to 60.8 MT with double-digit growth of 14 percent. The increase in volume terms stood at 7.3 MT, compared with 53.5 MT during the same month last year. CIL’s pithead stock was down to 35.6 MT at the end of January, as the company managed to liquidate its coal inventory by nearly 64 MT during the 10 months of FY22. The company began the fiscal saddled with 99 MT of the stockpile. The Central Electricity Authority (CEA) monitored indigenous coal stock at power plants at 23 MT as of January 27, with CIL chipping in with more than 90 percent of the stock.

Western Coalfields supplies 18.9 MT coal to MAHAGENCO: Government

30 January: The government said Coal India Ltd arm WCL (Western Coalfields Ltd) has supplied 18.96 million tonnes (MT) of coal to MAHAGENCO (Maharashtra State Power Generation Company) against the prorated contracted quantity of 18.68 million tonnes up to this fiscal. The annual contracted quantity of coal to MAHAGENCO which is agreed by Western Coalfields Ltd (WCL) under the Fuel Supply Agreement (FSA) is 23.14 MT. As per the flexi-utilisation plan, MAHAGENCO has the option to distribute the quantity despatched from the coal companies to any of its power stations. WCL also endeavour to make power station- wise distribution of allocation of coal as per the priorities indicated by MAHAGENCO.

National: Power

Power generation companies will shut if dues not paid: SC

1 February: Noting that the country-wide total power dues have crossed INR1k bn, the Supreme Court (SC) warned that if state-owned power distribution companies (discoms) do not promptly clear their dues to power generators, the latter will shut shop. This warning came from an SC bench while dealing with an application from Adani Power Maharashtra seeking at least 50 percent payment from Maharashtra State Electricity Distribution Corp Ltd and keeping in mind the large number of power generating companies moving the court against state-run discoms that have chronically defaulted in payment of outstandings. Directing MSEDCL to pay 50 percent of the outstanding amount to Adani Power within four weeks. Data by Union Power Ministry shows that Maharashtra tops the list of defaulters. The total current outstanding amount against Maharashtra is INR212.49 bn. Tamil Nadu is a close second with outstanding amount of INR211.32 bn, Rajasthan INR123.93 bn, Uttar Pradesh INR113.07 bn, Madhya Pradesh INR69.64 bn, Karnataka INR62.02 bn, Jharkhand INR27.73 bn, Bihar INR17.81 bn and Delhi INR13.98 bn. All Northeastern states are shown to be promptly clearing their power dues with Arunachal Pradesh registering the lowest outstanding of INR100 mn. Uttarakhand has an outstanding due of INR540 mn, Himachal Pradesh INR2.57 bn, Odisha INR3.38 bn, Chhattisgarh INR7.38 bn, West Bengal INR9.46 bn and Gujarat INR11.49 bn. As per the Ministry of Power, the overdue amount at the end of January was the maximum for IPPs, which cumulatively have not been paid INR553.77 bn against the electricity already supplied. The central public sector enterprises have not yet been paid INR235.11 bn of which Nuclear Power Corporation of India Ltd alone has an outstanding of over INR100 bn and NTPC Ltd nearly INR70 bn.

Budget 2022: Total investment by power PSUs to rise five percent to INR514.7 bn

1 February: The government has proposed to increase the total investment by eight state-owned power companies by about 5 percent to INR514.7 bn for financial year 2022-23. According to the Budget document, total expenditure of the power ministry has also been pegged slightly higher at INR160.74 bn for 2022-23. According to the budget document presented in Parliament, Satluj Jal Vidyut Nigam — the public sector undertaking (PSU) under the administrative control of Ministry of Power, witnessed the highest increase at INR80 bn in 2022-23, from the budgeted as well as revised estimate of INR50 bn for 2021-22. The investment by NHPC has also been increased to INR73.61 bn for 2022-23. In case of Power Grid Corporation of India Ltd (PGCIL), the investment for 2022-23 has been kept flat at INR75 bn for 2022-23, while Damodar Valley Corporation’s investment has been pegged at INR20.09 bn for 2022-23. In case of NTPC, investments for 2022-23 has been reduced to INR224.54 bn, from budgeted as well as revised estimates of INR237.36 bn for 2021-22. According to the Budget, North Eastern Electric Power Corporation will invest INR9 bn in 2022-23, as against revised estimates of INR7.33 bn for this fiscal.

Power sector employees to go on indefinite strike, even as government issues stern warning

31 January: Puducherry remains on the edge as the opposition against the government’s move to privatise power distribution and transmission in Puducherry has intensified with power sector employees sticking to their decision to go on an indefinite strike from 1 February in all four regions of the UT, ignoring the warning given by the Puducherry Electricity Department (PED) of initiating stern action against them under CCS (Conduct) Rules, 1964. The strike will go on till the government drops the move to privatise power distribution and transmission. Though the government had moved for a conciliation meeting with the employees through the Labour Department, EEEPPC (Electricity Engineers and Employees Privatisation protest committee) boycotted the meeting scheduled. Meanwhile, to prevent the strike, the government has declared PED as a “Public Utility Service” from 19 January for a period of six months. Meanwhile, the opposition parties led by DMK has decided to organise a series of agitations demanding that the government drop the move to privatise the power transmission and distribution.

MPERC asks MP discoms to file ARR, tariff hike petition afresh

29 January: The Madhya Pradesh Electricity Regulatory Commission (MPERC) has turned down a petition of three state-owned power distribution companies (discoms) for determination of Aggregate Revenue Requirement (ARR) for 2022-27 and a tariff hike proposal for 2022-23. Keeping in view the concern of stakeholders and in the interest of obtaining substantive comments on the tariff proposal, it was felt appropriate to direct the three firms to file a fresh petition on the issue in accordance with MPERC (Terms and Conditions for Determination of Tariff for Supply and Wheeling of Electricity and Methods and Principles for Fixation of Charges) Regulations, 2021, the order from the regulatory body said.

India’s power demand expected to rise by 8-10 percent in FY22: HDFC Securities

29 January: India’s electricity demand is expected to rise in the range of 8-10 percent during FY22, HDFC Securities said. The brokerage house had earlier predicted a 12 percent rise in power demand in FY22. Accordingly, the downward revision of demand expectation is largely due to a prolonged winter and disruptions in demand caused by the rising corona cases in January 2022. Notably, the overall demand has increased by 9.5 percent on year-on-year (YoY) basis in the ‘YTDFY22’ period. According to the report, the power demand grew by only 2.5 percent on a year-on-year basis last month due to low temperatures at the onset of peak winter.

National: Non-Fossil Fuels/ Climate Change Trends

India’s emerged as a responsible global voice on climate change: President

31 January: India has emerged as a responsible global voice on the issue of climate change and its ambitions are a testimony to the country’s sensitivity towards nature, President Ram Nath Kovind said. The Indian President said that climate change is a challenge confronting the whole world and lauded the government for announcing India’s ambitious targets to combat it. Climate change is a major challenge confronting the whole world at present. India has emerged as a responsible global voice on the subject. At the COP26 summit, the government has announced that by 2030 India will reduce its carbon emission by 1 billion tonnes. India has also committed to a target of becoming a net zero emission economy by 2070. India has also taken the initiative of “Green Grid Initiative: One Sun, One World, One Grid” with the global community. It is the first international network of globally interconnected solar power grids. Our ambitions and resolves towards the environment are a testimony of our sensitivity towards nature, Kovind said. India’s commitments to the ambitious targets were announced by Prime Minister Narendra Modi at the 26th climate summit held in Glasgow last year.

SBI, Tata Power launch ‘Surya Shakti Cell’ for financing solar projects

31 January: India’s largest lender State Bank of India (SBI) has launched a dedicated centralised processing cell – ‘Surya Shakti Cell’ after entering into an agreement with Tata Power Solar Systems Ltd (a Tata Power Company). SBI, with the launch of this centralised processing cell, aims to strengthen the existing financing arrangement for solar power projects. The Surya Shakti Cell, which is set up in the Mumbai’s Ballard Estate, will process all the loan applications for Solar Projects (capacity up to 1 MW) from across the country, for business entities as well as household installation. SBI aims to offer an end-to-end platform for digital and hassle-free loan applicants for financing Solar projects. The bank, with this digital initiative, plans to provide a complete solution at competitive rates for Solar projects.

Economic Survey calls for policy roadmap for pace of shift from fossil-fuel sources to Renewable Energy

31 January: The country needs a policy roadmap for clarity about the pace at which it wants to make a shift from conventional fossil-fuel based sources to determine investments in the renewable energy generation sources, the Economy Survey said. The two main pillars for mitigation action to achieve net-zero carbon ambition are transition to clean and renewable sources of energy and storage of this energy, it said. The survey quotes a World Bank report on Minerals for Climate Action that this transition from conventional fossil fuel-based energy to clean energy as well as battery storage will be mineral intensive. Minerals and metals like copper, aluminium, iron, manganese, and nickel are critical for developing clean energy sources like solar PV, wind, nuclear while minerals like lithium and graphite are important for energy storage, it said.

Indian refiner HPCL eyes net zero carbon emissions by 2040

31 January: Indian refiner Hindustan Petroleum Corp (HPCL) is working on a plan for net zero carbon emissions by 2040, Chairman M.K. Surana said. India, the world’s third-biggest greenhouse gas emitter, is aiming to reach net zero emissions by 2070. He said a Mumbai refinery on the west coast is operating at expanded capacity of 190,000 barrels per day (bpd), while an expansion of the Vizag refinery in southern India to 300,000 bpd would be completed by March. HPCL hopes to complete a residue upgrade project at Vizag by end-2022 to produce lighter value-added products. The expansions of the plants is aimed at bringing in efficiencies and cutting emissions, he said. An electrolyser splits water into hydrogen and oxygen using electricity. For green hydrogen, renewable energy is used for electrolysis.

SJVN gains on bagging 200 MW solar project in Bihar

31 January: SJVN rose 2.33 percent to INR30.80 after the company said that it has emerged as the lowest bidder for 200 megawatt (MW) grid-connected solar project in the state of Bihar. Bihar Renewable Energy Development Agency (BREDA) has accepted the bid submitted by the company and issued a letter of intent (LoI) for supply of 200 MW power at the fixed quoted tariff of INR3.11 per Kilowatt hour (kWh) for sale of solar power. These projects will assist SJVN in achieving its ambitious shared vision of 5,000 MW by 2023, 25,000 MW by 2030 and 50,000 MW by 2040 and simultaneously contribute towards RE capacity addition target of 500 GW by 2030 set by Government of India.

IREDA to provide consultancy to Goa Shipyard for solar rooftop project

29 January: Indian Renewable Energy Development Agency (IREDA) inked a Memorandum of Understanding (MoU) with Goa Shipyard to provide its techno-financial expertise to set up a rooftop solar power project. Under the MoU, IREDA will assist Goa Shipyard Ltd (GSL) to set up a rooftop solar power project at the headquarters of the company in Vasco da Gama, Goa. With this, GSL will be able to bring down the expenditure on electricity and reduce its carbon footprint as well, IREDA said.

No pollution certificate, no petrol in Delhi soon

29 January: Next time you visit a petrol pump, you may have to show your ‘Pollution Under Control’ (PUC) certificate to get your vehicle tanked up since the Delhi government is all set to make it mandatory. A draft policy on this will be placed for public opinion before being notified. Environment Minister Gopal Rai said the policy would help to ensure that polluting vehicles don’t play on Delhi roads and that residents can enjoy cleaner air. Reena Gupta, Advisor to the Environment Minister, said the policy affirms the commitment of the AAP government towards ensuring clean air for all residents of Delhi. Vehicle owners will have to carry their PUC certificates to the pump. In case, the PUC is found invalid, they will have to get it reissued at the pump. As per department experience, PUC enforcement is highly effective when conducted at fuel stations. Thus, it has been proposed to make PUC certification mandatory for the refuelling of vehicles at petrol pumps in Delhi. The government is also working on setting up technology-based methods for the effective implementation of this policy so as to ensure that vehicle owners, as well as petrol pump owners, don’t face any inconvenience and there are no long queues due to the checking of PUC certificates.

India’s renewable energy sector can employ one million people by 2030: Study

27 January: India’s renewable energy sector has the potential to employ around one million people by 2030, and most of the new jobs would be generated by small-scale renewable energy projects, according to the Council on Energy, Environment and Water (CEEW), Natural Resources Defense Council (NRDC) and Skill Council for Green Jobs (SCGJ) study. India’s renewable energy sector could potentially employ around one million people by 2030, which would be 10 times more than the existing workforce of an estimated 1.1 lakh employed by the sector, according to study. In FY21, a majority of the new workers were employed in the rooftop solar segment where annual capacity additions grew by nine percent over FY20 and accounted for 1.4 GW capacity, it said. The study further noted that India has successfully trained 78,000 people under the Suryamitra training program, between 2015 and 2017, to improve the availability of skilled workers for clean energy projects.

Bharti Airtel commissions 21 MW solar power unit in Maharashtra

26 January: Telecom operator Bharti Airtel said it has commissioned a new 21 megawatt (MW) solar power plant in Buldhana district of Maharashtra as part of its commitment to reduce carbon footprint and contribute to the global efforts to curb the effects of climate change. The company expects the solar-powered unit to reduce 25,517 tonnes in carbon emissions annually. The captive power unit, spread over 80 acres, has been set up by Airtel in partnership with Avaada to supply clean energy to Airtel’s Nxtra data centres and switching centres in Maharashtra, the company said. Nxtra by Airtel has already commissioned two captive solar power units of 14 MW each in Uttar Pradesh. The company claims to have the largest network of data centres in India with 11 large and 120 edge data centres across the country and will invest over INR50 bn over the next four years to expand its capacity by three times. Airtel has committed to reducing absolute Scope 1 and 2 Green House Gas (GHG) emissions across its operations by 50.2 percent by the financial year 2031, considering FY 2021 as the base year. Airtel has committed to reducing absolute scope 3 GHG emissions by 42 percent over the same timeframe.

International: Oil

Canada’s CGX Energy reports oil and gas discovery off Guyana coast

31 January: Canada’s CGX Energy reaffirmed it and parent Frontera Energy discovered an oil and gas reservoir off the coast of Guyana and said drilling on a second well could begin later this year. Its Kawa-1 well found approximately 177 feet (54 meters) of hydrocarbon-bearing reservoirs based on an initial evaluation of logging data, the company said. It did not disclose the size of the potential find. CGX said the Kawa-1 results suggested the presence of oil and gas, but warned it may be required to seek additional financing to continue drilling. Costs associated with the well had risen to between US$115 million and US$125 million, it said. Final well cost estimates and additional results of the discovery will be disclosed in the future, the company said. Guyana produces about 120,000 barrels per day of crude from an offshore project controlled by a consortium that includes Exxon Mobil, Hess Corp and China’s CNOOC Ltd.

China’s 2022 crude imports seen rebounding on new refineries, inventory refill

28 January: China’s crude oil imports could rebound by 6-7 percent this year, reversing 2021’s rare decline as buyers step up purchases for new refining units and to replenish low inventories, analysts said. Robust demand from China, which accounts for a tenth of the global crude trade, would help underpin global oil prices, keeping supplies tight amid forecasts for a jump in crude prices to US$100 a barrel or more. Demand recovery, however, is not expected until the second half of the year as China continues to combat COVID-19 outbreaks and limit production by smaller refiners. For 2022, crude oil imports into China look set to grow by 600,000-700,000 barrels per day (bpd), offsetting last year’s 590,000 bpd fall to match or beat 2020’s record volume of 10.85 million bpd, analysts at FGE, Rystad Energy and Energy Aspects said. Brent and West Texas Intermediate futures , are already at seven-year highs near US$90 a barrel as investors look beyond the demand hit from the Omicron variant. Demand is set to recover later in the year, driven by new refining capacity at integrated petrochemical producers, in particular Zhejiang Petrochemical Corp and Jiangsu Shenghong Petrochemical. East China-based Zhejiang Petrochemical, the country’s single-largest refiner, aims to operate its newly built 800,000-bpd crude units at full rates this year. That will represent an increase of 280,000 bpd versus 2021.

International: Gas

TotalEnergies aims to restart US$20 bn Mozambique LNG project in 2022

31 January: TotalEnergies CEO (Chief Executive Officer) Patrick Pouyanne said the French firm aimed to restart a US$20 billion liquefied natural gas (LNG) project in the north of Mozambique that was halted by an insurgent group with links to Islamic State almost a year ago. The attack on the town of Palma, on the doorstep of the project and home to many gas workers, prompted TotalEnergies to withdraw all staff and declare force majeure, putting a halt to all works until security was restored.

Global gas rally to kickstart long-stalled US LNG projects

28 January: High global natural gas prices are breaking a two-year logjam of new US (United States) liquefied natural gas (LNG) projects with at least three of the multibillion-dollar proposals likely achieving enough supply contracts to start construction this year, developers and industry experts said. A Louisiana project that received a green light in 2019 was the last wholly new US plant to receive a go-ahead, benefiting from then-strong demand from China and utilities swapping to LNG from coal. But super-hot demand for the fuel in northern Europe and China have pushed global gas prices to near record highs, reviving financing prospects for plants that chill natural gas into liquid for transport by seaborne tankers. A key benchmark price for natural gas deliveries in northern Europe has more than quadrupled from a year ago, to about $30 per million metric British thermal units per day (mmBtu). Europe’s declining gas production and increased dependency on Russia for its supplies also has driven worldwide LNG prices higher and focused attention on the need

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