October 2016

Volume 5 | Issue 6 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

Surge in global energy

prices threatens to spoil
indias honeymoon

Increase in cross subsidy Integration of renewable

surcharge trips open access capacity poses challenge to
market for consumers grid operators

Ashok Ganesan Dilip Kumar Jena Utpal Ghosh Dr. Giorgio Cellere
Managing Director Manager CEO & President Head of Product Management
GE Power India Limited Mining, PwC UPES Applied Materials
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&2016 Yearbook
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Key Highlights
Sector Performance Review: FY 2015-16
Key Policy and Regulatory updates
Extensive Database of Sector specific Companies including
Manufacturers, Developers, EPCs, BFSIs and Consultants
Top management with contact details
Direct exposure to top decision makers and influencers

tory 2016 tory 2016 ory 2016

Yearbook & Directory 2016 Renewable

Yearbook & Direc Yearbook & Direc ory 2016 Yearbook & Direct
Yearbook & Directory 2016 Oil & Gas

Yearbook & Direct

Yearbook & Directory 2016 Roads
Yearbook & Directory 2016 Power

Power Oil & Gas Energy

Renewable Roads

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InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
October 2016 | Volume 5 | Issue 06

Editors Letter Editorial

Shashi Garg, Editor
India has been enjoying a dream run in recent years
thanks to the low energy prices globally. However,
hardening of prices in recent months seems News Team
to suggest that this cushion of low prices may Chetan Gupta
prove be short lived. Data reveals that Australian
coal prices have risen by more than 25 per cent Analyst
between June and August. Similarly, Brent crude Mohd. Arif
price has shot up by almost 50 percent taking
January as the baseline. With the OPEC recently
agreeing to cut oil production, a spike in oil prices Content Consultant
seems imminent. Even LNG prices have surged during July after hitting all- News Monster
time lows in June. All of this does point to the fact that Indias honeymoon
with low energy prices is expected to be cut short.
There is no denying the fact that the country is heavily dependent on imports
to meet its energy needs. India is the worlds fourth largest LNG importer,
while 81% of its crude oil needs are met from imports. Similarly, we continue Business Development
to be dependent on imported coal to fuel our thermal power capacity. In
this scenario, a surge in global prices is likely to have a major impact on Manoj Narang, Director
Indias energy sector. As time ticks by, India needs to make the most of the Tel.: 0120-6799106 / 100
continuing low price environment by fast tacking its energy sector reforms. Email: manoj.narang@infraline.com

In this issue, we have also raised the issue of open access for power
consumers. Open Access has been conceived as an important tool of
introducing competition in the electricity industry and ensuring choice to Advertisement
buyers and suppliers of electricity. It is time that open access is made free
Ashwini Solomon
of additional charges to ensure a uniform power market across the country
in order to protect consumer interests. Tel.: 0120-6799157/100
Mobile: +91 9811708110
Maintaining grid stability is another issue which we have tabled given 3
Email: ashwini.solomon@infraline.com
that India is making rapid advancement in setting up renewable energy
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with the national grid requires expansion and modernization of the intra and
inter-state distribution as well as transmission grid. In this regard, energy
storage options need to be explored and a significant push towards the Circulation & Subscription
R&D of these technologies is the need of the hour. Sneha Pandey
India recently ratified the Paris Agreement under which it is required to Tel.: 0120 6799125
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fossil sources by 2030. In this regard, we bring to you an article which
analyses the pro and cons of this approach and the likely challenges to be
faced in future. One important step in this regard will be promoting the gas-
based fuel capacity. To emphasise the same, we provide an analysis on the Form IV
City Gas Distribution sector in India and what needs to be done to promote Periodicity of its Publication: Monthly
this environment-friendly approach. Also, there is a need to increase coal Printers / Publishers /
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 October 2016
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InfralinePlus

Contents
Editors Letter
3

Cover Story 33
Time running out! Surge in global
energy prices threatens to spoil Indias
honeymoon
Energy-guzzling India has tremendously
benefited from historic low prices in recent years.
However, energy prices are again hardening in
the international market and could soon pose
new challenges for Indian industry and policy
makers. According to World Bank commodity
price data, Australian coal prices have risen
by more than 25 per cent between June and

33
August on increased Chinese demand. If we take
January as the baseline, Brent crude price has
risen by nearly 50 per cent.
4

Power Coal
6 22
News Briefs p6 News Briefs p22
In Conversation: Ashok Ganesan, Managing Director, In Conversation: Dilip Kumar Jena, Manager -Mining,
GE Power India Limited p10 PwC p25
In Depth: Increase in cross subsidy surcharge trips In Depth: Clean Coal: Enhancing value by improving
open access market for consumers P14 quality through Coal Washing p27
Financials P18 Financials P30
Statistics p20 Statistics p31

Topics Covered Topics Covered

Power transmission Coal import
Open access Coal washeries
Digital equipment Coal demand
 October 2016
www.InfralinePlus.com

Oil and Gas Renewable

38 53
News Briefs p38 News Briefs p53
In Conversation: Utpal Ghosh, CEO & President, UPES In Conversation: Dr. Giorgio Cellere, Head of Product
p41 Management, Baccini Cell Systems, Applied
Expert Speak: Vijay S Laghate, Consultant p43 Materials p58

In Depth: City Gas Distribution: Time to move on p46 Expert Speak: Shravan Sampath, Taruna Idnani,
Researcher, Climate Parliament-South Asia p60
Financials P49
In Depth: Integration of renewable capacity poses
Statistics p51 challenge to grid operators p63
Financials P66
Statistics p67

Topics Covered Topics Covered

Manpower requirement New technology in renewable
5
Petrochemical projects Climate action plan
PNG and CNG demand Grid stability

Expert Speak/Interview

Ashok Ganesan Vijay S Laghate

Managing Director Consultant
GE Power India Limited Off Beat
69
Expert Speak: Prasad Shetty, Executive Director, Fraud
Investigation & Dispute Services, EY India

Reports & Studies

71
People in News
Taruna Idnani
Researcher
Prasad Shetty
Executive Director, Fraud Investigation
74
Climate Parliament-South Asia & Dispute Services, EY India
 October 2016
www.InfralinePlus.com
NewsBriefs | Power National
Govt to bid out Rs 4,697 crore power projects in first reverse e-auction
In a major change aimed at infusing
transparency in the infrastructure sector,
the Modi government will conduct its
first-ever bidding of power transmission
projects through reverse auction on an
electronic platform and award six mega
contracts worth Rs 4,697 crore through the
Centre to set up nuclear plants in Ukhand, Punjab, Haryana
Of the 22 nuclear power plants in the
country, Rajasthan houses six reactors while
Narora in Uttar Pradesh has two. The rest
are located in western and southern India.
6 We are exploring the possibility of having
such establishments in other places, for
example near Dehradun in Utarakhand and
near Patiala in Punjab. We are also looking
for a place in Bhiwani in Haryana, Minister
of State in the Prime Ministers Office Jiten-
dra Singh said. Singh said most of the atomic
energy generation was confined mostly
to Maharashtra and Tamil Nadu. That is
one contribution that has received a lot of
push in last two years, he said. The Prime
Ministers Office looks after the Department
Security management system to safeguard countrys power grid
The Centre plans to safeguard the
countrys power grid by putting in
place a security management system
with the help of states amid growing
fears of cyber attacks that can cripple
the economy. Power secretary PK
Pujari noted that power generating
companies, transmission firms and
power distribution companies have been
asked to implement information security
management systems to safeguard the
grid. The power ministry has asked all
power companies to nominate a senior
officer as their chief information security
officer, who will coordinate cybersecurity
related issues with the National Critical
novel initiative. It is learnt that the projects
would be bid out in the next few months
through the reverse e-auction route.
The process will evaluate tariff-based
competitive bids submitted by companies
for the first time. Power projects financing
firms Power Finance Corporation (PFC)
and Rural Electrification Corporation
(REC) would act as the nodal agencies for
implementing the electronic tenders. The
electronic bidding is being seen as a huge
opportunity for some of the key players in
the sector including Sterlite Power, Adani
Transmission, Kalpataru Power, Alstom
T&D and KEC International apart from the
largest and the state-owned Powergrid
Corp (PGCIL).
of Atomic Energy (DAE). Meanwhile, the
Nuclear Power Corporation (NCPIL), a PSU
under the DAE, is coming up with two more
reactors in Rajasthan and four PHWRs in
Gorakhpur in Haryana.
prevents cyberattacks against critical
Information Infrastructure Protection
Centre (NCIIPC) that was created under
National Technical Research Organisation
for taking all measures for protection of
Existing body may get to plan
interstate power transmission
network
The government is considering assigning
the responsibility of planning interstate
electricity transmission network to an
existing organisation like the Central Elec-
tricity Authority (CEA), reviewing its earlier
decision to set up a new central transmis-
sion utility (CTU). The power ministry had
proposed to move the Union Cabinet for
separation of central transmission utility
function from state run Power Grid Corp.
As per the proposal, after separation,
an independent non-profit organisation
will carry out transmission planning and
organise bidding process for projects under
tariff-based bidding competition. The
separation was envisaged to provide level-
playing field for all bidders of transmission
projects. Various ministries, including the
finance ministry, have questioned the need
for creating a new company for transmis-
sion infrastructure planning. The govern-
ment had separated grid management
division from Power Grid Corp by creating
Power System Operation Corp (Posoco)
that took several years.
critical infrastructure in India. NCIIPC
infrastructure, minimises vulnerabilities
to such threats and reduces damage and
recovery time when such attacks take
place. Energy sector is seen as a key
critical infrastructure whose destruction
could cause a debilitating impact on
national security, governance, economy
and social well-being of a nation. The
generating companies and transmission
network are fairly protected with security
systems in place, but distribution
companies have not paid attention to
threats, making them vulnerable to
attacks.

NewsBriefs | Power National
India, US Ex-Im Bank in talks on $8-9 bn nuclear loan
India is negotiating with U.S. Export-Import
Bank for an $8-9 billion loan to finance six
Westinghouse Electric nuclear reactors,
although a lending freeze at the trade agency
threatens progress. The mega-project, the
result of warming U.S.-India ties in recent
years, could open up billions of dollars of
further investment in Indias nuclear power
NTPC bullish on power demand, to add 24 GW at Rs 1.6 lakh crore
Amid global economic uncertainty, state-
owned NTPC remains sanguine about
domestic electricity demand and has
planned a total capacity addition of 24 GW
entailing an investment of Rs 1.6 lakh crore.
Various projects of the company having an
aggregate capacity of around 24 GW are
under implementation at 23 locations across
the country, NTPC CMD Gurdeep Singh
said. Singh said, This (24 GW) includes
4,050 MW being undertaken by joint venture
and subsidiary companies. This translates
into a capex of about Rs 1,60,000 crore.
The installed capacity of the NTPC group
today stands at 47,228 MW, which includes
800 MW of hydro and 360 MW of solar
176 MW more power to NE grid by March next
ONGC Tripura Power Project (OTPC) is
contemplating to increase its power gen-
eration capacity from 550 MW to 726 MW
by next year. Although two units of OTPC
are supposed to produce 726 MW power,
the units could not achieve the installed
capacity due to shortage of gas. In the
recently concluded OTPC board meeting,
it was conveyed that the ONGC will supply
more gas so that OTPC plant at Palatana
could produce power as per installed
capacity. The meeting was conveyed that
the ONGC would increase supply of gas by
March 2017 if everything went well. Cur-
rently, the ONGC supplies 2.5 MMSCMD
gas to the OTPC to operate its two units
sector, which was for decades shut out of the
global market. India now targets a tenfold
expansion in capacity to 63,000 MW by 2032,
and U.S., French and Russian companies
are among those chasing the business. The
Westinghouse deal, however, is contingent on
financing and Ex-Im cannot approve loans
of more than $10 million, owing to a row in
the U.S. Congress over board appointments
stemming from a campaign by conservatives
to close the government lender. Only two
of five seats on Ex-Ims board are filled and
the appointment of a third director the
minimum needed to clear board decisions is
on hold due to opposition from the Senate
Banking Committee Chairman, Republican
Richard Shelby.
generation capacity. The company has
planned an all-time high stand-alone capex
of Rs 25,960 crore exceeding the MoU target
of 23,000 crore and the NTPC group capex
stood at Rs 32,091 crore last fiscal.
at Palatana plant per day to produce
550/560 MW. If the ONGC increases gas
supply, the two units of Palatana will be
October 2016
www.InfralinePlus.com
States to get Centres financial
support for free power scheme
The Centre will extend financial support
to states to enable them to offer new
electricity connections free of cost
to everyone. At present, electricity
connections to only below poverty line
(BPL) families are offered for free. The
Union power ministry has proposed to
extend the free connections scheme
to all in line with the Centres goal to
achieve 24x7 power for all by March
2019. Rural Electrification Corporation
(REC) is working on a scheme to provide 7
long-term loans to states that agree to
offer free new electricity connections.
REC is working on a scheme for
financing the power distribution
companies so that they could release
new electricity connections to
households. The scheme covers funding
of expenses like laying of lines to give
access to electricity, installation of
meters and other accessories.
able to generate 726 MW power by March
2017. However, exploration is a kind of un-
predictable thing. But the ONGC is leaving
no stone unturned to increase gas supply
to the OTPC as well as to the NEEPCO,
OTPC Managing Director Satyajit Ganguly
said. If OTPCs power generation capacity
is increased, entire North East will be
benefited as almost all NE States are
receiving power from Palatana combine
cycle power plant in Tripura. As per the
schedule, the ONGC is supposed to provide
gas to NEEPCO for its Manarchak power
plant by December. Now, NEEPCO is wait-
ing to receive gas so that it could operate
the much-delayed power plant.
 October 2016
www.InfralinePlus.com
NewsBriefs | Power States
Thermal power stations in Odisha to generate 70 MT of fly ash
Thermal power stations in Odisha are
estimated to generate as much as 70
million tonnes (MT) of fly ash annually after
completion of all projects. This was stated
by Odisha Energy minister Pranab Prakash
Das in the Assembly. While seven existing
thermal power stations now generate 25 MT
of fly ash, it is estimated that about 70 million
Telangana to get 1,000 MW of power from Chhattisgarh from January
The two power distribution companies
(Discoms) in Telangana are expected to
get 1,000 MW power from Chhattisgarh by
December-end this year or in January next.
Power purchase agreement in this regard
8 was signed in September last year. This was
indicated by Chairman and Managing Director
of TS-Transco and TS-Genco D. Prabhakar
Rao. He stated that the 765kV Wardha-Dich-
pally-Maheshwaram transmission line being
commissioned by Power Grid Corporation of
India Ltd (PGCIL), which is essential to drawl
of power from Chhattisgarh, is expected
to be completed by December. Telangana
has already booked a slot for evacuation of
1,000 MW power from Janjgir thermal power
PSPCL to shut its thermal units for six months; says cheaper to buy electricity from private firms
Claiming to be a purely commercial
company, the Punjab State Power
Corporation Limited (PSPCL) has issued
a circular saying there is no need to run
its own thermal plants from October
2016-March 2017. It has also indicated
that the thermal plants are supposed to
remain shut from October-December next
year. There are a total of 14 units in these
thermal plants with a generational capacity
of 2,560 mega watts (MW) of power.
Instead, the corporation is buying power
from private thermal plants operational
in Talwandi Sabo, Rajpura and Goindwal
Sahib. The PSPCL is liable to purchase from
private thermals for 25 years as per the
of fly ash will be produced annually when all
IPPs (Independent Power Producers) start
functioning, he said. The minister said the
thermal power stations have been asked by
the Odisha State Pollution Control Board to
create captive fly ash ponds and utilise the
ash in making bricks, blocks and roads for
the better management of fly ash. Das said
while seven thermal stations were already in
operation in the state, the Odisha government
has signed MoUs with 30 IPPs for setting
up thermal power generation projects in
different parts of the state. Of the 30 IPPs,
agreements with three of them have been
rejected due to different reasons, the minister
said, adding that the three IPPs have so far
started commercial production.
project in Chhattisgarh on the 765kV double-
circuit line being commissioned with a total
transmission capacity of 4,350 MW power.
After signing a memorandum of understand-
ing in November 2014, power utilities of the
two States signed the power purchase agree-
ment (PPA) in September last year.
thermals. PSPCL is making need-based
agreement signed before commissioning of
these thermals. The full generation capacity
of these thermals is, however, 3,870 MW
much more than that of government-owned
Kerala government gets tough with
KSERC, invokes Power Act
The LDF government has instructed
the Kerala State Electricity Regulatory
Commission (KSERC) to simplify the
procedure for releasing electricity
connections. In a rare move, the
government has employed Section
108 of the Electricity Act to issue the
instructions, amply indicating its decision
to end its silence on the bitter stand-
off between the commission and the
Kerala State Electricity Board (KSEB)
over multiple issues, including long-term
power purchase deals and power tariff.
The Additional Chief Secretary (Power)
has asked the quasi-judicial body to re-
work its Kerala Electricity Supply Code
in the light of a Union Power Ministry
directive seeking a much simpler,
three-step process to release industrial
and commercial connections. Besides,
simpler procedures are also key to the
success of the state government goal to
provide electricity for all by March 2017.
Existing supply code guidelines specify
time-consuming manual procedures and
entails multiple visits to KSEB offices.
purchases and pays fixed charges for the
rest. The PSPCL says it has been unable to
find any buyers for their surplus power and
hence took the decision to shut the plants.
Apart from buying from private thermals,
PSPCL is also purchasing power from the
central pool so as to meet the daily need
of power ranging from 2,350 to 2,400
lakh units. However PSPCL authorities are
spreading this message wide that private
thermals are providing cheaper power
ranging from Rs 2.20 per unit to Rs 2.40
per unit against their own thermals where
average cost per unit is not less than Rs
3.50 per unit.

NewsBriefs | Power International
China-led AIIB approves $320 mln in loans to Pakistan, Myanmar power projects
The China-led Asian Infrastructure Invest-
ment Bank (AIIB) approved loans totaling
$320 million to energy projects aiming to ease
severe power shortages in Myanmar and Paki-
stan. A $300-million loan will fund expansion
of a hydropower project in Pakistan, co-fi-
nanced with the World Bank, and a loan of $20
African Development Bank aims to lend Nigeria $4.1 bn for power and farming
The African Development Bank (AfDB) is
set to lend Nigeria a total $4.1 billion over
2016 and 2017, and $10 billion by 2019,
to help Africas biggest economy plug its
budget gap and develop its infrastructure.
Akinwumi Adesina, President, AfDB, said he
would go to the pan-African lenders board
next month to seek approval for a first, $1
billion loan to cover this years deficit as
Nigeria grapples with its first recession in
more than 20 years. The bank is going to
provide in total between 2016/2017 $4.1
billion to Nigeria in various areas, said Ad-
esina. I expect that our portfolio in Nigeria
will not decrease -- it will actually grow.
We expect to invest in Nigeria, by 2019, a
Ausgrid gets bid from local consortium after Chinese, HK offers blocked
Australias top two pension funds have
made a joint indicative offer to buy a
majority stake in the countrys biggest
electricity network, a month after bids
from Chinese and Hong Kong interests
were rejected on security grounds. The
unsolicited approach for a 50.4 percent
stake in Ausgrid was made by IFM
Investors, which invests on behalf of
29 domestic superannuation funds, and
AustralianSuper, which says it holds the
pensions of one in six working Australians.
Terms of the proposal were not disclosed.
In the previous auction, the stake had
been widely expected to top the Australian
privatisation record of A$10.3 billion
million went to a power plant in Myanmar co-
financed with other lenders. With the approval
of two new projects, we are well on our way to
meeting our target to extend financing of $1.2
billion in 2016, said President Jin Liqun, add-
ing that the move met a core mandate of back-
ing green and cost-effective infrastructure. The
bank has previously co-financed projects such
as a slum renovation in Indonesia and highway
construction in Pakistan and Tajikistan. Crisis-
hit Mongolia plans to pitch a number of railway
projects to the AIIB as it steps up efforts to
attract investment and boost trade. The bank,
proposed by Chinese President Xi Jinping two
years ago, began operations in January, with
57 founding member countries and $100 bil-
lion in committed capital.
total of $10 billion. Adesina said funds that
the AfDB aims to lend over the next two
years would be used to develop the power
and agriculture sectors in the west African
country, aiding a move away from the coun-
trys reliance on oil revenue.
($7.9 billion) that was paid for another
energy grid. A successful winning bid
October 2016
www.InfralinePlus.com
Uganda to spend $2 bn on power
connections, grid
Uganda plans to spend at least $2 billion
in the next five years to connect more
people to its electricity grid and raise
connection rates, a senior executive at
sole power distributor Umeme Ltd said.
Ugandan officials say they want to boost
electricity supply rapidly to power an in-
dustrialisation drive. In recent years they
have cut subsidies for consumers and
introduced a tariff adjustment mecha-
nism. The country said in 2015 it planned
to increase its electricity generating ca-
pacity to at least 1500 megawatts (MW)
over the next three years from 850 MW. 9
Sam Zimbe, deputy managing director
of Umeme, said to go hand in hand with
this, the country aimed to increase the
number of electricity connections to 3
million in the next four years from about
900,000 at present. We intend to spend
at least $800 million just on that activity
alone, constructing low voltage lines,
and looking at last-mile connections,
Zimbe noted.
from local investors would likely help
politicians tamp down a backlash over
foreign asset ownership and the joint
bidders emphasised that their proposal
was all-Australian. If we are ultimately
successful (we) intend to manage the
asset in a responsible, considered manner
over the long term, AustralianSuper CEO
Ian Silk and IFM Investors CEO Brett
Himbury said. The government of New
South Wakes, which wants funds to invest
in new roads and train lines, said it has
formed a panel to assess the proposal and
expects to give a decision by the end of the
year. It still plans to repeat the formal bid
process.
 October 2016
www.InfralinePlus.com

InConversation
Digitisation of power sector the game
changer that will transform the industry
Ashok Ganesan, Managing Director, GE Power India Limited,
remains bullish on the future growth prospects in the power
sector. Ganesan believes that while India is making steady
progress on the renewable front, it is equally essential to find
the right balance between renewable and conventional power
in order to maintain firm and reliable supply of power. At the
same time, he feels that there is a need to embrace digital
technologies that can enable and accelerate transformation to
help decarbonize the world. Excerpts:

What are the challenges facing
the power sector today? What
are your suggestions to remove
bottlenecks?
The goal for the power sectorand the
10
country today is to deliver affordable
power more flexibly, responsively and
cleanly. Coal will continue to be a
critical source of electricity in India for
the next couple of decades, even while
we ramp up the generation capacity in
renewable energy. The ability of coun-
tries (including India) to meet emis-
sions goals set out in the Paris COP21
agreement, while meeting growing
demand for electricity, will depend on
the ability of fossil fuel-powered plants
such as coal to deliver.
In this scenario, improving the
efficiency of power generated from
coal-fired plants is a critical need and
a challenge. As a nation, one way to
increase the efficiency of coal based
power generation is to switch more and
more of the generation to highly efficient
super critical and ultra-supercritical
plants. These plants have designs net
efficiencies of ~2200 Kcal/KWH as
compared to some of the older plants that
were designed to operate at efficiencies
of around 2450+ Kcal/Kwh. However,
this approach has its own challenges.
Firstly, new plants require signif-
icant investment. Given the financial
situation of many of the private players
(and quite a few government entities),
adequate funding for new plants will
prove to be a challenge. Financial
institutions are already over-exposed
on Non-Performing Assets (NPAs)
to the power sector. Secondly, new
plants will also require significant
amount of space. Land where it is
available is probably better served in
putting up renewable energy based
generation. Thirdly, time to build.
Tendering a new plant and eventually
bringing the power from such plants
to the grid takes a very long time (3-5
years). Fourth, demand vs Supply gap:
Even with the addition of such plants,
demand will continue to grow, and it
may not be feasible to add sufficient
capacity over the next decade to keep
pace with the growing demand.
For all these reasons, the biggest
opportunity to improve efficiency
is in the installed base. Plants con-
tinue to age (about 36 GW in India is
more than 25 years old), systems are
highly complex and average efficiency
is very low. Many of the existing
plants have operating efficiencies
much deteriorated from the design
Ashok Ganesan, Managing Director, GE Power
India Limited
condition while some have operating
efficiencies even as high as 4000Kcal/
KWH and beyond. Companies must
therefore, embark on plant level R&M
(Renovation and Modernization)
and upgrades to increase total plant
efficiency, while extending life. This
has the dual advantage of increasing
efficiency of power generation for
minimal capital investment, while
utilizing existing space and (mostly)
depreciated assets. Such renovated
plants will see increased efficiencies
(better than original design.) As per
studies, it has been found out that
1% efficiency improvement in power
generation would typically result in
2-3% reduction in the GHG emissions.
Typical R&M solution would improve
the efficiency level by 10-15%. If
one assumes ~40GWof coal capacity
currently operating at poor effi-
ciency levels deploys R&M solutions
improving their operating efficiencies
by say ~10%. The emissions from
them would get reduced by around 42
million tons/year from their current

levels. This is equivalent to having
approximately 32.4 million motor
vehicles off the Indian roads.
These are substantial benefits in
emission reduction and added to this
one would also achieve the objective of
having cheaper and affordable power
available to the Indians.
It will also be able to compete with
the newer plants on price of power.
However, this requires significant focus
from the regulatory agencies to ensure
that the benefits of such improvements
do remain with the companies making
the requisite investments otherwise;
there will be no incentive for any of
the companies to make the required
investment.
At the same time, companies also
need to embrace digital technologies
that can enable and accelerate trans-
formation to help decarbonize the
world. In India, we need to step up the
upgradation of the power infrastructure
through such technological interven-
tions. We have a huge installed base
and upgrading them into efficient and
productive ones will help India realise
its sustainable energy goals.
Please outline your growth plans
for the Indian market. What are
the likely areas that the company
is looking at for expansion?
With the acquisition of Alstom, GE has
a strong foothold in the power indus-
tryand our strategy will be to ensure
robust growth in all the areas - coal,
gas, hydro, wind. We have a solid
localized footprint in the country, and a
strong services footprint, with presence
in all products and solutions across the
energy value chain.
The revision of environment control
norms and new tariff policy are likely
to open up opportunities for OEMs like
us. Increasing focus on getting more
out of the installed base will open of
opportunities in retrofits and renovation
& modernisation projects.
As more and more renewables
With the acquisition of
Alstom, GE has a strong
foothold in the power
industry and our strat-
egy will be to ensure
robust growth in all the
areas - coal, gas, hydro,
wind. We have a solid
localized footprint in the
country, and a strong
services footprint, with
presence in all products
and solutions across the
energy value chain
is added to the grid, there is also
increased need for more flexible
operations of coal powered plants and
gencos are focused on improving the
flexibility of their assets and in driving
efficiency improvements over a range
of operations.
We also strongly believe in digi-
tization, as that will be the biggest
game changer for the power industry
in the coming years. It will drive better
outcomes in terms of efficiency, cost
rationalisation, and optimum utilisation
October 2016
www.InfralinePlus.com
of resources. We are focused on how
to get more efficiency, output and both
longevity and servicing of the existing
installed base. We also see a larger role of 11
hydro pump storage projects as a possible
solution to manage peak-hour energy
requirements and grid stability, where
issues may arise sue to the increasing
share of renewables. Thus, we see an
uptake in such hydro projects as well.
Do you think India is ready to
achieve its gigantic 175 GW
renewable energy target by 2022?
Renewable energy is fast emerging as
a major source of power in India. Wind
energy accounts for an estimated 60%
of total installed capacity (21.1GW).
There are plans to double wind power
generation capacity to 20GW by 2022.
India has also raised the solar power
generation capacity addition target by
five times to 100GW by 2022. With the
costs declining by roughly 70 percent
over the past 10 years, undoubtedly
India will witness significant renew-
able capacity growth. At this pace, it is
certainly possible for India to achieve
its renewable energy targets.
Having said that, it is equally
essential to find the right balance
 October 2016
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InConversation
between renewable and conventional
power in order to maintain firm and
reliable supply of power.The uncer-
tainty and variability associated with
renewables generation are creating
operational and grid stability chal-
lenges. This will only get further
accentuated as we add more of the
targeted 175 GW of renewables. In
order to fully utilize the power from
these renewable sources, it needs to
be complemented with commensurate
amount of load balancing flexible
generation capacity which can absorb
the variability.
With coal set to remain as Indias
largest energy source through 2030
and beyond, GEs leading steam tech-
nology and digital capabilities will be
critical to achieving global green-
house gas reduction targets set out at
COP21. Renovating and modernizing
(R&M) and Life Extension (LE) of
existing old thermal power stations
12
will also be a vital touchpoint. About
36 GW in India is more than 25
years old and needs to be replaced in
phased manner while about 144 old
thermal stations have been assigned
mandatory targets for improving
energy efficiency.
How can India use technology to
reduce carbon emissions from
thermal plants?
The government has already taken
several initiatives to improve the
efficiency of coal based power plants
and to reduce its carbon footprint.
The new emission standards for SOx,
NOx, particulate matter and mercury
have been notified for thermal plants.
Earlier, there were no standards to
With coal set to remain
as Indias largest ener-
gy source through 2030
and beyond, GEs lead-
ing steam technology
and digital capabilities
will be critical to achiev-
ing global greenhouse
gas reduction targets
set out at COP21. Reno-
vating and modernizing
(R&M) and Life Exten-
sion (LE) of existing
old thermal power sta-
tions will also be a vital
touchpoint
curb emissions of SOx, NOx and
mercury. The only standards that
existed were for particulate matter,
which were quite lax compared with
the global norms. The new norms
will also require restricted water
consumption by power plants which
can have a remarkable reduction in
freshwater withdrawal by thermal
power plants. The proposed changes,
if implemented well, will go a long
way in safeguarding public health and
environment.
GEs repertoire of technology and
solutions are designed to meet these
specific needs. It includes some of
the classic technology solutions like
Flue Gas Desulfurization (FGD) for
SOx removal, NID -a unique solution
that helps in taking out sulphur from
the environment and Low Lox burner
technologies ike Selective Catalytic
Reduction (SCR) to control NOx to
name a few.
The problem Indian industry is
facing is that we have to achieve these
pollution norms while making the
power plants efficient. By definition,
addressing pollution means you are
losing efficiency as you are consuming
auxiliary power and in that case, not
only do you have capex, but also opex.
At GE, we are constantly working on
developing innovative solutions that
not only addresses these broader issues
of enhancing efficiency, flexibility and
reliability factor of the equipment, solve
the emission problems but also bring
competitive value for our customers.
Going forward, we also need
to have a realistic discussion on
some of the policies related to coal
quality. Some of the imported coal
has a lot of sulphur content which
drives a lot of space requirement
and huge investment. We need to
discuss whether it is it better-off to
use domestic coal instead of imported
coal with its huge sulphur content. It
can go a long way in addressing the
emission issues related to sulphur.

How does GE plan to use its
digital expertise and technology
to transform the power and
renewable sector in India? What
are your primary digital offerings
for the Indian market in the
energy space?
Digitisation of the power sector
will be the game changer that will
transform the industry. It holds the key
to meet all the power based challenges
to deliver reliable, affordable,
sustainable power, pull down costs,
and lower overall carbon output.
Digital transformation includes
combination of technologies from
cloud, analytics, mobile, to cheap
sensors. As a part of its digital power
plant vision, GE has been using
real-time data analytics, increasingly
available through cloud-based
technologies that enable operators to
more effectively manage real-time
challenges, as well as predict actions
needed to improve productivity and
solve the problem of emissions in a
much better way in real time.
GEs suite of digital technologies
help plant operators make smarter deci-
sions about how to optimally run their
Digitisation of the
power sector will be the
game changer that will
transform the industry.
It holds the key to meet
all the power based
challenges to deliver
reliable, affordable,
sustainable power, pull
down costs, and lower
overall carbon output.
Digital transformation
includes combination
of technologies from
cloud, analytics, mo-
bile, to cheap sensors
power plants, achieving better perfor-
mance, greater efficiency and improved
reliability while lowering environmental
impact. One such example is the Digital
Power Plant software that can reduce
CO2 emissions from power plants by
3%. With GEs advanced controls and
cyber security software, the Digital
Power Plant for Steam interprets data
drawn from sensors across the power
October 2016
www.InfralinePlus.com
plant, highlights key factors that may
affect performance (such as fuel quality,
plant aging and ambient conditions)
and takes appropriate action through a
closed loop control system. GE Powers
new software can reduce CO2 emissions
from those plants by 3% and reduce fuel
consumption by 67,000 tons of coal per
year with the same MW of output based
on a 1,000 MW power plant.
GE firmly believes that future of
electricity lies in digital. Benefits from
the digitization of electricity can be
created at many points along the value
network which in turn will help Indias
utilities to boost their productivity while
reducing their environmental impact and
operating costs throughout the energy
value chain. Can we put more from the
first question back in here?
What is your outlook for the
power sector in India in the
wake of series of reforms 13
and initiatives taken by the
government such as UDAY and
Power for All by 2019?
The situation on ground continues to be
challenging. The lack of demand from
the industries and losses of electricity
boards and distribution companies are
affecting the overall performance of the
power sector. The NPAs of the listed
banks in the country at over 4 trillion
has led to significant reduction in sec-
toral lending to power and infrastruc-
ture sector.
Despite current weaknesses, the
long term potential of the Indian
power sector still remains intact. The
government has taken some strong
long term measures to inspire con-
fidence in the sector. Initiatives like
UDAY, Power for All, Integrated
Power Distribution Scheme etc. if
implemented well, will definitely reap
results. These are long term reforms
and it will be sometime before the
situation improves.
For suggestions email at feedback@infraline.com
 October 2016
www.InfralinePlus.com

InDepth
Increase in cross subsidy surcharge
trips open access market for consumers

14

Cross Subsidy Surcharge has been the single biggest roadblock to Open Access regime
Power transmission sector has significantly high entry barriers and little or no competition

By Team InfralinePlus

The Electricity Act 2003 which was
a landmark legislation passed by the
NDA government ushered in the first
wave of all-India reforms in the power
sector. Post this Act, the private sector
added nearly 40,000 MW of Power
Generation (generation was delicensed
in EA 2003). Further, the Act explicitly
provided for consumer choice vide
provisions for Open Access which were
introduced (e.g. section 42).
Open Access has been conceived as
an important tool of introducing com-
petition in the electricity industry and
ensuring choice to buyers and suppliers
of electricity. However, even after 13
years of the Act coming into force, the
issue still evokes strong reactions from
all the stakeholders with some resisting
the idea while others welcoming it.
Open access is now limited to indus-
trial and commercial consumers with a
load of 1 MW and above; in practice,
even this is implemented sparingly as
state electricity distribution company
(DISCOM) and load despatch centres
tend to protect their turf and stymie
consumers access to competitors.
Some of the high potential states have
been reluctant to allow open access
to consumers and third party sales
by captive generators because of
concerns of losing large high-paying
consumers and the resultant impact on
utility finances. The high incidence of
cross-subsidy surcharges and wheeling

charges imposed on the direct sale of
power to consumers, reduces the com-
petitiveness of energy in an otherwise
potentially high-demand market.
Cross Subsidy Surcharge has been,
for the last several years, the single
biggest roadblock to an Open Access
regime. When an industrial or com-
mercial consumer decides to purchase
power from an independent generator
and not from the distribution licensee
in that area, that distribution licensee
loses the cross subsidy amount. The
CSS is then imposed on the Open
Access consumer. As per Section
42 of the Electricity Act, 2003 such
surcharge and cross subsidies shall be
progressively reduced in the manner
as may be specified by the appropriate
state regulatory commission (SERC).
Many states in India have increased
Cross Subsidy Surcharges (Punjab, Raj-
asthan, Maharashtra, Haryana among
others) which has severely curtailed
open access transactions. States such as
Uttar Pradesh never really allowed open
access transactions in the first place.
This means that 1 MW and above power
consumers have to purchase power only
from the monopoly DISCOM at most
likely higher prices than would oth-
October 2016
www.InfralinePlus.com
independent generator. This comes at
a time when most states have already
signed up for the central governments
Ujwal Discom Assurance Yojana
(UDAY) scheme that aims to bring
down losses and improve efficiency
in the last mile distribution segment.
However, most of the states have
increased the amount of additional
charges levied on industry.
High level of open access charges
for availing energy supply by con-
sumers with load of 1 MW and above,
primarily owing to the increase in cross
subsidy surcharge (CSS) coupled with
levy of additional surcharge by regu-
lators in a few states such as Punjab,
Gujarat and Rajasthan, has constrained
procurement from open market for
such consumers. Further, disallowance
of open access permissions by utilities
in some states and invocation of
Cross Subsidy Sur- Section 11 by state governments under
charge has been, for the Electricity Act, 2003 in the past, 15
the last several years, restricting sale of power through open
the single biggest access by power generators have led to
constraints in sourcing of power under
roadblock to an Open
open access for the such consumers.
Access regime. When As per clause 8.5.4 of the National
an industrial or com- Tariff Policy (2016), the additional sur-
mercial consumer charge for obligation to supply as per
decides to purchase section 42(4) of the Act should become
power from an inde- applicable only if it is conclusively
demonstrated that the obligation of a
pendent generator and
licensee, in terms of existing power
not from the distribu- purchase commitments, has been and
tion licensee in that continues to be stranded, or there is an
area, that distribution unavoidable obligation and incidence
licensee loses the to bear fixed costs consequent to such a
cross subsidy amount contract. Over the past few years, it has
been seen that a number of states have
erwise be available in the power market. either imposed a high level of Addi-
Moreover, the state load dispatch center tional Surcharge or proposed to levy
(SLDC) and DISCOM do not act in such surcharge in upcoming financial
a non-discriminatory manner, thus year. This Additional Surcharge is also
denying open access. becoming a hindrance for the Open
CSS is levied by DISCOMs to Access consumers.
recover cost of supply. However, most The cross-subsidy regime in several
states have been charging a high level states has been hampering the progress
of cross subsidy, which makes the of open access in India and it has been
power purchase cost prohibitively high unduly used by states (governments/
for a private operator to buy from an commissions) to block the progress
 October 2016
www.InfralinePlus.com

InDepth

on Open Access. Para 8.2.2 of the

Some states have imposed significant barriers to Open Access. This problem
National Tariff Policy 2016 (amend- was meant to be addressed by the National Tariff Policy (2006), which established
ments to 2006 policy) states that regu- a methodology for determining the cross-subsidy surcharge to be levied on
latory assets should be created only Open Access consumers, with the goal of reducing it over time. Nonetheless,
as a rare exception in case of natural cross-subsidy surcharges over the years have gone up. Significant non-price
calamity or force majeure. Further barriers exist in states that do not cross-subsidise to a great extent but where
Para 8.2.2 (b) states that outstanding discoms derive the bulk of their revenues from industry.
regulatory assets should be recovered - From the Economic Survey of India 2015-16
in a time-bound manner within a period
not exceeding seven years. Cross-subsidy surcharge in states
Regulatory failure in controlling State/UT FY 15-16 (INR/ FY 16-17 (proposed) Tariff
costs combined with the inability to unit) (INR/unit) (INR/unit)
enforce prudent planning has led to Haryana 0.93 1.57 7.69
the creation of regulatory assets for West Bengal 2.20 2.87 6.67
both the parallel licenses. Delay and Uttar Pradesh 0.23 0.63 6.35
ambiguities in decisions pertaining to Karnataka 0.63 0.86 6.25
applicability of various charges such Gujarat 0.59 1.45 5.99
as Cross Subsidy Surcharge (CSS), Meghalaya 1.47 1.90 5.89
Regulatory Asset Charge (RAC), etc. Daman & Diu 0 0.42 5.79
made it difficult for the consumers to Dadra & Nagar 0.03 0.22 5.79
make informed choices. Haveli
Chhattisgarh 0.89 1.21 5.70
Impact of the denial of Open Bihar 0.13 0.78 5.10
16 Access Odisha 1.29 1.21 4.83
Power transmission systems in the coun- Himachal Pradesh 0.14 0.41 4.20
try are largely a natural monopoly. Also, Uttarakhand 0.42 0.47 4.13
it is a very capital intensive proposition
Table 1: Increase in cross-subsidy surcharge in states for FY 16-17 (proposed)
to lay such lines across large distances, Source: Tariff Petitions of State DISCOMs, SERCs
connecting power surplus entities to
power deficit ones. The power transmis-
Additional surcharge in states
sion sector thus has significantly high State/UT Additional surcharge Tariff (INR/unit)
(INR/unit)
entry barriers and little or no competi-
Haryana 0.87 7.69
tion. In order to prevent the misuse of
Delhi 1.67 7.21
monopoly power, where the owner of
the transmission or distribution system Rajasthan 0.80 6.50
can negotiate unfairly low prices of Punjab 1.13 6.03
electricity purchased from power pro- Himachal Pradesh 0.78 4.20
ducers or unfairly high prices of power Table 2: Increase in additional surcharge in states for FY 16-17 (proposed)
Source: Tariff Petitions of State DISCOMs, SERCs
sold to the consumer, there is a need
to provide non-discriminatory, open
access to such facilities to private power In order to prevent the misuse of monopoly
generators, sellers and buyers, enabling power, where the owner of the transmission
them to transact power with other buy- or distribution system can negotiate unfairly
ers and sellers of their choice. low prices of electricity purchased from power
Further, denial of open access
through high cross subsidy surcharges
producers or unfairly high prices of power sold
also affects power generation capac- to the consumer, there is a need to provide non-
ities which are unable to sell power discriminatory, open access to such facilities to
through open access to consumers. private power generators, sellers and buyers,
This inhibits fresh investments in new enabling them to transact power with other buy-
generation capacities. Captive power ers and sellers of their choice
units with surplus power similarly have
 October 2016
www.InfralinePlus.com

no incentive to sell. Power surplus important to bring forth the issue of in a time bound manner. The National
areas stay stranded from power deficit consumer electricity subsidies into Electricity Policy acknowledged that
areas, lesser quantities of electricity policy discourse as despite con- the current level of cross subsidy
are transacted than the market clearing tinuing policy debate lacunae are still was unsustainable and it was being
equilibrium and long term prices of visible in the existing subsidy design, used to hide inefficiencies and losses
electricity and/or power cuts keep rising. which is aggravated by insufficient in the system. The statutory provi-
Majority of the electricity dis- oversight. sions emphasized need to correct this
tribution companies mostly state- Electricity sector reforms need imbalance without giving tariff shock
owned, have struggled to maintain to be addressed at the state level. to consumers, while progressively
their financial solvency due to lack Electricity tariffs are often a major reducing the existing cross-subsidies.
of cost-reflective tariff-setting. As electoral issue and lower tariffs are But even after the initiation of power
distribution segment of the power often used by the state governments to sector reforms, the Indian power
sector caters directly to the end-users, placate the public and garner support sector is yet to achieve significant
which means, revenue flow of the before the elections. The EA 2003, the progress in reducing cross-subsidies
sector originates here, any financial Tariff Policy (2006) & amendments prevailing in the system.
imbalance at this segment can poten- (2016) and the National Electricity The recent initiatives of state
tially create shocks throughout the Policy (2005) specify intentions to governments in uplifting of section 11
sector value chain. Therefore, it is reduce cross-subsidies in retail tariffs of the Electricity Act 2003 may be of
help in implementing Open Access as
Majority of the electricity distribution companies already mandated in the act, in letter
and spirit. Open access is yet to be
mostly stateowned, have struggled to maintain made mandatory for all consumers
their financial solvency due to lack of cost- in states under the Electricity Act.
reflective tariff-setting. As distribution segment It is also proposed that open access 17
be made free of additional charges
of the power sector caters directly to the end- to ensure a uniform power market
users, which means, revenue flow of the sector across the country in order to protect
originates here, any financial imbalance at this consumer interests.
segment can potentially create shocks through-
out the sector value chain For suggestions email at feedback@infraline.com
 October 2016
www.InfralinePlus.com

FinancialResults
Tata Power Q1 net profit falls 76% to Rs 72 crore
Tata Power Co. Ltd reported a 76% fall in the
first quarter net profit due to one-off items
and the impact of adopting the new Indian
Accounting Standards. The power producer,
which in June announced the acquisition of
Welspun Renewables Energy Pvt. Ltd, said
that one-off items during the quarter included
Rs.120 crore related to subsidiary Coastal
Gujarat Power Ltd (CGPL), Rs.62 crore on
account of regulatory orders pertaining to
Reliance Power Q1 profit up 12.5% to Rs 340 crore
Reliance Power Ltd posted 12.5% jump in
consolidated net profit at Rs.340.49 crore
in the first quarter ended June on higher
electricity generation. The group had
18 posted a net profit after taxes, minority
interest and share of profit of associates of
Rs.302.64 crore for the quarter ended 30
June 2015, Reliance Power Ltd said. The
total income of the company decreased
to Rs.2,748.37 crore for the quarter under
review from Rs.2,765.39 crore in the year-
ago period. The rise in profit was recorded
in the first quarter due to higher power
generation and better utilisation of plants.
The company said that the Sasan Ultra
Mega Power Project in Madhya Pradesh
generated 8,003 million units, operating
at availability of 92.6%. The Rosa Power
Plant in Uttar Pradesh generated 2,072
million units, operating at availability
of 103%. The Butibori Power Plant in
previous years, and adjustments of Rs.130
crore related to the new accounting standards.
Net profit for the quarter ended 30 June fell
to Rs.72.49 crore from Rs.303.14 crore a year
ago. Total income from operations fell 4.8%
to Rs.6,838.30 crore from Rs.7,183.67 crore
a year ago. The company had favourable
Appellate Tribunal for Electricity (ATE) order
in stand-alone revenue of Rs.137 crore in the
previous year compared with an adverse Ma-
harashtra Electricity Regulatory Commission
(MERC) order in its Mumbai transmission busi-
ness for stand-alone revenue of Rs.62 crore in
the latest quarter, and lower capacity revenue
in CGPL. Revenue from power, its largest
business, fell 5.7% to Rs.6,164.88 crore from
Rs.6,537.27 crore a year earlier. Most other
operations, excluding CGPL, have done better.
Maharashtra generated 1,116 million units,
operating at availability of 103%. The 40
MW Dhursar Solar PV plant in Rajasthan
generated 18.81 million units, operating
at availability of 100 per cent. The 45 MW
Wind capacity in Vashpet, Maharashtra,
generated 24.68 million units, operating at
availability of 91%. 100 MW Concentrated
Solar Power (CSP) project at Dhursar,
Rajasthan, generated 21.6 million units,
operating at availability of 87%. The
company has a portfolio of power projects
in the private sector based on coal, gas,
hydro and renewable energy with an
operating portfolio of 5,945 megawatts.
JSPL Q1 net loss widens to Rs 1,082
crore
Jindal Steel and Power (JSPL) reported
a consolidated net loss of Rs 1,082.15
crore for the quarter ended June 30,
2016 against net loss of Rs 542.42 crore
in the same quarter last year. However,
consolidated total income from operation
of the company 5.67 per cent year-on-
year to Rs 4655.45 crore for the quarter
under review against Rs 4405.73 crore
in the same quarter last fiscal. For April-
June period, consolidated total expen-
diture of JSPL jumped to Rs 4588.48
crore against Rs 4392.68 crore in the
same period last year. On a standalone
basis, the company reported a net loss
of 276.65 crore against net loss of Rs
371.37 crore in the same quarter a year
ago. Standalone total income from opera-
tions of Jindal Steel stood almost flat at
3123.50 crore. It had reported a stand-
alone total income from operations of Rs
3126.16 crore in the same quarter last
year. JSPL said, The quarter ended June
30, 2016 saw tepid growth in domestic
steel demand (0.4 per cent yoy), which
under paced the production ramp up dur-
ing the quarter. JSPL introduced several
high value grade steels during Q1 for the
automotive, rail and defence segments.
For Q1FY17, JSPL on a consolidated level
produced 1.19 mt (up 8 per cent yoy) and
sold 1.11 mt (as compared to 1.07 mt in
Q1FY16).

GVK Power Q1 net loss up at Rs 51 crore

GVK Power and Infrastructures quarter ended June 30, 2016. The firm
standalone net loss increased to Rs 51.04 has made investments and receivables
crore for the first quarter ended June aggregating Rs 295.04 crore and provided
30, 2016. The company has posted a guarantees and commitments for loans
net loss of Rs 51.04 crore for the quarter amounting to Rs 7,843.34 crore taken by
ended June 30, 2016 as compared to Rs GVK Coal Developers (Singapore) Pte Ltd
3.09 crore for the quarter ended June 30, (GVK Coal) as on June 30, 2016, an entity
2015, GVK Power and Infrastructure said. whose net liabilities exceeds net assets
According to the company, total income by $900 million (Rs 5,741.60 crore) as on
increased from Rs 15.88 crore for the June 30, 2015, it said.
quarter last year to Rs 16.85 crore for the

FinancialResults
GMR Q1 loss mounts to 123 crore
GMR Infrastructure Limited reported
higher losses for the first quarter ended
June 30, 2016, at Rs 123.06 crore as
compared to a net loss of a meagre Rs
1.33 crore in the corresponding quarter
of the previous fiscal. Losses mounted
despite a rise in total income during the
first quarter of FY17 at Rs 361.26 crore
as against Rs 269.19 crore in the year
ago period. The total expenses during the
Lanco Infratech Q1 loss widens to Rs 449 crore
Lanco Infratechs Ltd consolidated net
loss widened to Rs.448.88 crore during
the quarter ended 30 June. The company
had posted consolidated net loss after
taxes, non controlling interest and share
of loss associates of Rs.316.52 crore in
the corresponding quarter of previous
fiscal, Lanco Infratech said. The total
income from operations during the
quarter increased to Rs.1,940.35 crore
from Rs.1,638.14 crore in the year-ago
period, it said. Lanco is present in five
sectorspower, solar, natural resources,
infrastructure and property development.
The EPC sector and the power sector
together contributed to 86% of the gross
revenues. Power sector contributed
Adani Power Q1 loss narrows to Rs 33.51 crore due to lower expenses
Adani Power Ltd, the largest private power
producer in the country, reported a lower-
than-expected net loss for the quarter ended
30 June, helped in part by lower expenses.
The company, a part of the Gautam Adani-
controlled Adani Group, said consolidated
net loss narrowed to Rs.33.51 crore from
Rs.171.87 crore a year earlier. Consolidated
net sales fell 6% to Rs.55,77.31 crore from
Rs.5,935.61 crore in the year earlier quarter,
hurt by lower power generation. Net sales
in the quarter includes compensatory tariff
Rs.160.72 crore based on an order of the
Central Electricity Regulatory Commission
period under review shot up to Rs 80.9
crore from Rs 36.7 crore. In view of the
lower supplies/availability of natural gas
to power generating companies in India,
subsidiaries GMR Energy Ltd (GEL), GMR
Vemagiri Power Generation Ltd (GVPGL)
and associate GMR Rajahmundry Energy
Limited (GREL) are facing shortage of
natural gas supply and delays in securing
gas linkages. As a result, GEL has not
generated and sold power since April
2013 and GVPGL has not generated and
sold power from May 2013 till March 31,
2015, due to which the company has been
incurring losses, including cash losses on
account of the lack of natural gas supply,
thereby resulting in erosion of net worth,
the company informed.
to 69% of the gross revenues. Lanco
Infratechs projects, both operational and
under construction and development, are
spread across India. At present, the power
portfolio includes an installed capacity
of 3,465 MW and another 5,956 MW
under various stages of construction an
development.
(CERC) dated 21 February 2014. The company
sold 13.96 billion units of power in the first
quarterdown about 12% from 15.86 billion
units sold same quarter last year, due to shut-
October 2016
www.InfralinePlus.com
Essar Power Gujarat turns profitable
Essar Power Gujarat Ltd (EPGL)
announced turning profitable with a
net profit of Rs. 1 crore in the first
quarter ended June 30, 2016, against
a net loss of Rs. 126 crore in the
corresponding quarter in the previous
fiscal. EPGL owns and operates a
1,200-MW imported coal-fired thermal
power plant at Salaya, Gujarat. The
company recorded a 90 per cent
growth in EBITDA for the quarter due
to significantly higher plant availability,
a 32 per cent increase in energy sales,
and a 13 per cent reduction in coal
cost per unit because of widening coal
basket, e-auction based procurement,
falling coal prices and substantial 19
efficiency improvements. In Q1 FY17,
plant availability improved by 82 per
cent, leading to a robust growth in
sales, which stood at Rs. 522 crore
quarter-on-quarter up from Rs. 396
crore in Q1 FY16. Finance costs for
Q1 FY17 were lower by 12 per cent,
leading to a PAT of Rs. 1 crore against
a net loss of Rs. 126 crore in the
corresponding quarter in the previous
fiscal, Sushil Maroo, Executive Vice
Chairman, Essar Power, said.
down at its Tiroda plant on account of non-
availability of water. Total expenses during the
quarter, however, fell 13.5% to Rs.4,260.68
crore from Rs.4,923.49 crore a year earlier.
In the current quarter, the average avail-
ability at all the plants has remained near to
90% however; the revenue was affected due
to non-availability of water at Tiroda plant
despite improved performance from other
plants ... Improved domestic coal availability,
recently announced special forward e-auction
scheme for power sector will further improve
the financial performance of the company,
chief executive Vneet Jaain said.
 October 2016
www.InfralinePlus.com

StatisticsPower
State-wise achievement of village electrification under DDUGJY (As on 31.08.2016)
Mode of Electrification
Total inhabited Village Electrification Cummulative Unin-
Sl. Unelectrified
States/UTs villages as per During 2016-17 Village Electrified habited
No. villages Under
2011 census (Upto 31.08.2016) (As on 31.08.2016) Through Under State Villages
DDUGJY/
off-Grid Plan
RGGVY
No. No. No No. No. No. No. No.
1 Andhra Pradesh 16158 0 16158 0 0 0 0 0
2 Arunachal Pradesh 5258 160 4014 1244 478 766 0 0
3 Assam 25372 761 24183 1189 568 621 0 0
4 Bihar 39073 194 38274 799 799 0 0 0
5 Chattisgarh 19567 66 18958 609 117 492 0 0
6 Goa 320 0 320 0 0 0 0 0
7 Gujarat 17843 0 17843 0 0 0 0 0
8 Haryana 6642 0 6642 0 0 0 0 0
9 Himachal Pradesh 17882 17 17865 17 10 0 0 7
10 Jammu&Kashmir 6337 2 6232 105 105 0 0 0
11 Jharkhand 29492 467 28184 1308 778 433 73 24
12 Karnataka 27397 5 27363 34 2 36 0 0
13 Kerala 1017 0 1017 0 0 0 0 0
14 Madhya Pradesh 51929 122 51796 136 9 84 0 43
15 Maharashtra 40956 0 40956 0 0 0 0 0
16 Manipur 2379 37 2215 164 164 0 0 0
17 Meghalaya 6459 596 6144 315 106 209 0 0
18 Mizoram 704 12 674 30 30 0 0 0
19 Nagaland 1400 15 1333 67 67 0 0 0
20 Odisha 47677 272 45724 1938 1236 269 0 433
21 Punjab 12168 0 12168 0 0 0 0 0
22 Rajasthan 43264 140 43084 192 74 0 106 12
23 Sikkim 425 0 425 0 0 0 0 0
24 Tamil Nadu 15049 0 15049 0 0 0 0 0
25 Tripura 863 4 850 13 13 0 0 0
26 Telangana 10128 0 10128 0 0 0 0 0
27 Uttar Pradesh 97813 131 97720 93 41 0 10 42
20 28 UttaraKhand 15745 2 15671 74 61 13 0 0
29 West Bengal 37463 0 37449 14 14 0 0 0
Total(States) 596780 3003 588439 8341 4668 2923 189 561
Union Territories
1 A & N Island @ 396 0 341 0 0 0 0 0
2 Chandigarh 5 0 5 0 0 0 0 0
3 D & N Haveli 65 0 65 0 0 0 0 0
4 Daman & Diu 19 0 19 0 0 0 0 0
5 Delhi 103 0 103 0 0 0 0 0
6 Lakshadweep 6 0 6 0 0 0 0 0
7 Pondicherry 90 0 90 0 0 0 0 0
Total(UTs) 684 0 629 0 0 0 0 0
Total 597464 3003 589068 8341 4668 2923 189 561
The figures are based on the data available on DDUGJY website (Except Union Territories).
55 Villages unelectrified as per Census 2011 are in encroached forest area and cannot be electrified as per the Supreme Court order
@ (accordingly total has been shown)

Capital Expenditure Of DISCOMs in FY13, FY14 & FY15 (INR Crores)

Region State Utility 2012-13 2013-14 2014-15
Eastern Bihar BSEB 6,707
NBPDCL 15 421 1,056
SBPDCL 37 439 1,414
BSPGCL 625 1,242 1,427
BSPTCL 72 249 513
Jharkhand JSEB 1,013 512
JBVNL 3,519 72
Odisha CESU 148 235 279
GRIDCO 0 1 1
NESCO 62 137 87
OHPC 33 17 10
OPGCL 62 340 1,272
OPTCL 256 381 772
SESCO 10 221 -117
WESCO 40 142 42
Sikkim Sikkim PD
West Bengal WBPDCL 1,265 1,770 1,287
WBSEDCL 1,926 2,496 2,231
WBSETCL 339 475 717
Eastern Total 12,609 12,597 11,063
North Eastern Arunachal Pradesh Arunachal PD 561 150 0
Assam AEGCL 283 343 184
APGCL 145 43 -44
 October 2016
www.InfralinePlus.com

North Eastern APDCL 492 778 739

Manipur Manipur PD 752
MSPDCL 54
MSPCL 171
Meghalaya MePDCL 533 79 30
MePGCL 1,589 78 103
MePTCL 54 96 25
Mizoram Mizoram PD 139 135 0
Nagaland Nagaland PD 61 26 937
Tripura TSECL 87 95 100
North Eastern Total 4,695 1,823 2,300
Northern Delhi BSES Rajdhani 255 296 270
BSES Yamuna 105 177 143
Delhi Transco 284 283 256
Indraprastha 26 7 11
Pragati 294 213 181
TPDDL 280 264 241
Haryana DHBVNL 425 1,408 664
HPGCL 232 82 211
HVPNL 590 624 632
UHBVNL 348 -54 442
Himachal Pradesh HPSEBLtd. 511 276 502
Jammu & Kashmir J&K PDCL 656 812 1,129
J&K PDD 165 260
Punjab PSPCL 2,868 2,109 2,326
PSTCL 979 769 542
Rajasthan AVVNL 775 1,074 938
JDVVNL 931 1,309 1,185
JVVNL 1,125 1,862 1,530
RRVPNL 2,236 1,782 1,713
RRVUNL 2,792 3,488 4,058
Uttar Pradesh DVVN 363 562 1,036
KESCO 19 25 24
MVVN 44 832 992
Pash VVN 681 767 1,396
PoorvVVN 518 1,328 1,374
UPJVNL 9 7 9
UPPCL 2 10 16
UPRVUNL 2,034 1,407 1,217
UPPTCL 1,711 1,882 1,718
Uttarakhand UJVNL 161 210 169
UtPCL 257 299 1,807 21
Ut Transco 139 165 243
Northern Total 21,816 24,534 26,974
Southern Andhra Pradesh AP Genco 1,811 1,899 0
AP Transco 1,136 1,373 0
APCPDCL 1,008 1,097
APEPDCL 435 521 798
APNPDCL 384 312
APSPDCL 926 1,121 4,147
Karnataka BESCOM 819 1,282 1,497
CHESCOM 304 392 367
GESCOM 262 469 330
HESCOM 141 482 424
KPCL 1,216 2,048 1,155
KPTCL 958 796 770
MESCOM 121 178 221
Kerala KSEB 849 609
KSEBL 468 1,190
Puducherry Puducherry PCL 5 1 5
Puducherry PD 33 0 0
Tamil Nadu TANGEDCO 3,939 4,063 6,006
TANTRANSCO 1,136 3,045 3,173
Telangana TS Genco 295
TS Transco 1,318
TSNPDCL 334
TSSPDCL -837
Southern Total 15,482 20,155 21,192
Western Chhattisgarh CSPGCL 2,350 2,220 1,001
CSPTCL 826 234 313
CSPDCL 454 1,619 1,121
Goa Goa PD 0
Gujarat DGVCL 533 627 622
GETCO 2,157 2,515 2,717
GSECL 2,301 1,330 111
GUVNL 0 0 2
MGVCL 340 431 478
PGVCL 1,382 1,206 1,572
UGVCL 545 539 634
Madhya Pradesh MP MadhyaKshetra VVCL 1,205 1,283 968
MP Paschim Kshetra VVCL 948 809 672
MP Purv Kshetra VVCL 874 1,084 927
MPPGCL 2,366 2,696 765
MPPTCL 596 625 677
Maharashtra MSEDCL 5,040 3,641 3,325
MSPGCL 8,327 5,509 3,818
MSETCL 2,179 1,469 1,323
Western Total 32,422 27,836 21,711
Grand Total 87,025 86,946 83,239
 October 2016
www.InfralinePlus.com
NewsBriefs | Coal National
New coal distribution policy amended
Union Ministry of Coal has issued an
order with respect to the amendment to
the New Coal Distribution Policy (NCDP),
2007 to increase the annual cap of coal
from 4200 tonnes per annum for sale
through State Nominated Agencies (SNA)
NTPC 4000 mw Pudimadaka project awaits domestic fuel linkage
The NTPC 4000 mw Pudimadaka
(Lalamkoduru) super thermal power
project, proposed to come up close to
Visakhapatnam, is awaiting fuel (coal)
linkage to commence works on the project.
22 The power major had initially proposed to
fire up the ultra mega power project using
imported coal that was when the country
was facing coal shortage. But now, the
Government has advised us to take up the
project on domestic coal. We are awaiting
linkage to take up the project, VB Fadnavis,
Regional Executive Director, South), NTPC,
said. Fadnavis said NTPC has a pipeline of
about 9000 mw of projects in South India.
This includes 4000 mw thermal power
project at Ramagundam in Telangana
Coal Ministry shelves plans to auction of coal blocks in near future
With coal production hitting all time
high and demands remaining feeble, the
government has decided to shelve plans of
auctioning of coal blocks in the near future.
In its efforts to fuel the rapid expansion for
generating power, the government had set
a massive target of producing one billion
tonnes of coal by 2020. This was estimated
keeping in mind, the demand for power gen-
eration of the fuel at a level of 8-9 percent
annual growth. But since the actual growth
of the power generation has been only 4
percent, there has been a situation of excess
production in the country. Coal Secretary
Anil Swarup had said that, currently, all
to 10,000 tonnes per annum. In addition
to raising the annual cap of coal, the
Ministry has also amended the phrase,
small and medium sector, as mentioned
in the NCDP to small, medium and
others. The Ministrys order states that
the guidelines will also stand applicable
to the distribution of coal from Singareni
Collieries Company Limited (SCCL). The
NCDP was issued in October, 2007, laying
down the guidelines for distribution and
pricing of coal to various sectors. As per
the policy, the scope of coverage through
State Nominated Agencies was increased
up to 4200 tonnes per annum.
and 4000 mw thermal power project
at Pudimadaka near Visakhapatnam,
to be taken up as part of the Act under
the States Organisation Act, and other
renewable energy projects.
power plants are ample quantities of coal.
Even, more than 20 million tonnes of coal
has started coming out from 13 of the 29
mines auctioned so far. By March 31, the
CIL to e-auction 20 million tonnes
of coal in a few months
Coal demand in India is often under-
estimated even though the average
consumption is much lower than many
emerging economies. The fact that
there are still a lot of power outages
and load-shedding in a number of
States means there is latent demand,
says Coal Secretary Anil Swarup.
The problem is not in the context of
fundamental demand of electricity in
the country. The problem lies with the
State distribution companies which
are not in a position to buy power and
are unable to meet the demand of
the consumers because they are not
financially sound to purchase power, he
says. According to Swarup, more coal is
now made available than what it was in
the past few years. Coal India Limited
(CIL) had pit head stocks of around
56 million tonnes at the start of this
financial year. E-auction of another 20
million tonnes of coal is in the offing in
the next few months.
rest of the mines would also start producing.
The government has so far allocated 75 coal
mines for specified end use, including 31
through auction and 44 through allotment
to public sector units. Piyush Goyal, minister
of coal, power and mines had earlier said
that the government expects to earn rev-
enue of these mines to the tune of around
Rs 3.53 lakh crore during the life of mines.
The countrys largest coal producer Coal
India Limited has known to build up huge
inventor, as it reported a record production
of 536 million tonnes during FY15-16, 42
million tonnes more than the previous year,
growth of 8.5 percent.

NewsBriefs | Coal National
Lanco may sell majority stake in coal projects to pare debt
Debt-laden Lanco Infratech may spin off
its coal power projects into a single holding
company and then may sell majority of it to
OPG Power Ventures to ease the burden. It
is learnt that the creation of new entity will
be completed by the end of this calendar
year. As part of the agreement with
With fall in sales, Coal India set to offload fuel in open market
Faced with declining sales after
contracted buyers from the power sector
refused to take delivery of fuel, Coal India
is set to offload an estimated additional
20 million tonnes of fuel in the open
market this year with flexible offtake
options. At a recent board meeting, the
miner decided to do away with a ceiling
imposed by a 2007 policy, under which
CIL was restricted from selling more
than 10 per cent fuel in the spot market.
To tap smaller consumers, spot e-auction
norms will be relaxed to allow traders
to participate. For the first time in two
decades, CIL is facing a decline in offtake
in the first six months of the fiscal. After
nearly 9 per cent growth last year, offtake
Coal India Limited seeks alternative coal blocks from Mozambique government
State-run Coal India (CIL) has asked
for alternative coal blocks from the
Mozambique government since it did not
find any commercially viable reserves in
the block it was allotted a few years ago.
We have asked for alternative blocks
from the Mozambique government since
there was no mineable coal in the one
we were given, Sutirtha Bhattacharya,
chairman at Coal India, said recently. It
is further learnt that Coal India has in
fact surrendered the block and asked for
a fresh allotment. CIL was allotted two
exploratory blocks covering 224 sq km at
Tete province in Mozambique in August
lenders, Lanco Anpara (2X600 mw) will be
put on sale and the proceeds will be used
to complete unfinished power projects.
Lanco has about 4000 mw thermal power
projects under construction -- (Lanco
Amarkanta 3 and 4 -1320 mw, Lanco
Babandh-1320 mw, Lanco Vidarba-1320
mw) -- and the progress of those projects
is getting delayed for variety of reasons.
The spin off entity will have all the above
mentioned three projects and 1,800 mw
operational projects Amarkanta I and
II and 1,200 mw Anpara project. Lanco
Infratech has about Rs 7,000 crore plus
debt at corporate level.
slowed down to 3 per cent in the first
quarter. The growth was a little over 1 per
cent in July. But August and September
were devastating, with offtake down by 9.6
per cent and over 4 per cent, respectively,
relative to last year.
2009. Following this, it floated a wholly-
owned subsidiary in Mozambique Coal
October 2016
www.InfralinePlus.com
Govt forms panel for policy on
coal reject disposal
Government has constituted a panel to
frame a tentative policy for disposal of
low-grade coal rejects from washeries at
thermal power plants. The five-member
panel has been asked to submit the same
in 15 days. Coal quality is enhanced by
washing and the plant where such activity
is carried out is called coal washery. The
panel will prepare a tentative policy for
disposal of washery rejects keeping a
harmonious balance between the (draft)
policy formulated by the coal ministry and
comments or suggestions furnished by the 23
stakeholders. The terms of reference of
the panel also include listing out amend-
ments in the draft policy as formulated by
the coal ministry vis-a-vis comments from
stakeholders and listing out the reasons
for acceptance or rejection of the said com-
ments or suggestions, if any. CMD of Coal
Indias consultancy arm CMPDIL is the
chief coordinator of the committee. Other
members of the panel include Coal India
director (marketing) and coal controller.
India Africana Limitada (CIAL)for
exploring the blocks. Initially, the validity
of Coal Indias exploration licence was
August 2014, but it was extended up to
August 2019. Coal India discovered that
out of the 224 sq km of the total license
area, 170 sq km had no coaly horizon till
a depth of 500 meter and it surrendered
this block to the Mozambique government.
It, however, retained the remaining 54
sq km of area, for which the Mozambique
government had issued a new licence that
was valid till August 2019. But Coal India
later discovered that it was not feasible to
do mining in this area as well.
 October 2016
www.InfralinePlus.com
NewsBriefs | Coal International
China hikes thermal coal trading fees after volumes surge
China raised transaction fees for thermal
coal futures after trading volumes surged
to a record and prices rose to the highest in
two years. Zhengzhou Commodity Exchange
will start collecting transaction fees for coal
Indonesian diesel demand picks up as coal miners churn out more
Consumption of diesel by Indonesian miners
has picked up for the first time in four years
as coal producers in the country ramped up
output to meet Chinese demand, offering a
glimmer of hope to Asian traders grappling
24 with multi-year low fuel margins. Once Asias
top buyer of diesel, Indonesias imports of the
fuel slowed to a fraction of what it used to be
with a plunge in coal prices over the past four
years curbing mining activities. But this year,
thermal coal prices have rallied amid a supply
squeeze in top consumer China. Coal prices
are getting higher so the miners are trying to
speed up production, boosting demand for
the fuel needed to power mining machinery,
said a trader, who supplies diesel to mining
companies in Indonesia. Monthly diesel use
Fifty pct coal price jump no leap to competitive joy for Asia LNG
Natural gas producers have long yearned
for a price spike in coal that would
allow them to compete in Asian power
generation. Yet even a 50 percent jump in
thermal coal prices this year has not been
enough for liquefied natural gas (LNG) to
gain an advantage over its dirtier fossil-
fuel cousin. The use of natural gas - when
not supported by government policies -
has typically been hampered in countries
such as China, Indonesia and Vietnam
by cheap coal as they seek the cheapest
means possible to energize their emerging
economies. This year, things started to
look different: an ongoing slump in oil and
contracts that were opened and closed in
the same day, the bourse said. The exchange
is probably trying to curb speculation after
volumes spiked. Investors piled into Chinese
commodities exchanges in the first half of the
year, driving up prices and stoking fears of a
bubble, on bets that economic stimulus and
industrial reforms would lead to shortages
of everything from cotton to iron ore. The
authorities quelled the frenzy, with bourses
raising transaction fees and margins. While
volumes for most contracts havent recovered,
coal trading has ballooned in recent weeks on
speculation that mining cutbacks are leading
to shortages.
in Indonesias mining sector rose by at least
5 to 10 percent over July-September, traders
said. Benchmark Australian thermal coal
prices rose to $74.30 a tonne in the week to
Sept. 23, the highest in 28 months and up
almost 47 percent this year.
gas coincided with coal prices surging to
nearly $75 per tonne from $49 in January,
leading many to believe there would
Banks in Chinas Shanxi province
boost funding to coal firms by 23 pct
Banking institutions in Chinas Shanxi
province have boosted funding to
coal firms in the northern province
via underwriting or purchases of
corporate bonds by 23 percent since
the start of the year, the local banking
regulator said. Banking institutions
have underwritten or bought 38
billion yuan in corporate bonds from
coal companies so far in 2016 versus
last year, bringing total funding for
the sector to 206.5 billion yuan ($31
billion), the Shanxi branch of Chinas
banking regulator said. Heavy industries
such as coal and steel have languished
in China due to an industry downturn,
and the companies are under pressure
from Beijing to cut excess capacity by
shutting down mines and plants. While
banks have grown wary of lending to
the two sectors, the China Banking
Regulatory Commission (CBRC), the
countrys banking regulator, has given
lenders some latitude to manage their
lending.
finally be a chance for gas to compete. But
even with Goldman Sachs calling coal one
of this years hottest commodities, and
LNG prices not that far above a multi-
year low of $4 per million British thermal
units (mmBtu) touched in April, gas has
not become competitive. Asian spot LNG
prices LNG-AS have fallen to less than $6
per mmBtu, from $20 per mmBtu in early
2014, even as coal markets have soared.
Asian benchmark coal prices have risen
this year to $73.60 per tonne, the highest
since March 2015, driven by mining
capacity limits in China that resulted in a
surge in imports.
 October 2016
www.InfralinePlus.com

InConversation
Coal India should look at selling coal on
commercial terms to entities outside India
Coal consumers were left staring at a serious fuel crisis in
2014 when the Supreme Court cancelled all but a handful of
captive coal blocks. However, NDA government moved fast
on reallocation of cancelled blocks and averted the looming
crisis. Not only that, thanks to government support, CIL was
also able to step up coal output. As a result, fuel shortage has
become a thing of the past and there is excess coal available
with producers, prompting the government to think of exports.
Dilip Kumar Jena, Manager - Mining, PwC, shares his views on
governments strategy for the coal sector. Excerpts:

How do you assess NDA Coal India is planning to export

governments performance in
augmenting coal supplies? Will
the current strategy work in the
long run?
After de-allocation of 204 coal blocks
by the Supreme Court vide judg-
ment dated 25th August, 2014 read
with its order dated 24th September,
2014, Government moved relatively
fast, and rightly so, in promulgating
the Coal Mines (Special Provisions)
Act, 2015. This is helping in auction
of the de-allocated coal blocks to
corporations and allotment to govern-
ment companies. Further, for optimal
utilisation of coal from allotted coal
blocks, the Act provides for swapping
of coal between projects and among
the successful bidders, falling within
the definition of the same specific end
use. This shift is in right direction
(from the earlier policy of allotting
coal blocks for specific project). Also,
the Government has opened up doors
for the auctioning of coal linkage for
non-regulated sector. Since the new
policies provide for greater transpar-
ency, competition and optimal utilisa-
tion of coal resources, the strategy
may work in the long run.
excess coal. Will this be the right
strategy?
In the long run, all government-owned
corporations should work on commer-
cial principles and without any financial
support from the government. Working
on commercial principles would help
Coal India service its debts in a timely
manner and give higher dividends to
government with time. This requires all
the coal mines of Coal India to perform
in consonance with their respective
mining plans and sell produced coal on
commercial terms. Further, its been
observed that stocks of coal are increas-
ing at power plants and at mine mouth.
Such increasing stocks of coal at mine
mouth face the risk of pilferage or spon-
taneous combustion that could result in
loss of revenues. Therefore, selling coal
on commercial terms to entities outside
India, after meeting the domestic de-
mand, would be the right strategy.
Can India meet the target of 1.5
billion tonne of coal production
by 2019-20?
This is a rather ambitious target. If all the
allotted coal blocks start timely produc-
tion, after securing forestry & environ-
Dilip Kumar Jena, Manager -Mining, PwC
25
mental clearances, we may reach near the
target. However, the target of 1.5 billion
tonnes of coal production by 2019-20,
not only faces challenges from limited ca-
pacities of allottees to develop the mines
themselves but also from the limited
infrastructure to evacuate the mined coal
from mine mouth and to transport them
to consumers through rails and ports.
Do you think time has come for
India to allow private players
to do commercial mining? Is
commercial coal mining better
than captive mining?
Time has come for commercial mining
provided that the domestic mining
companies meet domestic demand
before they plan to export.
Do you think pricing of Indian
coal should be linked to
international indices?
The drivers impacting the demand
dynamics of domestic coal market are
different from the drivers impacting the
demand dynamics of global coal mar-
 October 2016
www.InfralinePlus.com

InConversation

ket. Since most of the produced coal to power sector. However, the pricing cannot be carried out. However, clean
within India is consumed for power of coal, reserved for exports, may be coal option is a viable option to reduce
generation, which is largely a regulated linked to international prices. SOx and NOx levels.
industry, the direct linking of the coal
prices to international market may not Do clean coal generation Is there any light at the end of
be viable. The domestic coal market technologies offer a viable tunnel for coal sector which
may be opened gradually starting with alternative to renewable energy? has fallen out of favour with
the sale of coal to non-regulated sec- With lack of quality research within investors and policy makers
tors. And with increase in production India on total carbon footprints of globally because of climate
of coal from commercial mines, the renewable energy including the carbon change concerns?
domestic coal market could be opened footprint of processes for producing The share of coal in global primary
completely including the sale of coal PV cells, a quantitative comparison energy consumption fell to 29.2%, the
lowest since 2005. Further, the share
of coal in primary energy consumption
Since most of the produced coal within India is
is projected to decline to 22% in 2040
consumed for power generation, which is largely compared to 28% in 2012. However,
a regulated industry, the direct linking of the coal the demand of coal increases at a rate
prices to international market may not be viable. of 0.6%/year from 153 quadrillion Btu
The domestic coal market may be opened gradually (~5.51 billion tonnes) in 2012 to 169
starting with the sale of coal to non-regulated sec- quadrillion Btu (~6.08 billion tonnes) in
2020 and to 180 quadrillion Btu (~6.48
tors. And with increase in production of coal from
billion tonnes) in 2040. This increase in
commercial mines, the domestic coal market could global demand requires new capacity
26
be opened completely including the sale of coal to additions in coal production.
power sector
For suggestions email at feedback@infraline.com

InDepth
Clean Coal: Enhancing value by improving
quality through Coal Washing
As per the new policy, all coal supplies located beyond 500 km from pithead be washed
Use of washed coal results in various savings and benefits for stakeholders
By Team InfralinePlus
Indian coal is of inferior quality due
to it being of drift origin with high ash
content. This makes coal washing an
integral part of coal production. To meet
industrial requirements, it becomes
necessary to enhance coal quality by
washing to make it suitable for feeding
into boilers and for steel plants.
Coal washing is a process of sepa-
ration mainly based on difference in
specific gravity of coal and associated
impurities like shale, sand and stones
to get relatively pure marketable coal
without changing its physical properties.
Raw coal feed to washeries is converted
into washed coal and middlings.
Whereas coal beneficiation includes
sizing, handling and washing of run-of-
mine coal. Beneficiated coal improves
performance of end use plants, reduces
cost of transportation of coal as well as
brings down the adverse effects of coal
October 2016
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27
combustion on the environment. Coal
beneficiation is technically known as
coal washing process.
Why coal washing?
Numerous studies have been conducted
by various organizations, both in India
and abroad, indicating benefits of using
washed coal. The use of washed coal
results in various savings and benefits for
stakeholders. Major economic benefits
 October 2016
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InDepth

Total installed capacity

of washeries in the
Reduction in country is around
fuel and 131.24 Million tonne
transportation
costs per year (MTy) as on
31 March 2015. A total
Economic of 52 washeries, both
PSUs and Private,
Benefits of were operating in the
washing country considering
both Coking and Non-
Reduction in Coking. CIL (Coal India
emission costs
and taxes.
Ltd) which is largest
producer of country
with a contribution of
Reduction in about 84 per cent of the
maintenance countrys coal output,
costs at present has a total
coal washing capacity
of 36.8 Mty through 15
28 existing washeries
driving the coal washing industry include based measure of heat content, it
reduction in maintenance costs, reduc- ignored the impact of ash content on which may incentivise CIL to sell
tion in fuel and transportation costs and heat values. Also, the UHV-based beneficiated coal.
reduction in emission costs and taxes. In grade bands were wide. As a result,
addition to this, there are various derive often washing would not change the Present scenario
benefits of using of washery rejects. grade of coal which led to the coal The Indian Coal Washing Industry is
Also earlier, CIL used to price coal producers inclination to sell raw coal. almost six decades old. Total installed
by a measure known as useful heat That has changed now with narrower capacity of washeries in the country is
value (UHV), which was a formula bands of GCV-based grading of coal, around 131.24 Million tonne per year
(MTy) as on 31 March 2015. A total of
52 washeries, both PSUs and Private,
CILs existing coal washeries: were operating in the country consid-
Sl. No. Name of coal washery Subsidiary company Type of coal ering both Coking and Non-Coking.
1 Dugda-II BCCL Coking coal CIL (Coal India Ltd) which is largest
2 Bhojudih BCCL Coking coal producer of country with a contribution
3 Patherdih BCCL Coking coal of about 84 per cent of the countrys
4 Sudamdih BCCL Coking coal coal output, at present has a total coal
5 Moonidih BCCL Coking coal washing capacity of 36.8 Mty through
6 Mohuda BCCL Coking coal 15 existing washeries. This includes 12
7 Madhuban BCCL Coking coal coking and 3 non-coking with 23.30
8 Kathara CCL Coking coal Mty and 13.5 Mty capacity, respectively.
9 Swang CCL Coking coal CIL is aiming to improve the grade
10 Rajrappa CCL Coking coal of coal to maintain uniformity and stop
11 Kedla CCL Coking coal the supply of boulders and foreign mate-
12 Kargali CCL Coking coal rials. In FY16, a total of 63.8 million
13 Gidi CCL Non Coking tonnes (MT) of crushing capacity has
14 Piparwar CCL Non Coking been added with installation of mobile
15 Bina NCL Non Coking
crushers and feeder breakers. From

January 1, 2016, it has been made man-
datory to supply 100 per cent crushed
coal of (-) 100 mm size to power sector
consumers having FSA excluding pit
head power plants of NCL and ECL.
In addition to existing washeries,
CIL has also initiated action to establish
15 more coal washeries having state-
of-the-art and innovative technologies
in the field of coal beneficiation with
an aggregate throughput capacity of
112.6 Mty. Out of these washeries, six
are Coking Coal washeries with total
capacity of 18.6 Mty and nine non-
coking washeries of 94.0 Mty. Apart
from these, three washeries of 11.6 Mty
are under construction. Tenders have so
far been invited for 12 washeries. These
washeries will be built in two phases on
Build-own Maintain and EPC contract
on turnkey basis.
The Indian coal washing industry
is mainly concentrated in the states of
Jharkhand, Odisha, West Bengal and
Chhattisgarh. The state of Jharkhand,
which has the largest coal reserves, also
houses majority of the coal washeries
in the country. South Eastern Coalfields
Limited (SECL), a subsidiary of the
CIL is planning to set up countrys
largest coal washery with a capacity of
25 million tonnes per annum (MTPA)
in Korba district of Chhattisgarh. The
coal washeries in India have various
technologies installed based on their
requirements.
Way forward
In India, government support in pro-
moting washing of coal as one of the
clean coal technologies is fairly posi-
tive. Ministry of Coal is focusing on
quality production. The coal washery
and disposal policy, an imperative of
the Environment Ministry effective
CIL has also initiated
action to establish 15
more coal washeries
having state of-the-art
and innovative tech-
nologies in the field
of coal beneficiation
with an aggregate
throughput capacity of
112.6 Mty. Out of these
washeries, six are cok-
ing coal washeries with
total capacity of 18.6
Mty and nine noncoking
washeries of 94.0 Mty.
of washery rejects, middlings and coal
Apart from these, three
washeries of 11.6 Mty
are under construction
October 2016
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since June 2016 according to which
it is required that all coal supplies to
power plants located beyond 500 km
from pithead be washed and that the
fuel have a minimum quarterly average
gross calorific value of 4 000 kcal/kg.
Another target that has been set for
2017-18 is that private and govern-
ment miners only be allowed to market
crushed and washed coal.
The Government has also decided
to supply 100% crushed coal to its
customers from 1st April, 2016 and
transport coal above G10 level only
after being washed from 1st October
2017. The decision is taken to tackle
the quality issue of the coal produced.
Along with washed coal, coal wash-
eries produce rejects which contain 65%
or more ash content known as washery
rejects. Despite such high ash content,
rejects from coal washing contain some
amount of useful energy content. The
energy content in coal washery rejects 29
ranges from 1300 kcal/kg to 2400 kcal/
kg and can be commercially utilized to
generate electricity
Coal Ministry is planning to unveil
a comprehensive policy on the disposal
surplus by private miners in a bid to
streamline the process of attracting
private sector investment in value
addition of coal. In order to finalize
the draft policy MoC had meeting with
various stake holders in the month of
August to discuss stakeholders views.
Recently a panel has been for-
mulated to prepare a final policy for
disposal of washery rejects keeping a
harmonious balance between the (draft)
policy formulated by the coal ministry
and comments or suggestions furnished
by the stakeholders. The washery
policy need to be fine-tuned in line
with the Standard Coal Mines Devel-
opment and Production Agreement,
which every successful bidder at the
coal block auctions is mandated to sign
with the government.
For suggestions email at feedback@infraline.com
 October 2016
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FinancialResults
Coal India posts decline of 14.78 per cent in net profit in Q1
Low price realisation from e-auctions,
fuelled by depleting interest income from
banks on its cash reserves, in a situation
when the demand of the fossil fuel is at a
low, resulted in state-owned miner Coal
India posting a decline of 14.78 per cent
year-on-year in its net profit at Rs 3,065.28
Vedanta Q1 net profit down 30% to Rs 615 crore
Vedanta Ltd, the flagship firm of Anil
Agarwals Vedanta Resources Plc, reported
a drop of 30% in consolidated net profit
30 for the June quarter, hurt by lower oil and
metal prices. Net profit dropped to Rs.615
crore from Rs.844.14 crore a year ago.
Net sales fell 15% to Rs.14,437 crore from
Rs.17,008.81 crore in the year-ago quarter.
Sales were lower on account of a fall in oil
and metal prices, a weaker power market
and lower zinc volumes, partially offset by
a ramp-up in production of iron ore, power
and aluminium, said the company in a
statement. Tom Albanese, chief executive
officer, Vedanta Ltd, said: We have made
good progress on the ramp-up of capacities
at our aluminium, power and iron ore
businesses during the quarter. These would
be significant contributors to earnings as
GMDC reports 59% jump in Q1 net profit
Gujarat Mineral Development Corporation
(GMDC) posted 58.94 per cent increase in its
net profit at Rs 114.80 crore for the quarter
ended June 30, 2016 as against Rs 72.23
crore for the same quarter in the previous
year. The companys total income stood at
Rs 447.48 crore, registering an increase of of
26.02 per cent for the quarter under review
from Rs 355.08 crore for the corresponding
quarter of the previous year. The promoters
holding in the company stood at 74 per cent,
crore for the quarter ended June. While
the companys total income or net sales
fell 6.12 per cent at Rs 17,796.05 crore
for the period under review as against Rs
18,955.75 crore in the year-ago quarter,
the total expenses (including depreciation)
in the quarter also came lower by 3.18 per
cent to Rs 14,834.20 crore. Earnings before
interest, tax, depreciation, and amortisation
(Ebitda) stood at Rs 4,255 crore. The higher
bank interest income arising out of its cash
reserves that had helped boost profit of
Coal India in past also saw a decline in the
quarter as the other income declined 20.65
per cent year-on-year to Rs 1,130.62 crore.
Interest income earned on companys cash
reserves with banks comprises major portion
of other income. But, Coal India had paid Rs
the year progresses. He added, We are
focused on generating stronger free cash
flow and deleveraging the balance sheet,
in line with our strategic priorities. Another
of these priorities, the simplification of the
group structure, is also on track, following
the recent announcement of the revised
and final terms for the Vedanta Ltd and
Cairn India merger. For the June quarter,
Vedanta posted earnings before interest,
taxes, depreciation and amortization (Ebitda,
or operating profit) of Rs.3,543 crore, down
while Institutions and Non-Institutions
held 15.12 per cent and 10.88 per cent
respectively. GMDC is engaged in business
of mining and mineral processing. The
17,306.84 crore as dividend during 2015-16
leading to a decline in cash. Although sales
volume improved marginally in the quarter
by 2.9 per cent at 133.19 million tonnes,
lower income from e-auctions brought
down total income. The price realisation
from e-auction was down by Rs 614 a tonne
during the first quarter of the 2016-17. Also,
we were able to sell 20 mt less quantity in
the April-June period, an official said adding
that the demand for coal from the countrys
power plants remains subdued. These apart,
lower sales of its high grade coal impacted
the companys top line. However, with China
cutting down its production by 9.7 per cent in
recent times thereby pulling up global prices,
Coal India is hoping of posting better results
in the coming future.
14% from Rs.4,139 crore for the same period
last year. The Ebitda margin was flat at 32%.
Finance costs were marginally higher by
Rs.20 crore year-on-year, primarily driven
by capitalization of power units, increase in
temporary borrowing at Hindustan Zinc Ltd,
and change in Rs./$ borrowing mix. Other
income increased by Rs.139 crore year-on-
year due to higher mark-to-market gains on
investments in the quarter, partially offset
by a lower investment corpus on account
of the payout of a special dividend at the
beginning of the quarter at Hindustan Zinc.
Gross debt fell by Rs.606 crore during
the quarter to Rs.76,953 crore, given the
repayment of an inter-company loan of
Rs.5,736 crore to Vedanta Resources,
partially offset by borrowings by Hindustan
Zinc and the aluminium businesses.
company manufactures two grades of
fluorspar namely acid and metallurgical. It
owns two bauxite reserve located at Kutch
and Jamnagar.
 October 2016
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StatisticsCoal
Coal Statement of Thermal Power Stations for April15 - March16 (Quantity in 000 T)
ACTUAL RECEIPT Consumption
Sl. Closing Stocks
Name of TPS CIL / SCCL Other Source Import Total Actual
No.
Qty mode Qty Qty Qty Qty
1 RAJGHAT TPS 44 0 0 44 42 11
2 BADARPUR TPS 1475 0 0 1475 1715 160
3 PANIPAT TPS 1153 0 59 1212 1167 386
4 RAJIV GANDHI TPS 3247 0 78 3325 3103 552
5 YAMUNA NAGAR TPS 2624 0 62 2686 2612 206
6 INDIRA GANDHI STPP 4667 15 188 4870 4177 943
7 MAHATMA GANDHI TPS 3126 0 504 3630 3206 652
8 GH TPS (LEH.MOH.) 1797 12 220 2029 1876 412
9 ROPAR TPS 2681 0 278 2959 2864 666
10 GND TPS(BHATINDA) 677 0 0 677 618 201
11 RAJPURA TPP 3910 0 352 4262 4115 432
12 TALWANDI SABO TPP 1875 0 243 2118 2162 186
13 KOTA TPS 4639 480 117 5236 5198 558
14 SURATGARH TPS 3681 147 82 3910 3761 495
15 CHHABRA TPP 1439 1465 42 2946 2831 289
16 KAWAI TPS 620 0 3504 4124 4108 275
17 KALISINDH TPS 2570 0 2570 2748 79
18 ANPARA TPS 9443 0 0 9443 9200 590
19 HARDUAGANJ TPS 2760 0 0 2760 2595 343
20 OBRA TPS 3426 0 0 3426 3453 362
21 PANKI TPS 593 0 0 593 500 140
22 PARICHHA TPS 5678 0 0 5678 5338 477
23 DADRI (NCTPP) 5849 0 959 6808 6498 547
24 RIHAND STPS 13443 0 650 14093 13860 821
25 SINGRAULI STPS 11550 0 0 11550 11832 438
26 TANDA TPS 2736 96 0 2832 2316 607
27 UNCHAHAR TPS 5231 15 104 5350 4739 948
28 ROSA TPP Ph-I 4820 0 160 4980 4655 1121
29 ANPARA C TPS 4772 356 290 5418 5549 231
30 MAQSOODPUR TPS 290 0 0 290 281 108
31 KHAMBARKHERA TPS 337 0 0 337 289 155 31
32 BARKHERA TPS 355 0 0 355 305 146
33 KUNDARKI TPS 359 0 0 359 318 120
34 UTRAULA TPS 401 0 0 401 356 170
TOTAL NORTHERN REGION 109697 5156 7892 122745 118388 13827
35 DSPM TPS 2766 0 0 2766 2845 275
36 KORBA-II 2354 0 0 2354 2324 50
37 KORBA-WEST TPS 7138 0 0 7138 6975 164
38 KORBA STPS 14162 0 28 14190 14454 546
39 SIPAT STPS 13649 243 122 14014 14026 686
40 PATHADI TPP 1898 264 0 2162 2048 247
41 BHILAI TPS 2256 0 58 2314 2440 271
42 BARADARHA TPS 0 0 0 0 0
43 AKALTARA TPS 2932 958 95 3985 3916 64
44 TAMNAR TPP 880 2649 244 3773 3133 266
45 OP JINDAL TPS 3659 108 3767 3972 27
46 SIKKA REP. TPS 145 0 531 676 734 19
47 GANDHI NAGAR TPS 1660 0 78 1738 1749 120
48 UKAI TPS 3598 0 157 3755 3732 219
49 WANAKBORI TPS 3980 0 78 4058 3889 499
50 SABARMATI (C STATION) 898 0 592 1490 1388 198
51 MUNDRA TPS 398 0 16767 17165 17189 184
52 MUNDRA UMTPP 0 9295 9295 9901 366
53 SALAYA TPP 0 2018 2018 2100 73
54 AMARKANTAK EXT TPS 979 0 0 979 1059 58
55 SANJAY GANDHI TPS 5037 0 52 5089 5032 239
56 SATPURA TPS 5101 0 116 5217 4527 659
57 SHRI SINGHAJI TPP 3279 0 208 3487 3018 573
58 VINDHYACHAL STPS 20549 125 625 21299 21548 1058
59 BINA TPS 919 186 4 1110 880 485
60 ANUPPUR TPP 1602 0 0 1602 1576 80
61 SASAN UMTPP 16654 0 16654 16654 0
62 BHUSAWAL TPS 5753 0 847 6600 6101 762
63 CHANDRAPUR(MAHARASHTRA) STPS 10838 0 160 10998 10409 824
64 KHAPARKHEDA TPS 7245 0 92 7337 6918 580
65 KORADI TPS 2727 0 211 2938 2091 501
66 NASIK TPS 3508 0 0 3508 3390 273
67 PARLI TPS 1459 0 0 1459 1097 421
68 PARAS TPS 2937 0 0 2937 2786 286
69 TIRORA TPS 10443 0 1943 12386 11906 498
70 DAHANU TPS 1978 0 416 2394 2167 601
71 BUTIBORI TPP 1830 0 558 2388 2422 171
 October 2016
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StatisticsCoal

ACTUAL RECEIPT Consumption

Sl. Closing Stocks
Name of TPS CIL / SCCL Other Source Import Total Actual
No.
Qty mode Qty Qty Qty Qty
72 AMARAVATI TPS 2881 166 1073 4120 3718 421
73 EMCO WARORA TPS 2150 502 43 2695 2508 180
74 MAUDA TPS 1235 0 114 1349 1326 620
75 WARDHA WARORA TPP 328 854 29 1211 1230 2
76 JSW RATNAGIRI TPP 0 3272 3272 3353 292
77 TROMBAY TPS 0 2698 2698 2705 127
TOTAL WESTERN REGION 151493 26260 42633 220385 215236 13985
78 Dr. N.TATA RAO TPS 9624 0 94 9718 9225 633
79 RAYALASEEMA TPS 5632 0 140 5772 5340 494
80 SIMHADRI 7988 0 2244 10232 10027 851
81 DAMODARAM SANJEEVAIAH TPS 2040 0 99 2139 1537 705
82 THAMMINAPATNAM TPS 0 1119 1119 1167 122
83 SIMHAPURI TPS 0 2575 2575 2612 173
84 PAINAMPURAM TPP 946 0 2102 3048 2846 487
85 RAICHUR TPS 8354 0 543 8897 7483 588
86 BELLARY TPS 4280 0 0 4280 3797 296
87 TORANGALLU TPS(SBU-I) 0 1293 1293 1293 0
88 UDUPI TPP 0 3371 3371 3352 121
89 TORANGALLU TPS(SBU-II) 0 1096 1096 1096 0
90 TUTICORIN (JV) TPP 536 0 1287 1823 1680 320
91 ENNORE TPS 597 0 0 597 572 42
92 METTUR TPS 4791 0 2223 7014 6452 597
93 NORTH CHENNAI TPS 5039 0 2219 7258 6934 182
94 TUTICORIN TPS 4401 0 1268 5669 5222 555
95 VALLUR TPP 3309 0 1857 5166 5160 45
96 KOTHAGUDEM TPS 9422 0 0 9422 9337 664
97 RAMAGUNDEM STPS 12482 0 833 13315 13229 539
98 RAMAGUNDEM - B TPS 269 0 0 269 275 15
99 KAKATIYA TPS 2296 0 0 2296 2323 153
TOTAL SOUTHERN REGION 82006 0 24363 106369 100959 7582
100 BARAUNI TPS 0 0 0 0 0
101 KAHALGAON TPS 12134 0 539 12673 12758 1073
32 102 MUZAFFARPUR TPS 604 0 0 604 595 20
103 BARH II 2619 0 510 3129 2777 367
104 PATRATU TPS 301 0 0 301 520 18
105 TENUGHAT TPS 1835 0 0 1835 1987 196
106 BOKARO `B` TPS 1378 20 0 1398 1432 243
107 CHANDRAPURA(DVC) TPS 3468 373 0 3841 3727 342
108 MAITHON RB TPP 4067 0 0 4067 4039 203
109 KODARMA TPP 2312 0 0 2312 2176 337
110 MAHADEV PRASAD STPP 1505 301 71 1877 1800 72
111 IB VALLEY TPS 2697 0 0 2697 2785 91
112 TALCHER (OLD) TPS 3127 0 0 3127 3097 95
113 TALCHER STPS 15718 0 1827 17545 18000 579
114 STERLITE TPP 3785 1248 402 5435 5597 330
115 KAMALANGA TPS 3263 249 796 4308 3932 266
116 DERANG TPP 820 1953 0 2773 2775 87
117 DURGAPUR TPS 788 0 0 788 748 121
118 MEJIA TPS 7973 0 0 7973 7684 638
119 BANDEL TPS 1017 3 0 1020 963 167
120 BAKRESWAR TPS 4625 16 0 4641 4623 337
121 D.P.L. TPS 1402 4 0 1406 1370 110
122 KOLAGHAT TPS 5103 63 0 5166 5036 327
123 SAGARDIGHI TPS 1855 66 0 1921 1837 261
124 SANTALDIH TPS 2529 0 0 2529 2482 153
125 BUDGE BUDGE TPS 1615 1505 219 3339 3459 138
126 SOUTHERN REPL. TPS 274 126 30 430 409 56
127 TITAGARH TPS 405 9 13 427 477 51
128 FARAKKA STPS 7915 11 927 8853 8562 694
129 DURGAPUR STEEL TPS 3309 0 0 3309 3057 300
130 HALDIA TPP 1946 0 494 2440 2387 169
TOTAL EASTERN REGION 100389 5947 5828 112164 111091 7841
TOTAL ALL INDIA 443585 37363 80716 561663 545674 43235

Production Performance of SCCL (April 2016 to August 2016) (Unit - MT)

Month 2016 (in MT) 2015 (in MT) % Increase
April 4.44 4.32 2.78%
May 4.90 4.86 0.82%
June 4.76 4.46 6.73%
July 3.83 4.56 -16.00%
August 4.22 4.56 -7.45%
April August 22.15 22.76 -2.68%

CoverStory
Time running out! Surge in global energy
prices threatens to spoil Indias honeymoon
OPEC agrees to cut oil output, may impact Indias current account deficit
Surge in coal prices to impact power plants running on imported coal
By Infraline Bureau
Energy-guzzling India has tremen-
dously benefited from historic low
prices in recent years. However, energy
prices are again hardening in the inter-
national market and could soon pose
new challenges for Indian industry and
policy makers. According to World
Bank commodity price data, Australian
coal prices have risen by more than
25 per cent between June and August
on increased Chinese demand. The
average price for Australian coal stood
at $67.4/tonne in August from $53.2/
tonne in June. During the same period,
Brent crude price has declined from
$48.5 to $46.1 per barrel. However, if
we take January as the baseline, Brent
crude price has risen by nearly 50 per
cent. Oversupply continues to hang
on the oil market, which has forced
Organisation for Petroleum Exporting
Countries (OPEC) to think of produc-
tion freeze. If the outfit succeeds in
evolving consensus on output freeze
among members, oil could again start
surging.
October 2016
www.InfralinePlus.com
33
LNG prices too have seen an uptick
during July after hitting all-time lows
in June. Analysts project that new
demand from South Korea could lift
the global LNG market. Korea recently
took offline four reactors with a com-
bined capacity of 2,770 MW following
an earthquake.
In contrast, natural gas prices were
down 5 percent in April-June quarter,
particularly in Europe and Asia, due
to weak demand and surplus LNG
supplies. However, US gas prices rose
 October 2016
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CoverStory
from their lows in March on stronger
demand and higher exports. Coal
prices rose 2 per cent on tightening
supply and strong demand in China
during the same quarter.
Imported coal prices to
impact power plants
Newcastle coal, an Asian benchmark,
has advanced about 41 per cent this
year, according to Globalcoal. The spot
price of thermal coal which is used for
power generation is now more than
$70/tonne while coking coal price has
surged to $160/tonne.
Mundra-based power plants of Tata
Power and Adani Power could feel
the heat of surging coal prices. Tata
Powers Mundra ultra mega power
project reported tariff under-recovery
of 30 paise per unit during the April-
June 2016 quarter when the free-on-
board (FoB) price of imported coal
34 averaged at $42 per unit. With coal
price hitting $70/tonne, the private
developer could see commensurate
increase in its tariff under-recovery
during July-September quarter. Adanis
Mundra power plant too could suffer
similar under-recovery.
Salil Garg, an energy expert with
India Ratings and Research, said:
International coal prices have remained
volatile and rebounded in 1QFY17
and 2QFY17 from the lows seen in
4QFY16. While sustaining of the coal
price rally is not certain, the coal price
increase is usually passed on to the
consumers such as Indian IPPs using
imported coal. This volatility in the coal
prices has a direct bearing on the fuel
cost recovery and thus profitability of
Mundra-based power
plants of Tata Power
and Adani Power could
feel the heat of surging
coal prices. Tata Powers
Mundra ultra mega
power project reported
tariff under-recovery of
30 paise per unit dur-
ing the April-June 2016
quarter when the free-
onboard (FoB) price of
imported coal averaged
at $42 per unit. With coal
price hitting $70/tonne,
the private developer
could see commensu-
rate increase in its tariff
under-recovery during
July-September quarter
such IPPs wherever the fuel costs are
not fully pass through in the tariffs and
the IPPs are selling in the merchant
market. For the large imported coal
based IPPs like Coastal Gujarat and
Adani Power, the full impact of coal
price increase will be known once the
compensatory tariff matter is settled.
Other companies running power
plants based on imported coal will
have to hike tariff if they want to pass
on increase in fuel cost to electricity
buyers. India is projected to imported
160 million tonnes coal this fiscal.
The surging coal price could also put
upward pressure on overall electricity
in the country.
Back in 2007, Tata Power had
emerged as the L1 bidder for the 4,000
MW Mundra UMPP by quoting a
levellised tariff of Rs 2.26 per unit for
power supply to Gujarat, Maharashtra,
Haryana, Punjab and Rajasthan. The
project was envisaged to be operated
on imported coal, for which the
company also purchased a 30 per
cent stake in an Indonesian mining
company.
Similarly, Adani Power has been
seeking compensatory tariff for power
purchase agreement (PPA) of 1,000
MW with Gujarat utilities and 1,424
MW with Haryana utilities. Adani
Power quoted a levellised tariff of Rs
2.35 per unit for Gujarat utilities and
Rs 2.94 per unit for Haryana utilities.
The Central Electricity Regulatory
Commission has yet to come out with
a final order after its earlier 2013 com-
pensatory tariff orders were quashed by
the Appellate Tribunal for Electricity
in April.
Institute for Energy Economics
and Financial Analysis (IEEFA) says
that the 10 percent decline in coal
production across China in the first
seven months of 2016 is the key
pressure point. With Chinas coal
consumption down only 4-5% year
over year, imports are making up the
difference. When domestic Chinese
coal production runs at 10-15 times

that supplied by imports, a 5 percent
domestic shortfall can lead to a real
squeeze upwards on imports. After a
31 percent year-on-year rise in China
thermal coal imports in July, total
Chinese coal imports for August 2016
were 26.6 million tonnes, a 52 per cent
increase over the previous year.
Thermal coal prices rose 2 per cent
in the April-June, the first increase in
10 consecutive quarters, reflecting a
jump in Chinas imports and a tight-
ening of coal supply. Production cuts
in China, a reduction in Indonesian
supply because of heavy rains, and low
stocks at Chinas ports and utilities
contributed to the pick-up in imports.
Supplies also tightened due to pro-
duction outages in Australia and lower
availability from Colombia. Prices rose
sharply in July on the back of strong
seasonal demand, low inventories and
tightening supply, but the market is
expected to remain in structural over-
supply going forward. China consumes
half of the worlds coal output and coal
accounts for nearly two-thirds of the
countrys energy consumption.
The government plans to reduce
coals share from 64 to 60 per cent by
2020 by reducing the energy intensity
of the economy by 15 per cent and
increasing the share of nuclear energy,
natural gas and renewables.
Impact of oil price volatility
on India
According to the World Bank, energy
prices leapt almost 30 per cent in the
April-June quarter. Oil prices averaged
$47.70/bbl in June, 37 per cent above
the first quarter average. The oil price
rebound reflects a number of supply dis-
ruptions that removed up to 2.5 million
barrels per day (mb/d) of production at
peak during May and June, with large
losses concentrated in Canada due to
wildfires, and in Nigeria due to militant
attacks on oil infrastructure. In addition,
there were disruptions in other coun-
tries, including Kuwait, Iraq, and Libya.
Declines in non-OPEC production, led
If under-recoveries
again widen, upstream
companies might be
asked to bear a third of
petroleum subsidy bur-
den as per the formula.
The government will
also have to step up do-
mestic exploration if oil
prices start surging. The
Modi government has
targeted to reduce In-
dias import dependence
by 10 per cent by 2022.
If oil prices surge, it will
be asked to walk the talk
by the US, were partly offset by higher
OPEC production, mainly from Iran.
Global oil demand remained strong.
India has seen a strong growth in
petroleum product consumption in
the wake of the precipitous drop in
global oil prices since June 2014.
For example, petroleum consumption
grew by 10.9 per cent in 2015-16,
sharply up from 4.5 per cent in
2014-15, as per provisional data com-
piled by the Petroleum Planning and
Analysis Cell.
October 2016
www.InfralinePlus.com
Rising oil prices could also
adversely affect governments
finances as it bears subsidy on
domestic LPG and PDS kerosene
whose prices often rise in tandem
with the international market. The
crash in the oil market has signifi-
35
cantly reduced governments subsidy
burden. Oil marketing companies
under-recoveries on petroleum
products fell from Rs 76,285 crore
in 2014-15 to Rs 27,571 crore in
2015-16. Because of the precip-
itous fall in under-recoveries, the
government has spared upstream
companies including ONGC, Oil
India and Gail India from bearing the
subsidy burden.
If under-recoveries again widen,
upstream companies might be asked
to bear a third of petroleum subsidy
burden as per the formula. The
government will also have to step
up domestic exploration if oil prices
start surging. The Modi government
has targeted to reduce Indias import
dependence by 10 per cent by 2022. If
oil prices surge, it will be asked to walk
the talk. The government might have
to unveil more incentives to attract
private investors back to India. If oil
prices start surging again, investment in
renewable energy sources will become
more lucrative.
 October 2016
www.InfralinePlus.com
CoverStory
Crude oil prices rose 37 per cent
in the second quarter and averaged
$44.8/bbl on a number of supply
outages. Oil prices climbed for five
straight months, averaging $47.7/
bbl in June, and have traded in a
relatively narrow band of $45-49/
bbl since the middle of May. Prices
eased in July on slowing demand for
petrol and recovery of disrupted oil
supply.
At their peak, large supply dis-
ruptions removed up to 2.5 mb/d of
production during May and June,
with losses concentrated in Canada
because of wildfires in Albertas oil
sands region, and in Nigeria due to
militant attacks on oil infrastructure.
In addition, there were disruptions in
Kuwait, Iraq, Libya and elsewhere.
Meanwhile, non-OPEC production
continued to decline, led by the United
States, but this was partly offset by
36 higher OPEC production, mainly from
Iran. Global demand remained fairly
robust, particularly in India, but there
was a noticeable slowdown in the US
and China, analysts said.
With the supply outages, the market
quickly transitioned toward balance on
a current supply/demand basis, though
stocks remain near-record levels.
Inventories are expected to decline
modestly in the second half of the
year, led by higher seasonal demand
and declining non-OPEC supplythis
despite a rebound in shut-in volumes
in Canada.
World oil demand in the first
quarter rose by 1.6 mb/d or 1.7 per
cent, slightly down from strong
growth in 2015 of 1.9 mb/d or 2.0
percent, the largest gain in five years.
Oil demand slowed in the second
quarter, rising by 1.4 mb/d or 1.5 per
cent. The strength in oil demand last
year was centered on petrol, chiefly
in the US and China, but its demand
growth has slowed, partly due to the
waning effect of low prices. OECD oil
demand rose by 0.6 mb/d or 1.3 per
cent in the second quarter, with rela-
OPEC agrees to cut oil output for the first time in eight years
For the first time since 2008, OPEC has agreed on modest oil output cuts
in an effort to reduce a global glut of crude that has depressed oil prices for
more than two years and weakened the economies of oil-producing nations.
OPEC would reduce output to a range of 32.5-33.0 million barrels per day.
OPEC estimates its current output at 33.24 million bpd. The move would
effectively re-establish OPEC production ceilings abandoned a year ago.
However, how much each country will produce is yet to be decided.
Saudi Arabia is by far the largest OPEC producer with output of more than
10.7 million bpd, on par with Russia and the United States. Together, the
three largest global producers extract a third of the worlds oil.
Oil prices are well below the budget requirements of most OPEC nations.
But attempts to reach an output deal have also been complicated by political
rivalry between Iran and Saudi Arabia, which are fighting several proxy-wars
in the Middle East, including in Syria and Yemen.
A spike in oil prices can have major implications for the countrys current
account deficit and economy in general as 80 percent of Indias energy
requirements are met through imports.
tively strong increases in both Europe Japans Institute of Energy
and the US. Economics has projected that global
LNG demand will increase from 268
Rising LNG prices a million tonne in 2016 to 282 million
concern tonne in 2017. However, oversupply
Rising LNG prices have forced Indian too will increase from 288 million
buyers to delay orders for purchases. tonne to 336 million tonne. But LNG
Gail India has sought five cargoes for prices indexed to crude oil are expected
October-December delivery while other to increase. The average price of LNG
Indian importers are also said to be going to Japan could rise from $6.6
negotiating deliveries. Industry sources, per mmbtu in 2016 to $7.4 per mmbtu
however, said price-sensitive Indian in 2017, says Yoshikazu Kobayashi of
market seems to be nearing its cut-off Institute of Energy Economics.
point, with traders delaying tenders. Analysts say LNG industry has
Energy market intelligence pro- become energy sectors black sheep
vider Platts says Indian LNG demand in the last two years, with demand
growth has largely failed to meet slumping just as supplies soar. While
expectations over the past years. It coal and oil, LNGs competitors, have
was hit by very high LNG prices from risen this year, LNGs ties to the fuels
2012 to 2014, and when prices started limit its gains. LNGs common price link
to dip in 2015, LNG buyers and with crude oil keeps a lid on gas while
storage capacity in the country were coal is a cheaper alternative for power
limited, it added. generation than LNG, say analysts.
Indias LNG imports increased by
2.5 per cent to 14.7 mmtpa in 2015. More to come amid
The drop in LNG prices, combined oversupplies
with new regasification capacity Huge reserves off Africas east coast,
and pipelines, will accelerate Indias in the eastern Mediterranean, and in
LNG demand over the next 3-5 years, Canada are waiting to be developed,
says energy consultancy firm Wood and current exporters like Qatar, Russia,
Mackenzie in a recent report. Australia, and the US have large re-

serves they could ramp up. Asian LNG
prices rose early September on renewed
Indian demand and prospects of South
Korea ramping up term supplies from
Qatar to replace lost nuclear output.
Asian LNG spot prices LNG-AS
almost tripled between 2010 and 2014
to over $20 per mmBtu, attracting huge
investment and triggering new LNG
trading desks opening from London
to Singapore. But soaring output from
Australia and the US, as well as the
general commodities slump, pulled
LNG prices back by almost 75 per cent
to under $5.50 per mmBtu.
But now Asian LNG prices have
shown signs of hardening in recent
weeks. Prices rose early September on
renewed Indian demand and prospects
of South Korea ramping up term-
supplies from Qatar to replace lost
nuclear output. Trade sources said
India is struggling to accept higher
demand at current import prices.
Dealers continue to watch for
higher LNG imports from South
Korea, which took offline four
reactors with a combined capacity
of 2,770 megawatts following an
earthquake this month. Owing to
government restrictions, the biggest
importer Korea Gas Corp may find
it hard to contract replacement gas
via spot markets, leading traders to
believe it will instead ramp up imports
from long-term suppliers such as
Qatar, which has begun scaling back
deliveries to Europe.
Korea Gas Corp already was
talking to suppliers about upping
deliveries for winter after strong
air conditioning demand in summer
depleted domestic stockpiles. The
If LNG prices harden, it
will have serious impli-
cations for India which
is battling with domestic
gas shortages and
badly needs imported
fuel. Anyway, Indias
gas usage at less than
10 per cent of primary
energy consumption
is far below the global
average of 24 per cent.
A big chunk of Indias
gas-based generation
capacity remains unuti-
lised due to domestic
gas shortage
October 2016
www.InfralinePlus.com
latest nuclear outages have increased
its sense of urgency. According
to a survey conducted by Deloitte
recently, respondents expect Asian
natural gas prices to be much higher
than Henry Hub to the end of 2016-
2020, which creates opportunity for
US. LNG exporters. Of professionals
surveyed, 81 per cent said they
believe international prices will range
from $5-10 per mmbtu.
If LNG prices harden, it will
have serious implications for India
which is battling with domestic gas
shortages and badly needs imported
fuel. Anyway, Indias gas usage at less
than 10 per cent of primary energy
consumption is far below the global
average of 24 per cent.
A big chunk of Indias gas-based
generation capacity remains unutilised
due to domestic gas shortage. Running
these plants on LNG is not an
affordable option. India has adopted 37
gas pooling route to overcome this
constraint. However, if prices rise
sharply, even the pooling option could
become difficult to implement.
India is banking on capacity addition
in renewable power to meet its emission
reduction commitments. However,
renewable energy may alone not be
enough in meeting countrys power
requirement which would increase
when the economy shifts to a high-
growth trajectory. India will have to
ramp up its natural gas-based gen-
eration capacity to keep its economic
growth engine running. In this context,
hardening LNG prices are going to pose
challenges for Indian policy makers.
India needs to make the most of
the continuing low price environment
by fast tacking its energy sector
reforms. These include phasing out
the remaining subsidies, bringing in
fuel pricing reforms, and targeted
subsidy measures. It can also take
advantage by accelerating its stra-
tegic oil storage programme.
For suggestions email at feedback@infraline.com
 October 2016
www.InfralinePlus.com
NewsBriefs | Oil & Gas National
Government keen on RIL, ONGC mutually settling gas diversion dispute
In order to prevent a long drawn legal battle
of court proceedings, the government believes
that both explorer - Oil and Natural Gas Corpo-
ration Limited and Reliance Industries Limited
should come across the table and sought
out the issue of diversion of flow of gas from
Cabinet clears IOC, OIL, BPCLs Russian stake buy for $3.14 billion
The Cabinet has given its nod to a consortium
of IOC, Oil India and BPCL buying stakes
in two Russian oilfields for a total of $3.14
billion. Indian Oil Corp, Oil India and a unit
38 of Bharat Petroleum Corporation (BPCL)
will buy 29.9 per cent stake in Taas-Yuryakh
oilfield in East Siberia for $1.12 billion and an-
other 23.9 per cent in Vankor oilfield for $2.02
billion. The Cabinet Committee on Economic
Affairs (CCEA), headed by Prime Minister
Narendra Modi, approved the consortium
buying 29.9 per cent stake in Taas-Yuryakh
Neftegazodobycha LLC, which holds and op-
erates two licences for the Srednebotuobins-
koye oil and gas condensate field, one of the
largest in the East Siberia. The stake is being
BPCL will invest over Rs 3,000 crore for better fuel standards
State-run oil marketing company Bharat
Petroleum Corporation Ltd (BPCL) will
have to invest over Rs 3,000 crore over the
next year to upgrade its existing refining
capacity to meet better fuel standards. R
Ramachandran, Director (Refineries), BPCL,
said that the company plans to add a Rs
600-crore gasoline treatment facility at
the Mumbai refinery in order to produce
fuel that complies with Bharat Stage (BS)
VI norms. A similar facility, with a capital
outlay of Rs 3,000 crore, will be set up
at the Kochi refinery as well. The funding
for these two facilities are expected to
come from internal accruals and debt.
the Krishna Godavari basin. Meanwhile, the
oil ministrys technical arm - the Directorate
General of Hydrocarbons (DGH) is said to come
out with the quantum of penalty to be paid by
the private explorer RIL for the migration of
gas during the last seven years. The petroleum
ministry had assigned DGH to calculate the
penalty on RIL after the A P Shah panel, con-
stituted to recommend quantum of compensa-
tion for ONGC, left the decision on quantifying
the compensation with the government. Ac-
cording to the US based consultant De Golyer
and Mac Naughton (D&M), around 11.122 bil-
lion cubic metre of natural gas that worth over
Rs 11,000 crore has been migrated from the
KG fields of ONGC to the private operator.
acquired from LLC RN-Razvedka I Dobycha
(RN Upstream), a wholly-owned subsidiary of
Rosneft, Russian state firm, officials said. The
licence for the central block is valid till 2041
and the northern block till 2032.
Minister for Petroleum and Natural Gas
Dharmendra Pradhan has set April 2020
as the target for implementation of BS VI
fuel requirements, advancing the deadline
Petroleum consumption to grow by 6
per cent in India: Moodys
Petroleum consumption in India is
likely to grow by about 6 per cent in
2017-18, but this is not enough to fully
offset slowing growth in China said
Moodys in a report on Asian refining
and marketing industry. The report
mentions that refiners focused on
domestic markets including the three
state-owned Indian refiners - Indian
Oil Corporation Ltd, Bharat Petroleum
Corporation Ltd, Hindustan Petroleum
Corporation Ltd are least vulnerable to
growing Chinese exports and weaken-
ing Chinese demand. These refiners sell
over 80 per cent of petroleum products
within their domestic market and derive
less than 5% of sales revenue from
China. Moodys Investors Service says
that slow but steady demand growth
from China and India underpins its
stable outlook for the Asian refining
and marketing (R&M) industry, despite
a likely modest earnings contraction
through 2017.
by four years and skipping the BS V stage
altogether. Currently, BS IV-compliant fuel
is being supplied in 15 major cities, while
the rest of the country is still using BS III-
compliant fuel. The Bharat Stage standards,
which closely mimic the Euro fuel emission
standards, are environmental norms that
regulate vehicular emissions, controlling the
levels of carbon monoxide, nitrogen oxides
and particulate matter that can be released
when petrol or diesel is burnt. By the end of
this fiscal, BPCL expects to commission its
expanded refining capacity of 15.5 million
tonnes per annum (mtpa) at the Kochi
refinery, from the current 9.5 mtpa.

NewsBriefs | Oil & Gas National
All unexplored oil fields to go under the hammer in 2017
The oil ministry is preparing to offer nearly
half of Indias 3 million sq. km of sedimentary
basins at one go to energy companies for
exploration next year under a new auction
method designed to give more choice and
easier terms to bidders. The idea is to get ex-
ploration going in as many fields as possible.
ONGC Board approves pact to take stake in GSPC gas block
The Board of state-owned ONGC has
approved signing of a preliminary agreement
for buying a stake in Gujarat government
firm GSPCs KG basin gas block. The
Board of Oil and Natural Gas Corp (ONGC)
approved signing of an MoU for taking
a stake in Gujarat Petroleum Corp Ltds
(GSPC) difficult gas block. The MoU
approved strangely also incorporates a
dispute resolution wherein any differences
over issues like valuation or natural gas
reserves would be referred to a three-
member committee of outside experts.
Sources said this is perhaps for the first time
that a memorandum of understanding (MoU)
sets out a dispute resolution committee and
OIL achieves all-time highest natural gas production during 2015-16 fiscal
Oil India Limited, countrys second largest
national oil and gas company in terms of
total proved plus probable oil and natural
gas reserves, achieved the highest ever
production and sale of natural gas in the
history of the company. While natural
gas production was 2838 MMSCM as
against 2722 MMSCM during 2014-15,
natural gas sale was 2314 MMSCM as
against 2181 MMSCM during 2014-15.
Crude oil production was 3.247 MMT as
compared to 3.440 MMT during 2014-15.
The turnover of the company stood at
Rs 9,764.87 crore as against Rs 9,748.23
crore while the Profit after Tax (PAT)
In a departure from the practice of offering a
limited number of fields for auction at a time,
all unexplored basins will be open for bidding.
Under rules being framed under the open
acreage policy cleared by the Union cabinet
in March, any application received for a
particular block will immediately lead to the
authorities inviting counter-bids. Geological
data for reference will be made available by
Halliburton Offshore Services Inc. hired by
the government. Sudhir Mathur, acting chief
executive officer, Cairn India Ltd, welcomed
the new policy. Cairn India accounts for over
27% of domestic crude oil production of 37
million tonnes and has plans to raise it to
50% over the next few years.
it perhaps is indication of the pitfalls that
ONGC anticipates in buying a stake in the
block. It has already differed with GSPC on
the gas reserves the block holds and has
appointed US-based consultant Ryder Scott
to do an independent assessment.
crore and that to the Central Government
was Rs 2,330.11 crore against PAT of Rs
2,510.20 crore during 2014-15. During
2015-16, the company declared dividend
at 160%. The contribution to the State
Exchequer during the year was Rs 1,861
October 2016
www.InfralinePlus.com
BPCL to list Bina refinery JV in FY18
State-run Bharat Petroleum Corpora-
tion Ltd (BPCL) plans an initial public
offering (IPO) for its Bina refinery joint
venture company in the next financial
year. The company also plans to start full
operations for its expanded Kochi refinery
project in the fourth quarter of the current
financial year. We are looking for a public
issue for Bina somewhere next year. Bina
reported profits last yearand in the first
quarter, said S Vardarajan, chairman
and managing directorfor BPCL. Bharat
Oman Refineries Limited (BORL) is a joint
venture company of Bharat Petroleum
Corporation Limited (BPCL) and Oman Oil 39
Company (OOC). BORL owns and operates
the 6 million tonne capacity Bina refinery.
On the equity structure for the planned
public offer for theBina joint venture, OVS
intends to remain invested in the project
and will not exit through the public offer.
The company also plans to expand Binas
current 6 mt capacity to 7.8 mt in the first
phase. OOC has shown reluctance in
funding the expansion from 6 mt to 7.8 mt,
yet to come to a final decision.
was Rs 3,245 crore. OILs audited annual
accounts had Nil comments from the
Comptroller and Auditor General of India
for the 14th year in succession. OILs
sound financial performance has enabled
the Company to retain International credit
ratings for the third consecutive year -
Moodys BAA2 (higher than sovereign
rating) and Fitch Rating BBB(-) (Stable)
(equivalent to sovereign rating). Also,
the company obtained highest domestic
ratings from CARE Ratings-AAA (for long
term facilities) and A1+ (for short term
facilities).
 October 2016
www.InfralinePlus.com
NewsBriefs | Oil & Gas International
Canada approves $27 billion LNG complex; Petronas in no rush to start
Malaysias Petronas said it would review a
proposed C$36 billion ($27.25 billion) liquefied
natural gas (LNG) project in western Canada
after Ottawa approved the project with
conditions to limit the environmental impact.
The green light for the Pacific NorthWest
LNG project in northern British Columbia
comes after a 3-year wait for Petronas and
Saudi Aramco plans to spend $334 billion by 2025
Saudi Arabias state-owned oil giant
Aramco plans to invest a total of about
$334 billion by 2025, including spending
on infrastructure and projects to maintain
40 oil capacity, Abdulaziz al-Abdulkarim, vice
president for procurement and supply chain
management, said that the figure included
spending on exploring for and developing
unconventional resources, such as shale gas.
Saudi Aramco is forecast to spend around
$334 billion. This will be spent on material
and services to support service facilities,
infrastructure projects, drilling and maintain
(oil) potential projects, unconventional
resources both in the exploration phase and
development and several other projects, he
Thai petroleum concession auction to be completed by Sept 2017
Thailands government will complete by
September 2017 an auction for expiring oil
and gas contracts held by Chevron Corp and
PTT Exploration and Production. Recently,
the government said it planned to open bids
for the contracts in March 2017. Energy
minister General Anantaporn Kanjanarat
said the auction would be completed at the
earliest in September 2017. We want the
auction to be transparent. The private sec-
tor has said that if the auction takes place
next year they can take part in time but if it
is longer than that then entrepreneurs will
be uncertain, Anantaporn said. Chevrons
Thai unit holds concessions to operate
its partners, but analysts are skeptical about
the projects prospects given low gas prices
and cost-cutting at the Malaysian oil giant.
The approval came with 190 conditions
that Petronas and partners in China, India,
Japan and Brunei would have to meet, after
a review found the project would have a
significant environmental impact. Petronas
investment in the project would depend on
LNG prices that have dropped by over a third
in two years amid worries about oversupply
and faltering Chinese demand. The econom-
ics (of the project) require much higher LNG
prices than currently and than are forecast
for the next few years, said Wood Mackenzie
analyst Alex Munton.
noted. Saudi Aramco outlined a plan known
as In-Kingdom Total Value Add (IKTVA)
last year, when CEO Amin Nasser said the
company would spend more than $300
billion over the next 10 years, of which 70
percent would be local content.
the Erawan gas field. PTTEP operates the
Bongkot gas field. Contracts for the two
offshore fields are due to expire in 2022 and
Indonesia ends oil exploration taxes
in bid to revive investment
Indonesia said it will eliminate taxes
on oil and gas exploration in an effort
to bolster investment in the countrys
flagging oil and gas sector. Oil and gas
director general Wiratmaja Puja said
the government was aiming to remove
all taxes on exploration, including a
value-added tax on imported goods and
a land tax that had been a deterrent to
investment since it was introduced in
2010. Global exploration (companies)
will return enthusiastically, Puja noted.
The government has been trying to
revive flagging oil and gas production
but investors have been deterred by
low global oil prices and regulatory
and investment risks in Indonesia.
Indonesias crude oil output peaked at
around 1.7 million barrels per day in
the mid-1990s. But with few significant
oil discoveries in Western Indonesia in
the past 10 years, production has fallen
to roughly half that as old fields have
matured and died.
2023, respectively. They have combined
production of 2.2 billion cubic feet per
day, or 76 percent of output in the Gulf of
Thailand. PTTEP, Thailands largest oil and
gas explorer, has said it will bid to operate
the Bongkot field. The military government
put off a bidding round of concessions for 29
onshore and offshore blocks in early 2015
due to criticism of the contract terms from
politicians and activists. The bidding round
was originally planned for 2011 but was
on hold after devastating floods that year
and then a political crisis that began in late
2013 and culminated in a military coup in
May 2014.
 October 2016
www.InfralinePlus.com

InConversation
Indian companies need to reinvent their human
resource strategies to meet growing challenges
Senior members from Energy Majors such as Schlumberger
Asia Services Ltd, L&T Hydrocarbon Engineering Ltd, ONGC
Videsh Ltd, Reliance Industries Ltd, Emerson Processes
management, (India) Pvt Ltd and a couple of others got
together during the recently held Oil & Gas HR roundtable
organised by the University of Petroleum and Energy Studies
(UPES) in Mumbai. The agenda of the roundtable was
Leading Human Resources in Business Cycle Trough. In
this context, InfralinePlus caught up with Utpal Ghosh, CEO
& President, UPES, to understand his views on the human
resource challenges facing the sector. Excerpts:
Utpal Ghosh, CEO & President, UPES
In a business cycle trough, what What turnaround potential
are the leadership challenges do you see in the oil and gas How can the government and
being faced by oil and gas com- sector? Do you see a hope of policymakers intervene in the 41
panies? What are the strategies the sector moving in positive current situation and help the oil
being adopted to face them? directions? and gas sector companies cope
These are challenging times globally Despite the drop in crude prices, up with the business cycle low?
for the oil and gas sector. Competi- huge spending cuts and thousands According to recent reports, a number
tion, declining oil prices and glutted of job losses, there are reports of the of government reforms are in process
energy demand are significant factors worlds top oil and gas companies that aims to unlock $40 billion of oil
affecting this industry. Companies are gearing up to produce more in the and gas output by simplifying licens-
downsizing as volatility and uncer- near future. Top oil companies ing rules and offering price incentives
tainty in the sector seem to the new continue to struggle with declining to recover gas from difficult offshore
norm. It is time for the leadership revenues after more than halving of fields. Crude prices are expected
team to reassess the strategic direction prices since mid-2014. However, to rise in future and the new set of
their organization should take and how their production has persistently reforms by the Indian government will
to sustain and stay profitable. Some grown as projects sanctioned surely provide a much needed shot in
strategies that may help leadership earlier in the decade come on line. the arm to development of hydrocar-
team include- look for their strength Some analysts estimate that overall bon resources.
areas and become agile enough to production at the worlds seven
adapt to changing market conditions; biggest oil and gas companies is set What are some of the major
avoid illogical cost cuttings that can to rise by about 9 per cent between challenges in terms of human
leave an organization ill prepared for 2015 and 2018. There is expected resource faced by oil and gas
future conditions; focus on exploit- to be slow and steady recovery in companies in times of downturn?
ing new technologies to innovate prices, driven by global supply- The oil and gas industry is changing
and reduce operational costs. As the and-demand dynamics. Demand for constantly, and it is difficult for human
volatile conditions in the oil and gas transportation fuel caused by growth resource managers to sketch their
sector continue every organization in developing economies will be strategies and modify them in line with
will be challenged in various ways and responsible for sustaining global oil the dynamic business environment.
leadership teams will have to prepare demand leading to minimal growth in At a time when HR training is
themselves for quick turnarounds. some markets. witnessing phenomenal changes the
 October 2016
www.InfralinePlus.com

InConversation

world over, it is imperative that Indian experience and the majority is due to relevant training and skill development
oil and gas companies reinvent their retire in the next 5-10 years. programmes that would not only help
human resource strategies to meet retain the current workforce but also
the challenges facing the sector and What strategies can be used rope in fresh talent. This would enrich
prepare employees for the exciting by HR managers in times of the oil and gas companies and result in
future that awaits the energy space. downturn? consolidation of the industry.
However, adapting to changes in the The current downturn in the oil and Skill India, Make in India and
oil and gas sector is not easy because gas industry is a great opportunity Digital India are great ideas and they
of long investment and project for training, retraining and reskilling need to be converted to outcomes and
lifecycles. the workforce. This would arrest the actions. Considering I represent an
According to an EY study, the decline in the talent pool and make the academic institution, Skill India for the
industry requires around 25,000 sector more attractive for the younger oil and gas sector is close to my heart.
additional professionals in next five generation looking to build careers There must be close engagements
years due to business growth and in this critical industry. There is an between the industry and academia to
retirement or attrition in the sector. urgent need to reinvent HR strategy ensure graduates are more employable.
Aging workforce in this sector is also so as to make it attractive for exist- The focus here, in addition to hard
a cause of concern as around 50% ing and future employees. Oil and gas technical skills, should also be on soft
employees have more than 20 years of companies could create and implement skills communication the ability to
lead and take people along.
Skill India, Make in India and Digital India are Oil and gas companies also need to
great ideas and they need to be converted to establish a core team of people to decide
outcomes and actions. Considering I represent an on human resource strategies that will
set off an avalanche of goal-oriented
academic institution, Skill India for the oil and gas
ideas. The idea is to get this core
42 sector is close to my heart. There must be close together and initiate action learning
engagements between the industry and academia programmes at every level of the
to ensure graduates are more employable. The organisation. We need to have the entire
focus here, in addition to hard technical skills, organisation engaged in the fabric of
should also be on soft skills communication the learning and development.
ability to lead and take people along
For suggestions email at feedback@infraline.com

ExpertSpeak
Pet Coke gasification a viable
alternative to natural gas
With declining natural gas production, companies are increasingly
looking at alternatives. Gasification of Pet coke may well be the
answer. Vijay S Laghate, a Pune-based Consultant, feels that Pet
Coke has several advantages over natural gas and companies are
already gung ho on the prospects.
Gasification of Pet coke can help
ameliorate the declining trend in
domestic supplies of Natural Gas. Pet
coke is the final residue obtained in the
coker unit of a crude oil refinery. Many
refineries in India have added coker
facilities to extract the maximum out of
crude oil, and reduce sulphur content
of fuels, in order to meet stricter fuel
quality norms. As Pet coke is mainly
carbon, it can be gasified (using oxygen
from air) to produce Syngas, which is
the intermediate that most Natural Gas
is converted into. Thus, Pet coke can be
an alternative to Natural Gas.
As a source of Syngas, Pet coke
has several advantages over Natural
Gas. Reserves of Natural Gas occur
deep underground (often in the sea),
and are discovered by undertaking
expensive and complex exploration
activities that usually have more
failures than successes. In contrast,
Pet coke is conveniently available
in many refineries; it does not
have to be brought from a distant
location through a pipeline, with its
attendant contractual obligations.
Unlike Natural Gas, Pet coke is not
subject to Government allocation
or pricing policies. Output from gas
fields declines over time (sometimes
unpredictably !), and requires special
efforts to enhance recovery ratios;
however, Pet coke is, and will be,
available in steady predictable
quantities so long as refining of crude
oil continues in the country.
In 2014-15, Indias refineries pro-
duced 12.4 mil mts of Pet coke. The
quantity will soon rise to around 14.5
mil mts, since MRPL is expected
to produce about a million mts
per year, and IOC
Paradeep, which As
was recently a source
commis- of Syngas, pet
sioned, will
coke has several Tropsch processes. Thus, Pet coke,
add another
1.3 mil mts
advantages
per year. over natural
At present, gas
refineries sell Pet
coke for use as a fuel to RILs mega gasification
cement manufacturers and industries,
who find it an excellent supplement
to coal, because of its high carbon
content (more than 85%) and low ash
content (below 12%). Consumption in
2015-16 was 18.3 mil mts - much more
than production, making India a major
importer for Pet coke.
A more promising use of Pet coke is Pet coke annually. Ten gasifiers will
to gasify it to produce Syngas, which is convert all its Pet coke, after blending
a mixture of mainly Carbon Monoxide
and Hydrogen that can be burnt as a
fuel to produce power and steam, and,
more importantly, be converted into
several value added chemicals such
as Ammonia, Urea, etc, Methanol, Di
Methyl Ether and / or Olefins, by MTO
process, Acetic Acid, leading to an
Acetyl Complex, as well as Ethanol,
Oxo-Alcohols, Mono Ethylene Glycol
(MEG), a raw material for polyester
and Synthetic Crude, via Fischer
October 2016
www.InfralinePlus.com
Vijay S Laghate, Consultant
43
the residue at the bottom of the
barrel of crude oil, can become the
starting point for a whole range of
useful chemicals.
project
Reliance Industries Ltd is investing
about $ 5 billion to set up the worlds
largest Pet coke gasification facility, at
Jamnagar in Gujarat, where it operates
the worlds largest refinery location,
processing about 66 mil mts of Crude
Oil, and producing 6.5 mil mts of
with 3.5 mil mts of coal, into Syngas
equivalent to 23.4 mmscmd of Natural
Gas - which is as much as 27% of the
85 mmscmd Natural Gas produced in
the country in 2015-16.
Reliance plans to use 52% of the
Syngas output to generate power and
steam, 25% for process heaters, and
balance 23% for generating Hydrogen
gas to make refinery clean fuels. Syngas
will replace Reliances large purchases
of LNG. It will also substitute refinery
 October 2016
www.InfralinePlus.com

ExpertSpeak

Table 1 Pet coke production in India, in 000 mts

While Reliances
S. No. Refinery 2012-13 2013-14 2014-15
1. Bharat Oman Refinery Ltd, Bina 410 439 530
project is nearing
2. Essar Oil Ltd, Vadinar 1,739 2,112 2,248
completion, Indian Oil
3. HPCL Mittal Energy Ltd, Bhatinda 457 795 770 Corporation is evalu-
4. Indian Oil Corporation Ltd, Guwahati 55 61 60 ating, with Celanese
5. Indian Oil Corporation Ltd, Barauni 142 124 132 Corporation of USA, a
6. Indian Oil Corporation Ltd, Koyali 606 681 761 proposal to gasify Pet
7. Indian Oil Corporation Ltd, Digboi 40 35 35 coke at its new refinery
8. Indian Oil Corporation Ltd, Panipat 886 978 870 at Paradeep, Odisha,
9. Indian Oil Corporation Ltd, Bongaigaon 129 128 137 and convert Syngas to
10. Mangalore Refineries and
Petrochemicals Ltd, Mangalore
- - 367 Ethanol (via Methanol
11. Numaligarh Refinery Limited, Numaligarh 66 67 93 and Acetic Acid). About
12. Reliance Industries Ltd, Jamnagar 2,837 2,799 2,844 1.1 mil mtpa of Ethanol
13. Reliance Industries Ltd, Jamnagar 3,578 3,849 3,600 can be made from 1.8
(SEZ) mil mtpa of Pet coke, of
Total 10,944 12,068 12,447
which 1.3 mil mt will be
Source: MoPNG Press Release 14 Mar 2016
from Paradeep and bal-
off gases that are currently being burnt has spent considerable time and effort to ance from elsewhere
as fuel; these off gases contain valuable optimise the design of this project that
44 components, and will now be diverted has significant capital cost. Apparently, replaced by Pet coke gasification. It
to a new cracker being set up to make the project is viable at present crude also throws up the radical idea whether
1.8 mil mts of value added products prices; profitability should increase at some of the countrys additional
such as MEG and polymers (LDPE, higher crude prices. requirements of Natural Gas could be
LLDPE, HDPE, PP). Reliance will also Reliances conversion ratio for met, not by importing LNG, but by
extract significant quantities of sulphur Pet coke to Syngas indicates that, if importing Pet coke and gasifying it.
and heavy metals, such as Vanadium, all domestic Pet coke is gasified, the
Nickel & Titanium, which are contained Syngas produced will be the equivalent IOCs Ethanol proposal
in Pet coke. of 52 mmscmd of Natural Gas - which While Reliances project is nearing
Some other chemicals may be is very close to last years LNG imports completion, Indian Oil Corporation is
made in future. The site layout enables of 58 mmscmd. It may be worthwhile evaluating, with Celanese Corporation
addition of gasifiers in future, whenever to conduct a study to determine how of USA, a proposal to gasify Pet coke
refining capacity is increased. Reliance much LNG imports can practically be at its new refinery at Paradeep, Odisha,
and convert Syngas to Ethanol (via
Methanol and Acetic Acid). About 1.1
mil mtpa of Ethanol can be made from
1.8 mil mtpa of Pet coke, of which 1.3
mil mt will be from Paradeep and bal-
ance from elsewhere.
The Ethanol is to be used for
blending with petrol. As petrol con-
sumption has been rising rapidly,
Government wants to blend upto 20%
Ethanol into petrol, by 2020-21. This
will help reduce imports of crude oil,
and curb air pollution. Petrol con-
sumption was 21.8 mil mt in 2015-16;
at a conservative growth rate of 10%
p.a, it will reach 35 mil mts in 2020-21,
 October 2016
www.InfralinePlus.com

and more thereafter. That places Ethanol Table 2 Fertiliser units located near Refineries producing
requirement in 2020-21 at 7 mil mts Pet coke
or about 9 mil kilolitres - which is an
Sl no Location Refinery Fertiliser Unit Item
enormous 6 mil kilolitres more than the
domestic production in 2015-16. 1 Panipat IOC National Fertilisers Ltd Natural Gas
The sugar industry, which is 2 Bhatinda HPCL Mittal National Fertilisers Ltd Natural Gas
Energy Ltd
tuned to demand for sugar, cannot be
expected to meet this massive shortfall. 3 Vadodara IOC Koyali Gujarat State Fertiliser Natural Gas/
Corporation Ammonia
If sugarcane acreage is raised in order
4 Mangalore MRPL Mangalore Chemicals Natural Gas /
to produce fuel Ethanol, it will divert and Fertilisers Ltd Ammonia
land from food to fuel purposes. As 5 Vadinar / Sikka Essar Oil Gujarat State Fertiliser Ammonia
this is not desirable, Government is Corporation
promoting bio-ethanol production 6 Paradeep IOC IFFCO and Paradeep Ammonia
from other forms of excess bio-mass Phosphates
available in the country. This will be
a dispersed activity, involving several improve project viability. It may also refinery with access to a million mts of
units across the country, from where be noted that, globally, Ethanol is being Pet coke plus coal can generate enough
Ethanol will have to be transported to blended with petrol even upto 100%, Syngas to support a world scale ammo-
refineries for blending with petrol. implying that the requirement for fuel nia plant of 0.7 mil mt per annum. The
In contrast, Pet coke based Ethanol Ethanol can multiply over time. ammonia may be sold, or converted to
can be conveniently blended with the urea fertiliser and / or other derivatives.
petrol produced at the refinery itself. As Ammonia for Fertilisers Interestingly, many refineries having
there are many refineries producing Pet Another excellent end use for Syngas significant Pet coke output are located
coke, it is possible to envisage many is Ammonia, which India imports to near fertiliser units that use Natural 45
such Ethanol units - which could help the extent of 2 mil mts annually. Any Gas or import Ammonia.
It will be worth examining if
If sugarcane acreage is raised in order to produce workable schemes can be developed
fuel Ethanol, it will divert land from food to fuel for supply of Syngas or Ammonia. Any
Natural Gas saved can be diverted to
purposes. As this is not desirable, Government is
other customers, for national benefit.
promoting bio-ethanol production from other forms
of excess bio-mass available in the country. This Conclusion
will be a dispersed activity, involving several units All Pet coke manufacturers, not just in
across the country, from where Ethanol will have to India but also elsewhere in the world,
be transported to refineries for blending with petrol will be following Reliances project to
see how it fares. MRPL has indicated
interest in exploring opportunities
from Pet coke gasification. Essar Oil
has deferred its Pet coke gasification
proposal citing low gas prices; also, it
is in the process of bringing in a major
equity partner. Pet coke utilisation may
be affected by the view that the National
Green Tribunal takes on a petition cur-
rently before it, seeking a ban on the
use of Pet coke, on the ground that its
burning emits harmful pollutants. Pet
coke gasification should be preferred, as
it would be conducted under well con-
trolled conditions at the refinery site.

For suggestions email at feedback@infraline.com

 October 2016
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InDepth
City Gas Distribution: Time
to move on

46

Govt aims to treble its domestic piped gas consumer base to one crore by 2019
Uneven distribution of gas pipeline network remains a major concern

By Team InfralinePlus

India is among the top energy consumers
in the world and witnessing consistent
growth in demand for energy. Natural
gas contributes about seven percent of
the total energy basket whereas glob-
ally it accounts for twenty four percent.
Indias consumption grew at a CAGR
of 3.1% over the previous seven years
to 46.6 Billion Cubic Metre (BCM) in
2015-16 from 37.6 BCM in 2008-09.
The demand for natural gas in
India is majorly driven by the Power,
Fertilizer, Refineries and City Gas
Distribution (CGD) sectors. Natural
Gas is colourless and odourless which
is converted to Compressed Natural
Gas (CNG) and Piped Natural Gas
(PNG) and then distributed to the end
users through CGD network. Owing
to accessibility to ample natural gas
reserves in the country, its environ-
mental friendliness and easy transport-
ability, city gas distribution is forecast
to witness robust growth in the country
over the next decade. The natural
gas demand from CGD companies is
growing at a speedy pace with almost
thirty five YoY increase in demand for
the period of April-May 2016.
CGD business can be further sub
categorised in three segments: CNG
for vehicles as an alternative to petrol,
diesel and liquefied petroleum gas
(LPG); PNG as a domestic cooking
fuel in place of LPG and PNG as a
substitute to commercial LPG and
 October 2016
www.InfralinePlus.com

South India to have a City Gas distri-

bution system in place.
Compressed Piped
Natural Gas Natural Gas At the beginning of the current fiscal
(CNG) For Vehicles, as an (PNG) year, the number of domestic piped gas
As a domestic
alternative to petrol,
cooking fuel, an consumers stood at 31.6 lakh whereas
diesel and liquefied
petroleum gas (LPG)
alternative to LPG Commercial and Industrial connec-
tions stood at 23.30 and 6.23 thousand
respectively. The country has added
As a substitute to barely 3 lakh new domestic piped gas
commercial LPG and
fuel oil in commercial consumers in 2015-16.
and industrial So far seven rounds of CGD auction
establishments have taken place. Earlier 11 geo-
graphical areas (GA) were identified for
fuel oil in commercial and industrial where CGD network is almost fully the seventh round of bidding. However,
establishments. established include Delhi, Mumbai after considering the views from
and Gujarat. Currently only 15 states various stakeholders in response on the
Present Status are covered with the natural gas basis of identifying and selecting GA
India has a natural gas pipeline pipeline network in which Gujarat, for inviting bids, only 5 geographical
network of about 16,000 km with a Maharashtra and Uttar Pradesh (UP) areas were considered. Later, of these
capacity of 401 million metric stan- consumes almost 65 per cent of the 5 GAs, three were withdrawn based on
dard cubic metre per day. Major areas gas. Ernakulam is the first district in the issue of uncertain or distant natural
gas pipeline connectivity.
So far seven rounds of CGD auction have taken In the sixth round of CGD auction,
place. Earlier 11 geographical areas (GA) were iden- 14 of the total 34 geographical areas 47
received no bid while six attracted just
tified for the seventh round of bidding. However, one bid each. Similarly, last year, of the
after considering the views from various stakehold- 20 districts, eight got no bid and two
ers in response on the basis of identifying and got just a single bid each.
selecting GA for inviting bids, only 5 geographical In these bidding rounds, the
areas were considered. Later, of these 5 GAs, three bidding parameters consist of Network
were withdrawn based on the issue of uncertain or tariff, Compression charges, Inch
distant natural gas pipeline connectivity. Kilometer and Minimum Work
Program (MWP). It has also been
noticed that in previous auctions all
gas companies offered Rs 0.01 per
unit as network tariff bid and also as
charges for compressing natural gas,
the two key price bid criteria, forcing
the regulator to pick winners on the
basis of the bid bond value.

Challenges
The city gas projects are capital
intensive where much of the
investment comes upfront. And if
revenues dont stack up quickly,
internal rate of return (IRR) becomes
a challenge straight away. Therefore
it is required to convince people to
switch which is tough task. The other
challenge is unavailability of major
pipelines. A number of major pipeline
 October 2016
www.InfralinePlus.com

InDepth

IGL to set up city gas network in Haryana During 2016-2030, the countrys
CGD network is anticipated to
IGL is fully geared to seize emerging opportunities in the CGD sector.
witness robust expansion on account
The company, which supplies CNG and PNG in Delhi, recently received authori-
of increasing number of vehicles
zation to construct the CGD network in Rewari in Haryana.
coupled with rising urbanization in the
IGL is undertaking first of its kind pilot project in the country to run two wheelers
on CNG country. With an increasing number
of favorable initiatives taken by the
In 2015-16, companys 16 new CNG stations were made operational and work
started on another 78 CNG stations, which were subsequently made operational Government of India in CGD sector,
in the first quarter of 2016-17. various companies are foraying into
This saw IGL recording the highest ever sale of 29.5 lakh per day in August 2016, this business in different geographies
which is the highest for any CGD company on a single day. across the country. The government
aims to treble its domestic piped gas
projects have been approved but no Way forward consumer base to one crore by 2019.
significant progress has been made. With increase in economic growth, PNG segment is projected to grow
Without pipelines it is difficult to India has immense potential for growth at around 5% through 2030 due to
connect cities. The award of GAs to in natural gas energy segment and its anticipated advancements in CGD
non-serious parties is another concern. share of natural gas in overall energy sector and increasing government
The uneven distribution of the mix is expected to increase significant- focus to expand PNG network
natural gas pipeline network across ly. City Gas Distribution is expected to throughout the country.
the country remains a major concern play a pivotal role in enhancing natural GSPL, which has a strong presence
in achieving Indias ambitions of gas consumption and in the growth in Gujarat, is planning to increase the
increasing contribution of natural gas of all sectors such as transportation, pipeline network in the coming year by
to its energy basket from 6.5 per cent to domestic, commercial and industrial in 200 kms to connect to some of the new
48 15 per cent. the coming years. market areas in the Saurashtra region
as well as in north Gujarat region.
With this, the company will be able to
During 2016-2030, the countrys CGD network
cater to the industries there as well as
is anticipated to witness robust expansion on domestic consumers.
account of increasing number of vehicles coupled In order to meet the set targets and
with rising urbanization in the country. With an addressing the challenges faced to
increasing number of favorable initiatives taken enhance CGD network, government
by the Government of India in CGD sector, various has recently formulated two com-
companies are foraying into this business in mittees, with members from small and
different geographies across the country big city gas companies and PNGRB.
One committee will look at making
the bidding process more effective by
suggesting a replacement of the current
process where fewer cities attract bid
in auctions and all bids offer the same
tariff, the key competing criterion. The
other committee will suggest ways
to deal with key obstacles city gas
companies face such as high restoration
charges levied by local authorities,
and delays in obtaining permissions.
Based on the analysis done by these
committees and suggestions provided
by them, the Petroleum Ministry might
look at making bidding parameters
more effective.

For suggestions email at feedback@infraline.com


FinancialResults
ONGCs Q1 profit falls 21% as oil prices slump, output drops
Oil & Natural Gas Corp.s quarterly profit
declined 21% as oil prices slumped and output
fell. Net income at Indias biggest energy
explorer dropped to Rs4,230 crore ($638 mil-
lion) in the three months ended 30 June from
Rs 5,370 crore a year earlier, the New Delhi-
based company said. Sales dropped 21% to
Rs 17,670 crore. The state-run explorer is
key to Prime Minister Narendra Modis goal
of increasing the nations energy security and
Oil India Q1 net profit drops 34%
Oil India Ltd (OIL) has posted a 33.47 per
cent drop in net profit for the first quarter of
the financial year 2016-17 to Rs 494.41 crore,
as compared to Rs 743.21 crore during the
same period during the financial year 2015-16.
The companys total income too decreased
22.2 per cent to Rs 2460.85 crore during the
period under review, as against Rs 3164.12
crore during the first quarter of financial year
2015-16. The average crude price realised by
OIL during the quarter was $43.09 per barrel,
which was 25 per cent lower than the price
realised during Q1 last year. OIL did not share
any subsidy burden during the quarter. In
rupee terms, the net crude oil price realisation
during first quarter of 2016-17 was Rs 2,882
a barrel as against Rs 3,644 a barrel last year.
GAIL Q1 net profits raises 244 per cent to Rs 1,355 crore
State gas utility GAIL India Ltd reported
a 244 per cent increase in its net profit
in the first quarter of this fiscal year.
Gail was boosted by the sale of stake
in Mahanagar Gas, which retails CNG
in Mumbai. Gails net profit in April-
June 2016 stood at Rs 1,335 crore
compared to Rs 388 crore for the same
period a year ago. GAILs Profit after
Tax (PAT) excluding gain from stake
sale in Mahanagar Gas Limited is Rs
846 crore, signifying an increase by 118
reducing import dependence by 10 percent
in the next six years. Declining earnings will
weigh on ONGCs plans to invest billions of
dollars to develop oilfields and boost flagging
output from aging fields. It could also hinder
efforts to add assets in India and overseas.
ONGC sold crude oil to refiners including In-
dian Oil Corp. at $46.10 a barrel in the quarter,
compared with $59.08 a barrel a year earlier
after adjusting discounts to state refiners,
according to the statement. The rebate, for
selling fuels below cost when oil is expensive,
amounted to Rs1,096 crore in the year-earlier
period. The company didnt give any discounts
on crude oil in the quarter ended 30 June.
ONGC sold gas at $3.06 per million British
thermal units from $4.66 per million Btu a
year ago.ONGCs total oil output fell to 6.34
million tons in the first quarter from 6.48 mil-
lion a year ago, while gas production slipped
5.6% to 5.49 billion cubic meters.
During the quarter, the companys natural gas
production was 731 million metric standard
cubic meter (MMSCM), which was13.86 per
cent higher than the production during the
first quarter of the previous fiscal. Sale
of natural gas during the quarter was 606
MMSCM, which was 20.7 per cent higher than
the sale during the same period last year. On
the other hand, the crude oil production during
Q1 was seen at 0.803 MMT, 4.63 per cent
lower than last year.
per cent, added the company. GAILs
petrochemical business saw a turnaround
October 2016
www.InfralinePlus.com
Petronet LNGs Q1 profit floats 55% to
Rs 378 crore
Petronet LNG Ltd posted a nearly 55
per cent jump in its standalone net
profit at Rs 377.86 crore for the quarter
ended June 30, 2016. The company
had reported a net profit of Rs 244.12
crore in the corresponding quarter a
year ago. However, total income during
the period under review fell to Rs
5,386.66 crore as against Rs 8,411.61
crore a year ago. Petronet LNG has set
up the countrys first LNG receiving
and regasification terminal at Dahej,
Gujarat, and another terminal at Kochi,
Kerala. While the Dahej terminal
has a nominal capacity of 10 mmtpa 49
(equivalent to 40 mmscmd of natural
gas), the Kochi terminal has a capacity
of 5 mmtpa (equivalent to 20 mmscmd
of natural gas). The company is in
the process to build the third terminal
at Gangavaram, Andhra Pradesh.
Formed as a Joint Venture by the Union
Government to import LNG and set
up LNG terminals in the country, it
involves Indias leading oil and natural
gas industry players. Its promoters
are GAIL (India) Ltd, Oil & Natural Gas
Corporation Ltd, Indian Oil and Bharat
Petroleum. The authorised capital is Rs
1,200 crore ($240 million).
with production and sales jumping 149
per cent and 121 per cent respectively.
This resulted in revenue increase in
this segment by 95 per cent to Rs 1,133
crore, while the profit stood at Rs Nine
crore as against loss of Rs 397 crore in
the corresponding period of the previous
year. The increase in net profit during
Q1 of Financial Year 2016-17 was also
supported by increase in Natural Gas sales
and transmission volumes which increased
by 15% and 10% respectively.
 October 2016
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FinancialResults
Indian Oil Corporation Q1 net profit rises 25 per cent to Rs 8268.98 crore
Oil marketing company Indian Oil
Corporation (IOC) reported 25.4 per cent
rise to Rs 8268.98 crore for the first quarter
ended June as compared to Rs 6590.83
crore in the same quarter in the previous
year. Total income of the company stood at
Rs 1,07,200 crore, registering a fall of 5.75
HPCL profit up 30% in Q1 on higher inventory gains
Higher sales volume, stable refining margins
and a substantial increase in inventory gains
helped Hindustan Petroleum Corporation Ltd
50 (HPCL) report a 30 per cent rise in its net
profit for the first quarter of 2016-17. The
companys net profit for the quarter stood at
Rs 2,098.38 crore compared to Rs 1,614.13
crore in the same quarter last year. During
the quarter, the companys net revenue fell
5.7 per cent to Rs 51,661.04 crore compared
to Rs 54,822 crore in the same quarter last
year. HPCLs inventory gains increased to
nearly Rs 1,100 crore (against Rs 600 crore).
According to MK Surana, Chairman and
Managing Director of HPCL, the companys
gross refining margin for the quarter stood
at $6.83 a barrel as against $8.56 per barrel
in the same quarter last year. The company
reported a 7.9 per cent increase in petrol
sales, 3.7 per cent increase in diesel sales
Margins, products help MRPL record 77% growth in Q1
Mangalore Refinery and Petrochemicals
Ltd (MRPL) recorded a net profit of Rs
720.28 crore in the first quarter of 2016-
17 as against a profit of Rs 405.52 crore
in the corresponding period of previous
fiscal, registering a growth of 77.62 per
cent. The increased profit is on account of
increased margins in the products coming
out of the secondary units in phase-III
and also from polypropylene unit. The
per cent in June quarter as compared to
Rs 1,13,743 corer in the same quarter last
year. Average gross refining margins for
the June quarter was $9.98 per barrel as
against to $10.77 in June quarter of 2015.
The company also informed that its Board
of Directors has recommended issue of
Bonus shares in the ratio of 1:1 i.e. 1 (One)
equity bonus share of Rs 10/- each for every
1 (One) existing equity share of Rs 10/- each
fully paid up subject to the approval of the
shareholders. Earnings per share rose to
Rs 34.90 during the April-June quarter as
compared to Rs 27.81 in the same quarter
last year. IOC has presence in the complete
hydrocarbon value chain from downstream
refining & marketing, pipeline transportation,
Petrochemicals, E&P and Gas Marketing.
and 8.8 per cent increase in LPG sales during
the quarter. Overall, the company sold 8.85
million tonnes of refined petroleum products
during the quarter as compared to 8.46
million tonne in the same quarter last year.
Surana said the companys board of directors
has already approved expanding the capacity
of Vizag refinery to 15 million tonnes per
annum from the existing 8.33 million tonne
per annum. The cost of the project will be Rs
20,928 crore.
BPCL Q1 net rises 11% on higher
product prices
Bharat Petroleum Corporation (BPCL)
reported 11 percent increase in its
June quarter net profit to Rs.2,620.50
crore aided by higher product prices
and inventory gains. The numbers
come amid drop in refinery margins.
Indias third largest oil retailer saw
its total income falling three per
cent to Rs.57,015.75 crore from
Rs 58,818.37 crore in the year-ago
period. Gross refining margins (GRMs)
for the quarter stood at $6.09 per
barrel compared to $8.55 per barrel
during the June 2015 quarter. BPCLs
profitability increased due to inventory
gains of over Rs.1,000 crore during the
quarter. It recorded crude throughput
at 6.2 million tonnes in Q1FY17, which
was higher than 6.08 million tonnes.
Market sales grew 8.11 per cent at
9.73 million tonnes compared to 9
million tones.
companys refining throughput stood
at 3.66 million tonnes (mt) in the first
quarter of 2016-17 against 3.89 mt in the
corresponding quarter of previous year.
It exported 1.29 mt (1.03 mt) of products
during the quarter. The refining throughput
during the quarter was lower compared
to corresponding quarter of previous
year on account of water stoppage from
Netravathi River.
 October 2016
www.InfralinePlus.com

StatisticsOil & Gas

Production and consumption of petroleum products (August,2016) (Million Metric Tonnes)
April-March 2016 August 2015 August 2016 April-August 2015 April-August 2016
Products
Production Consumption Production Consumption Production Consumption Production Consumption Production Consumption
LPG 10.6 19.6 0.9 1.5 0.9 1.8 4.2 7.6 4.5 8.4
MS 35.3 21.8 3.1 1.8 2.8 2.2 14 8.8 15.1 10
NAPHTHA 17.7 13.4 1.5 1.2 1.8 1.2 7.2 5.6 7.8 5.6
ATF 11.8 6.2 1.1 0.5 1.2 0.6 4.4 2.5 5.7 2.8
SKO 7.5 6.8 0.6 0.6 0.5 0.5 3.1 2.9 2.8 2.6
HSD 98.6 74.6 8.4 5.4 8.5 6.1 40.4 30.3 42.3 32.1
LDO 0.4 0.4 0.04 0.03 0.05 0.04 0.2 0.2 0.2 0.2
LUBES 1 3.2 0.09 0.2 0.09 0.3 0.4 1.3 0.4 1.4
FO/LSHS 10.7 6.7 1 0.5 1 0.6 4.6 2.6 5.2 3.1
BITUMEN 5.2 5.8 0.2 0.2 0.2 0.3 2 2.1 2.1 2.4
OTHERS 32.5 24.9 2.6 2.1 3 2.2 13.3 9.7 14.5 11.9
ALL INDIA 231.3 183.5 19.5 14.2 20 15.8 93.8 73.5 100.6 80.4
GROWTH 4.80% 10.90% 7.60% 14.20% 2.60% 11.40% 4.60% 7.50% 7.30% 9.30%

Companywise Crude Oil Production (August,2016) (000 Tonnes)

Cumulative Production % variation over
Production during the % variation
Planned (April-August) last year
during the
Produc- Planned Actual Actual produc-
Name of Undertak- Preceding During month under
tion Month Correspond- production production tion during Upto the
ing/Unit/State month of the month review over
during the under ing month of during during correspond- end of the
current under planned
Month review the last year current current ing period period
year review production
year year of last year

1. ONGC 1897.029 1865.309 1929.264 1867.769 9339.924 9225.22 9384.573 -3.31 -1.7 -1.67

Onshore 498.786 504.911 492.769 496.593 2455.027 2452.08 2412.734 2.46 1.63 1.23
51
Andhra Pradesh 23.155 22.023 25.447 21.248 113.024 106.512 126.946 -13.46 -16.1 -4.89

Assam 83.828 80.603 81.638 78.692 404.541 391.268 406.217 -1.27 -3.68 -3.85

Gujarat 373.224 382.955 363.953 377.733 1842.915 1857.736 1769.568 5.22 4.98 2.61

Tamil Nadu 18.579 19.33 21.731 18.92 94.547 96.564 110.003 -11.05 -12.22 4.04

Offshore 1398.243 1360.398 1436.495 1371.176 6884.897 6773.14 6971.839 -5.3 -2.85 -2.71

Eastern Offshore 0.746 1.314 1.787 1.103 6.582 6.31 9.196 -26.47 -31.38 76.14

Western Offshore 1278.974 1245.421 1321.859 1251.918 6304.461 6202.497 6420.435 -5.78 -3.39 -2.62

Condensates 118.523 113.663 112.849 118.155 573.854 564.333 542.208 0.72 4.08 -4.1

2. OIL (Onshore) 276.322 272.075 276.024 272.69 1345.262 1342.943 1388.147 -1.43 -3.26 -1.54

Assam 275.748 271.385 275.578 272.039 1342.175 1339.663 1386.281 -1.52 -3.36 -1.58

Arunachal Pradesh 0.574 0.69 0.446 0.651 3.087 3.28 1.866 54.71 75.78 20.21

3. DGH (Private / JVC) 926.134 930.419 987.857 936.942 4576.01 4578.052 4865.605 -5.81 -5.91 0.46

Onshore 741.83 747.575 754.168 743.79 3644.454 3636.024 3724.279 -0.87 -2.37 0.77

Arunachal Pradesh 4.566 4.041 4.271 3.954 20.922 19.801 21.114 -5.39 -6.22 -11.5

Gujarat 15.503 11.723 14.197 11.668 69.07 58.082 61.405 -17.43 -5.41 -24.38

Rajasthan 716.706 728.597 735.7 725.381 3537.308 3548.044 3641.76 -0.97 -2.57 1.66

Tamil Nadu 5.054 3.214 0 2.787 17.154 10.097 0 - - -

Offshore 184.304 182.844 233.689 193.152 931.557 942.028 1141.326 -21.76 -17.46 -0.79

Eastern Offshore 81.564 82.82 111.885 81.378 416.899 411.221 602.303 -25.98 -31.73 1.54

Gujarat Offshore 30.71 33.048 36.126 32.891 162.538 167.064 165.928 -8.52 0.68 7.61

Western Offshore 72.03 66.976 85.678 78.883 352.12 363.743 373.095 -21.83 -2.51 -7.02

GRAND TOTAL 3099.485 3067.803 3193.145 3077.401 15261.196 15146.215 15638.325 -3.93 -3.15 -1.02
(1+2+3)

Onshore 1516.938 1524.561 1522.961 1513.073 7444.743 7431.047 7525.16 0.11 -1.25 0.5

Offshore 1582.547 1543.242 1670.184 1564.328 7816.454 7715.168 8113.165 -7.6 -4.91 -2.48
 October 2016
www.InfralinePlus.com

StatisticsOil & Gas

Industry Sales Trend Analysis (Provisional): April-August 2016 (000MT)

August April-August
Product
2015-16 2016-17 Growth (%) 2015-16 2016-17 Growth (%)
(A) Sensitive Products
SKO 572.7 496.5 -13.3 2860.6 2577.8 -9.9
LPG 1544.9 1842 19.2 7581 8363.2 10.3
Sub Total 2117.6 2338.4 10.4 10441.6 10941 4.8
(B) Major Decontrolled Product
Naphtha 1194.3 1150.2 -3.7 5576.7 5559.7 -0.3
MS 1764.4 2204.4 24.9 8821 10045.9 13.9
HSD 5425.9 6143.5 13.2 30343.4 32059.8 5.7
Lubes+Greases 244.9 266.2 8.7 1302.2 1424.1 9.4
LDO 30.9 40.7 31.8 156.6 182.9 16.8
FO/LSHS 532 606.4 14 2596.2 3071.8 18.3
Bitumen 235.7 258.9 9.9 2089.1 2412.1 15.5
ATF 502.3 554 10.3 2485 2791.3 12.3
Sub Total 9930.4 11224.3 13 53370.2 57547.4 7.8
Sub - Total (A) + (B) 12048 13562.7 12.6 63811.8 68488.4 7.3
(C) Minor Decontrolled Products
Pet Coke 1533.8 1679 9.5 7030.4 9211 31
Others 604.7 562.9 -6.9 2676.6 2670.5 -0.2
Sub Total 2138.5 2241.9 4.8 9707 11881 22.4
Total 14186.5 15804.6 11.4 73518.8 80370 9.3

52
Status of PNG connections and CNG stations across India (August,2016) (Nos.)

PNG PNG
CNG stations
connections connections
State Entity operating Geographical region
(as on (as on (as on
April 2016) August 2016) May 2016)
Haryana Haryana City Gas, Adani Gas Sonepat, Faridabad, Gurgaon 24 34,881 31,523
Limited, GAIL Gas Ltd.
Andhra Bhagyanagar Gas Ltd Kakinada, Vijayawada 12 3,273 3,154
Pradesh
Telangana Bhagyanagar Gas Ltd Hyderabad 21 1,883 1,140
Assam Assam Gas Co. Ltd Tinsukia, Dibrugarh, Sibsagar, Jorhat, Golaghat 0 29,271 29,000
Gujarat Sabarmati Gas Ltd, Gujarat Gas Gandhinagar, Mehsana, Sabarkantha, Nadiad, 377 15,44,924 15,11,616
Ltd, Adani Energy Ltd , Vadodara Halol, Hazira, Rajkot, Khambhat, Palej, Valsad,
Gas Ltd, Hindustan Petroleum Navsari, Surendernagar, Vadodara, Ahmedabad,
Corporation Ltd, Charotar Gas Surat, Ankleshwar, Bhavnagar, Anand
Sahakari Mandal Ltd
Madhya Avantika Gas Ltd, GAIL Gas Ltd Dewas, Vijaipur, Indore including Ujjain, Gwalior 22 8,089 6,316
Pradesh
New Delhi Indraprastha Gas Ltd National Capital Territory of Delhi (Including Noida 340 6,62,537 6,41,656
& Ghaziabad)
Rajasthan GAIL Gas Ltd Kota 3 189 189
Maharashtra Mahanagar Gas Ltd, Maharashtra Thane & adjoining contiguous areas including 225 9,15,900 8,98,021
Natural Gas Ltd, GAIL Gas Ltd Mira Bhayender, Navi Mumbai, Thane City,
Ambernath, Bhiwandi, Kalyan, Dombivily,
Badlapur, Ulhasnagar, Panvel, Kharghar &Taloja,
Pune City including Pimpri Chinchwad and along
with adjoining contiguous areas of Chakan,
Hinjewadi & Talegaon GA, Panvel
Tripura Tripura Natural Gas Co. Ltd Agartala 5 24,203 23,039
West Bengal Great Eastern Energy Corporation Kolkata 7 0 0
Ltd
Uttar Pradesh GAIL Gas Ltd, Sanwariya Gas, Green Meerut, Mathura, Agra, Kanpur, Bareilly, Lucknow, 45 36,816 34,447
Gas, Central U.P. Gas, Siti Energy Ltd Moradabad, Ferozabad
Total 1,081 32,61,966 31,80,101

NewsBriefs | Renewable International
Solar sector face hurdles as cash-strapped discoms buy cheaper power
The solar sector continues to face hurdles
while accelerating towards the ambitious
growth targets as cash-strapped discoms
are purchasing cheaper power from
the power exchanges and also on the
e-auction platform resulting in curtailment
issues for solar power. Some discoms are
Softbank eyes Indian solar manufacturing in boost to Modis goal
Japans SoftBank Group Corp. is mulling a
manufacturing joint venture in India that
could produce the solar panels needed
to meet Prime Minister Narendra Modis
energy targets. SoftBanks strategy for India
includes solar panel manufacturing, Manoj
Kohli, executive chairman of SB Energy said.
He ruled out making the panels through the
companys existing joint venture, formed last
year with Foxconn Technology Group and
Bharti Enterprises Pvt. to generate about 20
gigawatts of solar power. While Modi seeks
100 gigawatts of solar capacity by 2022 -- a
target second only to China -- the countrys
manufacturers will need to ramp-up produc-
tion in order to tap into the growth. Only
EESL raises Rs 500 crore through bonds, planning additional Rs 700 crore masala bonds
Energy Efficiency Services Limited (EESL),
a state-owned firm under the aegis of
the power ministry, has raised Rs 500
crore from the market through its maiden
bonds issue to fund energy efficiency
projects in India. Domestic bonds worth
Rs 500 crore were issued to investors
on private placement basis at a coupon
rate of 8.07 per cent per annum. These
bonds have been rated AA by ICRA and
CARE. The maturity of the bonds range
from 3.5 to 7 years, the power ministry
said. It added the access to Indian bond
markets will be a key milestone for EESL
to channelize more investments in the
resorting to power cuts as they cannot
afford to purchase power at low rates on
the exchanges. The increase in renewable
energy addition has caused some solar
power curtailment issues in Rajasthan and
Tamil Nadu where discoms have flouted
the must run status of solar power
thereby negatively affecting developers.
Currently, power is traded at Rs 2.40 to
Rs 2.50 per unit on exchanges and on
e-auction platform compared to Rs 4 to 5
per unit for solar power under the power
purchase agreement (PPA). According to
experts, the comparison between price of
conventional power and solar power is not
for total price of conventional power but
only marginal cost of variable charge.
about 40 percent of Indias 1.2 gigawatts of
annual solar-cell manufacturing capacity is
operational, according to estimates by Bridge
to India. Module manufacturing capacity is
about 5.6 gigawatts, of which 60 percent
capacity is operational.
energy efficiency market. The companys
capital expenditure requirement stands
October 2016
www.InfralinePlus.com
National
Landed solar module prices drop 15
percent in three months, leads to glut
Landed solar module prices in India
have dropped by nearly 15 per cent to
$0.36/Watt in just three months. This
drop is the result of a steep fall in com-
ponent prices globally and could lead
to a major supply glut says solar sector
analysis firm Bridge to India. The im-
pact of this fall on domestic manufac-
turers is likely to be very damaging. The
current oversupply is likely to result in
severe financial stress for module man-
ufacturers and lead to bankruptcies and
consolidation, said Jasmeet Khurana,
associate director consulting at Bridge
to India. Most tier-1 suppliers should 53
survive the downturn because of their
stronger financial position and superior
technology. Many of them are upgrading
to higher efficiency technologies. The
smaller players will face much greater
difficulties. The Indian government is
keen to promote domestic manufactur-
ing and as much as 2,500 MW of new
domestic capacity is expected to come
up by next year through new facilities
and expansions.
at Rs 3,500 crore for the current financial
year. The corporate bonds issued will
be the first of many tranches. EESL is
also planning to introduce Green Masala
Bonds worth around Rs 700 crore in
November this year. The firm has also
tied-up funding from multi-lateral
agencies including KFW, AFD and ADB for
funding its energy efficient projects. Our
requirement from the markets is quite
high. However, we are confident of a great
response from investors looking at our
unique model, EESL Managing Director
Saurabh Kumar said.
 October 2016
www.InfralinePlus.com
NewsBriefs | Renewable National
India saved 55.7 million units of energy through UJALA
The ministry of powers initiative Unnat
Jyoti by Affordable LEDs for All (UJALA),
has already resulted in 55.7 million units
of energy savings and has reduced carbon
emissions over 45,000 tonnes. UJALA
has benefitted more than 5 crore citizens
Greenko to buy SunEdisons Indian assets for $315 million
The U.S. based SunEdison, Inc., the largest
global renewable energy development
company, has agreed to sell its Indian
portfolio to Hyderabad based Greenko Energy
Holdings for $315 million. UKs private equity
54 company Actis Capital backed renewable
platform Ostro Energy Private Limited has
supported Greenko to get through this deal.
SunEdison had created quite a stir when it
introduced its new projects in India in 2014
with huge profit predictions and low tariff
bids. However, in April 2016, SunEdison filed
for bankruptcy under Chapter 11 in the U.S.
Two months later, it hired Rothschild Inc.
and McKinsey Recovery & Transformation
Services U.S., LLC as advisors for the
restructuring process. This deal, which
Counterparty delays forcing renewable energy projects to run out of steam
Bulk purchaser of renewable power
state utilities, insensitivity to projects
debt service commitments and delays
in making payments - problems specific
to conventional energy developers are
now plaguing renewable energy projects,
says India Ratings and Research (Ind-
Ra). The central governments initiative
- Ujwal Discom Assurance Yojana (UDAY)
scheme - aims to lessen cash flow strain
on distribution companies through transfer
of debt loads to states. However, until
the scheme gathers further momentum
and meaningfully bears any fruits to the
sector, renewable energy projects are
across 18 states and 4 union territories.
This has been possible only through robust
distribution and awareness mechanisms.
The government has also ensured that
awareness of its UJALA programme
reaches every beneficiary, irrespective of
their social and economic background.
Nevertheless, there are four states where
the scheme has not taken off owing to
necessary state government approvals. The
government is engaging with the respective
state governments and ensuring that the
scheme is rolled out soon. The ministry
of power, have ensured that the common
man is made aware of the scheme through
various platforms and in respective local
language of the state.
includes acquisition of SunEdisons 390MW
operational solar park and 48MW of wind
parks, is being referred to as the biggest
distress sale of all times in the renewable
energy sector in India.
several developers embarking on capital
market transactions, counterparty delays
of stakeholders. This is especially in view
penchants for renewable energy bonds.
compelled to tide over the elevated risk
of liquidity strain. In the backdrop of
Goldmans ReNew Power seeks $300
million for green energy projects
ReNew Power Ventures Pvt. Ltd wants to
raise a part of the $300 million required
for expansion of its green energy projects
before top shareholder, Goldman Sachs
Group Inc., helps bring the company pub-
lic next financial year. ReNew Power will
try to raise $100 to $150 million by March,
the balance would be raised through an
initial public offering (IPO). The company,
with almost 1 gigawatt (GW) of solar and
wind power in operation, wants to double
capacity by the end of the financial year
in March and has another gigawatt under
construction. The money will go toward
the pipeline of 3 gigawatts. ReNew
Power has raised total equity of $655 mil-
lion since its inception in 2011. Included
are four rounds from Goldman Sachs to-
taling $370 million. The companys other
investors include Abu Dhabi Investment
Authority and the Global Environment
Fund. The company has enough existing
equity to develop 2.5 gigawatts and gener-
ated cash-flow could be used to reach the
3-gigawatt mark.
could not only jeopardise bond potential
issuances, but also erase the confidence
of the growing interest of developers
to tap the capital market and investors
Additionally, at this time, when masala
bond and dollar bond market is fledgling,
a default on a domestic bond may prove
costly and could skew risk spreads.
Counterparties timely payments are
inevitable to nurture the nascent non-
recourse capital market debt instruments.

NewsBriefs | Renewable International
Solar projects in Maharashtra receive Rs 4.42 per unit bid
The proposed 450 mw grid connected
solar projects in Maharashtra under
National Solar Mission has received
lowest bid of Rs 4.42 per unit and nine
other companies submitted bids of Rs
HERC increases incentive on grid connected solar power generation
In a development that should give a big
push to solar power generation in Haryana,
incentive given to rooftop solar plants
installed under the states new solar
policy for residential buildings for solar
power generation has been quadrupled,
from 25p per kWh to Rs1 per kWh. The
order from Haryana Electricity Regulatory
Commission (HERC) says starting from
August 2016, till March 2017, an incentive
of Rs 1/kWh shall be given by the discoms,
instead of the 25 paise/kWh offered earlier,
during financial year 2016-17. For rooftop
solar systems installed by consumers
under the new solar policy (starting April
1, 2016 till July 31, 2016), incentive shall
be given at the rate of 25 paise/kWh for
Odisha to implement roof-top solar projects in major cities
The Odisha government has planned to
implement roof-top solar projects across
all major cities in the state. The Green
Energy Development Corporation of Odisha
Limited (GEDCOL) would implement the
project in urban areas of the state, Energy
minister Pranab Prakash Das told the
state assembly. GEDCOL and the Central
Electricity Supply Utility have signed a
25-year project implementation agreement
with Azure Power Mercury Private Limited
to develop a grid-connected rooftop solar
project in Bhubaneswar and Cuttack.
The project, with a minimum installed
capacity of four MW, will be set up on
4.43 per unit. Lowest bidder was Vijaya
Printing Press Pvt Ltd which offered to
build a 10 mw solar plant at a tariff of Rs
4.42 per unit. This was followed by Solar
Edge Power and Energy Pvt Ltd (130 mw).
Others were Light Source Renewable
Energy Holdings, Neel Metal Products
Ltd (100 mw) and Canadian Solar Energy
Holding (80 mw). This was under Part-B
of the National Solar Mission Phase-II
which Solar Energy Corporation of India
(SECI) is implementing along with a large
number of schemes under the National
Solar Mission (JNNSM) including this one
in Maharashtra. These projects are also
eligible for viability gap funding (VG F).
the corresponding period. From there on,
the incentive shall be applicable at Rs 1/
kWh. The incentive is assessed by HERC
every year. This year, the commission has
decided to raise it from 25 paise/kWh to
Rs 1/kWh.
government buildings in the twin cities.
Further, GEDCOL is also looking forward
to replicate this scheme in other towns/
October 2016
www.InfralinePlus.com
States
MP readies blue print for Green
Energy Corridor Project
Madhya Pradesh government has readied
its blue-print for the Rs 4000 crore worth
Green Energy Corridor project spearhead-
eed by Power Grid Corporation (PGCIL),
as next five years would add another 6000
megawatts (Mw) of renewable energy
projects in its installed capacity. This will
also include a mega solar power project of
750 Mw capacity. The German develop-
ment Bank KfW has already tied-up for
a loan with the Centre for the project.
The first phase of the project will be of
Rs 2100 crore. The KfW will give 40 per 55
cent or Rs 840 crore, while another 40 per
cent of the project will come from Central
clean energy fund grant and the rest 20
per cent will be contributed by the Madhya
Pradesh government, Manu Shrivastava,
principal secretary of renewable energy
department said. In next five years Mad-
hya Pradesh would add 2588 Mw in solar,
2704 in wind, 282 Mw in mini and micro
hydel power projects and 271 Mw through
bio-mass to the existing capacity.
urban areas in the state. In the first phase,
Berhampur, Sambalpur, and Rourkela towns
are proposed for taking up roof-top solar
photo voltaic projects on the government
buildings in the ensuing years, said the
minister, adding the project is scheduled
to be completed by September 2017. He
informed that GEDCOL has successfully
commissioned the full capacity of 20 MW
solar power plant at Manamunda in Boudh
district during June this year. GEDCOL
is also developing solar power plants of
16.5 MW capacity on the unutilised lands
available inside Odisha Power Transmission
Corporation Ltd grid substations.
 October 2016
www.InfralinePlus.com
NewsBriefs | Renewable International
Paris climate targets to cost Asia $300 billion a year, but will help save lives
Developing economies in Asia will have
to spend $300 billion a year until 2050
to meet targets set by the Paris climate
deal, but can expect to save thousands
of lives and avoid worsening poverty if
they shift to low-carbon growth, a recent
Statewide blackout plunges Australia into renewable energy debate
An unprecedented power outage across
South Australia state has stopped produc-
tion at major miners BHP Billiton and OZ
Minerals and left one steelmaker struggling
to prevent molten steel from hardening and
56 damaging its factory. The statewide outage
sparked political calls for an inquiry into
the power sector and questions over the
states reliance on renewable energy. Prime
Minister Malcolm Turnbull said it was a
wake-up call to ensure energy security.
Questions have to be asked: Is their over-
reliance on renewable energy exacerbating
their problems and the capacity to have a
secure power supply, Australias Deputy
Prime Minister Barnaby Joyce, a climate
change skeptic, said. South Australia, a
Asia-Pacific wind turbine tower market to fall significantly to $5.5 billion by 2020
Asia-Pacific will see a significant fall in
wind turbine tower market from $9.62
billion in 2015 to $5.5 billion in 2020
although the region will remain global
leader in terms of demand. The decline
is estimated to be a negative compound
annual growth rate of 10.5%, according to
research and consulting firm GlobalData.
The firm has estimated that the decline
can primarily be attributed to the decrease
in wind capacity addition and falling tower
costs. China, for example, added 33
Gigawatts (GW) of wind capacity in 2015,
which represents 86.5% of APAC and
49.6% of global wind addition in the year.
research has showed. As part of the
landmark accord reached in December,
nearly 200 nations agreed to keep global
temperature increases to well below 2
degrees Celsius to curb global warming.
The Asian Development Bank (ADB) said
the economic returns of spending on the
Paris climate targets far outweighed the
costs in the developing region - one of
the most vulnerable to climate change
and disasters like typhoons and flooding.
The Manila-based banks definition of
developing Asia comprises 45 of the ADBs
member countries in Asia Pacific including
Cambodia, Indonesia, the Philippines and
Vietnam.
major wine producer and traditional manu-
facturing hub, is one of the few states with
a heavy reliance on renewable energy. Wind
power provides roughly 40 percent of the
states electricity supply. Australias renew-
ables have been under political pressure in
recent years.
However, annual capacity addition in the
country is expected to witness a decline
during the 2016-2020 period, as its target
to install 250 GW of wind capacity by
Chinas lowest ever solar bids in Inner
Mongolia
A tender for 1GW capacity in Inner Mon-
golia has brought in Chinas lowest ever
bids for solar energy. As per reports, fifty
solar developers and manufacturers had
bid as low as CBY0.52/kWh (US$0.078)
in this government-backed auction. This
price comes in at around the top end of
Chinas coal-fired thermal power prices in
various regions. However, the prices are
still a fair way off recent world-beating
tariffs set in Chile and Dubai as well as
three record breaking bids as low as
US$0.0242/kWh submitted, but not yet
awarded, in Abu Dhabi. An unnamed
bidder told Reuters that policy incentives
are given to Chinas government-backed
projects, unlike for other commercial
projects, which tend to experience greater
financial losses as a result of transmis-
sion curtailment and subsidy default.
The countrys solar industry has been
dogged by curtailments in certain states
and delays to subsidy payments. Subsidy
delays have also caused a slowdown in
new project development as well as grid
curtailments in certain regions of China.
2020 can be achieved with only 22 GW a
year, the report said. The market will also
be heavily restricted by a lack of sufficient
grid infrastructure, as the industry strug-
gles to upgrade existing infrastructure and
construct new facilities to meet demand.
These limitations affect the entire value
chain and increases development time.
The report notes that rising demand has
increased production capacities of towers
as new players entered the industry and
existing providers increased their capacity.
This sudden rise of industry growth has
created supply chain defects and strained
supply lines.
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 October 2016
www.InfralinePlus.com
InConversation
Metallization is critical to achieve high
conversion efficiencies in solar market
Dr. Giorgio Cellere, Head of Product Management, Baccini Cell
Systems, Applied Materials, talks about how the solar industry in
India is poised for growth and how it can immensely benefit from
technological innovations. Excerpts:
The Make in India programme
will be completing two years this
month. What is your assessment
of this initiative? How can it help
solar industry to grow into a
global manufacturing hub?
The Make in India initiative has
renewed impetus in the solar sector and
this has been received positively by
industry stakeholders and renewable
58 energy advocates. The solar down-
stream market is expected to see strong
growth, which will enable opportuni-
ties in PV manufacturing as well as
in operating large plants, in rooftop
systems and in off the grid generation.
We believe this is going to create a
lot of jobs and can foster innovation
and added value creation. The 100GW
by 2022 target is challenging but
definitely achievable if we look at the
sharp increase between 2015 and 2016.
Another important aspect is linked to
the economies of scale; it is impossible
to manufacture PV systems in a cost
efficient way without proper scale. We
are definitely seeing a focus on large-
scale manufacturing by talking with all
our customers in India.
Do you feel the falling solar
tariffs in India are sustainable
given the financial challenges?
There has been a global glut
in PV module manufacturing,
especially in China. What kind of
impact on price corrections has
it had in the market?
The Indian solar energy sector is in the
middle of unprecedented growth, fed
by rapidly declining tariffs, improved
technology and a global oversupply of
photovoltaic panels and other material,
mainly in China. Although a smaller
market than the United States, China
or Japan, India is expanding the fastest
among major nations. One clear effect
in the last few months has been a sharp
decline of prices for wafers, cells and
modules. While this leads to some
concerns for the manufacturers, it also
helps the final market to grow faster.
While solar sector in India has
grown rapidly in recent times,
growth in rooftop solar has been
slow. What, according to you, are
the reasons for the same? What
can be done to improve growth in
rooftop segment?
The Ministry of New & Renewable
Energy is keen to set up solar park
projects with a cumulative capacity of
20,000 MW, in addition to the already
launched program of 20,000 MW in
2014. There has been slow progress of
rooftop solar projects as it is mainly
being implemented by institutions
like government offices, schools and
colleges. To kick start the mainstream
adoption of rooftop solar in residential
homes, there is a need to create massive
awareness and pull in the home user
segment. This has to be backed with
appropriate programs to have a skilled
deployment force and management of
Dr. Giorgio Cellere, Head of Product
Management, Baccini Cell Systems
user experience. Conceive schemes
like the Charanka Solar Park in Gujarat
envisages supporting the states in set-
ting up solar parks at various locations
in the country, with a view to create
the required infrastructure for the solar
power projects.
What are some best practices
from high-tech ecosystems that
India can emulate?
Most people in the industry are fond of
saying that the solar economy is all about
cost per watt. This means that on one
side prices are sharply declining year
over year, and on the other side efficien-
cies are going up, with power delivered
by modules steadily increasing by 5-10W
per year. We call this effect the efficien-
cy clock. While these two directions
hold true, we think there is a third one
emerging, which we could summarize
as getting the lowest Levelized Cost
of Electricity (LCOE). Getting there
means aspects such as energy harvesting
capability; power stability and reliability
must be taken into account.

Please share your companys
presence in the renewable energy
space, along with growth plans.
Applied Materials is a leading supplier
of tools for incoming wafer inspection
and for metallization of advanced c-Si
cells. We serve all major solar cell and
module manufacturers worldwide, and
support all technologies from stan-
dard, cost-effective p-multi to the most
advanced IBC projects.
What is the relevance of
Applied Materials Baccini for
the solar industry? What is its
applicability in India?
We are supplying metallization and
test and sort technologies to virtu-
ally all major solar cell and module
manufacturers worldwide. Due to
the use of precious materials and
single-wafer handling, metallization
is the most expensive and perhaps the
most critical step to achieve the high
conversion efficiencies required by to-
days market. Thats why we invented
technologies such as Fine Line Double
Print, which is becoming the stan-
dard for advanced cells metallization.
Also, every technology improvement
has implications on metallization, so
there is a high degree of customization
needed in order to satisfy different
customer requirements. Thats what
led us to be the supplier of choice for
the most advanced projects for stan-
dard p-multi to PERC, PERT/PERL,
heterojunction and IBC.
What technologies can India
use to expand its solar power
programme?
Solar is one of the best options to ad-
dress Indias growing energy needs.
India has one of the
most diversified power
sectors in the world
with sources of power
generation varying
from conventional
sources to viable non-
conventional sources
such as wind, solar
and agricultural and
domestic waste. Elec-
tricity demand in the
country has increased
rapidly and is expected
to rise further in the
years to come.
October 2016
www.InfralinePlus.com
Other regions of the world have
developed superior technologies and
worked on a host of innovations in so-
lar manufacturing. India can start from
where others have already arrived, and
leverage this to grow faster.
What are the challenges facing
renewable energy sector today?
India has one of the most diversi-
fied power sectors in the world with
sources of power generation varying
from conventional sources to vi-
able non-conventional sources such
as wind, solar and agricultural and
domestic waste. Electricity demand in
the country has increased rapidly and
is expected to rise further in the years
to come. In order to meet the increas-
ing demand for electricity in the coun-
try, a massive addition to the installed
generating capacity is required. The
ambitious green corridor project, an
alternative transmission network for
59
renewable energy, has been revised
and re-revised since 2013. Lack of
transmission could leave renewable
projects at the same crossroads where
conventional projects are - no takers
and a congested grid.
For suggestions email at feedback@infraline.com
 October 2016
www.InfralinePlus.com
ExpertSpeak
India needs to bring paradigm shift towards
non fossil fuel mix to meet intended goals
Taruna Idnani, Researcher, Climate Parliament-South Asia,
discusses why India must ensure that its Intended Nationally
Determined Contributions (INDCs) submitted in COP 21 are
implemented and the key challenges which need to be addressed
for a smooth transition towards green growth.
The landmark climate change agree-
ment in Paris designed a new treaty
in December 2015 aiming to keep the
rise in global temperature level well
below 2C. It aspires that cooperation
from individual countries along with
financial and technological support
drive an effort globally to deal with the
challenges of climate change.
60 India played a significant role in
the COP 21 negotiations by pledging
ambitious Intended Nationally Deter-
mined Contributions (INDCs). It aims to
advance its efforts for Sustainable Devel-
opment through greater integration of
pillars of economic development, social
equity and environmental concerns as
it has twin challenge of sustaining high
economic growth while keeping a check
on its emissions. It means it has to adopt
low carbon pathways in every sector
including emission intensive sectors to
meet the intended targets. This is pos-
sible when our climate and energy policy
includes the key objectives of the Paris
Agreement, the Sustainable Devel-
opment Goals (SDGs) and the Indias
INDCs which have common goal to
ensure infrastructure growth, sustainable
development and inclusive economic
development.
India in its INDCs has pledged to
reduce carbon intensity of its GDP by 33
to 35 per cent from 2005 levels by 2030.
It has committed to increase the share
of non fossil fuel based electricity to
40% by 2030. It has committed to build
capacities while adopting and deploying
new energy efficient technology and
other technologies to reduce carbon
emissions. Prime Minister is opti-
mistic about diversifying Indias
fuel mix by addition of hydro,
nuclear, gas and
expand the Need
current to adopt
capacity
RE in a cost
of wind,
solar
effective manner
and with storage and
biomass flexible gen-
to a level eration avail-
where ability
they take
the center stage.
He refers this paradigm shift as seven
horses of energy referring it from a
Hindu mythology where chariot of
the sun is being drawn by seven white
horses. However, achieving this vision
certainly requires significant coordi-
nated action and effort and adoption of
unique pathways where non fossil fuels
take the major share of power mix.
The announcement of INDC target to
increase the share of non fossil fuel mix
to 40% by 2030 would help in reducing
the reliance on coal imports. INDC
target for Power sector is important
to be achieved because of number
of reasons. Firstly, the power sector
contributes to a major chunk of 37%
of the Indias total emissions (World
Resources Institute (2011), CAIT
Database). As per BP statistical review
of World Energy 2015, India is among
Taruna Idnani, Researcher, Climate Parliament-
South Asia
top three coal importing countries and
coal fired power generation stood at
74% of Indias electricity generation
in 2014/15 making it one of the most
coal-dependent nations in the world.
The planning commission forecasts
of 2013 has estimated that Indian coal
imports for electricity generation are
expected to rise from 90 million tonnes
in 2011-12 to 250 million tonnes
in 2022. Government has pledged
reduction in coal imports; however,
renewables can play a significant
role in achieving this pledge. As per
study by conducted by NITI Aayog,
investment in RE sector to the tune of
about Rs 7000 crores could be helpful
in savings of coal import to Rs 60,000
crores by 2022. Therefore, reduction in
emissions from power sector is crucial
for Indias mitigation efforts.
Secondly, India is going to observe
industrial growth, rise in population, and
urbanization and rise in per capita energy
consumption that will widen the gap
in energy access in the country. Large
scale deployment of RE technologies has
the potential to address the energy access
issues and would help in extending

electricity to 240 million people who are
still far from the reach of the grid.
At the same time, realizing the
importance of this transformation,
Government of India announced
domestic target of 175 GW of installed
renewable energy capacity by 2022.
This target is not a component of
INDC but would be a crucial stepping-
stone for achieving 2030 target and a
synergy between the two targets yet to
be achieved. This is important particu-
larly to define the roadmap of increase
in installed capacity after 2022 till
2030. If clear decisive targets for each
year are defined, they would help in
addressing the gaps and push forward
towards the intended goals. As per
the Climate Action Tracker analysis,
with a target of 175 GW of Renewable
Energy by 2022 and currently imple-
mented policies in place, India is likely
to achieve 39% of generation capacity
from non fossil fuel sources corre-
sponding to 24% of electricity gener-
ation. This directly means a mammoth
capacity addition of renewables is to be
achieved in Indias power sector in the
coming seven years.
Achieving 175 GW target
As on June 2016, all India generation
capacity stood at 303.11 GW with a
contribution of 69.8% from thermal
energy, 14.1% from hydro, 14.1% from
renewables and 1.9% from nuclear
sources. The target of 175 GW will
determine the path for its the course
for 2030 target. Renewable energy
technologies come with myriad benefits;
however, they also bring the challenge of
variability and cost of implementation.
When the capacity to be installed
is huge, the factor of variability would
play a major role for its integration
with the grid. Whereas the government
is positive about achieving this target,
As per the Climate Ac-
tion Tracker analysis,
with a target of 175 GW
of Renewable Energy
by 2022 and currently
implemented policies
in place, India is likely
to achieve 39% of gen-
eration capacity from
non fossil fuel sources
corresponding to 24%
of electricity generation.
This directly means a
mammoth capacity ad-
dition of renewables is
to be achieved.
October 2016
www.InfralinePlus.com
the attention to various other aspects
related to the grid comes into picture.
Another area of concern is that capacity
utilization factors (CUFs) of renewables
are lower than conventional fuels. This
indicates that there would be a visible
difference between capacity installed
and actual generation. Some of the key
challenges for achieving the ambitious
175 GW target are as follows:
Technological advancements:
To integrate renewables in the power
sector, there are several issues like grid
balancing, inter state transmission,
forecasting and scheduling and others.
If the capacity addition is increased and
not absorbed and utilized with the grid
support, then it would hamper the very
purpose of the goal and discourage the
interests of clean energy investors. The
Chinese government data reveal that
in 2015 alone 33.9 billion killowatt-
hours of wind powered electricity
was wasted which is equivalent to 61
electricity consumption of 3 million
American households in a year. For
India, ensuring that renewable capacity
which is commissioned every year is
worth the investment, when the energy
that is generated is also transmitted
and utilized for consumption. In India,
investors have suffered generation
losses in the past. If we wish to execute
our vision of bringing the renewables
to core, now is suitable the time to
start implementing the technological
advancements in the power sector at
the scale which is in line with capacity.
With the ongoing transmission projects,
the scale and pace required to match
the tall capacity addition target also has
to be coordinated.
Grid integration measures are useful
in increasing the overall efficiency
of grid operations and reducing the
overall costs to consumers. Some of
these measures include the visibility of
grid status to neighboring areas with
advance decision making and control
systems, grid operation protocols,
balancing areas, availability of
flexible resources. The technological
 October 2016
www.InfralinePlus.com
ExpertSpeak
advancements would redesign the grid
customized for Indian conditions and
work as a key to ensure that energy
that is generated is also absorbed and
utilized.
Policy framework: On the policy
62
aspect, the Government has taken
several positive initiatives which are
in process of implementation like
amendments in Electricity Act 2003,
formulation of Renewable energy
policy, National Tariff Policy, UDAY
Scheme and as well as sectoral policies
like formulating policies for off shore
wind energy sector and several others
are currently under preparation. The
link between different policy frame-
works still needs to be achieved which
supports holistic development of
renewables including land availability,
transmission clearances and financial
incentives. Therefore, an integrated
energy policy along with systematic uti-
lization of financial support is crucial in
view of massive 175 GW target by 2022
which ensures the interests of investors.
Financial support: Achieving
175 GW of renewables definitely
calls for massive amount of invest-
ments in the sector. In an estimate,
investment required to achieve 100
GW of solar by 2022 is to a tune of Rs
6,00,000 crores. This tall investment
level is expected to be contributed
India can be better
served by a plan that
envisages adopting
renewable energy in a
cost effective manner
with storage and flexible
generation availability to
all states. The long-term
benefits of this capacity
addition would ensure
reducing the demand of
new coal plants. Addi-
tionally, the co-benefits
like equity, employment
generation, energy secu-
rity and energy indepen-
dence would also sup-
port the growing pace of
energy demands.
from various sources. This also calls
for innovating financing mecha-
nisms, conducive policy support,
and project development cycle and
revenue assurance. Already, India has
received considerable support from
international sources. However, it
is important to realize that this calls
for mechanism that would effective
utilization of finances to promote
renewable energy sector.
Research and manufacturing:
Some of the issues like infrastructure
development, research and devel-
opment (R&D), promoting indigenous
manufacturing remains to be focused
upon with financial support for holistic
and healthy trajectory of renewables in
the country.
Besides renewables, India has
nuclear estimates of 63 GW of nuclear
energy from a current base of 6 GW.
The nuclear growth rates over the last
decade were low and fuel faces con-
tinued political and other obstacles to
its expansion. However, considering the
high costs of fuel and associated risks
involved, achieving nuclear INDCs
would call for clear roadmap for
planning, funding and fuel availability.
The way forward
Implementing the intended INDCs calls
for the transformation in the energy sec-
tor which needs to taken as a platform
for bringing paradigm shift towards non
fossil fuel mix, technological develop-
ments, investment flows towards clean
energy and long term vision of achieving
equity, security and sustainability. India
can be better served by a plan that envis-
ages adopting renewable energy in a cost
effective manner with storage and flex-
ible generation availability to all states.
The long-term benefits of this capacity
addition would ensure reducing the
demand of new coal plants. Addition-
ally, the co-benefits like equity, employ-
ment generation, energy security and
energy independence would also support
the growing pace of energy demands.
To pursue ambitious goals of Indias
mitigation efforts outlined in its INDCs,
integration of its principles in our current
energy planning and policy initiatives is
ensured. The vision to bring transforma-
tional and fundamental changes in the
power sector would build a conducive
environment to accommodate non fossil
fuels generation in the grid.
The views in the article of the author are personal.
For suggestions email at feedback@infraline.com

InDepth
Integration of renewable capacity
poses challenge to grid operators
Expansion and modernization of power distribution and transmission grid needed
Energy storage options need to be explored, significant push required towards R&D
By Team InfralinePlus
The Indian government is pursuing
one of the most ambitious renewable-
energy programmes anywhere in the
world, to ramp up renewable energy and
fight climate change simultaneously.
The Intended Nationally Determined
Contributions (INDC) submitted to
United Nations Framework Convention
on Climate Change (UNFCCC) and rati-
fied finally on October 2 2016 begins by
listing a wide array of activities India has
already undertaken to reduce emissions
and adapt to climate change including
the ambitious target of building 160 GW
of Solar and Wind Power capacity by
2022 (175 GW from Solar, Wind, Bio-
mass & Small Hydro) and an enhanced
energy efficiency mission cutting across
industrial sectors. It also promises to
increase the share of renewable energy
in the energy mix though it does not
explicitly mention that about 350 GW of
solar and wind power would be required
to achieve the 40% non-fossil fuel power
capacity a projection the government
had made to reach the INDC numbers.
The integration of this planned
RE generation capacity with the
national grid requires expansion and
modernization of the intra- and interstate
distribution as well as transmission grid.
This is mainly due to the geographical
distance between centres of generation
and consumption as well as due to the
October 2016
www.InfralinePlus.com
63
intermittent availability of RE sources
and the necessary means for grid
stabilization. A bigger problem is how to
handle a higher share of solar or wind in
terms of its impact on managing the grid!
These problems primarily revolve
around the need to deal with large scale
integration of renewable energy into
the grid and include the complexities of
backing down long term thermal power,
the deployment of energy storage
projects, deviations in scheduling,
contractual obligations of long-term
contracts and the inability of finan-
cially stressed utilities to buy expensive
renewable power. Backing down long
term thermal firm must run power for
 October 2016
www.InfralinePlus.com

InDepth

accommodating infirm power is unsus- renewable energies (95.5%) and ran in can never be activated, if necessary. For
tainable both technically and financially, early May on RES generation exclu- example, in case of high feed-in-tariff
and will be a big challenge for system sively for 107 hours straight. News of from RE, a single state has less power
operators to deal with, besides attracting the zero emissions landmark comes capacity available to back down. In the
penalties for under supply in existing just days after Germany announced that state of Tamil Nadu, when the system
long term power purchase contracts. clean energy had powered almost all operator is not able to back down
The availability of solar and wind its electricity needs on Sunday 15 May, sufficient conventional generation, it
energy is largely determined by the with power prices turning negative at eventually leads to the curtailment of
weather conditions, and therefore several times in the day effectively generation from RE sources.
characterized by strong variability. As paying consumers to use it. Because of
a result, power generation from these the German feed-in-tariff law (EEG), Challenges in India
sources cannot easily be matched to the renewables have dispatch priority, There are various stumbling blocks in In-
electricity demand, such as power gen- which implies that they are always dia (including states such as Tamil Nadu,
erated from conventional plants (coal- used first, sometimes leaving very little Telangana, etc.) that need to be ironed
fired unit and gas stations). Integration power demand left to be supplied by out if grid integration of renewable en-
of large amount of fluctuating RE in coal and natural gas-based power plants. ergy is to happen smoothly. The biggest
the grid is a serious technical challenge In the Indian context, there are constraint is the limited ability of opera-
for grid managers to ensure smooth number of key takeaways from the tors to back down coal generation due
operations of the Indian grid the fifth German experience. In India, at the to a variety of technical and economic
largest in the world. To compound moment, balancing of renewables is left reasons. Further, hydro power capacity
matters, RE generation forecasting in completely to the capability of states available for balancing is not significant
the country is in its early days. producing the energy from RE sources. enough. Hydel capacity is suited to be
In April 2016, Portugals electricity This is ineffective as the complete run in tandem with renewable power as
64 generation came almost entirely from available balancing capacity of a region these projects can be delinked from the
grid or plugged back in a short notice.
Severe fuel shortage is a big con-
There are various stumbling blocks in India (includ-
straint for gas-based power plants, which
ing states such as Tamil Nadu, Telangana, etc.) that otherwise have the capability to respond
need to be ironed out if grid integration of renew- to sudden variations in the output of
able energy is to happen smoothly. The biggest solar and wind power plants. The vari-
constraint is the limited ability of operators to back ability of RE sources has led to concerns
down coal generation due to a variety of technical regarding the reliability of an electric grid
that derives a large fraction of its energy
and economic reasons. Further, hydro power capac-
from these sources as well as the cost
ity available for balancing is not significant enough of reliably integrating large amounts of
variable generation into the electric grid.
Because the wind doesnt always blow
and the sun doesnt always shine at any
given location, there has been increased
call for the deployment of energy storage
as an essential component of future
energy systems that use large amounts of
variable renewable resources.

Scheduling of renewable
energy sources
Renewable Energy Sources like Wind
and Solar are variable, uncertain and
intermittent, because of which ensuring
Load-Generation balance difficult at any
given point of time. Therefore, it is all
the more important to keep the Schedule

of the Generation to as near to Actual
Generation as possible by forecasting
and scheduling their Generation. For the
Generators connected to ISTS, CERC
mandated Forecasting, Scheduling and
application of Deviation charges. As
per 3rd amendment of IEGC, Wind and
Solar Generation connected to Inter-State
Transmission system (ISTS) are required
to forecast and furnish the 15-minute
block-wise Schedules. In case any
change in Generation is predicted, the
Schedule can be revised from 4th time.
A maximum of 16 revisions in a day are
permitted up to a maximum of one revi-
sion each for every 11/2-hour duration.
The level of RE penetration (in terms
of energy generated) in India is presently
around 5 to 6 percent. While the capa-
bility of generators to forecast generation
and to provide timely schedules are key
requirements, it is equally important
that other institutions involved, whether
central level or state level are adequately
prepared. Apart from wind/solar gen-
erators, the implementing institutions
such as SLDC, RLDC, NLDC and RPC
need to be geared up with adequate infra-
structure and trained manpower. Imple-
mentation of full-fledged Scheduling
mechanism and Settlement system within
the States has been long pending and it
will bring in synergy and optimization.
Government of India has embarked on
an ambitious mission to integrate 100
GW of solar power and 60 GW of wind
power by 2022. For this to become a
reality there is an urgent need to adopt
path breaking measures in the Grid
operation. Extending real time SCADA
data from the Renewable Generators
would provide Situational awareness to
the System Operators about the ramp
events. Establishment of Renewable
Energy Management Centres (REMC)
would facilitate trading of RE sources
(market participation) across the states.
Deployment of energy storage
projects: Need of the hour
Energy storage options need to be
explored and a significant push towards
October 2016
www.InfralinePlus.com
Energy storage projects are required to be given a
special status as they provide a mechanism to con-
vert infirm power to firm power in 15-minute time
bocks to ensure scheduling of renewable power
in both intra & inter-state transactions. Further, we
need to have a special mechanism and status to be 65
given to energy storage projects whereby they are
treated neither as a consumer nor as a generator
the R&D of these technologies is re- we need to have a special mechanism
quired. Energy storage not only provides and status to be given to energy storage
means to absorb higher penetration of projects whereby they are treated neither
variable wind and solar photovoltaic as a consumer nor as a generator from
(PV) generation into the electricity sys- the point of view of inward and outward
tem, it also helps in effective utilisation wheeling, transmission losses or charges
of transmission and distribution assets since the transformative losses in such
(T&D) assets, provides competitive fre- projects are extremely high. In fact,
quency regulation service (grid ancillary the only practical way that renewable
service) ad enables the thermal genera- energy projects can be mainstreamed
tion plants to operate more efficiently. on the scale that has been envisaged by
With the view to combat climate the government will be through energy
change effects through large scale storage mechanism. In the absence of the
deployment of renewable energy same it will not be possible for stranded
projects, one of the most effective solu- capacities and renewable energy projects
tions to address the lack of scheduling/ to be able to compete with thermal/
high intermittency while allowing scale hydro power and will face resistance in
up of these technologies is the use of purchases by state electricity distribution
energy storage technologies. Energy companies (DISCOMs) in the long run.
storage projects are required to be given a Therefore, energy projects need to be
special status as they provide a mech- given more importance and dealt with as
anism to convert infirm power to firm a part of the amendments to the Elec-
power in 15-minute time bocks to ensure tricity Act, 2003.
scheduling of renewable power in both
intra & inter-state transactions. Further, For suggestions email at feedback@infraline.com
 October 2016
www.InfralinePlus.com
FinancialResults
Suzlon June quarter loss at Rs 260 crore
Wind turbine maker Suzlon Energy Ltd
reported a Rs260 crore consolidated loss
in the April-June period, compared with
a restated profit of Rs1,014 crore a year
ago on account of lower income from
operations. Suzlon said that income from
operations declined 37% to Rs1,655 crore
during the quarter under review from a
year ago. Earnings Before Interest, Taxes,
Depreciation and Amortization margin
(EBITDA margin), an indicator of operating
profitability, stood at 10.4% for the June
quarter, compared to 10% for the year-ago
Inox Winds Q1 net falls 80% at Rs 11.82 crore
Wind turbine maker Inox Wind reported
80 per cent decline in consolidated net
66 profit at Rs 11.82 crore for the quarter
ended June 30, 2016. The firm had
clocked a net profit of Rs 60.42 crore in
the year-ago period. Total consolidated
income of the company fell by 32 per cent
to Rs 435 crore in April-June quarter this
fiscal from Rs 644 crore during the same
quarter in 2015-16. Its total expenses
were lower at Rs 399 crore against
Rs 557 crore during the period under
review. Inox Wind Executive Director
Devansh Jain said over the June quarter,
the company has undertaken several
steps that augur well for its long term
performance. Higher production of Blade
Orient Green Power net loss narrows to Rs 22.64 crore
The net loss of Orient Green Power
Company for the quarter ended June
falls to Rs 22.64 crore, compared with
a net loss of Rs 53.8 crore during the
corresponding quarter of the previous
financial year. The total income from
operations grew 16.6 per cent to Rs 126.3
crore, compared with Rs 108.3 crore a
year ago. The company, an operator and
developer of renewable energy, is planning
to acquire 26 per cent equity shares of
its two subsidiaries from group captive
period. Finance costs fell to Rs304 crore in
the first quarter of this financial year from
Rs417 crore in the year-ago period. Net
profit for the previous comparable quarter
was revised lower from the Rs1,047 crore
as the company has adopted the new
accounting standards called Ind AS that
is compatible with International Financial
Reporting Standards (IFRS). The com-
pany reported a wind turbine order book
of 1,205 MW for the current year. In the
first quarter it has delivered equipment for
204 MW. First quarter typically repre-
sents about 10-15% of the entire years
volumes, said the company. We are very
optimistic on the growth of renewables
in India. The country witnessed record
renewable energy installations in FY16
and the industry will surpass it by over
Sets and Towers compared to Nacelles
and Hubs during the quarter has cleared
the inventory backlog and will significantly
improve the working capital cycle of the
company, he added. The component
manufacturing capacity of Inox Wind is
also now fully aligned with doubling of the
blade manufacturing capacity to 1,600
MW and enhanced tower manufacturing
capacity, Jain said. We also see significant
traction in order inflow during the coming
shareholders to make it wholly-owned
subsidiary. The company said that its
board of directors has approved to acquire
26 per cent equity shares of Shriram
Powergen and Shriram Non-Conventional
30% in the current fiscal. Combined, wind
and solar capacity has surpassed hydro
capacity and is only next to coal-based
capacity in India, a company statement
said citing group chief executive officer J.P.
Chalasani. Suzlon is now diversifying into
other sources of renewable energy such as
solar. It has won bids for 515 mega watt
(MW) of projects and has signed power
purchase agreements with distribution
companies for 340 MWs. The projects are
in Telangana, Rajasthan, Jharkhand and
in Maharashtra. In FY17, we are focused
on ramping up volumes by executing our
strong order backlog, ensuring that we
continue to maintain tighter control on
our working capital and fixed costs, the
statement said citing group chief financial
officer Kirti Vagadia.
quarter with multiple order wins to be
announced. Inox Wind remains on track
to meet its annual performance targets,
he added. Inox Wind said 99 blade sets,
74 towers and 20 nacelles and hubs were
produced during the June quarter. As of
Q1 2016-17, significant inventory backlog
has been cleared with higher production
of blade sets and towers. As of date,
the entire inventory backlog has been
cleared, it added. Going ahead, the firm
said: Commissioning activity to pick up
significantly in the current year with state
policies announced. The company has a
robust order book position of 1,240 MW as
of June 2016 with very strong order inflow
visibility going forward.
Energy, from the group captive customers.
After the acquisition, these two companies
will become wholly-owned subsidiaries of
the company.
 October 2016
www.InfralinePlus.com

StatisticsRenewableEnergy
1) Programme/ Scheme wise Physical Progress in 2016-17

FY- 2016-17
Cumulative Achieve-
Sector Achievement
Target ments (as on 31.08.2016)
(April - August, 2016)
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW)
Wind Power 4000.00 897.10 27674.55
Solar Power 12000.00 1320.32 8083.17
Small Hydro Power 250.00 36.40 4310.35
BioPower (Biomass & Gasification 400.00 51.00 4882.33
and Bagasse Cogeneration)
Waste to Power 10.00 7.50 115.08
Total 16660.00 2312.32 45065.48
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ)
Waste to Energy 15.00 1.23 161.39
Biomass(non-bagasse) 60.00 0.00 651.91
Cogeneration
Biomass Gasifiers 2.00 0.00 18.15
-Rural
8.00 1.80 166.04
-Industrial
Aero-Genrators/Hybrid systems 1.00 0.20 2.79 67
SPV Systems 100.00 28.30 342.18
Water mills/micro hydel 1 MW + 500 Water Mills 0.10 MW + 100 Water Mills 18.81
Total 187.00 31.63 1361.27
III. OTHER RENEWABLE ENERGY SYSTEMS
Family Biogas Plants (in Lakhs) 1.00 0.09 48.64
Source: MNRE

2) REC Trading Volume and Price for September 2016

Through IEX
MCV
Buy Bid Sell Bid MCP
(No. of Month of Month of
REC Type (No. of (No. of (INR /
certificate) Auction Auction
certificates) certificates) Certificate)
Qty. (MWH)
Solar 15,126 1,881,110 15,126 3,500 464 September
Non-Solar 91,355 6,714,750 91,355 1,500 819 2016
Source: IEX

Through PXIL
Buy Bid Sell Bid MCV (No. of
MCP
REC Type (No. of (No. of certificate) Month of Auction
(INR / Certificate)
certificates) certificates) Qty. (MWH)
Non Solar 84170 6196499 1500 84170
September 2016
Solar 16598 1696205 3500 16598
Source: PXIL
 October 2016
www.InfralinePlus.com

StatisticsRenewableEnergy

3). State-wise Installation of Small Wind Energy Hybrid Systems (as on June, 2016)
Total
Sl. Up to 2014- 2015-
State 2009-10 2010-11 2011-12 2012-13 2013-14 cumulative
No 2008-09 15 16
in kW
1 Andhra Pradesh 16 16
2 Arunachal Pradesh 0 6.8 6.8
3 Assam 6 6
4 Goa 68.8 95 30 193.8
5 Gujarat 10 10 20
6 Haryana 10 10
7 Jammu & Kashmir 15.8 30.6 46.4
8 Karnataka 39.2 39.2
9 Kerala 8 8
10 Madhya Pradesh 0 24 24
11 Maharashtra 566.9 40.8 23 403.2 348.2 40 176.5 15 1613.6
12 Manipur 30 40 40 30 140
13 Meghalaya 5 10 106.5 70 191.5
14 Nagaland 20 20
15 Odisha 13.1 13.1
16 Pondicherry 5 5
17 Punjab 0 30 20 50
18 Rajasthan 4 10 14
19 Sikkim 15.5 15.5
20 Tamil Nadu 24.5 133.4 157.9
68
21 Tripura 2 2
22 West Bengal 38 36 74
23 Uttarakhand 0 4 20 24
Total 848.9 222.6 53 523 464.7 140 277.1 161.5 2690.8
Source: MNRE

4. Status of Wind Power Projects Commissioned in Rajasthan (Financial Year Wise) up to 31.03.2016
Total Capacity of Wind Power Cumulative capacity
S. No. Financial Year
Projects Commissioned (MW) Commissioned (MW)
1 1999-2000 2 2
2 2000-2001 7.11 9.11
3 2001-2002 8.38 17.49
4 2002-2003 43.99 61.48
5 2003-2004 114.4 175.88
6 2004-2005 103.74 279.62
7 2005-2006 73.275 352.895
8 2006-2007 111.75 464.645
9 2007-2008 70.45 535.095
10 2008-2009 199.6 734.695
11 2009-2010 350 1084.695
12 2010-2011 436.7 1521.395
13 2011-2012 545.65 2067.045
14 2012-2013 632.00 2699.045
15 2013-2014 98.80 2797.845
16 2014-2015 523.50 3321.345
17 2015-2016 685.50 4006.845
TOTAL 4006.845
Source: RRECL
 October 2016
www.InfralinePlus.com

OffBeat |ExpertSpeak
The role of experts in
arbitration
The last decade has seen a significant rise in the number
and intricacies around commercial disputes. As global
enterprises increasingly aim at grabbing a piece of this
pie in emerging markets; business models, commercial
transactions and contracts tend to become more complex.
Cut throat competition, potential for financial gain and
ambition could also lead to potential differences between
stakeholders. According to Prasad Shetty, Executive
Director, Fraud Investigation & Dispute Services, EY India,
these factors have made commercial disputes even big-
ger and sometimes even difficult. In this context, role of
experts in arbitration has become critical.
Prasad Shetty, Executive Director, Fraud
Arbitrator: Mr. John, what is an equi- agreements or contracts Investigation & Dispute Services, EY India
ty beta? What is the impact of levering contain an arbi- 69
and unlevering a beta? How is country tration clause More that is efficient, practical and
risk premium impacting the weighted to enable and more helpful to the claimant is critical.
average cost of capital (WACC) that efficient countries are Involvement of an expert at an
you have applied for discounting of resolution introducing and early stage of arbitration, i.e.
cash flows? Questions such as these of disputes, before submission of stage of
and more can possibly trigger an if any
updating laws claim or counter-claim, can help
adrenaline rush for some attorneys. arising in to strengthen the counsel and the claimant
However, these could also indicate due course arbitration get inputs on possible outcomes
the importance of referring a case to of business. process of an arbitration through financial
a technical and financial expert, in a As a result, modelling. The financial parameters
specific business context. tribunals, lawyers that can be evaluated under different
The last decade has seen a signif- and parties to the contract are grad- business situations would include,
icant rise in the number and intricacies ually taking assistance from relevant loss of profit if the capital expenditure
around commercial disputes. As financial and technical experts as part was deferred by five years, or if the
global enterprises increasingly aim at of arbitral proceedings. funding was done through interna-
grabbing a piece of this pie in emerging tional financial instruments rather
markets; business models, commercial Arbitration on the up than issuing debentures. It could also
transactions and contracts tend to Trend shows that arbitration as a be around the impact on the company
become more complex. Cut throat com- mode of dispute resolution has been if another joint venture partner was
petition, potential for financial gain and considerable growth in across sectors introduced at some point, after termi-
ambition could also lead to potential including oil & gas, telecommunica- nation of the existing contract.
differences between stakeholders. tion, shipping, maritime, energy and A financial model will also help
These factors have made commercial natural resources. Here, the propensity incorporating variations in possible
disputes even bigger and sometimes in infrastructure, construction and oil & forecast parameters such as prices,
even difficult. gas remains higher due to the nature of foreign exchange impact, revenue
According to EYs survey, these businesses. and input costs, leading to different
Emerging trends in arbitration in The need for legal counsels to possible scenarios in case of loss
India, a majority of commercial design a proper arbitration strategy of profit.
 October 2016
www.InfralinePlus.com

OffBeat | ExpertSpeak

It has been observed that an The evidence, being an essential and make it more effective. In such
arbitration tribunal tends to be element, plays a vital role in the time bound proceedings, the role of
more comfortable with the evidence commercial arbitration proceedings. an expert becomes pivotal to avoid
submitted by an independent expert Evidence can be oral as well as written, ambiguities and unscientific quanti-
on the subject, who can substan- and both can equally contribute to the fication, making the overall process
tiate these through various industry outcome of a dispute. more efficient.
reports, analysis and point of view. More and more countries including Due to the magnitude and intricacy
Experts reports are gradually India are introducing and updating of disputes, there is a huge amount
becoming a norm in arbitration, laws to strengthen the arbitration of documentation required that is
especially in complex cases as they process and making it time bound. submitted to the tribunal. With use of
are seen as independent, professional Regulations such as these would technology, the evidence, supporting
and unbiased. lead to reduced cost of arbitration documents, submissions to tribunal can
now be done in an electronic form.
Due to the magnitude and intricacy of There are increasing instances
where experts from both sides are
disputes, there is a huge amount of
invited for hot-tubbing, also known
documentation required that is submitted as witness conferencing. During this
to the tribunal. With use of technology, process, presentation, discussion, and
the evidence, supporting documents, proper detailing of an expert can be
submissions to tribunal can now be done a potentially deciding factor in an
in an electronic form. There are increasing arbitration judgement, especially at the
instances where experts from both sides are quantification stage.
invited for hot-tubbing, also known as
70 witness conferencing The views in the article of the author are personal
For suggestions email at feedback@infraline.com

Reports & Studies
Petroleum sector could face over Rs 2.4 lakh crore impact of project delays
The total size of the price paid by the
petroleum sector due to unwanted
delays in implementation of oil and gas
projects could be a staggering over Rs 2.4
lakh crore through 2040, according to a
study by Project Management Institute
(PMI). The Mumbai-based institute said
the country faces the humongous cost
overruns and additional investment outlay
over 2015-40 period if the existing project
implementation scenario in the petroleum
sector continues to prevail. The oil and gas
sector has witnessed an average delay of
1.5 years in implementation of projects
with average cost escalation of 6.2 per
cent in the past, according to the report. An
Nearly 35% rural households still bereft of electricity in India: Report
Nearly 35 per cent of rural households
across the country are still bereft of
electricity mainly due to lack of effective
monitoring and co-ordination between the
Centre and state governments, a recent
Increased efficiency and timely tariffs revision critical for UDAYs success: ICRA
State-owned distribution utilities will bene-
fit from the Ujwal Discom Assurance Yojana
(UDAY) scheme in FY2017 but stricter focus
on efficiency and timely tariff revisions is
critical for their sustained financial turn-
around said ICRA in a recent study. Sabya-
sachi Majumdar, senior vice president, ICRA
said: Discoms will benefit significantly in
the near to medium term from measures
taken under UDAY. These include lower
interest costs arising out of de-leveraging,
and reduction in power procurement cost
arising out of improved domestic coal avail-
ability along with recent policy measures
by Government such as flexible utilisation
of domestic coal linkage and e-auction
average of 15-month delay has been noticed
in projects worth Rs 100-999 crore each
while the delay increases to 18 months in
projects worth Rs 1,000 crore and more.
Also, an average cost overrun of 6.9 per
cent has been noted in projects worth Rs
1,000 or more across all PSU petroleum
report has said. Access to electricity is a
key socio-economic development indicator
for a country. As of May 2016, 35 per
cent of rural households are bereft of
electricity with sharp variation across the
country, a study by brokerage firm said.
While 87 per cent households in Bihar
and 71 per cent in Uttar Pradesh have no
reported access to electricity, there is
universal electricity access in states such
as Punjab, Andhra Pradesh and Gujarat,
it added. As electricity is a concurrent
subject, lack of effective monitoring and
co-ordination can be attributed to the
wide variance across states, the financial
services firm noted. It pointed out that
process for short term power. However,
serious focus of utilities on improving their
efficiencies, mainly aggregate technical &
commercial loss levels, is necessary. This
has to be in line with targets set by UDAY.
Timeliness and adequacy of tariff hike in
October 2016
www.InfralinePlus.com
projects. Delays in petroleum projects
occur at two stages -- The Planning Stage
and The Execution Stage. At the planning
stage delays occur due to lack of detailed
planning, poor risk management and lack
of flexibility. Issues like change of scope of
work, procurement delays and manpower
allocation occur at the execution stage,
the report stated. The report said only
25 per cent of the surveyed oil and gas
companies had a dedicated independent
risk management vertical and only 28
per cent of the respondents mentioned
about organizational practice of drawing
detailed response plan for each of the major
identified risks.
there has been a delay in execution of
projects and was evident from the low
actual spend in past programmes. By May
2016, only 25 per cent of the 12th Plans
amount allocated to rural electrification
programme has been spent and 81 per 71
cent for the 10th-11th Plan has been
spent. The Narendra Modi government
has launched the Deen Dayal Upadhyaya
Gram Jyoti Yojana as the flagship rural
electrification programme. The scheme
incorporates real-time monitoring of
work progress, independent verifications
through Gram Vidyut Abhiyanta engineers
and is likely to see improved execution,
the firm said.
relation to the cost of power supply is also
necessary. It has to necessarily include
periodic rise in fuel and power purchase
costs. These factors remain critical in the
long run for sustained improvement in the
financial position of the discoms, he said.
However, ICRA notes that state electricity
regulatory commissions (SERCs) in only 20
out of 29 states have issued tariff orders for
FY2017 so far, indicating moderate progress
in terms of issuance of tariff orders for the
year. Fuel and power purchase cost adjust-
ment framework for such a pass-through
is yet to be implemented in Uttar Pradesh,
despite a large unrecovered revenue gap - a
matter of concern.
 October 2016
www.InfralinePlus.com
Reports & Studies
Goa has failed to attract investments: ASSOCHAM
Even as the state government has been
talking of achieving success in attracting
investment through the Investment
Promotion Board, a study by the Associated
Chambers of Commerce and Industry
of India (ASSOCHAM) has criticised Goa
for its failure to attract new investment.
According to the study, Goa urgently needs
to infuse confidence in investor community
to attract investment. New investments
have virtually failed to come in due to a
fluid economic situation prevailing in the
state, says the study. The study, which
is blight on Goas economic situation,
says that predictability and stability are
important conditions for a continuous flow
of investments and it seems both are
Air pollution cost India 8.5% of its GDP in 2013: Study
72
According to a joint study by World Bank
and University of Washington - The
cost of air pollution: strengthening the
Cybercrime in India up 300% in 3 years: Study
Cybercrime cases in the country
registered under the IT Act surged nearly
300 per cent between 2011 and 2014,
according to a study, which cautioned
that cyberattacks around the world are
occurring at a greater frequency and
intensity. The study revealed that in
the past, the attacks have been mostly
initiated from countries like the US,
Turkey, China, Brazil, Pakistan, Algeria,
Turkey, Europe, and the UAE, adding
with growing adoption of internet and
smartphones India has emerged as one
of the primary targets among cyber
criminals. With every passing year,
seriously lacking in Goa. The growth rate of
inflow of new investments dipped to about
nine per cent in 2015-16 from a level of
over 91 per cent in 2014-15. As of 2015-16,
Goa has attracted outstanding investments
worth about Rs 26,000 crore, which
include all projects under various stages
economic case for action - total welfare
losses between 1990 and 2013 because
of premature deaths from air pollution
increased by 94%. Of this, damages from
ambient PM 2.5 air pollution rose by 63%
during this period to $3.5 trillion, while
damages from household air pollution
from cooking with solid fuels jumped
almost four-fold to $1.5 trillion, adjusted
to the purchasing power parity (PPP) in
2011. In terms of welfare losses because
of air pollution, India ranks second after
China at $505.1 billion, or 7.69% of its
gross domestic product (GDP), in 2013.
Premature deaths due to air pollution in
2013 cost the global economy about $225
cyberattacks continue to escalate in
frequency, severity as well as impact. In
of announcement or implementation.
However, the growth in outstanding
investments has not been able to pick up.
It suggests that the government take
urgent corrective measures and facilitate
ease of doing business to infuse confidence
in investor community in the wake of falling
investments. Declining investments in
power sector can dampen the spirit of
investor community as energy consumption
is positively linked to economic growth,
especially manufacturing constituents like
cement and steel, notes the study. Besides,
importance of power can be judged by
the fact that it is required by agriculture,
industrial and domestic household sectors
for their functioning.
billion in lost labour income, or about
$5.11 trillion in welfare losses, worldwide,
according to the report. India reported
the highest loss in labour output in 2013
owing to air pollution globally at $55.39
billion (2011 PPP-adjusted), or 0.84%
of its GDP. China followed close behind
with $44.56 billion, or 0.28% of its GDP,
lost due to forgone labour output. Adding
welfare costs and costs of lost labour
due to air pollution puts Indias GDP loss
at more than 8.5% in 2013. Indias GDP
growth at constant prices was less than
7% in 2013-14. So air pollution alone
might be offsetting the Indian economys
growth efforts.
India, from 2011 to 2014, there has been
a surge of approximately 300 per cent in
cybercrime cases registered under the IT
Act, 2000, said the Assocham-PwC joint
study. Attackers can gain control of vital
systems such as nuclear plants, railways,
transportation or hospitals that can
subsequently lead to dire consequences
such as power failures, water pollution
or floods, disruption of transportation
systems and loss of life, noted the
study. In the US alone, there has been
an increase of nearly 50 per cent in
reported cyber incidents against its critical
infrastructure from 2012 to 2015, it said.

Reports & Studies
India biggest recipient of remittances in 2015; Kerala gets highest share
India was the biggest recipient of
remittances globally in 2015, with the
southern state of Kerala accounting
for the highest share, a study showed.
India received $69 billion in remittances,
followed by China at $64 billion, according
to the report Remittances and its impact
on financial inclusion and development
in India, commissioned by Western
Union, an American financial services
and communications company. Kerala
received 25-30% of the remittances to
India, followed by Andhra Pradesh, Tamil
Nadu and Punjab. Kerala and Tamil Nadu
used most of the remittances not just for
subsistence and debt repayments but also
Sell last gasoline car by 2035 to meet climate goals, study says
The last gasoline-powered car will have to
be sold by about 2035 to put the world on
track to limit global warming to the most
stringent goal set by world leaders last year,
according to a study. The report, by a Cli-
Jet fuel could be produced from trees, study claims
Australias iconic gum trees may be used
to produce enough low-carbon renewable
jet fuel to power five per cent of the
worlds aviation industry, a new study
has claimed. Renewable fuels that could
power commercial aeroplanes are limited
and expensive but a solution could be
growing all around us, according to lead
researcher Carsten Kulheim from The
Australian National University (ANU).
If we could plant 20 million hectares of
eucalyptus species worldwide, which is
currently the same amount that is planted
for pulp and paper, we would be able to
produce enough jet fuel for five per cent of
the aviation industry, he said. The aviation
for productive reasons such as education,
healthcare expenses and bank savings,
mate Action Tracker (CAT) backed by three
European research groups, said a drastic
shift was needed towards clean electric cars
and fuel efficiency since transport emits
about 14 percent of world greenhouse gas
emissions. Last December, world leaders at
a Paris summit set a goal of limiting a rise
in temperatures to well below 2 degrees
Celsius (3.6 Fahrenheit) above pre-industrial
times while pursuing efforts for a much
tougher 1.5 C (2.7F) ceiling. We calculate
that the last gasoline/diesel car will have
to be sold by roughly 2035, the CAT report
said, to make the car fleet consistent with
staying below 1.5C. It assumes the last
fossil-fuel vehicles would be on the roads
sector globally produces about two per
cent of all human-caused carbon dioxide
emissions. Eucalyptus-based fuel would
initially be more expensive than fossil
fuels to make on a mass scale, but would
produce significantly less net carbon
October 2016
www.InfralinePlus.com
the report said. The report was prepared
by Edelman India, the research and
analytics department of Edelman. The
paper highlighted the positive impact of
inward remittances on financial inclusion,
poverty and social factors such as health
and education. The Gulf countries are
among the top eight remittance sources
for India in 2015. Five Gulf Cooperation
Council (GCC) countriesthe UAE,
Qatar, Saudi Arabia, Kuwait and Oman
contributed 50% of the total value
of remittances in 2015, despite their
economies suffering from a decline in
oilprices.
until 2050. Its striking that its so early - it
means a huge change in the whole automo-
bile industry, Niklas Hhne, of the NewCli-
mate Institute, said. The other think-tanks
behind the report were Ecofys and Climate
Analytics. The phase-out is earlier than set 73
by most car makers. Toyota, for instance,
has a zero carbon dioxide emissions chal-
lenge for new vehicles under which it aims
to cut emissions from its vehicles by 90
percent by 2050, from 2010 levels. Many
scientists reckon that the 1.5C goal, seen
by many developing nations as a dangerous
threshold for droughts, floods and rising sea
levels, has already slipped out of reach and
that the 2C limit is growing close.
emissions, researchers said. Kulheim
said powering a modern jet aircraft with
anything other than fossil fuels was
difficult, due to the high energy required.
Renewable ethanol and biodiesel might
be okay for the family SUV, but they just
dont have a high enough energy density
to be used in the aviation industry, he
said. The study examined how to boost
production of monoterpenes to obtain
industrial scales of jet fuel from plants.
This includes selecting appropriate
species, genetic analysis, advanced
molecular breeding, genetic engineering
and improvements to harvesting/
processing of the oils.
 October 2016
www.InfralinePlus.com
People in News
Rajeev Sharma takes over as Power Finance Corporation CMD
Tata Power appoints Chetan Tolia as Welspun Renewables CEO
74
Tata Power Co. Ltd has named its chief
human resources officer Chetan Tolia as the
new chief executive officer and executive
director of Welspun Renewables Energy Pvt.
Ltd, which was acquired in a Rs.9,249 crore
deal in June. Tata Power said its unit Tata
Power Renewable Energy Ltd. has complet-
ed the acquisition of Welspun Renewables
and its arms in the largest deal involving
renewable energy firms in the country.
GK Satish takes over as Director (BD), IOC
G K Satish has taken over as Director
(Planning and Business Development) of
Indian Oil Corp (IOC). Prior to this, he was
Rajeev Sharma has taken over as the Chair-
man and Managing Director of state-run Power
Finance Corporation (PFC). Sharma succeeds
M K Goel who retired on September 30, 2016
on attaining the age of superannuation. Prior
to joining PFC, Sharma was the CMD of Rural
Electrification Corporation (REC). Under his
leadership, REC scaled greater heights in
excellence by doubling the revenue and profits
in the last five years. He is considered the
architect of Governments flagship schemes
like Rajiv Gandhi Grameen Vidyutikaran Yojana
(RGGVY). Sharma holds B Tech (Electrical)
and Masters Degree in engineering from IIT
Roorkee and also an MBA degree from FMS,
Including the assets acquired from Welspun
of 1.1 giga watts, Tata Power Renewable
Energy now has 2.3 GW of renewable power
capacity. This acquisition will enable the
company to deliver significant value for all
stakeholders as most of the assets are rev-
enue generating and operating assets...The
acquisition is also a significant step towards
attaining the companys objective of having
non-fossil fuel based capacity up to 30-
40% of its total generating capacity, Tata
Power said citing chief executive officer and
managing director Anil Sardana. Tata Power
Company has 9.4 GW of power generation
capacity from all sources at present, which
it wants to double in six years. Welspuns
1.1 GW of capacity includes 990 mega watt
(MW) of solar power and about 150 MW of
wind capacity.
executive director in-charge (Gas Business)
at IOC. He replaces Debasis Sen who super-
annuated on August 31, 2016. A Graduate in
Mechanical Engineering from the National
Institute of Technology, Surat and a Post-
Graduate in Management from Management
Development Institute, Gurgaon, Satish has
over 30 years experience in IOC in the areas
of marketing operations, logistics, business
development, international trade, natural
gas business and human resources. He is
also Chairman of IndianOil-Adani Gas Pvt
Ltd, which is developing city gas distribution
(CGD) networks in various cities across the
Delhi University. He has more than 30 years of
experience and has served in various positions
in Central Electricity Authority (CEA), Power
Grid Corporation & PFC (as Director, Projects).
In CEA, he was involved with the design,
engineering and consultancy of Nathpa Jhakri
HE Project (1500 MW). During his tenure as
Deputy Secretary in the Ministry of Power, im-
portant projects like 2000 MW Talcher- Kolar
HVDC Bipole and Tala Transmission System
(first public private partnership) of POWER-
GRID were approved by the Government. He
has also looked after APDRP, Rajiv Gandhi
Grameen Vidyutikaran Yojna (RGGVY) apart
from THDCIL, NEEPCO, BBMB and SJVNL.
Vivekanand appointed Director-
Finance at ONGC Videsh
Vivekanand has taken over as the Director
(Finance) of ONGC Videsh Ltd, the over-
seas arm of state-owned Oil and Natural
Gas Corp (ONGC). He brings over three
decades of experience as finance and
accounting professional in the upstream
oil and gas industry both in domestic and
international operations. He has played
key roles in financing campaigns of ONGC
Videsh raising financing of nearly USD 6
billion in the last three years.
country, and Chairman of IndianOil LNG
Pvt Ltd, which is setting up an LNG import
terminal at Ennore near Chennai. He is also
a Director on the Boards of Green Gas Ltd,
which is operating CGD networks in Agra
and Lucknow, and GSPL India Gasnet Ltd
and GSPL India Transco Ltd, which are
implementing cross-country natural gas
pipelines. IOC also named Satish as its
nominee director on Petronet LNG Ltd to
replace Sen. IOC holds 12.5 per cent stake
in Petronet and has right to nominate one
director on board of Indias largest liquefied
natural gas importer (LNG).
 Freel
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