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January 2017

Volume 5 | Issue 9 | `100

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The Complete Energy Sector Magazine for Policy and Decision Makers

2017 : Energy sector


set for a bull run

CEAs draft national electricity Union Budget 2017-18:


plan spells trouble for thermal Sops crucial to energise
power industry power and coal sector

Prakash Chandraker Darshan Hiranandani Richard Slater V P Mahendru


MD & Vice President, Schneider MD & CEO Director, Research, Development Chairman & Managing
Electric Infrastructure Limited H-Energy Private Limited & Learning, IPE Global Group Director, EON Electric Ltd
Intelligent Transport System
A gAme ChAngeR
Its topics Which are Unexplored in the Indian market

On 18th January, 2017 at shangri-la hotel, new Delhi

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Development Government of India. Central Railways

Dr Rajesh Krishnan Mr. Mohit Kochar, Ms. Madhumita Ghosh


CEO, ITS Planners and Leader - Smart Cities, Practice Leader - BIG DATA
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InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
January 2017 | Volume 5 | Issue 09

Editors Letter Editorial


Shashi Garg, Editor
2016 was an eventful year in more ways than one.
India laid the foundation of a carbon-free economy by
ratifying the Paris Agreement on climate change. This News Team
was followed by action on ground with the country Chetan Gupta
taking rapid strides in renewable energy capacity
addition. Infact, for the first time, renewables overtook
hydro power in terms of total installed capacity which Analysts
is a reflection of the shifting focus of the policy makers Mohd. Arif
towards non-conventional energy sources. Kalyan Verma
There was more. The country overshot its power Shubhendra Singh
generation capacity targets during April-November period, with a generation
capacity of 5463 MW, as against a target of 3,655 MW. What was heartening to
Content Consultant
see was that the private sector contributed a major share to the commissioned
projects during the year, thanks to the fuel supply issues addressed by the News Monster
Government through coal allocation and auction of coal and RLNG for power plants.
This led to talks of India achieving a power surplus for the first time which,
however, is more to do with reduced demand for power rather than the country Business Development
actually being self sufficient in electricity. The discom financial restructuring
Manoj Narang, Director
package, UDAY, also made steady progress with as many as 15 states already
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being a part of the bandwagon, which augurs well for the power sector. The
Email: manoj.narang@infraline.com
energy sector also benefitted immensely from falling prices of coal, oil and gas,
which worked in favour of oil refining companies, also reducing coal imports in
the process.
However, what came as a rude shock was the CEAs estimation in its draft
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InfralinePlus

Contents
Editors Letter
3

Cover Story 35
Energy market set for a bull
run in 2017
After touching new lows in January,
world energy prices have partially
recovered lost ground and now
look set for a bull run in 2017.
While hardening prices would help
energy-exporting countries to bal-
ance their budgets, which have
been under stress since June 2014
crash in the global energy market,

35
big energy-importing countries like
India could face serious macroeco-
nomic challenges.
4

Power Coal
6 22
News Briefs p6 News Briefs p22
Expert Speak: Prakash Chandraker, Managing In Depth: Union Budget 2017-18: Sops crucial to
Director & Vice President, Schneider Electric energise power and coal sector p25
Infrastructure Limited p10
In Depth: CEAs draft national electricity plan spells
In Depth: Power sector in 2016: Achievements and trouble for thermal power industry p28
outlook p12
Statistics p33
In Depth: Government upbeat on growth in
transmission for 24x7 power supplies p17
Statistics p20

Topics Covered Topics Covered


Power transmission Clean technology
Power generation Technical challenges in thermal
Electrical equipment Commercial coal mining
January 2017
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Oil and Gas Renewable


44 55
News Briefs p44 News Briefs p55
In Conversation: Darshan Hiranandani, MD & CEO, Expert Speak: Richard Slater, Director, Research,
H-Energy Private Limited p47 Development & Learning, IPE Global Group p60
In Depth: Strategic Petroleum Reserves: Insights and Expert Speak: V P Mahendru, Chairman & Managing
recommendations p49 Director, EON Electric Ltd p63
Statistics p53 In Depth: India needs effective financing mechanisms
to achieve 175 GW target by 2022 p65
Statistics p68

Topics Covered Topics Covered


LNG terminal Manufacturing
Pipeline development 5
Banking and finance
Petroleum reserves Smart city

Expert Speak/Interview

Prakash Chandraker Darshan Hiranandani


MD & Vice President, Schneider MD & CEO
Electric Infrastructure Limited H-Energy Private Limited

Off Beat
Liquidity crunch impacts cement industry 70
Reports & Studies
73
People in News
Richard Slater
Director, Research, Development
V P Mahendru
Chairman & Managing Director
74
& Learning, IPE Global Group EON Electric Ltd
January 2017
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NewsBriefs | Power National


Panel examines direct benefit transfer of subsidy for power consumers Indias per capita electricity
consumption touches 1010 kWh
the ministry to suggest ways to increase
electricity demand and consumption, is
examining subsidising the target consumers
in a manner similar to what has been done
in the case of LPG cylinders for plugging
leakages and bringing down the subsidy
burden. The Niti Aayog and industry
experts have been advocating the scheme
to lower subsidy, prevent its misuse and
strengthening power distribution utilities. In an indication of growing appetite for
The committee comprises principal electricity in India, the countrys per capita
After cooking gas, consumers may now get energy secretaries of states like Madhya electricity consumption has reached 1010
direct subsidy on electricity. An expert panel Pradesh, Gujarat, Uttar Pradesh and energy kilowatt-hour (kWh) in 2014-15, compared
comprising senior officials from states and secretaries of Tamil Nadu and Bihar, besides with 957 kWh in 2013-14 and 914.41
industry is studying the matter and will top officials of the Central Electricity kWh in 2012-13, according to the Central
present its report to the power ministry in Regulatory Commission and the Central Electricity Authority (CEA), Indias apex
January. The expert committee, set up by Electricity Authority. power sector planning body. But experts
are far from enthused from the increasing
Parliamentary panel junks claims on power sector achievements consumption figure. Per capita electricity
consumption crossing 1,000 units a year
Punching holes in the Centres claims that it is certainly a milestone, but without much
has overachieved the capacity addition target significance. One-fourth of the households
in the power sector for the 12th Plan period by in the country still have no access to
adding around 88,928.2MW as against the tar- electricity, with some states in East and
6 get of 88,537MW till October 31, 2016, a high North East having less than even 30%
level Parliamentary panel has noted that the households with (electricity) access. Most
overall target is being achieved due to over- significant milestone that the nation must
achievement of targets assigned to the private achieve is 100% households having 247
sector for the entire Plan period. In its report, quality supply of electricity. Indias per
the Parliamentary Standing Committee on En- tion figures provided to it by the power ministry capita power consumption is among the
ergy has noted that the share of capacity addi- for the period till March 31, 2016. The ministry lowest in the world. Around 280 million
tion assigned to the state-owned entities was a in its year ending review for 2016 has claimed people in the country do not have access
meagre 26,182MW, out of which it was to able that during the 12th Plan period, the capacity to electricity. In comparison, China has
to achieve only 14,692MW, a poor 56 per cent addition of about 88,928.2MW was achieved a per capita consumption of 4,000kWh,
till March 31, 2016.The panel has made its against the actual target of 88,537MW from with developed nations averaging around
observations on the basis to the capacity addi- conventional sources, till October 31, 2016. 15,000kWh per capita.
In a first, Power Trading Corporation ties up with Indores SEZ

With industrial consumers bearing the to the agriculture sector and the less
brunt of high power costs in the form privileged domestic consumers. This,
of cross-subsidy imposed by the state- however, reduces the competitive
run power discoms even in the special ability of the manufacturing unit with
economic zones (SEZs), Power Trading tariff as high as R10/unit in some of the
Corporation (PTC) India has joined hands industrialised states. Assuming R8/unit
with a multi-product SEZ in Indore for as the power cost for such an industry,
distribution of 80 MW power in a first-of- even a reduction of R1/unit in the energy
its-kind arrangement. The company has bill could bring down the input cost by
availed the deemed licensee status of over 10%. PTC India, which has a base of
the SEZ, which allows it to replace state nearly 500 bulk consumers, will execute
with any other agency as the designated the distribution business through its
discom. The discoms in nearly all states subsidiary PTC Retail. Going ahead, the
charge the industrial consumers over company could also look at roping in the
twice as much per unit of electricity as defence establishment.
the domestic ones to finance subsidies
January 2017
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NewsBriefs | Power National


Tilaiya UMPP: Panel seeks fresh comments from Ministry of Power, others Need for better management of
grants-in-aid for power sector
reasons for delays in developing coal mines
allocated for Tilaiya UMPP. The panel was of
the view that the comments received from
the Ministry of Power and the Jharkhand
government did not reveal anything specific
so as to facilitate decision making on the
issue of release/deduction of bank guarantee
(BG). The power ministry had clarified that
with regard to development of coal blocks
The inter-ministerial panel formed to look earmarked for UMPPs, it was no way involved
into the issues pertaining to Tilaiya UMPP and the actual responsibility for the mines
relinquished by Reliance Power has failed development was of the procurers of this
to make any headway in the matter relating project. The ministry further informed the
to the bank guarantee and has sought fresh panel that the procurers had accepted the Comptroller & Auditor General of India
comments from the power ministry and termination of power purchase agreement (C&AG) has highlighted that grants-in-
PFC. The Coal Ministry had earlier issued a (PPA), however, refused to accept the delay in aid given by the Central Government
show-cause notice to Reliance Power, seeking development of coal block on their part. to its Power Sector has increased to
Rs. 12388 crore during the last two
India to give Nepal additional 240 MW electricity financial years amounting to 27 Office
of Ministry of Power`s (MoP)`s total
India has agreed to export to Nepal revenue expenditure. The grants have
additional 240 megawatts of electricity flowed primarily under Deen Dayal Urja
-- 80 MW immediately from January and Jyoti Yojana (DDUJY) for electrifying
160 MW from February -- in a bid to lessen village households, on augmenting
the power woes of the Himalayan nation. An the Integrated Power Distribution 7
agreement was signed to this effect in New System (IPDS) for strengthening the
Delhi recently between Nepal Electricity distribution network, as well as to
Authority (NEA) and NTPC Vidyut Vyapar the Power Safety Development Fund
Nigam (NVVN), a wholly-owned subsidiary (PSDF) for disbursements towards
of Indias state-owned power major NTPC. promoting efficiency and safety in
The NEA is Nepals state-owned electricity grid operations. Major portion (97 %)
company. The import will be made extent address the problem of blackouts in of the grant-in-aid funds of MoP were
through Dhalkebar-Mujjafpur Cross Border the country, the NEA said. Nepal is reeling intended for creation of assets. C&AG
Transmission line which was inaugurated under a huge power crisis. The country have however pointed out that there
in February 2016. The fresh agreement on suffered power cuts up to 15 hours everyday were lacunae in fund management by
power purchase from India would to some until last year -- mostly in winter season. the recipient agencies.
Government asks Power Grid Corp to consider selling stakes in projects

Power Grid Corporation of India Ltd., a sheet size by half is an endorsement of that
state-run electricity transmission company, plan. Power Grid, which owns and operates
should sell stakes in its projects to unlock more than 85 percent of Indias inter-state
capital for future expansion, according to the power transmission capacity, plans to invest
power ministry. The company should cut its 1 trillion rupees ($6.8 billion) in the next
balance sheet size to half by selling stakes four years to build new projects, it said in
in projects, power minister Piyush Goyal said November. It had fixed assets worth 1.58
recently. It should consider an infrastruc- trillion rupees as of Sept. 30, including
ture investment trust, or InvIT model to plant machinery, transmission projects,
monetize assets, he said. Selling stakes in telecom equipment, buildings and land. The
projects will help the company free-up capi- plan has been on the governments agenda. companys debt-equity ratio was 71:29 as
tal and raise more debt for future projects at Finance Minister Arun Jaitley asked state- of Sept. 30, compared with a 70:30 ratio
competitive rates, Power Secretary Pradeep run companies to sell assets to unlock value recommended by power regulator Central
Kumar Pujari said. We want to avoid a and make investments in new projects in his Electricity Regulatory Commission, which
situation where raising debt in the future budget speech in February. Goyals advise determines transmission charges based on
becomes difficult, Pujari said. An asset-sale that Power Grid should reduce its balance capital and operating costs.
January 2017
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NewsBriefs | Power States


Tamil Nadu sees strong demand for power in November Rajasthan and Punjab miss UDAY
scheme targets; Bihar improves
Tamil Nadu had a peak demand of 13,888
MW, which the State managed to meet. In
the comparable period in 2015, the States
power requirement was 6,273 million units
and availability was 6,270 million units. In
November 2015, peak demand was 12,154
MW, which was met, according to the CEA
data. According to Elara Capital, a lower
base has helped the southern States register
Power demand in Tamil Nadu had grown by strong growth in November 2016. Demand Discoms of Rajasthan and Punjab have
over 30 per cent in November 2016 from the in Andhra Pradesh and Karnataka was up 28 missed their loss-reduction targets
corresponding period last year, according per cent each in November 2016 (vis-a-vis under Ujwal Discom Assurance Yojana
to data compiled by the Central Electricity a contraction of 4 per cent and 2 per cent (UDAY) by wide margins, recent data
Authority (CEA). The data revealed that Tamil respectively in November 2015). Likewise, reveals. On the other hand, Haryana
Nadus power requirement was 8,183 million Tamil Nadus demand was up 30 per cent (as and Bihar have managed to reduce their
units (MUs) in November 2016 as against against a contraction of 6 per cent in the base discoms cost-revenue gap or losses
the 8,180 MUs available. In November 2016, year), it added. more than committed by them under
the tripartite UDAY MoU. Also, all five
No power tariff revision in Delhi for first time in 5 years
states with the most debt-burdened
For the first time since 2011, power tariffs discoms were running behind schedule
wont be revised in Delhi. The tussle as on September 30, 2016, in curbing
between AAP government and LGs office the aggregate technical and commercial
over the appointment of Krishna Saini as (AT&T) losses or pilferage and theft of
Delhi Electricity Regulatory Commission electricity (see table). A glance at the
8 chief has meant that tariffs will remain performance of the five key states that
unchanged. It is learnt that discoms might signed on for UDAY reveals a mixed
file an appeal with the appellate tribunal, picture. A total of 18 states had decided
stating that the failure to revise the tariff to participate in UDAY, a scheme to
was a violation of its guidelines and Delhi facilitate the financial turnaround and
consumers could face stiff increases in and BRPL are yet to send their petitions. revival of power distribution companies
the future to correct this anomaly. Tata DERC is mandated to give discoms PPAC, (discoms). The scheme was launched in
Power Delhi recently filed a petition, according to the orders of the Appellate November last year and the states have
seeking power purchase adjustment Tribunal of Electricity. However, its committed to reduce their AT&C losses
charges equivalent to a 2-3% hike in fuel unclear how long it will take to process to 15% and eliminate the cost-revenue
bills for July-September 2016. BYPL the petition. gap by the end of FY19.

Haryana discom reports Rs 201 crore profit in first half of 2016

One of the two state-owned power for the health of other segments of the
distribution companies in Haryana, electricity value chain which depends on
Dakshin Haryana Bijli Vitaran Nigam Ltd, power offtake. Better power demand from
has become the first power utility to distribution firms will help generation
turn around under rescue scheme Ujjwal companies, especially thermal power
Discom Assurance Yojna (UDAY), rolled plants, to step up their capacity utilisation
out in November 2015, raising hopes which is currently at about 60%. Coal
that fortunes of the entire electricity demand, too has been sluggish in the past
value chain including of coal mining and as loss making distribution firms were not
power generation will benefit from better able to cater to the actual energy demand.
electricity demand in coming days. An The power ministry analysis said that the
analysis of the financial health of the Haryana utility still has to improve upon
utility said the company has reported its performance in meeting the target
remarkable achievement of turnaround of lowering losses on account of billing
from a loss of Rs479 crore in 2015-16 half of 2016-17. Turnaround of distressed inefficiency and power theft.
to a profit of Rs201.35 crore in the first state power distribution firms is crucial
January 2017
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NewsBriefs | Power International


Nebras acquires 35.5% stake in
PM Nawaz inaugurates 340MW Chashma-III nuclear power plant
Indonesian power firm
successful operation of the nuclear power
project which is a joint collaboration
between the Pakistan Atomic Energy
Commission (PAEC) and China National
Nuclear Corporation. It was executed by
the Pakistan Atomic Energy Commission
under the guidelines of the International
Atomic Energy Agency. The Chashma-
III nuclear power plant was preceded
by the Chashma-I and Chashma-II Nebras Power has completed the
Prime Minister Nawaz Sharif recently power projects. Another unit of the same acquisition of a 35.5 percent stake
inaugurated the power production from capacity, Chashma-IV, is expected to in Indonesian utility firm PT Paiton
340 MegaWatt Chashma-III nuclear be completed in 2017. Additionally, the
Energy through its wholly owned
power plant C-III near Mianwali, in Karachi nuclear power projects K-II
subsidiary Nebras Power Netherland
Khyber Pakhtunkhwa province. Radio and K-III will add a total of 8,800MW
Pakistan has reported Sharif and other electricity to the national grid by 2030 as BV. The acquisition was completed on
dignitaries offered prayers for the a mid-term target for the PAEC. December 22. PT Paiton Energy owns a
2,045 megawatt (MW) thermal power
Toshiba flags hit of billions of dollars on U.S. nuclear acquisition
plant in East Java, which is the first and
Toshiba Corp said it may have to book several largest Independent Power Producer
billion dollars in charges related to a U.S. (IPP) in Indonesia, representing 4
nuclear power plant construction company
percent of the countys total installed
acquisition, sending its stock tumbling 12
generation capacity. Paiton Energy
percent and rekindling concerns about its
accounting acumen. The Japanese group said sells the entire capacity and output of 9
cost overruns at U.S. power projects handled its power plant under two long term
by the CB&I Stone & Webster Inc business it power purchase agreements with PT
acquired last December from Chicago Bridge Perusahaan Listrik Negara (Persero)s
& Iron Company NV (CB&I) would be much (PLN), the Indonesian state-owned
greater than initially expected, potentially
vertically integrated electricity utility.
requiring a huge writedown. Toshibas
The remaining 64.5 percent equity stake
announcement came as its Westinghouse relatively small payment from Westinghouse
Electric Company subsidiary is engaged of only $161 million when the deal closed on in PT Paiton Energy is held by well-
in a legal and accounting row with CB&I, the understanding that the latter was taking known international and local utilities
which has argued in court that it expected a on a challenged business. and power development companies.

IFC provides $165 million financing package to help meet Bangladesh energy needs

International Finance Corporation (IFC), Bank Group. MIGA will also provide a risk
a member of the World Bank Group, will guarantee to Sembcorp to cover its equity
provide $165 million in debt financing investment of $103 million in the project.
to Sembcorp Utilities, a wholly-owned Tang Kin Fei, Group President and CEO of
subsidiary of the Singapore-based Sembcorp Industries said, The project
Sembcorp Industries, to significantly expand reflects Sembcorps strong capabilities
power generation capacity in Bangladesh. as a developer, owner, and operator of
The financing will be provided through a energy and water assets. With IFC, Clifford
combination of a $103-million loan from Capital, and CDC, we have strengthened
IFCs own account and an additional $62 the U.K. governments development-finance our commitment towards supporting
million mobilized through partners. The institution, CDC Group, and the Singapore- Bangladeshs vision for continued growth
financing will help Sembcorp set up a based infrastructure project-financing and development. Sembcorps Sirajganj
greenfield 414 MW dual-fuel combined- firm, Clifford Capital, will each contribute power plant will allow us to provide cost-
cycle power plant at Sirajganj in Bangladesh. $103 million in debt. A portion of Clifford effective and reliable energy solutions to the
The total project cost is estimated at around Capitals tranche will benefit from risk country over a period of 22.5 years upon its
$412 million. In addition to IFCs financing, cover from MIGA, a member of the World completion.
January 2017
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ExpertSpeak
IoT technology can help utilities in
boosting T&D efficiency
With India having one of the lowest per capita electricity con-
sumption, losses during transmission and distribution of power is
criminal. The country needs to save each and every bit of power
for it to achieve the goal of 24x7 power supply. In this regard,
Prakash Chandraker, Managing Director & Vice President,
Schneider Electric Infrastructure Limited, feels that Internet of
Things (IoT) can be a game changer for the country in stemming
its high T&D losses.

Even as India battles demand losses in the EU, the impact can well be
and supply mismatches in power, imagined if these are deployed to combat
transmission and distribution (T&D) Indias 20%-plus T&D losses. Indeed,
losses continue to be the highest with smart technology, its possible
globally. While some estimates put to plan, measure and boost T&D
T&D losses at around 20%, others peg efficiency. This can be Prakash Chandraker, Managing Director & Vice
this as high as 27%. Either figure is too done by installing President, Schneider Electric Infrastructure Limited
10 Utilities
high, particularly when the Centre has equipment and
ambitious power production targets software that cannot rely Distribution Management System
and plans to ensure power for all by monitors and upon outdated optimizes network configuration,
2019. Most losses are either due to communicates technology in the relieves overburdened network
inadequate infrastructure and technical across the dis- segments and helps minimize
Smart Grid era
inefficiency that triggers higher losses tribution path. It losses and load unbalance in high
or result from theft. The latter occurs is then important and medium voltage substation
when power is pilfered directly from to use the right transformers and feeders. Besides, this
power lines or by bribing officials strategies via the IoT and helps power utilities reach an optimal
during meter readings, while others associated smart technologies to achieve voltage profile and enhance voltage
tamper meters to minimize billing. the goal of minimal power losses. quality.
Consider active strategies to control In issue two, distributed energy
Lessons from the EU energy losses. Active energy efficiency resources distributed generators
Whatever the cause, it is possible to denotes reduction in energy con- (renewable or backup), controllable
curb such power losses via Smart Grids sumption via measurement, moni- loads used for demand response and
and the use of IoT (Internet of Things) toring and controlled usage. Dynamic energy storage (electrical or thermal)
technology. That such solutions are network reconfiguration and voltage can produce rising and falling voltage
workable can be gauged from the optimization are prime examples. simultaneously in different parts of the
European Union, where yearly T&D By deploying these strategies, power grid. Additionally, mandatory moni-
losses only average 6%, yet represent utilities can solve some of their toring of this voltage in older substa-
an annual wastage of 7 billion Euros. problems. Examples of three issues and tions can be costly and complex.
EU power distributors are therefore their relevant strategies will help better In strategy two, power utilities
mandated by new regulations to en- understand how this can be done. can tweak the voltage control
hance efficiency across networks, while In issue one, technical losses in MV infrastructure. To procure accurate,
integrating alternate energy generation (medium voltage) networks account real-time voltage data, cost effective,
and electric vehicles into their grids. for around 3% of distributed energy, self-powered, communicating IoT
If IoT technology and Smart Grids denoting a major loss. In strategy one, voltage sensors at the MV/LV
can offer solutions to address 6% T&D by the use of algorithms, an Advanced substation level or along lines can
January 2017
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be installed by the utilities. Virtual The following best practices could be deployed in creating a migration
sensors can also be used to estimate
plan that can help power utilities build a more efficient network:
MV output based on easily accessible
data. Also, power utilities can install 1. Within three months, identify the areas where waste occurs.
actuators with smart transformers along 2. Within a year, install sensors and applications that could accurately
MV lines to hike or lower the voltage.
estimate efficiency losses.
Issue three relates to estimates that
indicate 90% of non-technical losses 3. Within two years, undertake a pilot project to demonstrate feasibility,
take place in LV (low voltage) net- quantify the gains and estimate deployment costs.
works. Assessing improvements would 4. Within a decade, plan as well as undertake a staged rollout of the full
mean identifying and monitoring the range of Smart Grid technologies.
losses. Given the high number of points,
however, this is expensive. In strategy
three, the utilities can use Smart meters, and location of the LV network outages major steps to distribution network ef-
which could work as additional sensors for improved reliability. ficiency. The first point to remember is
in tracking network energy performance that utilities cannot rely upon outdated
data. Comparing the pattern of mea- Smart Grid Roadmap technology in the Smart Grid era. With
sured energy on an LV feeder to the Nonetheless, using IoT and connected the IoT and allied technologies already
patterns of energies delivered by smart technology strategies wont be easy a global reality, utilities can upgrade
meters pinpoints the exact location of without understanding how to do so, their present infrastructure to over-
losses as well as helps in faster detection step by step. Essentially, there are four come numerous modern distribution
network challenges.
It is important that power utilities
Given the high number of points, however, this is
in India undertake the above measures 11
expensive. In strategy three, the utilities can use to drive higher operational effi-
Smart meters, which could work as additional sen- ciencies. While these steps may inflate
sors in tracking network energy performance data. short-term capital costs, the long-term
advantages such as lower operating
Comparing the pattern of measured energy on an
expenses, reduced energy wastage as
LV feeder to the patterns of energies delivered by well as a more integrated and flexible
smart meters pinpoints the exact location of losses network are well worth the early
as well as helps in faster detection and location of investments.
the LV network outages for improved reliability The views in the article of the author are personal
For suggestions email at feedback@infraline.com
January 2017
www.InfralinePlus.com

InDepth
Year End Review 2016: Positive
Outlook for Power Sector

12

Capacity addition continues to exceed target, Private Sector takes lead


Government Schemes & Policies provide much needed momentum

By Kalyan Verma & Shubhendra Singh


Analysts - Power & Coal, Infraline Energy

The regulatory and policy initiatives grown from 10.63% in March2011 against the target of 88537 MW has been
of the Government have begun to 14.87% in November2016. Infact, achieved from conventional sources
to show results and the country the Renewables segment has, for the as on 30th November, 2016 and about
continues to exceed capacity addition first time, surpassed the hydro power 21,128 MW against the target of 30000
targets in FY 2016-17. Encouraged segment in terms of total installed MW from renewable sources have been
by private sector participation, capacity and this goes on to show the achieved till 30th September, 2016.
India has achieved a total installed shifting focus of the policymakers to In FY 2016-17, a generation capacity
generation capacity of 308834.28 non-conventional energy sources. of 5463.5 MW has been added in the
MW as on November 30, 2016. period Apr16-Nov16 against a target
Coal based capacity continues to Capacity addition continues of 3655 MW in the corresponding
dominate the countrys energy mix to exceed target, Private period. The Private Sector, having
with 60.81% of the total installed Sector takes the lead received a boost with Government
capacity followed by Renewable During the 12th Plan period (2012-17), a initiatives to reduce power supply
Energy Sources whose share has capacity addition of about 90463.22 MW uncertainities, in the form of transparent
January 2017
www.InfralinePlus.com

process for allocation/auction of coal programme to achieve 100% village of financial and operational turnaround
& RLNG E-auctions for stranded gas electrification by 1st May 2018 has of Power Distribution Companies.
based power plants, contributed with the witnessed rapid progress in the current The scheme was introduced after
majority of the Projects Commissioned year with only 7018 villages remaining the total accumulated debt of the
amounting to 3768 MW (68.97%) in FY to be electrified (As on 27th Decem- Discoms touched INR 4.5 Lakh
2016-17 (Upto Nov16). ber,2016). During the year 2016-17, Crore by September, 2015. So far
a total of 3976 villages have been 17 States (Jharkhand, Chhattisgarh,
Government Schemes & electrified so far and these figures only Rajasthan, Uttar Pradesh, Gujarat, Bihar,
Policies provided much reinforce the fact that Government is Punjab, Jammu & Kashmir, Haryana,
needed momentum serious in its efforts to bring electricity Uttarakhand, Goa, Karnataka, Andhra
to the last village in the country. Pradesh, Manipur, Madhya Pradesh,
Amendments in National Tariff Maharashtra, Himachal Pradesh) and one
Policy: Union Government approved UDAY (Ujwal Discom Assurance UT of Puducherry have signed the MOU
the amendments in the Tariff Policy in Yojana): In November 2015, for the UDAY Scheme to improve their
January, 2016 aimed at promoting the Government of India approved a reform operational and financial performance.
4 Es Electricity for All, Efficiency, package Ujwal Discom Assurance The recently launched portal www.
Environment and Ease of doing business Yojana (UDAY) with the primary aim uday.gov.in depicts the improvements
to attract investments and ensure
financial viability. The amendments The Private Sector, having received a boost with
in the National Tariff Policy will help
Government initiatives to reduce power supply
in harnessing the potential of hydro
power generation, increasing the share uncertainties, in the form of transparent process
of renewables and provide incentive for allocation/ auction of coal & RLNG E-auctions
to the developers in utilizing their for stranded gas based power plants, contributed 13
unrequisitioned power capacity.
with the majority of the Projects Commissioned
Village Electrification: Prime Min- amounting to 3768 MW (68.97%) in FY 2016-17
ister Shri Narendra Modis ambitious

Impact of the Amendments in National Tariff Policy


Benefit consumers by providing 24X7 power for all and also through reduction in
cost of power through efficiency measures

Spur renewable power growth towards a greener environment and protect Indias
energy security

Aid the objectives of Swachh Bharat Mission as well as Namami Gange Mission
through conversion of waste to energy

Improve ease of doing business to ensure financial viability of the sector and attract
investments

Promote transparency, consistency and predictability in regulatory approaches


across jurisdictions

Facilitate competition, efficiency in operations , improvement in quality of supply of


electricity & enhance Energy Security
January 2017
www.InfralinePlus.com

InDepth

Various Schemes & Policies launched in 2016 with the aim been launched by the Government like
of providing 24*7 Power for All Standards & Labelling Programme
of the Bureau of Energy Efficiency,
Perform Achieve and Trade (PAT)
Scheme, Energy Conservation Building
Codes (ECBC), Unnat Jyoti by Afford-
able LEDs for All (UJALA) & Street
24*7 Power for All
Lighting National Programme (SLNP)
Initiative and scheme for promotion of Energy
Efficient Fans and Agriculture pump
Amendments in
National Tariff sets. So far around 19.05 Crore LEDs
Policy to increase have been distributed under the
focus on
renewable energy, UJALA Scheme as on 2nd Jan 2017.
short term power
Ujwal Discom market &
Assurance Yojana affordable power Draft National Electricity Plan: The
(UDAY) to revive for all draft National Electricity Plan released
the distribution
sector by CEA has projected the capacity
addition forecasts upto 2027. In this
draft policy document, it is stated
that no new coal based power plants
in the performance of the Discoms are needed to be set up in the country
post UDAY. The performance of States
The recently atleast upto 2027. 50 GW of coal based
is uneven with DHBVN Discom in launched portal projects are Under-Construction which
14 Haryana registering profit for the www.uday.gov.in are likely to yield benefits in 2017-22
first time ever since its inception in depicts the improve- and would meet the countrys demand
1999. DHBVN Discom has reported a ments in the perfor- upto 2027 with 100 GW of targeted
remarkable turnaround from a loss of capacity addition from Solar and Wind.
mance of the Discoms
INR 479 Crore in 2015-16 to a profit However, the draft report is silent on
of INR 201.35 Crore in the first half of
post UDAY. The per- the future of the proposed coal based
2016-17. Most of the other States have formance of States is power plants in the country.
shown improvements in their losses but uneven with DHBVN
have missed their loss reduction targets. Discom in Haryana Modest Tariff Hike by SERCs in FY
UDAY bonds worth INR registering profit for 2016-17: The average tariff hike, based
183084.29 Crore have been issued so on the orders of the State Electricity
the first time ever since
far by the various State Governments Regulatory Commissions (SERCs) has
and the Discoms. While Rajasthan
its inception in 1999. been moderate for FY 2016-17. While
Discoms have issued bonds to the DHBVN Discom has the states of Delhi, Bihar, Punjab,
tune of INR 12368 Crore, Uttar reported a remarkable Haryana, Odisha & Uttar Pradesh have
Pradesh Discoms have issued 10714 turnaround from a loss witnessed no tariff hikes in the current
Crore of UDAY bonds. of INR 479 Crore in fiscal while Chhattisgarh has imple-
mented the maximum tariff hike so far
2015-16 to a profit of
24*7 Power for All Initiative: Under (Hike of 12% for domestic consum-
the Governments vision of providing
INR 201.35 Crore in the ers and (12 16)% for High Tension
24*7 Power for All, an assessment first half of 2016-17 consumers).
of the energy demand of the respective While Gujarat Electricity Regu-
States is made along with the adequacy the 24*7 Power for All document and latory Commission (GERC) has
of the power availability from various only two States Tamil Nadu and Uttar reduced power tariffs by 10 paise
generating stations, inter-state trans- Pradesh are yet to give their concur- per unit for all residential consumers
mission system, intra-state transmission rence in this regard. and 14 paise of HT consumers, the
system and the distribution system to tariff for consumers of all categories
provide 24*7 Power for All. 34 out Energy Efficiency Schemes: A num- in Haryana has been reduced by 37
of 36 States/UTs have already signed ber of energy efficiency schemes have paise per unit. Andhra Pradesh and
January 2017
www.InfralinePlus.com

Arunachal Pradesh have not effected


tariff hike for domestic consumers and
Maharashtra Electricity Regulatory
Commission (MERC) has allowed
MahaVitaran a moderate hike of 1%
to 1.3% for residential consumers.
Karnataka and Rajasthan have
increased their tariffs by an average of
9% and 9.6% across various consumer
categories.

Compensatory Tariff Granted:


Central Electricity Regulatory Au-
thority (CERC) has ruled in favour
of Tata Power & Adani Power in
case of Compensatory Tariff dispute
for granting compensation due to in-
crease in imported fuel costs to their
UMPP Projects won through Com-
petitive Bidding. The case was being
fought by Tata Power and Adani
Power with state utilities of Guja-
rat, Rajasthan, Maharashtra, Punjab
and Haryana. Tata Power and Adani 15
Power are suffering huge losses due
to change in imported coal prices and
regulations in the Indonesian coal
market and they requested compensa-
tion under Change in Law clause of
the signed PPAs.

Foreign Direct Investment: 100%


FDI has been allowed under the
automatic route for Power Generation
Projects (Except Atomic Energy Proj-
ects), Transmission, Distribution and
Trading, as per the notification issued
by Department of Industrial Policy
& Promotion (DIPP) in June,2016.
FDI upto 49% has been allowed in
Power Exchanges, registered under
the Central Electricity Regulatory
Commission (Power Market) Regula-
tions, 2010, under the automatic route,
subject to certain conditions, as laid
down in the policy. During the Year
2015-16 (April-2015 to March-2016),
Power Sector attracted FDI of INR
5662 Crore while the Sector has
attracted FDI of INR 3744 Crore so
far during the period April-2016 to
September-2016.
January 2017
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InDepth

Launch of Online Portals/Mobile Applications:


Grameen Vidyutikaran (GARV) app to help people track the progress of Village Electrification under Deen Dayal Upadhyaya Gram
Jyoti Yojana (DDUGJY)

GARV II App which hosts the data of about 6 lakh villages and that has been mapped for tracking the progress on household
electrification in each of these villages

Vidyut Pravah App to provide real time information on electricity availability and its price

Unnat Jyoti by Affordable LEDs for All (UJALA) app to keep track of LED distribution status under DELP Scheme

E-Tarang app for real time monitoring the status of Transmission Lines and Substations in the country

E-Trans app for better discovery of price in respect of Inter-State Transmission Systems awarded under Tariff Based Competitive
Bidding (TBCB) Route

DEEP (Discovery of Efficient Electricity Price) e-Bidding portal is a common platform for power procurement through E-Bidding with
facility for e-reverse auction process

Mobile app for Star Labelled Appliances is a mobile app launched by BEE for Standards and Labeling Programme (S&L) for
consumers with provisions to receive real-time feedback from consumers and other stakeholders

URJA (Urban Jyoti Abhiyaan) Mobile App provides information on urban power distribution sector related to consumer complaints,
16 AT&C losses, power outages, release of new service connection and number of consumers making e-payments

Reduced Peak Power Deficit: The much needed investors confidence in Distribution side and resolving issues
various initiatives of the Government the sector resulting in increased FDI of transmission congestion.
to improve the power supply position Flows and domestic investments. The The recent initiatives of the
in the country have already started entire sector has received the much Government to sign nuclear agree-
showing results in the form of an all needed momentum, leading to record ments with a number of countries
time low power deficit of 0.7% and peak commissioning of projects more than which include Sri Lanka, Australia,
power deficit of 1.6% in FY 2016-17 the target set for the last fiscal and the France, UK & Japan, resolution of
(As on Nov16). However, more needs current fiscal. Increased Coal Pro- the deadlock in the Indo-US civil
to be done in the form of Demand Side duction by CIL along with Govern- nuclear agreement and agreement by
Management initiatives and efficiency ments measures of providing coal to Canada to supply 3,000 metric tonnes
improvement measures by the Discoms the stranded projects in the form of of uranium under a $ 254 million
to reduce the AT&C Losses, to better E-auctions have brought transparency five-year deal to power Indian atomic
manage the issues of energy deficit. in the system and there has been a reactors is an indicator of the future
significant improvement in the critical outlook of the Indian power sector
Launch of Online Portals/Mobile coal stock level of the power plants which would bank heavily on nuclear
Applications: To improve the compared to the year before with only energy to meet the infrastructural
transparency and accountability in the 2 power plants with critical coal stock needs of a fast, developing economy.
functioning of the various Government (coal stock less than 7 days) as on However, coal based power plants
Departments, a number of Online 26th December, 2016. would continue to lead in meeting the
Portals and Mobile Applications were The RLNG E-Auction Scheme and countrys base load energy require-
launched during this year. initiatives to import cheap RLNG from ments in the next decade along with
Australia are all positive developments substantial increase in the share of
Positive outlook for Power on the generation front. India will Renewable Energy Sources.
Sector not need any new power plant for
The series of initiatives taken by the the next three years as the focus now
Government have helped revive the shifts in improving the efficiencies on For suggestions email at feedback@infraline.com
January 2017
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InDepth
Government upbeat on growth in
transmission for 24x7 power supplies

17

28,114 ckm of transmission lines commissioned during 2016, growth of 27.21% over previous fiscal
CERCs committee wants transmission planning to be aligned to meet customer aspirations

By Team InfralinePlus

A robust transmission infrastructure sumer) to another and vice versa for emphasis on the development of ade-
in the era of smart technologies is the drawing entity to switch from one quate transmission system, especially
the backbone for the operation of a generator to another. With open access at the intra-state level and its coordi-
competitive electricity market. The in transmission, the role of transmis- nated planning and development with
integration of the planned Renewable sion has changed from an infrastructure the inter-state transmission system.
Energy (RE) generation capacity with provider to an enabler in the operation A committee formed by Central
the national grid requires expansion of a competitive power market. Electricity Regulatory Commission
and modernization of the intra- and While there has been a marked (CERC) has recently come out with
interstate distribution as well as increase in the growth of the central a report (September 2016 report) to
transmission grid. Development of the sector transmission system and trans- Review Transmission Planning, Con-
transmission system must match with formation capacity during the previous nectivity, Long Term Access, Medium
the generating capacity on one side (11th) and the current (12th) five-year Term Open Access and other related
and growing demand on the other with plans, transmission congestion in some issues. The Committee has advised that
flexibility for generators to switch from parts of the grid as evident in the last the transmission planning be aligned to
one drawing entity (DISCOM or Con- few years, underlines the need for meet customer aspirations as opposed to
January 2017
www.InfralinePlus.com

InDepth

the existing system where transmission Growth in Transmission Line Network (in cKm)
is associated with long-term power
purchase agreements (PPAs). As per the
report, transmission planning can be 2015-16, 28,114
done on the basis of projected load of the [CATEGORY
2014-15, 22,101 NAME], [VALUE]
2013-14, 16,748
states and anticipated generation scenario 2011-12, 20434
based on economic principles of merit 2010-11, 15,161
2012-13, 17107
order operation.
System studies be carried out for
various generation and load scenarios
during peak and off-peak hours, con-
sidering renewable capacity addition 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
and scheduling of various generating (PROJECTED)
stations that dont have any PPAs,
in circuit kilometers (in cKm)
as per the report. Further, the com-
mittee has emphasised the need for
the creation of a central repository of Source: Ministry of Power (MoP)

generators in the Central Electricity


Authority of India (CEA), where any
generation project developer proposing Transmission projects worth more than INR
to set up a new generation plant must 50,000 Crore are expected to go under the ham-
register itself. The committee feels that mer during the current fiscal (2016-17). Last fiscal
this will not only provide vital data for year (in 2015-16), transmission projects worth
the transmission planning process but
18
will alleviate problems due to uncoor-
over INR 1 Lakh Crore were bid out of which the
dinated generation additions. Central Transmission Utility, Power Grid won
Consequent to various steps taken projects worth INR 56,000 Crore and the rest were
by the Government of expediting forest won by the private sector entities
clearances and intensive monitoring
of critical transmission lines, 28,114 taka, Rajasthan, Madhya Pradesh and and the rest were won by the private
circuit kilometers (ckm) of trans- Haryana would offer power transmis- sector entities.
mission lines have been commissioned sion projects through the bidding route,
during the period April-March 2016 which forms the part of their 24x7 Grid expansion for the sake
against 22,101 ckm commissioned Power for All plans. of renewables
during the same period previous year, Transmission projects worth more India is running the worlds larg-
thus having a growth of 27.21%. This than INR 50,000 Crore are expected est renewable energy expansion
is 118.56% of the annual target of to go under the hammer during the programme with a target to increase
23,712 ckm fixed for 2015-16. Of total, current fiscal (2016-17). Last fiscal overall renewable capacity by more
14238 ckm of transmission lines have year (in 2015-16), transmission than 5 times from 38 GW in 2016 to
been commissioned by Central sector projects worth over INR 1 Lakh Crore 175 GW in 2022.Integration of large
and 2402 ckm by State sector, while were bid out of which the Central amount of fluctuating RE in the grid is
2402 ckm by JV/Private sector. Transmission Utility, PowerGrid won a serious technical challenge for grid
projects worth INR 56,000 Crore managers to ensure smooth operations
Future projects
Ministry of Power (MoP) has expedited Likely scenario of transmission projects expected to bid
work on the long-term 20-year Per- (under tariff-based competitive bidding route)
spective Plan (2016-2036) for power Upcoming projects at RfQ stage (from August end) INR 2,900 Crore
transmission. Concepts such as General Tariff-based competitive bidding (TBCB) at RfP stage INR 6,735 Crore
Network Access (GNA) have been
Upcoming projects under TBCB INR 14,697 Crore
discussed and talked about comprehen-
Recently approved projects (PowerGrid, private sector) INR 3,044 Crore
sively in the MoPs document. State
governments of Tamil Nadu, Karna- Source: Ministry of Power (MoP), news articles
January 2017
www.InfralinePlus.com

of the Indian grid the fifth largest in reduce substantially in next 4 to 5 years GNA could be the framework for
the world. after the transmission system commen- providing long term access and usage
General Network Access (GNA) surate with GNA based planning is in of the national grid, which will replace
could be a framework for providing place. Needless to mention that proper the CERC regulations of long-term
stability in the uncertain situation assessment of Withdrawal GNA would Connectivity (2009) and long-term
prevalent today since generation has go a long way in setting up ISTS of Open Access (2004) and allow plug
been delicensed in the Electricity requisite capacity. and play flexibility to the generators
Act 2003 giving rise to an unwanted The current CERC regulations and consumers.
situation due to the inability of any require generators to identify the target The issue of green corridors and
central agency in planning trans- region and a long-term consumer their interconnections with the main
mission capacity addition resulting in with duly executed power purchase grid, the backing down of thermal
stranded generation and transmission agreement before using the grid power in favour of renewable to
assets. GNA will put the onus on through long term access: access limited transmission grids
generators and DISCOMs to apply The generator needs to identify the are all under consideration and the
for GNA and pay a periodic fee for target region where it intends to sell government along with the Ministries
the same. the power before securing long term seem to be upbeat and optimistic
Since the grid will be a plug and access to the grid, in coming out with sustainable
play grid it will be able to absorb the The generator also needs to execute solutions.
infirm with the firm power, demand a long-term Power Purchase
and supply curves effortlessly. This Agreement (PPA) to transmit power
For suggestions email at feedback@infraline.com
will happen due to the advantages of by using the long-term access.
the varying demand patterns across the
region due to weather and other reasons
whereby surplus power cannot only be 19
absorbed within the country but also
be exported to the Central, South and
South Eastern region.
As per the CERC Committee report,
GNA based development of trans-
mission system, on the other hand, is
not linked to PPAs. Development of
transmission system under GNA would
be based on (a) anticipated generation
and demand scenario (b) Withdrawal
GNA representing the quantum of
power each STU/Bulk Consumer
anticipates to draw from the ISTS (c)
Injection GNA and (d) the long term
PPAs already in place.
This would address the problems
being faced presently on account of
generators not seeking LTA or seeking
LTA for a quantum much less than
Installed Capacity and would also get
requisite participation of and contri-
bution from the Withdrawal DICs,
who are in best position to project their
drawal requirements, as part of the
transmission planning process.
As per the committee, GNA based
transmission planning, probability
of inadequacy of ISTS is expected to
January 2017
www.InfralinePlus.com

StatisticsPower
State-Wise Issuance of UDAY Bonds (As on Dec2016) (All Figures in INR Crores)
Discom Liabilities
Total Bonds issued Total Bonds issued Total bond issued
S.No. State (to be restructured)
by State till date by Discom till date under UDAY till date
as on 30-09-2015
1 RAJASTHAN 80530 58157 12368 70525
2 UTTAR PRADESH 53935 39133.29 10714 49847
3 CHHATISGARH 1740 870 0 870
4 JHARKHAND 6718 6136 0 6136
5 PUNJAB 20838 15629 0 15629
6 BIHAR 3109 2332 0 2332
7 JAMMU & KASHMIR 3538 3538 0 3538
8 HARYANA 34602 25951 0 25951
9 ANDHRA PRADESH 11008 8256 0 8256
10 MADHYA PRADESH 4539 0 0 0
11 MAHARASHTRA 6613 0 0 0
TOTAL 227170 160002.29 23082 183084.29

Month-wise Electricity Generation for FY 2016-17 (till Oct16) (Unit - MU)


Sector/Fuel Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16
Central sector 35861.47 38055.35 37846.87 38419.62 38788.71 37196.85 34887.89
20
Thermal 28977.44 29311.67 28215.18 26872.82 26531.38 27522.2 27284.99
Coal 25466.19 25897.77 25049.11 23605.1 23172.47 24016.74 23828.22
Gas 1687.31 1772.6 1586.42 1591.72 1634.26 1717.03 1725.44
Other 1823.94 1641.3 1579.65 1676 1724.65 1788.43 1731.33
Hydro 3598.72 5795.07 6764.82 8288.64 8707.53 6579.08 4448.04
Nuclear 3285.31 2948.61 2866.87 3258.16 3549.8 3095.57 3154.86
State sector 31525.34 30163.02 28238.36 25362.87 25725.07 28000.74 32134.45
Thermal 27802.44 26655.07 24656.62 20705.42 18952.46 22243.79 26874.19
Coal 26170.22 25081.13 23201.96 19276.36 17613.55 20841.83 25205.83
Gas 1270.34 1258.56 1131.74 1099.21 1134.72 1186.11 1436.02
Other 361.88 315.38 322.92 329.85 204.19 215.85 232.34
Hydro 3722.9 3507.95 3581.74 4657.45 6772.61 5756.95 5260.26
Nuclear 0 0 0 0 0 0 0
Private sector 31817.43 31421.33 30677.9 29810.9 29694.65 31918.7 31864.77
Thermal 31326.08 30001.92 28728.57 27674.19 27507.18 30170.25 30885.58
Coal 29078.71 27769.25 26445.71 25474.12 25060.6 27729.41 28973.19
Gas 1215.53 1290.43 1351.52 1336.99 1670.74 1680.74 1070.16
Other 1031.84 942.24 931.34 863.08 775.84 760.1 842.23
Hydro 491.35 1419.41 1949.33 2136.71 2187.47 1748.45 979.19
Nuclear 0 0 0 0 0 0 0
Total 99204.24 99639.7 96763.13 93593.39 94208.43 97116.29 98887.11
conventional
generation (MU)
All India as 99204.24 99639.7 96763.13 93593.39 94208.43 97116.29 98887.11
reported by CEA
January 2017
www.InfralinePlus.com

Plant Availability Factor of NTPC Thermal Power Plants : FY17 (Till Nov16)
FY17 (in %)
Sl.
Power Plants Region Cumulative
No. Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
FY17
1 ANTA Gas Power Plant 66.17 95.22 92.27 97.68 93.6 96.95 94.9 98.23 91.88
2 AURAIYA Gas Power Plant 97.73 95.71 96.82 97.68 97.72 96.24 96.47 96.47 96.85
3 DADRI Gas Power Plant 96.54 93.65 95.17 96.95 91.74 96.95 96.66 94.45 95.26
4 DADRI Thermal Power Station 105.66 104.74 104.74 104.74 104.39 105.1 106.04 105.47 105.11
5 DADRI-II Thermal power Station 55.56 103.38 103.24 103.39 103.23 101.74 104.92 100 96.93
RIHAND Super Thermal Power
6 79.62 66.55 48.15 78.54 90.33 96.88 98.15 98.24 82.06
Station
RIHAND-II Super Thermal
7 99.7 101.21 99.05 100.71 90.25 96.9 92.98 101.7 97.81
Power Station
RIHAND-III Super Thermal
8 NR 94.57 100.96 85.21 100.76 95.13 97.29 51.8 101.71 90.93
Power Station
SINGRAULI Super Thermal
9 51.2 84.65 98.52 100.15 86.83 85.18 89.53 96.35 86.55
Power Station
UNCHAHAR-I Thermal Power
10 79.13 91.7 91.42 91.36 96.4 70.97 61.62 91.45 84.26
Station
UNCHAHAR-II Thermal Power
11 56.98 92.6 104.64 104.5 104.51 104.58 104.76 105.37 97.24
Station
UNCHAHAR-III Thermal Power
12 104.47 104.66 104.66 104.66 104.66 104.66 104.76 105.37 104.74
Station
13 JHAJJAR (Indira Gandhi STPP) 66.16 81.58 100.07 97.55 97.91 100.13 95.37 97.43 92.03
Korba Super Thermal Power
14 96.54 90.88 96.63 76.87 97.16 96.15 93.79 93.62 92.7
Station
Vindhyachal Super Thermal
15 78.58 82.26 96.34 97.4 93.85 91.63 91.81 99.11 91.37
Power Station-I
Vindhyachal Super Thermal
16 95.48 94.23 93.13 57.27 49.39 76.9 93.95 99.81 82.52
Power Station-II
Vindhyachal Super Thermal
17 101.32 100.95 97.35 98.58 98.15 78.1 67.5 101.71 92.96 21
Power Station-III
WR
18 Kawas Gas Power Station 74.65 93.48 98.9 100.29 100.04 98.84 100.54 101.66 96.05
19 Gandhar Gas Power Station 97.01 96.19 96.18 98.79 97.91 98.72 74.58 93.78 94.15
Singrauli Super Thermal Power
20 100.53 95.81 100.3 99.19 61.01 100.29 100.41 97.33 94.36
Station-II
Korba Super Thermal Power
21 99.77 99.23 99.99 100.13 98.94 100.86 82.04 85.11 95.76
Station-III
NTPC-SAIL Power Company
22 84.45 93.09 91.95 94.99 95.3 94.25 94.37 94.35 92.84
Ltd (Bhilai)
Sipat Super Thermal Power
23 94.11 98.91 95.75 70.19 100.22 96.81 75.81 94.19 90.75
Plant Stage-I
Ratnagiri Gas and Power
24 0 0.25 0.04 1.35 3.33 7.44 5.62 5.59 2.95
Private Ltd (Dabhol)
Vindhyachal Super Thermal
25 95.38 100.97 100.94 95.28 96.47 96.56 95.5 97.91 97.38
Power Station-IV
Mauda Super Thermal Power
26 99.67 95.41 99.79 85.54 85.61 100.08 98.39 89.21 94.21
Station
Farakka Super Thermal Power
27 ER 34.84 75.28 97.28 93.38 95.97 91.34 93.48 84.72 83.29
Plant Stage-I&II
Farakka Super Thermal Power
28 97.81 99.78 99.7 97.72 96.95 99.86 100.01 97.02 98.61
Plant Stage-III
Kahalgaon Super Thermal
29 89.68 98.64 98.13 97.84 91.22 75.75 96.83 92.79 92.61
Power Station Stage-I
Kahalgaon Super Thermal
30 97.72 97.68 98.24 72.34 99.39 93.84 98.42 94.66 94.04
Power Station Stage-II
Talcher Super Thermal Power
31 96.32 97.77 92.15 97.91 95.65 94.36 87.53 91.72 94.18
Station Stage-I
Barh Super Thermal Power
32 50.85 82.5 80.9 90.18 83.21 44.94 87.61 76.22 74.55
Station Stage-II
Ramagundam Super Thermal
33 SR 99.45 99.51 83.22 78.63 82.06 100.47 98.2 97.77 92.41
Power Station Stage - I & II
Ramagundam Super Thermal
34 102.19 102.16 102.23 100.41 97.34 101.44 60.81 21.84 86.05
Power Station Stage - III
Talcher Super Thermal Power
35 96.98 95.87 93.4 97.81 82 71.66 77.85 81.62 87.15
Station Stage-II
36 Simhadri Stage-II 99.47 100.26 100.26 100.21 100.26 100.99 101.32 101.32 100.51
Vallur - NTECL Vallur STPS
37 68.64 65.23 56.45 58.12 87.77 93.32 69.46 79.8 72.35
(1500MW)
January 2017
www.InfralinePlus.com

NewsBriefs | Coal National


Coal price boom evades Coal India State discoms may soon swap
coal via online auction

for immediate two-quarters is certainly


not looking good due to comparatively
weaker demand. In 2016 thermal coal
prices were up 95% so far. Coal India had
raised its prices in May this year. However,
the companys average price realisation per
tonne of coal declined thereby upsetting
the benefits of the price hike. In case power
demand remains muted in the coming fiscal
Global coal mining companies have seen quarters, the average realisation from coal
one of the very good year in terms of sales may remain weak for the rest of the State-run power plants will soon be
realisations as prices have gone up sharply year too. Coal prices were increased from able to swap coal supplies with projects
in 2016, but that is not the case for Indias last May but looking at demand further of private companies through tariff-
largest and state-owned Coal India as its increase looks difficult despite the sharp based online competitive bidding. The
realisations have actually fallen and outlook upturn in coal prices globally. government will launch a portal to
enable the swap, aiming for optimum
NTPC to invest Rs 2,648 crore in developing three coal blocks in Odisha utilisation by private as well as public
power companies. It will enable
State-run NTPC has lined up investments states to procure cheaper electricity
worth Rs 2648 crore for developing three by swapping coal to efficient power
coal blocks in Odisha. The Maharatna public projects or by saving logistics cost.
sector undertaking (PSU) plans to invest Rs The portal, christened Coal Mitra, will
684 crore in the Dulanga coal block, which is initially allow transfer of domestic
22 linked to its Dariplalli super thermal power coal between state and central PSUs
project that has the capacity to generate but will soon be extended to include
1,600 Mw of power. The power project, which private power plants. For coal swap,
is supposed to come up in Sundargarh dis- state generation firms will have to
trict, will attract an investment of Rs 12,532 consult power distribution companies
crore from NTPC. The first unit of the Darli- 4,000 crore on the Darlipalli project. Fifty per and ensure cost of power does not rise
palli plant, which has the capacity to gener- cent of the power generated at this plant will above existing tariffs after the transfer.
ate 800 Mw of power, is expected to be set up by supplied to the state to meet its energy State generation companies will float
by February in 2018. Commercial operations demands. Apart from the Dulanga coal block, short term power supply bids and
would take off from August, said Arvind NTPC was also allocated the Mandakini-B companies that agree to offer power
Kumar, regional executive director (East-II), coal block last year to help fuel its first 4, at the lowest rate through reverse
NTPC Ltd. NTPC has already invested Rs 000-Mw power plant in Telangana. e-auction will be selected for coal swap.

SECL records 83.77 MT coal production during April-Nov

The South Eastern Coalfields Ltd (SECL) has October 1, 2017. The decision is taken to
recorded coal production of 83.77 millions tackle the quality issue of the coal produced.
tonnes (MT) against a target of 90.37 (MT) In order to meet the rising demand, Coal
between April to November 2016. The India Ltd has been setting up 15 new
company has also commenced the process washeries with a total capacity of 112.6
for setting up the 5.0 MTPA Baroud Coal million tonnes per annum. Out of these
Washery in Raigarh district of the State. The washeries, six are Coking Coal washeries
Washery will be set up on Build-Operate- with total capacity of 18.6 million tonnes per
Maintain (BOM) basis. It may be recalled annum and nine Non-Coking washeries of
that SECL will provide the capital funding 94.0 million tonnes per annum. Apart from
for setting up of the Washery and also other these, 3 washeries of 11.6 million tonnes
infrastructural facilities like land, water, per annum are under construction. SECL
power etc. Notably, the Central government is targeting total coal production of 250
has also decided to transport coal above million tonnes (MT) from its underground
G10 level only after being washed from and open cast mines by 2019-20.
January 2017
www.InfralinePlus.com

NewsBriefs | Coal National


Thermal power plants capacity utilisation to drop to 48 percent by 2022 NTPC and Nalco form joint venture
to set up 2,400 Mw coal-based plant

utilisation, they may lose the ability to run


at a technically viable level and might find it
extremely difficult to service debts turning
into non-preforming assets for lenders. The
CEA, in its Draft National Electricity Plan,
has predicted that by 2022 many plants
may get partial or no schedule of generation
at all meaning that many of these thermal
power plants may have to be kept idle for
All coal-based thermal power plants need to lack of demand. According to the CEA, the
brace for a drastic fall in capacity utilisation expected installed capacity from different Power major NTPC and aluminium
to as low as 48% by 2022, as additional non- fuel types at the end of 2021-22 in base case manufacturer Nalco will float a 50:50
thermal electricity generation capacities works out to 523 gigawatts, including 50 joint venture to set up a 2400 MW (3X
come on stream, the Central Electricity GW of coal-based capacity currently under 800 MW ) coal based power project at
Authority has warned. At that level of construction. Gajmara, Dhenkanal in Odisha. Power
from the plant would meet increased
Indias coal demand to see biggest growth globally power requirements at Nalcos Angul
facility. It will also supply power to the
Indias coal demand will see the biggest aluminium manufacturers greenfield
growth over next five years even as it slows
project at Kamakhyanagar in Odishas
down globally on lower consumption in China
Dhenkanal. Coal from the mines
and the US while renewable energy sources
allocated to Nalco shall be linked to
gain ground, the International Energy
the Joint Venture project at Gajmara. 23
Agency said. India will see an annual aver-
The two leading central public sector
age growth rate of 5 percent by 2021 even as
companies are synergizing their
demand peaks in the worlds top consumer,
China, the Paris-based body said in a report. respective domain expertise to fuel
Indias coal output rose 5.1 percent last year, economic growth of India in general and
it said. Growth in global coal demand will The share of coal in the power generation state of Odisha, joint venture agreement,
stall over the next five years as the appetite mix will drop to 36 percent by 2021, from power purchase agreement shall be fast
for the fuel wanes and other energy sources 41 percent in 2014, IEA said in the latest tracked and be in place by the end of the
gain ground, according to IEAs latest coal Medium-Term Coal Market Report, driven current financial year, a NTPC said. The
forecast. But much of Asia will remain by lower demand from China and the United Joint Venture between NTPC and NALCO
hooked on coal which, while polluting, is also States, along with fast growth of renewables has potential to create value for both the
affordable and widely available, IEA said. and strong focus on energy efficiency. companies which have public equity.

NTPC to phase out 11,000 Mw old power plants in five years: Piyush Goyal

Countrys largest power generator wants to phase out old power plants to
NTPC Ltd will replace its old power bring down pollution levels, Goyal said.
plants having a total capacity of 11,000 NTPC has already given the in-principle
Megawatt, power, coal, renewable energy clearance to replace around 11,000 MW of
and mines minister Piyush Goyal said its old, inefficient thermal power plants,
recently. He said the company would he said. Further, the Minister informed
phase out power plants older than 25 that the Power Ministry is in talks with
years and added that the whole process the Environment Ministry for clearances,
would require around Rs 50,000 crore which should not be a problem as it is a
and would take around five years. It is huge step in increasing energy efficiency
very concerning that this country has very and reducing carbon emissions. He also
old power plants running which leads to urged the State Governments to work in
very high carbon dioxide emission. The Mission-mode to modernize their existing
government wants to not only bring in thermal power plants with new super
new pollution control technology but also critical technology.
January 2017
www.InfralinePlus.com

NewsBriefs | Coal International


Obama sets rule to protect streams near coal mines S. Korea to close 10 aged coal
power plants by 2025

Donald Trump. The Interior Department


said the new rule will protect 6,000 miles
of streams and 52,000 acres of forests,
preventing debris from coal mining from
being dumped into nearby waters. The rule
would maintain a buffer zone that blocks
coal mining within 100 feet of streams,
but would impose stricter guidelines for
exceptions to the 100-foot rule. Interior
The Obama administration has set final officials said the rule would cause
rules designed to reduce the environmental only modest job losses in coal country,
impact of coal mining on the nations but Republicans and some coal-state South Korea plans to replace
streams, a long-anticipated move that met Democrats denounced it as a job-killer environmental facilities at 43 other
quick resistance from Republicans who being imposed during President Barack coal plants in the nation in the initiative
vowed to overturn it under President-elect Obamas final days in office. expected to cost a total of 11.6
trillion won (US$9.67 billion) by 2030,
China set to dominate the global coal market in 2017 according to the Ministry of Trade,
Industry and Energy. The ministry
In its medium-term coal market report for has signed an accord with five local
2016, IEA reports that global coal demand power plant operators on the project.
growth has stalled after more than a decade It plans to spend 203.2 billion won
of 4 percent annual growth, with demand on the shutting of the old plants.It
in 2016 to be below 2013 levels. Consump- marks the first time that coal power
24 tion decreased for the first time in 2015 plants in South Korea will be shut
as declines in the U.S. and China were not down, the ministry said. It represents
offset by growth elsewhere. China saw coal a resolve to establish the low-carbon
use decline in all major consuming sectors; and environment-friendly electricity
electricity, steel, and cement. Coal gen- source.Among other programs,
eration dropped due to sluggish 0.5 percent Air Toxics Standards (MATS). Overall U.S. coal 9.7 trillion won will be injected into
electricity demand growth and the countrys consumption dropped 15 percent, the largest modifying environment-related
diversification policy, which led to growth in annual decline ever. Even as coal declines in facilities at the 43 plants. It will help
hydro, nuclear, wind, solar, and natural gas Europe and America, the shift to the East is reduce the amount of pollutants from
power generation growth. Coal use in the U.S. accelerating. Coal is the preferred option to coal plants from 174,000 tons last
plummeted due to low natural gas prices and increase power generation in growing eco- year to 48,000 tons in 2030, added the
coal plant retirements pushed by the Mercury nomics that face electricity shortages. ministry.

Australia wants AIIB to invest in coal power

Australia is reportedly lobbying hard China launched the AIIB as clean, lean
for the China-led Asian Infrastructure and green lender to finance infrastructure
Investment Bank (AIIB) to invest in coal projects across Asia and the bank started
power projects in Asian countries. The operations in January with 57 member
newly-established development bank is countries and US$100 billion in committed
currently drafting its energy strategy and capital. The AIIB launched the first round
the prospect that coal could be excluded of consultations in October for its energy
from its priorities has alarmed both the strategy, which will be approved by the
Australian government and the countrys banks board in their annual meeting next
powerful coal lobbies. Australia accounts June. The banks first draft guidelines on
for around one-third of all coal trade in energy strategy to acknowledge that fossil the energy strategy published in October
the world, with most of its coal exports fuels will play a significant role in energy said Asia needs US$8,740 billion of energy
going to China, Japan, South Korea generation in the region for decades to investment by 2025 to implement already
and other countries in the region.The come, Kate Williams, spokeswoman for announced policies.
[Australian] government wants the AIIB Australias Treasury Department, said.
January 2017
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InDepth
Union Budget 2017-18: Sops crucial
to energise power and coal sector

25

An opportunity to put in place levers to strengthen the demand situation in the economy
MoF may look to extend 10-year tax holiday to companies that start generation by March, 2020

By Team InfralinePlus

The recent surge in Indias solar capac- which has left a significant capacity been proposed to setup 5 new Ultra
ity addition offers a ray of hope for being declared as stranded. Mega Power Projects (UMPP), each of
domestic producers and foreign inves- The central government wants to 4000 MW, in the plug-and-play mode
tors. However, investors confidence fulfill the promises of Make in India, and has been clarified that all clearances
in the power industry has been tested and to provide uninterrupted power would be in place before the project
severely over the past few years due to supply to each Indian household by 2022 is awarded by an auction process. The
the drastic erosion in the creditworthi- all these aspects may face an issue transparent auction process has also been
ness of the sector, triggered mainly by requiring massive surge in power adopted for coal, where it is envisaged
fuel shortages earlier which rendered requirement and consumption. In line that the coal bearing states will be
several projects commercially unviable with the above vision, the government, getting additional funds for creation
and more recently due to the weaken- in the 2015 and 2016 Union Budgets of long awaited community assets and
ing financial health of state power had announced certain policy measures welfare of people. Also, the ministry of
distribution companies (DISCOMs) which would address this issue. It has new renewable energy has revised its
January 2017
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InDepth

Power Sector
I. Power generation/distribution
(i) Tax incentives / sops such as extension of tax holiday to power projects till the end of March 2017 and re-intro-
duction of generation based incentives (GBIs) to wind power generators in the form of 80% accelerated depreciation
(AD) has brought some respite to the project developers in the last couple of years. However, since April 2016, AD
has been reduced by 40% which will significantly impact the wind power developers in the longer run. Moreover,
GBIs will cease post March 2017 which will further affect the creditworthiness of the renewable energy projects.
The Ministry of Finance (MoF) may look to extend the 10-year tax holiday to companies that start power generation
by March 31, 2020. Industry players have called for the extension of the sunset tax clause for power companies to
include plants that provide power till March 2020 as opposed to 2017 earlier.
(ii) Clean technology projects / super critical technology may be exempted from all taxes for a period of 10 years
from the date of commercialization extending all benefits for commercialization.
Projects that implement clean technologies should be given benefits in taxes. Manufacturers who have already
adopted internationally recognized clean technologies should be incentivized and encouraged by exemption from
levy of any clean energy cess.
(iii) Naphtha import should be given concession in duty on import as this would help in reviving the gas/naphtha
based power plants.
(iv)Fly ash is the waste product of Power generation. Fly ash bricks are now possible and they save having to dump
the fly ash while conserving the environment by replacing Coal baked bricks.
It is counterproductive to charge Central Value Added Tax (CENVAT) on sale of fly-ash bricks. They should be fully
exempted.
II. Financing
26
Recently, financing of projects has become very difficult considering most of the public-sector banks have reached
sectoral lending limit for the power sector mainly due to thermal and gas based power plants being stuck and
not being able to service the debt availed by such projects. To give push to development of projects generating
renewable energy, the Reserve Bank of India has recently added renewable energy sector within the priority sector
lending, for a loan up to INR 15 crore per project.
However, the limit of INR 15 crore per borrower - and INR 10 lakh per household - would restrict the flow to smaller
solar projects and rooftop plants. This should be addressed in the upcoming budget.
III. Other initiatives
(i)Two new proposed legislationsthe Public Contracts (Resolution of Disputes) Bill and the Regulatory Reform Bill
must see the light of the day after being put up for discussion post Union Budget 2015-16.This may be positive step
to help resolve long-standing power tariff disputes with high potential to revive impacted projects.
(ii) It is strongly recommended that Minimum Alternate Tax (MAT) should be reduced from the current level of 18.5%.
This will go a long way in incentivizing investments in the power sector.
(iii) All other state taxations, including Electricity Duty (ED) on consumption or production of power, and should be
subsumed into the proposed Goods and Services Tax (GST). This will ensure a uniformity in the taxation on con-
sumption of power and will ultimately reduce the power prices which will be beneficial to all consumers.
(iv) Power equipment imports for setting up captive power projected should be exempted from customs duties,
state governments have imposed cess, electricity duty and various other taxes which add to the cost of power.

Recently, financing of projects has become very difficult considering most of the
public-sector banks have reached sectoral lending limit for the power sector mainly
due to thermal and gas based power plants being stuck and not being able to
service the debt availed by such projects. To give push to development of projects
generating renewable energy, the RBI has recently added renewable energy sector
within the priority sector lending, for a loan up to INR 15 crore per project
January 2017
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Past initiatives/announcements for power sector (Union Budget FY 2015-16 & FY 2016-17)
To reduce dependence on imported coal, a Public Private Partnership (PPP) policy framework would be devised
with Coal India Limited to increase coal production.
Extension of tax sops to all power projects which begin generation, distribution or transmission of power by 31st
March 2017.
Adequate quantity of coal will be provided to power plants which are already commissioned or would be com-
missioned by March 2015. An exercise to rationalize coal linkages to optimize transport of coal and reduce cost
of power was underway.
Rs 500 crores to be provided for Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, Andhra
Pradesh and Ladakh.
Low-interestbearing funds to be provided from National Clean Energy Fund (NCEF) to Indian Renewable Energy
Development Agency Ltd (IREDA) for on-lending to viable renewable energy projects.
Government re-introduced generation-based incentives (for wind power projects) in the form of 80% accelerated
depreciation (AD) to boost capacity addition in the sector; cutting of custom duty by 5 per cent on capital goods
import. (FY 2014-15). However, in the Union Budget 2016-17 it was announced for the reduction in AD from 80%
to 40%.
Government proposed to set up 5 new Ultra Mega Power Projects, each of 4000 MWs in the plug-and-play
mode. (All clearances and linkages will be in place before the project is awarded by a transparent auction
system. Government hoped it will help unlock investments to the extent of INR 1 Lakh Crore). However, with the
recent enthusiasm shown by investors in the area of renewables, the proposal has been scrapped.
Increase in Clean Energy Cess from Rs 200 to Rs 400 per metric tonne of coal, etc. to finance clean envi- 27
ronment initiatives.

Coal Sector target of renewable energy capacity to


175 GW till 2022, comprising of solar
I. The Railway Budget for 2015-16 proposed raising freight rates for 12 (100 GW), wind (60 GW), biomass (10
commodities that include a 6.3 per cent increase for coal. Electricity tariffs GW) and small hydro power (5 GW).
were expected to rise with increased freight rates, as a direct consequence However, with the recent enthusiasm
of increase in transportation cost for power producers. Likely impact of shown by investors in the area of renew-
freight rate hike would be on the landed cost of coal. ables, the proposal has been scrapped
The Ministry of Finance (MoF) must reduce the railway freight rates for considering the muted interest shown by
transportation of coal. This will reduce the burden on power producers and developers/investors.
will result in lowering of power prices for consumers. The upcoming Union Budget
II. Introduction of PPP in coal mining sector to bring in best practices and (2017-18) provides an opportunity to
technology for coal mining. Domestic coal prices may be linked to one or a put in place levers to strengthen the
basket of international coal indices with adjustment to heat value and ash demand situation in the economy. This
content to ensure prices are commensurate with the quality of coal. is important to impart momentum to
the capex cycle and put GDP back on
III. Clean Energy Cess: The increase of Clean Energy Cess to INR 400 per
high growth track.
MT is a major burden which will further weaken the competitiveness of the
Power is the critical infrastructure on
Indian industry.
which the socio-economic development
This should be suitably reduced/or CENVAT credit must be given to negate of any country depends. So a clear and
the effect of increase in coal prices and ultimately the landed cost of power. stable tax regime is bare minimum
IV. Import duty of coking coal had been increased to 2.5% in the Union requirement of the investors/developers
Budget 2014-15. Negligible quantity of coking coal is available domestically, engaged in development of power
and thus the need is met mainly from imports for the steel sector. plants. The same will be expected in the
Union Budget 2017-18.
It is therefore recommended that the duty on coking coal be exempted as
was the case prior to the Union Budget 2014-15.
For suggestions email at feedback@infraline.com
January 2017
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InDepth
CEAs draft national electricity plan spells
trouble for thermal power industry

28

No immediate requirement for fresh capacity addition from coal based source up to 2027
Low asset utilization in future will make it difficult for power producers to service debt

By Team InfralinePlus

While Indias massive capacity for new coal plants in 2022-27. Nuclear - 2800 and RES 1,15,326
addition in renewables strengthens Based on demand projections, CEA MW as committed capacity during
countrys position against climate estimates new coal-based capacity 2017-22 and likely capacity addition
change and its commitment to the requirement of 44,085 MW in 2022-27. of 101,645 MW from conventional
United Nations Framework Convention Since 50,025MW of coal power sources during 12th plan and projected
on Climate Change (UNFCCC), it projects are already in different stages demand for the year 2021-22, the
also raises concerns for thermal power of construction and likely to yield study result reveals that no coal based
producers, especially in the wake of benefits in 2017-22, CEA does not capacity addition is required during
National Electricity Plan (NEP) drafted foresee any immediate requirement for the years 2017-22. However, a total
by the Central Electricity Authority fresh capacity addition from coal-based capacity of 50,025 MW coal based
(CEA). Given the massive capacity source up to 2027. As per the draft, power projects are currently under
addition plans in the renewable sector, Considering capacity addition from different stages of construction and
CEA estimates there is no requirement Gas 4,340 MW, Hydro 15,330 MW, are likely to yield benefits during the
January 2017
www.InfralinePlus.com

period 2017-22. Thereby, the total Purchase Agreements (PPAs) in the in their total energy mix is driving
capacity addition during 2017-22 is last three years. If PPA signing does long-term contracts to solar. It is
likely to be 1,87,821 MW. not commence soon, by the end of FY noteworthy that all long-term contracts
CEAs draft NEP highlights the 16-17, nearly 15% of private sector spanning more than 25 years, were all
demand side projections, and presents a capacities (20-25 GW) without PPAs signed by solar power companies in
perspective on electricity supply sources will be exposed to the vagaries of the 2015-16 and up to the second quarter
till 2027 while also projecting a subdued short-term electricity market. of the current fiscal year (FY 2016-17).
demand for power with a 20.7 per cent The central governments push for Coal-powered thermal power plants
lower peak demand in 202627. A key renewable energy capacity addition account for 70% of total electricity
highlight of this plan is the draft covers (proposed 175 GW by 2022) and the generated in the country and represents
the review of the 12thPlan, plan for states obligation to include solar 61% of the installed power capacity.
2017-18 in detail and perspective Plan Till the thermal generating capacity
for 2022-27. The projected peak demand CEAs draft NEP high- utilisation improves to 80-85%, PLF
at the end of 2021-22 is 235 GW, which levels (to the existing 58% PLF level)
is about 17% lower than the projection lights the demand and the existing untied capacities are
made in the 18th Electric Power Survey side projections, and contracted, its unlikely that there
(EPS) report, the CEA has written in the presents a perspective will be any private sector interest in
draft plan. the coal-based thermal generation
on electricity sup- sector. This can be gauged from a
Current Scenario ply sources till 2027 particular extract from the draft plan,
The total installed capacity is 308.8 while also projecting To accommodate high quantum of
GW (approx.) as on November 30, RES into the grid, thermal plants are
a subdued demand for
2016 while, the peak demand is 153 likely to run at low PLF in future. Many
GW. Power generation units in India power with a 20.7 per plants may get partial/nil schedule of 29
are running below capacity as state cent lower peak de- generation. The market mechanism
electricity distribution companies mand in 202627. A key through regulatory intervention needs
(DISCOMs) shy away from buying to be evolved so that the owners of
more power. According to data
highlight of this plan thermal plants are able to recoup the
published by the CEA, Indias thermal is the draft covers the investment and at the same time,
power plant load factor (PLF), slipped review of the 12thPlan, customers are not unnecessarily
to 52.03% in August this year, its burdened with high tariff. At that
lowest in over a decade and has been
plan for 2017-18 in level of utilisation, thermal power
consistently hovering below 60%. detail and perspective producers may lose the ability to run
There has been an increase in private Plan for 2022-27 at a technically viable level and might
sector capacities without Power find it extremely difficult to service
debts turning into non-preforming
assets (NPAs) for lenders. Apart from
IPPs, CEA projections spell trouble for
equipment suppliers in the capital goods
sector, especially in the industry-boiler,
turbine generator and related segments.
As there are large solar & wind
power capacity additions envisaged
to come on track in several states in
2016; however, the lack of assurance
on the evacuation infrastructure and
the grid availability can affect the
credit profile of the upcoming projects.
Technical and commercial challenges
are emerging for the DISCOMs
because of changes in the energy mix.
Efforts to address these challenges are
January 2017
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InDepth

Likely Future Scenarios (As per Draft National Electricity Plan 2016)

High Hydro (15,330 MW)

RES Target of 175 GW


Low Hydro (11,788 MW)

High Hydro (15,330 MW)


Demand CAGR RES Target of 150 GW
(6.34%, 7.34% and 8.34%) Low Hydro (11,788 MW)

RES Target of 125 GW High Hydro (15,330 MW)

Low Hydro (11,788 MW)

trailing behind what would be required


Deviation settlement in situations where infirm to mainstream the envisaged pace of
power is scheduled in 15-minute time blocks capacity addition. Moreover, deviation
settlement in situations where infirm
as firm power in reference to the CERC order
power is scheduled in 15-minute time
of February 2014 will lead to the imposition of blocks as firm power in reference to the
30 heavy penalties on DISCOMs for under, over CERC order of February 2014 will lead
drawls of power. Example MSEDCL has an to the imposition of heavy penalties on
DISCOMs for under, over drawls of
18,000 MW system; it is allowed a deviation of power (e.g. MSEDCL has an 18,000
150 MW under and over drawl and potentially MW system; it is allowed a deviation
faces a penalty as high as INR 16.92/unit of 150 MW under and over drawl and
potentially faces a penalty as high as
INR 16.92/unit). The person/consumer
Figure 1: CEAs projections based on sensitivity analysis buying the power which caused devi-
(High Hydro Scenario) ation will have to pay penalty charges
on deviating from schedule and pref-
PLF % vs RES Capacity Addition erential tariff. The person/consumer
procuring solar/wind power as per the
High Hydro Scenario (15330 MW)
provision of power purchase agreement
(PPA) with the state DISCOM or a
PLF % of coal based power plants

62.3
60.0 private player shall pay the UI Charges
57.5 57.4
52.8
55.1
52.6 (Unscheduled Interchange) as per
50.4
47.9 the Deviation Settlement Mechanism
(DSM) on deviating from the actual
schedule in addition to the preferential
tariff on that quantum of power pro-
cured from the distribution licensee.
As per the Draft National Electricity
Plan, 2016, it can be seen that,
125 150 175
under constant demand and hydro
RES Capacity Addition (GW)
condition, the PLF of coal-based is
CAGR of 6.34% (up to 2021-22) CAGR of 7.34% (up to 2021-22) CAGR of 8.34% (up to 2021-22)
almost negatively linearly co-related
with RES capacity. Detailed studies
Source: Central Electricity Authority (CEA) have shown that as RES generation
January 2017
www.InfralinePlus.com

Figure 2: CEAs projections based on sensitivity analysis Under a constant demand


(Low Hydro Scenario) and hydro condition, the
PLF of coal based sta-
PLF % vs RES Capacity Addition
tions is almost negatively
Low Hydro Scenario (11788 MW) linearly co-related with
RES capacity. Detailed
studies have shown that,
PLF % of coal based power plants

62.0
58.1
60.8
55.8
58.2 as the RES generation
53.5 53.3
51.1
48.6 increases there is equiva-
lent quantum decrease in
thermal generation. This
shows that any increase in
RES generation is mostly
replacing the thermal gen-
eration. Therefore, with
125 150 175
the increased infusion of
RES Capacity Addition (GW)
RES generation into the
CAGR of 6.34% (up to 2021-22) CAGR of 7.34% (up to 2021-22) CAGR of 8.34% (up to 2021-22) grid, the PLF of the coal
Source: Central Electricity Authority (CEA) based plants decreases

CEAs projections based on sensitivity analysis 31


i) Scenario with CAGR 6.34%
These scenarios have been studied based on the Energy Requirement (BU) and Peak Demand (MW) estimated by
Sub Committee on Demand projection. The CAGR of Electrical Energy requirement from the year 2015-16 to 2021-22
is coming out to be 6.34%.
It may be seen that no coal based capacity addition is required in all the scenarios during the years 2017-22 to meet
the energy demand. However, the PLF % of coal based power stations will increase with lower achievement in Hydro
and/or RES capacity addition.
ii) Scenario with CAGR 7.34%
These scenarios have been studied based on the Electrical Energy Requirement (BU) and Peak Demand (MW) esti-
mated by considering a CAGR of 7.34% in Electrical Energy requirement instead of 6.34% worked out in the Base case.
It may be seen that coal based capacity addition in the range of 7020 MW to 12040 MW is required in various
scenarios. The PLF % of coal based power station will increase with lower achievement in Hydro or RES capacity
addition targets.
iii) Scenario with CAGR 8.34%
These scenarios have been studied based on the Energy Requirement (BU) and Peak Demand (MW) estimated by
considering a CAGR of 8.34% in Electrical Energy requirement instead of 6.34% estimated in Base case.
It may be seen that coal based capacity addition in the range of 21,370 MW to 27,600 MW is required in various sce-
narios. The PLF % of coal based power station will vary with lower achievement in Hydro or RES capacity addition.
iv) Relationship between RES generation and PLF (%) of coal based thermal plants
It is seen that, under a constant demand and hydro condition, the PLF of coal based stations is almost negatively
linearly co-related with RES capacity. Detailed studies have shown that, as the RES generation increases there
is equivalent quantum decrease in thermal generation. This shows that any increase in RES generation is mostly
replacing the thermal generation. Therefore, with the increased infusion of RES generation into the grid, the PLF of
the coal based plants decreases.
Source: Central Electricity Authority (CEA)
January 2017
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InDepth

increases there is equivalent quantum growing preference for competitively inflexible plants. In France, existing
decrease in thermal generation. This bid merchant contracts mean the thermal nuclear plants can ramp down to 30%,
shows that any increase in RES power industry can no longer have the with ramp rates of up to 1%/minute.
generation is mostly replacing the luxury of stable long-term PPAs. In terms of flexibility, hydro plant,
thermal generation. Therefore, with the International Energy Agency (IEA) Pump Storage Plant, Open Cycle gas
increased infusion of RES generation provides a generic characterization turbine, Gas Engines etc. are very
into the grid, the PLF of the coal-based of the differences between flexible suitable. Coal plants are classified as
plant decreases. and inflexible plants. Flexible coal constant output or baseload plants
plants offer ramping rates of 4-8%/ and are rarely turned down or off
Likely impact analysis minute, 2-5-hour start up times, and frequently. Essentially, they are
Even though power generation has minimum output limits of 20-40% (of considered as inflexible. These plants
increased, lack of power purchase maximum), compared to inflexible experience reduced efficiency, more
power agreements (PPAs) continues plants with ramping rates of less than maintenance, lower equipment lifetime
to keep plant load factor at its low- 4%/minute, 5-7 hour start-up times and reduced cost etc. if subjected to
est. Low asset utilization in future as and minimum output limits of 40-60%. cycling or frequent ramp up and ramp
depicted (graphs) will make it difficult Flexible natural gas plants show down. However, existing coal based
for power producers to service debt. similar improvements, with minimum plant can be redesigned/retrofitted to
Lack of power demand from industries output limits of 15-30% compared enable quick start-ups and ramping.
is already causing ready capacities not to 40-50% for inflexible plants. A The financial position of state power
being able to find long term buyers fast-acting gas turbine plants on the distribution companies (DISCOMs)
and sell at abysmally low prices at the market today can offer start-up times is being cited as a key impediment to
power exchange. of just 40 minutes. Flexible nuclear demand growth. Over-investment in
With the increasing adoption of plants offer minimum output limits transmission is desirable for a country
32 renewable power (particularly solar) and of 30-60%, compared to 100% for like India because the sources of
energy lie either in the central/eastern
The financial position of state power distribution coal belt or hydro resources in north
companies (DISCOMs) is being cited as a key while demand centers are in the planes
impediment to demand growth. Over-investment of north, west and south. Stranded
power capacities of 22-28 GW
in transmission is desirable for a country like (industry estimates) may have to wait
India because the sources of energy lie either in for 2-3 years for securing PPAs. During
the central/eastern coal belt or hydro resources the present period, both government
in north while demand centers are in the planes and industry are relying on UDAY
of north, west and south scheme for the demand to pick up and
kick-start the growth in the sector.
As per CEAs draft, In view of a
large capacity addition programme
from renewable energy Sources, hydro
and gas based power stations are
required to play vital role by providing
balancing power to cater to the
variability and uncertainty associated
with RES. Therefore, suitable measures
to ensure timely completion of capacity
addition from hydro and adequate
supply of natural gas to stranded gas
based power plants may be taken.
In view of all of this, thermal power
industry will have to brace for a
transitional shift in future.

For suggestions email at feedback@infraline.com


January 2017
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StatisticsCoal
Port-wise Coal Imports in India (Quantity in Metric Tonnes)
Imports (FY 2016-
S.No. Ports Imports (FY 2014-15) Imports (FY 2015-16)
17) - till Nov16*
Coking Coal
1 Paradip 8,992,360 7,233,877 5,082,526
2 Vizag 5,887,886 4,611,482 2,564,240
3 Goa/Marmagoa 5,839,993 6,163,132 3,231,410
4 Dhamra 5,560,774 4,844,386 5,529,345
5 Gangavaram 5,318,145 5,506,715 2,822,790
6 Kolkata / Haldia 4,998,623 4,949,814 3,661,000
7 Krishnapatnam 1,289,343 4,510,943 2,430,997
8 Mundra 1,044,334 1,056,048 735,561
9 New Mangalore 812,391 121,659 0
10 Kandla 431,878 358,952 289,513
11 Ennore 398,202 347,039 199,871
12 Magdalla 383,983 978,695 817,846
13 Karaikal 118,833 533,575 577,913
14 Jaigarh 82,100 30,000 44,870
15 Tuticorin/VOC 49,100 0 0
16 Chennai 1,628 1,288 838
Non-Coking Coal
1 Mundra 38,914,325 14,667,996 9,282,917
2 Krishnapatnam 25,360,804 21,938,131 13,377,124
3 Dahej 13,207,450 11,232,142 7,011,810
4 Ennore 11,586,516 10,758,859 5,618,440 33
5 Tuticorin/VOC 9,965,779 12,001,649 6,858,887
6 Vizag 9,931,812 7,666,590 3,684,668
7 Paradip 9,631,993 7,321,302 4,560,248
8 Gangavaram 9,447,943 8,560,804 4,680,422
9 Kandla 8,804,707 11,654,689 7,464,428
10 Navlakhi 7,359,030 6,119,175 1,730,493
11 Kakinada 6,045,996 2,822,054 1,439,989
12 Dhamra 5,768,643 7,597,423 2,572,347
13 Magdalla 5,484,802 5,225,930 3,492,976
14 Bedi 4,995,030 4,561,545 1,842,571
15 Mumbai 4,565,464 3,432,878 1,717,014
16 New Mangalore 3,859,485 5,053,589 3,215,832
17 Goa/Marmagoa 2,613,456 4,896,621 2,786,262
18 Adani Hazira 2,472,140 2,657,841 2,329,865
19 Pipavav 1,969,786 1,501,845 811,097
20 Kolkata/Haldia 1,897,477 2,552,225 2,274,487
21 Karaikal 1,232,716 2,199,504 2,655,854
22 Jaigarh 1,174,264 1,902,981 1,000,987
23 Bhavnagar 1,047,030 967,807 626,444
24 Okha 646,030 612,491 441,277
25 Porbandar 570,030 570,596 327,974
26 Muldwarka 337,630 682,916 266,995
27 Jafrabad 271,030 354,413 328,790
28 Jakhau 244,030 291,090 275,923
29 Cochin 48,034 113,850 63,000
30 Sikka 44,330 64,197 66,508
31 Chennai 247 843 843
* November 2016 is provisional data
January 2017
www.InfralinePlus.com

StatisticsCoal

Indonesian Coal Prices - HBA - FY 2016-17 (till Dec16)


HBA 6322 HPB MARKER (kcal/kg GAR) (USD/Ton)
Month kcal/kg Gunung Prima Pinang Indominco Melawan Jorong
(USD/ton) Envirocoal Ecocoal
Bayan I Coal Coal IM East Coal J-1
7000 6700 6150 5700 5400 5000 4400 4200
16-Apr 52.32 55.87 57.84 52.29 43.06 43.25 41.6 33.45 30.87
16-May 51.2 54.66 56.7 51.26 42.16 42.44 40.89 32.88 30.35
16-Jun 51.81 55.32 57.32 51.82 42.65 42.88 41.28 33.19 30.63
16-Jul 53 62.42 63.97 57.8 47.95 47.6 45.45 36.57 33.64
16-Aug 58.37 56.61 58.53 52.9 43.61 43.74 42.04 33.8 31.18
16-Sep 63.93 68.45 69.61 62.87 52.45 51.6 48.99 39.43 36.18
16-Oct 69.07 74.01 74.82 67.55 56.6 55.3 52.26 42.07 38.53
16-Nov 84.89 91.15 90.85 81.97 69.39 66.68 62.32 50.21 45.77
16-Dec 101.69 109.35 107.88 97.28 82.98 78.77 73.01 58.85 53.46

Mine Wise Production from Captive Coal Blocks for the period April 2015 to
November 2016
Final Bid Coal Production (Provisional) Revenue Generated from monthly
S. Name of the Avg. Price / in Million Tonnes production of coal on account of Final
No. coal mine Grade Reserve 2016-2017 (till Bid Price / Reserve Price from April-15
34 Price 2015-2016 to November-2016 (Rs. in crores)
November-2016)
1 Sarisatolli G11 470 1.877 0.895 124.13
2 Talabira-I G13 478 0.56 0.151 21.07
3 Gare Palma IV/4 G9 3001 0.069 0.723 205.66
4 Gare Palma IV/5 G9 3502 - 0.582 167.03
5 Chotia G7 3025 0.12 0.18 90.75
6 Belgaon G10 1785 0.165 0.062 40.45
7 Amelia (North) G8 712 2.8 2.657 309.97
8 Sial Ghogri G8 1402 - 0.005 0.44
9 Parsa East & G11 100 6.21 4.974 104.84
Kanta Basan
Total 11.801 10.229 1064.34
January 2017
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CoverStory
Energy market set for a bull
run in 2017

35

Power and coal faces slowdown in 2016, industry bullish on demand revival
Momentum in Renewable Energy, especially solar, expected to continue in 2017

By Infraline Bureau

After touching new lows in January, skills could be put to the test sooner with Indonesian coal reaching 25-month
world energy prices have partially rather than later. If dollar continues to high of $69.70 per tonne in October,
recovered lost ground and now look set strengthen against rupee, India could after hitting its lowest point in January
for a bull run. While hardening prices face the double whammy of surging since 2009. Global LNG prices have
would help energy-exporting countries crude price and an unfavourable also stabilised after crashing in 2014.
to balance their budgets, which have exchange rate, though such a scenario After plunging to $6.08 per mmbtu in
been under stress since June 2014 crash is a bit unlikely. April-July 2016 quarter, LNG prices
in the global energy market, big energy- 2016 was a roller coaster year for have climbed up to $7.15 mmbtu (Japan
importing countries like India could face the world energy market. Crude oil reference price), as per data compiled by
serious macroeconomic challenges. prices hit a 14-year low in January and the World Bank.
The Narendra Modi government has then bounced back to nearly double Back home, renewable energy
been a major beneficiary of low energy in December. Pledge of production especially sector found favour with
prices, which it used to hike excise cuts by Opec and non-Opec cartels investors, with tariff falling to a new
duty by nine times and fill its coffers. brought stability to the crude market low of Rs 3 a unit, much lower than
But if the current uptrend in energy which has been in the grip of vola- for many new coal-fired power plants.
market continues, the NDA govern- tility due to supply glut. As year 2016 Rising international coal prices,
ments macroeconomic management progressed, coal market also hardened, coupled with weak electricity demand,
January 2017
www.InfralinePlus.com

CoverStory

led generators to defer import orders. policy. Investors response to the auction Oil and gas sees some
Given the weak demand for coal, the would be seen as a referendum on the action
government has also scrapped Coal new policy. The Modi government has targeted
Indias 1 billion tonne production target After a pick-up in the last fiscal, to bring down countrys crude import
by 2020. award of contracts for highways showed dependence by at least 10 per cent by
Because of sluggish growth in signs of slowing in the first half of 2022 but this sounds more like a slogan
electricity demand, the government has the current fiscal. National Highways than serious commitment. Crude oil
not envisaged any new capacity addition Authority of India not only awarded production during April-November
plan in coal-fired generation while four fewer projects but the total length of was 3.6 per cent lower compared to
ultra mega power projects envisaged projects was also 16 per cent shorter the same period last year. On the other
in Odisha, Chhattisgarh, Maharashtra compared to the same period last year. hand, petroleum consumption grew by
and Tamil Nadu have been scrapped. 9.4 per cent during the same period,
Investment activity in the power sector In 2016, the government which means crude import dependence,
is unlikely to pick up unless manufac- took several policy steps which has already crossed 80 per cent
turing gets demand boost. to attract investment of the countrys requirement, would
Demonetisation is likely to delay further rise in 2016-17. Drop in natural
manufacturing revival by a couple
into exploration and gas output was even sharper at 3.7 per
of quarters, feel analysts. However, boost oil and gas cent lower during April-November
the silver lining is that the Goods and production, including a period. The LNG import during the
Services Tax (GST) is now proposed shift to revenue-sharing same period was 23.2 per cent higher
to be rolled out from April 2017. dispensation from the compared to the corresponding period
Experts feel that the manufacturing production sharing of the previous year.
sector will revive in 2017-18, which In 2016, the government took several
would entail increase in demand for
regime, policy for policy steps to attract investment
36
electricity and coal. The demand of extension of PSC period into exploration and boost oil and
coal is going to be steady in the coming and marginal field policy. gas production, including a shift to
year, said Dilip Kumar Jena, manager, Based on the experience revenue-sharing dispensation from the
PwC. Meanwhile, robust fuel demand of Nelp implementation, production sharing regime, policy for
threatens to push up Indias crude oil the government has extension of PSC period and marginal
import dependence as domestic output field policy. Based on the experience
continues to stagnate.
announced Hydrocarbon of New Exploration Licensing Policy
The government overhauled policy Exploration Licensing (Nelp) implementation, the government
to attract enhanced into oil and gas Policy (HELP) to give has announced Hydrocarbon Explo-
exploration. The government has also a boost to oil and gas ration Licensing Policy (HELP) to give
invited bids for the development of 69 production. a boost to oil and gas production.
small and marginal fields under the new The government also unveiled
uniform licensing for both conventional
and non-conventional resources, a
move that would facilitate extraction of
coal bed methane, shale and shale gas.
The government also introduced new
gas pricing formula that would provide
marketing and pricing freedom for new
production from difficult fields like
those in deepwater, ultra deepwater and
high pressure-high temperature areas.
This pricing, which is subject to a cap
based on the price of alternative fuels,
is expected to improve the viability of
capital-intensive offshore projects.
The government also introduced
a concessional royalty regime for
January 2017
www.InfralinePlus.com

deepwater and ultra-deepwater areas


no royalty for the first seven years,
and thereafter the rate will be 5 per cent
and 2 per cent, respectively. Royalty
rates for shallow water areas have been
reduced from 10 per cent to 7.5 per
cent. The government has also unveiled
a vision document to ensure speedier
exploitation of hydrocarbon resources in
the North-East region.
However, refiners and retailers
are having a good time as consumers
splurge on cheaper fuel. Three oil PSUs
IOC, BPCL and HPCL are planning
a mega refinery, with annual processing
capacity of 60 million tonne, on the
west coast to benefit from the pro- The gloomy outlook on countrys
jected explosion in the countrys fuel
The petroleum and natural gas production in coming years
demand. The implementation cost for natural gas sector augurs well for LNG imports. India is
the proposed refinery is estimated at Rs attracted FDI worth $ the fourth-largest LNG importer after
2 lakh crore. State-owned refiners have 6.67 billion between Japan, South Korea and China, and
already committed a huge investment April 2000 and March accounts for 5.8 per cent of the total
to reconfigure specifications of their global trade. Domestic LNG demand
2016. Investments in
refineries to produce greener fuels is expected to grow at a compounded
compliant with euro-VI norms.
Indias oil and gas annual growth rate (CAGR) of 16.89
37

Because of high crude oil imports, sector will likely touch per cent to 306.54 MMSCMD by
Indias current account has been its tra- $ 37.28-44.73 billion 2021 from 64 MMSCMD in 2015, say
ditional vulnerability. A sudden increase over the next few years, analysts. That would call for a commen-
in current account deficit could trigger which will help raise surate increase in gas pipeline network
capital flight and send rupee into a free capacity an LNG infrastructure.
the share of gas in
fall. The most significant development The governments ambitious plan to
in energy sector in 2017 would be how
the countrys primary more than double the share of natural
the crude prices move when the Opec energy mix to 15 per gas in Indias energy mix -- from 6.5
and select non-Opec members actually cent by 2030, says BP per cent in 2015 to 15 per cent over
implement the production cut as decided Group the medium term -- would necessitate
a month ago. India has been having a investments of at least Rs 65,000 crore
lucky run in last 30 months due to low oil government chooses the latter option, (nearly $10 billion) just to augment
prices, if there is sudden jump in prices, it could risk political backlash. So the infrastructure for gas import and for
the stress would be felt by the worlds government would be cautious while laying pipelines. Gas pipeline infra-
fourth largest consumer of oil, that passing on increase in global crude oil structure in the country stood at 15,808
imports 80 per cent of its requirement prices to consumers. km in December 2015.
warned Debasish Mishra, Partner at According to data released by the
Deloitte Touche Tohmatsu India LLP. Department of Industrial Policy and A year marked by
The government can cushion fuel Promotion, the petroleum and natural acquisitions
consumers by rolling back excise duty gas sector attracted FDI worth $ 6.67 Russian oil major Rosneft acquired 98
hikes on petrol and diesel if interna- billion between April 2000 and March per cent stake in Essar Oil and related
tional crude oil prices remain below 2016. Investments in Indias oil and gas infrastructure such as captive port and
$65 a barrel. If this mark is breached, sector will likely touch $ 37.28-44.73 power units at an enterprise valuation
the government will have to bring billion over the next few years, which of Rs 86,100 crore, including debt.
back some kind of subsidy-sharing will help raise the share of gas in the This is the largest foreign direct invest-
mechanism to cushion consumers or let countrys primary energy mix to 15 per ment into India which would wipe off
market forces decide fuel price. If the cent by 2030, says BP Group. half of the Essar groups debt.
January 2017
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CoverStory

In 2016, ONGC Videsh completed


acquisition of 15 per equity in Vankor
Field located in East Siberia of the
Russian Federation from Rosneft Oil
Company and subsequently acquired
additional 11 per cent interest. Vankor
is Russias second largest field by
production and accounts for 4 per cent
of Russian production. The average
daily production from the field is
around 415,500 barrels per day of
crude oil (bopd) since acquisition and
ONGC Videshs share of daily oil
production from Vankor (considering
both the acquisitions) will be about
108,030 bopd.
ONGC Videsh and Petroleos Among private-sector players, Praj barrel. If this proposed cut is strictly
De Venezuela SA (PDVSA) signed Industries is planning to invest Rs 3,000 enforced and supports prices, we
definitive agreements for facilitating crore for multiple refinery projects, would expect it to prove self-defeating
redevelopment of the San Cristobal CVC Bio-refinery is setting up two medium term with a large drilling
joint venture project in Venezuela in projects in Gujarat and Punjab for Rs response around the world, Goldmans
November. The redevelopment plan 1,000 crore, and Munzer Biofuel will analysts said.
aims to increase the current level of invest another Rs 300 crore for a bio- Back home, ONGC has recently
38 production of about 18,000 bbl/day to diesel plant in Mumbai. signed agreements with Schlumberger
27,000 bbl/day by use of water flooding In the area of digital technology, and Halliburton Offshore Services for
techniques. The agreement also provides despite the downturn, oil and gas com- enhancing production from its matured
for mechanism to liquidate ONGC panies plan to invest the same amount or fields of Geleki in Assam and Kalol in
Videshs outstanding dividends from the more in digital technologiesincluding Gujarat, respectively. Schlumberger
project and obtain long term finance for cloud-enabled mobility, Big Data- will provide its technical expertise with
the capital investment for implementing powered analytics and the Internet of investments for service charge payable
the redevelopment plan. Things (IoT), says Accenture Consulting. to them on per barrel of oil and per
According to Accenture, as upstream oil SCM of natural gas of incremental pro-
Market for clean fuel, and gas companies scrutinise every dollar duction of oil and gas respectively. Hal-
digital technology set to invested, theyre spending smarter today liburton too will provide similar support
increase on digital technologies, seeking to drive to ONGC. Analysts say this model by be
In its quest for clean fuel, India is value and reduce costs amid low oil and adopted by other upstream players too
expected to witness investments to the gas prices. in coming days.
tune of Rs 15,000 crore in the biofuel If oil prices keep surging in the
industry in the next few years. This Outlook for 2017 international market, the government
comes at a time when the government Following the OPEC agreement on might unveil new incentives to attract
is expecting biofuel business in the supply cut, it is widely believed that investment and expedite exploration,
country to touch Rs 50,000 crore by crude oil prices are expected to see an say analysts. The government might
2022. As per estimates, public-sector upswing in 2017. However, Goldman also push oil PSUs to expedite acquisi-
undertakings are set to invest Rs 4,000 Sachs thinks otherwise. According tions of oil and gas assets abroad if
crore to produce blended fuels and to the firm, the OPEC deal to cut oil international energy surges beyond its
another Rs 5,000 crore to set up nine production may provide a short-term comfort. Investment in gas and LNG
plants that will produce second-gener- support for prices, but chances are it infrastructure will continue uninter-
ation ethanol produced from sources wont change the supply outlook much. rupted given the low share of gas in
other than molasses, like biomass. Goldman said that it was sticking with Indias primary energy mix and bleak
Apart from this, Numaligarh Refinery its forecasts for WTI at $53 a barrel in prospect of growth in domestic pro-
would invest Rs 950 crore to set up 2017. The investment bank had cut its duction. Foreign investors are likely to
300,000 tonnes bio fuel plant. year-end forecast this week from $50 a increase their wager on retailing sector
January 2017
www.InfralinePlus.com

which has seen withdrawal of subsidies mines were earmarked for state PSUs agreement has yet to be signed for
and introduction of a level playing field of host states while the remaining Amelia coal mine, which is allotted for
in recent years. was reserved for PSUs in other states. end use to a generator.
Subsequently, five coal mines were In an innovative move, the gov-
Coal losing favour? successfully allocated to PSUs of coal ernment has allowed public and private
Weak demand for electricity impacted bearing-states and two to PSUs in other power producers to swap their coal
capacity utilisation of coal-fired power states. Allotment agreements have also supplies with a view to reducing the cost
plants in 2016. The plant load fac- been executed with the allocatees for of electricity by ensuring more efficient
tor (PLF) of coal-based power plants seven of these coal blocks. In addition, fuel usage. The government is likely
varied between 54 and 67 per cent and allotment agreements were also signed to extend the facility to other coal-con-
the average PLF was lower compared for five coal mines under the provisions suming industries sooner or later.
to 2015. Domestic coal production of the Coal Mines (Special Provisions)
grew by an anaemic rate of 1.6 per cent Act 2015 -- 3 for power and 2 for non- Quest for clean coal
during April-November. Power plants regulated sector -- during the period technology continues
based on imported coal postponed their January-November 2016. But allotment As the worlds third largest coal
fuel supply orders due to the double producer, the development of modern
whammy of weak electricity demand coal technology is critical if the Indian
and higher fuel prices. Weak demand for elec- government is to provide enough af-
The coal ministry maintained its tricity impacted capacity fordable electricity to address the needs
focus on increasing coal production utilisation of coal-fired of more than 300 million people that do
as part of its strategy to rationalise not currently have access to this basic
dependence on imports. Through this
power plants in 2016. human need. Placing high efficiency,
policy, the ministry hopes to bring down The plant load factor low emissions coal (HELE) technol-
coal import by over 15 million tonne (PLF) of coal-based ogy at the heart of Indias energy 39
in the current fiscal. Several new web power plants varied policy will ensure significant CO2 and
portals like Coal Allocation Monitoring non-CO2 emission reductions, while
System (CAMS) and Coal Mitra Web
between 54 and 67 per generating the critical, stable electric-
Portal were launched by the ministry to cent and the average ity supply the country needs to meet its
promote ease of business and to bring PLF was lower com- ambitions for the future.
transparency in distribution of coal to pared to 2015. Domestic During Prime Minister Narendra
the small and medium-sized enterprises. Modis recent visit to Japan, India and
As a first step towards commercial
coal production grew by Japan agreed to strengthen bilateral
mining, the government offered 16 an anaemic rate of 1.6 energy cooperation, especially in clean
coal mines for allocation to state public per cent during April- coal technologies. Both the countries
sector undertakings for sale of coal or November. underlined the importance of promoting
commercial mining. Of these, 8 coal further cooperation in such areas as
clean coal technologies and populari-
sation of eco-friendly vehicles including
hybrid vehicles, electric vehicles, etc.
The preparatory work for the energy
cooperation between the two sides was
laid by Union power minister Piyush
Goyals visit to Japan at the beginning
of the year.

Outlook for 2017


Demand for coal is expected to pick
up in 2017 on the back of revival in
electricity generation which has been
sluggish due to weak demand from
the manufacturing sector. However,
due to absence of a medium-term plan
January 2017
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CoverStory

for capacity addition in generation, MW from renewable sources have been urbanization coupled with impetus from
there will not be much pressure on achieved till September, 2016. Government for rural electrification,
domestic coal producers to step up However, during April-November the rating agency added. But capacity
output. However, as international coal 2016, electricity generation grew by addition in transmission network
prices are on upswing, generators using just 4.9. Capacity addition in generation continued at a brisk pace. As much as
domestic coal will be at an advantage. also slowed to 5,463 MW during April- 42,005 MVA of transformation capacity
Coal India has planned Rs 57,000 November compared to 8,346 MW was added during April-November,
crore investment by 2020 to expand registering 35 per cent decline. The compared to 33,181 MVA in the same
its mining capacity. However, the PSU Union power ministry has also given period last year.
may go slow as the government has in-principle clearance to replace 11,000 Meanwhile, the Union power
scrapped the 1 billion tonne output MW thermal power plants, older than 25 ministry has maintained its focus on
target for the company. years, with energy efficient super critical ensuring uninterrupted power supply to
Further, coal-based power generation plants in about five years, with an all by 2019. To this end, specific plans
in the country faces an uncertain future investment of around Rs 50,000 crore. are under implementation in 34 states
in the back of the recent draft National However, Crisil says it expects and Union territories. Only UP and
Electricity Plan (NEP) released by CEA healthy power demand growth over Tamil Nadu are yet to sign agreements
which projects no fresh coal-based the next 5 years (2016-17 to 2020-21). with the Centre. During the 12th Plan
capacity addition from 2022 to 2027. Industrial demand is expected to grow period (2012-17), nearly 88,928 MW
This has set the cat among the pigeons at a moderate pace in line with GDP of conventional power generation was
as the country is still heavily reliant on growth and gradual pick-up in economic added till October end against the 12th
coal to meet its electricity needs and any activity. However, residential demand is Plan (2012-17) target of 88,537 MW. A
attempt to tinker with the energy basket expected to witness stronger growth on total of 3000 MW of inefficient thermal
at this stage can have drastic implica- account of high latent demand and rapid generating capacity was also retired
40 tions not only for the energy sector but during the current year till October end.
also for the entire economy. Clearly, Crisil says it expects Due to large generation capacity
this will have to be addressed by the addition, electricity energy shortage in
healthy power demand
industry in 2017. the country has reduced to 0.7 per cent
growth over the next 5 during April-October, 2016 from 8.7 per
Power sector faces years (2016-17 to 2020- cent during the year 2012-13. Adequate
slowdown 21). Industrial demand supply of the domestic coal to power
During the 12th Plan period (2012-17), is expected to grow plants has been ensured.
a capacity addition of about 90463.22 at a moderate pace in Nearly 1,00,468 ckm-long trans-
MW against the target of 88537 MW mission line was laid down till October
line with GDP growth
has been achieved from conventional end against the target of 1,07,440 ckm
sources as on November, 2016 and about
and gradual pick-up in for the 12th Plan. Transformation
21,128 MW against the target of 30000 economic activity capacity of 2,88,458 MVA was also
added during the period against the
target of 2,82,750 MVA. The gov-
ernment has launched a scheme by
providing support from Power System
Development Fund (PSDF) for opera-
tionalisation of stranded gas-based gen-
eration. The outlay for the support from
PSDF has been fixed at Rs 4,000 crore
for the current fiscal. It was Rs 3,500
crore in 2015-16. Deen Dayal Upad-
hyaya Gram Jyoti Yojana (DDUGJY)
projects with total cost of Rs 42392
crore for 29 states and Union territories
have been sanctioned.
The Ujjwal Discom Assurance
Yojana (UDAY) seems to have found
January 2017
www.InfralinePlus.com

favour with the states, with as many as


17 states including Jharkhand, Chhat-
tisgarh, Rajasthan, Uttar Pradesh and
Union Territory of Puducherry joining
the loan repricing scheme introduced by
the Union power ministry in 2015. The
Centre has now extended the deadline
till March end to help other states avail
the scheme. Bonds to the tune of Rs
1.82 lakh crore has been issued by
states which have joined UDAY so far.
A multi-level monitoring mechanism
has been put in place to ensure a close
monitoring of performance of the states
participating in UDAY.
The Union cabinet approved the
new electricity tariff policy, which during the recent visit of Prime Minister in 2016 and it is likely to get attention
would encourage harnessing of hydro Narendra Modi to that country. This is in 2017 as well given the urgency to
as well as renewable energy resources. the first time Japan agreed to such a deal fight climate change despite election of
Promotion of renewable general with a country that is not a member of Donald Trump as next US president.
obligation, compulsory electricity the Nuclear Non-Proliferation Treaty. The government has targeted to have
procurement by discoms from waste- 1.75 lakh MW renewable power by
to-energy plants, exemption from Outlook for 2017 2022. Against that, over 46,000 MW
competitive bidding for hydel projects Demand for electricity is set to pick capacity was added till the end of Octo- 41
till 2022 are key features of the policy. up in 2017 and in subsequent years ber, the fourth largest in the world.
The Centre also took initiatives like as states move towards implement- Solar tariff fell to an all-time low of
separate e-auction for power sector and ing Power for all. Besides, Centres Rs 3 per unit in an auction for rooftop
revision of guidelines for short-term flagship programmes like Make in solar power conducted by Solar Energy
procurement of electricity by discoms India, Digital India and growing rural Corporation of India (SECI). The offer
through competitive bidding route. electrification are also expected to add was made by Amplus Energy Solu-
to electricity demand. India needs a tions. But 2016 also saw US-based solar
Little technology play cumulative $2.8 trillion investment developer Sun Edison file for bankruptcy.
Kanoria Group Company, IPCL, and in energy supply by 2040, three- India has targeted to have 1 lakh mw
Germanys Uniper will build a new quarters of which goes to the power solar power by 2022. Against that, it has
technology that will allow coal-fired sector, and a further $0.8 trillion to added 8,727 MW capacity as at the end
power plants to start generation at improve energy efficiency, according of October. India has targeted to add
a short notice, which would in turn to International Energy Agency. Given 16,725 MW renewable power capacity
help in better integration of renewable the governments resolve to speed up in current fiscal including 12,000 MW
power into grid. development of transmission network solar, 4,000 wind, 500 mw biomass and
In what would be a new techno- and debt structuring of state discoms 225 mw based on small hydro projects.
logical jump in the power transmission under UDAY, the sector outlook for The capacity addition plan will be
sector, state-owned Power Grid plans to 2017 remains positive. scaled up to 20,450 MW in 2017-18 and
use drones to monitor project devel- Power sector will look forward to 22,150 in 2018-19.
opment in critical areas. The PSU has improved demand and better liquidity The government has taken various
already received approval to deploy in 2017 on the back of reforms initiated measures to encourage capacity addition
drones from a committee that includes in 2016, said Salil Garg, Expert, India in renewable power, including setting up
representatives from the ministries of Ratings and Research Private Ltd. of exclusive solar parks; development
defence, home affairs, and power, and of power transmission network through
allied departments. Renewable steals the Green Energy Corridor project; identifi-
Japan will sell civil nuclear power limelight cation of large government complexes/
equipment and technology to India, Renewable energy sector, especially buildings for rooftop projects; pro-
as per the agreement by the two sides solar remained the darling of investors vision of roof top solar and 10 percent
January 2017
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CoverStory

renewable energy as mandatory under largest player in the world after China, opment of onshore wind power projects
Mission Statement and Guidelines for US and Germany. The government has with provisions for hybridisation and
development of smart cities. approved a scheme for building 1,000 repowering. The draft envisages clear
The government has also introduced MW Inter State Transmission System timelines for completion of project after
amendments in building bye-laws for (ISTS) connected wind power projects. grant of land use permission to prevent
mandatory provision of roof top solar The scheme provides for formulation squatting of land.
for new construction or higher Floor of guidelines by MNRE for implemen-
Area Ratio; granted infrastructure status tation of the programme. Energy storage holds key
for solar projects to help issue tax free ICRA said that the scheme for award As more and more renewables get
bonds and secure long-term funding. of 1000 MW wind-based projects integrated into the grid, Energy Storage
As a step towards fulfilment of would facilitate the consumption of will play an important role in helping
the Government of Indias target for wind based generation by distribution with grid management and smoothing
installation of 40 GW rooftop solar utilities in states with limited wind out the peak curve created by Renew-
power plants by the year 2022, SECI energy resources, which would in turn able Energy. It is expected that Energy
recently floated a tender of 1,000 MW would enable discoms in such states to Storage will be a multi GW market in
capacity for development of grid- honour their non-solar RPO requirement the years to come. However, as of now,
connected rooftop solar capacity for the renewable energy sector is still
central government ministries and As more and more re- awaiting a breakthrough in energy stor-
departments. This would be the largest age technology. Unless that happens,
newables get integrated
rooftop tender to be launched by SECI, the sector will have to contend with
and is expected to give a big boost to
into the grid, Energy intermittency, which limits its role in
the hugely potent rooftop solar power Storage will play an im- meeting electricity requirement without
generation segment. portant role in helping interruption.
42 Union power minister Piyush Goyal with grid management Apart from energy storage, another
and US Ambassador to India Richard and smoothing out the technology which came to limelight in
recently launched US-India clean 2016 is the Digital Wind Farm of GE.
peak curve created by
energy finance (USICEF) initiative The company has unveiled its latest
which would support project prepa-
Renewable Energy. It is innovation in the Industrial Internet
ration activities for distributed solar expected that Energy era, The Digital Wind Farm, which
projects in order to unlock OPIC Storage will be a multi it says is making its turbines smarter
financing and mobilize public and GW market in the years and more connected than ever before.
private capital to expand access to to come. However, as According to GE, the Digital Wind
distributed clean energy solutions that Farm pairs its newest turbines with a
of now, the renewable
will benefit disadvantaged commu- digital infrastructure, allowing cus-
nities in India and contribute to Indias
energy sector is still tomers to connect, monitor, predict and
ambitious renewable energy and energy awaiting a breakthrough optimize unit and site performance. This
access goals. USICEF builds on the in energy storage technology has a lot of potential for a
success of other project preparation technology country like India.
facilities to support renewable energy
in emerging markets. Through this to some extent. Although the option of Outlook for 2017
initiative, project developers pursuing renewable energy certificate (REC) is Determined to meet emission
mini-grid, distributed rooftop and off- already available for such utilities to commitments made under the Paris
grid solar projects, as well as smaller- meet the RPO norm, ICRA that the REC climate agreement, the Modi government
scale grid connected solar projects route is not exercised by the distribution is focusing on reducing reliance on
would be benefited. utilities in many cases. fossil-fuel generated electricity. That is
While the scheme would also the reason it is aggressively pursuing
Wind encourage the addition of fresh capacity capacity addition in renewable sector.
Nearly 1502 MW wind power capacity in the sector, the extent of fresh capacity What is aiding the governments plan
has been added till October end against addition could be lower than the 1,000 is the falling price of solar equipment,
the target of 4,000 MW for 2016-17. MW approved under the scheme, which is progressively reducing tariff.
The cumulative capacity has reached the rating agency added. The MNRE On the back of strong government push,
28,279 MW, making India the fourth has issued draft guidelines for devel- aggressive solar bidding, falling prices
January 2017
www.InfralinePlus.com

of equipment and positive investor curement and construction basis. raise external commercial Borrowings
sentiment, the sector is expected to Transport minister Nitin Gadkari with a minimum maturity of five years
continue the growth momentum in 2017. has announced the governments target and with an individual limit of $ 750
of Rs 25 lakh crore ($ 376.53 billion) million for borrowing under the auto-
Infrastructure push investment in infrastructure over a matic route.
required period of three years, which will include The shipping ministrys Sagarmala
The infrastructure sector continues to Rs 8 lakh crore ($ 120.49 billion) for Programme is now moving from the
reel under demonetisation announced developing 27 industrial clusters and conceptualization and planning to the
by Prime Minister Narendra Modi on an additional Rs 5 lakh crore ($ 75.30 implementation stage. The National
November 8. The real estate sector has billion) for road, railway and port con- Perspective Plan (NPP), for the compre-
been hit hard due to exodus of workforce nectivity projects. Gadkari recently hensive development of Indias coastline
deployed at project sites. There is a fear announced Rs 2 lakh crore worth of and maritime sector, has been released.
that some project could miss their sched- highway projects in the poll-bound As part of Sagarmala, more than 400
ules committed to homebuyers. The cash states of Punjab and Uttar Pradesh. projects, at an estimated infrastructure
driven real estate also apprehends drastic However, only three projects in Punjab investment of more than Rs. 7 lakh crore,
fall in prices, which would help buyers have been identified across the areas of
no doubt. However, the sector might The road and highways port modernisation and new port devel-
benefit if banks lower interest rates. opment, port connectivity enhancement,
sector also fared worse
The road and highways sector also port-linked industrialisation and coastal
fared worse in 2016-17 compared to the
in 2016-17 compared community development. These projects
previous year despite increase in infra to the previous year will be implemented by relevant central
spending and provision of fiscal sops by despite increase in ministries, state governments, ports and
the government. As per available data, infra spending and other agencies primarily through the
the National Highways Authority of provision of fiscal private or PPP mode. 43
India (NHAI) awarded fewer contracts
sops by the govern-
in the first six months of the current Outlook for 2017
financial year, compared to the same
ment. As per available The infrastructure sector remains a key
period last year. Not only was the data, the National priority area for government spending.
number of projects less this year, the Highways Authority of The challenge for the government is to
total length (km) of these projects was India (NHAI) awarded ensure cheaper funding for the sector.
also down 16 per cent. The shortfall is fewer contracts in the International investors are ready to put
because the government was not ready big in Indias infrastructure projects.
first six months of the
with the detailed project reports (DPR). However, they remain hesitant given the
Besides, land was to be made available
current financial year, dismal failure of the government in the
on priority. compared to the same past to abide by contracts in the face of
Projects awarded by the NHAI in period last year judicial activism and public protests.
2015-16 spanned about 16,600 km. After coming into power in May
The pace of road construction also have made it to the list of 29 contracts 2014, the Modi government has
improved by 40 per cent to 6 km per awarded since April, while UP bagged tweaked contractual terms to unclog
day in fiscal 2016 from an average 4.3 only one project. The total cost of these stalled public-private partnership
km per day in fiscal 2015. Thirty-six projects is Rs 3,330 crore. (PPP) projects in the road sector. It
highway contracts, totaling a length of The Centre is planning to boost has also launched Rs 40,000 crore
2,549 km, had been awarded during regional connectivity by setting up 50 National Infrastructure and Investment
April-September 2016. However, in new airports over the next three years, Fund to ensure cheaper funding
the first half of 2016-17, 29 projects of out of which at least 10 would be opera- for road and highway projects. The
2,130 km, estimated at Rs.26,000 crore tional next year. The government also government will be well-advised to
were awarded. Half of the total contracts plans to invest over Rs 7,000 crore (US$ sweeten terms of model contract to
awarded this year were on hybrid 1.04 billion) in FY2016-17 to develop win back confidence of investors
annuity model, where the government its network in the north-eastern region spooked by Indian states failures to
would bear 40 per cent of the total for better connectivity. maintain contractual sanctity.
highway cost. As many as 11 projects The Reserve Bank has allowed
were awarded on engineering, pro- companies in the infrastructure sector to For suggestions email at feedback@infraline.com
January 2017
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NewsBriefs | Oil & Gas National


Indias fuel consumption jumps over 12 per cent on demonetization Bhatinda Refinery eyes Rs 5,000
crore for expansion

diesel, kerosene and cooking gas rose 12 per


cent during the month as compared to a 6
per cent growth in the same month last fiscal
(Nov 2015). According to data published by
Petroleum Planning & Analysis Cell (PPAC),
overall fuel consumption rose 9.4 percent for
the first eight months of the current fiscal as
compared to 9.5 per cent growth in the corre-
sponding period last fiscal. Motor spirit (Pet-
rol) consumption recorded a growth of 14.2 The Guru Gobind Singh refinery at Bhat-
Indias fuel demand growth continued its percent in November 2016 and on cumulative inda in Punjab will increase its refining
upward trajectory for the third straight month basis registered y-o-y growth of 11.7 percent. capacity to 18 million metric tonnes per
in November 2016 fuelled largely by demon- PPAC attributed the high growth to consumer annum (mmtpa) and set up a petro-
etisation that allowed the use of banned Rs preference for petrol-driven vehicles, contin- chemical complex, people aware of the
500 and Rs 1,000 notes for payment of auto ued high sale of two-wheelers and the policy development said. The unit, also known
and cooking fuels. The consumption of petrol, on scrapping old diesel vehicles. as Bhatinda Refinery, is run by HPCL-
Mittal Energy Ltd (HMEL), a joint venture
Essar Oil posts record Rs 2,162 crore net profit for FY16 between Hindustan Petroleum Corp.
Ltd and Mittal Energy Investments Pvt.
Essar Oil earned a record net profit of Rs Ltd, Singapore. HPCL and Mittal Energy
2,162 crore in the 2015-16 fiscal on back Investments hold 49% stake each in the
of robust refining margins. Essar earned a venture, with financial investors owning
highest-ever USD 10.81 on turning every the rest. Expansion plan for the refinery
44 barrel of crude oil into fuel during the fiscal is in the process and we would be setting
as compared to a current price gross refining up a petrochemical complex as part of
margin of USD 8.37 a barrel in the previ- the refinery expansion. We are working on
ous year. Essar Oil got delisted from stock the plan and would be shortly finalising
exchanges last year and is therefore, not Rs 2,162 crore -- a rise of 42 per cent from details, said an official. It is learnt that
obliged by regulations to report quarterly FY2014-15, a company statement said. The the company would be funding expan-
numbers and this is the first time it is giving total throughput of the refinery stood at 19.1 sion through a combination of equity and
financial earnings for 2015-16. In FY2015- million tonnes in 2015-16, compared to 20.49 debt syndication by banks to the tune of
16, the company achieved its highest ever million tonnes in the previous year. The lower Rs5,000-6,000 crore. HMEL is currently
EBIDTA of Rs 7,773 crore, which was 35 throughput during the year was on account of expanding the capacity of the refinery
oer cebt higher than the previous year. The the planned shutdown of 28 days, undertaken from 9 mmtpa to 11.5 mmtpa, raising
Profit after Tax was also at a new high of during the September-October period, it said. refinery throughput by about 25%.

ONGC to pay $1.2 billion for GSPC assets in KG Basin

Oil and Natural Gas Corp (ONGC) will pay hydrocarbons by 10% by year 2021-22. The
$1.2 billion for Gujarat State Petroleum trial gas production from Deen Dayal West
Corps (GSPC) entire 80% stake in the Field has already begun, the company said.
Deen Dayal West field and six other finds It said the acquisition would act as a pivot
in the KG Basin in a deal that would help to develop other fields in the region using
the Gujarat firm de-leverage. ONGC will the infrastructure already built by GSPC.
acquire the participating interest of GSPC, GSPC had announced the gas discovery in
a company of the Gujarat government, will be adjusted against the valuation of the Deen Dayal West field with much fanfare
along with the operatorship in the Deen these discoveries after the approval of their when Narendra Modi was Gujarats chief
Dayal West field for $995.26 million, the field development plans. The acquisition minister. Subsequently, the company faced
company said. Jubilant and Geo Global of participating interest and operatorship unexpected technical hurdles resulting in a
Resources have 10% each in the field. ONGC rights in the block fits well with the strategy rise in development expenditure, debt and
would also pay GSPC $200 million towards of ONGC to enhance natural gas production delay in execution. GSPC has spent $3 billion
future consideration for six discoveries from domestic fields on a faster pace ... to develop the field but hasnt been able to
other than Deen Dayal West Field, which with a goal to reduce import dependency of start commercial production.
January 2017
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


CCEA nod likely for farming out 67percent of oil blocks in January RIL commissions 1st phase of
paraxylene plant at Jamnagar

(DSF) auction will happen only by the third


week of January. Earlier, the Dharmendra
Pradhan-led ministry had indicated that
the fields were likely to be allotted to the
parties concerned by the end of December.
The Directorate General of Hydrocarbons
(DGH), an arm of the petroleum and
natural gas ministry, which was conducting
the bidding, has already forwarded the
The Cabinet Committee on Economic list of selected bidders to the ministry Reliance Industries announced the
Affairs (CCEA) is likely to award around 31 of petroleum. The ministry is likely to commissioning of the first phase of its
oil and gas blocks to various bidders out of move the Cabinet for its final clearance Paraxylene (PX) plant at Jamnagar,
46 contract areas (or 67 per cent) which by the third week of January. Forty-two Gujarat. The plant with capacity of 2.2
were put on offer. A final nod for awarding companies took part in the current round of million tons per annum is built with
the contract areas to the selected bidders auction for the small and marginal fields, of state-of-the-art crystallisation technol-
in discovered small and marginal field which 37 were private companies. ogy from BP which is highly energy
efficient and environment friendly. With
Dilip Shanghvis Sun Oil buys out Niko Resources stake in Hazira field the commissioning of this plant, RILs
PX capacity will more than double from
Billionaire Dilip Shanghvis Sun Oil and 2.0 million tons to 4.2 million tons per
Natural Gas has bought a 33.3% stake in annum, a company statement said. On
the Hazira oil and gas field from Canadas commissioning of entire PX capacity, Re-
Niko Resources Ltd and is in talks to buy the liance will be the worlds second largest
rest from Gujarat State Petroleum Corp. Ltd PX producer with 9 per cent of global PX 45
(GSPC).The deal value, however, could not capacity and 11 per cent share of global
be ascertained. Niko has operated the field production. The new PX capacity will
for 22 years. Sun Oil and Natural Gas is a add value to the output from refiner-
unit of Shanghvis Sun Petrochemicals Pvt. ies and improve the profitability of the
Ltd while GSPC is 87% owned by the Gujarat Jamnagar complex. PX is the building
government. The Hazira field is part of 16 block for the entire polyester chain. The
hydrocarbon assets in Gujarats Cambay also a 10% partner in Reliance Industries new capacity will complete the integra-
basin where GSPC holds stakes. Currently, Ltds (RIL) and BP Plcs D6 block in the tion within Reliances polyester value
the Hazira field produces 1,300-1,400 Krishna-Godavari (KG) basin. It has been chain, leading to improved margins and
barrels of oil per day (bopd) and 7-9 million facing financial headwinds owing to which also strengthen its position in polyester
standard cubic feet of gas per day. Niko is on 9 November it said it would sell its stake. industry globally.

Railways to run passenger trains on LNG, cut diesel costs by 20percent

Brace for a pollution-free train ride 1.80 a litre. In contrast, use of LNG would
soon. Indian Railways has decided to mean significant savings for the Railways
move towards using Liquefied Natural as the country has recently renegotiated
Gas, commonly called LNG, to run its a long-term deal with Petronet LNG Ltd in
passenger trains, converting all its exiting December reworking a 25-year contract
locomotives into dual-fuel based. The with Qatars RasGas Co, resulting in prices
driving power cars, which so far have dropping by almost half. Indian Railways
been using diesel as its fuel, would now has firmed up the plan under which it
be retro-fitted to use LNG as well, for the would convert existing and new driving
first time, sources said. The aim is to cut power cars of diesel-run trains, called
down on diesel consumption by 20%.To DEMUs into dual-fuel system. Initially,
achieve this, the locomotives have to be all Cummins 1400 HP engines would be
overhauled with enhanced safety features petroleum prices are now on an uptrend taken up for conversion, which are either
as LNG is a hazardous inflammable fuel. with most oil marketing companies raising new or freshly-overhauled engines done
The development comes at a time when retail prices of diesel by as much as Rs after 18,000 hours of run.
January 2017
www.InfralinePlus.com

NewsBriefs | Oil & Gas International


Asia set for biggest refining capacity jump in three years Europe could absorb 40 bcm more
gas per year if price right

highest since 2014, energy consultancy


Wood Mackenzie said. The increase amounts
to about an additional 1.5 percent of refining
capacity on top of Asias total installed
capacity of nearly 29 million bpd, Thomson
Reuters Eikon data shows.Heavy crude
demand in particular is expected to rise
in 2017 as more Asian facilities undergo
Asia will post its biggest net refining capacity upgrading and new ... refineries come
addition in three years in 2017, further online, said Sushant Gupta, WoodMacs Asia
boosting demand for crude in the worlds research director for refining. The rise in Europes power industry could absorb
biggest and fastest growing oil consuming capacity will tighten Asias crude market as around 40 billion cubic metres (bcm) of
region. New and expanded refineries from it coincides with planned output cuts by oil additional natural gas annually in com-
China to India will offset closures in Japan, producers like the Organization of Petroleum ing years if gas prices fell against those
adding a net 450,000 barrels per day (bpd) Exporting Countries (OPEC) and Russia in a of coal to lift generation margins, a
of crude processing capacity in 2017, the bid to end oversupply and prop up prices. study by German energy advisory Team
Consult said. Our core question was
Indonesia plans shake-up of upstream oil and gas contracts what is the potential of coal-to-power
generation that could be replaced with
Indonesia plans to change future gas, said Jens Voeller, head of the
production sharing contracts in its upstream gas business unit of the Berlin-based
oil and gas sector so that contractors company. We are aware that 40 bcm is
shoulder the cost of exploration and a maximum level, he added. Northwest
46 production, rather than be reimbursed by European gas traders are trying to
the government. Energy Minister Ignasius gauge such potential in a region where
Jonan said that the government plans to underemployed liquefied natural gas
issue a new regulation in January so that (LNG) terminals expect to receive a
such costs would be reflected by a more wave of global supply, especially from
flexible split in revenue from production. the United States and Australia. Team
Such a system, instead of the existing struggled to attract fresh investment and Consult looked at the utilisation and
cost-recovery system, would be fairer and to develop new fields. Indonesias chamber economics of gas-fired power plants in
more efficient, and likely to increase proven of commerce said it was waiting for more six European countries, namely Britain,
reserves, he said. Big global resource firms clarity on the plans and the Indonesian Germany, Italy, the Netherlands,
such as Chevron, Exxon Mobil and Total Petroleum Association said it was still in Belgium and Spain, over the past six to
operate in Indonesia, but the country has discussions with the government. eight years.

Ghana gets fresh $517m World Bank loan for oil & gas

The World Bank Group said two of its Ghanas commercial borrowing needs
units would provide another $517 million for the project and will be issued for up
to Ghana in debt and guarantees to to 15 years. The new pledges bring the
support the $7.7 billion Sankofa oil and World Bank Groups financing share of
gas project developed by Italys ENI SpA the Sankofa project to about 16 percent.
and upstream trader Vitol Ghana. The Sankofa is expected to generate $2.3
financing adds to a $700 million World billion in revenues for Ghanas government
Bank guarantee package announced in per year and provide a stable, long-term
July and brings the institutions total source of domestic gas that will solve
financing to around $1.217 billion for the Ghanas chronic gas supply constraints,
offshore project, whose gas component an IFC statement said. ENI holds a 44.4
is set to open in 2018. The banks and is arranging another $65 million in percent stake in Sankofa, Vitol holds 35.6
commercial lending arm, the International debt. Guarantees by the Multilateral percent and Ghana National Petroleum
Finance Corporation (IFC), has committed Investment Guarantee Agency, another Corporation holds a combined carried and
a loan of $235 million to Vitol Ghana bank institution, will support Vitol participating interest of 20 percent.
January 2017
www.InfralinePlus.com

InConversation
Attractiveness for LNG spot contracts
has increased
Darshan Hiranandani, MD & CEO, H-Energy Private
Limited, talks to InfralinePlus about the LNG scenario in
India, companys growth plans and challenges in the natural
gas industry.

Please share your outlook on the facilityat Jaigarh Port in Ratnagiri


LNG industry in India. district of Maharashtra.The project
India is one of the largest importers will be implemented in 2 phases.
of natural gas after Japan, Korea and Phase1 will consist of a jetty
China. The increasing requirement of based FSRU [Floating Storage
natural gas for new power generation Regasification Unit] of approx. 4
projects, fertilizer plants and other MMTPA capacity and will be hooked
industrial users has resulted into rapid up through a 60 km tie-in pipeline
growth in LNG demand over last few from Jaigarh to Dabhol. The project Darshan Hiranandani, MD & CEO, H-Energy
Private Limited
years. Currently, India has four LNG is strategically located at Jaigarh
re-gasification terminals with a total near Dabhol where two major trunk from Maharashtra Maritime Board 47
capacity of appox. 30 MMTPA and natural gas pipelines viz. Dahej- (MMB). Presently the company is in
proposed projects are likely to aug- Uran-Dabhol-Panvel (DUDPL) and the process of finalizing the charter
ment this capacity to approx. 50-60 Dabhol-Bangalore (DBPL) are inter- party contract for the FSRU and
MMTPA. connected. With this existing pipeline will initiate jetty construction work
Regasified LNG (RLNG) infrastructure, RLNG from Jaigarh shortly to ensure timely completion
contributes to 45% (around 55 LNG Terminal can be supplied to of the project. The detailed route
MMSCMD) of the total natural western, northern and southern survey and regulatory permissions for
gas consumption in India which is markets giving the terminal access to the 60km tie-in line are in place and
140-145 MMSCMD.Considering existing gas markets. the laying of the pipeline will begin
that the rising energy needs,steady The first phase of the project shortly.
decline of indigenous productionand is expected to be operational by
discovery of domestic fields not Q2/2018. Phase-II will consist of What is the update on the
keeping pace with the rate of decline construction of land based LNG Jaigarh-Mangalore Natural Gas
of existing fields, the contribution of regasification terminal with a Pipeline?
RLNG is expected to soar further. capacity of 8 MMTPA.The sub- We have received authorization from
Today there are 250 million house- concession agreement and port Petroleum and Natural Gas Regula-
holds in India. Only about 3.3 million services agreement have been signed tory Board (PNGRB) to lay, build,
are connected to gas which is barely with JSW Jaigarh Port Limited. operate or expand 637 km natural gas
1.5%. This figure is expected to grow Jaigarh Port is an operating all- pipeline from Jaigarh to Mangalore.
and become much stronger leading to weather and deep-water port with The pipeline will connect to the de-
more demand for natural gas con- night navigation facilities. The mand centers in the coastal towns and
sumption. port has an existing breakwater cities of Ratnagiri, Sindhudurg, Goa,
and sufficient draft which provides Karwar, Udupi and Mangalore. It is
What is the progress on the adequate tranquil conditions for expected that regasified LNG flowing
LNG project being executed by berthing LNG carriers. The LNG through this pipeline will act as a key
H-Energy on the west coast? terminal project has also received all source of clean energy for industries,
We are setting up a LNG receiving major clearances, including approval homes and vehicles in these coastal
January 2017
www.InfralinePlus.com

InConversation

towns and cities which have been


deprived of natural gas infrastructure
so far.
After receiving the authorization
for this pipeline in June 2016, we have
started detailed route survey work and
are in the process of obtaining regu-
latory clearance required for the laying
the pipeline.

The company also has plans to


execute an FSRU on the East
Coast. Please elaborate.
We have plans to set up a Float-
ing Storage and Regasification Unit
(FSRU) at offshore Digha region,
West Bengal. The FSRU will have re-
gasification capacity of 3-4 MMTPA
and is expected to be commissioned
by Q4-2019. The offshore FSRU will
deliver regasified LNG to onshore
receiving facility (ORF) at Contai in
West Bengal through a 115 km subsea This infrastructure project entails flows to infrastructure projects. That
48 pipeline.From the ORF the regasified investment up to USD 2.0 billion. is what we are experiencing currently
LNG will be supplied to the cus- Being involved in sourcing of LNG in the Indian market. Offtake
tomers through the 715 km Contai- and marketing of RLNG, H-Energy planning for short term contracts is
Dattapulia-Jajpur-Dhamra pipeline. will pioneer a regime of contractual easier as demand in the near future
The pipeline on its northern leg will offers to customers that will strike can be more accurately forecasted
serve regions of Haldiaand Kolkata in a balance between commercial than for a period of ten to fifteen
West Bengal and will also supply gas viability and flexible provisions years.
to customers in Western Bangladesh. for both buyer and seller which is The next three to five years are
On its southern leg, the pipeline will still an alien concept to the existing going to be quite crucial in deter-
connect Dhamra, Pradeep and Bhu- industry. We also plan to enter into mining how the markets are going
baneshwar in Odisha. city gas distribution business for to behave during the next decade.
H-Energy consortium was awarded development of local gas pipeline Demand from city gas is expected to
this project through a tender by Kolkata network ensuring its presence in grow faster as compared to industrial
Port Trust (KoPT) in August 2015 and the midstream and downstream segment.Going ahead, operating on
will be the first offshore FSRU project industries. a demand pull rather than inventory
in India. The project will enable cus- push will help industry to grow.
tomers in Eastern India to have access What are the challenges in the Customers will enjoy the freedom to
to regasified natural gas allowing them Indian gas market today? opt for contractual arrangements that
the opportunity to switch over from Price volatility in the recent past suits their requirement rather than
existing liquid fuels towards a cleaner has made customers sceptical being compelled to accept the terms
fuel option. towards long term contracts.Gas of the seller. Industry will eventually
pricing issues remain a concern. make progress if business entities
Please share your current The uncertainty in price is one of will collaborate rather than compete.
investments and future plans. the major challenges in seeking long Going ahead shared synergy is likely
H-Energy is currently developing term contracts from customers. The to be the norm of this industry.
LNG re-gasification terminals attractiveness for spot-contracts has
and cross-country pipelines on increased. When short-term contracts
the east and west coast of India. predominate, it deters investment For suggestions email at feedback@infraline.com
January 2017
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InDepth
Strategic Petroleum Reserves:
Insights and Recommendations

49

Crude from SPR can also be used to manipulate fuel prices


Bangladesh, Sri Lanka and Nepal can be involved to have a stake in SPR

By Mohd. Arif, Analyst (Oil & Gas), Infraline Energy

Energy is rudimentary for the quality In 2014, crude oil and natural gas had a The strategic petroleum reserve
of life. All across the globe we are very collective share of 57%. (SPR) is an emergency storage of crude
much dependent on the uninterrupted Countries like U.S., China etc. are oil or refined products like gasoline,
supply of energy for our basic and having strategic storages of crude oil so diesel etc. so that it can be used in an
advanced necessities. Any disruption that the same can be used in the case of emergency situations like supply dis-
in energy can prove to be lethal in the any disruptions of supply from external ruption from the main source, war etc.
development of a nation as almost all sources, whereas on the other side In todays world, where energy is
the sectors are dependent on it. The Indian strategic petroleum reserves are a necessity for everybody and crude
major sources of energy include crude in nascent stage. Since the price of crude oils share in the energy mix is about
oil, natural gas, coal, nuclear energy, oil is low these days, it is high time to 33%, therefore, it is imperative for
and renewables. The crude oil con- make the most out of this situation by countries to safeguard their supply of
sumption is highest in the energy mix. importing crude oil and storing it. crude oil. Apart from this, crude from
January 2017
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InDepth

SPR can also be used to manipulate construction of strategic storage of Low price of crude oil
fuel prices. For example, if there is a crude oil in majorly three locations As there is a drop in global oil
sudden surge in the global benchmark at present: Visakhapatnam (Vizag), prices due to the supply glut
price of crude oil for a shorter period Mangalore and Padur. because of cold war between
then the effect can be negated by These crude oil storages are in U.S and Saudi Arabia. India can
utilizing crude from SPR. underground rock caverns and their leverage from this by importing
Apart from this, stored crude can location is such that they can be crude oil and filling up the SPR.
also be sold in international market easily accessible to the refineries.
so as to gain profits. Moreover, the The cost estimates of strategic Geopolitics
most important factor is its use in the crude oil reserves facilities in There is a tension going on between
time of oil shocks or in the case of oil Visakhapatnam, Mangalore and India and Pakistan over several
disruption, like we have witnessed in Padur are Rs. 1178.35 crore, Rs 1227 issues like terrorism and Kashmir,
the past. crore, 1693 crore respectively. An in case of war, there will be a
India is having strategic storage additional capital of 265.79 crore will disruption in the supply of crude oil
facilities for crude oil and LPG. be provided by Hindustan Petroleum from overseas, as war will affect the
ISPRL (Indian Strategic Petroleum Corporation Limited (HPCL) for transportation of crude oil.
Reserves Limited) is the government the added 0.3 MMT capacity at
agency which manages the Visakhapatnam. Inclusion of foreign and
domestic players
With the establishment of SPR
Stored crude can also be sold in international along with favorable policies, India
market so as to gain profits. Moreover, the most can attract foreign players that can
important factor is its use in the time of oil invest in India and this will conse-
quently help in energy security and
50 shocks or in the case of oil disruption, like we
in the generation of employment.
have witnessed in the past
Learning from the U.S. and
Parameters for the development of SPR China
The U.S. has released its crude oil
from SPR in the past in order to
manipulate the prices of crude oil
Low crude oil
and China has included domestic and
prices
foreign players as a result of which
its SPR are growing at a fast pace.

OPEC policies
OPEC members collective policies
can make an impact in the energy
OPEC policies Geopolitics
scenario. Thus, to minimize the
dependency of these countries,
India should concentrate on the
establishment of more SPR and
utilizing existing SPR.

The OPEC crude oil price is deter-


mined by the OPEC basket, which is a
Inclusion of weighted average of crude oil produced
Learnings from by the OPEC countries. The price fluc-
foreign and
the U.S. and tuations can be easily seen in the graph.
domestic
China 2015 has witnessed an average price
players
of $49.49 per barrel, which was the
lowest since 2004 price of $36.05 per
January 2017
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Crude Oil: Price history the domestic market, the result will
be the decrease in prices of refined
2016* 3 9 .6 9 products like gasoline and diesel.
Although in the long run the price
2015 4 9 .4 9
will bounce back, as they did in the
2014 9 6 .2 9 case of the U.S., when they released
the crude oil in the market for the
2013 1 0 5 .8 7
same reason.
2012 1 0 9 .4 5

To increase foreign
2011 1 0 7 .4 6
participation: International
2010 7 7 .3 8 companies like Aramco, ADNOC,
KNPC etc. have shown interest in
2009 6 0 .8 6
storing and refining in India only,
2008 9 4 .1 so as to reduce the transportation
cost. Thus, an agreement can be
2007 6 9 .0 4
done between the government
2006 61 and these foreign players to have
a stake in SPR and they can store
2005 5 0 .5 9
their products, but in the case of
2004 3 6 .0 5 emergencies, India will have a
right to use the stored oil. Foreign
Source: Statista participation will also bring the
money to India, and will help in 51
International companies like Aramco, ADNOC, reducing the import bill.

KNPC etc. have shown interest in storing Major geo-political issues


and refining in India only, so as to reduce the
transportation cost. Thus, an agreement can be Saudi Arabia and Iran
The rivalry between Saudi Arabia
done between the government and these foreign and Iran is one of the main reasons
players to have a stake in SPR. of conflict in the Middle East. Saudi
Arabia executed Irans leading
barrel. The graph is shown in order to the worlds total energy will increase Shia cleric Sheikh Nimr al-Nimr.
highlight the significance of appropri- in the coming future. In order to However, the dispute between
ate timing to purchase crude in bulk so secure the future of energy, India Saudi Arabia and Iran is historical.
as to fill up SPR. will have to maintain SPRs. This animosity between the two
nations can cause war. In the case of
Need for Strategic Petroleum To earn profits: Although SPR is war, the nations that are dependent
Reserve solely for strategic purposes, but it on the Saudi Arabian oil and Iranian
can be sold in small quantity in the oil will get affected. Indias main
To bridge the supply market when the prices of crude oil supply comes from Middle East,
demand gap in the case of are high so as to gain substantial and Saudi Arabia is the largest sup-
emergencies: There will be a profits. And it can be filled when the plier of crude oil to India.
huge supply demand gap if the prices of crude oil are low.
supply is stopped from the source. Israel Palestine conflicts
Strategic reserves will help in To manipulate domestic prices: Israel and Palestine conflict is one
bridging this gap. Although this can be for short term of the major conflicts in this era,
only, but if the prices of refined and some countries are siding with
To increase the energy products are high in the market Israel whereas some countries are
security: India is the fourth largest because of high crude oil prices, then siding with Palestine over the West
consumer of energy and its share in government can release crude oil in Bank and Gaza strip land. A war
January 2017
www.InfralinePlus.com

InDepth

might result in the supply disruption they can show their interest in this be involved to have a stake in SPR,
of crude oil worldwide. business. this will help economically and
speedy establishment of SPR.
India- Pakistan conflict Fast track legal formalities
India and Pakistan have locked For establishing SPR and to attract Type of SPR with least
horns before also over the matter of foreign players, it is necessary that maintenance cost should be
Kashmir. In the case of war, crude legal aspects like paper work should identified and established
oil supply from exporting countries be dealt with the speedy pace. This There can be different types of SPR,
might get affected as vessels filled is essential because these aspects each having different constructing
with oil can become easy target for take too much time for approval in and maintenance cost, the type of
enemies. current scenario and due to which SPR having least maintenance cost
projects get delayed a lot. should be established as crude filled
Syrian civil war in SPR will stay there for indefinite
Syrian civil war is the protest Extracting data period of time.
against the President Bashar al- All the data should be extracted from
Assads regime; many countries all the countries that are having the Suggested SPR policy
have intervened like U.S., Russia SPR and are having ample expe- At present, 5 MMT of strategic storage
etc. Many civilians have died so rience in dealing with SPR like U.S, of crude oil is already under construc-
far and many are migrating towards China etc. So that detailed study can tion. The main salient features of the
Europe. This is resulting in crude be conducted and so that we can suggested SPR policy are as under:
oil production loss as Syria is a avoid the mistakes which they have No custom duty on imports of
significant oil producing country in made in the past, and we can learn equipment related to the construction
Eastern Mediterranean Region. from their experience. of SPR should be levied
52 Proposal of one time lump sum
Recommendations Location identification investment of USD XX million by
All the potential locations for the foreign players and share of X%
Develop and implement a establishment of SPR should be in the stored crude, which they can
robust SPR policy identified in order to clear the future further market the same at market
A proper SPR policy needs to be course of action. determined prices
developed or implemented and at Corporate income tax should be
the same time it is also required to Involvement of neighboring payable as per the Income Tax Act,
be communicated, so that various countries 1961
potential stakeholders get aware Neighboring countries like Ban- Fiscal stability provision should be
about the favorable SPR policy and gladesh, Sri Lanka and Nepal can introduced in the contract
Pre-determined location according
to phases should be planned and
imposed
Bidding rounds should be conducted
for getting the stakes in Strategic
Petroleum Reserves
SPR should ideally be refilled when
crude oil prices would be in the
range of $X per bbl. to $Y per bbl
At the time of very high or uncon-
trollable oil prices in international
market, the crude oil present in our
SPRs should be exploited in order
to maintain internal stability
Foreign countries stake in the SPR
should be up to X%.

For suggestions email at feedback@infraline.com


January 2017
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StatisticsOil & Gas


Monthly Crude Oil Processed by Refineries (November, 2016)

OIL COMPANIES APR MAY JUN JULY AUG SEPT OCT NOV TOTAL
Indian Oil Corporation Ltd.(IOCL)
IOCL-KOYALI, GUJARAT 1215 1240 1233 1273 1229 1084 1134 1185 7275
IOCL-MATHURA, UTTAR PRADESH 797 814 797 755 701 749 804 714 4613
IOCL-PANIPAT, HARYANA 1316 1386 1357 1400 1048 1234 1302 1294 7741
IOCL-HALDIA, WEST BENGAL 692 713 682 659 630 665 679 544 4042
IOCL-BARAUNI,BIHAR 559 577 547 576 571 513 481 523 3343
IOCL-GUWAHATI,ASSAM 75 73 68 86 66 68 72 72 436
IOCL-DIGBOI,ASSAM 52 46 43 24 40 46 51 47 251
IOCL-BONGAIGAON,ASSAM 212 215 200 215 202 193 212 213 1236
IOCL-PARADIP,ODISHA 394 538 257 697 465 445 807 554 2797
IOCL TOTAL 5313 5602 5183 5686 4953 4996 5543 5146 31733

Hindustan Petroleum Corporation Ltd.(HPCL)


HPCL-MUMBAI,MAHARASHTRA 714 725 623 689 737 631 720 715 4119
HPCL-VISAKH,ANDHRA PRADESH 804 815 798 731 517 734 804 819 4398
HMEL-GGSR, BATHINDA, PUNJAB 920 945 878 909 934 915 816 754 5501
HPCL-TOTAL 2438 2485 2299 2329 2188 2279 2340 2288 14018

Bharat Petroleum Corporation Ltd (BPCL) 53


BPCL-MUMBAI, MAHARASHTRA 1146 1169 1163 1210 1212 1167 1245 1221 7068
BPCL-KOCHI, KERALA 895 933 897 923 938 924 975 1012 5509
NRL-NUMALIGARH, ASSAM 217 238 233 237 239 80 197 263 1244
BORL-BINA 534 617 532 502 588 501 610 171 3273
BPCL-TOTAL 2791 2957 2825 2872 2977 2673 3027 2667 17094

Chennai Petroleum Corporation Ltd (CPCL)


CPCL-MANALI, TAMILNADU 821 807 878 951 957 885 939 833 5298
CPCL-NARIMANAM,TAMILNADU 56 50 33 48 46 42 46 38 275
CPCL-TOTAL 877 856 911 1000 1003 927 985 872 5574

Oil & Natural Gas Corporation Ltd.(ONGC)


ONGC-TATIPAKA,ANDHRA PRADESH 7 6 8 7 6 7 7 7 42
MRPL-MANGALORE,KARNATAKA 1166 1232 1274 1332 1376 1302 1369 1400 7683
ONGC TOTAL 1173 1239 1282 1339 1382 1310 1376 1407 7724

Reliance Industries Ltd. (RIL)


RIL,JAMNAGAR,GUJARAT 2732 2856 2727 2814 2779 2658 2757 2655 16566
RIL-(SEZ), JAMNAGAR,GUJARAT 3115 2183 3215 3425 3224 3124 3224 3162 18284
RIL TOTAL 5846 5039 5942 6239 6003 5782 5980 5817 34850

ESSAR OIL LTD.,VADINAR,GUJARAT 1719 1779 1720 1760 1781 1751 1777 1727 10510

GRAND TOTAL 20157 19955 20162 21224 20287 19718 21028 19923 121504
January 2017
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StatisticsOil & Gas

Production of Petroleum products by refineries and fractionators (000 MT)

PRODUCTS APR MAY JUN JULY AUG SEP OCT Nov TOTAL
LPG 841 870 906 954 893 836 965 944 7209
NAPHTHA 1361 1364 1529 1738 1788 1761 1821 1650 13012
MS-III 815 887 867 799 799 791 838 890 6686
MS-IV 762 804 734 831 816 781 1033 860 6620
MS Others 1392 1525 1436 1438 1218 1223 1366 1152 10750
ATF 1159 1057 1170 1114 1162 1066 1191 1129 9039
SKO 507 583 586 616 513 547 464 386 4211
HSD-III 2805 3004 2932 2893 2564 2443 2715 2723 22079
HSD-IV 2448 2501 2421 2719 2531 2365 2900 2758 20644
HSD Others 2784 2602 3303 3426 3406 3066 3109 3018 24714
LDO 35 37 25 30 47 41 52 69 337
LUBES 79 87 94 93 93 82 96 77 702
FO 1037 1131 925 1038 930 921 992 1034 8008
LSHS 18 29 28 22 20 30 25 15 186
BITUMEN 590 578 475 268 227 251 414 461 3264
RPC/Petcoke 979 962 1065 1104 1065 1071 1119 1134 8499
Others 1936 2069 1705 1624 1978 1890 1646 1356 14426
TOTAL, 19548 20090 20201 20707 20050 19165 20746 19656 160386
OF WHICH :
REFINERIES 19295 19796 19924 20406 19747 18883 20445 19365 158083
54

FRACTIONATORS 253 294 277 301 303 282 301 291 2303
19548 20090 20201 20707 20050 19165 20746 19656 160386

Consumption of Petroleum Products (As on November, 2016) (In 000 MT)


PRODUCT 16-Apr 16-May 16-Jun 16-Jul 16-Aug 16-Sep 16-Oct 16-Nov
(A) Sensitive Products
LPG 1590 1599 1613 1708 1840 1874 1860 1882
SKO 516 530 533 502 497 501 380 387
Sub total 2106 2129 2142 2216 2339 2374 2240 2269
(B) Major Decontrolled Products
MS 1996 2083 1845 1918 2204 1815 2106 2026
HSD 6767 6957 6384 5807 6134 5217 6673 6749
Naphtha 1107 1084 1129 1200 1156 1050 1106 1082
ATF 557 571 553 559 555 554 587 583
LDO 34 36 37 35 41 37 43 42
Lubricants & Greases 273 291 333 301 246 302 286 294
FO & LSHS 656 608 633 596 582 591 588 572
Bitumen 680 684 510 227 211 317 444 534
Sub total 12070 12314 11424 10523 11128 9883 11832 11882
(C ) Other Minor Decontrolled Products
Petroleum coke 1570 1898 2327 2166 2749 1880 1837 1910
Others 509 530 566 608 571 561 578 579
Sub total 2079 2428 2893 2774 3320 2441 2515 2489
All Products total 16234 16848 15658 14922 15805 14792 16551 16639
January 2017
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NewsBriefs | Renewable International National


India to invest $1.8 billion on lines to transmit solar power Energy Efficiency Services net profit at
project, will transmit 20 gigawatts of power Rs 35.59 crore for 2015-16
capacity from 34 solar parks across 21
states, the government said in a series of
reports commissioned by minister for power,
coal and mines Piyush Goyal. The reports
were written by Power Grid Corp. of India
Ltd to develop plans to integrate renewable
energy on the national grid. The green-
energy corridor is part of the countrys plans State-run Energy Efficiency Services
to boost transmission capacity to enable Ltd (EESL) has registered a net profit of
a seamless flow of electricity from clean Rs 35.59 crore for 2015-16. Net profit
India will invest Rs127 billion on lines to electricity producing states to consuming of the company in 2015-16 is Rs 35.59
transmit power from solar parks to enable states that face power shortages. New lines crore, an increase of Rs 26.53 crore
Prime Minister Narendra Modis goal of will also help manage intermittency chal- over the previous year, a statement
boosting clean energy capacity to 175 giga- lenges of renewable energy, especially as said. During the financial year 2015-16,
watts by 2022. The dedicated transmission clean sources increase their share of power the company registered an increase
lines, part of the so-called green corridor generation to almost 50% in some states. of Rs 646.31 crore in revenue from
operations, which went up to Rs 708.84
SECI floats tender for grid-linked 1GW rooftop solar crore from Rs 62.53 crore, it said.
EESL declared Rs 10.68 crore towards
As part of efforts to achieve the Centres dividend for 2015-16 in comparison to
target of 40 GW rooftop solar by 2022, Rs 2.72 crore in the previous year.The
Solar Energy Corp (SECI) has floated a net worth of the company as on March
tender of 1000 MW power for development 31, 2016 has increased from Rs 110.33
of grid-connected rooftop solar capacity crore to Rs 208.03 crore, it added. 55
by utilising buildings of central ministries/ EESL, a joint venture company of NTPC
departments.This would be the largest Limited, Power Finance Corporation
rooftop tender to be launched by SECI and Limited, Power Grid Corporation of
is expected to give a big boost to the hugely India Limited, Rural Electrification
potent rooftop solar power generation Corporation Limited under Ministry
segment, the New & Renewable Energy MW capacity, targeting buildings in the resi- of Power, concluded its 7th Annual
Ministry said. According to the ministry, the dential/institutional and social sectors. SECI General Meeting on December 24, 2016.
1000 MW tender, one of the largest globally, is the leading PSU in the rooftop solar seg- EESL Chairman K K Sharma said the
is a move to rapidly escalate rooftop solar ment and has already commissioned over 54 company is growing at an exceptional
capacity in the country, and comes in quick MW capacity of rooftop solar projects under pace and poised for a big leap in the
succession to SECIs earlier tender of 500 multiple government schemes. coming years.

India will be among the largest installations of renewable energy by 2022: Piyush Goyal

Asserting that the present generation the worlds largest installation.Under its
has the duty to leave behind a better plan, Goyal said, the government is also
place to live in for the next generation, committed to set up solar plant of one
Minister of State for Power, Coal, New lakh megawatt to meet its security needs.
and Renewable Energy and Mines Piyush So far in the two and half years, we have
Goyal said by 2022, India will be one of the expanded the solar install capacity by
largest installations of renewable energy 200 percent, i.e. 9,000 MW and by end of
in world. Goyal also said Prime Minister December 2017 I expect it to be 20,000
Narendra Modi is committed towards MW, he added. Goyla further said India is
ramping up renewable energy.This also considering to expand its hydro power
government is committed and has created capacity which currently stands at 25
an actionable agenda so that by 2022 MW.Similarly in wind we are aggressively
India would probably be one of the worlds renewable energy in the world if not the taking it to 20,000 MW, apart from
fasted growing renewable energy in the largest. India will have about 2, 25,000 expanding the scope of nuclear and small
country, one of the largest installations of MW of renewable energy by 2022, which is hydro projects, he said.
January 2017
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NewsBriefs | Renewable National


Azure Power wins 50 MW Solar Power Project under SECI Auction Railways plan 1,200 Mw of solar, wind
of the total 100 MW capacity auctioned and energy
will supply power to SECI for 25 years. The
project will be built in the Ananthapuramu
Solar Park, which is being developed by the
Solar Park Implementation Agency (SPIA),
Andhra Pradesh Solar Power Corporation
Limited (APSPCL). The tariff on the project
will be Rs 4.43 per kWh (US$0.067) with
an additional support of Rs 12.7 million per
Azure Power, a leading solar power MW (US$ 0.19 million) from the Govern-
producer in India, announced that it has ment of India in terms of Viability Gap
won a 50 MW solar power project under Funding (VGF). This makes the levelized In an effort to get at least a tenth of its
the National Solar Mission (NSM) Phase tariff of this project significantly higher energy need from renewable sources,
II Batch III, which was recently put up than the levelized tariff of the lowest bid, the ministry of railways plans to set up
for auction by Solar Energy Corporation of including VGF, under SECI auctions in NSM at least a 1,000 Mw solar power plant
India (SECI). Azure Power secured 50 MW Phase II Batch III. and about 200 Mw of wind power plants
by 2020. And, solar energy panels on
Viability gap funding likely for wind power train coach roofs. In a year, Indian
Railways consumes 18.25 billion kilowatt
The Union Budget is likely to introduce vi- hours (kwh) of electricity, 1.8 per cent
ability gap funding and an incentive scheme of the countrys total. Its annual diesel
for power distribution companies procuring need is 2.78 billion litres. In a recent
wind power. If announced, these will be major presentation, it said 1,000 Mw of solar
reliefs for the wind power sector, which could units were envisaged to be set up by
56 lose key incentives by the end of this financial developers on railway or private land and
year. The previous Union Budget had capped rooftops of rail buildings, at their own
accelerated depreciation at 40 per cent from cost; the ministry of new and renewable
April 2017. It was 80 per cent earlier. Also, energy would give a subsidy or viability
the generation-based incentive of 50 paise per gap funding for five years. So far, 14 Mw
unit will cease from March 31, 2017. Of the of solar and 36.5 Mw of wind energy have
28,279.40 megawatts (Mw) of wind power projects, the share of which has increased been set up, and 218 railway stations
in the country, around 70 per cent is built on over the years. Most of these projects receive have solar rooftop installations.
accelerated depreciation. Eighty per cent of a generation-based incentive of 50 paise per Of the 1,000 Mw of solar units planned,
a projects cost is paid back if commissioned unit. As the generation-based incentive will half are planned as rooftop installations
before September 30. The rest of the capac- expire, the government is discussing a new through developers and the rest as land-
ity has been set up by independent power incentive for procurers of wind power. based systems.

Wind power reverse auction deferred

Indias first reverse auction for wind power keenly watched. Three previous attempts
has been postponed by three weeks. The to hold auctions for wind energy -one by
last date for submission of bids has been the Karnataka government, followed by
extended to January 8 in the New Year two such by the Rajasthan government
from December 15, while the opening of -failed as wind developer associations raised
bids, earlier scheduled for December 16, several legal issues. This time, however, the
will take place on January 9. There was a issues have been ironed out. SECI notice to
pre-bid meeting on November 29 at which auction 1000 MW of wind power was issued
developers sought many clarifications, on October 28. Solar auctions have seen
said Ashvini Kumar, Managing Director, tariffs fall by over 60% to Rs 4 per kwH and
Solar Energy Corporation of India, the it is hoped that wind auctions will similarly
arm of the Ministry of New and Renewable reduce wind tariffs as well. Until now, wind
Energy which is conducting the auction. India has been holding solar auctions for tariffs were set by each states electricity
These took a little time to sort out, so the the past three years, this is the first one for regulatory commission, and currently vary
bidding period was extended. Although wind energy and the response to it will be between Rs 3.50 and Rs 5 per kwH.
January 2017
www.InfralinePlus.com

NewsBriefs | Renewable International States


Odisha to set up rooftop solar panels in 15 towns
J&K harnessing less than 1percent
up rooftop installations on the government of 111 GW available solar potential
buildings in 15 key towns, said an official.
The towns identified are Rourkela, Burla,
Sambalpur, Hirakud, Balasore , Bhadrak, Bari-
pada, Berhampur, Chakradharpur, Koraput,
Sunabeda, Nabarangpur, Khurda and Puri.
The Green Energy Development Company
Ltd (Gedcol), the nodal agency for imple-
mentation of renewable energy projects,
will implement 10 megawatts (Mw) rooftop
In its bid to harness the green energy poten- projects at a cost of around Rs 80 crore by
tial, Odisha plans to set up solar panels on 2017-18. Recently, the Odisha government Due to non-seriousness of the State
rooftops of government buildings in 15 key has signed implementation agreement with Government and lack of proper support
towns. Odisha is betting big on non-conven- Azure Power Mercury Pvt Ltd for developing from the Union Ministry of New and
tional sources of energy. The state govern- the countrys first grid-connected Mw scale Renewable Energy, Jammu and Kashmir
ment has approved a proposal for taking rooftop project on the net metering basis. is harnessing less than 1% of the
available solar power potential and given
the prevailing situation nobody knows
Rajasthan exempts electricity duty for solar rooftop units to encourage renewable
whether the State would ever be able to
In what would further encourage invest- make use of this gift of nature to tide over
ments in renewable energy projects, the the energy crisis. The National Institute
state government has exempted electricity of Solar Energy has assessed the solar
duty of 40 paise per unit for rooftop solar power potential of Jammu and Kashmir
and captive units. The decision is expected at 111 Gigawatts with the mention that if
to help Rajasthan reach closer to 2300 MW all out efforts are made to tap this huge 57
rooftop solar capacity by 2022, a target potential this border State would surpass
given to it by the Centre. The duty cut is all other States in the country as far as
expected to have a positive impact on the generation of solar power is concerned.
new capacity lined up. Recently, Rajasthan However, all the concerned agencies of
Renewable Energy Corporation (RREC) is- projects enjoy a subsidy of 30% provided by Jammu and Kashmir have been able
sued rate contract order for 25 MW rooftop the government. Capacity of these plants to tap less than one percent of the
plants and empaneled companies to design, varies from 1 kWh to 500 kWh. The 2300 solar potential because of non-serious
supply and install these projects. People MW target given to Rajasthan by the Centre approach from all the quarters within the
interested to put up rooftop plants can reach for solar rooftop is steep, but we have all the State as well as lack of proper support
these vendors who are also required to necessary policies in place to achieve that, from the Union Ministry of New and
guarantee 5 years of maintenance. These said B K Doshi, managing director, RREC. Renewable Energy.

Gujarat slips to third position in solar power generation

After losing its top rank to Rajasthan last co-chairman, Global Solar Council. On the
year, Gujarat has now slipped further to other hand, Tamil Nadu has aggressively
end at third position in commissioned solar installed solar capacity to promote green
power capacity. Rapid capacity addition energy and meet its RPO target, Mehta
by Tamil Nadu helped the state to topple said. RPO mandates states to purchase
both Rajasthan and Gujarat from their re- specified amounts of power from solar
spective top ranks. According to the Union plants. The RPO for Gujarat is 1.75% of to-
ministry of new and renewable energy tal power demand in state. Tamil Nadu has
(MNRE), Tamil Nadu has topped the list jumped to top from the fourth position in
with solar power capacity of 1,555.41 MW January 2016 when its capacity at 418.94
as on October 31, 2016, while Rajasthan MW. The Adani group commissioned a
stands at second position, with 1,301.16 648 MW solar power plant, said to be the
MW and Gujarat third with 1,138.19 MW. has surplus power and it has also been worlds largest at a single location, at
The capacity addition in Gujarat has able to meet its renewable purchase ob- Ramanathapuram district of Tamil Nadu in
slowed down because the state already ligation (RPO) target, said Pranav Mehta, September this year.
January 2017
www.InfralinePlus.com

NewsBriefs | Renewable International


ADB provides USD 150 million to Sri Lanka for green power development
Nigeria to become the hub of
Facility (MFF). This program consists of renewable energy in West Africa
two tranches. Accordingly, the Government
of Sri Lanka signed two loan agreements
worth of USD 150 million with ADB on 20th
November 2014 to finance the first tranche
of the program. The total investment cost of
the tranche 2 is USD 260 million and ADB
will provide USD 150 loan directly to Ceylon
The implementation of Green Power Electricity Board (CEB) under a treasury
Development and Energy Efficiency guarantee. Tranche 2 of this program consists
Improvement Investment Program will of the following three major components; (i)
support the Governments objective of Transmission infrastructure enhancement; (ii) Notwithstanding the hiccups currently
enhancing clean power generation, system Efficiency improvement of medium-voltage being experienced in the power sector
efficiency and reliability. The total investment network and (iii) demand-side management of the economy, stakeholders in the
cost of this program is USD 440 million improvement for energy efficiency through sector have resolved to make Nigeria
of which USD 300 million will be provided development of a smart grid and metering the power generation hub in West Africa
by ADB under Multi - tranche Financing pilot subproject. with the vast opportunities available
in the nations renewable energy
China to cut solar, wind power prices as project costs fall
resources. This has come with calls by
China is reducing the amount of money it the stakeholders on the need for the
pays to newly completed solar and wind Federal Government to take urgent
power generators for their electricity, in order step in ensuring the development of
to reflect declines in construction costs, cost-effective renewable energy options
the countrys price regulator and economic in view of huge threat to climate by
58 planner said. The nation will cut tariffs paid fossil fuels. Most stakeholders argued
to solar farms by as much as 19 percent in that pursuit of renewable energy
2017 from this years levels and by as much provision is most appropriate at this
as 15 percent for wind mills in 2018 from point in the life of the nation, considering
current prices. The changes will help reduce numerous advantages attached to that
subsidies paid to new photovoltaic and developers offer to build projects. Prices of source of power supply. A German
wind power projects by about 6 billion yuan wind turbines also fell in 2016, according firm, LTI Re Energy recently signed
($863 million) annually. The move comes to London-based BNEF. China will also an agreement with a Nigerian firm,
as average solar panel prices have tumbled encourage local authorities to continue NIGUS International, to construct a
about 30 percent this year, according to making use of auctions to select renewable 500 megawatts solar energy plants
data from Bloomberg New Energy Finance, energy developers, in order to further lower in the North East zone, beginning with
resulting in a lowering of the bids that solar power prices, according to the NDRC. Adamawa State.

Chevron to sell geothermal assets in Indonesia and Philippines

Philippine conglomerate Ayala Corporation power plants with a combined capacity of


(AC), through its wholly owned subsidiary around 700MW. Chevron Upstream execu-
AC Energy, has signed an agreement to tive vice-president Jay Johnson said: These
acquire the geothermal assets of Chevron assets deliver reliable energy to support the
in Indonesia and the Philippines. AC Energy, needs of Asia-Pacifics growing economies.
as part of separate Indonesian and Philip- This sale is aligned with our strategy to
pine consortia, has signed shares sale and maximize the value of our global upstream
purchase agreements with Chevron Global businesses through effective portfolio
Energy, Union Oil Company of California and management. The assets being considered
their relevant affiliates to acquire Chev- for sale were valued at $3bn. The Indonesia
rons geothermal operations. In Indonesia, consortium, named Star Energy Geothermal
Chevron operates the Darajat and Salak has 40% interest in the Philippine Geother- (Salak-Darajat), comprises AC Energy with
geothermal fields which have a combined mal Production Company, which operates 19.8% stake, Star Energy Group, Star Energy
capacity of 235MW equivalent of steam and the Tiwi and Mak-Ban geothermal field Geothermal, and Electricity Generating
402MW of electricity. The company also in Southern Luzon and supplies steam to Public Company.
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January 2017
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ExpertSpeak
Need a single central body for energy policy
that encourages right balance of fuel mix
India is striving towards more sustainable and resilient cities which
can adapt to rapid change, manage shocks and natural disasters and
respond to negative environmental impacts through the provision of
energy efficient infrastructure and resources. However, with the cli-
mate change agreement in place, India also needs to move towards
a clean economy. In this regard, Richard Slater, Director, Research,
Development & Learning, IPE Global Group, examines the current
growth and development scenario and suggests ways in which India
can achieve its goals of sustainable development.

India is striving towards more sustain- A country such as India that is


able and resilient cities which can adapt extraordinarily rich in bio-diversity,
to rapid change, manage shocks and with species of rare flora and fauna
natural disasters and respond to nega- is threatened today, by
Richard Slater, Director, Research, Development
tive environmental impacts through the over-exploitation & Learning, IPE Global Group
provision of energy efficient infrastruc- of resources and India
ture and resources. However, with the climate change. needs to affordable housing for weaker sec-
60 balance growth
climate change agreement in place, In- Thus, it is tion, ending open defecation and
dia also needs to move towards a clean imperative
with sustainability manual scavenging, modern and
in human, social,
economy. In this regard, Richard Slater, that India scientific municipal solid waste
economic and envi-
Director, Research, Development & is able to and water management across the
ronmental terms
Learning, IPE Global Group, examines balance growth country.
the current growth and development with sustain- While these initiatives are
scenario and suggests ways in which ability in human, moving in the right direction, cities
India can achieve its goals of sustain- social, economic and continue to experience increased traffic
able development. environmental terms. congestion, air pollution, rising green-
India is currently standing at the house gas emissions, and poor public
threshold of a major transformation. Where are our cities today? health. Poor city planning is a major
On the one hand, the government India is striving towards more sustain- contributor to this combination of
is focusing on urban development able and resilient cities which can adapt problems. Lack of reliant infrastructure
through initiatives such as Smart to rapid change, manage shocks and and poor services have also resulted in
Cities and urban growth, and on natural disasters, and respond to nega- a rise in communicable diseases such
the other hand, it has taken several tive environmental impacts through the as Chikungunya and Dengue which
steps to encourage the transition to provision of energy efficient infra- have severely affected public health
a low-carbon economy. India has structure and resources. In the last two in many cities across India. At least
already taken this into account and years, the government has also launched 10,851 chikungunya cases have been
clearly defined its goals in its Intended several projects in the urban sector reported in Delhi alone in 2016 whilst
Nationally Determined Contributions such as Pradhan Mantri Awas Yojana cities such as Pune registered 2,523
(INDCs) which says that there can Housing for All (Urban), Atal Mission chikungunya cases in October alone.
indeed be a reconciliation between for Rejuvenation and Urban Transfor- Air pollution is another major
economic development and the state mation (AMRUT), Smart City Mission, health hazard. Delhi Pollution
of the environment, as opposed to the Swachh Bharat, etc. These schemes aim Control Committee data shows that
rapid development of many countries to improve water supply and sanitation, the concentration of PM2.5 (par-
in the past that came at the cost of the pedestrian, non-motorised and public ticles less than or 2.5 micrometers
environment. transport facilities, slum rehabilitation, in diameter) peaked at an alarming
January 2017
www.InfralinePlus.com

883 micrograms per cubic metre


post Diwali this year, which is more
than 14 times the safe standard of 60
micrograms per cubic metre! Smaller
cities such as Kanpur, Raipur, Agra,
Patna, Varanasi, etc. are also showing
alarming increases in air pollution.
Rapid urbanization also poses the
problem of greater demand in the near
future. The Government of Indias
Power for All scheme proposes
continuous and uninterrupted power
to all households and industries by
March 2019 with a 132% rise in
energy consumption by 2035. The
substantial increase in energy demand
will translate into higher demand for
electricity and increased environmental
challenges.
As the Paris agreement on climate
change takes effect, India has an obli- Rapid urbanization also poses the problem of
gation to hold global warming to not greater demand in the near future. The Govern-
more than 2 degree Celsius above pre- ment of Indias Power for All scheme pro-
industrial levels. Thus, there is increasing
poses continuous and uninterrupted power to all 61
need for co-operation and collaboration
within cities to build resilience. The
households and industries by March 2019 with
importance of a cleaner fuel at this a 132% rise in energy consumption by 2035.
juncture cannot be stressed enough. The substantial increase in energy demand will
translate into higher demand for electricity and
Resilient energy for smart increased environmental challenges.
cities
Indias economy is currently heavily renewable energy is that it is difficult to same level of energy consumption as
dependent on coal almost 70% of generate power at scale. compared to coal. Moreover, it is quite
Indias power plants are coal-based. As The answer here is not to pick one versatile and can be used in process
part of the Paris Agreement, non-fossil source of energy over another. Instead, industries and transport. In early
fuels would account for 40 per cent of it is vital to recognize the role that 2016, vehicles running on compressed
Indias total energy generation capac- different fuels can play at different natural gas (CNG) were exempted
ity by 2030. However, the share of stages. Since targets of renewables are from the odd-even rule in Delhi. The
renewable energy stood at 14.14% as of quite stretched, the next alternative Supreme Court also ordered the Delhi
September 2016, which is not anywhere would be to switch from high carbon government to pull 30,000 cabs off the
close to the target that India has set emitting fossil fuels to lower ones. For roads as they run on diesel or petrol
out for itself. Power generation from instance, natural gas can absorb infirm rather than CNG. All this reiterates the
renewable energy has not been able to renewable energy and consequently, fact that gas is not just cheap but also
meet peak power demand. One of the provide support during peaking hours. safer and cleaner, making it a viable
major constraints of renewable energy This would not just ensure the more source of energy.
is the reliability of power supply. For efficient use of energy from all sources Climate Proofing infrastructure
example, solar or wind power is heavily but would help to overcome the short- is another necessary step to ensure the
dependent on weather conditions, hence falls in renewable generation. supply of energy in times of floods,
represents an intermittent and unpredict- Data on GHG emissions and higher temperatures and higher levels of
able supply that is unlikely to be able primary energy consumption by fuel precipitation. Solar energy use should
to meet the demand during peaking type shows that natural gas results in also be encouraged for all establishments
hours. Another disadvantage of current 60% lesser emission for CO2e for the with floor area of more than 300 sqm.
January 2017
www.InfralinePlus.com

ExpertSpeak

Cities Mission aim for better waste


management systems and therefore, it
is important that these schemes operate
in sync with each other.

Increased private sector


participation
Going forward, there is an urgent
requirement to attract private play-
ers to boost investment and promote
PPP projects. Since many investors
are cautious of delays and uncertain-
ties, there is a need for government
to devise an effective system for
the allocation of power projects and
a clear methodology for incentiv-
izes investments. Energy Efficient
practices should also be incentivized
in construction, manufacturing and
transportation.
At a fundamental level, there is a
Both the renewable sector and the gas industry need to review obsolete approaches to
in India have witnessed reasonable growth financing public bodies with tools and
62 in terms of demand over the last few years. support systems that can enhance the
However, this growth has been uneven with ability of cities to plan and implement
projects and deliver results. For
the renewable sector growing by 13.7% while
instance, a system integrator can help
natural gas has shrunk and fallen below the map and develop models for meeting
previous years consumption. In contrast, coal the supply and demand for urban
has grown by 4.8% while oil has grown by an infrastructure and services. Such
astounding 8.1% integration can serve as engine of
economic growth by providing solu-
Green building standards need to be energy policy and regulatory affairs tions for high quality infrastructure in
adopted mandatorily to help reduce total which results in inconsistencies for the future.
energy demand in cities and building sub-sectors, i.e. coal, oil, electricity India will continue to witness the
applications should demonstrate the use and gas. This highlights the need for a growth and development of its small,
of climate friendly designs and materials. single central body for energy policy medium and large cities into the future
that encourages the right balance of cities and the process of revitalising
Need for integration fuel mix by incentivizing the overall existing cities must be carried out
Both the renewable sector and the fiscal and policy frameworks. It is without interrupting ongoing activ-
gas industry in India have witnessed imperative that the central government ities. To meet these challenges in a
reasonable growth in terms of demand and state government are in consensus sustainable manner, the government
over the last few years. However, and are willing to create some poten- will need to reassess how it produces
this growth has been uneven with the tial synergies and opportunities that and consumes energy and, together
renewable sector growing by 13.7% are mutually beneficial. with its stakeholders, work towards a
while natural gas has shrunk and There are several central and state lower-carbon future. It is imperative
fallen below the previous years con- government schemes across sectors but that such solutions are at the core
sumption. In contrast, coal has grown ultimately, there is a need to integra- of Indias growth and development
by 4.8% while oil has grown by an teall these initiatives in a way that strategy.
astounding 8.1%. One major road- they lead to a more holistic pattern
block in India is the lack of a single of development. For instance, both The views in the article of the author are personal.
central body that is responsible for Swachh Bharat Abhiyan and Smart For suggestions email at feedback@infraline.com
January 2017
www.InfralinePlus.com

ExpertSpeak
Government needs to incentivize domestic
LED manufacturers to boost R&D
Indian still has a long way to go in manufacturing of LED lights
given the stiff competition faced from the Chinese. Presently, in
the back of strong inventives, Chinese products are often superior
and cheaper compared to India. Add to that minimal R&D facility,
the LED manufacturers in India are grappling to compete with their
Chinese counterparts. In this article, V P Mahendru, Chairman,
Managing Director, EON Electric Ltd, offers a series of suggestions
to address this challenge.

The global reverberations of Make Chinese products are often superior


in India were felt when the Chinese and cheaper compared to those made
decided to launch their Made in China in this country. More importantly, the
campaign, which showed they were authorities need to take measures
not taking the prospective threat of against the cheap lighting products
faster industrial growth in India lightly, sold in the grey mar- V P Mahendru, Chairman, Managing Director,
EON Electric Ltd
despite being a global manufacturing kets across India. Made
hub for the past two decades. Along It is impossible in India label mind and aversion to even good 63
with its high-decibel campaign, China for domestic quality similar products in India.
has not gained
announced a raft of tax concessions manufactur- Once consumers are made
total confidence of
to counter Prime Minister Narendra ers to com- aware about the drawbacks
Modis Make in India pitch. pete against
the Indian consumers of such cheap / sub-standard
Given Chinas manufacturing head- the low prices and sometimes products, there will be more
start, India can only hope to steal a of these prod- acquires negative appreciation for Made in
march over the more nimble dragon by ucts. Although brand image India products, even if these
surpassing the incentives and benefits these are mostly of cost somewhat more than cheap
offered by its northern neighbour to sub-standard quality, imports. It is also important to ensure
manufacture indigenously. The case they are eagerly lapped up by Indian that all products made in India are
of LED lights can serve as a classic consumers who are extremely price as attractive and have an excellent
example in this regard. While Indian sensitive and sometimes overlook qual- finish like the high-value items
manufacturers have taken steps to ity and performance standards. manufactured overseas. Lack of looks
manufacture LED Lights in India While promoting its Make in India and proper finish are some of the
and also promote its exports, they campaign, the Government should drawbacks that bedevil some India-
have been pushed on the back foot by publicise the fact that its products are made goods. Consequently, over the
Chinese LED makers, who receive of better quality, compared to many decades, the Made in India label
immense incentives and support from of those made in China, which are of has not gained total confidence of
their Government. the use and throw variety. With most the Indian consumers and sometimes
Chinese items being cheaper, there is acquires negative brand image.
Incentivize innovation no assurance about how long they will
Accordingly, the Government needs to last. Moreover, the moment such cheap Quality quotient and green
incentivize domestic LED manufactur- products develop a problem, most labelling
ers to boost R&D efforts in India. This cannot be repaired and simply have Yet, this drawback should not deter In-
is imperative if Indian companies are to be thrown away. That is how such dian manufacturers unduly. Recall how
to overcome the stiff challenge from Chinese products have gained global half a century ago Japans manufactur-
cheap Chinese LED makers. Presently, notoriety as the use-and-throw variety ers faced similar image problems about
due to minimal R&D work in India, and yet such issues build in consumers their products being sub-standard. But
January 2017
www.InfralinePlus.com

ExpertSpeak

the Japanese worked hard on improv- underestimated in todays world. at their own peril. Automotive com-
ing their quality quotient and the Companies ignoring these issues do so panies across the globe have paid a
results are there for the world to see. heavy price for defective products that
Today, most products made in Japan have led to massive recalls. Besides
The Government needs
are considered among the best world- the logistics nightmare and tremendous
wide. Names such as Sony and Toyota
to incentivize domestic monetary loss due to product recalls,
are still synonymous with great quality LED manufacturers to the companys brand image suffers
products, notwithstanding the problems boost R&D efforts in damage too, which may take years, if
of acceptance they may have faced in India. This is imperative not decades, to repair.
the past and now face issues of higher if Indian companies are Finally, whether it is LEDs or the
cost of manufacturing. manufacture of other products in
to overcome the stiff
Additionally, the Make in India India, ease of doing business in the
programme should focus on products
challenge from cheap country is still not a ground reality.
made through sustainable processes Chinese LED makers. Manufacturers need to negotiate a
that leave a low carbon trail and cause Presently, due to mini- maze of approvals before they can
minimal damage to the environment. mal R&D work in India, begin manufacturing. Its time the
The publicity campaigns for such Chinese products are Government simplified the myriad
products should highlight the fact that sanctions required through single-
often superior and
these have been made via sustainable window clearance system. If this
processes with low / adverse envi-
cheaper compared to single reform is undertaken, it would
ronmental impact. Green labelling of those made in this coun- be another big boost to the Make in
these products will boost their brand try. More importantly, India campaign. Chinas status as a
value and encourage environmentally- the authorities need to global manufacturing hub would then
64 conscious customers to support such take measures against be truly under threat.
products in the interests of global
the cheap lighting prod-
sustainability.
The importance of green labelling
ucts sold in the grey
and quality benchmarks cannot be markets across India. The views in the article of the author are personal.
For suggestions email at feedback@infraline.com
January 2017
www.InfralinePlus.com

InDepth
India needs effective financing mechanisms
to achieve 175 GW target by 2022

65

By 2020 annual solar power capacity additions and investments could surpass those in coal
Debt has emerged as a major constraint both in terms of availability and cost of financing

By Team InfralinePlus

Indian government is running one of vigorous move to greening India attains setting up of Green Energy Corridor
the most ambitious renewable energy momentum. Some of these include the projects, etc.
(RE) programmes in the world with enactment of the National Off Shore It is expected that by 2020, annual
commitment at the United Nations Wind Energy Policy paving the way solar power capacity additions and
Framework on Climate Change Con- for offshore wind energy development, investments could surpass those in coal
vention (UNFCCC) to install 175 GW establishment of the PACE setter fund power projects. This is on the back
of installed generation capacity from with US with a collective contribution of strong commissioning (4.5 GW),
renewable energy sources (100 GW of USD 4 million to fund innovative under construction projects (more
Solar, Wind 60 GW, 10 GW Bio- clean energy projects through seed than 5 GW), and new projects (more
mass, 5 GW Small Hydro) by 2022. capital, inclusion of renewable energy than 15 GW). Private sector interest
Since the advent of such programme, in priority sector lending by RBI, is decisively moving towards solar
there has been a queue of domestic and increasing coal cess for incentivizing from coal power, already visiblefrom
international firms willing to invest in RE projects, etc. This is in conjunction numerous opportunities of fund-
Indias burgeoning RE sector. with other policy interventions such raising, and Mergers & Acquisitions
Several steps have been taken by as the enforcement of Renewable (M&A) activity. Tata Powers
the government to ensure that this Purchase Obligations (RPOs) and the acquisition of Welspun Renewables
January 2017
www.InfralinePlus.com

InDepth

Energy in September underlines the the countrys infrastructure financing 70% of the overall funds is sourced
opportunities of M&A in the RE sector problems, underdeveloped debt markets through debt component and 30% from
as of presently. and other macroeconomic constraints. equity. Among the commercial financing
The most remarkable feature about According to CPI report, In order institutions, banks, both public and
renewable energy investments in 2016 to meet the renewable energy targets private sector, followed by NBFCs have
has been the predominance of the by 2022, the amount of debt financing emerged as the leaders in infrastructure
developing and emerging economies in required is $132 billion, and the amount financing. In the case of clean energy
the area. A report from Climate Policy of equity financing required is $57 sector, which is classified as infra-
Initiative (CPI) shows that in order to billion. In order to estimate the debt and structure, the dependency on commercial
meet the target of 175 GW of renewable equity financing requirement, we used a banks, NBFC and ECBs is higher.
energy by 2022, the renewable energy debt to equity ratio of 70:30. Higher lending rates in the economy
sector in India will require $189 billion Conventionally, financing in India pushes up the cost of debt for the clean
in additional private investment, a follows a structure of 70:30 wherein energy sector. While higher interest rates
significant amount. The potential affect all business activity, the clean
amount of investment in the renewable energy sector is even more sensitive
energy sector in India is $411 billion,
A report from CPI especially considering capital intensity.
which is more than double the amount shows that in order Counterparty risks arising due to the
of investment required. It is noteworthy to meet the target of financial troubles of state electricity
that Indias Intended Nationally Deter- 175 GW of renewable distribution companies (DISCOMs) is
mined Contributions (INDC) document a critical bottleneck for lending to the
(ratified and signed on October 02,
energy by 2022, the energy sector in general. For instance,
2016) lays out a 2030 target to achieve renewable energy almost 85% of DISCOMs in India have
about 40% cumulative electric installed sector in India will a credit rating of B+ or less (CRISIL/
66 capacity from RE sources, with the help require $189 billion ICRA reports). In the case of RE
of technology transfer and low cost power development, this translates to a
international finance.
in additional private situation where despite being payment
In the Indian context, equity investment. The security risks associated with individual
financing does not appear to be a potential amount of states discourages commercial bankers
concern as compared to debt financing, investment in the from lending to the sector.
at least in the short to medium term.
However, debt has emerged as a major
sector in India is $411 Challenges facing renewable
constraint both in terms of availability billion, which is more growth
and cost of financing. Barriers to debt than double the amount The sector, while very attractive for
emerge from contexts specific to RE as of investment required investment, faces a handful of issues
well as from larger concerns related to including land availability, aggressive
tariffs, challenges around evacuation
of power, inexperienced promoters
entering the sector, a lack of established
and professional O&M (operations and
maintenance) players. Solar resource
and other cost parameters differ from
location to location and project to
project. Considering a continuous drop
in module prices, developers are taking
aggressive positions in their project cost
estimates to bid aggressive tariffs which
have been witnessed in recent past. The
actual scenario may or may not follow
such aggressive considerations.
But it also faces financing chal-
lenges as investors become more
cautious amid a fall in solar energy
January 2017
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Figure 1: Potential investment required to achieve 175 GW RE NPAs (non-performing assets) and
capacity by 2022 quality of bank loan books. Hence, there
is a fear that some of the developers
looking at investing in India may be
put off by the Indian market due to the
unviable tariffs and returns.
Besides financials, technical issues
pose a big threat to Indias capacity
addition plan in the clean energy sector.
Integration of such large quantum
of infirm power from RE projects
which have been accorded must-run
status would lead to backing down of
cheaper thermal power. This may lead
to increasing cost of scheduled power
and possible losses for thermal power
Source: Climate Policy Initiative (CPI) November 2016 Report producers on account of unscheduled,
hence unsold power. Since fixed charges
tariffs. The main reason for aggressive auctions, which would require them to for the thermal power would still have
bidding in recent set of auctions was acquire land and build infrastructure to be paid by DISCOMs, it would lead
because the projects were bid under support. to still more financial pressure on them.
the government-provided solar parks, While the top-tier developers will Backing down long term thermal firm
which meant the developers get ready- continue to attract debt financing, it is must run power for accommodating
to-use infrastructure, such as land and expected that projects with tariffs below infirm power is unsustainable, both 67
transmission facilities, leading to low INR 5/unit levels will face difficulties technically and financially, and will be
project risk and lower costs. Foreign in debt financing as the lenders are a big challenge for system operators to
firms, looking to make big bang becoming increasingly risk averse, deal with, besides attracting penalties
announcements in India, see this as an particularly in the current environment for under supply in existing long term
attractive bet compared to state-level when there is so much scrutiny around power purchase contracts.
To sum up, there is clearly a need for
Figure 2: Possible Scenarios of Installed Generation Capacity effective RE financing mechanisms over
in 2022 and 2030 and above market creating regulation
& policy mechanisms to stimulate debt
By 2030, an
additional 320
availability from the commercial and
GW of RE will be private sector. Given Indias higher
required
savings rate as well as generally
40% RE in the overall 800
favourable capital inflows, lack of funds
GW power scenario is not a major barrier. Rather the barriers
rise from the absence of financial infra-
Addition of 15.7% structure such as a deep bond market
RE generation
(compounded and fixed interest debt instruments
growth per annum)
is required
which can channelize long-term and
low-cost funds towards infrastructure
financing in general. Simultaneously,
there is also a need to improve the risk/
return profile on renewable energy
projects such that they can be compet-
itive in attracting long-term and cheaper
finance, both domestically as well as
internationally.

Source: Navroz K. Dubash, Climate Policy Initiative (CPI) For suggestions email at feedback@infraline.com
January 2017
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StatisticsRenewableEnergy
1. Cumulative Renewable Energy capacity addition achievement as on 30.11.2016
Program/ Scheme wise Physical Progress in 2016-17 (& during the month of November, 2016)
FY- 2016-17 Cumulative Achievements
Sector Achievement (April -
Target (as on 30.11.2016)
November, 2016)
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW)
Wind Power 4000 1641.95 28419.4
Solar Power 12000 2112.02 8874.87
Small Hydro Power 250 50.92 4324.85
BioPower (Biomass & Gasification and 400 101 4932.33
Bagasse Cogeneration)
Waste to Power 10 7.5 114.08
Total 16660 3913.39 46665.53
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ)
Waste to Energy 15 2.24 161.12
Biomass(non-bagasse) Cogeneration 60 0 651.91
Biomass Gasifiers 2 0 18.34
-Rural
-Industrial 8 4.3 168.54
Aero-Generators/Hybrid systems 1 0.38 2.97
SPV Systems 100 74.97 382.01
68
Water mills/micro hydel 1 MW + 500 Water Mills 0.10 MW + 100 Water Mills 18.81
Total 187 81.99 1403.7
III. OTHER RENEWABLE ENERGY SYSTEMS
Family Biogas Plants (in Lakhs) 1 0.286 49.384

2. Details of CFA under VGF, Defense, Rooftop, Canal Bank & Canal top, CPSU and Solar parks
schemes (up to 31.10.2016)
Sl. No. State Funds released by SECI 2016-17
1 Andhra Pradesh 12,717.31
2 Chhattisgarh 22.9
3 Delhi 169.57
4 Gujarat 1,759.58
5 Haryana 114.99
6 Jharkhand 22.79
7 Karnataka 8,501.46
8 Kerala 321.13
9 Madhya Pradesh 11,820.37
10 Maharashtra 344.28
11 Odisha 2.54
12 Punjab 300
13 Rajasthan 14,829.34
14 Tamil Nadu 600.58
15 Telangana 375
16 Uttar Pradesh 192.9
17 Uttarakhand 638.25
18 West Bengal 514.62
Total 53,247.61
January 2017
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3. State-Wise No. of Projects, Cumulative Capacity and Subsidy Released for Grid Connected and
Decentralized Projects installed under Waste to Energy Program during last 3 years (2013-14, 2014-15 &
2015-16) and in the current year 2016-17 (as on 30.11.2016)
SI. No. Name of State No. of Projects Installed Capacity, in MW Subsidy Released, in Crore
1 U.P. 4 8.03 6.62
2 Punjab 4 5.17 2.78
3 Maharashtra 5 5.26 5.51
4 Rajasthan 1 0.7 1.4
5 Uttarakhand 1 0.5 0.3
6 Tamil Nadu 1 1.68 0.83
7 Gujarat 1 1.17 2.32
8 A P. 8 14.83 6.59
9 M.P. 1 0.37 0.18
10 Karnataka 3 5.24 3.82
11 West Bengal 2 1.17 0.58
12 Himachal Pradesh 1 1 0.5
13 Kerala 1 0.23 0.11
Total 33 45.34 31.54

4. State/UT-wise details of solar power projects/systems installed (as on 30.11.2016)


Solar power projects/
Sr. No. State/UT systems installed (Megawatt)
(as on 30-11-16)
1 Andaman & Nicobar 5.4
2 Andhra Pradesh 979.65
3 Arunachal Pradesh 0.27 69
4 Assam 11.18
5 Bihar 95.91
6 Chandigarh 16.2
7 Chhattisgarh 135.19
8 Dadra & Nagar Haveli 0.6
9 Daman & Diu 4
10 Delhi 38.41
11 Goa 0.05
12 Gujarat 1158.5
13 Haryana 53.27
14 Himachal Pradesh 0.33
15 Jammu & Kashmir 1
16 Jharkhand 17.51
17 Karnataka 327.53
18 Kerala 15.86
19 Lakshadweep 0.75
20 Madhya Pradesh 840.35
21 Maharashtra 421.75
22 Manipur 0.01
23 Meghalaya 0.01
24 Mizoram 0.1
25 Nagaland 0.5
26 Odisha 68.08
27 Puducherry 0.03
28 Punjab 568.04
29 Rajasthan 1317.64
30 Sikkim 0.01
31 Tamil Nadu 1590.97
32 Telangana 973.41
33 Tripura 5.02
34 Uttar Pradesh 239.26
35 Uttarakhand 45.1
36 West Bengal 23.07
37 Solar rooftops in Railways, Government Departments, Public Sector Undertakings etc. 15.07
TOTAL 8970.03
January 2017
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OffBeat
Liquidity crunch impacts
cement industry
Cement industry facing higher input costs and sluggish demand
Sector is hopeful that infrastructure projects will offset weakness in
realty sector

70

by Team InfralinePlus

With demonetisation hitting construc- Cement sector valuations were left with unprecedented level of bad
tion sector hard, the cement industry pricing in a strong recovery before loans and halted lending to infra-
has suffered serious collateral damage demonetisation was announced on structure projects. The industry finally
and its revival is likely to be delayed November 8. However, the prospects saw green shoots of recovery in the
at least by a year. Cement demand of recovery have been hit hard by January-March 2016 quarter. The Modi
plunged by nearly half in November. demonetisation. That is why cement governments infrastructure spending
Spooked investors hammered down stocks are under pressure, said analysts. plans further boosted hope for cement
shares of cement companies. Ambuja Betting big on UPA governments demand revival.
Cements share price, which was at Rs infrastructure spending plan, the
244.65 on November 8, had slipped cement industry aggressively added Higher input costs and
to Rs 198.35 on December 26. ACCs capacity in the past decade. However, sluggish demand
stock price fell by 15 per cent to Rs the economic slowdown that began in But the demonetisation has now dashed
1,284.10 during the same period. JK 2011-12, coupled with high interest the hope. On the contrary, the cement
Cements share plunged by 30 per rates and inflexibility in contractual industry is facing the double whammy
cent. UltraTech Cement lost 22 per terms for public private partnership of higher input costs and sluggish
cent in market valuation during the projects, hurt infra spending. demand. That means there is hardly
same period. As a consequence, banks were any room for the industry to cut price
January 2017
www.InfralinePlus.com

to boost demand. Following note ban, demand recovered to 70 per cent of the squeeze might be mitigated if the
construction sites saw mass exodus of usual level in the subsequent period. central government passes on a higher
workers as developers were unable to Cement demand may see subdued 3 proportion of its improved finances to
pay them due to cash crunch. Devel- per cent growth in Q4FY17 and upturn the states, analysts said.
opers had to provide free meals and is expected only in FY20 as compared Before demonetisation, the cement
arrange part-payment to stop workers to FY19 earlier, Deutsche Bank industry expected 55-65 per cent
from abandoning project sites. Markets Research said in an update. demand from housing, 17-20 per cent
Cement demand dropped 45-50 from infra and 25 per cent from institu-
per cent in November with the sharp Infrastructure push may spur tions and commercial realty. Experts
decline in trade segment purchase demand said in urban housing, the already
post-demonetisation of high value cur- The cement sector is hopeful that subdued levels over the last 3-4 years
rency. Cement industry produces about infrastructure projects will offset weak- could get prolonged but might not nec-
23 million tonnes a month. Demand ness in realty sector. With the govern- essarily get worse. Cement companies
for cement fell across regions with the ments balance sheet likely to be in a are also not in a position to cut prices
central region covering Uttar Pradesh to boost demand given that 30 per
and Madhya Pradesh managing Cement demand cent of manufacturers are not breaking
minimum disruptions. Infrastructure even on a cash cost basis, said industry
and construction activities across the
dropped 45-50 per cent sources. After the recent hike in fuel
country came to abrupt halt following in November with the cost, this figure is estimated to have
withdrawal of Rs 500 and Rs 1,000 sharp decline in trade risen to 43 per cent.
currency notes from circulation. The segment purchase Experts point out that cement
fall in cement demand has come when post-demonetisation demand could be hurt, given that 70
the industry was expecting revival of of high value currency. per cent of cement is consumed by
infrastructure activities post-monsoon. housing. Demonetisation could cause
Rating agency ICRA said that while
Cement industry demand destruction in organised real
71

cement prices have been affected in produces about 23 estate as well as individual and rural
the southern and western markets, million tonnes a month. house construction, which would then
volume growth has been adversely Demand for cement get transmitted to cement demand in due
impacted in all regions in November fell across regions course. Analysts reckon that cement
following demonetisation. In the with the central region producers could cut back production and
southern market, the prices have shown take some price impact, which would
a decline of Rs 30/bag in October and
covering Uttar Pradesh further dent their profitability which
November together, with the current and Madhya Pradesh is already depressed due to increase in
prices hovering around Rs 300/bag. On managing minimum costs of inputs like coal and petcoke.
an average, in the southern market, the disruptions Cement producers said contractors
cement prices during 8M FY2017 stood are finding it difficult to make cash
at around Rs 305/bag, lower by Rs 20/ much better fiscal position, the industry payments for buying key raw materials
bag when compared to 8M FY2016. A expect a sharp pick-up in infra demand, such as sand, bricks and stones besides
similar decline in prices post demon- considering the governments contin- meeting labour salary. Transactions
etisation was witnessed in the western ued focus on public spending. between companies and their dealers
markets wherein the price, after having Currently, road and railway sector are undoubtedly through the banking
recovered by Rs 15/bag in October to spending is primarily driven by central system but from there on the pay-
Rs 265/bag, slipped to Rs 240/bag in government agencies. State gov- ments by retailers and customers vary
November, the rating agency said. ernment finances, on the other hand, according to their business relationship.
As per a recent survey by JM may come under some pressure, as a Going ahead, the slowdown of
Financial, cement volumes are down good 5-10 per cent of their revenue construction activity in the unorganised
across markets. The northern and receipts come from the property sector. realty segment that uses unaccounted
western regions witnessed fall in sales. To that extent, their spend on rural funds to buy land parcels and get
Some southern regions have seen roads, urban development projects such various approvals will impact sales in
decline in the first week of December. as metro and mono-rail, affordable select regions. December cement sales
The eastern region saw a 70 per cent housing, irrigation, etc, could be may also be hit as the actual impact of
demand decline in November but adversely affected. States financial demonetisation plays out on near-term
January 2017
www.InfralinePlus.com

OffBeat

demand. While most manufacturers Pay commission disbursements letter written by him to shareholders.
pushed supplies to the dealers last would happen and trigger housing The last and first quarter of a financial
month, the delay in actual consumption growth. Besides, roads, hydel projects, year are typically considered the best
will impact this month sales volume of metro projects, and low income quarters for the cement sector due to
cement companies. Demand scenario housing projects in the infrastructure increased construction activity seen
may pickup from January with the segment had started doing since the last before the onset of monsoons. HDFC
liquidity improving. quarter of 2015-16. In April, Harish Securities has said in its latest report
Because of aggressive capacity Badami, CEO and managing director that the expected recovery in the
addition, the domestic cement manufac- of ACC, had told shareholders at the cement sector may take another year.
turing capacity is expected to go beyond companys annual general meeting It has also cautioned against a longer
400 million tonne by the end of this that demand growth was projected slump in the unorganised real estate
fiscal. India is already worlds second to touch 6 per cent in calendar year market, due to the aftermath of demon-
largest producer of cement after China. 2016 compared to 2 per cent in etisation, a sector which drives a large
After a long spell of demand slump, 2015. Badamis optimism apparently proportion of cement sales.
the cement industry was expecting a stemmed from major spends planned The report says that until October,
revival in 2016-17. The industry had by the government on infrastructure, cement demand had grown by 5.1 per
expected demand growth to bounce connectivity, housing and sanitation. cent year-on-year. Strong monsoons had
back to 6-8 per cent this year, up from 3 Encouraged by revival in infra also raised the expectation of a demand
per cent in 2015-16. These forecasts are spending, NS Sekhsaria, chairman, revival in Maharashtra, Telangana and
grounded on expectations of improved Ambuja Cements Ltd, had projected Karnataka. However, HDFC Securities
demand from infrastructure and housing compounded annual growth rate of 6-7 says that things have taken a turn
projects backed by the government. per cent over next five years, as per a for the worse post demonetisation.
Demand declined by 25-30 per cent in
72 After a long spell of demand slump, the cement North Central India and by 15-30 per
cent in West and South India. Cement
industry was expecting a revival in 2016-17. The demand is unlikely to recover for
industry had expected demand growth to bounce another year due to demonetisation
back to 6-8 per cent this year, up from 3 per cent and increase in prices of diesel and pet
in 2015-16. These forecasts are grounded on coke that has put cost pressure on most
cement makers.
expectations of improved demand from infra- Luckily, the Union budget 2017-18
structure and housing projects backed by the is round the corner and would provide
government an opportunity for the government
to announce new sops to attract
Growth in installed cement production capacity investment into the infrastructure
Financial year Installed capacity (mt) sector. The real estate sector has been
used to cash transactions for too long.
FY13 248.2
Now that the government wants to
FY14 255.8 wean it away from cash, it should
FY15 270.3 provide additional sops to mitigate
Fy16 282.8 the adverse impact of its cashless
FY17 407 (Projection drive on the industry. Incoming US
Source: industry president Donald Trumps promise
to step up infra spending has sent
Worlds top cement consumers in 2016 US stock markets soaring. The Modi
Country Consumption (mt) government too can focus on boosting
China 2,511 domestic demand through stepped-up
India 280 infra spending as the global economy
US 93 stutters. That would help generate
Brazil 78 new jobs.
Russia 73
Source: International Cement Review For suggestions email at feedback@infraline.com
January 2017
www.InfralinePlus.com

Reports & Studies


Big chunk of private coal-based power plants under operational stress: FICCI

power plants is under operational stress new capacities in pipeline are to be


mainly due to absence of fuel supply mainstreamed. Constraints of power
agreement and power purchase pact, purchase agreements (PPA) as well
industry body FICCI said. 46 GW out as fuel supply agreements (FSA) are
of installed capacity of 71 GW of coal- majorly restricting these plants from
based IPP plants are in operational approaching the power market and
stress attributable largely to absent finding buyers, the study showed. Taking
FSA and PPA, but also to financial and together the commissioned and pipeline
regulatory issues, the industry body projects of private developers as on
said. FICCI said it conducted a unit- August 2016, aggregate coal-based
wise analysis to examine the business capacities without FSA and PPA are
A major portion of the installed capacity of environment in which the commissioned seen to be in the range of 2628 GW and
71 GW of private coal-based independent plants are being operationalised and the 4143 GW respectively.

Mining sector can add $70 bn to Indias GDP in next 15 yrs: CII

A vibrant mining sector has the capacity to taken some important steps for removing
spur growth and add up to USD 70 billion to stagnation in the sector. A major step is the
the countrys economy as well as generate enactment of Mines and Minerals (Develop-
60-70 lakh jobs, a report by industry body ment and Regulation) Act, 2015, which has
CII said. The report -- Mining Opportuni- made the process of allocation of mines
ties - Realising Potential -- also stresses on transparent by introducing auctions. The
dealing with clearances which it says still tenure of the mineral concessions has also
remain an impediment for a smooth transi- been increased from the existing 30 years
tion from auction stage to implementation to 50 years, the report said. Presently, 73
stage. A vibrant mining sector has the po- the process of obtaining approvals and
tential to propel economic growth not just could play a crucial role in employment clearances still remains long drawn and
through its contribution to GDP but also generation for India moving many from varies from state to state. This requires to
through its forward and backward linkages, poverty to empowerment. In an acceler- be made simpler and expeditious so that
the report said. In high growth scenario, ated growth scenario, mining can generate the time required for operationalisation of
mining sector can add close to USD 70 an additional 6-8 million jobs, it added. the mineral concession can be drastically
billion to GDP from now to 2030. Mining Over last two years, the government has reduced, it added.

Net-metering battles in the US hold crucial lessons for India

Evolution of net metering policy in USA holds and industrial rooftop solar by 2020 based
vital lessons for the fledgling rooftop solar on BRIDGE TO INDIAs overall market
market in India, which is still very small but projection, the state utilities will lose 0.8%
growing rapidly. Many Indian utilities are of their power sales by volume but 1.4% by
already resisting net-metering connections revenues, equivalent to Rs 9.7 billion (USD
for commercial and industrial customers, 140 million) annually, the report said. The
solar energy research agency Bridge to India reason for disproportionate loss of revenues
said. Rapid growth in the US rooftop solar is that commercial and industrial customers
market and the number of net-metering con- pay the highest tariffs to subsidize residential
nections has opened a battle-front between and agricultural customers. Some states
utilities on one hand and solar developers including Tamil Nadu and Maharashtra are
and consumers on the other hand. Utilities decided by public hearings, ballots, regula- already resisting net-metering connections
are arguing against the rationale of giving tory intervention and court rulings. The for commercial and industrial customers.
customers full retail credit for their excess current Indian net-metering regulations are Other states are also likely to take that view.
energy and vigorously challenging the cur- too simplistic and they need to be overhauled The current Indian net-metering regula-
rent net-metering framework in many states urgently for sustainable growth of rooftop tions are too simplistic. There is usually no
including Arizona, Nevada, Maine, Florida, solar in India, Bridge to India said in a report. grandfathering protection for customers and
and Alabama. Future net-metering policy If a state like Tamil Nadu realistically no satisfactory financial compensation for
in these battle ground states is now being installs around 700 megawatt of commercial the utilities.
January 2017
www.InfralinePlus.com

People in News
Shyamal Mukherjee elected new Dr. P.V. Ramesh, IAS takes over as MM Mani to be new power minister
chairman of PwC India CMD of REC of Kerala

Shyamal Mukherjee has been elected as the Dr. P.V. Ramesh, an IAS officer of the 1985 In the first reshuffle since it came to pow-
chairman of PwC India, replacing two-time batch of Andhra Pradesh Cadre has taken er in May, the LDF government in Kerala
chairman Deepak Kapoor. Mukherjee, who over as Chairman and Managing Director of inducted senior party leader and MLA MM
joined PwC in 1984 and became a partner Rural Electrification Corporation Limited (REC) Mani from Idukki district as the electric-
in 1993, will lead the network of Indian on 5th January, 2017. Prior to joining REC, ity minister. Mani, a first time legislator
accounting firms, and the consultancy Dr. Ramesh was the Special Chief Secretary, and CPM state Secretariat member, is a
major. Kapoor steadied PwC Indias country Environment, Forest, Science & Technology veteran labor leader from the high range
business after the audit firm was severely and Development Commissioner in the Gov- Idukki district and had functioned as the
hit by the Satyam Computer Services scam. ernment of Andhra Pradesh. He is a trained partys district secretary for many years.
PwC were the auditors for Satyam. During Doctor from the Christian Medical College & As per the decision taken at the CPM
his tenure the India business recorded the Hospital, Vellore. He has, during his service State Committee meeting, Kadakampally
fastest pace among PwC network countries tenure of over 31 years, held important posi- Surendran who now holds the electricity
for three years in a row. Commenting on tions of Principal Finance Secretary, Principal portfolio will be given the Co-operation
74 his appointment, Shyamal Mukherjee noted Secretary Department of Health and Family and Tourism portfolios. He will also con-
that his focus will be on seamless client Welfare and Commissioner of Industries in tinue to handle the Devaswam portfolio.
delivery, being a great employer in the the Government of Andhra Pradesh. He has A C Moideen, who has been handling the
country and pioneering use of technology to served in the United Nations Organization for Co-operation and Tourism portfolios, will
drive innovation and efficiency. Mukherjee is nearly 13 years and worked in several coun- be given the Industries portfolio. The
a member of the India leadership team and tries across Asia Pacific and Africa, Europe and Industries portfolio fell vacant after EP
part of PwCs Global Strategy team. Prior UNOPS Head Quarters in New York. Jayarajan stepped down on nepotism
to his current role as PwC Indias brand & charges in October. Moideen has also been
NTPC Ramagundams new ED takes
strategy leader, Mukherjee was the joint given Sports and Youth Affairs.
charge
leader of the firms tax & regulatory practice.
Dilip Kumar Dubey, Executive Director-NE- Jindal Steel & Power announces
TRA at NTPC EOC, Noida, has taken charge change in CFO
Sameer Sawhney appointed Srei
Infra CEO as Executive Director of NTPC-Ramagundam.
A mechanical engineer from Awadesh Pratap
Sameer Sawhney has been appointed as Singh University and also an MBA (finance)
the Chief Executive Officer (CEO) of Srei graduate from FMS-Delhi, Mr. Dubey joined
Infrastructure Finance Ltd. Prior to this the NTPC on September 21, 1981 as ET. He
appointment, he was the regional CEO and has rich and varied experience in different
Managing Director (South East Asia and India) areas of the power plant. He had held several
ANZ Bank, driving the business, customer important positions in a career spanning over
and country strategies across the banks key three-and-a-half decades in NTPC. Mr. Dubey Jindal Steel & Power announced that
markets. Commenting on the appointment, is widely known as a boiler expert and in- K. Rajagopal, has resigned from the
Hemant Kanoria, Chairman and Managing volved in the activities of Advance Ultra Super position of Chief Financial Officer and he
Director of Srei Infra, said, Sameers ap- Critical units of NTPC. He has been actively will relinquish his Office from the close
pointment as CEO adds to our strength and involved in climate change negotiations of the of business hours on 21 November 2016.
will bring dynamism in our business. Srei United Nations Framework Convention on Further, Rajesh Bhatia has been ap-
Infrastructure Finance is one of Indias largest Climate Change (UNFCCC). The existing ED pointed to the position of Chief Financial
private sector integrated infrastructure institu- of Ramagundam, Prasant Kumar Mohapatra, Officer of the Company with effect from
tions, constantly and consistently delivering was transferred as regional ED of WR-head- 22 November 2016 to fill the vacancy
innovative solution in the infrastructure sector. quarters-II Raipur. caused by resignation of K. Rajagopal.
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6 Key Highlights
th
LNG Business
India Summit
Building a Resilient LNG Value Chain

22 March, 2017, New Delhi

Meet the Biggest visionaries, leaders & stakeholders of the LNG industry
Discover the opportunities for LNG to stimulate economic development
How to Leverage the Gap between the buyers and sellers
Evaluate the LNG Infrastructure and Technology advancement
Know about the LNG regasification technology for performance optimization
Understand the dimensions & directions of the LNG Industry considering todays
and tomorrows geopolitical scenario

Richa Asnani Rahul Tandon


Tel: +91 120 6500894 (D), 8882163082 (M) Tel: +91 120 6500895 (D), 9811442305 (M)
Email: richa@whizabstracts.com Email: rahul.tandon@whizabstracts.com