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December 2016

Volume 5 | Issue 8 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

Rise of Donald Trump to


change global energy dynamics

Thermal power developers Need to link domestic


feel the stress over coal pricing with
plunging financials international market

Rajiv Agrawal Sandeep N Gupta Prafulla Pathak Sukhdeep Brar


Secretary, Indian Captive Power G.M., Business Development, Secretary General Former IAS officer
Producers Association Linde Engineering India Pvt. Ltd Solar Energy Society of India World Bank official
Intelligent Transport System
A Game Changer

on 18th January, 2017


The aim of the conference is to explore possible ITS implementations and
opportunities in the region to provide solution to various Road Traffic Control,
Railways, Aviation & Maritime issues.
Intelligent transport systems vary in technologies applied, from basic management systems
such as car navigation; traffic signal control systems; container management systems;
variable message signs; automatic number plate recognition or speed cameras to monitor
applications, such as security CCTV systems; and to more advanced applications that
integrate live data and feedback from a number of other sources, such as parking guidance
and information systems. Additionally, predictive techniques are being developed to allow
advanced modeling and comparison with historical baseline data.
We have now decided to introduce an intelligent traffic system under the new Motor Vehicle Act. The
new statute is likely to be passed during the coming winter session of Parliament Nitin Gadkari

Media Partner

To know more, please contact:


Rahul Tandon, Email: rahul.tandon@whizabstracts.com, +91-9811442305 (M)
InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
December 2016 | Volume 5 | Issue 08

Editors Letter Editorial


Shashi Garg, Editor
History was made on November 9th with two major
developments shaking the world. While their epicenters
were at New Delhi and Washington DC, the tremors were News Team
felt across the globe. On November 8, India decided to Chetan Gupta
demonetize Rs 500 and Rs 1000 currency notes in a
proactive move to weed out black money and corruption
as well as to put an end to illegal funding of cross-border Analyst
terrorism. As Prime Minister, Narendra Modi, announced
Mohd. Arif
this move, hours later, another history was made, but
this time across the border Election of Donald Trump
as the President of USA. Both these developments will
have an important bearing on the future. While demonetization will seek to revive the Content Consultant
domestic economy by cleansing it of black money, the rise of Donald Trump to the News Monster
US Presidency will have a significant impact on global economy and will also add a
new spin to energy dynamics.
With Trumps rise to the helm, there is an increasing skepticism over the future
of renewable energy across the world given his strong views on global warming,
which he described as an expensive hoax. There are fears that it may derail the
fragile global progress to tackle climate change and risk undermining the growth of Business Development
green energy worldwide. On the other hand, fossil fuels may get a new lease of life, Manoj Narang, Director
with Trump claiming to access $50 trillion in untapped shale, oil and natural gas
Tel.: 0120-6799106 / 100
reserves, plus hundreds of years in clean coal reserves in USA. We will have to wait
for some time to see how his energy policy unfolds. Email: manoj.narang@infraline.com
Back home, demonetization has impacted one and all. Infact, financial experts are
of the view that, in the long term, demonetization will lead to a spurt in economic
activity, which will in turn push GDP growth to 10%. Further, it is likely to destroy
about Rs 4 lakh crore worth of cash held in black money and fake currency, which Advertisement
constitute about 12% of the black economy in India, which will add to economic Ashwini Solomon
growth. Energy and infrastructure sector is not expected to face the brunt of this
move in any major way. Tel.: 0120-6799157/100
Mobile: +91 9811708110
The power sector, however, is grappling with a major issue due to the rising incidence 3
of stressed assets. Despite the coal block auctions and a pick-up in pace for Email: ashwini.solomon@infraline.com
clearances, developers have been unable to revive plans and take up new projects. advertising@infraline.com
Several equipment manufacturers are hamstrung as most developers are dealing with
stretched balance sheets and banks are jittery about potential bad assets from the
sector. Low asset utilization is making it difficult for power producers to service debt.
Circulation & Subscription
Nonetheless, there have also been quite a few positives. The oil and gas sector
finally saw some action this month, with the Government deciding to auction small Sneha Pandey
oil fields. Nearly 73% of contract area under offer received bids, with 42 firms placing Tel.: 0120 6799125
bids for 34 contract areas out of 46 total areas on offer. The move is significant as Email: sneha.pandey@infraline.com
production of hydrocarbon from these fields would help India cut down imports to
the tune of Rs 3,500 crore annually.
In the coal sector, the Governments decision to adopt technology to check rising
incidence of illegal mining is a welcome move. Illegal mining in India has become
a menace and can be a major hindrance for the government to achieve its targets. Form IV
In this regard, the Mining Surveillance System (MSS) was recently launched which Periodicity of its Publication: Monthly
uses automatic remote sensing detection technology to check illegal mining. It is Printers / Publishers /
Mrs Shashi Garg
Editors / Owners
imperative that this technology is implemented across the country at the earliest.
Nationality Indian
While India has made rapid progress in the renewable energy sphere, the rooftop 14-D, Atmaram House, 1, Tolstoy Road
solar segment continues to lag behind. As India embarks on its ambitious program Address
New Delhi - 110001
to generate 100 GW of solar power by 2022, we provide a reality check on the solar 14-D, Atmaram House, 1, Tolstoy Road
rooftop segment, which is projected to contribute 40% to this capacity, in terms of Place of Publication
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Name and address of individuals who own the newspaper and partners
or shareholders holding more than one percent of the total capital Owner:
M/s Infraline Technologies (India) Private Limited, 14-D, Atmaram House,
SHASHI GARG 1, Tolstoy Road, New Delhi - 110001
Managing Director and Editor Shareholders holding more than one percent of total Capital of the
InfralineEnergy Research and Information Services owner Company
1. Mrs Shashi Garg, 60, Siddhartha Enclave, New Delhi-110014
2. Abhav Garg, 60, Siddhartha Enclave, New Delhi-110014
Registered Office Branch Office
I Shashi Garg hereby declare that the Particulars given above are true to
14th Floor, Atmaram House, Noida the best of my knowledge and belief.
1, Tolstoy Road, New Delhi - 110001 A-31, Sector 3, Noida Sd
Email: business@infraline.com Tel.: 0120-6799100 Mrs Shashi Garg
Signature of the Publisher
December 2016
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InfralinePlus

Contents
Editors Letter
3

Cover Story 31
US elections: Rise of
Donald Trump to change
global energy dynamics
Donald Trump remains an unknown
quantity and nobody knows exactly
what his energy policy will be like.
However, if his campaign rhetoric
is anything to go by, Trump presi-
dency could prove to be a boon for
fossil fuel consumers. Trump has
said he is in favour of removing oil-

31
sector regulations, opening federal
land to drilling, while pledging to
support the coal industry.
4

Power Coal
6 19
News Briefs p6 News Briefs p19
Expert Speak: Rajiv Agrawal, Secretary, Indian In Depth: Need to link domestic coal pricing with
Captive Power Producers Association p10 international market p22
In Depth: Thermal power developers feel the stress In Depth: Curbing illegal mining: India explores use of
over plunging financials p13 satellite-based Mining Surveillance System p26
Statistics p17 Statistics p29

Topics Covered Topics Covered


Captive power plants Theft of coal
Stressed power assets Coal surveillance technology
Power transmission Coal pricing
December 2016
www.InfralinePlus.com

Oil and Gas Renewable


36 48
News Briefs p36 News Briefs p48
Expert Speak: Sandeep N Gupta, General Manager, Expert Speak: Prafulla Pathak, Secretary General,
Business Development, Linde Engineering India Solar Energy Society of India p53
Pvt. Ltd p39
Expert Speak: Sukhdeep Brar, former IAS officer and
In Depth: Govt moves ahead with auction of small oil World Bank official p55
fields p41
In Depth: Solar Rooftop a vital cog in governments
In Depth: Moving towards Methanol Economy key to push for 100 GW solar capacity p58
reduce oil dependence p43
Statistics p61
Statistics p46

Topics Covered Topics Covered


Oil exploration Price parity
5
Improving refinery margins Pollution control
Alternate fuels Solar rooftop

Expert Speak/Interview Event-Focus


63
International Shale Gas and Oil Workshop - 2016

Rajiv Agrawal Sandeep N Gupta


Secretary, Indian Captive Power G.M.- Business Development,
Producers Association Linde Engineering India Pvt. Ltd.

Off Beat
Demonetization impact positive for energy and
infrastructure sector
67
Reports & Studies
73
People in News
Prafulla Pathak
Secretary General
Sukhdeep Brar
Former IAS officer and
74
Solar Energy Society of India World Bank official
December 2016
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NewsBriefs | Power National


PowerGrid to set up energy highways to meet demand growth Power generation up 6.5 percent at
632.11 BU in Apr-Sept this fiscal
high-capacity HVDC (high-voltage, direct
current) systems (6,000 Mw each). The
central transmission utility will also develop
eight inter-state transmission systems
(ISTS) or green energy corridors to help
the renewable energy sector. The ones to
come up first would be to connect the solar
power parks in Rajasthan, Madhya Pradesh,
Karnataka, Andhra Pradesh and Gujarat.
PGCIL is constructing the first phase of
Power Grid Corporation of India Limited green corridors connecting renewable-
(PGCIL) is planning to build energy rich states. The investment planned for Power generation in the country
highways across the country to meet a these projects is Rs 1.12 lakh crore, with recorded a growth of 6.5 per cent in
projected growth in demand and ease the the energy highways costing Rs 58,000 April-September period this fiscal at
load on the national grid. The highways crore and the HVDC systems Rs 12,000 632.11 billion units (BU) compared to
include 11 high-capacity corridors, each with crore each. The cost of the ongoing green year ago period. Electricity generation
a capacity of about 4,000 Mw, and three corridors is Rs 18,000 crore. during the current year was more as
compared to previous year. The power
BHEL bags export orders from Togo, Benin generation including from renewable
sources during April to September, 2016
State-run power equipment maker BHEL was about 632.11 BU as against 593.68
has expanded its footprint in the international BU during the same period last year
market by securing export orders for supply showing a growth of 6.5 per cent, Power
of industrial motors to the African nations Minister Piyush Goyal recently stated in
6 of Togo and Benin. Scancem International written reply to Lok Sabha. According
DA, Norway (Heidelberg Cement group) has to the reply, 681.09 BU were available
placed the order for the motors for their ce- against the power demand of 686.09
ment plants, Ciments Du Togo S.A. &Cimbenin BU during the April-October period this
S.A, Benin. The motors will be manufactured fiscal recording a deficit of 0.7 per cent.
and supplied by BHELs Bhopal unit. BHEL has inaugurated by President of Sudan Omer In 2015-16, this deficit was 2.1 per
been present in the African continent almost Hassan Ahmed El-Basheer. The project came cent. Similarly, against the peak power
since its export journey commenced 45 years close on the heels of the successful commis- requirement of 1.59 GW, as much as
back and has references today in almost half sioning of BHELs 28 MW Nyaborango Hydro 1.56 MW was available in April-October
of the African continent. The company has project in Rwanda, 2x20 MW Steam Turbine period, resulting in peak power deficit
recently built 500 MW Kosti Thermal Power and Generators for cogeneration application at of 1.6 per cent. Last fiscal, peak power
Plant - the largest in Sudan. The plant was Tendaho Sugar Factory in Ethiopia. deficit was 3.2 per cent.
Slow progress in commissioning private sector hydro projects

Indicating slow progress in commissioning by the authority. At present, the CEA is


of hydro power projects by the private examining DPR of six hydro power projects
sector, only 3,269 megawatts of capacity having capacity of 3,317 MW while reports
has been operationalised so far out of the of 16 such projects of 5,338 MW capacity
overall plans for 38,039 MW across the were returned to private players for
country. As many as 120 hydro projects resubmission. Private players are still
with a total capacity of 38,039 MW preparing DPR of 31 hydro power projects
were conceived by the private sector but having a total capacity of 6,502 MW.
unfortunately 3,269 MW could be made According to Power Minister Piyush Goyal,
operational. These 20 operational hydro the reasons for delay in respect of hydro
power projects with generation capacity of projects under construction in private
3,269 MW include even small hydro power sector mainly include law and order
units of above 3 MW. As per the CEA data, issues, rehabilitation and resettlement,
19 private sector hydro power projects natural calamities, geological surprises,
having a total capacity of 4,555 MW are projects with 15,058 MW capacity whose environmental clearances, financial
under construction while there are 22 detail project reports (DPR) were approved constraints, etc.
December 2016
www.InfralinePlus.com

NewsBriefs | Power National


CERC for change in power transmission bid rules Canada back as partner in civilian
nuclear programme after 42 years
commissioning, incentives and the delays.
As there is no benchmark for implementa-
tion of a project, the network operator also
misses on the chance to earn incentives
for early commissioning. Suggesting a way
forward, CERC said large projects, not
components of large projects, should be
awarded. In the case of a new transmis-
sion network, splitting into components
To expedite development of the power and award through tariff (rate)-based
transmission network and avoid delay, the competitive bidding (TBCB) complicates
Central Electricity Regulatory Commission the execution. Therefore it is advisable to Canada has agreed to help modernise
(CERC) has emphasised to the Power min- identify the entire network for develop- Nuclear Power Corporation of India
istry the need to give out large projects, ment through TBCB, instead of compara- Ltd (NPCIL), a development that
instead of breaking these into parcels. This tively smaller elements, commissioning of comes 42 years after it withdrew from
comes in the wake of increasing numbers which depends upon commissioning of all Indias civilian nuclear programme
of petitions, arguing over the dates of upstream/downstream elements. in the wake of the nuclear tests
done by the country. It is learnt that
NTPC-BHEL power gear unit finally up, but downsized Canadian firms could produce nuclear
reactor components in India following
After eight years, many twists and turns discussions between the two sides at
and delays, the Rs 6,000-crore joint venture the recently conducted fourth round
between two public-sector majors of India-Canada Nuclear Cooperation
NTPC and BHEL to manufacture power Agreement Joint Committee meeting
equipment has finally got into production in Ottawa. The two sides also explored 7
mode at Mannavaram in Chittoor district investments in the civil nuclear
of Andhra Pradesh. The NTPC-BHEL sector under PM Narendra Modis
Power Projects Limited (NBPPL), whose Make in India initiative. Canada
foundation was laid by former Prime had withdrawn from Indias civilian
Minister Manmohan Singh on September nuclear programme after Pokhran-I
1, 2010, has seen an investment of Rs test in 1974 reportedly involving
363.94 crore, in what is termed as Phase-I, Rayalaseema region of Andhra Pradesh, the CANDU (Canada Deuterium Uranium)
and got into commercial production in project was sanctioned in 2007 and a JV reactors operational in the country.
mid 2015. Perceived as the first major agreement signed on December 17, 2007. Subsequently Nuclear Suppliers Group
manufacturing unit in the public sector that After initial fast-track moves, it ran into (NSG) was formed in reaction to Indias
would be a game-changer in the backward rough weather. nuclear tests.
Private capacity accounts for 41 percent of total power generation in India

Favourable government policies have boosted ity compartments according to their FSA
private investments in power generation over and PPA status with limited or no market
the last decade and resulted in significant access. The study also shows that 46 GW out
capacity additions, according to FICCI. of installed capacity of 71 GW of coal-based
From 17 GW in 2006-07, private capacity has IPP plants are in operational stress attribut-
moved up to 124 GW in 2015-16, constituting able largely to absent FSA and PPA, but also
41 percent of the total generation portfolio of to financial and regulatory issues. Taking
302 GW in the country. To examine the busi- together the commissioned and pipeline
ness environment in which the commissioned projects of private developers as at August
plants are being operationalised and the new 2016, aggregate coal-based capacities
capacities in pipeline to be mainstreamed, agreements (FSA) are majorly restricting without FSA and PPA are seen to be in the
FICCI took up a unit-wise analysis of the these plants from approaching the power range of 26-28 GW and 41-43 GW, respec-
project shelf of base load generation taken up market and finding buyers, the study reveals. tively. Market corrections are necessary to
by independent power producers (IPPs) with An aberration is that while investments have optimally utilise these generating assets and
coal as fuel. Constraints of power purchase been made in new generating assets, the IPP avoid stress on the banking system by ensur-
agreements (PPA) as well as fuel supply industry stands fragmented in various capac- ing the operational cash flows.
December 2016
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NewsBriefs | Power States


T&D losses in Andhra Pradesh dip to 9.98 per cent J&K fails to meet deadline for
achieving 1st milestone under UDAY
for All since September 2014. The state
annually consumes 50,000 million units of
power with the cost of service pegged at
Rs 5.33 a unit but the demand is expected
to increase exponentially due to increased
industrialisation. As metered sale of power
rose by one per cent from 72 per cent last
year, power utilities could save Rs 270
Energy utilities of Andhra Pradesh, making crore annually. Early this month, the World
rapid strides on various fronts, achieved Bank ranked Andhra Pradesh as the best Jammu and Kashmir Government has
yet another distinction by bringing down state in the country in implementing energy failed to meet the deadline for achieving
the transmission and distribution (T&D) efficiency and conservation measures. The the first milestone fixed by the Union
losses to a record 9.98 per cent, lowest in Power Transmission Corporation of AP has Power Ministry under its Ujwal DISCOM
the country, in the first half of the current brought down T&D losses from 12.6 per cent Assurance Yojana (UDAY) Scheme
fiscal. The state currently boasts of a zero in 2014-15 to 10.60 per cent in 2015-16 and as feeder metering has yet not been
deficit in energy availability and has been now to 9.98 per cent in the F1 of 2016-17 completed particularly in rural parts
successfully implementing 247 Power financial year. of the State. Moreover, the Power
Development Department has not
ADBs $48 million loan to help Assam improve power distribution
ensured compliance to the directives
Asian Development Bank (ADB) will provide of State Electricity Regulatory
the second tranche loan of USD 48 million to Commission (SERC) on furnishing action
Assam to help the state expand and upgrade plan for implementation/achievement
its power distribution system. This is the of operational milestones agreed to by
second tranche loan of the USD 300 million it in a Memorandum of Understanding
8 multi-tranche financing facility for the As- (MoU) signed with the Government
sam Power Sector Investment Programme of India. The J&K Government had
that was approved by the ADB Board in entered into an MoU with the Union
July 2014. The project will help Assam to Ministry of Power on March 15, 2016
enhance capacity and efficiency of its power under UDAY Scheme for operational
distribution system to improve electricity the first tranche, ADB had provided loan of and financial turnaround of the States
service to end users. An agreement regard- USD 50 million in February last year. The Power Development Department. Under
ing the second tranche was signed between project, which is expected to be completed the scheme, the PDD has committed
ADB and the Union Government recently to by December 2019, will help APDCL add an to achieve 11 operational milestones
help Assam continue its drive to improve additional substation capacity, expand and within the timelines fixed by the
access to efficient and reliable power. In improve medium voltage network. Ministry of Power.

No Chhattisgarh power till March-end

Availability of power purchased from Nizamabad district commenced. It will


Chhattisgarh is unlikely for the rabi crop as conclude by January second week. The
second phase of laying electric cables from second phase work of laying the cables
Dichpally to Maheshwaram is going to be from Dichpally to Maheshwaram in Ranga
extend till March-end stretching beyond Reddy district should be completed by
the deadline. It may be recalled that Chief March, but are likely to be extended till
Ministers of Telangana and Chhattisgarh March-end. The current demand for power
on November 3, 2014 inked a pact on 134 million units is likely to increase
supply of 1000 mw to Telangana by to 200 million units during the January-
Chhattisgarh. Telangana power distribution March period. NTPC produces 20 million
companies on September 22, 2015 entered units and SCCL 16 million units. Non-
into power-purchase agreement with the conventional energy sources to contribute
Chhattisgarh counterparts. The major 35 million units to the state, which is to get
impediment in executing the agreement Telangana via Chhattisgarh. Soon after 22 million units from Andhra Pradesh. The
was lack of electric lines. They should the agreement, work relating to laying surge in demand is likely to be up by 50 per
be laid from Wardha in Maharashtra to cables from Chhattisgarh to Dichpally in cent in near future.
December 2016
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NewsBriefs | Power International


China starts to build its first
Over 17,000MW to be generated under China-Pakistan Economic Corridor projects
floating nuclear power reactor for
but would produce surplus electricity for deployment off coast
benefit of the country. As many as 1,100
MW electricity generated through these
projects would be included in the national
grid by 2016. During the year 2017 about
1,650 MW electricity would be included
in the national grid system while projects
of 3,270 MW capacity would become
operational by 2018. The additional projects
of 2,250 MW capacity would be completed China has started to build its first
As many as 17,045 megawatts of energy after 2018. Currently work on 1,320 MW floating nuclear power reactor, which
will be generated through energy projects coal-fired power project Sahiwal is in it plans to deploy off its coast by the
spreading all across under the China- progress and work on 1,320 MW Port Qasim end of the decade. State-controlled
Pakistan Economic Corridor (CPEC). These Coal project is also going on which would China General Nuclear Power Group
energy projects initiated under the CPEC generate 660MW electricity by 2017 while
(CGN) has begun construction of the
project would not only help overcome the the remaining 660 MW would be ready for
ACPR50S reactor, and will acquire the
existing energy crisis faced by Pakistan consumption by 2018.
reactor pressure vessel that encloses
Chinese power generators face tougher times as deregulation sparks competition the reactor core from Dongfang Electric.
Ongoing deregulation in Chinas electricity The 200-megawatt reactor will help
market has heightened price competition power offshore facilities in Chinas open
and squeezed profitability among the sea and island reefs, CGN said, adding
nations power generators amid capacity that offshore energy supply is an issue
oversupply but they have yet to feel the that China has to overcome in order to
full force of market-based pricing due to 9
become a naval power. The ACPR50S
the absence of a spot market. National project was approved by the National
Energy Administration chief engineer Han
Development and Reform Commission,
Shui recently said that the regulator aims
the countrys state economic planner,
to complete the revamp of transmission
earlier this year, together with plans for
and distribution tariffs by the end of next
year, and will start trial spot market China National Nuclear Corps ACP100S
power trading by the end of 2018 and fully monopolies are broken. It is the clearest floating reactor and China Shipbuilding
operate it in 2020. It also plans to finish timetable yet for deregulation in the Industry Corps proposal to turn an
work related to the opening of the retail highly regulated electricity market since a offshore military nuclear facility into a
market to new players after state-run blueprint was outlined in 2002. floating power station for civilian use.

Indonesia takes steps to increase power capacity by 6 GW

Indonesian state-owned Perusahaan stalled projects, PLN has been tasked


Listrik Negara (PLN) is attempting with completing President Joko Jokowi
to improve the countrys ability to Widodos ambitious program to procure
meet increasing economic demand for an additional 35,000 MW by 2019. The
electricity by getting stalled power 35,000 MW project succeeds the 10,000
projects off the ground. 34 power plant MW policy launched by Yudhoyono during
projects worth in the region of $828.8m his first presidential term in 2005, to
have been held up for the last seven keep reserve margins the difference
years. The projects were part of former between capacity and peak demand
president Susilo Bambang Yudhoyonos within the International Energy Agencys
administrations fast track programmes recommended level of 20 to 35 percent.
and account for 627.8 MW in capacity. 11 As the nation is at risk of a power crisis
of the plants are coal-fired and PLN have the remaining six will be taken over and should the level decline to below 20
decided to convert many of these to gas- continued by PLN through engineering, percent, Jokowi has taken the initiative
fired power as they are quicker to build. procurement and construction (EPC) to boost power capacity to accommodate
The other 17 will continue as planned and contracts. Apart from handling the higher economic growth.
December 2016
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ExpertSpeak
Proposed amendments to electricity rules
discriminatory to captive power generation
On October 6, 2016, the Ministry of Power sought public com-
ments on the proposed amendments to Electricity rules 2005.
In this article, Rajiv Agrawal, Secretary, Indian Captive Power
Producers Association (ICPPA), analyses how these changes are
discriminatory to captive power generation (both coal and renew-
able power); negates the legislative intent and spirit of Electricity
Act 2003 and its policies (i.e. competition in power sector and
greater role for CPP & group CPP), and also re-define proviso of
companys Act. He feels that these are clearly aimed at forcing
CPPs to close down or reduce generation forcing them to draw
power from IPPs and DISCOMs

Who wants these invidious and hence most lucrative for


changes? DISCOMs and IPPs Rajiv Agrawal, Secretary, Indian Captive Power
Subsequent to restricting open access at which are under Producers Association (ICPPA)
10 Proposed
state level, the proposed amendments pressure to
amendments
are aimed at closing down all group search new defined by the following criteria:
aimed at closing
CPPs and hamper flexibility to mange industrial It should have Captive
business (owning CPP) on account of customers.
down all group CPPs consumption of minimum 51%
the following reasons: Thus, they and hamper flex- of produced power (not related to
After explosive unplanned growth consider it ibility to mange capacity).
of IPPs, the national PLF is hov- as a threat business In case of Group CPP, all
ering around 50-60%. This problem when industries captive consumers should have
of Excess power gets com- produce own power minimum 26% share in the Group
pounded by addition of renewable using CPPs and Group CPPs as per CPP.
solar power on war-footing (mostly Electricity Act & policies. Further, in case of association of
as IPP). Current economic slow- For example, a company has mul- persons the power consumption
down and subdued power demand tiple business lines at one location and should be in proportion to their share-
has increased the pain. drawing power from a CPP. Today, it holding (within +/- 10% variation).
Summation of all state and central can de-merge one product line (with Explanation 1(c) to Rule 3(2) Own-
taxes and new Environment Cess CPP) into new company and can ership of power plant set up by a
(of Rs.400 PMT) makes it 100% tax continue to draw power as Group CPP. body corporate shall mean equity
on billing price of CIL coal (mostly However, after this amendment, if you share capital with voting rights.
available G10 grade). This makes convert a CPP in group CPP, you either If any part of condition is not
the power very costly for nation and end up paying cross-subsidy to get complied, cross subsidy surcharge (as
increases the losses for DISCOMs power from CPP or operate it at partial penalty) has to be paid on the entire
(T&D and free power). capacity or close down CPP. power consumed on captive basis.
Even under proposed GST regime,
coal is not only clubbed with Luxury Affected parts of Electricity Amendments and their
and Sin goods, but additional non- Rule 2005 implications
vatable Cess is proposed that will In simple words, a unit is defined as Following are the amendments
not allow power cost reduction. CPP / CGU if its primary purpose under consideration along with their
Industrial power tariff is highest is to supply power for captive use as implications:
December 2016
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1. The provision of power con-


sumption in proportion to
share-holding is applicable to
association of persons. After
amendment, it will also be appli-
cable to SPV, body corporate,
partnership firm etc.
The amendment is trying to regu-
larize APTEL decision {Kadodara
Power Private Limited v. GERC
[2009 ELR (APTEL) 1037] but
challenged in Supreme Court} that
treat SPV registered as Company
to be treated as association of
persons and treated power not
consumed in proportion to share-
holding and levy penalty on entire
captive generation. How SPV, a
legal person itself can be asso- By adding a few words in the rules
ciation of persons? If Group CPP sells in place of explicitly explaining
The rule is trying to re-define power in open market each word (that may need a full
legislatures. If a SPV is registered beyond 51%, DISCOM book volume) the amendment will
under Companies Act, how it can still earns Cross- create more ambiguity than can be
be interpreted as Association of imagined
Persons that are defined under
subsidy surcharge The manner in which companies
11

Societies Act 1860? without doing anything. should be constituted and made
2. Rule 3(1)(a): If power is consumed However, if the power to function is being dictated by
by Captive USER over and above beyond 51% is given electricity rules which is diluting
51%, it should also be in proportion to Group CPP member, the rights otherwise available under
of their share-holding the Companies Act
Even if a single user (and not all
no Cross Subsidy is Redefining full paid up: Under
users together) will use power from payable and DISCOM the Companies Act, a Co. has right
balance 49% power, penalty may perceives it as a busi- to issue either fully or partially
have to be paid by all users even for ness loss paid up shares. Company can make
first 51% power consumed a call (in future) on the unpaid
During private discussions, by paying cross-subsidy surcharge, capital as committed in documents
authorities admit that if more else you lose status of CPP filed before issue of share. Thus
industries keep getting power It also means that the amendment inclusion of condition of full paid
from Group CPP as its member will change Major-Purpose of up share curbs the right to freedom
lucrative revenue to DISCOMs gets captive Generation as selling to run a company and may also
hampered. power beyond 49% in place of require Co. to go against docu-
If Group CPP sells power in open captive-use ments before issue of shares
market beyond 51%, DISCOM still 3. Explanation 1(c) to Rule 3(2) Redefining rights such as value
earns Cross-subsidy surcharge Definition of Ownership has been of shares: all rights available to
without doing anything. However, modified to mean the paid up equity 26% shareholders will accrue to the
if the power beyond 51% is given share capital with full right such as, captive consumers irrespective of
to Group CPP member, no Cross value of shares, sharing of profit the value at which the shares have
Subsidy is payable and DISCOM and dividends, capital appreciation, been subscribed to or acquired by
perceives it as a business loss voting rights, transfer of shares etc. them. The value of a company is
It is a serious issue that even after There is no need to re-define the never constant and the equity alone
investing in a group CPP, its member term ownership defined by a doesnt provide funding for the
have to buy power from the unit specific legislature Companies Act. entire project.
December 2016
www.InfralinePlus.com

ExpertSpeak

Given that the cost of setting up ing logic and assured to remove criteria even imagination that business
power projects is high, captive related to power consumption in fluctuation will be only within +/-
users would have to make a sub- proportion to share-holding. However 10%. During sagging economy or
stantial lump sum contribution to in place of Ease of Doing Business changed market demand, if plants
the capital of the CPP owner at the proposed amendments create more operate at much lower capacity
the time of becoming member of rigid approach towards CPPs. Follow- a group-CPP member may draw,
Group CPP. ing are the main issues: just a fraction of power (allotted in
Due to large scale NPA in power It is against natural justice because proportion to shareholding).
sector, funding for power projects if one member of Group CPP fails It is forcing CPP to operate at
has dried-up. Hence it will prevent to draw power, other members partial load causing national waste
a small & medium captive con- have to pay penalty (cross subsidy and losses to the CPP
sumer to access Captive power charge) even if they continue to Example:
Redefining full rights such as... draw allocated power E1: Three units A, B & C have 19%,
sharing of profits and dividends: It is against freedom to do 31% and 50% (5MW, 8MW &
under the Companies Act each business because it is beyond 13MW) shareholding within 26%
shareholder has rights for different and draw 26 MW power (52%)
category of shares issued based Power Ministry should out of 50 MW capacity.
on funding needs of the company. abandon the proposed E2: Balance 24 MW power is given
These rights get restricted by to anyone including fluctuating
lenders and shareholders discretion
changes to Electricity demand from A, B & C.
to run the business. rules, remove the con- E3: Market of Cs products crashes
Full rights for transfer of share: dition of proportionate to just half and need only 7 MW
Companies act regulate the right power consumption power.
12 to transfer shares. More over full for all categories of E4: To supply total 20 MW (5 A + 8
rights to share transfer to an entity B + 7C) and still maintain 51%
other than power consumer, may
consumers and seek Captive Criteria, the Group-CPP
make the whole CPP lose its status to reduce coal cost by has to reduce production by 11
waiving off 100% taxes MW from 39MW.
Proposal is contrary to logic and apply only 5% mini- E5: However, the new share of A, B
accepted by Power Ministry mum GST slab so that & C within 51% power is 25%,
Two years back, during a joint meeting 40% & 35% means they are not
between ICPPA and Ministry of Power,
the losses for DISCOM drawing power in proportion to
the Government provided the follow- are minimized their shareholding and will have to
pay penalty (equal to cross-subsidy
surcharge)

Way forward
Keeping all these points in mind,
the Power Ministry, in the right
earnest, should abandon the proposed
changes to Electricity rules, remove
the condition of proportionate power
consumption for all categories of
consumers and seek to reduce coal
cost by waiving off 100% taxes and
apply only 5% minimum GST slab
so that the losses for DISCOM are
minimized.

The views in the article of the author are personal


For suggestions email at feedback@infraline.com
December 2016
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InDepth
Thermal power developers feel
the stress over plunging financials

13

Around 17 GW of power projects, faces high debt risk, says Crisil


15% of private capacities to be exposed to vagaries of short-term market for lack of PPAs

By Team InfralinePlus

Despite euphoria surrounding renew- of discoms, aggressive bidding, and and banks are jittery about potential
able energy and new schemes an- distressed financials of several Indepen- bad assets from the sector. According
nounced by the government, the coun- dent Power Producers (IPPs). to a data published by the Reserve
trys struggle to provide adequate power The coal block auction and a Bank of India (RBI), the infrastructure
to an aspiring 1.27 billion population pick-up in pace for clearances could sectors share in gross non-performing
which is going to increase significantly have made a case for developers to assets of banks was 13.90 per cent in
by 2030, continues. The sector has been revive plans and take up new projects. June 2016, higher than 12.69 per cent
grappling with issues related to fuel But several equipment manufacturers in December 2015, and the power sec-
supply availability (both coal and gas), are hamstrung as most developers are tors contribution to these numbers was
weak demand led by the financial woes dealing with stretched balance sheets 5.97 per cent in June 2016.
December 2016
www.InfralinePlus.com

InDepth

Even though power generation has


increased, lack of power purchase
agreements (PPAs) continues to keep
plant load factor at its lowest. Low
asset utilization is making it difficult
for power producers to service debt.
Lack of power demand from indus-
tries is causing ready capacities not
being able to find long term buyers
and sell at abysmally low prices at
the power exchange. There is a huge
amount of generation capacity lying
undispatched due to unavailability of
coal which is due to the policy that
only plants with long term contracts
will get coal linkage, thereby ren-
dering installed transmission capacity
under-utilised. On the other hand,
state electricity distribution companies
(DISCOMs) are not pursuing long There has been an increase in private sector
term contracts resulting in a Catch-22 capacities without PPAs in the last three years.
situation for the generation and
transmission capacity addition and a If PPA signing does not commence soon, by
14 utilization mismatch. the end of FY 16-17, nearly 15% of private
The total installed capacity is 307 sector capacities (20-25 GW) without PPAs will
GW (approx.) as on October, 2016
while, the peak demand is 153 GW.
be exposed to the vagaries of the short-term
Power generation units in India are electricity market
running below capacity as DISCOMs
shy away from buying more power. fuel-related worries to some extent, little scope for developers to sign
According to data published by the legacy issues such as new coal block LTPPAs (based on thermal power)
Central Electricity Authority (CEA), auctions at aggressive prices still haunt with utilities.
Indias thermal power plant load factor some generators.The uncertain future The Ujwal Discom Assurance
(PLF), slipped to 52.03% in August this of Indian domestic gas production has Yojana (UDAY), launched by the
year, its lowest in over a decade and cascading effects on the overall role government for financial turnaround
has been consistently hovering below of gas in the countrys energy sector. and revival of power distribution com-
60%. There has been an increase in The impact has already been felt in the panies, will have definite impact on
private sector capacities without PPAs power sector where the PLF of gas- the buying capacity of the distribution
in the last three years. If PPA signing fired plants during the year averaged utilities. But thats going to be more
does not commence soon, by the end of only 18.64% in May last year and more long term and sustainability would
FY 16-17, nearly 15% of private sector recently at 23.73% (May 2016) due to depend on the overall turnaround of the
capacities (20-25 GW) without PPAs unavailability of gas. distribution segment.
will be exposed to the vagaries of the Recent trends indicate that short
short-term electricity market. term (including day ahead) prices have Huge chunk of capacity at
Power plants are generally built on remained lower in comparison to the risk
a 70:30 debt equity ratio and if plant prices under LTPPAs. With the onset According to a CRISIL report, around
load factor falls below 65 per cent, of ambitious renewable energy (RE) 17 GW of power projects, includ-
return on investment falls to such a programme in the country, DISCOMs ing those facing the consequences of
low level that it becomes difficult for will now have to tie-up significant aggressive bidding for coal supplies
the company to service its debt. While portion of the RE capacity in order or huge cost overruns, and those with
Coal India Ltds stellar performance to fulfil their renewable purchase gas-supply issues, are projects where
over the past two years has taken away obligations (RPOs). This leaves very the debt at risk is the highest today. The
December 2016
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rating agency believes that such proj- Likely scenario of transmission projects expected to bid
ects are not expected to turn viable in (under tariff-based competitive bidding route)
the long run even if they are structured
States Commissioned Capacity Under-Construction Capacity Total
under the 5:25 (asset restructuring
Chhattisgarh 4636 990 5626
scheme) of the RBI.
Cost overrun for projects include Madhya Pradesh 1824 1200 3024
factors such as delay in execution Odisha 1315 - 1315
caused by the following, i) land acqui- Maharashtra 3098 1080 4178
sition ii) securing required clearances Himachal Pradesh 1174 244 1418
especially related to forest and envi- Sikkim 96 535 631
ronment as well as iii) EPC contractors, Uttarakhand - 76 76
[b] exposure to INR-USD exchange Andhra Pradesh 1150 2020 3170
rate volatility especially for projects Gujarat 945 945
using imported BTG equipment and [c] Tamil Nadu 942 150 1092
delay in securing funding for the cost
Karnataka 980 980
overruns (both debt and equity) thereby
Rajasthan 120 120
increasing the pre-operative expenses
Uttar Pradesh 198 198
component (primarily interest during
construction). Gas-based 5000 5000
projects
While the gross NPAs in the sector
Total 21280 6493 27773
have increased from 1.3 percent to 4.4
percent in financial year 2015-16, the Table: Stranded Capacity without PPAs
Source: Motilal Oswal Securities Limited (MOSL) document
stressed assets as measured by gross
NPAs and restructured standard assets 15
continue to remain steady, close to 14 While the gross NPAs in the sector have increased
percent. Constraints of PPAs as well from 1.3 percent to 4.4 percent in financial year
as fuel supply agreements (FSA) are 2015-16, the stressed assets as measured by
majorly restricting these plants from
approaching the power market and
gross NPAs and restructured standard assets
finding buyers. Further, coal linkages continue to remain steady, close to 14 percent.
are given to power plants on the basis Constraints of PPAs as well as FSA are majorly
of Long Term PPAs signed by them. restricting these plants from approaching the
However, since the past 2-3 years there power market and finding buyers
has been little or no activity on the
part of the DISCOMs to issue fresh
tenders for long term PPAs (LTPPAs)
with power producers setting up power
plants under Case-1 Bidding.
Denial of open access through
high cross subsidy surcharge (CSS)
also affects power generators who
are unable to sell power through open
access to consumers. This inhibits fresh
investments in new generation capac-
ities. Captive power units with surplus
power similarly have no incentive to
sell. Power surplus areas stay stranded
from power deficit areas, lesser quan-
tities of electricity are transacted than
the market clearing equilibrium and
long term prices of electricity and/or
power cuts keep rising.
December 2016
www.InfralinePlus.com

InDepth

Compliance with new increases, further spike in costs would Renewables plays its part!
emissions norms may be stoutly resisted by the consumers. The central governments push for
increase woes The new laws on emissions have renewable energy capacity addition
Coal-based thermal plants in the drawn distinctions between plants com- (proposed 175 GW by 2022) and the
country may have to spend massive missioned before 2003, those that came states obligation to include solar in
amounts over the next two years for the up between 2003 and 2016 and the ones their total energy mix is driving long-
technical upgrades to meet the stringent going to be commissioned in 2017. The term contracts to solar. It is noteworthy
and ambitious emission norms notified emission standards have been made that all long-term contracts spanning
by the ministry of environment and progressively stringent for newer plants, more than 25 years, were all signed
forests and climate change (MoEFCC) thus elevating the cost for them. by solar power companies in 2015-16
recently. However, domestic financial and up to in the second quarter of the
institutions are already facing massive Coal-based thermal current fiscal year (FY 2016-17).
accumulation of non-performing assets plants in the country Coal-powered thermal power plants
(NPAs) on account of the power sector, may have to spend account for 70% of total electricity
and are unlikely to lend given the massive amounts over generated in the country and represents
uncertainties involved. 61% of the installed power capacity.
The technical feasibility of
the next two years for Till the thermal generating capacity
retrofitting plants remains questionable, the technical upgrades utilisation improves to 80-85%, PLF
which may make scrapping of old to meet the stringent levels (to the existing 60% PLF level)
plants more viable than upgrading and ambitious emis- and the existing untied capacities are
them. Additionally, the power industry sion norms notified contracted, its unlikely that there will
and regulators would have to deal by MoEFCC recently. be any private sector interest in the coal-
with the expenditure involved in the based thermal generation sector. With
consequent tariff hikes. Although the
However, domestic the increasing adoption of renewable
16
additional cost for the comprehensive financial institutions power (particularly solar) and growing
environmental upgrade may be are already facing preference for competitively bid
considered as Change in Law and massive accumulation merchant contracts mean the thermal
may be allowed to be a pass-through, of NPAs on account of power industry can no longer have the
the power producers feel that as UDAY the power sector luxury of stable long-term PPAs.
scheme itself entails timely tariff For suggestions email at feedback@infraline.com
December 2016
www.InfralinePlus.com

StatisticsPower
DDUGJY Progress Report of Village Electrification as on 31.10.2016
Village Electri- Cumulative Mode of Electrification
Un-elec- Un- Unin-
Cumulative Vil- fication During Village Electri- Under Under
trified electrified Through habited
lage Electrified 2016-17 (Upto fied (As on DDUGJY/ State
Sl. Region/ villages villages off-Grid Villages
31.10.2016) 31.10.2016) RGGVY Plan
No. States/UTs
As on 31.03.2016 As on 31.10.2016
No. No. % No. No No. No. No. No. No.
Northern Region (NR)
1 Chandigarh 0 5 100 0 5 0 0 0 0 0
2 Delhi 0 103 100 0 103 0 0 0 0 0
3 Haryana 0 6642 100 0 6642 0 0 0 0 0
4 Himachal 34 17848 99.81 27 17875 7 7 0 0 7
Pradesh
5 Jammu&Kashmir 107 6230 98.31 5 6235 102 102 0 0 0
6 Punjab 0 12168 100 0 12168 0 0 0 0 0
7 Rajasthan 332 42944 99.26 183 43127 149 39 45 0 65
8 UttaraKhand 76 15669 99.52 3 15672 73 54 19 0 0
9 Uttar Pradesh 224 97589 99.77 131 97720 93 42 0 9 42
Subtotal (NR) 773 199198 896.7 349 199547 424 244 64 9 114
Western Region (WR)
10 Chhattisgarh 675 18892 96.55 116 19008 559 102 457 0 0
11 Daman & Diu 0 19 100 0 19 0 0 0 0 0
12 D & N Haveli 0 65 100 0 65 0 0 0 0 0
13 Goa 0 320 100 0 320 0 0 0 0 0
14 Gujarat 0 17843 100 0 17843 0 0 0 0 0
15 Madhya Pradesh 258 51674 99.51 133 51807 125 29 53 0 43
16 Maharashtra 0 40956 100 0 40956 0 0 0 0 0 17
Subtotal (WR) 933 129769 696.1 249 130018 684 131 510 0 43
Southern Region (SR)
17 Andhra Pradesh 0 16158 100 0 16158 0 0 0 0 0
18 Karnataka 39 27358 99.86 7 27365 32 23 9 0 0
19 Kerala 0 1017 100 0 1017 0 0 0 0 0
20 Lakshadweep 0 6 100 0 6 0 0 0 0 0
21 Puducherry 0 90 100 0 90 0 0 0 0 0
22 Tamil Nadu 0 15049 100 0 15049 0 0 0 0 0
23 Telangana 0 10128 100 0 10128 0 0 0 0 0
Subtotal(SR) 39 69806 699.9 7 69813 32 23 9 0 0
Eastern Region(ER)
24 A & N Island @ 0 341 86.11 0 341 0 0 0 0 0
25 Bihar 993 38080 97.46 258 38338 735 735 0 0 0
26 Jharkhand 1775 27717 93.98 529 28246 1246 760 398 64 24
27 Odisha 2210 45452 95.33 424 45876 1786 1353 0 0 433
28 Sikkim 0 425 100 0 425 0 0 0 0 0
29 West Bengal 14 37449 99.96 0 37449 14 14 0 0 0
Subtotal(ER) 4992 149464 572.8 1211 150675 3781 2862 398 64 457
North-Estern Region(NER)
30 Arunachal 1404 3854 73.3 171 4025 1233 273 960 0 0
Pradesh
31 Assam 1950 23422 92.31 789 24211 1161 570 591 0 0
32 Manipur 201 2178 91.55 37 2215 164 164 0 0 0
33 Meghalaya 911 5548 85.9 657 6205 254 239 15 0 0
34 Mizoram 42 662 94.03 22 684 20 20 0 0 0
35 Nagaland 82 1318 94.14 22 1340 60 60 0 0 0
36 Tripura 17 846 98.03 6 852 11 11 0 0 0
Subtotal(NER) 4607 37828 89.14 1704 39532 2903 1337 1566 0 0
Grand Total 11344 586065 2955 3520 589585 7824 4597 2547 73 614
The figures are based on the data available on DDUGJY website (Except Union Territories).
55 Villages un-electrified as per Census 2011 are in encroached forest area and cannot be electrified as per the Supreme Court order @ (accordingly total has
been shown)
December 2016
www.InfralinePlus.com

StatisticsPower

Plant Availability Factor of NTPC Thermal Power Plants: FY17 (Till Oct16)
FY17
Sl.
Power Plants Region Cumula-
No. Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16
tive FY17
1 ANTA Gas Power Plant 66.17 95.22 92.269 97.679 93.601 96.954 94.901 90.97
2 AURAIYA Gas Power Plant 97.73 95.71 96.821 97.679 97.719 96.237 96.465 96.91
3 DADRI Gas Power Plant 96.54 93.65 95.173 96.95 91.735 96.951 96.661 95.38
4 DADRI Thermal Power Station 105.66 104.74 104.736 104.736 104.389 105.103 106.037 105.06
5 DADRI-II Thermal power Station 55.56 103.38 103.243 103.387 103.225 101.735 104.916 96.49
6 RIHAND Super Thermal Power Station 79.62 66.55 48.151 78.536 90.328 96.878 98.148 79.74
7 RIHAND-II Super Thermal Power Station NR 99.7 101.21 99.052 100.708 90.254 96.899 92.976 97.26
8 RIHAND-III Super Thermal Power Station 94.57 100.96 85.208 100.763 95.128 97.293 51.797 89.39
9 SINGRAULI Super Thermal Power Station 51.2 84.65 98.519 100.154 86.826 85.175 89.527 85.15
10 UNCHAHAR-I Thermal Power Station 79.13 91.7 91.423 91.357 96.395 70.967 61.616 83.23
11 UNCHAHAR-II Thermal Power Station 56.98 92.6 104.644 104.497 104.507 104.575 104.762 96.08
12 UNCHAHAR-III Thermal Power Station 104.47 104.66 104.657 104.657 104.657 104.657 104.76 104.65
13 JHAJJAR (Indira Gandhi STPP) 66.16 81.58 100.071 97.554 97.909 100.128 95.367 91.25
14 Korba Super Thermal Power Station 96.54 90.88 96.6302 76.8652 97.16 96.15 93.79 92.57
15 Vindhyachal Super Thermal Power Station-I 78.58 82.26 96.3408 97.4018 93.85 91.63 91.81 90.27
16 Vindhyachal Super Thermal Power Station-II 95.48 94.23 93.1265 57.2697 49.39 76.9 93.95 80.05
18 17 Vindhyachal Super Thermal Power Station-III 101.32 100.95 97.349 98.58 98.15 78.1 67.5 91.71
18 Kawas Gas Power Station 74.65 93.48 98.8953 100.29 100.04 98.84 100.54 95.25
19 Gandhar Gas Power Station 97.01 96.19 96.1843 98.79 97.91 98.72 74.58 94.2
20 Singrauli Super Thermal Power Station-II 100.53 95.81 100.3006 99.1868 61.01 100.29 100.41 93.93
WR
21 Korba Super Thermal Power Station-III 99.77 99.23 99.9851 100.131 98.94 100.86 82.04 97.28
22 NTPC-SAIL Power Company Ltd (Bhilai) 84.45 93.09 91.9493 94.9876 95.3 94.25 94.37 92.63
23 Sipat Super Thermal Power Plant Stage-I 94.11 98.91 95.754 70.1914 100.22 96.81 75.81 90.26
24 Ratnagiri Gas and Power Private Ltd 0 0.25 0.043 1.3524 3.33 7.44 5.62 2.58
(Dabhol)
25 Vindhyachal Super Thermal Power Station-IV 95.38 100.97 100.9443 95.277 96.47 96.56 95.5 97.3
26 Mauda Super Thermal Power Station 99.67 95.41 99.7859 85.539 85.61 100.08 98.39 94.93
27 Farakka Super Thermal Power Plant Stage- 34.84 75.28 97.28 93.38 95.97 91.34 93.48 83.08
I&II
28 Farakka Super Thermal Power Plant Stage-III 97.81 99.78 99.7 97.72 96.95 99.86 100.01 98.83
29 Kahalgaon Super Thermal Power Station 89.68 98.64 98.13 97.84 91.22 75.75 96.83 92.58
Stage-I ER
30 Kahalgaon Super Thermal Power Station 97.72 97.68 98.24 72.34 99.39 93.84 98.42 93.95
Stage-II
31 Talcher Super Thermal Power Station Stage-I 96.32 97.77 92.15 97.91 95.65 94.36 87.53 94.53
32 Barh Super Thermal Power Station Stage-II 50.85 82.5 80.9 90.18 83.21 44.94 87.61 74.31
33 Ramagundam Super Thermal Power Station 99.45 99.51 83.219 78.632 82.062 100.466 98.195 91.65
Stage - I & II
34 Ramagundam Super Thermal Power Station 102.19 102.16 102.229 100.407 97.336 101.44 60.808 95.22
Stage - III
SR
35 Talcher Super Thermal Power Station Stage-II 96.98 95.87 93.404 97.806 82.003 71.657 77.845 87.94
36 Simhadri Stage-II 99.47 100.26 100.264 100.213 100.264 100.986 101.319 100.4
37 Vallur - NTECL Vallur STPS (1500MW) 68.64 65.23 56.453 58.121 87.766 93.318 69.457 71.28
December 2016
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NewsBriefs | Coal National


Coal imports decline 14 pc to 16 MT in October Coal India raises auction aim to
stave off imports

procurement and sales platform floated


jointly by SAIL and Tata Steel, said. It
further said that total imports of 15.59
MT in October also include 10.34 MT of
non-coking fuel and 3.54 MT of coking coal.
Coal imports (all type of coals) in October
2016 stood at 15.59 million tonnes MT
(provisional) against 18.09 MT in October
2015 and 15.55 MT in September 2016,
Coal imports fell 13.7 per cent to 15.59 it said. Coal imports in October remained Coal India has dramatically increased
million tonnes (MT) in October due to almost flat compared to September as the target for selling coal through
higher prices of the fossil fuel in the Indian buyers continued to delay their auction to 120 million tonnes (mt)
international market. The country had purchases, expecting prices in international this financial year, which it hopes
imported 18.08 MT of coal in October markets to soften, mjunction CEO Vinaya will help in import substitution and
last year, mjunction services, an online Varma said. meet electricity needs. Last year, the
miner had sold 66 mt of coal through
Govt backs use of drones in mining operations auction. Coal secretary Anil Swarup had
previously indicated that next financial
The Union mines ministry is exploring year onwards, government-owned
possibilities of use of drones (unmanned power plants would go for 10 per cent
aerial vehicles) in different mine related domestic coal and private players will
functions including, exploration, surveillance, be encouraged to use more local fuel.
regulation and operation of mines, managing Coal India has been auctioning 10 mt
waste dumps and post mining reclamation of coal (8 mt for regulated sector and 19
of land. To achieve successful applications 2 mt for non-regulated sector) every
of drones, the ministry has asked PSUs month through auction to meet power
National Mineral Development Corporation demands of entities including power
(NMDC), Steel Authority of India Ltd (SAIL), plants that either dont have fuel supply
National Aluminium Company (Nalco), Though originated in military applications, agreements with the state-owned coal
Rashtriya Ispat Nigam Ltd (RINL) and the use of drones is vastly expanding in miner or have lost their mines due to
Hindustan Copper Ltd (HCL) - to exploit commercial, scientific, recreational and a Supreme Court order. This financial
the new technology. State government other applications. With civilian drones now year, realisations so far have been 22 per
organisations, Indian Bureau of Mines largely outnumbering military drones, the cent higher than the notified price. Last
(IBM) and the Geological Survey of India ministry is considering using them for mine financial year, realisations were 33 per
(GSI) can also bank on drone technologies. related applications. cent higher than the notified price.

Stocks pile up with Coal India as 15 power plants didnt lift fuel

As many as 15 power plants did not lift stocks have dwindled to five days in some
any coal from Coal India in September, cases. According to Coal India, power
foregoing the 2.6 million tonnes of stock producers, both near and away from coal
they were supposed to lift from the mines, are not lifting their full quota of
state-run monopoly miner and resulting in coal each month because they are now as-
thermal power plants across the country sured of railway rakes and coal availability
receiving delivery of only 80% of the coal whenever required, unlike in the past when
allotted to them during the month. This availability of both were uncertain for
in turn reduced stocks at various power major part of the year. At the time when
plants, specially the ones near coal mines. coal and rakes were not available freely,
A number of them did not lift their full the Central Electricity Authority had
quota of coal despite stocks falling down stipulated that all power stations stock
to five days, or critical stock position, ac- Madhya Pradesh, Haryana and Punjab coal that would support generation for 15
cording to Central Electricity Authoritys have not been lifting their full quota for days in a row. Critical and super critical
definition. Plants in Gujarat, Rajasthan, several months in a row although their stocks were also defined at that time.
December 2016
www.InfralinePlus.com

NewsBriefs | Coal National


Odisha coal to be used in Maha, Guj power plants Tamil Nadu to stop using foreign
coal, save Rs 400 crore

port) via sea route to western parts of the


country like Maharashtra and Gujarat for
their power plants, we can save Rs 10,000
crore per year and due to this power tariffs
in Gujarat and Maharashtra is likely to come
down by 50-60 paise per unit, he said. The
minister was referring to the ambitious
Sagarmala project which mulls using sea
routes to transport raw materials and
Union minister for road transport and other commodities from surplus states to
shipping Nitin Gadkari said surplus coal different parts of the country by connecting Tangedco is all set to stop importing coal
mined in Orissa can now be supplied to major and minor ports. While claiming for all its thermal units in Tamil Nadu.
power plants in western states like Gujarat that Paradip port possesses the greatest With the stoppage of import, the discom
and Maharashtra. If we can transport potential in the country, he said It can will save at least 400 crore per annum.
surplus coals from Orissa (through Paradip become the biggest port of the world. This follows Centre agreeing to increase
the coal allocated to fire Tangedco
Rising coal production in India may push up atmospheric CO2 levels thermal units. As of now Tangedco is
importing coal from Indonesia. The
With its plans double its coal production by Centre has agreed to supply the extra coal
2020, India is likely to be the engine that from Jharkhand coal mines and it will be
drives global carbon dioxide pollution over easy for the discom to evacuate the coal
the next few years. Global carbon dioxide through rail. The Union coal ministry has
production has virtually remained unchanged initiated talks with Railways to allocate
20 at about 36.4 billion tonnes a year for the extra rakes for Tamil Nadu. The Centre
last three years. Global carbon dioxide emis- has also agreed to increase coal alloca-
sions from fossil fuels and industry grew tion to Tangedco for the new thermal
at over 3% per year in the 2000s. Growth projects too. There was a concern over the
slowed in the 2010s and has levelled off in quality of coal from western coal mines
the last three years, according to annual near Nagpur in Maharashtra. The Centre
analysis of trends published by the Global reductions in US coal consumption making agreed to allocate coal from western coal
Carbon Project in the journal Earth System important contributions in single years, par- mines instead of Ib Valley in Odisha. But,
Science Data. The study attributes the drop ticularly 2012, 2015, and 2016. Indias emis- as in Ib Valley , the quality from western
and levelling off in the amount of carbon di- sions grew at over 5 per cent in 2015, which coal mines is poor. Due to this Tangedco
oxide produced globally to a sharp slowdown happened on the back of a strong decade of asked Centre to ship coal from Jharkhand
in Chinese coal consumption since 2012 and growth of around 6 per cent per year. or Singareni, which has been accepted.

Piyush Goyal says 83 cancelled coal mines allocated so far

The Ministry of Power, Coal, New and mines for specified end use power under
Renewable Energy and mines announced the provisions of the Coal Mines (Special
that 83 coal mines have been allocated Provisions) Act, 2015. The Minister
to be used for Power, Steel, Cement and further elaborated that out of the 17 coal
Captive Power Production as well as for mines auctioned, mining operations have
sale of coal. 31 coal mines out of the commenced in 10 schedule II mines. The
83 have been allocated through auction. Supreme Court had earlier cancelled 204
These mines will be used for specified coal mines due to irregularities in awarding
end-uses other than power such as Iron & the coal mines by the government. All the
Steel, Cement and Captive Power Plants mines currently being auctioned off by the
have been clubbed as Non-Regulated government are a part of the cancelled
Sector, said Piyush Goyal, Minister of group. 9.56 million Tonnes of coal have
Power, Coal, New and Renewable Energy been produced from these coal mines
in a written reply to a question in Rajya successfully auctioned 22 coal mines to after re-allocation and starting of mining
Sabha. The government has so far the non-regulated Sector and nine coal operations, the minister added.
December 2016
www.InfralinePlus.com

NewsBriefs | Coal International


Canada speeds up plan to phase out coal power, targets 2030 Rich countries told to shut coal
plants by 2030 to save climate:
report
Its coal-cutting plan would help it meet
the emissions reduction targets of the Paris
agreement, which Parliament ratified last
month. Canadian Environment Minister
Catherine McKenna said Canadas coal
regulation, which accelerates an exist-
ing timetable, will take into account the
positions of provinces, some of which have
Canada will speed up plans to virtually resisted federal plans to counter climate
eliminate traditional coal-fired electric- change. The government will support the
ity by 2030, a stance contrasting sharply transition by using the Canada Infrastruc-
with that of U.S. President-elect Donald ture Bank public-private funding mecha- Rich countries must close all their
Trump, who has pledged to revive the sec- nism. Four provinces still burn coal for coal-fired power plants by 2030 to have
tor. Canadas Liberal government ran on a electricity: Alberta, Saskatchewan, Nova a chance of holding global warming
platform to do more for the environment. Scotia and New Brunswick. to tolerable levels, a report from an
environmental research group said.
China to cap coal at 55 percent of total power output by 2020: NEA China would have to phase out the
most polluting fossil fuel by 2040
China aims to cap coal-fired power capacity and the rest of the world by 2050,
at 1,100 gigawatts by 2020, higher than the according to climate analytics, a
current ceiling but accounting for less of Berlin-based non-profit that is studying
the countrys total power supply, as the top how nations can meet the emissions
global energy market seeks to increase the goals they agreed at United Nations
use of cleaner renewable fuels. Announcing talks in Paris last year. The findings 21
its five-year plan for the power industry, illustrate the difficulty in achieving
the National Energy Administration (NEA) the UN goal of holding global warming
said China aimed to have 2,000 gigawatts to well-below 2 degrees Celsius (3.6
of electricity generating capacity by 2020, degrees Fahrenheit). The world already
of which at least 320 gigawatts, or 16 - excluding hydro-power - stands at around has 8,175 coal plants and is building
percent, would come from solar and wind 22 percent and 10 percent, respectively. As another 733, providing about 40 of all
power and 110 gigawatts from natural part of its long-term plan to shift to clean electricity. Pollution from coal plants
gas. That would bring China much more in power, the NEA said China will eliminate could create 2.5 times more carbon
line with current power generation mixes or delay at least 150 gigawatts (GW) of dioxide emissions than allowed by
in the United States and the European coal-fired power projects between 2016 scenarios consistent with 2 degrees of
Union, where installed renewable capacity and 2020. warming, the report said.

Indonesian ITMs Jan-Sep coal production falls, cuts 2016 output target

Indonesian thermal coal miner Indo Tam- quarterly report. We believe coal price is
bangraya Megah said that its production and continuing to increase during this last quar-
sales over January-September fell to 19 ter of 2016. Higher-than-expected rainfall
million mt and 20.1 million mt respectively. impacted production, the company said,
It also cut its output target for 2016, citing adding that production was now targeted
weather disruptions. Over January-Septem- at 26.2 million mt and sales were expected
ber 2015, ITM produced 21.5 million mt of to be about 27.1 million mt for the full year.
thermal coal and sold 20.9 million mt. Aver- ITM, which counts China, Japan, Indonesia
age selling price over January-September and India among its major buyers, said
slumped 18% to $47.50/mt from $57.70/mt 99% of its target sales volume for 2016 had
a year ago. However, in the July-September demand and supply tightness in various been sold. The company operates six min-
quarter, the average selling price rose 12% producing regions. The thermal coal market ing concessions in East, South and Central
to $49.90/mt from $44.70/mt in April-June. continued to remain tight in Q3, driven by Kalimantan provinces, producing coal with
Thermal coal prices have surged in the lat- lower domestic supply in China and wet heating value ranging from 4,400 to 6,300
ter half of the year, driven mainly by Chinese season in Indonesia, ITM said in its latest kcal/kg gross as received.
December 2016
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InDepth
Need to link domestic coal
pricing with international market

22

Linking domestic prices with global market could deprive CIL of its profits
Private players unlikely to show interest unless coal pricing is linked to international indices

By Team InfralinePlus

India must reform its coal sector if it sector at discounted prices by Coal However, consensus could not be
has to secure long-term energy supplies India discourages usage of imported evolved on this matter
for its fast-growing economy. The first fuel, thereby putting undue burden on The coal ministry has said linking
step would be to align domestic coal Indian railways which is tasked with domestic coal prices with global
prices with the international market. transporting coal within the country. market could deprive CIL of the flex-
Niti Aayog has suggested correcting the Earlier, Montek Singh Ahluwalia, ibility to maximise its profits. While
mismatch in the draft National Energy deputy chairman to the erstwhile the PSU supplies coal to the power
Policy. But unfortunately, the suggestion Planning Commission, too had made sector at concessional prices, it charges
is being opposed by the coal ministry. a strong pitch in 2013 for removing higher prices from non-priority sector
Analysts have been pointing out that the disparity between domestic and customers. Besides, it also sells 10-12
supply of thermal coal to the power international coal market prices. per cent of its annual coal production
December 2016
www.InfralinePlus.com

whereas in domestic produce, it is 25


per cent. So, 25 per cent less imported
coal would be required to generate 1
unit of electricity.
It would be advisable to set up
imported coal-based power plants
in areas away from coal mines,
especially at locations in coastal
areas. That would release pressure
on railways. But developers tend to
prefer domestic coal for its better
cost economics.
Unless, domestic coal pricing is
linked to the international market,
opening coal sector for commercial
mining to private players would not
be possible. While providing inputs
to Niti Aayog, Pune-based Prayas, a
think-tank, has said there has to be
via e-auction which fetches it higher clarity whether opening up the coal
margins and helps maximise profits. CIL produces more sector would only be to introduce
Unwilling to lose control of coal than 80 per cent of more players into mining operations
pricing, coal minister Piyush Goyal countrys coal. The or whether it is also to move towards
has raised reservations over the draft National Energy competitive markets. 23
National Energy Policy. The lack of Prayas argues that if it is the
consensus between the Centre and the Policy drafted by Niti former, then there is a need for an
coal ministry has delayed the policy. Aayog is aimed at empowered and enlightened regulator
CIL produces more than 80 per curbing imports by who can determine prices for various
cent of countrys coal. The National increasing production coal consumers and also an objective
Energy Policy drafted by Niti Aayog is and transparent method to allocate
aimed at curbing imports by increasing
of renewable energy the resource among many applicants.
production of renewable energy in the in the country fivefold If it is the latter, there is a need for
country fivefold to 300 billion units to 300 billion units a market design. It should be noted
by 2019 and tripling coal production by 2019 and tripling that even in the auction process,
to 1.5 billion tonnes. Coal imports are the actual end-user of coal from
coal production to 1.5
envisaged to come down by 10 per cent a block may be different from the
by 2022 and by 50 per cent by 2030. billion tonnes block winner due to the possibility of
We should try to align the domestic arrangements and diversions that
coal price to the international price. tation cost is added, at a rail charge is provided for, the non-government
If you do not do that, the coal prices from Rs 1,000 to Rs 2,000 a tonne, the organisation has said.
would certainly go up...And that is an delivered cost of CIL coal works out to Prayas has further said that coal
important issue that we have to face, Rs 2,400-3,400 per tonne. from other sources such as imports
Ahluwalia had said while addressing Analysts say that the rail transit should also be factored into devising
a KPMG Energy Conclave. Because cost for every tonne per km is the policies to deal with pricing and allo-
of the cheaper domestic supply, the same for both imported and domestic cation. Either approach would require
demand is higher and it is distorting coal, but because of higher heating the setting up of an effective regulatory
the market. We solve that problem by value, the imported fuel has the edge. framework, it has added.
pooling coal, he had added. Coal sold by CIL is lower grade, with India is aspiring for 10 per cent
As per an estimate, CILs average a value of 3,500 to 5,500 kcal while annual GDP growth over the long-term.
production cost is Rs 900-2,000 a imported coal has one of 5,550 to To sustain this growth rate, power
tonne. The average sale price of CILs 6,500 kcal. The ash content is also sector will have to grow at least by 8
coal is Rs 1,400 a tonne. If transpor- low at two per cent in imported coal per cent. In the foreseeable future, coal
December 2016
www.InfralinePlus.com

InDepth

is likely to continue to dominate Indias Overutilisation of railways existing Private sector participation is
energy mix. So, the coal sector must lines has been a big hindrance to needed in commercial coal mining
be reformed and pricing be determined timely transportation of coal to power to ensure modernization of mining
based on market forces rather than plants in the western region and other practices and technology and adequate
through regulations. areas far away from mines. To avoid investment in coal washeries. However,
According to an analysis by PwC, congestion on the railway networks private players are unlikely to show
a consultancy firm, nearly 87 per in these regions, the government will interest unless coal pricing is linked to
cent of Indias proved coal reserves have to promote usage of imported coal international indices.
and majority of the present coal for power generation in such regions
production is concentrated in the and areas. House panel too supports
three eastern states of Odisha, West linking domestic coal
Bengal and Jharkhand and two central Even a parliamentary prices with global market
region states of Madhya Pradesh and panel has supported Even a parliamentary panel has
Chhattisgarh. While 49 per cent of supported the idea of linking
the coal-based installed capacity is the idea of linking do- domestic coal prices with the global
in the northern and western region, mestic coal prices with indices and opposed CILs practice
a geographical mismatch remains the global indices and of raising price to maximise profits.
between the demand and supply The standing committee on coal and
centres of coal.
opposed CILs prac- steel led by Kalyan Banerjee in 2014
The production targeted by CILs tice of raising price to said that CILs board should review
subsidiaries in FY 2020 shows that maximise profits. The domestic coal prices in consonance
93 per cent of CILs production will with changes in international market
standing committee
remain concentrated in the eastern prices, which should be done both in
24 and central region. Further, more than on coal and steel led cases of increase as well as decrease in
80 per cent of the mines auctioned or by Kalyan Banerjee in international prices.
allocated are in these regions. In FY 2014 said that CILs For example, the committee
2020, the northern and western regions recommended that coal price hikes
are expected to emerge as major board should review should not be driven only by the
centres of electricity demand. That domestic coal prices motive of profit maximisation and
would call for a commensurate increase in consonance with investments in future projects should
in coal transportation infrastructure if not be a factor for determination of
domestic coal remains the sole choice
changes in interna- coal prices. The panel had noted that
for power developers. tional market prices the requirement of additional resource
mobilisation for fresh investments in
new coal projects and modernization
of existing mines for augmentation
of production to achieve planned
production target was also added as a
factor for determining the coal prices
by coal PSUs.
In that context, the committee
said it was not convinced with the
argument put forward by the CIL that
investment in the new projects is one
of the factors in coal price fixation.
The panel said it failed to understand
as to how CIL and its subsidiaries can
add estimated cost of a future project
which has not yet started and may take
years together to complete in fixing
coal prices which ultimately put extra
burden on consumers.
December 2016
www.InfralinePlus.com

The committee felt that considering Coal producers should adopt additional and minimising the quantity of coal
investments in future projects as one of efforts including austerity measures to sold through e-auction. The committee
the factors for determining coal price reduce production costs, it said. noted that the same grade of coal is
is against the sound principles of logic On e-auction of coal, the panel being sold at different prices for some
and economics and recommended that said it only benefits big traders and of the CIL subsidiaries even after
such cost estimations for new projects cartels. It recommended an increase in adoption of a new classification and
be kept out for fixation of coal price transparency in the e-auction process pricing system. It asserted that uniform
so as to secure the interest of common prices for same grade are essential
consumers. It is clear that there and suggested that CIL formulate a
It took the view that CIL and its is a strong case for National Policy for Coal Prices appli-
subsidiaries should raise prices only cable to all its subsidiaries.
to the extent necessary to match cost
linking domestic It is clear that there is a strong case
increases. It also lambasted CILs coal prices with for linking domestic coal prices with
practice of charging 30 per cent higher the international the international market. Given the
prices to the consumers in sectors other market. Given the political consensus over the issue, there
than power and fertilisers, calling it is not much merit in coal ministrys
political consensus
discriminatory. It underscored the need opposition to Niti Aayogs suggestion.
for a regulatory mechanism for coal over the issue, there The coal ministry is supposed to
sector. In absence of a regulator, the is not much merit protect all stakeholders interests and
central government should constitute a in coal ministrys not just that of CIL which has been
coal pricing regulatory committee with opposition to Niti mandated to mine coal that basically
adequate representation of all stake- belongs to the people of this country.
holders, the panel said.
Aayogs suggestion. Prime Minister Narendra Modi has to
The committee emphasised the The coal ministry is take a final call in this matter and the 25
need for rationalisation of rail freight supposed to protect all industry hopes he will go with Niti
rates for coal transport. It suggested stakeholders interests Aayogs suggestion.
that the coal ministry and CIL explore
and not just that of CIL
alternate modes for transport of coal. For suggestions email at feedback@infraline.com
December 2016
www.InfralinePlus.com

InDepth
Curbing illegal mining: India explores use of
satellite-based Mining Surveillance System

26

MSS aims to establish a regime of responsive mineral administration


Haryana, Telangana and Chhattisgarh selected for a pilot launch

By Team InfralinePlus

Indian government plans to ramp up continue mining activity even without body, it will oversee the management of
mining activities across the country and renewing their license. This also comes the process. Courts, the Lokayukta and
intends to increase output by around under ambit of illegal mining. other institutions are also in place to
20% per year to increase the sectors Illegal mining activities rose supplement these efforts.
share in the countrys gross domestic primarily due to high demand which
production. Illegal mining in India also pushed up the prices of minerals. Mining Surveillance
has become a menace and can be a Because of this pressure of demand and System launched
hindrance for government to achieve prices, suboptimal deposits have also With objective to curb illegal mining
its targets. Illegal mining often occurs become attractive activity and ensure sustainable utilisa-
when there is mining without a license The National Mining Tribunal tion of the countrys mineral resources,
or outside the leased boundaries or ensures that the grant of the concession Mining Surveillance System (MSS),
more than a permissible amount of is done according to the law of the land. which is developed under the Digital
mineral extraction. Few lease holders While it is not exactly a monitoring India Programme, was launched on
December 2016
www.InfralinePlus.com

The remote sensing


technology-based
monitoring system
enables mining areas to
Activities be monitored regularly
Constitutes in an effective manner
Illegal
Mining
having quick response
time with follow up
mechanism in place
wherein action taken
on triggers is followed-
up at various levels
like DMG, State Mining
Secretary, State Office
October 15, 2016. MSS is a satellite- on such complaints. Ministry of Mines, and Headquarters
based monitoring system which aims through Indian Bureau of Mines (IBM),
to establish a regime of responsive has developed this in coordination with
Office of IBM and
mineral administration, through public Bhaskaracharya Institute for Space Ministry of Mines
participation, by reporting instances Applications and Geo-informatics 27
of illegal mining through automatic (BISAG), Gandhinagar and Ministry of globally using space technology.
remote sensing detection technology. Electronics and Information Tech- For the purpose of this system the
The remote sensing technology- nology (MEITY). It is one of the first Khasra maps of the mining leases
based monitoring system enables kind of surveillance systems developed have been geo-referenced. The
mining areas to be monitored regularly
in an effective manner having quick How MSS works?
response time with follow up mech-
anism in place wherein action taken on
triggers is followed-up at various levels Khasra maps of the mining leases have been geo-referenced
like DMG, State Mining Secretary,
State Office and Headquarters Office of
IBM and Ministry of Mines. Geo-referenced mining leases are superimposed on the latest
It is an unbiased, independent and satellite remote sensing scenes obtained from CARTOSAT &
transparent monitoring mechanism USGS
in which public has been provided
an access to the system. This system
has deterrence effect i.e. surveillance System checks a region of 500 meters around the existing
mechanism from the sky. This system mining lease boundary to search for any unusual activity
will initially generate a trigger for
any illegal mining activity within a
region of 500 metres around the mining
Automatic software leveraging image processing technology
leases boundary in case of major min-
will generate automatic triggers of unauthorized activitie
erals, including iron ore and bauxite.
Prior to MSS, the monitoring of
illegal mining activity was based on
Triggers will be studied at a Remote Sensing Control Centre of
local complaints and unconfirmed
IBM and then transmitted to the district level mining officials
information and there was no robust
for field verification.
mechanism to monitor the action taken
December 2016
www.InfralinePlus.com

InDepth

geo-referenced mining leases are across the country.The process is non-working mines and it is expected to
superimposed on the latest satellite underway to launch a similar system be completed in the next three months.
remote sensing scenes obtained from for minor minerals in coalition with In an another initiative to tighten
CARTOSAT and USGS. The system the State Governments. Haryana, illegal mining, the mines ministry is
checks a region of 500 meters around Telangana and Chhattisgarh have been now exploring the use of unmanned
the existing mining lease boundary to selected for a pilot launch. Karnataka, aerial vehicles, or drones, to curb
search for any unusual activity which which reported large instances of instances of illegal mining. The
is likely to be illegal mining. Any illegal mining in the past, stands to gain ministry has told state governments
discrepancy found is flagged-off as a tremendously from this technology. to explore the use of drones to check
trigger. Automatic software leveraging Presently there are total 3,843 mining illegal mining, as officials crackdown
image processing technology will leases of major minerals in the country, on an activity that has led to defores-
generate automatic triggers of of which 1,710 are working and 2,133 tation and the use of child labour.
unauthorized activities.These triggers non-working mines. Most working With the help of this they can also
will be studied at a Remote Sensing mines have been digitized. Efforts are monitor whether reclamation has been
Control Centre of IBM and then going on to complete digitization of done as committed when a mine is
transmitted to the district level mining closed, and calculate the extent of the
officials for field verification. The mines ministry is green cover. Drones are increasingly
A check for illegality in operation now exploring the use being used around the world to check
is conducted and reported back using illegal activities and to survey damage
a mobile app. A user-friendly mobile
of unmanned aerial to the environment. In Panama,
app has been created which can be used vehicles, or drones, indigenous people are using drones to
by these officials to submit compliance to curb instances of monitor deforestation on their lands.
reports of their inspections. The mobile illegal mining. The In India, Uttarakhand began using
app also aims to establish a participative drones recently to check illegal quar-
28
monitoring system where the citizens
ministry has told rying, while western Maharashtra has
also can use this app and report unusual state governments recently deployed drones to check
mining activity. An executive dashboard to explore the use of illegal sand mining.
has been designed under MSS to work drones to check illegal Drones alone wont stop illegal
as a decision support system. mining or prevent worker abuses.
Using this dashboard, officials can
mining, as officials There needs to be a proper mechanism
track the current status of mapping of crackdown on an to monitor all activities and subsequent
the mining leases, reasons for triggers, activity that has led to action needs to be taken after reporting
the status of inspections related to deforestation and the any illegal activities.
triggers generated, the penalty levied use of child labour
etc. for all major mineral mining leases For suggestions email at feedback@infraline.com
December 2016
www.InfralinePlus.com

StatisticsCoal
Coal Sector Performance Summary during Apr-Oct16
Coal Production by CIL (Million Tonnes)
Monthly Cumulative
Month Growth
Target Actual Achievement Target Actual Achievement
(MoM)
Apr-16 44.48 40.09 - 90% 44.48 40.09 90%
May-16 44.64 42.58 6% 95% 89.12 82.93 93%
Jun-16 43.31 42.72 0% 99% 132.43 125.65 95%
Jul-16 40.29 36.74 -14% 91% 172.72 162.38 94%
Aug-16 40.89 32.43 -12% 79% 213.61 194.82 91%
Sep-16 41.51 35.24 9% 85% 255.11 230.06 90%
Oct-16 51.88 43.51 23% 84% 306.99 273.59 89%

Coal Production by SCCL (Million Tonnes)


Monthly Cumulative
Month Growth
Target Actual Achievement Target Actual Achievement
(MoM)
Apr-16 4.94 4.45 - 90% 4.94 4.45 90%
May-16 5.04 4.91 10% 97% 9.98 9.35 94%
Jun-16 4.9 4.76 -3% 97% 14.87 14.11 95%
Jul-16 4.19 3.83 -19% 92% 19.06 17.94 94%
29
Aug-16 3.99 4.22 10% 106% 23.05 22.16 96%
Sep-16 3.97 4.02 -5% 101% 27.02 26.18 97%
Oct-16 4.41 4.7 17% 107% 31.42 30.84 98%

Coal Dispatch by CIL (Million Tonnes)


Monthly Cumulative
Month
Current Year Previous Year Growth (YoY) Current Year Previous Year Growth (YoY)
Apr-16 42.46 43.52 -2.46% 43.55 40.7 7%
May-16 45.53 43.8 4% 88.23 87.32 1%
Jun-16 44.96 42.07 7% 133.19 129.39 3%
Jul-16 41.47 40.91 1% 174.66 170.3 3%
Aug-16 36.72 40.64 -10% 211.38 210.93 0%
Sep-16 37.74 40.44 -7% 249.11 251.36 -1%
Oct-16 43.04 44.43 -3% 292.16 295.8 -1%

Coal Dispatch by SCCL (Million Tonnes)


Monthly Cumulative
Month
Current Year Previous Year Growth (YoY) Current Year Previous Year Growth (YoY)
Apr-16 4.64 4.6 0.83% 4.6 4.27 8%
May-16 4.91 4.89 0% 9.55 9.5 1%
Jun-16 4.47 4.43 1% 14.01 13.91 1%
Jul-16 3.99 5.07 -21% 18 18.99 -5%
Aug-16 4.44 4.87 -9% 22.44 23.86 -6%
Sep-16 4.11 4.5 -9% 26.55 28.35 -6%
Oct-16 4.68 4.76 -2% 31.22 33.1 -6%
December 2016
www.InfralinePlus.com

StatisticsCoal

Coal Dispatch by CIL to Power Sector (Million Tonnes)


Monthly Cumulative
Month
Current Year Previous Year Growth (YoY) Current Year Previous Year Growth (YoY)
Apr-16 30.788 32.839 -6% 30.788 32.839 -6%
May-16 33.365 33.124 1% 65.335 66.311 -1%
Jun-16 31.857 31.744 0% 97.693 98.352 -1%
Jul-16 31.498 30.984 2% 131.104 129.679 1%
Aug-16 26.48 30.25 -12% 157.15 160.22 -2%
Sep-16 27.11 30.62 -11% 184.99 190.63 -3%
Oct-16 31.66 34.51 -8% 216.59 225.13 -4%

Coal Dispatch by SCCL to Power Sector (Million Tonnes)


Monthly Cumulative
Month
Current Year Previous Year Growth (YoY) Current Year Previous Year Growth (YoY)
Apr-16 3.822 3.659 4% 3.822 3.659 4%
May-16 4.132 3.994 3% 7.986 7.512 6%
Jun-16 3.849 3.59 7% 11.835 11.242 5%
Jul-16 3.398 4.147 -18% 15.15 15.39 -2%
Aug-16 3.66 4.04 -9% 18.81 19.43 -3%

30 Sep-16 3.41 3.61 -6% 22.22 23.04 -4%


Oct-16 4 3.9 3% 26.62 26.94 -1%

State-wise coal production of CIL- FY14 to FY17 (Oct16) (in MT)


2016-17
STATE (APR-OCT) 2015-16 2014-15 2013-14
(Prov.)
West Bengal 11.691 23.718 21.652 20.43
Jharkhand 55.508 113.675 108.521 98.26
Chhattisgarh 65.334 124.206 115.192 110.143
Orissa 74.68 137.901 121.379 110.439
Madhya Pradesh 43.412 87.892 76.403 73.59
Maharashtra 14.94 38.187 35.354 34.175
Uttar Pradesh 7.876 12.689 14.957 14.721
Assam 0.127 0.486 0.779 0.664
CIL 273.568 538.754 494.238 462.422
December 2016
www.InfralinePlus.com

CoverStory
US elections: Rise of Donald Trump
to change global energy dynamics

31

Trump presidency could prove to be a boon for fossil fuel consumers


May prove counterproductive to climate change efforts, feel experts

By Team InfralinePlus

Donald Trump remains an unknown to follow protectionist policies to stop that. The fall-out would be messy, but
quantity and nobody knows exactly offshoring of American jobs. If he does it can be done, at least in theory, say
what his energy policy will be like. so, he could risk starting trade war with geopolitical experts.
However, if his campaign rhetoric is China and tip the world economy into Currently, Organisation for
anything to go by, Trump presidency a recession. That would hit oil demand Petroleum Exporting Countries (OPEC)
could prove to be a boon for fossil fuel and lower prices. India would benefit in is trying to hammer out an output
consumers. Trump has said he is in such a scenario. pact, but Saudi-Iran regional rivalry is
favour of removing oil-sector regula- The Joint Comprehensive Plan coming in the way. If America scraps
tions, opening federal land to drilling, of Action, as the Iran nuclear deal is Iran nuclear pact, sanctions will kick in
and has vowed to revive a major trans- titled, has not been ratified by the US again on the Persian nations oil export,
Canadian and trans-US oil pipeline Congress. It has been brought into which would instantly take 1 million
project while pledging to support the force through an executive order by barrels per day of oil out of the market.
coal industry. He has also promised President Obama. Trump could rescind That would be enough to set the oil
December 2016
www.InfralinePlus.com

CoverStory

market on fire. Needless to say, India infrastructure to enable LNG export, lakh MW solar energy programme,
would be hit hard. there is not likely to be much impact in could feel the squeeze as a fall-out
If Trump does not annul the Iran the medium term. of the regime change in America.
nuclear pact but stops implementing Trump may not be a staunch sup- However, industry experts feel it is too
it, the remaining sanctions will not porter of renewable energy like his pre- early to say how world energy market
be lifted. Banks and re-insurance decessor Barack Obama, but he cannot will react under Trump presidency.
companies will still drop Iran stop the march of solar energy which It is too early to predict the effect
like a hot potato, impacting its oil is running on its own steam. However, of Trump presidency on the global
export. Important Asian buyers were US banks and financial institutions energy scenario. But if the campaign
threatened in the past with the loss of may not be as keen to finance overseas pronouncements are indicators, he is
access to the US banking system to clean energy projects as they were going to encourage domestic oil and
persuade them to cut their purchases under Obama administration. The fund gas industry in the US, which will add
of Iranian oil. This tactic could work may be diverted to finance infra boom to the oversupply situation and keep
again, say analysts. Indian oil com- envisaged by Trump. the prices in a range, said Debasish
panies like ONGC Videsh, which have India, which has been getting Mishra, Partner at Deloitte Touch.
exposure to the Iranian hydrocarbon generous funding from US for its 1
sector, could feel the heat if nuclear Dollar play
sanctions are re-imposed on Iran. Trump has also prom- If America turns protectionist, dollar
That would also impact Indias energy ised to bail out the US could lose its safe-haven status and
security quest. coal industry which is weaken. And if sustained, a weaker
Trump has also promised to bail dollar should improve the competitive
out the US coal industry which is
reeling under demand position of US coal and LNG produc-
reeling under demand loss due to shift loss due to shift of ers in international markets. It should
32 of electricity generators to natural gas electricity generators also be good news for net energy
which has become cheaper in the wake to natural gas which commodity importers such as India.
of shale revolution. If he keeps his has become cheaper The dollar is, no doubt, the currency
promise and withdraws laws crippling in the wake of shale of international energy commodity
the coal industry, the shift towards trade. For both net energy commodity
natural gas could reverse. That could
revolution. If he keeps importing countries and net exporters,
in turn force gas producers to look his promise and with- changes in the value of the dollar have
at export option, which would put draws laws crippling major impacts; for the former on the
downward pressure on world LNG the coal industry, the relative value of their energy imports,
market, a scenario that should benefit shift towards natural and for the latter on the relative value
energy-starved countries like India. gas could reverse of their revenues.
However, since it takes time to build However, the dollar is no ordinary
currency; it is the worlds reserve cur-
rency. If the global economic outlook
is negative, investors tend to move
into dollar assets as a safe haven. This
creates an inverse correlation between
the dollar and energy commodity
prices. In other words, if the economic
outlook is poor, the dollar tends to rise
as commodity prices fall, analysts say.
Conversely, in a more positive
macroeconomic environment, wherein
demand for energy commodities
increases, investors seek riskier,
higher-yielding assets and the dollar
tends to weaken at the same time that
energy commodity prices increase,
they add. But this is a correlation
December 2016
www.InfralinePlus.com

rather than causal effect. A crisis of


confidence in the dollar, perhaps the
result of the election of Donald Trump
to the US presidency, could upset
this relationship, just as the 2008/09
financial crisis wrecked then prev-
alent assumptions about the relative
behaviour of different asset classes
with systemic effects.
If the credit worthiness of the US
government becomes doubtful, the
dollar becomes a riskier asset, raising
the question of where funds would seek
safe haven Asia or Europe? The
answer to this would determine relative
buying power and thus impact global
trade flows in energy commodities largest Middle Eastern oil supplier
between the Atlantic and Pacific basins, If Hillary Clinton would to the US with an 11 per cent market
feel analysts. have won the US presi- share and has also invested heavily in
the American refineries to help lock
dential election, off-
Implications for global in that supply. Around 31 per cent of
crude oil market and India shore exploration could all US oil imports are from OPEC
If Hillary Clinton would have won have been restricted members, while Canadian oil imports
the US presidential election, offshore to the Gulf of Mexico have a 41 per cent share. There is 33
exploration could have been restricted and onshore to private another reason why Trumps rhetoric
to the Gulf of Mexico and onshore to may not find traction most of US
private land. But Trump is for stepping
land. But Trump is for refineries are configured to process
up exploration to create domestic self- stepping up explora- heavy and cannot absorb domestic
sufficiency in oil and create more jobs. tion to create domestic shale oil which is lighter.
So the oil industry has every reason self sufficiency in oil The above analysis shows that
to cheer Trumps victory. He has even and create more jobs. Trump may have to do a lot of
threatened to block oil import from re-thinking on his outlook on the
Saudi Arabia. During his campaign he
So the oil industry has oil industry and may not be able to
vowed to secure US energy inde- every reason to cheer carry out threat which is likely to be
pendence from our foes and the oil Trumps victory counter-productive for US refiners.
cartels, while also creating complete According to analysts, a Trump
American energy independence. global industry that is interconnected, presidency that is pro-business will
For its part, Saudi Arabia has that is dealing with a fungible com- encourage oil development, permit
promised to engage with the US modity which is crude oil. So having pipelines, reduce corporate profit
unprovoked by Trumps rhetoric. Saudi equalisation through free trade is very taxes and generally make US oil more
Arabias oil minister Khalid Al-Falih, healthy for oil. The Saudi oil min- competitive. At first glance, weaker
also the chairman of Aramco, has fired ister added that Saudis are waiting for post-election oil prices may appear
back, At his heart president-elect Trumps presidency, as his presidential to encourage an OPEC deal but that
Trump will see the benefits of Saudi oil campaign had amounted to 50,000 may not be the case. The oil cartel
imports and I think the oil industry will feet announcements (description of a is working to get members agree on
also be advising him accordingly that situation that provides no details) that production cut. However, analysts say
blocking trade in any product is not may change. that the fear of losing market share
healthy. The US is sort of the flag- Despite the domestic shale oil could stop the OPEC from taking
bearer for capitalism and free markets, boom, which has made the US the third action. If OPEC were to cut back
Al-Falih added. largest global crude oil producer, the on production and raise oil prices,
He further stated, The US con- country still relies heavily on Saudi that would only strengthen the US
tinues to be a very important part of a crude imports. Saudi Arabia is the oil sector, intensifying competition
December 2016
www.InfralinePlus.com

CoverStory

with an industry that now has the full


backing of the president and a Repub-
lican congress, said analysts.
India, which meets 80 per cent of its
crude oil requirement through imports,
stands to benefit from depressed inter-
national oil prices. With Trump threat-
ening to tighten screws on Iran, internal
dynamic of the OPEC could change. As
we know, there is no love lost between
Saudi Arabia and Iran, the former
would benefit from re-imposition of
trade sanctions on Iran.
The outcome of the US election
adds to the challenges for the oil
exporters because it will likely lead
to weaker economic growth in an
already fragile global economy. And India, which meets 80 is tied to trade with the US. Hence it is
that means additional pressure on oil per cent of its crude oil negative for growth and oil demand, at
demand, feel analysts who foresee least due to the uncertainty that Trump
the global economy losing ground
requirement through creates, believe naysayers.
under Trump presidency. OPEC too imports, stands to
has hinted that it expects oil to remain benefit from depressed Implications for LNG
34 weak in coming days due to worries international oil prices. market
about the global economy and uncer- Even as many Trump policy propos-
tainty about Trumps policies for the
With Trump threatening als remain vague and ill-defined, it
Middle East. to tighten screws on seems certain that his administration
Analysts feel that even if the OPEC Iran, internal dynamic of will encourage increased US natural
agrees on output cut, it may not be the OPEC could change. gas production, both onshore and
able to support depressed oil market. If offshore. Analysts say Trump will
Trump abandons Iran nuclear deal, Iran
As we know, there is no open up new leases for shale and oil
would retaliate and abandon its own love lost between Saudi drilling in Alaska while also confirming
commitments in a reciprocal response. Arabia and Iran, the the divisive KeyStone XL pipeline. It
Life would also become difficult for former would benefit seems likely that Trump will confirm
Americans in Iraq, a close Iranian ally. the North Dakota Access pipeline, cur-
In such a scenario, Saudi Arabia would
from re-imposition of rently held up by strong protests, thus
ironically become Americas best trade sanctions on Iran kick-starting production in the Bakken.
friend overnight. Should the president- Trump holds personal investments in
elect remove the burden from Saudi the Trump administration and Iran Energy Transfers Partners and Phillips
Arabia to cut its own production by as would send oil prices higher. While 66, both sponsors of the project.
much as 1 million barrel per day and such a scenario would be welcome by This, together with the greater crude
shift it to Iran, whose output would the US oil industry, fuel consumers piped in from Alberta, will improve the
be forcibly cut, the Saudis would not could be hit hard as they would have supply side of crude oil. However, the
only preserve their market share, but to shell out for every litre of petrol. likely emphasis of Trumps policies on
also enjoy the spectacle of crude prices It could pose a serious dilemma for domestic, rather than international con-
surging back, say experts. Trump. siderations could end up complicating
So, it is unclear if Trump would Trump has promised to double US the overall impact of these develop-
enjoy being perceived as a hardliner economic growth but also pledged ments. His vow to carry out a trade
on Iran, yet one who indirectly helps protectionist trade policies which will war with China, as well as his calls for
support the nation that has been the have hugely negative implications for heavy tariffs on imported goods and
most vocal supporter of the Clintons, Indian and other energy-deficient Asian for US energy independence, could
Saudi Arabia. Any escalation between countries, given how much their GDP limit US access to export markets
December 2016
www.InfralinePlus.com

and reduce the competitiveness of US trations radar and Trump unveils ambi- We hope constraints in shale
energy products. tious infra spending plans, financing exploration and clean coal technologies
That is where things get compli- coming into Indias solar sector could will be taken care of under the new
cated for LNG, say analysts. Federal dry up, say analysts. president, said UD Choubey, director
clearance is needed to approve Trump has also vowed to withdraw general, SCOPE and former CMD,
additional LNG export terminals, the US from Paris climate pact. If he Gail India.
and an expansion in American LNG carries through on the threat, developed However, if the recent comments
export capacity would need at least countries may not keep their com- of Amos J. Hochstein, Special Envoy,
some cooperation from the federal mitment to provide 100 billion dollar Bureau of Energy Resources at the US
government. Other oil and gas experts per year funding from 2020 to help Department of State, are anything to go
believe the impact of Trumps policies developing countries mitigate impact by, very little will change between the
may be minimal. According to them, of climate change. Developed countries two countries as far as energy relations
rhetoric on the campaign trail is not already seem to be dragging their feet are concerned. According to Hochstein
always a great indicator of actual on this issue. US withdrawal could coal is being discarded by power manu-
policy plans. Certainly Trumps provide them the pretext to back out of facturers not because of government
confusion over what LNG is does not the commitment. That would hurt the regulations but due to the changes in
generate confidence. But if Trump is fight against climate change. technology. On the President-elect
serious about putting America first Donald Trumps promise to revive coal
and concentrates on domestic demand Trump has also vowed mining in the U.S. and leave the Paris
rather than exports, LNG exports to withdraw the US climate agreement, Hochstein said,
could be hit. Very little will change. Coal is not
from Paris climate pact. coming back in the U.S. regardless of
Implications for renewable If he carries through on what Republicans say.
energy the threat, developed Coal will remain a major part of 35
Trump has said he wants to scale back countries may not keep Indias energy mix, which is true when
federal spending on clean energy, Obama is President, which will be true
including R&D for wind, solar, nuclear their commitment to when Donald Trump will be President.
power, and electric vehicles. This provide 100 billion But it was not President Obama who
would require Congress nod, but it is dollar per year funding set the target of 175 GW of renewable
hardly impossible, say analysts. India, from 2020 to help energy for India, it was PM Modi. I
which has targeted to add 1 lakh MW dont see that changing, he said.
capacity based on solar by 2022, (175 developing countries Similarly, Dilip Kumar Jena, a
GW overall) has been getting generous mitigate impact of senior energy analyst at PwC, feels,
fund from US financial institutions. If climate change Clean coal technologies may move to
renewable energy goes off US adminis- our priority list if we desire to utilise
our coal resources, referring to the
change of guard in the US.
From the above analysis, it is clear
that it is too early to say how far Trump
will go in carrying out his threats on
immigration and trade war with China.
Analysts warn against reading too
much into Trumps rhetoric. Even if he
wants, Trump cannot defy reality which
has a way of asserting itself, analysts
add. Trumps world views are likely
to be tempered by economic reality,
though it is clear that he will be a
champion of drilling at home to create
jobs for his political constituency.

For suggestions email at feedback@infraline.com


December 2016
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


ONGC seeks complete autonomy on pricing of natural gas to boost output RILs partner Niko puts KG-D6 stake
for sale

that the gas prices could be deregulated,


Chairman Dinesh Sarraf recently said.
Some regulatory mechanism can be put in
place to protect the interest of the consum-
ers. But let the prices be deregulated. Let
it be determined by the buyers and sellers
collectively through the market forces.
With this ONGC has given a new thrust to
the demand from Reliance Industries, BP
Plc, and other private sector gas producers
State-run Oil and Natural Gas Corporation in the country to free up pricing. The gov- Reliance Industries partner Niko
(ONGC) is seeking total pricing freedom for ernment has kept a lid on prices through Resources of Canada has put on sale its
natural gas produced in the country, argu- a formula worked out two years ago that 10 per cent stake in the flagging KG-D6
ing it would help boost local output and de- aligns local with international rates, and a gas block off the east coast. Financially
velop India into a vibrant gas market. We gas allocation policy that prioritises sectors strained Niko had in February last year an-
are making the case before the government for receiving local supply. nounced plans to sell its 10 per cent stake
in the KG-DWN- 98/3 or KG-D6 block to
KG gas penalty: Reliance Industries sends arbitration notice to govt pay off $340 million debt. It had planned
to sell off the interest by April 30, 2015
Reliance Industries (RIL) and its foreign but later extended it to May 31 and then
partners the UKs BP and Canadas Niko to September 15, 2015. It called the sale
Resources have sent a notice of arbitra- off apparently because it could not find
tion to the government contesting the a buyer. The firms interim Chief Execu-
36 Centres demand of November 3 seeking tive Robert Ellsworth said the company
to recover from them $1.552 billion in the had re-launched the sales process for its
aggregate, for exploiting natural gas that interest in the D6 Block due to favourable
migrated to their KG-D6 block from state-run developments with respect to natural
ONGCs adjacent asset. On November 3, after gas pricing applicable to the companys
receiving the governments demand for $1.55 claim is not sustainable. The petroleum min- undeveloped deep-water fields. While gas
billion, RIL had said that it proposes to invoke istry, in letter sent to the firms on November from existing producing fields are priced
the dispute resolution mechanism in the pro- 3 with details of how the amount has been at a rate equivalent to the price prevailing
duction sharing agreement and issue a notice computed, directed the explorers to pay the in gas surplus economies such as Russia,
of arbitration to the government. RIL remains amount in the next 30 days, failing which the the US and Canada, the government has
convinced of being able to fully justify and ministry shall be constrained to take steps given pricing freedom subject to a cap for
vindicate its position that the governments for recovering the unpaid government dues. undeveloped gas finds in deep-sea blocks.

GAIL scraps $7 billion Make in India LNG carrier tender

After dragging for more than two years, meters to LNG it has tied up from Sabine
state-owned gas utility GAIL India Ltd Pass and Cove Point LNG projects in US,
has scrapped a $7 billion tender for hiring with supplies slated to start from December
newly built ships to ferry LNG from US after 2017. Bids were sought in lots of three,
bidders did not agree to Make-in-India with the condition that one of the three
terms. GAIL, which was forced by the Oil ships will be built at an Indian shipyard. It
Ministry to add the Make-in-India condition is learnt that Indian shipyards neither had
to its tender, will now hire the ships from the technology or experience of building the
global spot or current market to transport highly specialised LNG ships, the bidder
liquefied natural gas (LNG). Two Japanese sought sovereign performance guarantee for
bidders -- a consortium of Mitsui OSK Lines sought several deviations from the tender the ones built in India. After postponing the
(MOL)-Nippon Yusen Kabushiki Kaisha (NYK conditions, which were not agreeable deadline thrice, GAIL had in February last
Line) and Mitsui & Co and a consortium to GAIL. In the tender, GAIL sought to year scrapped the tender to hire nine LNG
comprising Mitsubishi Corporation-Kawasaki time-charter nine newly built LNG ships of carriers to ferry gas from the US, with a
Kisen Kaisha Ltd (K Line) and GasLog, had a cargo capacity of 150,000-180,000 cubic caveat that three of them be made in India.
December 2016
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


PETRONAS looks to expand its business in India Six more states keen to implement
DBT in kerosene: Government

as we see great potential to grow further


with our partners and customers, said Wan
Zulkiflee. As part of its business strat-
egy, PETRONAS will continue to invest in
expanding its capacity in commodity chemi-
cals and refined products, and enhance its
product offerings to include differentiated
and specialty chemicals for its customers
worldwide. India, one of the most competi-
PETRONAS, Malaysias national oil com- tive economies and the fourth largest LNG After Jharkhand, six more states
pany, is committed to explore business market in the world, also presents vast including Gujarat and Maharashtra have
growth opportunities across all segments potential for PETRONAS. Wan Zulkiflee said evinced interest to implement direct
of the oil and gas value chain in India, PETRONAS is keen to explore opportunities benefit transfer (DBT) in kerosene. In
said President and Group CEO, Datuk Wan in the Indian LNG market and is working October, Jharkhand became the first
Zulkiflee Wan Ariffin. India has always to establish a liaison office to help grow its state to roll out DBT in kerosene even as
been an important market for PETRONAS business in the country. all states were asked to implement the
same. ...State governments of Gujarat,
Iran overtakes Saudi Arabia as top oil supplier to India Madhya Pradesh, Chhatisgarh, Mahar-
asthra, Rajasthan and Himachal Pradesh
Iran overtook political rival Saudi Arabia have indicated their willingness to imple-
as Indias top oil supplier in October, ment DBT in kerosene, Minister of State
shipping data showed, just ahead of for Food, PDS and Consumer Affairs C
a producers meeting this month to R Chaudhary said in a written reply to
hammer out the details on output cuts the Lok Sabha. Under the DBT scheme, 37
aimed at reining in a global glut. Iran kerosene is sold to PDS beneficiary at
used to be Indias second-biggest oil non-subsidised rates and the applicable
supplier, a position it ceded to Iraq after subsidy is directly transferred into their
tough Western sanctions over its nuclear bank accounts. Replying to a query on
development programme limited Tehrans government reducing allocation of PDS
exports and access to finance. But Indias kerosene, the Minister said that the quota
oil imports from Iran have shot up this per day (bpd), according to ship tracking of PDS kerosene is rationalised based
year after those sanctions were lifted in data and a report compiled by Thomson on various factors like increase in domes-
January. In October they surged more Reuters Oil Research and Forecasts. That tic LPG/PNG connections, non-lifting of
than threefold compared with the same compares to 6,97,000 bpd supplied last PDS kerosene quota by concerned states
month last year, rising to 7,89,000 barrels month by Saudi Arabia. among others.

Rs 1,864 crore Petrochem Park gets Kerala nod

The Kerala government has issued an proposed expansion of BPCL, and proxim-
order granting in-principle nod for Kerala ity to port and natural gas infrastructure.
Industrial Infrastructure Development The detailed project report (DPR) for the
Corporation (Kinfra) to set up a petro- proposed park will be sent to the state
chemical park in Kochi. The next step is to government for final approval, said Kinfra
procure 600 acres from FACT complex at official, KN Srekumar. The corporation
Ambalamugal in Kochi for the project. The would also explore the possibility of getting
decision regarding this is pending for Union central funding for the project. Infra-
ccabinet approval, said M Beena, managing structure facilities required to be created
director of Kinfra. The estimated project include internal roads, drainages, water
cost is Rs 1,864 crore, including the cost and chemical factories, a bulk terminal treatment plants, internal water supply
of land and internal infrastructure, which and International Container Transhipment system, internal electrification, common
will be provided by Kerala Infrastructure Terminal, besides the LNG Terminal & Gas sewage treatment plants, common effluent
Investment Fund Board (KIFB) in loan. Pipeline Network being established. The treatment plants, rain water harvesting and
Kochi already has a large refinery, fertiliser project assumes significance in view of the solid waste management.
December 2016
www.InfralinePlus.com

NewsBriefs | Oil & Gas International


Shell considering selling its Iraq oil assets as part of $30 bn programme Singapore readies up to $1.1 bln in
loans for oil & gas-linked firms

2014 the company wants to focus on busi-


ness areas with the highest returns such as
LNG and deepwater oil production in Brazil
and the Gulf of Mexico. The Anglo-Dutch
company, which has been present in Iraq for
over a century, has found only limited finan-
cial benefits in recent years from its involve-
ment in Iraqs oil production, where it is paid
Royal Dutch Shell is considering selling out in crude oil but has limited say on production
of its oil fields in Iraq as part of its global strategy, the sources said. However, Shell
$30 billion asset disposal programme. Shell continues to see value in developing its gas Singapore plans to offer financial as-
is seeking to slim down its vast oil and gas business in Iraq and is not interested in sistance to its liquidity-hit marine and
portfolio following the $54 billion acquisition selling those interests. Iraq accounted for offshore engineering companies that could
of BG Group in February, which transformed around 4.4 percent of Shells total oil and help them raise as much as S$1.6 billion
it into the worlds top liquefied natural gas gas production in 2015, according to its 2015 ($1.1 billion) in loans. The two-year down-
trader. With oil prices having slumped since annual report. turn in oil prices has forced several firms,
including oilfield services firm Swiber,
U.S. is a net exporter of natural gas for first time in nearly 60 years oil and gas service provider Swissco
Holdings Ltd and container ship owner
The U.S. has become a net exporter Rickmers Maritime, to seek restructuring
of natural gas, further evidence of the of their debt. Billions of dollars have been
how the domestic oil and gas boom is wiped off the market value of the sectors
reshaping the global energy business. listed companies and thousands of jobs
38 The U.S. has exported an average of have been axed in the worst-hit area of
7.4 billion cubic feet a day of gas in Singapores slowing economy. Many of the
November, more than the 7 billion cubic companies in the affected sectors have
feet a day it has imported, according to not been able to issue debt or get bank
S&P Global Platts. Exports also topped loans. Singapores Ministry of Trade and
imports for a few days in September. It Industry (MTI) said the loans it is organis-
has been nearly 60 years since the U.S. were lifted, allowing tankers of crude to ing will be available from next month and
last shipped out more natural gas than it be freely shipped overseas for the first could catalyse about S$1.6 billion in total
brought in annually, according to the U.S. time nearly half a century, and together financing to the sector over the next year.
Energy Information Administration. The they mark a significant and potentially The MTI said it will introduce a scheme
milestone comes less than a year after permanent change in the way U.S. energy allowing affected companies to borrow up
restrictions on most crude oil exports flows around the world. to S$5 million for up to six years.

BP buys stake in Enis giant Zohr gas field offshore Egypt

BP has agreed to buy 10 percent of Enis of dollars in hard currency that would
Shorouk concession offshore Egypt, which otherwise be spent on imports. Once an
includes the giant Zohr gas field, for $375 energy exporter, Egypt has turned into a
million, joining other oil majors in increas- net importer because of declining oil and
ing bets on the growing gas market. The gas output and increasing consumption.
deal gives Eni much-needed cash as part It is trying to encourage quicker develop-
of its 5 billion euro divestment plan to ment of recent discoveries to fill its energy
continue investing and paying dividends gap as soon as possible. A run of big gas
despite weak oil prices. The companies finds off the Egyptian coast have made
also agreed BP could purchase another 5 the country a top destination for energy in-
percent of the field before the end of next vestment even as firms seek to save cash
year, when the Zohr field is slated to start ered by Eni last year, has an estimated to handle low oil prices better. The deal
production, under the same terms and 850 billion cubic meters of gas in place. deepens BP and Enis partnership in Egypt,
that BP would reimburse Eni around $150 It will help plug Egypts acute energy where they announced a significant gas
million in past expenditure. Zohr, discov- shortage and save the country billions discovery in the East Nile Delta in June.
December 2016
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ExpertSpeak
Integration of refinery with petrochemicals
can improve margins
Sandeep N Gupta, General Manager, Business Development, Linde
Engineering India Pvt. Ltd., feels that in todays hyper-competitive
and volatile environment, integration of refinery with petrochemicals
offers an important opportunity to hedge Gross Refining Margins
(GRMs). Further, an integrated petrochemical refinery not only has
flexibility in feedstock supply, it can adjust its product slate as per
market needs.

Globally, the change witnessed in utilities, offsite &infrastructure. The


energy landscape started from de- basic petrochemicals that are produced
coupling of crude oil and natural gas in such complexes are ethylene, pro-
pricing due to economical extraction pylene, benzene, toluene,
of Shale gas in 2008 and most re- xylenes. The
cently, crude oil price oscillations that demand of these Degree Sandeep N Gupta, General Manager- Business
Development, Linde Engineering India Pvt. Ltd.
have sent shock waves across world. building blocks of inte-
Companies have been scouting for in India has gration between unique opportunity to integrate their
refinery and 39
a business model that can help them been growing refining business with petrochem-
remain on positive side of cash flows. and driven
petrochemicals icals which is supported by rising
Time tested approach of Integrating by robust
varies from demand and GRM economics.
region to
refineries with petrochemicals for GDP that has
region
improving GRMs has been making led in increased Role of Petrochemicals
news again. consumption of Petrochemical capacity build up
petrochemicals. in India is driven by supply gap in
The Focus Thus, together with clean fuel regula- Indian market and availability of
Cursory review of literature reveals tions, refiners in India are having a feedstocks such as naphtha. While
that in a hyper-competitive and volatile
environment, integration of refinery India : Key Petrochemicals (2011-16)
with petrochemicals offers entire value Product Demand Multiplier Trade Insights
chain as opportunity ladder to hedge Polymers PE 1.6 Temporary Exporter
GRMs.The vagaries of inter-connected PP 1.7 Net Importer
economies make every refiner suscep-
PVC 1.5 Net Importer
tible to shocks that cannot be predicted.
PS 2.0 Net Importer
Companies like BASF have con-
sistently kept themselves ahead of Aromatics PX 2.0 Net Importer
curve and have been able to maintain PTA 1.8 Temporary Exporter
their global rankingsmainly driven by MEG 1.6 Temporary Importer
their verbund approach. It has helped PET 2.4 Net Exporter
BASF unleash value of each molecule Rubber PBR 1.5 Net Importer
by benefits arising out of integration. SBR 1.5 Net Importer
Integrating refinery with petro- NBR 1.5 Net Importer
chemicals has plenty of advantages like
BUTYL 1.5 Net Importer
enhancement in operational efficiency,
EPDM 2.9 Net Importer
higher returns on assets due to increased
streams integrationand optimization of (Ref: CPMA)
December 2016
www.InfralinePlus.com

ExpertSpeak

coal to chemicals route has lately Integration Petrochemicals Production


picked up, its viability is more centred
Low to If % of Crude throughput used towards petrochemicals is < 10
in Chinadue to coal monetization of moderate to 15%, integration regarded is low to moderate and hence will
stranded reserves. have low to moderate GRMs only
Companies operating non-inte- High If % of Crude throughput that is used towards petrochemicals
grated petrochemical complex have is > 15% but less than 30%, it is regarded as reasonably high
been confronted by persistent issues level of integration. Such a complex has above average GRM.
on feedstock quality and quantity. Petrochemical In case, petrochemicals production far exceeds fuels that
However, an integrated petrochemical Refinery are generated in a refinery, issues around product slate,
refinery not only has flexibility in flexibilityand type of crude processed play an important role in
feedstock supply, it can adjust its deciding the GRM of such a complex.
product slate as per market needs.
Meeting environmental regulations Petrochemical capacity build up in India is
like aromatics and benzene content in
gasoline are easy if it is an integrated
driven by supply gap in Indian market and
complex. For example, extraction availability of feedstocks such as naphtha. While
of BTX from a refinery cut into coal to chemicals route has lately picked up,
reformate stream clubbed with pygas
its viability is more centred in Chinadue to coal
from refinery, justifies business case
for a large scale BTX extraction unit. monetization of stranded reserves. Companies
Leveraging and optimizing utilities, operating non-integrated petrochemical
offsite and infrastructure also has complex have been confronted by persistent
positive impact on Capex as against
establishing separate facilities for issues on feedstock quality and quantity
40
a standalone refinery or petchem
complex. A refinery can reprocess by-products / Integration is the buzz word;
When close to 40 to 45% of project various streams from a petrochemical however, degree of integration
costs are on account of utilities complex like pyrolysis, petcoke, between refinery and petrochemicals
and off-sites, integration helps in etc., as it helps augment value to low varies from region to region. There
achieving better return on investment. revenue streams. are three main considerations while
firming up the degree of integration
mainly capex, demand/supply scenario
and technology options. Integrated
complexes can be roughly classified in
3 categories depending upon the per-
centage of crude oil that is processed
for petrochemical production:
Key role is played by technologies
in refinery integration with petro-
chemicals including steam cracking
of naphtha; catalytic reforming of
aromatics and refinery fluidized cata-
lytic cracking under different severity
modes. Integration is only achievable
if all the factors that are important can
be simulated and aligned withfactual
data on a dynamic basis. A toolbox of
technologies must be applied when
integration efforts are driven towards
higher levels of sophistication.

For suggestions email at feedback@infraline.com


December 2016
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InDepth
Govt moves ahead with
auction of small oil fields

41

134 e-Bids received for 34 contract areas, 120 for onland and 14 for offshore
Bidding took place in a challenging global market environment and price volatility

By Team InfralinePlus

In line with vision for reduction of bids through International Competitive In order to promote new companies
Indias oil imports by 10% by 2022, Bidding mechanism for these areas to enter the E&P sector, bidders
Ministry of Petroleum of Natural Gas which hold 625 Million Barrels of who didnt have any exploration
announced Discovered Small Field Oil and Oil Equivalent Gas in-place and production industry experience
(DSF) Bid Round 2016 on in May volumes, spread over 1500 sq. Km.The were also allowed. However bidder
2016, offering 46 contract areas across discovered small field policy provides was required to have an adequate net
9 sedimentary basins, for development. for uniform licence for exploration and worth. The net worth of the bidder
Of these, 26 are onland, 18 shallow production of all forms of hydrocarbon, should be equal to or more than its
water and 2 deepwater fields. The fields easy-to-administer revenue-sharing share of the value of the biddable work
on offer were discovered by state-run model, and marketing & pricing programme commitment cumulated
ONGC and Oil India Limited (OIL). freedom for the crude oil and natural across all its bids. Companies,
Directorate General of Hydrocarbons gas produced. Further, the contractor either alone or in association with
(DGH), the technical arm of the Ministry will have the rights for exploration unincorporated or incorporated joint
of Petroleum and Natural Gas, invited throughout the contract period. ventures, may bid for one or more
December 2016
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InDepth

contract areas. Domestic companies, Discovered Small Fields on offer


including NOCs were permitted to bid. Basin Contract Fields Oil initially in place Gas initially in place
Participation by foreign companies areas (MMt ) (BCM)
was permitted up to 100%. Cambay 5 5 1.38 0.03
The last round of auction under the Cauvery 2 2 0.41 0.04
New Exploration and Licensing Policy KG (on land) 7 8 0.03 0.74
was conducted in October 2010 when Assam-Arakan 9 13 16.03 5.79
Rajasthan 2 2 - 0.1
the crude oil price bench-marked to the
Vindhyan 1 1 - 0.51
Indian basket was $81 a barrel. Despite
Onshore 26 31 57 7.21
smaller contract areas on offer in the
Mumbai 13 27 27.02 27.95
DSF Bid Round, the response from offshore
private companies was overwhelming; Kutch offshore 2 2 2.61 0.11
around 37 private sector players KG (offshore) 5 7 0.56 3.12
submitted e-bids as against 27 private Offshore 20 36 30.19 31.18
companies, during NELP-IX.
DGH received 134 e-Bids for Snapshot of bids received
the 34 contract areas under the Total Contract Areas Bids received for (No. of Total Number of
Contract Areas) e-Bids
Discovered Small Fields (DSF) Bid Total 46 34 134
Round 2016. Out of the total 134 Onland 26 26 120
e-bids received, 120 e-bids were Offshore 20 8 4
received for onland areas and 14
e-bids were received for offshore The bidding process has failed to point (HRP) equal to or more than
areas. The fields hold an in place grab interest from major global players 1 million USD per day. The bidder
42 reserves of 48 million tonnes of oil, even as state-run Oil and Natural Gas with the highest net present value
17.85 mt in onland blocks and 30.19 Corporation (ONGC) too decided to (NPV) of revenue share offered to the
mt on offshore blocks and over 38 stay away from the ongoing auctions. government will get 80 points. For
billion cubic metres of gas reserves, For the current round, only five foreign calculating the NPV price, production
7.20 bcm in onland blocks and 31.18 companies showed up. scenarios have been provided in the
bcm in offshore areas. As many as 42 The bid round took place in a notice inviting offers (NIO).
companies individually or as member challenging global market environment Once a bidder is declared
of the bidding consortium participated when the oil and gas prices have successful it has to coordinate with the
in the bid round submitting 120 bids been volatile and the investment in NOC in order to obtain the Petroleum
for about 70 per cent area for the exploration & production sector has Mining Lease (PML) or Petroleum
Discovered Small Fields. All the 26 seen substantial decline. Despite the Exploration Licence (PEL), as the
onland contract area received e-bids challenges, the response to DSF Bid case may be, the same in its name.
while 8 out of 20 offshore contract round has been very favorable and The companies that win onshore
areas have received e-bids. exceeded expectations of all experts. It fields must start production within
South Patan-DSF in Gujarat has not only attracted the interest of oil three years, while those that win
received highest 19 bids. Among and gas companies but also attracted shallow water and deep water blocks
the major companies that submitted the interest of the first time investors in must start production in four and six
its bid include state-run Indian Oil E&P sector. years, respectively. The contract will
Corporation Ltd, Cairn India Ltd, The bidder with the highest total be valid for 20 years from the date
Oil India, GAIL India, Bharat Petro number of development or appraisal on which the PML/PEL, as the case
Resources Ltd, Adani Welspun wells will be assigned 20 points and may be, is transferred to the bidder.
Exploration and Hindustan Oil the other bidders will be assigned On mutual agreement, the contract
Exploration Company. One of the points on a pro-rata basis. Bidders duration can be extended by another
richest people in India, Dilip Shanghvi will bid the percentage share of the 10 years. The government reserves
of Sun Pharma too submitted a bid revenue offered to the government the right to terminate the contract if
through Sun Petrochemicals and at the two revenue points namely, production ceases for over one year at
Subhash Chandras Essel Group also lower revenue point (LRP) which is any instance.
entered into the sector through Essel less than or equal to 0.0100 million
Group Middle East. USD per day and the higher revenue For suggestions email at feedback@infraline.com
December 2016
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InDepth
Moving towards Methanol Economy
key to reduce oil dependence

43

Methanol can replace crude oil and natural gas to meet energy needs
India has large reserves of coal which can be gasified to make methanol

By Team InfralinePlus

The central Government has initiated map document for India to adopt Metha- With an 80.8% import dependency
work on moving India towards a Metha- nol and DME as a transportation fuel in petroleum products in 2015-16, India
nol Economy in future. An international in road transportation, shipping and rail is not far from the stage of Beyond Oil
seminar was organised in September network, as well as a chemical feedstock & Gas. Our petroleum resources are
2016 by NITI Aayog, along with Depart- and for power generation. It is therefore limited. The double digit GDP growth
ment of Science and Technology, TIFAC, useful to understand this concept. that everyone in India desires will raise
Ministry of New and Renewable Energy, Since oil and gas will sooner or import dependency significantly, reduce
the Methanol Institute (USA), and Cata- later get exhausted, there is need to national energy security, and draw down
lytic Think Tank (Bengaluru). The con- create an alternative, which should forex reserves. The Methanol Economy
ference was attended by the Ministers for ideally be carbon negative / neutral. has the potential to address these issues.
Petroleum & Natural Gas, for Shipping, One such alternative was proposed It seeks to replace crude oil and natural
Road Transport and Highways, and for by Professors George Olah, Alain gas by methanol to meet our needs for
Railways. NITI Aayog has constituted Goeppert and GK Surya Prakash, in energy and petrochemicals. The special
a Methanol Committee, headed by its their seminal book Beyond Oil and feature about methanol is that it can be
Member, V K Saraswat, to evolve a road Gas: The Methanol Economy. made from conventional fossil sources
December 2016
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InDepth

as well as from renewable feedstocks. until the economics is favourable. In agricultural & forestry residues such as
Methanol thus offers a transition the interim, the technology and other straw, rice husks, coconut shell, sug-
mechanism that gradually reduces aspects need to be fully developed, to arcane tops. Some of this can converted
dependency on petroleum. Importantly, ensure quick implementation. to bio-gas / methanol, without affecting
the Methanol Economy is expected to Methanol can be made, via the inter- food supply. In addition to creating
be carbon neutral / negative. mediate stage of bio-gas, from a variety employment, many activities requiring
of renewable feedstocks that contain energy will be facilitated, boosting the
Adequate availability of carbon, such as bio-mass, municipal rural economy, and changing the socio-
methanol required solid waste, sewage, etc. Biogas, which economic landscape.
In order to implement a Methanol is mainly methane, is often burnt for Another major source of bio-gas is
Economy, a few conditions need to be heating, or for power generation. In food waste generated at restaurants,
fulfilled. First, adequate quantity of future, this bio-gas could be converted commercial complexes, marriage
Methanol should be available. Sec- to methanol, with suitable technologies. halls etc. This can be collected, con-
ond, a nationwide distribution setup is India produces about 1 billion tonnes verted into bio-gas through anaerobic
required. Third, the vehicles and other of non-edible bio-mass consisting of digestion, purified, and supplied to
equipment should be compatible with industrial customers. Similarly, the
Methanol. Naturally, techno-commer- There is a possibility organic part of Municipal Solid Waste
cial viability is essential. The Govern- in some cities can be converted into
that the proposed new
ment has formed Expert Groups under bio-gas, from which electricity is
the aegis of the NITI Aayog for such coal / pet coke based generated. The huge quantities of
evaluation. The Department of Science methanol plants may municipal sewage from towns and
and Technology is also supporting not be competitive cities can also provide several thousand
related research proposals. with imports, which MW of power. These activities - in
As regards availability of methanol, operation in a few cities - will make a
44
a new approach is proposed. Production
are usually from sea change when expanded nationwide.
from Indias few small methanol plants plants enjoying huge In sum, there is enormous potential
is not enough even to meet the routine economies of scale and to make the required methanol from
domestic demand; the shortage of cheap gas as feedstock. existing renewable sources. An even
Natural Gas in India prevents additions If so, then investments more interesting possibility is the
to production capacity. However, India synthesis of methanol by combining
has large reserves of coal, which can be
in large methanol hydrogen obtained by electrolysis of
gasified to make methanol, as is done in plants may be delayed water with carbon dioxide collected
a big way in China. Another feedstock is until the economics is from industrial sources. A small plant
pet coke, which is available in sig- favourable in operation in Iceland could be the
nificant quantities from many refineries. forerunner to larger plants.
These have the potential to produce
several million tonnes of methanol, and
put us firmly on the path to a Methanol
Economy. Today, technologies are
available for handling the high ash
content of Indian coal; the Methanol
Committee proposes to set up a small
scale demonstration project to convert
such coal into methanol.
There is a possibility that the
proposed new coal / pet coke
based methanol plants may not be
competitive with imports, which are
usually from plants enjoying huge
economies of scale and cheap gas as
feedstock. If so, then investments in
large methanol plants may be delayed
December 2016
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Nationwide distribution setup Methanol can be chemically con- on DME as fuel are under development
required verted to Di Methyl Ether (DME), which in China. Similarly, passenger cars are
We may now turn to the second neces- is a clean, colourless gas that is easy to being developed in Europe. California
sary condition, namely distribution set liquefy and transport. As it burns cleanly, (USA) has approved the use of DME as a
up. This is readily met, as the great ad- it is promoted for use as an automotive vehicle fuel.
vantage of Methanol is that it is a liquid fuel, for electric power generation, and Methanol can also serve as a fuel
that can be easily transported and stored, in domestic applications such as heating to generate electricity in fuel cells,
similar to petrol. The third condition, and cooking. DME is safe - it has long which can be 2-3 times as efficient
of equipment compatibility, is also not been used in aerosols by the personal as an internal combustion engine. In
a major issue. Methanol is described as care industry. As its properties are Denmark, such methanol powered fuel
an excellent fuel substitute for internal similar to LPG, DMEs main use is for cells are used to extend the range of
combustion engines and diesel engines. blending with LPG. The largest producer battery powered electric vehicles; some
Though methanol has half the energy is China. Technologies for producing petrol stations now offer methanol
content of petrol, its octane number is DME are under study by Indian Institute to fill up such vehicles. International
higher. In India, two wheeler vehicles of Petroleum and IIT Roorkee, with Aus- automotive companies are conducting
are easiest to convert to methanol. tralian research organisations. The use of trials for passenger vehicles.
Industry statistics show that one third of DME in engines is under intensive study As a fuel for ships, methanol offers
the 70 mil mts of methanol sold in 2015 at the IIT Kanpur. As DME can sub- advantages over existing options. As
was used for energy and fuel uses, with stitute diesel, heavy duty trucks running India seeks to develop coastal shipping
China being the leader. Many provinces and inland waterways, this is an area of
in China blend methanol into petrol, Methanol can also serve interest. The railway network can use
ranging from 10% to 100%. Since meth- as a fuel to generate methanol, for both static and dynamic
anol burns cleanly with no particulate applications. Methanol is also used as
electricity in fuel cells,
emissions, this step improves air quality a clean cooking fuel, alone or blended
in cities-much desired in India too. Aus-
which can be 2-3 times with ethanol; such stoves would greatly
45

tralia, which is rich in natural gas but not


as efficient as an reduce indoor pollution for the large
in crude, is examining options to blend internal combustion part of Indias population that cooks
methanol (and ethanol plus methanol) engine. In Denmark, with wood / charcoal. Both methanol
into gasoline. Such blends are popular such methanol powered and DME may be used in existing gas
for racing cars in USA. Israel, which fuel cells are used to turbines for electric power generation.
has large off shore gas reserves, has set extend the range of The diesel gen sets used for cell phone
a draft standard for 15% methanol blend battery powered electric towers are potential conversion targets.
with gasoline. It appears that countries vehicles; some petrol Methanol is also used to manufacture
having resources to make methanol stations now offer bio-diesel from vegetable oils.
adopt it as a fuel to reduce their import methanol to fill up such Proven technologies exist for con-
bills. The European Union permits upto verting methanol to gasoline, as well as
vehicles
3% methanol blend in gasoline. to ethylene and propylene, the two most
important petrochemicals. Thus, the bulk
polymers of polyethylene and poly-
propylene, which are in short supply in
India, can be made with local feedstocks.
One concern is that methanol has
been implicated in many cases of spu-
rious liquor. This aspect will have to be
dealt with, for example by an additive
that gives it a bitter taste. In conclusion,
the Methanol Economy encourages
development of alternate energy sources,
will help reduce energy import bill, as
also meet climate change obligations.

For suggestions email at feedback@infraline.com


December 2016
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StatisticsOil & Gas


Industry Sales Trend Analysis (Provisional): April-October 2016 (000 MT)
October April-October
Product
2015-16 2016-17 Growth (%) 2015-16 2016-17 Growth (%)

(A) Sensitive Products

SKO 575.7 380 -34 3,999.50 3,458.70 -13.5

LPG 1,688.10 1,859.70 10.2 10,906.90 12,083.80 10.8

Sub Total 2,263.80 2,239.70 -1.1 14,906.40 15,542.40 4.3

(B) Major Decontrolled Product

Naphtha 1,087.20 1,106.10 1.7 7,712.00 7,830.50 1.5

MS 1,850.50 2,106.20 13.8 12,550.90 13,967.30 11.3

HSD 6,347.30 6,672.80 5.1 42,573.20 43,938.40 3.2

Lubes+Greases 241.1 285.6 18.5 1,922.00 2,031.70 5.7

LDO 36.1 42.8 18.7 229.6 262.6 14.4

FO/LSHS 5,26.0 587.8 11.7 3,632.20 4,253.10 17.1

Bitumen 519.6 444.1 -14.5 2,963.60 3,074.40 3.7

ATF 533.9 586.7 9.9 3,540.40 3,935.90 11.2

Sub Total 11,141.70 11,832.10 6.2 75,123.90 79,293.90 5.6

46 Sub - Total (A) + (B) 13,405.50 14,071.80 5 90,030.30 94,836.30 5.3

(C) Other Minor Decontrolled Products

Petcoke 1,522.80 1,837.40 20.7 10,206.00 14,427.00 41.4

Others 535.8 578 7.9 3,700.60 3,922.70 6

Sub Total 2,058.60 2,415.40 17.3 13,906.60 18,349.70 31.9

Total 15,464.10 16,487.20 6.6 103,936.90 113,186.00 8.9

Natural Gas at a Glance (October, 2016) (MMSCM)


October April-October
2015-
Details 2014-15 2016 2016
16 (P) 2015 2016 2015 2016
(Target) (Target)

(a) Gross Production 33,657 32,249 2,795 2,759 2,755 19,244 19,237 18,479

- ONGC 22,023 21,177 1,838 1,951 1,943 12,676 12,744 12,627

- Oil India Limited (OIL) 2,722 2,838 254 256 246 1,598 1,770 1,720

- Private / Joint Ventures (JVs) 8,912 8,235 702 704 566 4,969 4,723 4,132

(b) Net Production (Excluding 32,693 31,138 2,705 2,671 18,551 17,863
flare gas and loss)

(c ) LNG Import 18,536 21,309 1,908 2,262 11,928 14,915

(d) Total Consumption (In BCM) 51,229 52,448 4,612 4,933 30,479 32,777

(e ) Total Consumption (In BCM) 51.23 52.45 4.61 4.93 30.48 32.78

(f) Import Dependency based on 36.18 40.63 41.36 45.86 39.13 45.5
Consumption (C/d*100)
December 2016
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Refinery-wise Crude Capacity Utilization (October, 2016) (OOO Tonnes)


October, 2016 Cumulative (April - October)
2016-17
Name of Undertaking/Unit Prorated % Utilisation
Actual Crude Prorated % Utilisation
Installed of Installed Actual Crude
Throughput Installed of Installed
Capacity Capacity Throughput
Capacity Capacity
A. Public Sector 11471 11845.62 103.27 79189 79212.25 100.03
1. IOC, Guwahati 85 72.22 84.97 586 508.39 86.76
2. IOC, Barauni 510 481.32 94.38 3518 3824.31 108.71
3. IOC, Gujarat 1164 1134.24 97.44 8032 8409.4 104.7
4. IOC, Haldia 637 678.9 106.58 4397 4720.86 107.37
5. IOC, Mathura 679 804.47 118.48 4690 5417.03 115.5
6. IOC, Digboi 55 51 92.72 381 301.82 79.22
7. IOC, Panipat 1274 1301.8 102.18 8795 9042.84 102.82
8. IOC, Bongaigaon 200 211.97 105.99 1378 1447.88 105.07
9. IOC, Paradip 1274 806.83 63.33 8795 3603.39 40.97
Total IOC 5877 5542.75 94.31 40572 37275.92 91.88
10. BPCL, Mumbai 1019 1244.67 122.15 7036 8312.75 118.15
11. BPCL, Kochi 807 975.46 120.88 5570 6484.96 116.43
Total BPCL 1826 2220.13 121.58 12605 14797.71 117.4
12. HPCL, Mumbai 552 720.12 130.46 3811 4839.19 126.98
13. HPCL, Visakh 705 803.63 113.99 4866 5201.77 106.9
Total HPCL 1257 1523.75 121.22 8677 10040.96 115.72
14. CPCL, Manali 892 939.42 105.32 6156 6234.84 101.28 47
15. CPCL, CBR 85 46.38 54.57 586 321.87 54.93
Total CPCL 977 985.8 100.9 6742 6556.71 97.25
16. NRL, Numaligarh 255 197.12 77.3 1759 1440.68 81.9
17. MRPL, Mangalore 1274 1368.89 107.45 8795 9051.32 102.91
18. ONGC, Tatipaka 6 7.18 119.69 39 48.95 125.51
B. Joint Venture Sector 1274 1426.13 111.94 8795 10200.69 115.98
19. BORL, Bina 510 610.13 119.63 3518 3883.41 110.39
20. HMEL, GGSR, Bhatinda 764 816 106.81 5277 6317.28 119.71
C. Private Sector 6795 7757.53 114.17 46904 53116.63 113.25
21. RIL, Jamnagar 2803 2756.66 98.35 19348 19321.92 99.87
22. RIL, SEZ 2293 3223.7 140.59 15830 21507.95 135.87
Total RIL 5096 5980.36 117.35 35178 40829.87 116.07
23. EOL, Vadinar 1699 1777.17 104.6 11726 12286.76 104.78
TOTAL(A+B+C) 19540 21029.27 107.62 134888 142529.56 105.67

Crude Oil Production (October, 2016) (In TMT)

Target October (Month) April-October (Cumulative)


Oil
2016-17 2016-17 2015-16 % over 2016-17 2015-16 % over
Company
(Apr-Mar) Target Prod. Prod. last year Target Prod Prod. last year

ONGC 22766 1898.46 1872.31 1909.35 98.06 13074.54 12901.2 13150.2 98.11

OIL 3480 290.09 275.62 265.95 103.64 1909.01 1880.4 1915.61 98.16

PSC Fields 10839.32 921.3 902.94 976.52 92.47 6389.48 6332.9 6766.18 93.6

Total 37085.32 3109.85 3050.87 3151.82 96.8 21373.03 21114.5 21832 96.71
December 2016
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NewsBriefs | Renewable National


Solar tariff slumps to all-time low at Rs 4 a unit Centre to constitute panel to examine
finalised a tender issue for the 750 MW renewable energy absorption issues
solar Photovoltaic (PV) projects in Bhadla
solar park, Rajasthan, at a record low
tariff for power sale of Rs4 per unit with
viability gap funding (VGF) support. The
government has fixed solar power tariff at
Rs4 per unit as the benchmark rate for all
tenders in the states where solar tariff has
been discovered at up to Rs4.50 per unit
in various auctions, said SECI manag-
ing director Ashvini Kumar. About the
The solar power tariff slipped to an all- specific tender of the 750 MW solar power Based on a suggestion from the Tamil
time low of Rs4 per unitthe maximum projects, Kumar said, This auction will be Nadu government, the Union Power
ratefixed under the tender floated for completed in one and a half months. Now, Ministry will constitute a committee to
750 megawatt (MW) solar power projects Rs 4 per unit is the benchmark. The tariff look into issues related to integrating
at Bhadla solar park in Rajasthan. Solar can be lower than this rate also as it de- renewable energy into the grid. There
Energy Corp. of India (SECI) recently pends on the bidders to quote the price. was a record evacuation of wind energy
in Tamil Nadu last year, contributing to
Govt plans to boost setting up of biomass power plants over 40 per cent of the grid capacity.
While that was heartening, it had its own
There is a renewed interest in biomass downside and challenges of integrat-
power plants, which can not only generate ing renewable energy into the grid,
electricity but also help dispose of in a according to Rajeev Ranjan, Additional
carbon-neutral manner agriculture waste, Chief Secretary (Energy), Tamil Nadu.
48 burning of which in Punjab and Haryana is Challenges Tamil Nadu being a pioneer
partly blamed for the alarming levels of in wind energy has its own problems
pollution Delhi is experiencing. Minister of and challenges in making the grid
New and Renewable Energy Piyush Goyal stable. There are technical aspects as
held a meeting of top officials recently to to how much renewable energy can be
consider increasing incentives to boost this absorbed into the grid without distur-
segment. We are thinking of a scheme to government already provides financial as- bances, he said. The state load dispatch
encourage setting up of biomass plants sistance of Rs 20 lakh per MW for setting centre is facing difficulty in managing
using agricultural waste, but I cannot say up biomass power plants, and Rs 15 lakh the grid because of fluctuatitons in wind
anything more at the moment, said Santosh per MW for co-generation projects by sugar power generation. We need to back
Vaidya, joint secretary at the Ministry of mills (using sugarcane waste left over after down lot of conventional sources of
New and Renewable Energy (MNRE). The juice extraction). power, said Ranjan.

Govt to promote solar powered charkhas, rickshaws

The government is looking at promoting machine, it is feasible to operate the


solar powered charkhas as well as charkha using solar energy. A commercially
rickshaws in the country and has invited viable solar system for the operation of
views from stakeholders on design and 8-10 spindles charkha has been developed
costing of the products. Ministry of by many institutions. The technology
New & Renewable Energy (MNRE) is is now well proven. To revive the large
considering to promote Solar Powered numbers of charkhas going out of operation
Charkhas and Solar Rickshaw under off in villages, solar energy could be easily
grid and decentralised solar programme. harnessed. Solar charkha kit attachment
Suggestions are invited from the has been developed to operate the existing
stakeholders on...Technical specifications, 8-10 spindle charkhas which are normally
MNRE said. Since charkhas are being used for manual operation in practice. A
mainly operated in rural areas which dont motorised mechanism ensures an even
have assured electric supply, the use of of solar energy can usher in a new era power supply, which in turn ensures a
solar energy could be thought of. The use of spinning. Since the charkha is a small better quality of yarn.
December 2016
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NewsBriefs | Renewable International National


India and US launch $95 million clean energy projects Renewable energy capacity increased
Corporation (OPIC) financing for renewable by 14,300 MW in the last two years
energy projects in India; and announced to
launch a USD 20 million partnership with the
philanthropic sector to bring more efficient
appliances to rural Indian villages. The USD
75 million OPIC financing is for a utility-scale
PV project in Telangana. It is sponsored by
ReNew Power Ventures. This commitment
represents the rapid mobilisation of financing
The US recently announced two financial under a USD 250 million facility to support up
projects worth USD 95 million in India to to 400 MW of new solar power projects in In-
bring more energy-efficient appliances to dia across multiple states, the White House
rural sector, as part of its efforts to continue said. Further the OPIC and Indian Govern- A capacity of 14,300 megawatt (MW)
the global transition to zero-and-low carbon ment will this week formally launch a USD of renewable energy has been added
energy sources. The US has committed USD 20 million distributed solar facility in partner- during the last two and half years in
70 million in Overseas Private Investment ship with leading philanthropies, it said. the country. The ministry of new &
renewable energy today announced
Railways sets target of utilising 10percent of energy needs from renewables that 5,800 MW of solar power, 7,040
MW of wind power, 530 MW of small
The Railways has set a target of utilising at hydro power and 930 MW of Bio-
least 10 per cent of its energy needs from re- power has been added to the grid
newable sources and has accordingly planned connected renewable power in the
to set up separate solar and wind power past two years. The progress and
plants over the next four years. Railway Min- overall achievement made under Wind
ister Suresh Prabhu said that Railways being Power, Solar Power, Solar Roof Top, 49
a significant consumer of energy, identifying Solar power capacity tendered, state
cost-effective options to achieve and realise policies etc were satisfactory, said
an energy system with least environmental Piyush Goyal, minister for power, coal,
impacts is essential. Vision 2020 document new & renewable energy and mines,
of the Indian Railways states that the key in a written reply at the Rajya Sabha.
target is to utilise at least 10 per cent of its an official statement said. The Ministry said its The government has amended the
energy requirement from renewable sources. first major feat was achieved in Harnessing tariff policy for strong enforcement of
As a part of this, Indian Railways has planned Green Energy on Railways when a 10.5 MW renewable purchase obligation (RPO)
to set up 1000 MW solar power plant and capacity wind power plant was set up in 2009 and for providing renewable generation
about 200 MW of wind power plants by 2020 by Integral Coach Factory (ICF), Chennai- the obligation (RGO) to meet its ambitious
across Zonal Railways & Productions Units, first green production unit of the Railways. renewable goals.

Indias solar power generation capacity at 8.7 GW: Piyush Goyal

Addition of 1,964.76 MW in the first seven USD 625 million consisting of World Bank
months of the current fiscal has taken the loan of USD 500 million, Clean Technology
total solar power generation capacity in Fund (CTF) loan of USD 120 million and
the country to 8,727.62 MW, Parliament a CTF grant of USD 5 million for grid-
was recently informed. As on October connected rooftop solar programme. He
31, 2016, Solar Energy Projects with an said his ministry has also submitted a
aggregate capacity of over 8727.62 MW proposal to the Finance Ministry for USD
have been installed in the country, New 200 million World Bank financing for
and Renewable Energy Minister Piyush internal infrastructure development of
Goyal said in written reply to Lok Sabha. solar parks. He also informed the House
In another reply, the minister stated that that an agreement for the rooftop loan
1,964.76 MW of solar power generation was signed between the World Bank and
capacity has been added in the country power generation capacity was added in the State Bank of India on June 30, 2016.
till October end of this financial year. the country. Goyal said the World Bank Under this agreement the World Bank loan
During last fiscal, 3,018.88 MW of solar has recently approved a total amount of is taken by the SBI.
December 2016
www.InfralinePlus.com

NewsBriefs | Renewable International States


Chhattisgarh aims 1/3rd of Indias power generation target in 12th Plan
All agri pumps in Maharashtra to run
proximately 700 MW by FY 2018,. With this the on solar in next 3 years
average power purchase cost for Chhattisgarh
State Power Distribution Company Ltd (CSPD-
CL) based on the above power availability will
increase from 2.58 Rs/kWh in FY 2015-16 to
3.12 Rs/kWh in FY 2018. The rates have been
derived based on cost of power at existing
rates and considering no escalation in power
purchase cost since it is passing through for
the distribution company. Notably, Chhattis-
Chhattisgarh is aiming to achieve one-third garh Renewable Energy Development Agency
of the national power generation target of (CREDA) has invested Rs 400 crores during
90,000 MW through commissioning of various last 11 years in developing infrastructure for In the next three years all the agri-
projects during the 12th five-year Plan. Chhat- solar power generation which had resulted in culture pumps in Maharashtra will
tisgarh will procure additional power from 40 MW of electricity being generated from non run on solar energy. A scheme to save
renewable energy sources to the tune of ap- conventional energy sources. 1000 mega watt energy through solar
energy is likely to be placed before the
Jharkhand close to signing PPAs for 1.1 GW of solar after delay government soon, noted State energy
minister Chandrashekhar Bawankule.
Jharkhand may sign power purchase agree- Bawankule further said the state has
ments (PPAs) for a total of 1.1 GW solar a very good opportunity in the field of
projects soon. These solar projects were green & unconventional energy sector.
originally auctioned during early 2016 but were Till now there was no policy in the
stalled due to differences between the state field of unconventional energy sector.
50 power distribution company and developers The government is now deciding policy
over the quoted tariff. According to inputs in this sector. Earlier, unconventional
received by Mercom Capital Group from energy was being produced, but no
Jharkhand Renewable Energy Development agreements took place in regards to
Agency (JREDA), the budgetary support to its purchase. The present government
fund difference of the cost of solar power and renewables come under public services, this decided on PPP model and has entered
the weighted average pooled power cost has legislation comes as a relief to developers and into agreement to purchase 380 mega-
been approved and the PPAs are expected to resolves problems relating to land acquisi- watt energy. Electricity is now available
be signed around the third week of December. tion. Small project developers are the worst at cheaper rates in open market, hence,
According to reports Jharkhand recently affected with earnest money deposits still wind energy is costing high and its sale
passed legislation allowing the acquisition frozen and not expected to be released until is affected, Bawankule said.
of tribal land for public service purposes. As PPAs are signed.

Telanganas solar power generation capacity reaches 3,800 Megawatt

Telangana has so far commissioned 3,800 able energy targets. NITI Aayog has been
Megawatt (Mw) of solar power and 100 MW assigned the task of promoting India as a
of wind power. The solar policy of the state renewable energy investment destination so
has been widely received and there was that its target of achieving 175 GW can be
tremendous response to the tenders floated met by 2022. Kumar said the State Govern-
for 2,500 MW solar power. So far, 100 MW ment is planning to actively encourage re-
wind power has been commissioned and newable energy and go for Hybrid (wind and
nine more locations have been identified to solar) generation in the Hyderabad Pharma
take up wind power projects, Arvind Kumar, City and NIMZ. Kumar asked the NITI
Principal Secretary (Industries, Commerce Aayog to look into infrastructure constraints
and Energy), of Telangana said. The NITI and suggest models which would encourage
Ayog official recently met Kumar to discuss renewable energy and serve as a sustain-
the integration of renewable energy into discussed interventions required to promote able model for discoms. Jain said the NITI
electricity grid by promoting coordination India as a renewable energy investment Aayog would assist the States in achieving
between the Centre and states. They also destination for achieving national renew- their renewable energy targets.
December 2016
www.InfralinePlus.com

NewsBriefs | Renewable International


Vietnam and Indonesia eyeing 10 GW of solar PV
Sri Lanka to set up 60 mini solar plants
governments of Vietnam and Indonesia may by competitive tender
also both be on board to grow the industry,
as they each eye 5 GW of installed PV by
2020. Indonesia had already made a pledge
of 5 GW of solar PV to be installed over the
next 2-3 years in a decree earlier in the year;
however, this had been thrown into doubt
with the sacking of the countrys Energy and
Mineral Resources Minister Arcandra Tahar.
The new report suggests that there is still
Southeast Asia in many peoples eyes plenty of political will to see this pledge Sri Lankas will call open tenders for
would appear to be the perfect place for through, and that Vietnam also wants to put private investors to set up 60 solar
solar market development, with excellent an emphasis on solar development. The great power plants of with a capacity of one
solar resources, a growing need for driver behind these targets is the obligation to MegaWatt each, following a successful
electrification and close proximity to Asian build green energy capacity in the countries tender for wind power which slashed
solar manufacturers. It looks as if the after the Paris climate agreement. costs, Deputy Power Minister Ajith
Perera said. Sri Lankas state-run Ceylon
China scales back solar, wind ambitions as renewables cool Electricity Board, has been paying as
much 23 rupees per kilowatt hour as
China, the worlds biggest clean-energy feed-in tariffs after the renewable
investor, lowered its solar and wind power businesses lobbied the regulator,
targets for 2020, a reflection of how justifying various costs. The renewable
record installations of renewables have lobby is so powerful in Sri Lanka that it
overwhelmed the ability of the nations had lobbied and received higher prices for
grid to absorb the new electricity. China small power plants made with domestic 51
is now aiming for 110 gigawatts of solar material, critics say. Considering the
power by 2020, a 27% reduction from interest shown by investors, we will
an earlier target. The nation reduced call open tenders to set up 60, one
its goal for wind power by 16% to 210 MegaWatt solar plants distributed
gigawatts. While China has poured the country, hurting companies such as around the country, as soon as the
billions of dollars into clean energy in China Longyuan Power Group Corp. and cabinet (of ministers) gives approval,
recent years, the ability to deliver the China Datang Corp. Renewable Power Co. Deputy Minister Perera said. The most
newly-generated electricity from where The global large solar energy valuation important aspect in this is that to reduce
its produced to where its needed has peers index, which counts many Chinese corruption fraud and we are going to
lagged. The mismatch has left solar and manufacturers among its 20 members, call competitive tenders to establish the
wind capacity sitting idle in some parts of has slumped 42% this year. (feed-in) tariff, he said.

More than $274B worth of climate-smart investments up for grabs in Indonesia

A new study by the World Banks Interna- Indonesia should grow as a result of new
tional Finance Corporation (IFC) revealed green building codes and energy efficiency
that the Paris Agreement climate change incentives, representing a $23.2 billion
pact has opened up $23 trillion of opportuni- investment opportunity by 2020, while the
ties in climate-smart investments in emerg- transport and waste sectors are expected to
ing markets from now to 2030. IFC has esti- require $250 billion in investment com-
mated over $274 billion worth of investment bined, the report said. With this finding,
opportunities in Indonesia for climate-smart IFC believes that now is the best time for
projects in a variety of sectors, including IFC said in the report. Meanwhile, with investors to bet money on climate-smart
renewable energy and urban infrastructure. the population of the country expected to projects, particularly as smart policies are
Investment in renewable energy accounts grow beyond 300 million by 2030, climate on the rise while the price of clean technolo-
for almost $23 billion by 2030, with under resilient buildings should also be growing in gies decline. As Indonesia aims to generate
half of this [$9.3 billion] for biomass, and relation, especially in urban areas such as 23 percent of energy consumption through
the other half for geothermal energy [$10 Jakarta, Riau, Banten, Yogyakarta and West renewables by 2025, the outlook for invest-
billion] and small hydropower [$3 billion], Java. The low-carbon buildings sector in ment in this sector seems bright.
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ExpertSpeak
Stand-up Solar India!
Prafulla Pathak, Secretary General, Solar Energy Society of
India, discusses the concept of Stand-up Solar India, which is
solar sector generation which is independent of grid or conven-
tional power. According to Pathak, under this measure, the island
areas can be hooked to solar power generation and storage
systems have a major role to play in this.

It was almost seven years back when are in distress, a small chance to get
the Ministry of New and Renewable rid and becoming safe is a huge
Energy was working on the proposed opportunity.
solar mission. In those days, the pa-
rameter for measuring solar power was Recent
introduction of MW unit in solar power scenario Support
generation, along with other calcula- In the last for non- Prafulla Pathak, Secretary General, Solar Energy
Society of India
tion. This situation had a backdrop of 5-6 years, sunny part of the
shortage of conventional power in the solar day can be taken then, the solar sector has grown 53
country, where load shedding was a industry care of by storage almost 5-6 times and is expected
regular feature. So much so that the has begun to grow further. Today, the installed
systems
prime purpose of implementing solar to develop capacity of the country in power sector
PV technology was planned in terms of multi fold. The has crossed 300 GW figure, while solar
solar PV-based electricity generation. parameter of this capacity has crossed 10 GW, which
The electricity so generated from solar energy has changed from MW to GW. indicates that the gap is reducing.
power was mainly available during 9 This enhancement has been due to the At this juncture, discoms have to
AM to 4 PM in India. It had the advan- support provided by the Government by worry about the technical and com-
tage of minimising the base load and way of policy and prime sector. The unit mercial losses and their recovery. To add
peak load gap during the first part of cost of the sector has dropped from Rs to this, subsidies to the needy section and
peak load schedule of the day. 15-18 to Rs 4.5 to 5 in last few years. charging this to the relatively stronger
The results of load shedding, in There are various factors which sector is the model accepted and in use
other words shortage of power, has added to the flavour and the unit cost of everywhere. This makes the discom
resulted in the unit cost of the power conventional power and solar power are power costly for one section of society.
available in those days market, power coming closer with each passing day. Whereas solar sector has the
exchange, was to the tune of 8-9 Rs/ The competitive and reverse bidding advantage of generating and dis-
unit. Though the quantity of electricity opened a gateway of new concepts. tributing power at the very point of
available in such a mode was very less, At the same time, traditional Indian requirement, the conventional area
but in the situation of non-availability, investors sensed danger. The limit has to sustain huge losses, which in
this was advantageous in relation to of taking risk was crossed by global turn costs the last mile customer. As
these rates and those offered by state investors. However, till today the such, the incoming solar installations,
distribution utilities in respective states. parameter is Achieving Grid parity. if set up at the remote and rural belts,
The investors and solar power There are debates on whether the grid where the transmitting and distributing
developers sensed the opportunity. parity has been achieved or not? the power incur losses, then discoms
The easy installation relative to Five years back or so, the total can minimise losses and solar power
conventional/thermal power and Installed capacity of the country was generators can offer the power without
smaller period of installation was on 140 GW wherein the contribution of additional cost of transmission and
the advantageous side, and when you solar was less than one GW. Since distribution charges, or levies for
December 2016
www.InfralinePlus.com

ExpertSpeak

technical losses as well as commercial power generators. The support for non- is in multiple of half MW or below.
losses. Then the incoming installations sunny part of the day can be taken care The increased quantum of solar power
on account of solar power, which are of by storage systems, which are in the generation in operation may have such
ten times of todays total installation, pipeline for solar sector. independent supply locations, which
can easily be accommodated. Here, the discoms will have the are standalone and sustainable. Only
advantage of not supplying to far away then, the advantage to solar sector and
Stand-up solar India area and as it is not supplying to this conventional sector can be achieved.
Stand-up solar India can be termed as virtual island, will result in reduction Otherwise, solar power generation will
solar sector generation which is inde- in technical loss, area being away from have to face the problem of compe-
pendent of grid or conventional power. load/generation centre. The power or tition with already installed units.
The virtually island areas, may be to the energy spared this way can be utilised When we are planning these new
tune of 5/10/25/50 MW of Taluka and in areas which pays them a higher rate. setups, only then do we have a chance
beyond, can be straight away hooked Such type of virtual islands getting to set up differently.
up to solar power generation. This part, supply from the solar power generators Stand-up solar India can also be
which was otherwise regularly under and an assured power storage system can built to supply to small level industry
supply from discom, which is far away be put in operation at multiple locations. units. These units today have to pay
from load centres or generation centres, Such solar power generation can tariff at higher levels. Solar power can
be independently handled by the solar also be rooftop based, if the power load be made available at reasonable tariff
to such state industrial corporations at
Whereas solar sector has the advantage of individual locations. If the state indus-
trial corporations have industry setup,
generating and distributing power at the very
not running 24 hours or only running
point of requirement, the conventional area has in day times, then such locations can
54 to sustain huge losses, which in turn costs the have power at the tariff offered by
last mile customer. As such, the incoming solar local solar power developer. Stand-up
turns out to be independent on its own
installations, if set up at the remote and rural and functioning. On the same line,
belts, where the transmitting and distributing solar power developers independent of
the power incur losses, then discoms can conventional system and discoms in
particular can be developed.
minimise losses and solar power generators can
offer the power without additional cost The views in the article of the author are personal
For suggestions email at feedback@infraline.com
December 2016
www.InfralinePlus.com

ExpertSpeak
India needs resilient energy
systems to tackle air pollution
Sukhdeep Brar, a former IAS officer of 1979 batch, recently
retired from the World Bank. In this article, she talks about the
grave issue of air pollution in Indian cities and offers solutions to
address the same.

Half of the worlds 20 most polluted a better last-mile connectivity and


cities are in India, according to a World greater usage of public transport
Health Organisation (WHO) report. systems can have significant
However, it is not just cities like Delhi, impact on reducing
Mumbai, Bangalore, etc. that are threat- vehicular pol-
ened by over-exploitation and pollu- lution, but Renewables
tion; even smaller cities like Gwalior, currently can only
Allahabad, Patna, Ludhiana, Kanpur, they fall diversify the 55
Patna are showing alarming levels of far short supply mix and not Sukhdeep Brar, a former IAS officer and World
air pollution today. With very rapid in both be the backbone Bank official

urbanisation, India has entered its most quantity source of the Burning of agricultural waste in
energy-intensive phase of economic and quality Indian energy Punjab, especially paddy stubble,
growth. The demand for energy and to provide a system which is an illegal practice is another
its consumption will continue to grow serious alter- major sources of air pollution in the
leading to greater emissions. Central as native to the affluent car owners. NCR (and, of course, to a much greater
well as state governments will need to Dust, due to the unbridled con- extent in Punjab) in the winter months.
reconcile their strategies of economic struction and digging activities that Traveling through Punjab in November
development and protection of envi- by pass regulations and fail to manage is like moving through dense fog with
ronment with those of improving air dust at construction sites, contributes very low visibility. It is estimated that
quality. Strong political intervention an estimated 38 per cent to Delhis pol- every year over a million hectares of
will be required to combat the problem. lution load. This can easily be managed paddy stubble are torched in Punjab
Coordinated efforts between the center with a dust management plan that is dili- and that that this releases approxi-
and state governments and between gently enforced with strict penalties for mately 12 megatons of Carbon Dioxide
various agencies will be critical. For ex- violators. Local air pollution can also into the atmosphere. During this
ample, the decongestion of the National be checked by introducing mechanized season, recent NASA satellite images
Capital Region (NCR), and enforce- cleaning of roads at night as against seem to show large chunks of the
ment of uniform green regulations, can the present somewhat obsolete practice Punjab agricultural region to be on fire.
only be implemented with coordination of manual cleaning that aggravates air
among the three states. pollution. Also, Indian cities should Impact analysis
A national monitoring index for air focus on decentralised environment Air pollution and smoke has regional
quality that has been put in place by management protocols which mean that and global ramifications because it
the government is an important step localities/colonies should have their has no boundaries. It is a severe health
forward. Along with this a compre- own air pollution management plans hazard causing respiratory problems
hensive plan to manage dust and with active public participation. Most and allergies. It also reduces visibility
stringent regulations for vehicular cities in the world with better air quality on the roads resulting in traffic ac-
emissions must be employed. Ensuring have such protocols at the local level. cidents and loss of life. Not only is air
December 2016
www.InfralinePlus.com

ExpertSpeak

pollution a serious health hazard, but


it has long term negative impact on
agricultural productivity due to increas-
ing levels of carbon in the soil. With
the practice of leaving land fallow or
using animal manure almost defunct,
there are no options for regeneration of
the soil. While the focus has been on
paddy burning, a drive through Punjab
in March-April will show that farmers
are now also taking to burning wheat
stubble. Farmers are unaware of the
impact of this practice on their own
health and the fertility of their land,
they cannot be expected to know of
the much larger impact on air quality
across and beyond the states borders.
Although the practice of stubble
burning has been banned by the gov-
ernment, yet it goes on unabated. The farmers has not borne fruit due to the
farmer is constrained by both time and While the focus has lack of an economically viable alter-
capital. There is a very short window been on paddy burn- native. Since this is both an urgent and
of time between the rice harvest and ing, a drive through a complex problem, the government
preparing the land for wheat planting. needs to adopt a multi-pronged
56
Burning is fast, it is cheap, it kills
Punjab in March-April approach to addressing it. For starters,
weeds and pests and, most importantly, will show that farmers it should introduce and pilot the Happy
there is no viable alternative to burning. are now also taking to Seeder technology by selecting a
burning wheat stubble. scalable pilot project area. It should
Possible solutions provide free or subsidized service for
There are options that exist that need to
Farmers are unaware direct seeding and establish a central
be explored on scale and with immediate of the impact of this pool of tractors and Happy Seeders or
effect. The government must introduce practice on their own a similar alternative technology. Hiring
these options on an urgent basis. First, health and the fertility of local tractor owner operators and local
the farmers need access to access to ma- tractor drivers could have the added
chinery that farmers can rent to plough
their land, they cannot benefit of generating the much needed
the stubble back into the soil. This be expected to know of employment for rural youth in Punjab.
practice would recycle precious nutrients the much larger impact The subsidy can be gradually phased
back into the soil. There are peak periods on air quality across out as the economic benefits become
- lasting no more than a few weeks - apparent and the cost of technology
during which this can be done. The ma-
and beyond the states comes down due to the economies of
chinery, therefore, has to be available in borders scale and competition.
adequate numbers to allow for farmers It is important to rope in existing
to clear the fields and ready them for the traditional methods and has been found local knowhow, and strengthen
next sowing. Since farmers do not have to also improve yield. Again, high extension services through available
the capital to buy expensive machinery it initial cost is the main drawback to its resources such as Punjab Agriculture
should be available to rent. widespread adoption. This is more so University extension staff. Once
Then there are other technology where farm holdings are small. The farmers see the benefits from the new
options that also exist. One such is Government must take the lead and process versus the harmful effects of
the Happy Seeder, a tractor drawn perhaps collaborate with industry to stubble burning, they will be weaned
implement that allows direct seeding of provide this service to the farmers. away from this harmful practice. It
wheat into rice residues. In trials, it has The ban on stubble burning and must be understood that the farmer
been found to be more economical than efforts to generate awareness among in Punjab is under heavy economic
December 2016
www.InfralinePlus.com

pressure as is evident from the over another. Instead, the role the sources of energy be fully exploited.
increasing numbers of farmer suicides different fuels can play at different That India should aggressively
in the state. Therefore, without an stages of development needs to be pursue opportunities in renewable
enabling government intervention, the further examined. In the short term, energy is not in doubt. What must be
farmer is in no economic condition to to provide energy and not hinder eco- stressed, however, is that with elec-
introduce and adopt solutions that place nomic growth, coal will be the most tricity making up only a fifth of useful
an additional financial burden on him. critical fuel, particularly if the highest energy consumed, for renewables to
Biomass plants using paddy stubble priority is providing electricity to make a significant contribution, any
profess to provide an economically all. But if India is to build an energy policy on the upstream side should go
viable option to burning but they are infrastructure that is commensurate hand in hand with initiatives to electrify
too few in number. Costs of transpor- with its ambitions to limit greenhouse end-use technology. Even at this point,
tation are high. Farmers need to invest gas emissions, it must now begin to renewables can only diversify the
in balers. The long term commercial expand its natural gas infrastructure. supply mix, and not be the backbone
viability of biomass plants as sources Natural gas is by far the most credible source of the Indian energy system.
of electricity has not been established. clean source of energy that provides For delivering energy to non-urban
Government must continue to explore an option of a cheap, efficient and consumers, recent policies have focused
new technologies and Punjab will serve a safe fuel. Not only will this gas on solar technologies as a source of
as an excellent starting point. provide the heat for a multitude of electricity. This is encouraging, but
The problem of air quality in key industrial processes, but its role the scale of the residential sector again
India is also a problem of its energy as baseload capacity will be essential calls for a multipronged approach. India
systems. The challenge, in reality, is in what will potentially be the worlds cannot expect to electrify every single
building a resilient energy system. third largest power consumer. Only household using solar photovoltaics.
The answer for our policy-maker through building this guaranteed So, it must take into account the role
is not picking one source of energy baseload capacity can renewable of traditional biomass, now dominant. 57
Numerous technologies now enable
In the near future, the focus should be on the more efficient and safer burning of
these fuels. In the near future, the focus
shifting the population away from burning should be on shifting the population
traditional biomass on open fires and away from burning traditional biomass
implementing what is a relatively short-term on open fires and implementing what is
solution - the use of cleaner cook stoves and a relatively short-term solutionthe use
of cleaner cook stoves and other cleaner
other cleaner burning fuels. burning fuels. This in turn buys the time
to fully understand the economics and
technical challenges of a large-scale
solar photovoltaic roll-out.
In transportation, increasing vehicle
efficiency by 1% a year can be a
solution, but one of the more pro-
ductive solutions could be reducing the
distance to be travelled (through better
urban planning) and from modal shifts
(shifting more people and freight from
the roads onto railways, for example).
Better infrastructure planning has
the added benefit of enabling faster
penetration of technologies that rely
heavily on good infrastructure, such as
electric vehicles.

The views in the article of the author are personal


For suggestions email at feedback@infraline.com
December 2016
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InDepth
Solar Rooftop a vital cog in governments
push for 100 GW solar capacity

58

India has added 513 MW of rooftop solar capacity over the past 12 months
At current rate, India to reach just one third of its 40 GW target by 2022

By Team InfralinePlus

While conceptualizing ideas for new mies, it is seen that the lowered costs of segment. Under Phase I of JNNSM,
capacity generation, perhaps, it is wind and solar technology in the recent a separate scheme called Rooftop
now increasingly being kept in mind past have made it easier to commit to PV and Small Scale Solar Generation
that financing new coal fired plants is projects in emerging economies with a Program (RPSSGP) was implemented
more difficult than cleaner technolo- rich resource base. To illustrate this, we for developing solar PV projects
gies especially since it takes longer have the case of Photovoltaics (PVs) with maximum capacity of 2 MW
to build coal and gas plants. The easy in India, wherein the capital costs for as rooftop or, small scale ground
transformation of such projects into projects relating to PV has become one mounted solar projects.
stranded assets is a phenomenon that of the cheapest in the world. Government aims to achieve a
emerging economies with a vigorous Apart from promoting the ground target of 40 GW of solar power from
power generation plan may want to mounted solar PV projects, the SPV rooftop system out of the total
avoid. Getting back to the question of Jawaharlal Nehru National Solar expected target of 100 GW solar
core reasons for the investment shift Mission (JNNSM) also has a mandate capacity by 2022. The Ministry of
from developed to developing econo- to encourage the rooftop solar Finance (MoF) has issued an advisory
December 2016
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to all public-sector banks to encourage


home loan/ home improvement
loan seekers to install SPV rooftop
systems and include the cost of
such equipment in their home loan
proposals.

Current Scenario
By October end, Indias installed
capacity in the solar rooftop segment
crossed 1 GW. India has added 513
MW of rooftop solar capacity over the
past 12 months reaching total installed
capacity of 1,020 MW. Around 22% of
capacity addition in solar rooftop has
been done under OPEX model where a
Source: Solar Rooftop Policy Coalition report

Table 1: Net Metering Regulations in States (for solar rooftop projects)


State Regulation Other Details
Haryana Haryana Solar Policy 2016 A solar rooftop owner may enter into PPA with the licensee or go for third party sale
through Open Access.
Electricity generated shall be cumulatively capped at 90% of electricity consumption
by the consumer at the end of settlement period.
Surplus energy injected by the consumer shall be carry forward to the next billing 59
period as an Energy Credit.
Uttar UPERC (Rooftop Solar Grid Consumers availing Net Metering shall be allowed to apply for Gross Metering within
Pradesh Interactive System Gross/ Net the same premises.
Metering) Regulations, 2015 Excess Energy shall be carried forward to the next Billing Period as Electricity Credit
but within the settlement period.
At the end of each settlement period, any electricity Credit, shall be paid at the rate of
INR 0.50/kWh by the Distribution Licensee or as notified by the commission from time
to time.
Rajasthan RERC (Connectivity and Net Maximum Installed Capacity shall not exceed 80% of the sanctioned connected load/
Metering for Rooftop and Small Contract Demand.
Solar Grid Interactive Systems) Excess Electricity injected shall be paid by the Distribution Licensee at Feed-in-Tariff in
Regulations, 2015 (OR) RERC the next Billing Period (For above 50 Units)
Net Metering Regulations, 2015
Maharashtra MERC (Net Metering for Net Metering arrangement, solar rooftop project connected to the Distribution
Roof-top Solar Photo Voltaic Transformer shall not exceed 40% of its Rated Capacity.
Systems) Regulations, 2015 However, Distribution Licensee may allow above 40%, after considering the detailed
Load Study.
Net unadjusted Credited Units at the end of the Financial Year shall be purchased by
the Distribution Licensee at its Average Cost of Power Purchase as approved by the
commission for that year.
Electricity Consumption in any time block shall be first compensated in the same time
block in the Billing Cycle.Any excess Energy shall be treated as energy is injected in
the Off-Peak Hours.
Solar Energy generated by the eligible consumer under these regulations shall not be
eligible for REC.
Madhya MPERC (Grid Connected Net Distribution Licensee may offer the Net Metering Arrangement to the Eligible
Pradesh Metering) Regulations, 2015 Consumer, in case the cumulative capacity at the particular distribution transformer
(DT) shall not exceed the target capacity of 10 MW.
The cumulative capacity shall not exceed 15% of Peak Capacity of the Distribution
Transformer.
Net unadjusted Credited Units at the end of the Financial Year shall be purchased by
the Distribution Licensee at its Average Cost of Power Purchase as approved by the
commission for that year.
Source: State Development Agencies (SDAs), Websites of State Electricity Regulatory Commissions (SERCs)
December 2016
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InDepth

third-party project developer finances which is a key regulatory concern for tency in net metering regulations across
and installs the system on rooftop the solar rooftop PV segment. 25 states the states, as well as upgradation of
owner/consumers premises and sells have formally adopted net metering the infrastructure by the DISCOMsto
all power output to him under a long- policy, meanwhile net metered rooftop effectively integrate the surplus power
term agreement. solar is now viable for commercial and exported by the consumers to the grid.
This fiscal year, about 1 GW of industrial consumers in 7 states without But the largest barrier to a more
rooftop installations is likely to be added. subsidy, with more reaching tariff par- widespread uptake remains the upfront
The Government is providing subsidies ity each year as solar costs come down cost of a system, despite massive price
to both individual household consumers and tariffs rise globally. reductions in the last three years. What
and housing societies. Rooftop instal- The effective implementation of net if the customer payment of upfront
lations do come with their share of metering would thus require support capital cost can be completely avoided?
roadblocks, including lack of space in from state electricity distribution com- What if a customer can get the full
rooftops, insufficient storage technology panies (DISCOMs), overall consis- benefit of the solar energy units from
as well as net metering systems. a solar rooftop PV system, without
With a business as usual (BAU) The report Unleashing having to pay for the system?
approach, India is set to reach just one It is third party ownership (TPO)
third of its 40 GW by 2022 rooftop
Private investment along with power purchase agreement
solar target. India approved the 40 in Rooftop Solar in (PPA) that can remove the barrier.
GW rooftop target last year as part India claims that Financing of the system can come into
of its overall 100 GW solar target. the picture if there is a good PPA to
India is currently on a
However, the report Unleashing show the commercial lender. Financial
Private investment in Rooftop Solar in trajectory of reaching innovation and changing consumer
India claims that India is currently on just 13.5 GW of preferences are likely to put solar
60 a trajectory of reaching just 13.5 GW rooftop solar by 2022, rooftop PV panels within the com-
of rooftop solar by 2022, however, fortable reach of millions of grid-con-
aggressive market support could help however, aggressive nected electricity customers in India
India double its rooftop installation market support could in the next 12-36 months, primarily in
trajectory to 26 GW by 2022. help India double its the commercial and industrial (C&I)
category.For rooftop installations by
Progress on Net-Metering
rooftop installation C&I segments, no subsidy support
Policy trajectory to 26 GW is provided by MNRE and thus no
The implementation of net-metering by 2022. domestic content requirement will be
regulations varies widely across states, applicable. However, with the fall in
PV module price levels and improved
cost competitiveness of solar PV
energy (at about INR 4.34/kWh), the
rooftop segment remains economically
feasible for C&I customer segments.
Today, the DISCOMsin India are
relatively comfortable operating an all
one-way traffic delivery service for
electricity, where every hypothetical
delivery truck is discom-owned. Elec-
trons flow one way and money flows
the other way. But once rooftop PV
gets into the picture on a large scale,
energy will flow in two directions
along the lines and through substations
and transformers that were designed for
one-way traffic.

For suggestions email at feedback@infraline.com


December 2016
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StatisticsRenewableEnergy
1) The State/UT-wise and year-wise targets and achievements of family type biogas plants set up under
the National Biogas and Manure Management Programme (NBMMP) during 12th Five Year Plan (up to
31.10.2016).

2012-13 2013-14 2014-15 2015-16 2016-17


Sl. Achieve-
Name of State Achieve- Achieve- Achieve- Achieve-
No. Target Target Target Target Target ment (upto
ment ment ment ment
31.10.2016)
1 Andhra Pradesh 15800 16145 17000 16052 10440 10555 10200 10343 10200 3537
2 Arunachal Pradesh 100 190 100 0 50 3 50 0 100 0
3 Assam 7000 7397 6000 6000 7500 7500 7600 7600 9000 4720
4 Bihar 0 300 0 2 0 1 0 3 0 0
5 Chhattisgarh 4000 3933 3600 3911 4000 2736 4150 2213 3050 333
6 Goa 100 58 100 59 100 12 100 78 100 26
7 Gujarat 5000 5623 3500 2367 4000 1349 3800 1595 2500 522
8 Haryana 1500 1303 1500 1325 1700 1008 1650 790 1000 169
9 Himachal Pradesh 300 362 350 321 250 154 230 114 150 44
10 Jammu & Kashmir 200 290 150 15 100 28 100 84 100*** 0
11 Jharkhand 500 641 300 0 100 54 100 142 200 21
12 Karnataka 12000 13671 10300 10503 15500 9198 16000 7049 10000 1833
13 Kerala 3700 3991 3125 3547 4000 2971 4000 2642 2850 549
14 Madhya Pradesh 12000 11946 10000 9146 10400 7673 10700 6796 8000 1386
15 Maharashtra 16000 19023 12600 13443 14400 14825 14660 14577 14500 5125
16 Meghalaya 500 670 500 0 250 0 250 0 200 0 61
17 Mizoram 1000 500 1000 250 500 260 500 280 500 58
19 Nagaland 500 750 500 254 300 250 300 0 300 0
20 Odisha 7000 7002 6500 1774 5100 4145 5100 2930 4000 403
21 Punjab 10000 12127 8700 9400 10250 7856 10650 4281 5000 1032
22 Rajasthan 500 530 400 754 1100 1013 1050 568 1000 220
23 Sikkim 200 251 200 158 200 139 200 170 250 0
24 Tamilnadu 1000 1321 1100 843 500 579 450 308 300 42
25 Telangana 0 0 0 0 9900 9900 9900 9099 12300 3541
26 Tripura 500 219 500 110 400 40 350 165 400 40
27 Uttar Pradesh 2500 3923 2900 2002 1800 1417 1750 1239 1100 382
28 Uttarakhand 1100 1831 1150 1006 900 937 960 1454 1400 660
29 West Bengal 12000 1380 0 298 0 279 0 185 0 0
30 Puducherry 0 0 0 0 0 0 50 0 0 0
31 KVIC 20000 * 13925 * 6260 * 6200 * 8000# 874
32 BDTC, IIT 0 0 0 0 0 0 0 0 500 0
Guwahati
33 BDTC, IIT Delhi 0 0 0 0 0 0 0 0 500 0
34 BDTC, UAS, 0 0 0 0 0 0 0 0 1000 0
Bangalore
35 BDTC, PAU, 0 0 0 0 0 0 0 0 1500 45
Ludhiana
TOTAL: 135000 115377 106000 83540 110000 84882 111000 74705** 100000 25562**

Source: MNRE

[* KVIC achievements are included in the States achievements.]


[** Figs. are being firmed up.]
[# For KVIC, Mumbai, national target 8000 {6500 (5700 Gen.+800 NEZ) and 1500 SCP target}]
[*** Subject to settlement of outstanding amount of previous years lying with the State Govt. ]
December 2016
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StatisticsRenewableEnergy
2) REC Trading Volume and Price for November 2016
Through IEX
Buy Bids Sell Bids Cleared Volume Cleared Price No. Of Month of
REC Type Participants Auction
(REC) (REC) (REC) (INR/REC)
Solar 25,003 2,204,844 25,003 3,500 477
November 2016
Non-Solar 150,050 8,120,951 150,050 1,500 813
Source: IEX

Through PXIL

Buy Bid Sell Bid MCV


MCP Month of
REC Type (No. of (No. of (No. of certificate)
(INR / Certificate) Auction
certificates) certificates) Qty. (MWH)
Non Solar 111007 5553204 1500 111007 November
Solar 16826 1746236 3500 16826 2016
Source: PXIL

3) State-wise Solar power capacity addition achieved during last five years and current year up to
31.10.2016
Installed Installed Installed Installed Installed Installed
S. Capacity during Capacity during Capacity during Capacity during Capacity during Capacity during
State
No. 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
(in MW) (in MW) (in MW) (in MW) (in MW) (in MW)
1 Andaman & 0 5 0 0 0 0
Nicobar Islands
62 2 Andhra Pradesh 19.75 1.6 108.69 126.77 435.11 395.08
3 Arunachal Pradesh 0 0 0 0 0.24 0
4 Assam 0 0 0 0 0 10
5 Bihar 0 0 0 0 5.1 90
6 Chandigarh 0 0 2 2.5 2.31 0
7 Chhattisgarh 4 0 3.1 0.5 85.98 34.98
8 Daman & Diu 0 0 0 0 4 0
9 Delhi 0.4285 0 2.14 0.32 8.82 9.59
10 Gujarat 598.89 253.01 58.5 83.65 119.12 19.01
11 Haryana 7.8 0 2.5 2.5 2.59 2
12 Himachal Pradesh 0 0 0 0 0.2 0
13 J&K 0 0 0 0 1 0
14 Jharkhand 4 12 0 0 0.19 0.65
15 Karnataka 3 5 17 46.22 68.24 194.62
16 Kerala 0 0 0 0 13.02 0
17 Lakshadweep 0 0 0 0 0 0
18 Madhya Pradesh 2 35.215 309.85 205 217.79 35.01
19 Maharashtra 16 80 149.25 82.23 25.01 0.3
20 Mizoram 0 0 0 0 0.1 0
21 Odisha 13 0 17.5 2.26 35.16 0
22 Puducherry 0 0 0 0 0 0
23 Punjab 7 0 7.52 168.75 219.79 166.14
24 Rajasthan 192.5 355.25 178.95 228.85 327.83 31.23
25 Tamil Nadu 0 0 81.76 54.12 919.24 493.59
26 Telangana 10 2.055 0 61.25 360.8 435.95
27 Tripura 0 0 0 5 0 0
28 Uttar Pradesh 12 5 3.7 42.16 72.24 0
29 Uttarakhand 5 0 0 0 36.15 0
30 West Bengal 1 0 5 0 0.56 4
31 Others(PSU/ 0 0.01 0 0 58.31 42.61
channel partner )
under Rooftop

Source: MNRE
December 2016
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Event-Focus
International Shale Gas and
Oil Workshop - 2016

63

By Mohd. Arif, Analyst, Infraline Energy

Considering the significance of shale functionaries need to consider for the example, ONGC estimates 34 tcf
gas/oil exploration and management robust phrasing of shale policy. of shale gas in Damodar basin
in India, Pandit Deendayal Petroleum alone where it has drilled first
University (PDPU), under the aegis of Session I- Exploration and shale gas pilot wells and gas flow
Directorate General of Hydrocarbons Exploitation of Shale Gas/Oil to the surface was established from
(DGH), organized a conference on Speakers: Mr. B.S. Dhannawat, Barren Measure shale formation
The International Shale Oil/Gas Shale Gas COD, ONGC; Mr. Gregory in well RNSG-1 whereas,
Workshop on October 6, 2016 at Wrightstone, Wrightstone Energy Schlumberger estimates shale gas
PDPU, Gujarat. The conference, in as- Consulting, USA; Dr. Rakesh Walia, reserves in India of about 600-
sociation with the PDPU SPE Student Geoconsulting Business Manager & 2000 tcf
Chapter, was sponsored by Oil India Country Manager, CGG India; Prof. Four basins have been prioritized
Limited (OIL) with Infraline Energy Subhash Shah, Emeritus Professor, for having shale potential by ONGC
as knowledge partner and DEW as University of Oklahoma namely, Cambay, KG, Cauvery and
Media Partner. The symposium was a A&AA
maneuver to bridge the gap between Key discussion points: In Indian basins, kerogen is
the shale exploration and management There is a difference in opinion dominantly type III and there have
in India and the important facets that about shale reserves in India. For been continuous interactions with
December 2016
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Event-Focus

Pradesh and Rajasthan and OIL is


in the preliminary stage in process
of acquiring fresh conventional
cores for the evaluation of blocks
Horizontal drilling is a directional
drilling in which a well in initially
drilled vertically till the kick off
point , then the drill bit is deviated
from the vertical plane around
a curve and is drilled in near
horizontal inclination to intersect
areservoir
Typical fracturing process involves
pumping of thousands of barrels of
international domain specialists water and proppant down the well
and service providers for G&G, Four basins have been through perforations in the casing
Laboratory studies, Petrophysical prioritized for having towards the target shale zone.
and Hydrofracturing Hydraulic pressure creates cracks
Appalachian basin consists of Utica
shale potential by ONGC in shales and to keep them open,
shale, Marcellus shale and Burket namely, Cambay, KG, solid proppants are added to the
shale. Furthermore, Appalachian Cauvery and A&AA. In pumped fluid
basin is likely to have greater than Depending on the properties of
2,500 Tcf of unproven recoverable
Indian basins, kerogen is shale formations, fracturing fluid
64 reserves, therefore, making it the dominantly type III may be water based, oil based or
largest mega giant natural gas field acid based. Moreover, Service
in the world are flow rate, hole size, hole angle, providers adjust the proportion of
Nearly all wells in Appalachian rate of penetration, drilling fluid fracturing fluid additives to the
basin use extremely flexible properties, cutting size & shape and unique conditions of each well
multistage Plug & Perf cased mineralogy. In shale exploration, down hole
completions and Focused technical issues include water
Ion Beam Scanning Electron Session II- Management and quality, induced seismicity,
Microscopy is used to confirm the Development of Shale Gas Resources Naturally Occurring Radioactive
best landing zone in India Material (NORM), methane
The key influences for the American Speakers: Mr. Ajoya Nanda Borthakur, migration, emerging geology, well
shale gas development are environ- GM, Oil India Ltd.; yield trends, decline curve analysis
mental issues, skilled workforce, Mr. Himanshu Pant, Lead Fracturing and regulatory issues
technology, pipeline capacity, rig Engineer, Baker Hughes, India; Mr. Key water management options
availability, regulatory & land Thomas B. Murphy, Director, Penn include, direct reuse (blending),
issues, gas price and resource base State Marcellus Centre for Outreach on site treatment, off site
RoqSCAN is a fully portable real and Research treatment and UIC well disposal.
time automated mineralogical Treatment technologies include,
system that has been exclusively Key discussion points: bag filters, chemical precipitation,
developed by CGG and Carl Zeiss As per the resource triangle, electrocoagulation, evaporation
to work with both conventional conventional reservoirs are easy and filtration
and unconventional reservoirs. to develop and they are present in Major risks for shale oil/gas
In the low oil price environment, small volume as compared to the production in the U.S. include,
RoqSCAN is a cost-effective and unconventional reservoirs separating possible vs. probable
convenient solution applicable for Sweet shales represent the target risk, wellbore integrity, water
all types of geological plays and it location or area within a play that contamination, air emissions,
provides the necessary data for the has the best potential production health, climate and gaps in research
design of an optimized well OIL has 6 blocks for exploration of It takes comparatively shorter time
Factors impacting debris cleaning Shale oil/gas in Assam, Arunachal to drill a well in U.S. The direct
December 2016
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mass is almost 3 times higher than


either China or the U.S.
There are three building blocks for
the shale economics; Single well
EUR (Estimated Ultimate Recovery)
drilling cost, completion cost and
crude & gas netbacks. Moreover,
Typical cost breakup for shale wells
are 31% drilling cost, 63% com-
pletion cost and 6% facilities cost
Owing to low drilling cost, many
operators follows the strategy to
just drill well and hold it in their
inventory and complete them later
International Standard Operating Procedure (SOP) for continuous flow of oil/gas in
lower price environment
should be followed to make matter more clear. The hurdle IRR that every shale
Furthermore, statutory clearance should be fast operator considers for shale well is
tracked and the coordination among ministries 15% and it can be expected to be up
should be increased in order to avoid any delays to 30% in high potential acreages.
Further, the breakeven prices are
and uncertainties in their respective roles typically in the range of $27 $40
per barrel and for the gas acreages,
workforce required to drill a single and pricing freedom for the crude it is about $2- $2.5 per BOE. 65
well is 420 individuals working in oil and natural gas produced
150 different occupations. Water produced during dewatering Panel Discussion: Policy Framework
of CBM blocks, can be used in for Exploration and Exploitation of
Session III- Policy and Economics hydraulic fracturing for the pro- Shale Oil/Gas in India
Consideration in Shale Gas Projects duction of shale oil/gas Moderator: Prof. Anirbid Sircar,
Speakers: Mr. Manish Maheshwari, Materiality, Marketability, Envi- Director and Professor, SPT-PDPU
CEO, EOL; Dr. Venkatesh Raman ronment & Sustainability and Eco- Panel Members: Shri Mahendra
Prasad, Partner, Jyoti Sagar Associates; nomics are four major catalysts for Pratap, Dy. DG, DGH; Mr. Manish
Mr. Abhishek Sinha, Vice President, the production of shale oil/gas Maheshwari, CEO, EOL; Shri Arun
Transaction Advisory Services, EY Entry 53, list 1 of schedule VII in Kumar, GGM-Basin Manager, ONGC;
the Constitution of India states that Mr. Vilas Tawde, Vice President, Head
Key discussion points: it is only the Federal Government Commercials, EOL; Dr. Venkatesh
The Prime Minister of India during or Union Parliament which can Raman Prasad, Partner, Jyoti Sagar
the UrjaSangram has set a target to implement policies in the Oil and Associates; Mr. Abhishek Sinha, VP,
reduce the oil import dependence of Gas sector and Union of India is a Transaction Advisory Services, EY
10% by 2022 and reduction of 50% trustee of the public when dealing
by 2030 by increasing the domestic with natural resources Key outcomes:
production Shale E&P issues should be NOCs like ONGC and OIL are
To boost Indian E&P sector, Hydro- addressed so that fine balance permitted three Assessment phases of
carbon Exploration and Licensing between the rights of the stake- a maximum period of 3 years each.
Policy (HELP) is announced in holders and business community Further, the company shall carry out
March, 2016 and the guidelines are can be achieved the following with respect to target
in the formulation stage. Four main In India, 2/3rd of the population shale sections: Environmental Impact
facets of HELP are uniform license depends on the land and India has Assessment (EIA) Study, including
for exploration and production of 10 times more population density as sourcing of water and its disposal;
all forms of hydrocarbon, an open compared to the U.S. and 2.5 times G&G studies; Drilling of pilot/test
acreage policy, easy to administer than that of China. Furthermore, wells; Coring, Hydro Fracturing
revenue sharing model, marketing the share of arable land to total land etc.; Geo Chemical studies; Geo
December 2016
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Event-Focus

opinion about shale reserves in India;


Indias basin studies were presented
by ONGC and OIL suggesting that the
prioritized basins have more type-III
kerogen and less type-II kerogen.
Further, in order to determine the
right amount of gas/oil in place, it
is extremely vital to assimilate the
reservoir characteristics which can be
done with the help of log data, seismic
data or core samples.
Any business has to make
commercial sense; operators will be
attracted to exploit shale plays only
Mechanical/ Geo Hazard/ Geo if they will see potential for this
Technical studies; Resource Any business has to molecule to reach the end consumer.
Assessment for Shale Gas and Oil make commercial This demands strong infrastructure
In order to make a robust policy sense; operators will in place. Besides, the government
framework for Indias shale has taken a leap forward in this
exploration, different policies be attracted to exploit regard by introducing HELP and
from countries having proven shale plays only if they setting up the stiff target to reduce
shale reserves like U.S., Pakistan, will see potential for this import dependence. In addition, the
China, Scotland etc. needs to be administration should also allow
analyzed and their commonalities
molecule to reach the private operators and academia to
66
should be identified. For instance, end consumer get core samples for their further
China follows 3-tier policy regime studies by setting up of National Core
and China is set to become No.2 in Eastern offshore, where gas Repository. Moreover, all concerns
shale gas producer by 2040, pricing is market driven. Likewise, of different stakeholders in the value
environmental issues in England & for shale gas, market driven pricing chain should be addressed. To make
Scotland can be studied etc. should be followed. This attribute is this happen, different issues in shale
Different attributes of HELP like included in HELP exploration like water management,
unified license, open acreage policy National Core Repository can water treatment, regulatory issues,
will be constructive for shale be set up in India wherein the land acquisition, workforce,
exploration in India core samples can be provided to technological challenges, gaps in
Tax benefits should be provided operators, academia etc. for further legislation etc. needs to be addressed
to the operators in order to attract studies and research purposes in a priority basis by taking different
private investment alongside the International Standard Operating shale policies of producing countries
investment from NOCs Procedure (SOP) should be like the U.S. and China as a precedent.
Risk aside, it can be witnessed from followed to make matter more clear. Oil and gas prices in the market can
Essars CBM production that in Furthermore, statutory clearance soon rebalance themselves owing to
unconventional field development should be fast tracked and the the changing geopolitics and OPEC
early movers takes the advantage. coordination among ministries decision to cut production and this
Therefore, early players in the should be increased in order to price stability is also set to play a
Indian shale plays will have an edge avoid any delays and uncertainties part in the development of shale
over their competitors in their respective roles. plays in India. As the shale industry
CBM and Shale can be developed will unfold in India, calculated risk
from same acreages. This can result Summary can be taken by the players so that
in the better management of the The International Shale Oil & Gas they can capitalize early and can see
marginal cost and sustained pro- Workshop - 2016 ended on a dazzling themselves in the vanguard to garner
duction of hydrocarbons note and highlighted the paramount maximum benefits.
Ambiguity and complexity in gas factors for the establishment of robust
pricing needs to be addressed. As shale oil/gas policy. With difference in For suggestions email at feedback@infraline.com
December 2016
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OffBeat
Demonetization impact positive for
energy and infrastructure sector
Corruption in power equipment procurement expected to come down,
feel experts
Cash-driven real estate sector could be hit hard by money recall

67

By Team InfralinePlus

In one of the biggest financial reforms The sum of old Rs.500 and Rs.1000 Impact on energy sector
post-independence, the Government, on notes in the circulation is Rs.14.2 The energy sector has been an immedi-
November 8, announced its decision to trillion, and it constitutes 86% of the ate beneficiary of demonetisation, with
demonetize Rs 500 and Rs 1000 currency total value of currency. This decision motorists and truckers queuing up at
notes and replaced them with new ones will force the total cash pass though petrol pumps to refill their fuel tanks
in a bid to tackle the incidence of black the formal banking system to get while electricity consumers making a
money and corruption. While the move authenticity. In 1978, when demon- beeline to pay their arrears and current
has been much appreciated by analysts etization was carried out for the first dues by using scrapped Rs 500 and Rs
and financial experts, it has, in the short time in India, as much as 75 per cent 1000 notes. An industry expert said
term, taken its toll on the infrastructure of the money had returned in the while power distribution companies
sector especially in areas where cash system, while the remaining 25 per have got collateral benefit in the form
transactions are predominant. cent vanished. of quick clearance of arrears and cur-
December 2016
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OffBeat

Bank notes in circulation as on March 2016 March severe financial stress. For example,
(Source: RBI) Gujarat Urja Vikas Nigam Ltd
(GUVNL), the cumulative power bill
Denomination No of units in circulation (Million Share in total value of notes in
pieces, with share in bracket) circulation collection of its subsidiaries stood at
Rs. 2,002 crore as on November 19 as
Rs 100 15778 (17.5) 9.6
against Rs 1,849 crore in October 2016
Rs 500 15707 (17.4) 47.8 and Rs 1,665 crore in November 2015.
Rs 1000 6326 (7.0) 38.6 The Bareilly zone of UP Power
Distribution Company Ltd, where
rent dues, the long-term benefit would strengthening of our power networks average daily collection of bills used
be felt in procurement of power equip- and bringing in efficiencies in the to be Rs 2-3 crore, saw over Rs 25
ment in which money often changes system. This will ultimately benefit the crore deposited just on a single day
hand.Demonetisation and other steps consumers in the form of 24*7 Power after demonetisation. The corporation,
being taken by the government will to All (including Industrial Consumers) which has over Rs 1000 crore in unpaid
reduce, if not eliminate, corruption in at economical rates. electricity bills across the state, has set
power equipment procurement, said Revenues of the State Electricity up 154 special camps in Bareilly zone
Ashok Khurana, director general, as- Departments and Power Distribution to deal with people making long queues
sociation of power producers. Another Companies have increased significantly to pay their pending power bills.
unintended benefit has been huge in- since the Governments announcement Paschimanchal Vidyut Vitaran
crease in payment of outstanding dues that Electricity Bills can be paid in old Nigam, one of the five state-owned
to utilities, Khurana added. There is currency notes of Rupees 500 & 1000 discoms in Uttar Pradesh, saw bill
no major impact of demonetisation on till November 24, 2016. collection of Rs 500 crore in four days
the coal sector as cash economy is non- Defaulters lined up to clear their alone post demonetisation a tenfold
68 existent in the industry, say experts. dues and this is a win-win situation for increase over normal days. The three
Demonetization is likely to have the Distribution Companies who have discoms in Rajasthan collected close
a positive impact on power and coal struggled to collect the bills dues from to Rs 480 crore in four days after the
sector in the long term by boosting the the consumers and are reeling under announcement of demonetisation. The
investors confidence in our economy
and bringing in more FDIs in the Demonetization is likely to have a positive impact
country. However, in the shorter run, on power and coal sector in the long term by
cash crunch will have a minor impact boosting the investors confidence in our economy
in the sector especially on the small
players who are heavily dependent on
and bringing in more FDIs in the country. However,
daily cash flows to meet their opera- in the shorter run, cash crunch will have a minor
tional business requirements. impact in the sector especially on the small players
Demonetization has turned Banks who are heavily dependent on daily cash flows
liquidity position into surplus with huge
amount of cash deposits. This extra
liquidity may lead to a possible fall in
interest rates for the developers when
they seek Credit from Banks to fund
their projects. Further, Project Cost will
be reduced and more people will be
willing to invest in the Power Projects.
Demonetization will also go a long
way in controlling black money, coun-
terfeit currency and corruption. This
will help in bringing foreign investors
in the country who were earlier wary of
entering in the country due to negative
image of rampant corruption in the
country. FDIs are much needed for
December 2016
www.InfralinePlus.com

zation, people are unable to pay for the


smuggled coal. The illegal coal traders
are also worried that the cash collected
by them in this business has become
illegal tender and they are now worried
how they are going to change the old
currency to new.
In the oil and gas sector, auto fuel
retailers are expected to see a sharp
pick-up in sales post demonetisation
as the government has allowed use of
scrapped notes for purchase of petrol
and diesel. Petrol pumps will also
benefit from the permission given to
them to install card swipe machines to
dispense up to Rs 2000 cash per card
holder in a day.
monthly collection in the state is nor- According to experts, the oil and gas
mally around Rs 2,000 crore. According to experts, sector will not be adversely impacted
The demand for electricity has been the oil and gas sector by the demonetization of high cur-
slow in recent years and one of the will not be adversely im- rency. The refining margins, production
obvious reasons is poor bill collection. of petro products, gas transmission
But now that discoms have seen a
pacted by the demoneti- and LNG import will not be affected
dramatic improvement in their cash zation of high currency. by the demonetization of the high 69
flows, they might feel encouraged to The refining margins, currency. In addition, capacity utiliza-
buy electricity from the free market to tions, capacity expansions, marketing
production of petro
meet their power requirements. margins and tariffs for gas utilities are
Demonetization has led to liquidity products, gas transmis- independent of demand. Hence, the
crunch in the economy affecting indus- sion and LNG import downstream sector would still remain
trial production. This will lead to con- will not be affected by unaffected. However, for the near
traction in power demand and may cause term the demand of petrol, Diesel and
small losses to the power plants devel-
the demonetization of CNG may rise up for the month of
opers and the distribution companies due the high currency November16 and early December16,
to unutilized capacity. However, it is a as the Government allowed the use
short term impact of demonetization and to November 18, 2016 to participate in of old 500 currency notes at the retail
situation is going to ease soon. E-Auctions in view of demonetization, outlets till December 15. This would
Demonetization has hit Coal Indias cash crunch situation has not eased give a significant impact on the petro
E-Auction plans meant to offer coal keeping the small traders out of CILS products consumption during the last
to traders and non-power producers. forthcoming E-Auction. quarter of 2016.
These coal consumers have run out The ban on old Rs.500/1000 notes Lower industrial activity and drop
of cash in hand due to drying up of has hurt Illegal coal trade. The coal in consumption pattern can potentially
payments from their customers as a mafia operating in Jharkhand is finding lead to the slow growth or negative
result of demonetization. Cash in hand it difficult to find the buyers for the growth for LNG and Fuel Oil for
is necessary for these consumers to coal smuggled from the abandoned commercial and industrial end users.
employ casual laborers for loading coal mines. Earlier, they used to trade However, it appears to be a short term
and unloading coal on trucks and also the smuggled coal to the local roadside trend and is expected to bounce back
advance payments is to be made to eateries, hotels, brick kilns and other after 12 months.
participate in E-Auctions. furnace based industries locally and The demonetization of high
Inspite of Coal Indias best efforts also smuggle to West Bengal and other denomination currency should only
to protect the interests of small traders States through trucks. have a marginal impact on the Indian
by extending the deadline to pay the Most of the buyers pay in Rs. 500 oil and gas sector, Deutsche Bank has
upfront payments from November 11 currency notes and after demoneti- said. The bank said it sees a marginally
December 2016
www.InfralinePlus.com

OffBeat

adverse medium-term impact on sales


of petroleum products. It reiterated its
preference for state-owned refiners in
the oil sector and Petronet LNG among
the gas utilities.

Real estate prices set to


plunge
But cash-driven real estate sector could
be hit hard by money recall. Analysts say
property prices will fall in the wake of
demonetisation as also interest rates on
bank loans, potentially creating pos-
sibility for genuine buyers to invest in
flats and other residential properties.
Real estate has been the swamp of black
money as actual transaction rates, which out over Rs 8 lakh crore worth market
are much higher than government-noti- Cash-driven real estate value of residential properties sold and
fied rates, are never declared. As per the sector could be hit unsold by developers since 2008, said
industry practice, the difference is paid in hard by money recall. PropEquity, a real estate research firm.
cash. Also, there are lots of benami prop- Analysts say property In the aftermath of demonetisation
erties which could come under scanner of impact on Indian real estate sector,
the government which is armed with new
prices will fall in the market value of residential property
70 and more powerful anti-benami property wake of demonetisation of Rs 8,02,874 crore is expected to be
law, Prohibition of Benami Property as also interest wiped off in the next 6-12 months,
Transactions (PBPT) Act, which came rates on bank loans, PropEquity said in a statement.
into effect on November 1. According to PropEquity research,
potentially creating
The PBPT Act prohibits recovery of residential real estate valuation in the
the property held benami from bena- possibility for genuine top 42 cities in India, sold and unsold,
midar by the real owner. Properties buyers to invest in flats will take a tumble and fall up to 30
held benami are liable for confiscation and other residential percent, from Rs 39,55,044 crore to Rs
by the government without payment of properties. Real estate 31,52,170 crore, it added.
compensation. According to the new In a recent report, rating agency
law, people caught with benami prop-
has been the swamp of Fitch stated that homebuilders in the
erties could serve up to seven years of black money as actual NCR will continue to face the heat as
rigorous imprisonment and will have transaction rates are most sales of the higher-end prop-
to pay a significant fine. Additionally, never declared erties were to high-net worth indi-
the properties will be confiscated. viduals and investors, two categories
Under the Act, a transaction is named Capital says Indias black economy of buyers that have been hit badly by
benami if property is held by one stands at over Rs 30 lakh crore or about the governments crackdown on black
person, but has been provided or paid 20 per cent of the total GDP. If the money. Homebuilders with greater
for by another person. A person could ministrys 2012 assessment holds true exposure to large-ticket premium
also face rigorous imprisonment for today, real estate may be hiding more property projects are likely to be the
up to five years for knowingly giving than 50 per cent of the black money. most affected. Furthermore, we expect
false information and will have to Prime Minister Narendra Modi has homebuilders more exposed to projects
pay a fine of up to 10 per cent of the already said that the next target of his in the National Capital Region (NCR)
market value of the property. government in the fight against black to be hit more than in other regions,
A 2012 white paper on black money would be benami properties. because NCR is known to have a
money by the Finance Ministry stated Housing prices in 42 major cities greater reliance on cash-based transac-
that the real estate sector in the country across India could drop by up to 30 per tions Fitch said.
accounts for nearly 11 per cent of the cent over 6-12 months after the demon- According to PropEquity, maximum
GDP, but a recent report by Ambit etisation of high-value notes, wiping fall on total market valuation will be
December 2016
www.InfralinePlus.com

in Mumbai Rs 2,00,330 crore followed of toll on national highways pend- Movement of goods and passenger
by Bangalore by Rs 99,983 crore and ing improvement in cash availability. vehicles has also been impacted as
Gurgaon Rs 79,059. Indian realty is Transport is another sector that has tourist buses and cabs are supposed to
now bracing for sub-prime level crisis, been hit hard by demonetisation as they pay taxes in cash at state borders.
which is expected to deeply impact are unable to undertake their business The Delhi Transporters Association
the core of unorganised real estate and due to non-acceptance of old tender echoed similar thoughts, saying the
black money, the research firm said. notes by state authorities, toll plazas trucking business is largely cash-reliant
According to Colliers International, and labourers. According to industry for its en-route expenses that include
another real estate research firm, the estimate, more than 20 crore people are fuel purchase, toll payments and
Delhi-NCR property markets are associated with the sector. covering costs for truckers boarding,
already reeling under low transaction The All India Motor Transport vehicular repairs and payments to
volumes due to circle rates being Congress (AIMTC), which is an apex loaders and unloaders. We are worst
higher than the market rate. Demon- body for transporters in the country, affected due to demonetisation of Rs
etization will only see demand for has said that the withdrawal limit of 500 and Rs 1,000 currency notes. Yet,
real estate here reduce even further, Rs 10,000 per day and Rs 20,000 per never did we call for a strike and not
it added. We expect lot of secondary week has brought transport to a halt. even once tried to hamper flow of
market transactions (resales) coming The body said that the sector is facing essential commodities for the larger
down in volume. For every five buyers an acute financial crunch as 80 per cent public interest, Manjinder Singh
out there, there is only one buyer of its operational costs are paid in cash. Dhaliwal, Secretary, Maharashtra Tank
willing to pay all-cheque. And usually, and Lorry Owners Association, is
people want to take at least 20 to 30 Private developers quoted as saying.
per cent of the amount in cash, but this of highways and After demonetisation was
will now go away for the time being, expressways have also announced on November 8, many
Samir Jasuja, CEO and Founder decided to look for ways to acquire
of PropEquity, is quoted as saying.
found themselves at accepted currency, truck drivers, single
71

There will be almost a complete stop the receiving end of operators and many in the business
in resales in the coming weeks as this cash crunch resulting have suffered. Hardships in getting
move will take some time for real from demonetisation, the money exchanged quickly at fuel
estate sector to absorb, he added. pumps or banks have added to their
with the government
woes. In an effort to let go off their
Heavy toll on toll collections suspending collection old higher denomination notes, most
Private developers of highways and ex- of toll on national of our customers and clientele have
pressways have also found themselves highways pending passed on the abolished notes to
at the receiving end of cash crunch improvement in cash us. They threaten us to accept them
resulting from demonetisation, with without which we dont stand a chance
the government suspending collection
availability of receiving any revenue from them,
Dhaliwal added.
Transporters say that the withdrawal
limits imposed by the government are
too low for middle-sized and large-
scale operators. Due to loss of business,
many fear they could face difficulties in
paying installments for loans taken to
purchase vehicles. Mindful of default
on loan repayment, the government has
given addition 60 days to borrowers
to repay their loans. The exemption is
applicable to loans repayable between
November 1 and December 31.
It has been decided to provide
an additional 60 days beyond what is
applicable for the concerned regulated
December 2016
www.InfralinePlus.com

OffBeat

entity for recognition of a loan account EPC Construction Vs Building Material


as substandard, the Reserve Bank said
in a notification. EPC Construction (Neutral Impact) Building Material (Short Term Negative
Impact)
Rating agency ICRA has estimated
Most of these projects have big ticket Likely to be negatively impacted as the
operators loss during the first 10 days sizes and revenue is from larger underlying real estate demand (60-65% of
corporate houses and government consumption) will be severely impacted
after demonetisation at Rs 460 crore, authorities, which do bank transaction due to shortening of black money
which the state-owned agency NHAI However, for small contractors, due Large part of transactions made in cash in
will have to compensate. The monthly to cash crunch there will be some the sector like paints and other materials,
disruption in medium term hence likely to be negatively impacted
compensation expenditure for 115 toll
Toll collection, which are mainly done
projects of NHAI operated by private in cash, may face some disorder in
players is estimated to be Rs 1,380 crore. short-term
The concession agreement provides
adequate safeguard against such losses Rating agency ICRA has estimated operators
and the developers are likely to apply loss during the first 10 days after demonetisation
for compensation under the change
in law provision (compensation if
at Rs 460 crore, which the state-owned agency
aggregate financial impact exceeds the NHAI will have to compensate. The monthly
higher of Rs 1 crore and 0.5 per cent compensation expenditure for 115 toll projects of
of realisable fee) and the force majeure NHAI operated by private players is estimated to
clause (extending the concession by the be Rs 1,380 crore
number of days the force majeure was
prevalent), ICRA had said. industry experts said. That aside, traffic calculated either on the basis of their
Projected decline in road traffic and is expected to be lower in the coming October average or the average of first
72 the exemption of road tolls following quarter due to slump in economic eight days of November. It could pay
the withdrawal of high-value banknotes activity, which means loss for operators. 75 per cent immediately and the rest
may pose short-term cash flow concerns Road projects had seen a traffic growth over time, but there is no final decision
for toll road operators, companies and of about 6 per cent in fiscal 2016 and an on this. NHAI has said it is looking at
analysts said. While the government equivalent growth in the first half of the an overall impact of Rs 500-700 crore
plans to compensate these companies current fiscal year, but this is likely to for the first 10 days of toll collection.
for their toll loss, there would likely slow down in the second half. Overall It will compensate 75 per cent of the
be short-term pain as traffic plunges traffic growth at the end of the current loss immediately, and the balance 25
on low economic activity, they said. fiscal may be just about 3 per cent, said per cent will be done on a detailed
Demonetisation could drag down an analyst. These operators also face the evaluation of the loss. However, Paytm
2017-18 GDP growth to 5.8 per cent, risk of credit rating downgrade in the has bagged NHAI deal for automatic
Ambit Capital said in an update. wake of demonetisation. toll collection. All toll charges will
Analysts said the exemption on toll An analyst explained that more than be deducted from digital wallets. In
collection could result in cash flow the amount of toll collection, rating addition, the digital platform will
constraints for road projects for interest agencies are concerned about the operate toll booths across the country.
payments at the end of the month. The actual timing of the release of pay- Going forward, as the hue and cry
cash flow impact would be serious ments. Because toll road companies are over the cash crunch settles down,
wherever the revenue of road projects operating at very thin cushion in terms the benefits of demonetization will be
is linked to the repayment of loans. of debt servicing and these companies visible to all. The immediate fallouts
Under the concession agreement for have to make interest payments on a of demonetization which includes
road projects, companies need to apply monthly basis, and debt repayments on hurting illegal coal trading activities
for compensation against such losses monthly or quarterly basis, they could and boosting power bills collections,
under the change in law provision. The face rating downgrade. Even beyond shows that this move is a correct step
government could also compensate by this exemption period, overall toll towards cleaning up our economy,
extending the concession by a corre- revenue in this fiscal year may be lower bringing in more transparency and best
sponding number of days. than what the companies would have practices in the country and help revive
In case of cash compensation, expected prior to demonetisation. the economy.
anything less than 100 per cent will be The government could reimburse
a negative for toll-based road projects, companies for the loss of toll income For suggestions email at feedback@infraline.com
December 2016
www.InfralinePlus.com

Reports & Studies


Oil consumption wont peak before 2040; India to drive demand growth: IEA India needs $50 billion to install 40 GW
rooftop solar, says BNEF
the second half of the century in an effort to
limit the rise in average world temperatures
to well below 2 degrees Celsius (3.6
Fahrenheit) above pre-industrial times. But
while demand for oil to power passenger
cars, for example, may drop, other sectors
may offset this fall. The difficulty of finding
alternatives to oil in road freight, aviation and
petrochemicals means that, up to 2040, the
The International Energy Agency (IEA) growth in these three sectors alone is greater
expects global oil consumption to peak no than the growth in global oil demand, the Bloomberg New Energy Finance (BNEF)
sooner than 2040, leaving its long-term IEA said in its annual World Energy Outlook. has suggested that a massive financial
forecasts for supply and demand unchanged From 2020, the European Union will impose boost is required if India plans to meet
despite the 2015 Paris Climate Change much tougher legislation to control vehicle its aggressive target to have 40 GW of
Agreement entering into force. The Paris emissions, which many expect to quickly installed rooftop solar capacity by March
accord to cut harmful emissions seeks to erode use of traditional fuels such as gasoline 2022. BNEF recently reported that the
wean the world economy off fossil fuels in and diesel, a major source of oil demand. rooftop solar power segment has been the
fastest-growing renewable energy sector
Indias carbon emissions increased by over 5pc in 2015: study
in India over the last few months. How-
Indias carbon emissions from burning ever, despite the supportive regulatory de-
fossil fuels increased by 5.2 per cent while velopments, substantial financial support
Chinas decreased by 0.7 per cent in 2015, will also be needed to carry on the growth
according to new research which found that momentum. India has seen a recent surge
global CO2 emissions remained nearly flat in rooftop solar power projects over the
for three years in a row. India contributed few months with several home owners 73
6.3 per cent of all global CO2 emissions, as well as industries setting up projects
with emissions increasing 5.2 per cent, in under net-metering schemes and for cap-
2015 continuing a period of strong growth, tive consumption. Attractive net-metering
according to researchers at the University of provisions and high industrial electricity
East Anglia (UEA) in the UK and the Global tariffs have driven consumers towards this
Carbon Project. Global carbon emissions from the rapid emissions growth of 2.3 per sector. In spite of these positive develop-
from burning fossil fuels did not grow in cent per year in the decade to 2013, with ments, around $50 billion of additional
2015 and are projected to rise only slightly just 0.7 per cent growth seen in 2014. The investment would be needed over the next
in 2016, marking three years of almost no data shows emissions growth remained six years to achieve 40 GW of installed
growth, they said. The projected rise of only below one per cent despite GDP growth rooftop solar capacity.
0.2 per cent for 2016 marks a clear break exceeding 3 per cent.
Green bonds can potentially fund renewable energy: Report

With the government setting an ambitious relatively nascent in the Indian context with
target of 160 GW of solar and wind capaci- only few of the renewable energy indepen-
ties by 2022, green bonds can be a potential dent power producers issuing these bonds,
option to support the funding needs, a globally first green bond was issued in 2007.
recent report said. Green bond is a debt Though the initial issuances remained
instrument used to raise funds from inves- small, they have gained lot of prominence
tors and the proceeds are used only towards in the past couple of years due to increasing
financing green projects. According to a re- appetite and commitment of investors in
port released jointly by Assocham and Crisil, making climate-responsible investments,
to meet the renewable energy target, there it said. Given that green bonds would
is a need to look at innovative channels facilitate attracting a category of investors
for financing and banking alone would not capital expenditure of green projects such which are environment friendly and demand
be able to support the huge requirements. as renewable energy projects or refinanc- investments in green/sustainable financial
Green bonds could be a potential option ing existing loans of eligible green projects instruments, these could be a good option to
to support these funding needs. These pro- of the issuer, the report said. The report part fund the huge investment needs of the
ceeds could either be used for funding the also noted that while the green bonds are renewable energy sector, the report said.
December 2016
www.InfralinePlus.com

People in News
Susheel Kumar is new coal secretary, Rajeev Kapoor is secretary, MNRE Saptarshi Roy takes over as Human
the coal ministry in October 2014 under Resource Director of NTPC
power, coal, renewable energy and mines
minister Piyush Goyal. Prior to joining
the coal ministry, Swarup was serving as
an Additional Secretary in the Cabinet
As part of a high-level bureaucratic Secretariat. He is generally credited for
reshuffle, the government shifted coal successfully developing the model for
secretary Anil Swarup to the Ministry of allocation of natural resources through
Human Resources Development (HRD) as coal mine auctions. Swarup enjoys the
Secretary, School Education and Literacy. image of a go-getter and was hand-picked
He was replaced by Susheel Kumar was Prime Minister Narendra Modi for
who is at present serving as Secretary, the job. Also, Rajeev Kapoor, Director at NTPC, Indias largest power utility
Department of Border Management in Lal Bahadur Shastri National Academy of company, announced Saptarshi Roy,
the Home Ministry. Swarup, an Indian Administration, has been appointed as the Executive Director, NTPC has taken
Administrative Service (IAS) officer of new secretary of the Ministry of New and over as Director, Human Resources
the UP cadre, was handed the charge of Renewable Energy. (HR), of the company for a period of
five years from the date of assumption
Government appoints new NHAI Chairman of charge of the post on or after
November 1. Roy will remain HR
The government has appointed Yudhvir director of NTPC till the date of his
Singh Malik as the Chairman of National superannuation or until further orders,
Highways Authority of India (NHAI). Malik, whichever is the earliest. He replaces
an 83 batch Haryana cadre IAS officer, U.P. Pani who has relinquished the
was earlier posted as special secretary in charge of the post of Director (HR)
74 Niti Aayog. The outgoing chairman Raghav of the Company consequent upon
Chandra, an 82 batch Madhya Pradesh attaining the age of superannuation
cadre IAS officer, has been moved to the on 31st October 2016. 56 year old
National Commission for Scheduled Tribes Saptarshi Roy is graduate in Electrical
as secretary. Malik will have a huge task at Engineering, with career spanning over
his hands meeting governments ambitious finish the work within the timeline of two 36 years of contribution in NTPC as
road construction target of 10,000 km for years. The NHAI has a budgetary funding Regional Executive Director (North)
the current year. Malik will also have to of Rs 22,000 crore and has been given and ER-I Regions as well as Executive
get the work started on the Delhi-Meerut permission to raise bonds worth Rs 50,000 Director (Corporate Planning) besides
expressway. Prime Minister Narendra Modi crore. In the current year, the authority Head of HR at Projects and Corporate
has been personally monitoring this project plans to undertake highway construction Office.
and has already told the roads ministry to works of around Rs 70,000 crore.

HPCL appoints VS Shenoy as Director-Refineries, S Jeyakrishnan to head marketing

over from BK Namdeo, who retired on


October 31, 2016. During his career
spanning over 31 years, Shenoy has held
various positions in the Refinery Divisions
and Corporate Departments of HPCL.
The company also announced that S
Jeyakrishnan has assumed charge as
Director (Marketing). Prior to this, he was
the Executive Director (Retail) of HPCL.
During his tenure across the various
Marketing SBUs, HPCL became Indias
largest lubricant marketer, augmented
infrastructure, developed robust processes
HPCL has appointed Vinod S Shenoy and undertook several pioneering enhanced productivity and profitability and
as Director-Refineries. Shenoy takes customer centric initiatives which established HPCL as the preferred brand.
Exclusive Information Covered in
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SCCL
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Summary
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Performance of CIL & SCCL
Spot E-Auction Prices and Allotment

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