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August 2016

Volume 5 | Issue 4 | `100

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The Complete Energy Sector Magazine for Policy and Decision Makers

G rowth for power & coal

S tressed solar

T ransforming India
Govt announces
draft Solar-Wind
Hybrid policy

Transmission push
on the cards with private
participation

Satyajit Ganguly Salil Garg Ramakrishnan M Saurabh Kumar


Managing Director Director-Corporate Ratings Vice President Managing Director
ONGC Tripura Power Co. Ltd. India Ratings The Smart Cube EESL
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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
August 2016 | Volume 5 | Issue 04

Editors Letter Editorial


Shashi Garg, Editor
August 2016, perhaps, will go down as one of the most
important months in the history of economic reforms in
India. After a lot of debate and deliberation, the Rajya News Team
Sabha finally passed the GST Bill on August 3. The Chetan Gupta
new tax regime will pave the way for a single unified
and uniform tax regime in India, something which has
been a long time demand of the industry. While clarity Analyst
is yet to emerge on the tax rate and various other issues Mohd. Arif
need to be ironed out, the economy is gung-ho about
the passing of the GST Bill. From the perspective of
investors, both domestic and global, the idea of one- Content Consultant
nation-one-tax would not only reduce the level of taxes but will also improve ease News Monster
of doing business.
Coming to the energy sector, the new GST regime is expected to be a mixed bag.
Renewable sector, currently a beneficiary of several indirect tax exemptions, may
be a big loser as a result of GST since the bill proposes to revoke most of the
exemptions. For the oil and gas sector, products like kerosene, naphtha and LPG Business Development
will be under the ambit of GST, while five items in the basket crude oil, natural
gas, aviation fuel, diesel and petrol have been excluded during the initial years. Manoj Narang, Director
Dual tax regime for the oil and gas industry is expected to make compliance Tel.: 0120-6799106 / 100
difficult and hence, may impact the industry negatively. Email: manoj.narang@infraline.com

On the other hand, power sector stands to benefit if is brought under the ambit
of GST. It is estimated that a GST rate of 18 per cent for the power sector could
result in 15-20 per cent reduction in retail tariff. Further, a cut in power cost will also
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improve payment by end-consumers and reduce incentive for theft and losses.
This will also help distribution utilities to reduce their problem of revenue deficit. Ashwini Solomon
The GST will also facilitate seamless movement of goods across various States Tel.: 0120-6799157/100
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of the manufacturing sector and the single uniform tax regime will also propel advertising@infraline.com
the Make in India program. This would make Indian products competitive in the
domestic and international markets which would further spur economic growth.
Apart from GST, the Government has also provided policy push which is beginning Circulation & Subscription
to bear fruit. In the coal sector, the Governments decision to allow flexibility in
utilisation of domestic coal has been well accepted. Flexibility in optimal use of Sneha Pandey
domestic coal in efficient Generating Stations will result in the cost of electricity Tel.: 0120 6799125
generation and reduce the power purchase cost of State Distribution companies. Email: sneha.pandey@infraline.com
Such flexibility will be able to leverage coal to electricity conversion, efficiency of
equipments as well as transportation cost optimization, thereby benefiting the
entire industry.
Similarly, the Government has come out with a draft National Wind-Solar Hybrid Form IV
Policy to promote large grid connected wind-solar PV system. This is aimed at Periodicity of its Publication: Monthly
Printers / Publishers /
optimal and efficient utilization of transmission infrastructure and land, reducing Editors / Owners
Mrs Shashi Garg
the variability in renewable power generation and thus achieving better grid Nationality Indian
stability. The goal of the Policy is to develop 10 GW of wind-solar hybrid capacity 14-D, Atmaram House, 1, Tolstoy Road
by 2022. All of this is likely to see enhanced investor interest in the sector. Amidst Address
New Delhi - 110001
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SHASHI GARG 1, Tolstoy Road, New Delhi - 110001
Managing Director and Editor Shareholders holding more than one percent of total Capital of the
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I Shashi Garg hereby declare that the Particulars given above are true to
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1, Tolstoy Road, New Delhi - 110001 A-31, Sector 3, Noida Sd
Email: business@infraline.com Tel.: 0120-6799100 Mrs Shashi Garg
Signature of the Publisher
August 2016
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InfralinePlus

Contents
Editors Letter
1

Cover Story 35
GST: A mixed bag for energy, infra
sectors
History was made on 3rd August, 2016, with
India taking a giant leap towards a single
unified market after the Rajya Sabha approved
the Goods and Services Tax (GST) a reform
considered almost three decades back.
Taxation experts say that the GST will transform
the Indian economy by giving rise to a common
market and reduce the cascading effect of tax
on the cost of goods and services.

2
35
Power Coal
4 20
News Briefs p4 News Briefs p20
Expert Speak: Satyajit Ganguly, Managing Director, In Conversation: Salil Garg, Director-Corporate Ratings,
ONGC Tripura Power Company Ltd p8 India Ratings p23

In Depth: Govt seeks transmission push with private Expert Speak: Ramakrishnan M, Vice President and
participationP10 Mayank Taneja, Senior Analyst, The Smart Cube p25

In Depth: Water management for thermal plants need of In Depth: Coal linkage auction for non-regulated sector
the hour P14 gathers steam p27

Statistics p18 In Depth: Flexibility in utilisation of domestic coal to


bring down cost of power generation P30
Statistics p33

Topics Covered Topics Covered


Power transmission Coal linkage
Thermal power generation Coal imports
Power reforms Domestic production
August 2016
www.InfralinePlus.com

Oil and Gas Renewable


41 53
News Briefs p41 News Briefs p53
In Depth: A long road ahead for CBM to be a potential In Conversation: Saurabh Kumar, Managing Director,
star p44 EESL p58
In Depth: LNG imports critical to rescue gas-based In Depth: Coming together of solar and wind: Govt
capacity p48 announces draft Hybrid policy p62

Statistics p51 Statistics p65

Topics Covered Topics Covered


Coal Bed Methane Energy efficiency
3
LNG imports LED Lighting
Natural gas demand Solar and wind

Expert Speak/Interview

Satyajit Ganguly Mayank Taneja


Managing Director, ONGC Tripura Senior Analyst
Power Company Ltd The Smart Cube Off Beat
67
In Depth: Prime Minister Narendra Modis Cabinet gets
some new faces

Reports & Studies


71
People in News
Salil Garg
Director-Corporate Ratings
Saurabh Kumar,
Managing Director
72
India Ratings EESL
August 2016
www.InfralinePlus.com

NewsBriefs | Power National


Indias total power generation capacity crosses 300 GW mark Jaypee Group in talks to sell stake
in power transmission unit
ister Piyush Goyal in a written reply to the
Rajya Sabha on Monday. Private sectors
cumulative installed power generation
capacity was 1,24,995.51 Mw as on June
30, 2016 while central plants account
for 76,296.76 Mw and state capacities
101,825,94 Mw. The minister also stated
that the country has generated 12.01
billion units of electricity from renewable
energy sources till June-end this financial
Indias total installed power generation year while the output was 65.78 billion
capacity has crossed the 300-Gw mark, units in 2015-16 and 61.78 billion units in
which includes 42 Gw of renewable energy 2014-15. The target from clean sources in
sources, including solar and wind. Indias 2015-16 was 70 billion units. The minister Debt-laden Jaypee Group, which has so
total power generation capacity was also told the House that 1,107.82 billion far sold power assets worth Rs.11,900
3,03,118.21 Mw as on June 30, 2016, which units of electricity were generated last crore, may get luckier and get more
includes 42,848.43 Mw, stated Power Min- financial year. funds as it enters into discussions
with JSW Group for selling its stake
States pull the plug on mega power equipment tender in Jaypee PowerGrid Ltd. The group
is also likely to get more funds from
The Centres plan to procure electrical its asset sale of Bina thermal power
equipment on a mass scale under its two plant than the stated Rs.2,700 crore.
flagship schemes for power supply reforms On 18 July, group company Jaiprakash
in states might not take off, even though Power Ventures Ltd agreed to sell its
4 tenders for the same had been bid out. 500 megawatt (MW) Bina thermal
This is because state governments are not power plant to JSW Energy Ltd for
willing to follow a uniform norm. The central an enterprise value of Rs.2,700 crore.
governments plan to bring down the cost of Separately, Jaiprakash Power Ventures
power equipment, and eventually the power has also started discussions to sell its
tariffs, faced stiff resistance from four states 74% in power transmission subsidiary
Uttar Pradesh (UP), Maharashtra, Madhya Jaypee PowerGrid Ltd. These deals are
Pradesh (MP), and Chhattisgarh of which Budget for 2016-17 had allocated Rs 5,500 critical for Jaypee Group as it struggles
three are Bharatiya Janata Party (BJP)- crore for Integrated Power Development to reduce its debt to stay afloat. As on
ruled. Power is a subject in the concurrent Scheme for urban power supply and Rs 3,000 31 March, Jaiprakash Power had a debt
list and state governments have so far been crore for the Deendayal Upadhyay Gram of Rs.22,414.94 crore.
procuring equipment themselves. The Union Jyoti Yojana for rural power supply.
PowerGrid approves investment proposals of Rs 2,731 crore

Power Grid Corporation has approved power projects in Chhattisgarh and other
investment of Rs 2,731 crore in various generation projects in Western region at
projects, including setting up of a an estimated cost of Rs 333.17 crore with
transmission system for solar park at commissioning schedule progressively by
Bhadla in Rajasthan for Rs 1,429.38 crore. March, 2019. The company will also invest
The board of the company approved in transmission system strengthening
as many as 11 proposals in its meeting associated with Mundra Ultra Mega Power
held on July 20. The transmission Project (Part-B) at an estimated cost of
system for solar park at Bhadla in Rs 300.94 crore, with commissioning
Rajasthan at an estimated cost of Rs schedule of 29 months. The projects also
1,429.38 crore with commissioning include Western Region Strengthening
schedule of 30 months from the date Scheme XVI at an estimated
of investment approval is among the investment cost of Rs 150.99 crore, with
approved proposals. The investment commissioning schedule of 24 months
approval also include transmission from the date of investment approval.
system strengthening for independent
August 2016
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National
Nationwide powermen strike on Sept 2 against Electricity (Amendment) Bill Piyush Goyal inducts Urban Vidyut
Abhiyantas to monitor Integrated
of the energy sector even as they labeled the Power Scheme
Bill as anti-people. The powermen had earlier
sought discussion on the modified Electricity
(Amendment) Bill with all the stakeholders
for an amicable settlement of the issues.
The meeting at New Delhi was attended by
the representatives of Electricity Employees
Federation of India, Indian National Electric-
ity Workers Federation, All India Federation
of Electricity Employees, All India Power
Public sector power employees have an- Engineers Federation (AIPEF), TNEB Work-
nounced a nationwide strike on September ers Union, All India Power Mens Federation Union Power Minister Piyush Goyal
2 over the Electricity (Amendment) Bill. In a (AIPF) and All India Federation of Diploma recently inducted Urban Vidyut
meeting held recently, National Co-ordination Engineers. AIPEF Chairman Shailendra Abhiyantas (UVAs) to monitor the
Committee of Electricity Employees and Dubey said NCCOEEE resolution mentioned implementation of the Integrated
Engineers (NCCOEEE) flayed the Centre for that the central government was playing hide Power Development Scheme (IPDS).
allegedly failing to address the burning issues and seek on the Electricity (Amendment) Bill. The Minister said the UVAs will take
the work on a mission mode, similar
Centre asks States to offer power to industries at fixed rates to the Grameen Vidyut Abhiyantas
deputed for the Deen Dayal Upadhyay
The Centre has asked all States to offer Gram Jyoti Yojana. Goyal further said
power to industries at a fixed rate for they will upload their reports on the
a fixed period to attract investments. implementation of the scheme on
Power Minister Piyush Goyal said in Lok the URJA mobile application of the
Sabha that the country was producing Ministry of Power in an effort to increase 5
sufficient power and hence efforts should transparency. Some of the UVAs will be
be made by state governments to attract inducted in the State power distribution
industries by offering uninterrupted power. companies. These UVAs have an
Industries need uninterrupted power. If experience of 3-15 years in project
we can guarantee power, investment will management/distribution franchisee/
come for industries. Therefore, I would infrastructure sector. The IPDS is part
like to request all members to persuade as per information reported by the States of the Ministry of Powers efforts to
their respective state governments to to Central Electricity Authority, energy ensure 24x7 electricity availability to
offer regular power to industries for a shortage at all-India level was reduced to all by 2022 and has a total outlay of Rs
fixed rate like Rs. 4, Rs. 4.5 or Rs. 5 per 2.1 per cent during 2015-16 which is the 65,424 crore.
unit for 10 or 15 years, he said. Goyal said lowest in last two decades.
No final decision on scrapping SPVs for four UMPPs

No final decision has been taken to UMPPs, namely Sasan in Madhya Pradesh,
scrap special purpose vehicles set up Mundra in Gujarat, Krishnapatnam in
for four ultra mega power projects in Andhra Pradesh and Tilaiya in Jharkhand,
Maharashtra, Odisha, Karnataka and have already been transferred to the
Chhattisgarh. No final decision has developers, he said. Out of the four
been taken to wind up the four special awarded UMPPs, two namely Mundra and
purpose vehicles (SPVs), Power Minister Sasan are in operation, the minister said.
Piyush Goyal said in a reply to the Lok The minister said 6x660 mw Sasan UMPP
Sabha. Activities in the ultra mega power in Madhya Pradesh, which was awarded
projects (UMPPs) -- Maharashtra, Odisha and transferred to Reliance Power in
(second additional UMPP), Karnataka and 2007, is fully commissioned. The 5x800
Surguja in Chhattisgarh -- are stuck due mw Mundra UMPP in Gujarat, which was
to various reasons, including agitation set up for these UMPPs. According to the awarded and transferred to Tata Power in
by local people and non-identification of minister, the Chhattisgarh government 2007, also stands fully commissioned,
a suitable site. Goyal added that around has said it in not keen on setting up he added.
Rs 96.82 crore has been spent by SPVs of 4,000-mw UMPP in the state. Four
August 2016
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NewsBriefs | Power States


National
No hike in power tariff for urban domestic consumers in UP Gujarat offers to sell Railways power
at low rates
Bundelkhand region where tariff for tube
well users have been brought down to Rs
160/BHP/month to Rs 100/BHP/month.
Commercial establishments like shops and
commercial complex and malls will see a
hike of 7.24% with the average tariff being
increased from 7.47 per unit to 8.01 per
unit. The new tariff will come into effect
expectedly from August 10 soon after UP
Power Corporation Limited (UPPCL) issues Gujarat government has offered to sell
Urban domestic power consumers in poll a notification in a day or two. Announcing Indian Railways its surplus electricity
bound Uttar Pradesh got a major sop when the decision, UPERC chairman, Desh Deepak for running trains and other related work
the UP Electricity Regulatory Commission Verma said that the tariff has been designed across the country. Gujarats state-owned
(UPERC) announced no hike in power tariff so as to compensate the rising cost of units currently generate around 1500 MW
for financial year 2016-17. The sop extended distribution companies without putting to 2000 MW electricity which is expected
to rural consumers, including those in excessive load on the consumers. to increase to 4,000 MW in the coming
years. The surplus electricity can be
Plan ready to meet Maharashtra power needs till 2040 supplied to the Railways at economical
rates through the national grid. In 2013-
The state energy ministry has prepared a 14, the railways paid Rs 10,000 crore for
plan to meet the power requirements of using around 4000 MW electricity across
the state till 2040. According to energy the country. If Gujarat sells its surplus
minister Chandrashekhar Bawankule, power to the railways, it can be of mutual
distribution sector will need 22,000 crore interest to both. The state-owned power
6 in the coming 25 years, while transmission generating units currently have unused
sector will require 15,000 crore. On the capacity of around 1500 MW to 2000 MW.
generation front, the MSEDCL will sign In 2013-14, Indian Railways used over
power purchase agreements (PPAs) for 17.5 billion units of electricity during 2013-
4,000MW in the coming years. Rest of the assembly, Bawankule admitted that 14, equivalent to about 4000 MW and paid
requirement will be met through renewable MSEDCLs financial position was not good. about Rs10,000 crore towards electricity
sources. At present MSEDCL is grappling Its arrears due from consumers have charges, says an analysis of Vidyut Energy
with oversupply and will have 6,000MW reached 20,000 crore, of which 13,000 (a unit of the Indian Railways). This 4000
surplus power even in 2019-20. Bawankule crore are owed by farmers. Lift irrigation MW used by the railways in 2013-14
clarified that the 4,000MW PPAs will be schemes (LISs) and public water works are constitutes about 1.8% of the countrys
utilized after 2025. Earlier, in the state also major defaulters. total power generation.

No hike in Punjab power tariff

With the Punjab Assembly poll round the to Rs 6,364 crore this year. Announcing
corner, the PSERC has brought relief for the detailed power tariff order, Punjab
the 85 lakh power consumers in the state. State Electricity Regulatory Commission
For a second consecutive year, the power (PSERC) chairman DS Bains said the
tariff for the year 2016-17 has been left decision to not increase the tariff was
unchanged. The state electricity regulatory not based on political considerations, but
commission has also announced a number because the state was power surplus
of sops for two important categories of and thus, there was no need to burden
consumers a portion of agriculture pump the consumers. Bains in fact projected
set consumers get free replacement of the state power utility to have a revenue
their pumpsets, while all categories of surplus of Rs 165.94 crore. He said the
industrial consumers will get a relief of Rs PSPCL would save a total of Rs 270 crore
0.36- Rs 0.11 per unit in power tariff. The consumers has remained unchanged, this year Rs 120 crore through interest
new rates will be applicable from August although the power subsidy bill of the payment and Rs 150 crore towards bringing
1. The power tariff for the domestic, non- Punjab State Power Corporation Limited down transmission and distribution losses
residential consumers and bulk supply will swell from Rs 5,600 crore last fiscal to 14.5 per cent by the end of this fiscal.
August 2016
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International
France and Ireland eye 1 billion euro power link by 2025 China stakes a strong claim in the
Greek electricity landscape
from Britain via Northern Ireland but is
looking for ways to increase its electricity
supplies. The planned 600-km link will run
between Brittany and the south coast of
Ireland. The (interconnector) will improve
security of supply on the island of Ireland
and increase competition, driving down
prices for customers, Fintan Slye, EirGrid
Chief Executive said. French average spot
prices on power exchanges were around
France and Ireland plan to build a 1 30 percent cheaper than those in Britain The strong presence of Chinese firms
billion euro ($1.10 billion) cable which last year, according to data from French came as a surprise in the tender
would allow electricity to flow between power grid operator RTE. If built, the for the concession of 24 percent of
the two countries by 2025, Irelands 700 megawatt (MW) sub-sea cable could power grid operator ADMIE, given
grid operator said as French President transport enough electricity to power that the interest of both Italys Terna
Franois Hollande visited the country. around 450,000 homes, Eirgrid said. and Frances RTE had been taken for
Ireland currently imports electricity granted. China entered the race for a
stake in the Greek grid through two
World Bank stops funding worlds biggest power plant plan giants, the State Grid Corporation of
China (SGCC) which was also present
The World Bank has suspended funding in the first tender for 66 percent of
to help develop a $14 billion hydropower ADMIE and China Southern Power
project in the Democratic Republic of Congo, Grid, which was not expected to weigh in
a stage in what could become the worlds as it does not fulfill the basic condition
biggest power plant, after a disagreement of the tender for participating in the 7
with the nation over implementation European interconnection system of
plans. The announcement to halt financing ENTZO_E. It is learnt that the latter
the Inga 3 project followed the Congos Chinese company has expressed an
decision to take the project in a different interest in entering a consortium with
strategic direction to that agreed between one of the other companies that fulfill
the World Bank and the government in the conditions. Government sources
2014, the Washington-based lender said hydropower project which would produce describe the Chinese interest as very
in a statement. The World Bank agreed to 44,000 megawatts. Inga 3 alone would significant and associate it with Beijings
$73 million in technical assistance for the produce at least 4,800 megawatts, almost strategy to acquire stakes in energy
first phase of the $100 billion Grand Inga double Congos current installed capacity. infrastructure projects in Europe.

Russia and Bangladesh sign $11.38 billion loan deal for nuclear plant

Russia and Bangladesh have signed an Federation, and Mohammad Mejbahuddin,


$11.38 billion loan agreement, paving the senior secretary of the Economic
way for the main construction work of Relations Department of Bangladesh,
Rooppur Nuclear Power Project. The inter- signed the agreement. Speaking at the
governmental loan agreement was signed event, Vladimir Sabushkin, senior vice-
in Moscow, according to a statement from president of ASE Group of Companies,
the ASE Group of Companies, the general said: Now we have both the legal and
contractor of the project. The Russian financial base for implementing the
loan covers 90 percent of the project cost Rooppur nuclear power project. For us,
and carries an interest rate of LIBOR plus as the general contractor of the project,
1.75 percent. The interest rate will not Russias state credit to Bangladesh is very
exceed 4 percent. The repayment period important to begin the main construction
is 30 years, including a grace period works. Bangladesh is borrowing the funds
of 10 years. Disbursement will begin from Russia to build the 2,400-megawatt
in 2017. Sergei Anatolyevich Storchak, nuclear power plant.
deputy minister for finance of the Russian
August 2016
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ExpertSpeak
Need to fast track GNA mechanism for devel-
opment of Inter-State Transmission Systems
Satyajit Ganguly, Managing Director, ONGC Tripura Power Com-
pany Ltd, outlines the challenges being faced by the power trans-
mission industry and why it makes sense to expedite implementa-
tion of the GNA mechanism in India.

As India embarks on developing a ro- jection or drawal) for 25 years as may


bust country-wide mesh of power grid, be prescribed by CERC. GNA holder
it is imperative to have a mechanism shall have the option to be scheduled
to allow planning with fair degree of as preferred customer provided the
certainty without prior knowledge of counter party is also having GNA un-
pairs of injection and drawal. System der Long-Term Open Access (LTOA)
strengthening for additional drawal category, Medium Term Open Access
and additional injection could be done (MTOA) and Short- Term Open
without knowing the contracted source Access (STOA) and
Satyajit Ganguly, Managing Director, ONGC
of purchase or sale because power in a Access through GNA Tripura Power Company Ltd
meshed network would be transferred power exchanges a market
by displacement. In other words, the (PX). friendly product and more accountability of
8
generator and the States/Consumer Further, transmission planners to anticipate and remove
could be given General Network Ac- GNA holders
product to improve congestion. Further, a new and
system reliability
cess (GNA) to Inter State Transmis- having PPAs and remove dynamic approach to planning
sion System (ISTS) for the agreed of more than congestion required for GNA would help in
quantum of power (MW). A GNA three years shall improving system reliability. With
agreement could become the driver for be entitled under LTA both GNA and PoC pricing being point
investment. The new approach should category. They may seek reservation based, the users will be able to get the
therefore involve introduction of GNA under MTOA/STOA category. For full benefit of PoC transmission pricing
mechanism in ISTS for transmission access sought by the drawing entity which is free from pan caking.
system development and hassle free (DISCOM, OA consumers) above its Specifically, power generators also
access to the transmission system by GNA, request shall be entertained only stand to benefit from GNA. Benefits
the Generators. for STOA/PX service at a premium include all India access with flexibility
GNA is the ability in MW to draw (say 100%) after accommodating GNA to change point of drawal, no liability
or supply from a given point/zone of holders. Generators may be mandated to pay for notional point of drawal
connection (POC) to any ISTS point to take GNA corresponding to their charges, no requirement to declare
as assessed by the Central Trans- ex-bus capacity (other than captive). target beneficiaries and connectivity
mission Utility (CTU) through system Drawee entity may also be mandated to be linked to GNA so that it does not
studies. The concept of PoC charges to take GNA corresponding to import result in congestion.
has de-linked the transmission charges / export requirement. Transfer of On the other hand, even the distri-
and losses from the notional path of physical GNA right at least within the bution companies (discoms) stand to
transaction. GNA is also not path Discoms of a state is a possibility. A benefit from GNA. Benefits include
specific or point-to-point specific. GNA registry would be set up to keep potential for buying of power from
Accordingly, GNA charges would be track of GNA transfers. anywhere in the market and reliable
the PoC charges. access for short term and medium
Benefits of GNA mechanism term market. This will be a great
Salient features of GNA GNA is expected to extend benefits to comfort to OA consumers as well as
Entities availing GNA shall have to the sector in general. These include a Discoms. Further, states would be
commit to pay such POC charges (in- market friendly transmission service empowered to determine their GNA
August 2016
www.InfralinePlus.com

requirement and get the ISTS built that despite such blanket approval, power purchases by DISCOMs are
for it. Drawing entities will also be the transmission network has not been few and far) and then apply for LTOA/
allowed to import power beyond built in an optimum manner until today. MTOA/STOA. It gives them some time
GNA subject to the margins. The Congestion is commonplace and not an and advantage in managing cash-flow
transmission premium will be shared exception specifically in inter-regional better before the commercial operation
amongst the GNA holders. In addition, corridors between NEW and SR, WR of the unit. With the implementation of
discoms will be able buy cheap and NR, S1 and S2 and ER and NR. The GNA, the generators will be forced to
power with certainty through the intra-regional corridors are equally con- apply for GNA immediately which will
PX where the competition is intense gested in W3 region and N3 region etc. start the fund outflow much before the
thereby benefitting the consumers. Therefore generators would like to commercial operation thereby ham-
get a guarantee from CTU that once pering the cash-flow balance.
Concerns they pay GNA along with counter- Lastly, GNA (Import/export
While the concept is designed to parties, their contract will be scheduled requirement) should be assessed by
derive all the benefits associated with without any congestion in ISTS, the States at least 4-5 years in advance
POC tariff, there are certain issues failing which a penal amount equal to and STUs of respective state should
which need to be safeguarded so that three-fourth of the contract value may be the nodal agency for assessment in
it remains win-win for all the stake- be recovered from CTU. Similarly, gen- line with Section 39 of the Electricity
holders. The success of the GNA erators connected to STU system may Act. But whether such arrangement
would be contingent upon the success like to get a guarantee from STU with under federal structure is maintainable
rate of actual scheduling of contracts similar penal provision. and whether CERC/SERC/CTU would
undertaken by sellers with buyers Secondly, some DISCOMs have take responsibility is something that
spread across the country with minimal filed petitions highlighting various only time can tell. This is a very crucial
congestion. The guidelines delineated operational/implementation issues of point as more and more States are
in NEP 2005 should be adhered to: POC and are not paying transmission implementing coercive measure to 9
Network expansion should be planned charges in line with POC. If those force IPPs to remain connected with
and implemented keeping in view an- issues are not resolved immediately STU only as embedded customers. In
ticipated transmission needs that would it would be difficult to ensure that such a scenario, development of STU
be incident on the system in the open DISCOMs pay their share of GNA corridor is paramount for developing
access regime. Prior agreement with charges, which may put the entire competitive power-market.
beneficiaries would not be a precon- concept in jeopardy.
dition. CTU/STU should undertake Third, presently, generators apply Summary
network expansion in consultation with for connectivity to start with much GNA is a market friendly transmission
stakeholders and take up execution before the synchronization and are service product which is intended to im-
after regulatory approval. permitted to arrange for tie-up with prove system reliability and to remove
It may be inferred from the above beneficiaries with ease (as long-term congestion. It will extend full benefit of
PoC transmission pricing, free from pan
caking of charges. It would also help
generators as it does not require identi-
fication of target region or beneficiaries
at the time of seeking access. However,
its success would be contingent upon
the beneficiary DISCOMs seeking
GNA as per their load demands. The
details regarding the term of payment
and the time of payment would have
be addressed separately and adequately
to ensure that neither generator nor
beneficiaries are burdened right from
the beginning.

The views in the article of the author are personal


For suggestions email at feedback@infraline.com
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InDepth
Govt seeks transmission push
with private participation

10

Policy reforms and increased confidence of lenders have made power transmission attractive
NITI Aayog has set a target of adding 51,400 ckm transmission line in 2016-17

By Team InfralinePlus

India is one of the few countries where the seventh five-year Plan, this is the investment destination. There have
the power transmission sector has been highest net addition of CKM under any been suggestions that foreign investors
opened up for private participation five-year plan. may get to own power transmission
and has garnered significant interest Policy reforms and increased lines in India as the government
from private players. The recent policy confidence of lenders have made the is looking at monetising the assets
reforms in distribution segment (UDAY power transmission sector in India by offering equity to international
scheme for discoms) and the push attractive for the private sector. The pension funds aimed at mopping up
for renewable energy can be seen as improved pace of project implemen- INR 10,000-12,000 crore investments.
the drivers for fast implementation of tation and stable realisation from The proposal will aim at unlocking
transmission lines during the Twelfth investment have transformed this value of the existing power trans-
Plan (2012-2017) at 21,912 circuit sector from what was earlier described mission lines to generate revenues that
km (ckm) as on May 31, 2016. Since as a stressed sector to a new promising can be re-invested in strengthening
August 2016
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transmission system and other infra- buyers, who expect gains from the Aravali Transmission Service Co.
structure projects. governments attempts to plug power Ltd. Both are subsidiaries of GMR
Even as the market opportunity for leakage and attract investments. Infrastructure.
private sector in transmission business Adani Transmission Ltd, Indias
has improved, strict qualifying require- largest private power transmission Historical trend
ments in recent tenders have ensured company is said to be in talks to buy Transmission infrastructure is the back-
that the most competent bidders are in a 74% stake in Maru Transmission bone for the operation of a competitive
the fray. This has improved credibility Service Co. Ltd and a 49% stake in electricity market. Development of the
and attractiveness for private sector transmission system must match with
with core competency in transmission the generating capacity on one side
Even as the market
and will ensure that bids are not and growing demand on the other with
aggressive and projects are completed
opportunity for private flexibility for generators to switch from
in time. A total of 13 projects went sector in transmis- one drawing entity (Discom or Con-
under tariff-based competitive bidding sion business has sumer) to another and vice versa for the
during 2015-16 at a cumulative esti- improved, strict quali- drawing entity to switch from one gen-
mated cost of INR 18,300 crore. Three fying requirements in erator to another. While transmission
projects each were won by Sterlite as a segment accounts for only about
recent tenders have
Grid, Essel Infra, Adani Power and 8% of the total costs of the power value
state-owned Power Grid Corporation
ensured that the most chain, it makes the real Umbilical cord
of India (PowerGrid). One was won by competent bidders are of power, without which all invest-
Kalpataru Power. in the fray. This has ments in power sector become fruitless.
Apart from buying operational improved credibility With Open Access now being more im-
assets, more companies are looking and attractiveness for portant than ever before, transmission
to bid for projects in 2016-17, both is not only an enabler for power but
private sector with core 11
for PowerGrid EPC (engineering, also is the multiplier of a competitive
procurement, construction) projects
competency in trans- power market as well as basic param-
as well as for the PPP-BOT (public- mission and will ensure eter of power price sensitivity.
private partnership on built, operate, that bids are not ag- In recent years, investment in trans-
transfer) projects. Power transmission gressive and projects mission networks have lagged the curve
companies with assets that are up are completed in time vis-a-vis investments in generation. The
and running are seeing interest from accepted thumb rule is that for devel-
opment of a robust power system, every
unit currency invested in generation,
shall be followed by an investment of
0.5 unit in transmission. This ration of
1:0.5 has not been respected in Indian
power investment scenario.
In the 11th plan, which saw the real
burst of generation investments, the
ratio stood at 1:0.3. While generation
grew by 55%, transmission growth
was stunted at 27% only, leaving
large deficit to be filled in 12th plan.
This deficit moves the ratio to 1:0.6
or even more. The expected fund
requirement for meeting 12th plan
generation targets of about 88 GW
is about INR 4.8 lakh Crores, which
means the transmission sector would
need investments of about INR 3 lakh
Crores. Against this, government has
kept transmission investment target
August 2016
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InDepth

Fig.1: Net addition of transmission lines (in ckm) over at INR 2.09 lakh Crores only, thus
successive five-year plans compounding the existing investment
gap in transmission.
Transmission Lines Addition While there has been a marked
Over Successive Five Year Plans increase in the growth of the central
21912
sector transmission system and trans-
21351
19969 formation capacity during the previous
17636
17393 (XI) and the current (XII) five-year
13626 plans, transmission congestion in some
parts of the grid as evident in the last
few years, underlines the need for
emphasis on the development of ade-
quate transmission system, especially
at the intra-state level and its coordi-
VII Five Year Plan VIII Five Year Plan IX Five Year Plan X Five Year Plan XI Five Year Plan XII Five Year Plan nated planning and development with
(1985 -1990) (1992 -1997) (1997 -2002) (2002 -2007) (2007 -2012) (2012 -2017)
As of May 2016 the inter-state transmission system.
Net Addition in Circuit Kilometers India faces irregular power avail-
Source: Ministry of Power ability across states. Some states in
the northern and western parts of the
country have surplus power, while
While there has been a marked increase in the some states in the south face shortages.
growth of the central sector transmission sys- The central government, which has
tem and transformation capacity during the pre- made boosting power generation a key
policy priority, is looking to supply
12 vious (XI) and the current (XII) five-year plans, adequate power at affordable prices,
transmission congestion in some parts of the with the aim of doubling electricity
grid as evident in the last few years, underlines generation to two trillion units by 2019.
the need for emphasis on the development of The centre has set a target of bringing
adequate transmission system 24x7 power for all by fiscal 2019.

Future trends
Private sector investment in green energy corridor projects To meet the governments target of
providing 24x7 power to all, govern-
The green corridor, a INR 40,000 crore transmission network for renewable
ments think tank NITI Aayog has
energy, was envisaged by state-owned Power Grid Corporation in 2011. The
set a target of adding 51,400 ckm
project was divided into two parts to speed it up. PowerGrid is setting up the
transmission line in 2016-17, 82 per
first corridor connecting states rich in renewable energy. Work is also on for a
cent more than what was achieved in
second corridor connecting solar parks in Andhra Pradesh, Madhya Pradesh,
2015-16. In order to provide fillip to
Karnataka, Rajasthan and Gujarat.
the transmission segment, the gov-
Rajasthan, Karnataka, Gujarat and Andhra Pradesh will issue their tenders
ernment may soon invite bids from
later this year. These projects are expected to be awarded through transparent
private and public companies for
bidding to speed up transmission for upcoming solar parks. The move is in
interstate power transmission projects
line with the governments plan to open up power transmission to private
through reverse electronic auction on
investment. Adani Power, Sterlite Power, Essel Infra and Tata Power are likely to
build-operate-own (BOO) basis for 35
bid for these projects.
years. The proposal for separation of
The decision to adopt the tariff-based competitive bidding (TBCB) route for
planning function from PowerGrid has
new solar parks means the private sector would be allowed to compete for
also been mooted amid rising con-
21 prospective solar parks. It seems essential to ensure power evacuation
cerns on conflict of interest and level
infrastructure to the investors in solar projects. It takes 3-6 years for the
playing field for private companies as
developers to commission transmission lines while the solar project can be
the state-run company is involved in
ready in six months. Private participation will ease the burden on the government
planning the transmission system and
(PGCIL) to commission transmission projects in a limited time.
participates in the bidding as well.
August 2016
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Industry concerns
India is one of the few countries where the transmission segment of the power sector has been opened up for private
participation and has garnered significant interest from private players. The private developers however, face a number of
challenges in implementing transmission projects awarded under the competitive bidding route, which include:
- Delays in securing clearances under Section 164 and Section 68 of Electricity Act 2003;
- Delays in securing transmission license from the Appropriate Commission;
- Delays and cost escalation in securing Right of Way (ROW) clearance;
- Delays in acquiring forest land due to differing dispensations for Central Transmission Utility (CTU) vis-a-vis private
developers;
- Fixed quoted tariff for 35 years creates challenges due to long gestation period of the transmission projects leading to
cost and time overruns.
In contrast, the Central Transmission Utility (CTU) under cost plus regime does not face most of these challenges as:
- It has automatic clearance under Section 164 and Section 68 of the Electricity Act 2003 being deemed as a central
project;
- It is a deemed licensee;
- It has the power to pay double compensation for the forest land and acquire it without any procedural issues, being
deemed a central project;
- The tariff determination for projects executed by the CTU is under cost plus regime which allows any cost escalation
to be passed through the tariffs although there is a sunset clause which mandates competitive bidding for all future
projects.

India being on brink of explosive


Exponential growth in power generation has growth path cannot achieve it without
already proved that a healthy private sector robust power sector growth, which
participation is must to achieve significant cannot happen without having sufficient 13
emphasis on inter-state and intra-state
improvements in capacities. For private sector power transmission networks. Expo-
to draw confidence for participation in the nential growth in power generation has
process of competitive transmission, these already proved that a healthy private
key policy shifts are required to be made to sector participation is must to achieve
make the whole process more investor friendly, significant improvements in capacities.
empathetic and credible For private sector to draw confidence
for participation in the process of
competitive transmission, these key
policy shifts are required to be made to
make the whole process more investor
friendly, empathetic and credible.
Going forward, demand could
further increase with increasing
industrialization. If Indias trans-
mission capacity is not augmented in
a timely manner, the grid congestion
problem is expected to further
aggravate in certain areas. In order
to address the changing market mind
set, there is a need to design and
develop a grid which addresses the
changing needs of the consumers and
generators as well as acts as a market
enabler for growth of power demand
and generation.

For suggestions email at feedback@infraline.com


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InDepth
Water management for thermal
plants need of the hour

14

Total freshwater consumption of coal plants in India estimated at 4.6 bcm meters per year
Dedicated targets for reduction in freshwater consumption need to be set for thermal plants

By Team InfralinePlus

Despite the central governments on coal-based thermal power, to save volumes of water for their operations.
determination to increase domestic coal water and prevent power outages. Water is mostly consumed for cool-
production up to 1bn tonne by 2019, ing, with additional water going into
the power sector faced a new foe, water Thermal power sector: A scrubbing the air pollutants from power
scarcity. A lack of cooling water for water guzzler? plant emissions and handling coal ash.
coal-based power plants in Karnataka, Coal power plants are one of most A Greenpeace India analysis of
Maharashtra and West Bengal led to water-intensive industrial users of fresh a report released in March this year
repeated shut downs and curtailment in water across the world and in India. estimates that the total freshwater
electricity generation.The water crisis The water consumption of coal power consumption of coal power plants in
has once again highlighted the urgency plants has not received sufficient at- India is 4.6 billion cubic meters per
of shifting to a diversified energy tention, even during a drought affected year. This is enough to meet the basic
model that reduces Indias reliance year. Coal power plants require large water needs of 251 million (25.1 crore)
August 2016
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people. This figure will more than The water available in Indias most Such abnormally low levels of
double if all proposed plants are built. important reservoirs now stands at water have already affected electricity
According to the report, the water merely 29% of total storage capacity potential and generation, particularly
consumption for solar and wind of 45.8 billion cubic metres, the latest at hydropower projects. The electricity
energy is negligible in comparison to numbers released by the Central generation from Tehri hydro power
coal and the governments ambitious Water Commission (CWC) reveals. project stood at 205 million units
175 GW target for wind and solar The commission monitors live water (MUs) on March 10 compared with
energy holds the key to securing storage status of 91 big reservoirs that 1,921 MU at full reservoir level,
both water and electricity supplies have a holding capacity of 150 BCM, according to data available with
in water stressed regions. The total which is 62% of the total storage Central Electricity Authority (CEA).
capacity of power plants operating in capacity in India. Out of these, 37 res- On March 10 last year, the energy
Maharashtra which use fresh water in ervoirs have the capacity of generating content was 386 MUs in the dam on
cooling towers and cooling ponds is more than 60 MW of hydropower. the Bhagirathi River in Uttarakhand
14,660 MW while these coal power in the Himalayas.The situation is even
plants altogether consume about 350 worse in some other dams. The energy
million cubic metres of water each The total capacity of content at the SardarSarovar dam
year. On the other hand, the total power plants operating on the Narmada River, the countrys
capacity of power plants in Madhya in Maharashtra which largest in central India, stood at 95
Pradesh which use fresh water in use fresh water in cool- MU on March 10 against 1,818 at full
cooling towers is 9344 MW and these ing towers and cooling reservoir level. It was 288 MU on
coal-based power plants altogether the same date last year, according to
consume about 222 million cubic
ponds is 14,660 MW CEAs data.
metres of water each year. while these coal power
It is estimated that power plants of plants altogether con- Treatment of sewage water 15
National Thermal Power Corporation sume about 350 million for TTPs: An alternative?
(NTPC) at Farraka (West Bengal), cubic metres of water Given the increasing competition for
Adani Power at Tiroda (Maharashtra), each year. On the other water for different uses like agriculture
GMR at Warora (Maharashtra), and domestic supply, it is clear that
MAHAGENCO at Parli(Maharashtra)
hand, the total capacity such problems are likely to increase in
and the Karnataka Power Corporation of power plants in Mad- the future. The government of India has
(KPCL) at Raichur(Karnataka) were hya Pradesh which use also recognised the seriousness of the
the worst affected, losing about INR fresh water in cooling issue and has started taking steps to ad-
2,400 crore in revenues due to the towers is 9344 MW dress it. The one measure that it seems
shutdowns. to be relying upon in a big way is to
require thermal power plants to use
Figure-1: Generation and Revenue Losses from Coal-based treated sewage rather than fresh water.
power plants (due to water scarcity) (for the period between In the amendments to the National
January 1, 2016 and May 21, 2016) Tariff Policy (2006) notified by the
Ministry of Power (MoP) on Janu-
KPCL (Raichur) Generation and Revenue Losses from Coal-based ary 28, 2016, there is a provision that
Generation and Revenue Losses
power plants (due tofrom
waterCoal-based
scarcity) power
plants (due
MAHAGENCO (Parli)to water scarcity)
now requires that the thermal power
plant(s) including the existing plants
GMR (Warora) located within 50 km radius of sewage
Total generation loss: 6,828 MUs
Total revenue loss: INR 239,004 lacs (INR 2390 crore) treatment plant of any municipality/lo-
Adani Power (Tiroda)
cal bodies/similar organisation shall
NTPC (Farakka) mandatorily use treated sewage water
produced by these bodies
NTPC Adani Power MAHAGENCO
(Farakka) (Tiroda)
GMR (Warora)
(Parli)
KPCL (Raichur) Governments directive to use
Generation Loss (MUs)
recycled sewage water by power
1,119 570 480 4,529 130
Revenue Loss (in INR Lakhs) 39183 19958 17136 158,516 4,211
plants will call for an investment of
up to INR 32,000 crore to meet the
Source: Greenpeace Report (June 2016) requirement of 80 GW capacities of
August 2016
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InDepth

Water-Power Nexus: Several TPPs face shutdown undermining financial viability


Case Study: Maharashtra

This summer has already seen temporary shut downs of KPCLs Raichur power plant and NTPCs Farakka plant due
to lack of water. MAHAGENCOs Parli power plant has been shut since July 2015 due to lack of water. Five years earlier
Maharashtras state-owned utility, MAHAGENCO, had shut down several units of the 2340 MW Chandrapur Thermal Power
Station due to the impact of drought. The construction of NTPCs Solapur power plant in Maharashtra has been delayed
due to huge question marks about where the plant will get water to run on. Water scarcity could severely undermine the
plants financial viability.
Water crisis in Maharashtra had been precipitated as Dhapewada dam, the water source for 3,300 MW Tiroda power
plant of Adani Power, had almost gone dry. The only way to increase water level in this dam is to get water released from
Bawanthadi dam in Madhya Pradesh (MP) having capacity of 217 million cubic metres (mm3). The states share is 50%.
Tiroda plant supplies 2,400 MW on an average to Maharashtra State Electricity Distribution Company Limited (MSEDCL).
At present, the discom has 1,700 MW surplus power during night hours and 1,000 MW extra power during day hours.
Closure of Tiroda plant could lead to shortage of 700 MW during night and 1,400 MW during day. MSEDCL would have
had to buy additional power from open market. If power was not available at affordable rates, then MSEDCL would have
gone in for load shedding. Closure ofTiroda plant would burden MSEDCL with INR 233 crore as the company would have
to pay capacity charges to Adani as per the power purchase agreement (PPA).
Given the precarious water situation in large parts of India, the fact that generating electricity from coal requires significant
quantities of water is a clear financial risk multiplier. Financial risks from water scarcity could range from physical constraints,
where plants will experience water shortages leading to shutdowns, to regulatory risks with increased constraints on water
use, the restriction or cancellation of permits and tighter technological requirements to curtail water use. Civil unrest
because of the conflict between power generators and local farming communities over access to water will further reduce
companies social license to operate, and bring reputational damage to financiers of new coal projects. This could result
16 in abrupt policy changes, as policy makers realise that water consumption based on existing policies is unsustainable.

state and central utilities depending


Governments directive will not be legally binding upon the distance between sewage
and it depends on state regulators to implement treatment plant and the power plant,
according to Industry estimates.
it. But even if central and state generators with Governments directive will not be
aggregate capacity of 80 GW follow this directive, legally binding and it depends on state
they would be requiring supply of 8,000 million regulators to implement it. But even
litres treated water per day if central and state generators with
aggregate capacity of 80 GW follow
this directive, they would be requiring
supply of 8,000 million litres treated
water per day.
Recently, NTPC has decided to
use sewage water treated by Nagpur
Municipal Corporations (NMC) sewage
treatment plant (STP) at Bhandewadi for
its Mouda plant. The plant is operating
two 500 MW units using Gosikhurd
water. NMC is building a 200 million
litre per day (MLD) capacity STP at
Bhandewadi.While recycling and reuse
of sewage is a welcome step, it needs
to be undertaken with great caution and
only after assessing implications in each
individual case.
Finding the coal to run power
plants in India is no longer the big
August 2016
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hurdle it was a couple of years ago. available in which water is replaced not possible for power plant operators
Coal India (CIL) has cranked up with condenser cooling systems based to expect water availability at current
production, and inventories held on air. levels in the future. Deploying a water
by power producers are at a record The projected water scarcity in management strategy today would
high. The bigger resource crunch future will potentially cripple power help companies mitigate the impact of
today is water. The water needed in plant operations resulting in revenue upcoming water scarcity and ensure
ash-handling systems and cooling losses running into several crores on sustainability of their operations, in
plants could easily create acute a daily basis. The future situation is the long term.
local shortages, which would in turn alarming, considering that 2/3rd of Water management needs to become
lead to power plants being turned the current and planned capacities an integral factor in planning of future
off and electricity prices spiking. fall in water stressed regions. Hence, strategic initiatives. For existing
Power Ministry is preparing a the risks to operations due to water plants, dedicated targets for reduction
national roadmap for setting up water scarcity would impair the viability in freshwater consumption need to be
reprocessing facilities, which could of power plant operations. Power set, with clear timelines for short-term
marginally increasepower tariff. plants, who have historically treated and long-term measures. Water-shed
The power plants require water for a water availability as a given, need to management plan could be combined
critical plant operation condenser hence radically overhaul their current with CSR activities to implement water
cooling. But, today, technologies are approach to water management. It is conservation measures for other users
in the watershed. The power plant
Coal India has cranked up production, and must prepare a scenario analysis to
develop a contingency plan to deal with
inventories held by power producers are at a exigencies like regulatory disruptions or
record high. The bigger resource crunch today physical shortages. For future capacity
is water. The water needed in ash-handling additions, location planning must 17
incorporate potential water risks in
systems and cooling plants could easily create the decision making process. Potential
acute local shortages, which would in turn lead measures that can be incorporated for
to power plants being turned off and electricity some of the under construction plants
also need to be assessed.
prices spiking
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StatisticsPower
Trends in Production of Primary Sources ofEnergy in India(2014-15)
Natural Gas Electricity*
Coal (Million Lignite (Million Crude Petroleum
Year (Billion Cubic Hydro &
Tonnes) Tonnes) (Million Tonnes)
Metres) Nuclear (GWh)
2005-06 407.04 30.23 32.19 32.2 1,18,818
2006-07 430.83 31.29 33.99 31.75 1,32,304
2007-08 457.08 33.98 34.12 32.42 1,37,344
2008-09 492.76 32.42 33.51 32.85 142576
2009-10 532.04 34.07 33.69 47.5 1,25,316
2010-11 532.69 37.73 37.68 52.22 1,40,524
2011-12 539.95 42.33 38.09 47.56 1,63,000
2012-13 556.4 46.45 37.86 39.83 1,46,497
2013-14 565.77 44.27 37.79 35.41 1,69,076
2014-15(P) 612.44 48.26 37.46 33.66 1,65,346
Growth rate of 2014-15 over
8.25 9 -0.87 -4.94 -2.21
2013-14(%)
CAGR 2005-06 to 2014-15(%) 4.17 4.79 1.53 0.44 3.36
(p): provisional
* Thermal electricity is not a primary source of energy
18
Trends in Installed Generating Capacity of Electricity in Utilities and Non-utilities in
India from2005-06 to 2014-15 (in Mega Watt )
Utilities Non-utilities
As on Grand Total
Thermal * Hydro Nuclear Total Total

31.03.2006 88,601 32,326 3,360 1,24,287 21,468 1,45,755

31.03.2007 93,775 34,654 3,900 1,32,329 22,335 1,54,664

31.03.2008 1,03,032 35,909 4,120 1,43,061 24,986 1,68,047

31.03.2009 1,06,968 36,878 4,120 1,47,966 26,980 1,74,946

31.03.2010 1,17,975 36,863 4,560 1,59,398 28,474 1,87,872

31.03.2011 1,31,279 37,567 4,780 1,73,626 32,900 2,06,526

31.03.2012 1,56,107 38,990 4,780 1,99,877 39,375 2,39,252

31.03.2013 1,79,072 39,491 4,780 2,23,344 43,300 2,66,644

31.03.2014 1,99,947 40,531 4,780 2,45,259 42,257 2,87,516

31.03.2015(F) 2,24,674 41,268 5,780 2,71,722 44,657 3,16,379

Growth rate of 2014-15 over 12.37 1.82 20.92 10.79 5.68 10.04

2013-14(%) CAGR 2005-06 to


9.75 2.47 5.57 8.14 7.6 8.06
2014-15(%)
Thermal includes Renewable Energy Resources.
** Capacity in respect of Self Generating Industries includes units of capacity 1 MW and above. CAGR: Compound Annual Growth Rate =((Current Value/Base
Value)A(l/nos. of years )-l)* 100 Source : Central Electricity Authority (P) Provisional
August 2016
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Actual power supply position of various States during the year 2015-16
Region / State Requirement Availability (MU) Surplus(+) / Deficit(-)
/ System (MU) (MU) (MU) (%)
Chandigarh 1,607 1,607 0 0
Delhi 29,626 29,583 -43 -0.1
Haryana 47,506 47,437 -69 -0.1
Himachal Pradesh 8,821 8,758 -63 -0.7
Jammu & Kashmir 16,572 14,037 -2,536 -15.3
Punjab 49,687 49,675 -12 0
Rajasthan 67,417 67,205 -212 -0.3
Uttar Pradesh 106,350 93,033 -13,317 -12.5
Uttarakhand 12,889 12,675 -214 -1.7
Northern Region 340,475 324,009 -16,466 -4.8
Chhattisgarh 25,650 25,310 -340 -1.3
Gujarat 103,544 103,540 -4 0
Madhya Pradesh 62,375 62,375 0 0
Maharashtra 141,817 141,361 -456 -0.3
Daman & Diu 2,337 2,337 0 0
Dadra & Nagar Haveli 5,925 5,925 0 0
Goa 5,120 5,119 -1 0
Western Region 346,767 345,967 -800 -0.2
Andhra Pradesh 50,437 50,366 -71 -0.1 19
Karnataka 64,302 60,971 -3,331 -5.2
Kerala 23,318 23,194 -124 -0.5
Tamil Nadu 97,277 96,586 -690 -0.7
Telangana 50,254 49,948 -307 -0.6
Puducherry 2,437 2,429 -8 -0.3
Lakshadweep 48 48 0 0
Southern Region 288,025 283,494 -4,532 -1.6
Bihar 23,960 23,658 -302 -1.3
Damodar Valley 18,437 18,234 -203 -1.1
Corporation
Jharkhand 7,735 7,560 -174 -2.3
Odisha 26,763 26,600 -163 -0.6
West Bengal 47,359 47,194 -165 -0.3
Sikkim 399 399 0 -0.1
Andaman & Nicobar 240 180 -60 -25
Eastern Region 124,653 123,646 -1,007 -0.8
Arunachal Pradesh 625 591 -35 -5.5
Assam 8,762 8,271 -491 -5.6
Manipur 840 810 -30 -3.6
Meghalaya 1,832 1,724 -108 -5.9
Mizoram 471 455 -16 -3.3
Nagaland 755 738 -16 -2.2
Tripura 1,202 1,146 -57 -4.7
North-Eastern Region 14,488 13,735 -752 -5.2
All India 1,114,408 1,090,851 -23,557 -2.1
August 2016
www.InfralinePlus.com

NewsBriefs | Coal National


Rs 2,237-crore revenue generated from 74 coal mines Coal Indias e-auction premium
shrinks to a half

mines under the provisions of the Coal Mines


(Special Provisions) Act, 2015 is Rs 2,237 crore
(excluding royalty, cess and taxes) which shall
be devolving entirely to the coal bearing state
concerned, Coal and Power Minister Piyush
Goyal said in a reply to Rajya Sabha. The rev-
enue which would accrue to the coal bearing
states from the allocation of mines comprises
of upfront payment as prescribed in allotment
document, auction/allotment process and
According to the government, revenue of royalty on per tonne of coal production, the Kollkata-based Coal India Ltd (CIL) may
around Rs 2,237 crore has already been gener- minister added. Under the provisions of Coal have benefited from higher realizations on
ated till May-end from the allocation of 74 Mines (Special Provisions) Act, 2015 and its spot sales of the fuel through e-auction for
coal mines. The revenue already generated rules, he said, the government has so far al- years. But not anymore. The miner sold
till May 31, 2016 from the allocation of 74 coal located 75 coal mines for specified end uses. coal through e-auction at a price mere
20 per cent more than the notified price
Power generation utilities owe Rs 12,028 crore to Coal India in the first quarter ended June - a sharp
drop from 40 per cent premium it fetched
Power generation utilities owe Rs 12,028 in the same period last fiscal. The sharp
crore to state-owned CIL as on March drop in the premium available on e-auction
31. Various steps are being taken by Coal sales - coupled with a drop in volumes
India for timely recovery of dues from all -- is attributed to the slump in spot power
its consumers. The party-wise outstanding prices on the back of lacklustre demand
20 dues are being reviewed by the subsidiary for electricity. E-auction was launched by
companies on a monthly basis. In case of the government in 2005 to ease coal sup-
major defaulters, CIL authorities have taken ply for customers in the non-core sectors
up the matter with various ministries. In a bid of cement, fertilizer and sponge iron. The
to rescue almost bankrupt state electricity new trend signals how the electronic trad-
retailers, the central government had last ing platform, a traditional profit centre for
year approved a scheme to rejig Rs 4.3 lakh- Discom Assurance Yojna or UDAY, aims at CIL, is now failing to attract customers.
crore debt of the utilities. The Cabinet had reviving ailing state electricity boards and According to fresh data, during the quarter
approved the scheme to ease the financial bolstering operational efficiency of power ended June, CIL offered 26.3 MT coal to
crunch of power distribution companies or distribution companies. It envisages reducing spot consumers but could allocate only
discoms that has impaired their ability to interest burden, cost of power and aggregate 12.3 MT - or 47 per cent - of the quantity,
buy electricity. The rescue plan, called Ujwal technical and commercial losses. thanks to the depressed demand.

CAG suspects 1st e-auction of coal blocks was rigged with multiple biddings

Multiple bids by corporate groups made firewalls against the probability of price-
through joint ventures or group arms rigging or cartelisation from then on. The
may have limited the competition for government has been looking at barring
11 coal mines auctioned in the first two multiple bids by any corporate group to
rounds in March 2015, according to curtail the probability of price rigging or
the federal auditors report on the first cartelisation, which the coal ministry then
e-auction of natural resources conducted believed had led to wide variation in the
by the Modi government. The auction winning bids described as outliers in
was conducted after the Supreme Court the first round of mine auctions for power
cancelled allotment of 204 blocks in 2014. plants. These outliers had prompted the
The Comptroller and Auditor Generals ministry to put under the scanner bids
(CAG) report supports the suspicion that for several blocks and finally reject the
the government itself had developed winning bid of Naveen Jindal group firm
after the first two rounds of bidding, for Gare Palma IV/2&3 blocks.
prompting the coal ministry to put up
August 2016
www.InfralinePlus.com

NewsBriefs
| Coal National National
Coal linkages: Captive power segment comes to CILs rescue Green panel gives nod to MCLs
coal washery project in Odisha

coal was sold at a (small) premium ranging


up to 100 a tonne, it has been learnt. CIL
is scheduled to auction linkages worth 18
million tonne in the current round. Nearly 5
million tonne linkages were sold in the first
two days. After improved demand in May,
when offtake was up by almost three per
cent; demand for the fuel slowed down in
Lack of demand for Coal Indias linkages July. According to the latest information,
from sponge iron and cement sectors offtake grew by merely one per cent during
is being made up in a small way by the the month. The modest growth came in

International
captive power segment. Excepting the small the backdrop of a one per cent reduction The Centres green panel has recom-
offerings of a Western coalfields mine, the in coal-based power generation during the mended environment clearance to state-
rest of the coal offered in the first three days month as hydro-electricity was available at owned Mahanadi Coalfields Ltd (MCL)
found buyers. In a majority of the cases, a cheaper rate. to establish a 10 million tonnes per
annum capacity coal washery in Talcher
Kerala makes fresh bid for coal block allocation district in Odisha. Coal India arm MCL
has proposed setting up of Jagannath
Four years after it lost a claim on the Coal Washery with 10 million tonnes per
Baitarani West coal block in Orissa, the annum (MTPA) capacity in an area of 30
state is making a fresh bid for coal block hectare at Hensmul village in Talcher
allocation. The State Government has district. MCLs coal washery proposal
requested the Centre to allocate it a was taken up for discussion in the recent
new coal block for power generation. A meeting of the Expert Appraisal Com- 21
tentative plan is to use the coal to fuel mittee (EAC) set up under the Union
a power plant that would be established Environment Ministry. As per the rule, the
jointly by Kerala and Odisha in Odisha. ministry gives final green clearances to
The Union Power Minister said the states the projects based on the EAC recom-
request would be considered when it mendations. Among conditions specified,
submits concrete plans for a (power) Corporation and the Gujarat Power MCL has been asked to set up the wash-
project. According to top officials, the Corporation Ltd, was allocated the 602 ery as per the project report submitted to
state is gunning for a coal block with million tonne Baitarani West coal block the committee. It has been told to trans-
reserves of 200 million tonnes. In in Talcher, Odisha. The next year, they port raw coal through pipe-belt conveyor,
July 2007, the Kerala State Electricity floated an SPV - Baitarani West Coal and clean coal and rejected ones by rail
Board, along with Odisha Hydro Power Company Ltd - to mine the block. with wagon loading through silo.

Mahanadi Coalfields to commission coal corridor by March 2017

Mahanadi Coalfields Ltd (MCL) would degrade the environment unless adequate
complete work on a separate, dedicated coal measures are taken to curb pollution. Be-
transportation coal corridor in the coal-rich sides taking action for regulatory compliance
Talcher region by March 2017. The align- of the stipulations of consent order, MCL
ment of the coal corridor would be such that being one of the major stakeholders of these
it passes through the coal mining blocks two areas needs to take some additional
but avoids the populated areas of the coal steps for improvement of overall environ-
bearing region. MCL has already commenced mental scenario of the areas. On ground-
work on the corridor. In the existing coal water and its recharge potential, it was
transportation road of 35 km length from decided that MCL should take expeditious
Hingula to Pawitra Mohan Chowk in Talcher action to start survey work by CSIR-National
area, MCl would deploy road sweepers MCLs jurisdiction and have been classified as Geophysical Research Institute (NGRI),
and water sprinkling system on the routes critically polluted areas of Odisha. Since MCL Hyderabad during post monsoon period and
passing through the populated areas. Both operates numerous coal mines in this belt, ensure that the report preparation by NGRI
Talcher and Ib valley coalfields are under such large scale mining has the potential to is completed by July-2017.
August 2016
www.InfralinePlus.com

NewsBriefs | Coal International


Greenpeace slams China for creating more coal-fired power plants Philippines coal demand to grow
over 1 MT/yr until 2020

climate change policy in 2014. This policy


resulted in China pledging to bring their
renewable energy usage up to 20 percent
by 2030. These changes began after it
was clear China was the biggest emitter of
greenhouse gasses in the world. Greenpeace
went on to explain, China was on track to
add one additional coal-fired power plant
a week until the year 2020. It is believed
this is due to the countrys issues related
to overcapacity. Greenpeace is concerned The Philippines coal consumption could
A report created by Greenpeace East because China has still not reduced their grow by more than 1 million tonnes annu-
Asia was released recently slamming emissions, two years after their climate ally until 2020 as it expects to switch on
China for creating more coal-fired power change policy was put in place, and are still more coal-fired power plants to support its
plants. This came after China signed a new unable to meet the air quality standards. economy. The Southeast Asian countrys
consumption of the fossil fuel reached
BHP Billitons thermal coal production falls 16% on year in fiscal 2015-16 22 million tonnes last year, and about 80
percent of that, or a record high 17.4 million
Mining giant BHP Billiton expects further tonnes, had to be imported almost entirely
declines in its thermal coal production in fiscal from Indonesia, the worlds top seller of
2016-2017 after periods of drought and heavy thermal coal used in electricity generation.
rain took a toll on output in the current fiscal Higher Philippine coal demand could be
year that ended June 30. Production plunged good news for Indonesia though it might be
22 16% year on year to 34.25 million mt and well insufficient to move prices in an over-sup-
below the years guidance of 40 million mt, plied market. The Philippines relies heavily
the company said in its annual operational on coal imports as domestic supply, mainly
review. Further declines are expected in fis- from mine operated by Semirara Mining
cal 2016-2017 and it sees output only at 32 Corp , is not enough and the heat content is
million mt. BHP Billitons New South Wales too low to be used in most of the countrys
coal production fell 13% year on year to 17.1 of our New Mexico assets, BHP Billiton said. power plants. Imports in 2014 totalled
million mt in fiscal 2015-2016 on bad weather The sale of the San Juan Mine to Westmore- 15.2 million tonnes, based on government
as well as rescheduling of mine plans based land Coal was completed in January this year data. Were looking at an increment of 1
on individual pit economics. Productivity im- and the transfer of the Navajo coal mine to million tonnes per year until 2020, Arnulfo
provements at New South Wales Energy Coal the Navajo Transitional Energy Company was Robles, executive director of the Philippine
are expected to partially offset the divestment on track for December 31, BHP said. Chamber of Coal Mines, said.

Bangladesh awards USD2.5b coal-fired power project to Malaysia

Bangladesh has awarded a USD 5 billion project. The MoU paves the way for the
project to build a 1,320-megawatt coal- Malaysian consortium to finance and build
fired power plant to Malaysia. The decision the power plant in Maheshkhali, Coxs
was conveyed by visiting Bangladesh Bazar, Bangladesh with the Bangladesh
State Minister for Power, Energy and Power Development Board (BPDB). The
Mineral Resources, Nasrul Hamid, to Prime Malaysian consortium and BPDB would
Minister Najib Razak. Special Envoy for have equal equity shareholding in the
Infrastructure to India and South Asia S. power plant with a concession period of 21
Samy Vellu, said Najib has expressed the to 25 years. Samy Vellu said if the parties
governments gratitude to the Bangladeshi decided to go ahead with the project after
government for awarding the project on a consortium will implement the project but the completion of the feasibility study, they
government-to-government understanding. it will do a feasibility study first, he said. In will form a joint venture (JV) company and
Its final. The Bangladesh Cabinet made 2014, Malaysia and Bangladesh signed a conduct international tender to appoint the
the decision to award the project to the government-to-government memorandum engineering procurement and commission
Malaysian Government. Now, a Malaysian of understanding (MoU) to implement the (EPC) contractor for the project.
August 2016
www.InfralinePlus.com

InConversation
Discoms unable to cater to
latent demand
After the Modi government came into power in May 2014, India
has seen dramatic improvement in generation, pushing electricity
shortfall to all-time lows. This turnaround was made possible by
increased production of coal. Coal availability has improved to
the extent that now the government is looking at exporting coal to
deal with rising stocks at mines. However, the moot question is,
how sustainable is this situation? As economic growth picks up
momentum and flows of investment into governments flagship
programmes like Make in India become stronger, electricity
demand too would go up. In such a scenario, will electricity
supply be able to keep pace with demand? In an interview to
Infraline Plus, Salil Garg, Director-Corporate Ratings, India
Ratings, fields questions about the medium-term electricity
supply challenges. Excerpts:
Salil Garg, Director-Corporate Ratings, India
Ratings
23

The central electricity authority the discoms are unable to cater to the already exporting electricity to Bangla-
(CEA) says India will become latent demand. Over the medium term, desh where potential exists for further
power surplus by end of this the demand is expected to catch up increase in volumes. There was a talk of
fiscal. How sustainable will with supplies. electricity export to Pakistan as well but
be this projected situation that has other geopolitical implications.
of excess power given the The government says it could
governments strong focus on export surplus coal. Do you think Do you think electricity demand is
manufacturing sector? India will find buyers for its high growing at a healthy pace? How
India has seen rapid growth in power ash content coal? Anyway, will is your medium-term outlook on
generation capacity in the past 5 years this strategy make sense for power demand growth?
because of investments in the sector India which has been undertaking Electricity demand is indeed growing
from 2006-2007 onwards. As a result, huge imports to meet domestic at a healthy pace though the bulk of the
almost 100,000 GW of new capacity coal deficit? Would India not increased demand is coming from the
has been added in the past five years. benefit more if it exports domestic segment. The slowdown in
This capacity has helped reduce the electricity instead of coal? industrial growth has, however, subdued
power deficits which is visible in CEA The government is hopeful of finding demand growth from the industry. As
data. Many states are reporting very buyers for Indian coal. It may sound we know, electricity demand in this
low or nil deficits. Therefore, CEA far-fetched but small quantities of country is also a function of effective
could be technically right in saying that Indian coal could get exported in the intermediation by the discoms. The
India will become power surplus by the near term while India would still be discoms have not been able to service
end of this fiscal. However, this will importing coal at some other locations demand fully due to their poor financial
not capture the latent demand in the as boiler designs and other economic status, thus there is a huge latent
system and scheduled load shedding by considerations will prevent complete demand in the sector. In the medium
the discoms. The surplus power situ- import substitution. Export of electric- term, electricity demand will still remain
ation will continue as long as the coal ity is an option but such exports are robust and could outstrip the GDP
supplies remain robust and as long as possible to limited geographies. India is growth. In case the discoms are able
August 2016
www.InfralinePlus.com

InConversation

to improve their financial capabilities very difficult, even achieving 1 billion but nuclear power will face difficulties
under Mission UDAY, there is a tonne will have serious challenges. One in gaining critical mass India, mainly
possibility of consistent double-digit also has to look at the demand. due to long gestation period, high cost
demand growth over the next 3 years. and concerns over fuel availability.
Do you think India should use Thus, coal will remain the dominant
Do you think time has come nuclear power instead of coal- fuel in India for power generation
for the government to open up fired generation given the even if further investments in coal
commercial coal mining for growing global concern over remain muted.
private sector? Is the goal of emissions? Or do you think clean
producing 1.5 billion tonne of coal technologies will show the Should India provide additional
coal by 2019-20 achievable? way in coming days? incentives to promote usage of
Globally coal mining is largely in the Theoretically, nuclear fuel has an edge LNG in electricity generation?
domain of coal mining companies over coal from emissions perspective Use of LNG for electricity generation is
instead of the captive users. Commer- not economical and is possible only with
cial mining companies are expected to India has not seen very the help of subsidies. It is not possible
have the technical capabilities to mine to have a large capacity based on an im-
coal economically and also manage
effective results from ported fuel which is highly price sensi-
the market risks. India has not seen allocating mines to the tive and needs constant government sup-
very effective results from allocating end users. Opening of port. This is not a viable business model
mines to the end users. Opening of the the coal to commercial from the point of view of investors and
coal to commercial mining involves users. At a time when LNG prices are
a deeper dialogue with the stakehold-
mining involves a deep- benign, there is no interest to invest in
ers especially from the regulatory and er dialogue with the gas-based power generation. Making the
24 environmental perspective. Given the stakeholders especially existing gas-based investments viable is
present state of affairs, a rapid action is from the regulatory and a challenge at the moment.
not expected on this front.
As far as growth in coal output is
environmental perspec- How far solar and wind
concerned, the last two years have tive. Given the present electricity can help India in
been very successful but it is difficult state of affairs, a rapid meeting its energy demand
to maintain high rates of output growth action is not expected given the intermittent nature of
over a long term. The target of 1.5 renewable?
billion tonne by 2019-20 appears to be
on this front India has declared very ambitious tar-
gets for solar, wind power generation
but even after achieving these targets,
renewable will remain less than 10%
of the total electricity produced in the
country. Yes, solar and wind pose grid
stability issues which will hopefully get
resolved with the help of advancements
in technology. Also, the renewables
will meet part of the incremental elec-
tricity demand and garner a large chunk
of investments in the sector. However,
we have seen that there are other
challenges in the renewable electricity
space including availability of capital
and poor financial health of counterpar-
ties. As a result, investors are cautious
at this moment.

For suggestions email at feedback@infraline.com


August 2016
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ExpertSpeak
Coal: Darker days ahead
for India?
In this article, Ramakrishnan
M, Vice President and Mayank
Taneja, Senior Analyst, the
Smart Cube, assesses the
current supply demand scenario
of coal in India and examines
the path chosen by the Indian
government while answering
questions on the governments
long-term strategyis India
aiming to become a net exporter
of coal by 2020, is privatisation
on the cards and the forecast
price trend. Ramakrishnan M, Vice President, the Smart Cube Mayank Taneja, Senior Analyst, the Smart Cube
25

Coal India Declining coal (consumed by power plants Hence, Indias coal production target
Limited (CIL), global coal primarily in West Bengal, Bihar has been set at 1.5 billion MT
the largest prices and reduced and Jharkhand) by 130%net (1 billion MT to be achieved by the
coal miner shipping rates have increase stood at ~6.3%. The CIL) by 2020.
globally, made imported coal announcement came amid With the above targets in mind,
contributes declining prices globally due the government passed the Coal
~82% to In-
cheaper than to increased output and low Mines Special Provisions Bill and
dias total coal domestic coal demand. Moreover, in June 2016, the Mines & Minerals Development
production. Dur- ~12 power stations across UP, and Regulation (MMDR) bill in
ing FY20152016, Maharashtra and West Bengal asked March 2016. It can now allow private
the state-led company produced ~536 the CIL to stop further supply due to companies to mine and sell coal in the
MT of coalan 8.5% Y-o-Y increase. extensive stockpile. This has raised open market. In addition, the state-run
However, the commoditys demand did eyebrows at the strategy pursued by CIL is ramping up operations and
not report a similar trend, with demand the state-owned miner, or indirectly, increasing production. To achieve the
from the power sector (the largest the Indian government. 1-billion MT mark, the company aims
consumer of coal) witnessing a decline. to invest INR 57,000 crore during
During FY20142015, the countrys The Government way 20152020.
power plants operated at 65% capac- Privatisation, reduced
ity, posting the lowest plant load factor dependence on import Uncertainty Prevails Price
since 1990. To achieve its goal of 100% rural Outlook and Challenges
While the gap between supply and electrification, the Indian government Ahead
demand should have led to a decline plans to introduce reforms in the coal With the production ramp-up, the
in coal prices, in May 2016, CIL industrythe countrys largest source government has been successful
raised the prices of low-grade coal of electricity. The aim is to make India in reducing imports so far. During
(consumed by a majority of the power self-sufficient in terms of coal produc- FY20152016, imports declined
plants in the country) by 1319% and tion, i.e., reduce dependence on im- ~15% Y-o-Y, and thus helped gener-
reduced those of higher grades of ports to zero by the end of this decade. ate savings of ~INR 28,000 crore in
August 2016
www.InfralinePlus.com

ExpertSpeak

foreign exchange. Further, in April states prefer importing coal, instead commodity to increase consumption.
and May 2016, coal imports posted of purchasing it domestically. Low A majority of the companys labour
Y-o-Y declines of ~15% and ~19%, demand from the power sector, (60%) goes into the production of the
respectively. The government expects clubbed with the above factors, has latter, the cost of which is difficult to
to save ~INR 30,000 crore during resulted in extensive stockpile at recover on account of very few takers
FY20162017. CIL mines, despite the government in India. In addition, the companys
However, declining global coal encouraging states to buy the plans to invest in hi-tech machinery
prices and reduced shipping rates commodity domestically, and forced and technology to improve efficiency,
have made imported coal cheaper the government to postpone its while ramping up production, are not
than domestic coal, especially in current plans of auctioning mines to being received well by labour unions
coastal statessuch as West Bengal. private and foreign companies. (which fear huge job losses).
Further, due to the increase in While the CIL has hiked the Amid the challenging and dynamic
prices by the CIL, along with rising prices of low-grade coal, it has scenarios prevailing in the domestic
surcharges, taxes and transport costs, dropped those of high grades of the as well as the global coal market,
the Indian government is taking
Due to the increase in prices by the CIL, along numerous measures such as priva-
with rising surcharges, taxes and transport tisation, accelerated infrastructure
development and faster approvals
costs, states prefer importing coal, instead of to create a favourable position for
purchasing it domestically. Low demand from India in the global coal landscape.
the power sector has resulted in extensive However, it remains to be seen as to
stockpile at CIL mines, despite the government what all measures will work for the
encouraging states to buy the commodity Indian market.
26 domestically, and forced the government to
postpone its current plans of auctioning mines The views in the article of the author are personal
For suggestions email at feedback@infraline.com
August 2016
www.InfralinePlus.com

InDepth
Coal linkage auction for Non-Regulated
sector gathers steam

27

CIL to auction coal linkages for an annual contracted quantity of 23.25 MTPA
Coal linkages for sponge iron sector conducted, cement sector in action

By Team InfralinePlus

Battling all odds, the Government has 2007. The linkage would be for five Bidders will have to execute
fast tracked the auction of coal linkages years, while there is an exit clause in separate FSAs for each Lot where they
for the non-regulated sector. The Gov- the agreement where the consumers can emerge as Successful Bidders. Lot
ernment had earlier conducted auction exit after two years without giving any shall mean a specified quantity of coal
of coal linkages for the sponge iron sec- penalty. The Agreement (FSA) shall be belonging to a particular grade which
tor and has now kicked off the bidding executed between the Successful Bidder is to be offered for sale and which may
process for the cement sector. Notably, and the relevant Subsidiary in respect of be dispatched by road or by rail. Each
this is the first time coal linkages are be- the Allocated Quantity within 30 days of Lot will contain only one Grade and
ing e-auctioned. Earlier, the fuel supply receipt of the Performance Security; and will also have a pre-identified Sec-
agreements were governed by the New submission of the documents specified ondary Source. Each Lot will have a
Coal Distribution Policy of October in Scheme Document. specified mode of dispatch i.e. road or
August 2016
www.InfralinePlus.com

InDepth

rail. Bidders will have to off-take coal Sub Sector Offered Quantity (Mt) Allocated Quantity (Mt)
from Lots via the specified mode of
dispatch only. Players with large NCRs Sponge Iron 3.78 2.098
and located at Pit head will control the Cement 2.15 1.29
ascent in price, and overall the outcome CPP 17.52 To be allocated
of auctions. 0.30 (Left out from
Steel Coking Coal To be allocated
Tranche I)
Auction for sponge iron 0.30 (Left out from
sector Others To be allocated
Tranche I)
Coal India has secured a booking of Sub Sector Offered Quantity (Mt) Allocated Quantity (Mt)
about 2.05 million tonnes (mt) against
the offer of 3.78 mt in the first tranche use plant. In February, 2016, the Cabi- of non-regulated sector maturing in
of linkage auction for the non-regulated net Committee on Economic Affairs FY2016 onwards and 25% of incre-
sponge iron sector. The auction was (CCEA) approved that all allocations mental CIL/SCCL production during
conducted in 18 slots spanning six of coal linkages/Letter of Assurance FY2016 over FY2015. FSA tenure may
days. There were no bidders in some (LoAs) for non-regulated sector shall be as decided by MoC, subject to a
of the slots while only in three slots, henceforth be auction-based. As per maximum tenure of 15 years.
the booking exceeded the offer amount CCEA decision, proportion of coal al- Separate quantities are to be ear-
and hence attracted a premium over the location between power and non-power marked for sub-sectors. It has been
notified price in such cases. sector was pegged at 75% and 25%, decided to conduct the current auction
respectively. Bidders with tapering of coal linkages under non-regulated
Key provisions linkages are allowed to participate in sector (Tranche I) under the following
Linkages are assured supply commit- the linkage auction. sub-sectors: Cement (excluding its
28 ments from Coal India Limited (CIL) Total quantity earmarked for CPPs), Sponge Iron (excluding its
and Singareni Collieries Company Ltd Tranche-I is 23.25 mtpa. Quantity for CPPs), all Captive Power Plants
(SCCL) to a company that has an end- Tranche-I shall be aggregate of FSAs (CPPs), Steel (Coking Coal), all EUPs
that do not fall as mentioned above
In February, 2016, the Cabinet Committee on are included in Others sub-sector
[excluding Fertilizer (urea) sector].
Economic Affairs (CCEA) approved that all A bidder must be a consumer of
allocations of coal linkages/Letter of Assurance coal engaged in the Specified End
(LoAs) for non-regulated sector shall henceforth be Use and should be the owner of the
auction-based. As per CCEA decision, proportion Specified End Use Plant for which it
of coal allocation between power and non-power is submitting the Bid. Bidders shall
sector was pegged at 75% and 25%, respectively not have been convicted for wrongful
utilization of coal by the Central
Bureau of Investigation or any other
governmental authority or statutory
or judicial body. The Specified End
Use Plant for which the Bidder is
submitting the Bid should have com-
menced commercial operations as on
the date of issuance of this Scheme
Document and should have a Nor-
mative Coal Requirement of not less
than 4200 TPA.
Auction methodology shall be
Non Discriminatory Ascending Clock
Auction. In this system auctioneer
increments the premium on electronic
platform till demand supply equi-
librium is established. Bidder will have
August 2016
www.InfralinePlus.com

to register each EUP on the MSTC Incremental


system. In the event that the bidder Demand/Supply Ratio in a particular round Round Premium
combines one or more DRI/Cement (Rs. per tonne)
units under one EUP, it will not be able
Greater than 100% and less than or equal to 125% 10
to split them subsequently and submit
different Bids in respect thereof. As a Greater than 125% and less than or equal to 200% 25
part of Conditions to Auction, bidders Greater than 200% and less than or equal to 300% 50
shall provide details such as technical Greater than 300% 100
data of EUP (capacity of EUP only
DRI/Cement plant is to be provided), turers Association had argued the
details of any existing coal linkages The Sponge Iron Manu- present fuel supply agreement system
(expiring after June 30, 2016) for the facturers Association be continued and the implementation
above EUP and details of any coal had argued against of proposed market based allocation
mine allocated under CMSP and/or mechanism be only done after de-
MMDR Acts.
clubbing of sponge iron velopment of infrastructure like port
Premium shall remain constant sector with cement and and railway to facilitate movement
over contract period; Notified price to captive power produc- of coal from mines/ports in an cost
be paid shall be suitably indexed on ers sectors. Further, the effective manner. The association
semi annual basis. The auction will wanted the government to shift to e-
association wanted coal
commence at the Reserve Price (Floor auction methodology after the indig-
Price) and the bidders shall bid for mines of high grades to enous production would be adequate
premium above the Reserve Price and be exclusively reserved to meet the ever rising demand.
for a particular Quantity. Reserve Price for iron and steel sector The Sponge Iron Manufacturers
shall be the notified price published for as coal is a feed stock Association had argued against 29
a particular grade of coal. clubbing of sponge iron sector with
Premium for the first round will be
used to reduce iron ore cement and captive power producers
Rs. Zero/ tonne. Other than the first unlike other sectors (CPP) sectors. Further, the association
round, round premiums will depend where it is used as heat- wanted coal mines of high grades to
on the Demand/Supply Ratio of the ing fuel be exclusively reserved for iron and
immediately preceding round and will steel sector as coal is a feed stock
be determined by the auction platform Linkage Auctions for Captive Power used to reduce iron ore unlike other
as follows: announced on June 22, and auctions sectors where it is used as heating
The system will then calculate the scheduled to start on 19 July 2016. fuel. Besides, Railways need to accord
Normative Coal Requirement of the Muted response has been received same priority to the sponge iron plants
EUP. Bidders can bid up to normative from sponge-iron and cement sectors in allocation of rakes as is given to
annual coal requirement of the end with 40-45% quantity remaining steel plants.
use plant (EUP). The Bidder shall un-allocated. Low response has been Similar fears were voiced by the
deposit the necessary Bid Security witnessed for higher grades. After the Indian Captive Power Producers
and the Process Fee. The Bidders cement sector, coal linkages will be Association indicating that the
also need to submit a process fee in offered to captive power plants. auction and market based allocation
the form of an earnest money deposit will help and serve purpose of coal
within the timelines stipulated. Post Voices of discontent consumers within the close vicinity
submission of the requisite infor- The decision to auction coal link- of auction pit heads and far away
mation/payments, e-auction process ages for non-regulated sector had its consumers will be deprived and
will commence wherein the bidders share of opposition from the sec- never be able to get coal through this
are required to bid for quantity tor. According to CII, the proposed process. According to the association,
against a certain price. methodology of auction may lead all CPPs should have been kept in
CIL will allocate coal from area or to unsustainable price discovery as one basket and pegged at par with
mine within a subsidiary, as deemed fit. demand for coal is much more than power generation category with the
Linkage Auctions for Sponge Iron and the availability and also because creation of quota for them.
Cement already concluded during June Coal India is the only supplier in the
For suggestions email at feedback@infraline.com
10-16 and June 28-July 2 respectively. market. Further, Cement Manufac-
August 2016
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InDepth
Flexibility in utilisation of domestic coal
to bring down cost of power generation

30

To reduce cost of power generation by 40-50 paise per unit; savings of Rs 25,000 crore PA
To help in better utilization and consumption of domestic coal by the industry

By Team InfralinePlus

Coal is the primary source of power dent on timely availability of coal and utilization of domestic coal by the
generation in our country. Broadly transportation distance of coal from generation utilities for reducing power
coal-based thermal power plants can mine to generating station. Presently, purchase cost of state-owned distri-
be categorized as Pit Head based on one hand, there are efficient power bution utilities. This initiative paves
plants, which are situated near coal plants faced with a shortage of coal way for optimal use of domestic coal
Mines, and Load centre based plants and on the other hand other plants are in efficient power plants as well as
situated near load centres. Depending running way below capacity. lowers the cost of electricity. It is also
upon the technology, thermal power The Union Cabinet on May 4, in line with the UDAY scheme which
plant has different efficiency levels for 2016 has approved a proposal to relax envisages liberally allowing of coal
conversion of coal to electricity. The norms for utilisation of domestic coal swaps from inefficient plants to effi-
cost of generation of power is depen- with an objective of allowing optimal cient plants and from plants situated
August 2016
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away from coal mines to pit head to


minimize cost of coal transportation
which consequently help in reduction
in cost ofpower.
Before this reform, coal linkages
were provided to individual com-
panies for a particular plant only. The
linkage was not allowed to transfer the
coal even between two plants of the
same company. Though to ensure cost
optimization through savings in the
transportation cost, the government
has recently allowed swapping of
coal linkage between some plants of
NTPC. However this arrangement was
approved on case-to-case basis.
These norms offer freedom to use
coal in any power generation unit,
instead of prefixing its source and con-
sumption point. This provides flexibility These norms offer freedom to use coal in any
in use of coal amongst the generating
stations of state owned utilities, plants
power generation unit, instead of prefixing its
of other state power utilities, company source and consumption point. This provides
owning the Central Generating stations flexibility in use of coal amongst the generating 31
and IPPs, amongst each other. stations of state owned utilities, plants of other
The proposal envisages that all the
long term coal supply contracts of state
state power utilities, company owning the Central
generating stations will be clubbed and Generating stations and IPPs, amongst each other
assigned to respective states or state nom-
inated agency. Similarly, coal linkages of The Central Electricity Authority Generating stations, other State Gen-
individual central generating stations will (CEA) is the authorized body which erating Stations, Central Generating
be clubbed and assigned to the company in consultation with all the Stake- Stations (CGS) and IPPs. Similarly
owning them, so as to enable efficient holders issues the methodology methodologies used by a company
coal utilization or allocation amongst end for implementation of use of coal owning CGS for use of coal in their
use generating stations. assigned to the State(s) in their own own plants or any other efficient

Average cost of supply for a discom at varying levels of mix of coal based generation
in procurement and average distance for coal transportation
Average cost of supply
Average distance for coal transportation (KM)
per unit sold (Rs/unit)

% mix of 100 200 300 400 500 600


coal based 55% 5.90 5.96 6.03 6.09 6.15 6.22
generation
in overall 60% 5.78 5.85 5.92 5.99 6.06 6.13
procurement 65% 5.66 5.74 5.81 5.81 5.96 6.04
for the
discom 70% 5.54 5.63 5.71 5.71 5.87 5.95
75% 5.43 5.51 5.60 5.60 5.77 5.86
Source: ICRA
August 2016
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InDepth

plants shall also be issued by Central Impact of new norms


Electricity Authority.
For usage of coal in State or Central It is expected this initiative will help to reduce cost of power generation
power generating stations, the deciding by 40-50 paise per unit which will subsequently lead to savings of Rs
criteria will be plant efficiency, coal 25,000 crore per annum in 4-5 years.
transportation cost, transmission
It is also anticipated that it will help in improving the consumption of
charges and overall cost of power. The
domestic coal by the industry, mainly the power sector, against cheaper
actual realization of savings depends
on the decrease in the coal transpor- imports in the country.
tation distance.
is estimated to decrease by 7 paise
Benefits envisaged It is a positive per unit for every 100 km reduction
It is a positive development for the development for the in distance travelled for transpor-
utilities as it would result in an optimal tation of coal, considering that the
utilities as it would
utilization of the linkage coal from distribution utility procures 60% of
mines and assist to minimize the trans- result in an optimal its overall power requirement from
portation cost of domestic coal used. utilization of the coal-based generation stations. If this
Coal is transported from mines to end linkage coal from assumption is altered i.e. distribution
user plants within range of varied dif- utility procures 75% of its overall
ference range most likely between 100
mines and assist power requirement from coal based
km to 1000 km. to minimize the generation stations than for every 100
On an average, coal is transported transportation cost of km reduction in coal haulage, cost of
for 700 kilometer as sources of generation would reduce by 9 paise
domestic coal used.
32 coal for every generating station is per unit.
prefixed. Providing flexibility for con- Coal is transported Average cost of supply for a discom
sumption points will lead to optimal from mines to end user at varying levels of mix of coal based
utilization and help lower transpor- plants within range of generation in procurement and average
tation costs. This in turn will lead to distance for coal transportation
reduction in power purchase cost for varied difference range It will not only help in reduction
distribution utilities. most likely between of transportation cost but also result
According to ICRA, the average 100 km to 1000 km in removal of congestion of Railway
cost of supply for distribution utility network. This will also be a more
environment friendly arrangement as
less coal will be used to produce more
power and also the distance for trans-
portation of coal would be optimized.
Considering the coal prices remains
low and domestic coal production
maintains its growth rate during the
year, the government is expecting
to reduce the coal importbill by Rs
40,000 crore duringFY17.
This will also help in getting rid
of micro management by government
for utilization of coal in specified
facilities and to grant more flexibility
to central public sector undertakings,
states and private power producers at a
group level to determine which of their
facilities gets the fuel.

For suggestions email at feedback@infraline.com


August 2016
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StatisticsCoal
Trends in Consumption of Energy Sources inIndia(FY06 - FY15)
Coal# Lignite Crude Oil** Natural Gas(Billion Electricity*
Year
(Million Tonnes) (MMT) CubicMetres) $ (GWh)

2005-06 433.27 30.24 130.11 36.39 118,818.00


2006-07 462.35 30.81 146.55 37.6 132,304.00
2007-08 502.82 34.65 156.1 39.8 137,344.00
2008-09 549.57 31.85 160.77 39.81 142,576.00
2009-10 585.3 34.41 192.77 55.67 125,316.00
2010-11 589.87 37.69 196.99 61.18 140,524.00
2011-12 642.64 42.77 204.12 59.69 163,000.00
2012-13 688.75 46.83 219.21 52.92 146,497.00
2013-14 724.18 44.64 222.5 47.67 169,076.00
2014-15(p) 827.57 49.57 223.24 48.25 165,346.00
Growth rate of 14.28 11.05 0.33 1.22 -2.21
2014-15 over 2013-
14 (% )
CAGR 2005- 06 to 6.69 5.07 5.55 2.86 3.36
2014-15(% )
(p): Provisional
GWh = Giga Watt hour = 106 xKilo Watt hour 33
*Includes hydro & nuclear electricity from utilities.
**Crude oil in terms of refinery crude throughput.
$ Due to non-availability of the Consumption data it has been assumed that Consumption is equal to the Production
# Does not include Lignite

Trends in Industry wise Consumption of Raw Coal in India(FY06 - FY15) (Million tonnes)
Fertil-
Elec- Steel & Sponge
Year Cement Paper Textile izers & Brick Others * Total
tricity Washery Iron
chemicals
1 2 3 4 5 6 7 8 9 10=2 to 9
2005-06 306.04 19.66 14.97 2.77 0.29 - - - 51.85 395.59
2006-07 321.91 17.3 14.71 2.5 0.3 - - - 63.08 419.8
2007-08 350.58 16.99 15.27 2.64 0.37 - - - 67.72 453.57
2008-09 377.27 16.58 13.12 2.16 2.53 - - - 77.52 489.17
2009-10 390.58 16.45 14.66 2.34 0.27 - - - 89.5 513.79
2010-11 395.84 17.26 15.08 2.43 0.28 - - - 92.58 523.47
2011-12 437.67 47.86 26.36 2.03 0.26 21.69 2.82 0.13 69.36 608.17
2012-13 485.47 51.7 31.79 2.12 0.3 20.9 2.86 2.01 116.24 713.39
2013-14 493.25 53.05 32.46 1.91 0.36 18.49 2.64 4.01 133.19 739.34
2014-15(p) 527.1 66.37 37.95 1.54 0.42 14.68 2.69 0.11 169.46 820.31
Distribution (%) 64.26 8.09 4.63 0.19 0.05 1.79 0.33 0.01 20.66 100
Growth rate of 6.86 25.11 16.91 -19.15 16.39 -20.64 2.05 -97.18 27.23 10.95
2014-15 over
2013-14(%) CAGR 5.59 12.94 9.75 -5.71 3.82 -9.3 -1.17 -3.26 12.57 7.57
2005-06 to 2014-
15(%)
(P): Provisional
* Includes Sponge Iron, colliery consumption, jute, bricks, coal for soft coke, fertilisers & other industries consumption.
@ From 1996-97 and onwards Cotton includes Rayon also.
August 2016
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StatisticsCoal
Monthly Coal Production during FY12 to FY17 (Million Tonnes)
Month 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12
April 40.35 48.87 45.38 43.52 41.46 39.84
May 42.58 49.23 45.58 43.23 44.09 40.76
June 42.27 46.49 43.75 40.42 41.36 38.5
July 42.27 42.34 39.94 39.27 38.71
August 43.63 43.46 38.38 35.84 32.37
September 44.95 43.97 41 35.76 29.53
October 53.33 49.73 42.73 44.26 39.66
November 56.59 54.62 47.71 46.17 47.56
December 61.95 58.37 54.23 53.69 52.78
January 62.89 58.08 57.13 56.47 54.29
February 60.12 58.34 52.26 50.75 55.1
March 69.41 69.2 65.3 64.06 63.62
Total (Apr-Mar) 125.65 637.87 609.18 565.85 553.18 532.72

FOB Thermal Coal Prices - Australia & South Africa - FY 2017


Australia (FOB Newcastle South Africa (FOB Richards
Month
6700 kcal/kg) (USD/Ton) Bay 6000 kcal/kg) (USD/Ton)

April 16 50.8 52.7

May 16 51.2 53.7


34
Jun 16 53.4 57.3

Indonesian Coal Prices - HBA - FY 2016-17


HBA HPB MARKER (kcal/kg GAR) (USD/Ton)
6322
Month kcal/kg Gunung Prima Pinang Indominco Melawan Jorong
Envirocoal Ecocoal
(USD/ Bayan I Coal Coal IM East Coal
5000
J-1
4400
ton) 7000 6700 6150 5700 5400 4400

April 16 52.32 55.87 57.84 52.29 43.06 43.25 41.6 33.45 30.87
May 16 51.2 54.66 56.7 51.26 42.16 42.44 40.89 32.88 30.35
Jun 16 51.81 55.32 57.32 51.82 42.65 42.88 41.28 33.19 30.63
August 2016
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CoverStory
GST: A mixed bag for energy,
infra sectors

35

GST could add 1 to 1.5 per cent to GDP, say economists


Renewable energy to feel the brunt due to higher solar and wind tariffs

By Infraline Bureau

History was made on 3rd August, 2016, Compliance, Credit Utilization and the overall economy will definitely get
with India taking a giant leap towards Reporting leading to a complete a boost from the implementation of the
a single unified market after the Rajya overhaul of the current indirect tax GST, impact on different sub-sectors in
Sabha approved the Goods and Ser- system, says consulting firm EY. It adds the energy sector will not be uniform.
vices Tax (GST) a reform considered GST will have a far-reaching impact on Renewable sector will feel the pinch
almost three decades back. Taxation almost all the aspects of the business when the country shifts to the GST even
experts say that the GST will transform operations in the country, for instance, as there is no consensus over bringing
the Indian economy by giving rise to a pricing of products and services; supply oil, gas and electricity within the ambit
common market and reduce the cascad- chain optimization; IT, accounting and of the proposed indirect tax reform.
ing effect of tax on the cost of goods tax compliance systems. Conventional power producers,
and services. Economists say that implementation however, expect significant gains
Specifically, the proposed reform of GST could add 1 to 1.5 per cent to from the implementation of the GST.
will impact the Tax Structure, Tax Inci- GDP, supporting the ongoing economic Currently, the power sector is subject
dence, Tax Computation, Tax Payment, recovery that remains fragile. While to multiple taxes on capital goods and
August 2016
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CoverStory

other inputs. The incidence of these


taxes passes to end consumers in the
form of higher tariffs. It is estimated
that the GST rate of 18 per cent for
power sector could result in nearly
15 per cent reduction to consumers,
says Ashok Khurana, director general,
Association of Power Producers. On
the other hand, the GST could create
complications for infrastructure and
real estate sectors which are currently
enjoying various tax sops.

Renewable energy to feel


the brunt of GST
GST is a key taxation reform as it seeks
to simplify a complex maze of state
and central taxes by subsuming these
into a single tax levied at the point of essential items where GST would be
consumption. Renewable sector, cur-
Under the current waived off. But given Goyals com-
rently a beneficiary of several indirect regime, there is no tax ments, that looks unlikely. Solar
tax exemptions, may be a big loser as a or duty applicable on equipment would fall either under the
result of GST since the bill proposes to import of solar cells or standard list or merit list. In either sce-
36 revoke most of the exemptions. modules as against an nario, the overall project cost is likely
Despite the threat looming over to increase and pare most of the price
the renewable energy sector, Union
import duty of 26-29 per reduction gains made over the last 1-2
power minister Piyush Goyal seems cent applicable to most years, Bridge-to-India concludes.
disinclined to pitch for keeping the goods. As solar modules Under the current regime, there is
industry out of the GST purview. are normally procured no tax or duty applicable on import
Instead, he wants a level-playing field of solar cells or modules as against
directly by the project
for domestic manufactures. Ideally an import duty of 26-29 per cent
we should put GST on imports so that developers, there is applicable to most goods. As solar
it becomes a level-playing field and also no additional local modules are normally procured directly
domestic manufacturing is not at dis- tax. Under the GST by the project developers, there is also
advantage. Today there is an inverted regime, this zero rate no additional local tax. Under the GST
duty structure. Domestic manufac- regime, this zero rate would be replaced
would be replaced by
turers are paying more taxes than by a combination of basic custom duty
imports, Goyal said recently. a combination of basic and the applicable GST rate.
Bridge to India, a solar sector con- custom duty and the It is expected that the basic custom
sulting firm, says that due to implemen- applicable GST rate duty will continue to be waived off
tation of the GST, input cost or tariff for solar cells and modules but the
increase will go up by 12-20 per cent, would be payable. The consulting firm standard GST rate will need to be
which could wipe out the pricing gains points out that VAT and other levies paid. The standard import duty for
of the past two years in the solar sector. such as excise, entry tax and octroi on inverters in India is 28.44 per cent but
The cost increase of this magnitude solar modules and the complete system, this is reduced to just 5.15 per cent for
would also put viability of several together at around 5 per cent in most solar projects. Consequently, the cost
projects in jeopardy. states because of many exemptions, of imported solar inverters will also
The cost increase would arise would again be replaced by a combined increase under the GST regime.
because of two reasons: currently, no GST of 17-20 per cent. However, many prominent
import duty or indirect tax is applicable The industry had been expecting international inverter suppliers
on solar modules but under the new solar cells and modules to find a place assemble their inverters in India and
regime, GST of between 17-20 per cent in the exemption list of around 100 tax inefficiencies weeded out by GST
August 2016
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should benefit local manufacturing by (PPAs) in India include a change in willingness to buy more solar power at
providing them with a level playing law clause, wherein, any impact due higher tariffs will also be affected and
field against imports. to change in law is passed through to could pose another short-term chal-
Currently, VAT and/or a CST is appli- power procurers. However, there is no lenge for the sector.
cable on sale of equipment within India. precedence or a process in place for Similarly, cost of wind power will
Several states including Uttar Pradesh calculating the pass through impact go up by 11-14 per cent, depending
(UP) and Rajasthan have completely of such a change for bidding based on whether equipment are procured
waived off VAT, normally around 14 solar project. This uncertainty will be within or outside home state. Cur-
per cent for solar equipment, and most a cause of concern for the investors, rently, wind power equipment are
other states have set it around the 5 per say analysts. Post implementation of exempted from additional excise duty
cent. Excise duty on manufacturers is GST, power distribution companies and special additional duty. However,
also waived off for items such as solar when GST comes into effect, IGST of
module mounting structures. As all these 20 per cent along with additional tax of
exemptions go away and VAT, CST and Currently, VAT and/or 1 per cent will be applicable on inter-
excise duty get replaced with GST, the a CST is applicable on state procurement of wind equipment.
project cost will certainly increase. sale of equipment within However, for intra-state procurement,
However, a part of this increase only 20 per cent IGST will be appli-
will be offset as a pass through will be
India. Several states cable on wind power equipment.
allowed on the GST paid at the time including Uttar Pradesh Service tax which is currently
of import and savings on multiple (UP) and Rajasthan applicable at 14.5 per cent would be
taxes and duties along the value chain, have completely waived replaced by GST of 20 per cent. Lev-
Bridge-to-India says. elised tariff could go up to nearly Rs
off VAT, normally around
The magnitude of actual cost 7.5 a unit from the current level of Rs
increase will depend on the applicable 14 per cent for solar 6.58 a unit. 37
GST rate and the procurement pattern. equipment, and most
The ministry of new and renewable other states have set Power and coal sector to
energy (MNRE) estimates the cost it around the 5 per reap benefits
increase to be in the range of 12-16 Power companies have made a strong
per cent for a GST rate of 20 per cent.
cent. Excise duty on case for the inclusion of power, coal
Now the question is how do devel- manufacturers is also and natural gas in the GST regime to
opers manage the risk of GST being waived off for items subsume multiple taxes and thereby
implemented when they are bidding for such as solar module reduce the cost of power projects and
projects and signing PPAs? mounting structures the per-unit tariff. They say the power
Most power purchase agreements transmission & distribution (T&D) sec-
tor should be granted the infrastructure
industry status and that all related tax
benefits available to other infrastruc-
ture sectors be extended to this sector.
Industry players say even though
generation is exempt from CENVAT,
excise and value-added tax, taxes on
power generation equipment and other
inputs are included in the cost of power.
The overall impact of present taxation
regime at both Central and state levels
leads to higher price of power.
A power sector analyst explained
that taxes on domestic coal are at 27-28
per cent while on domestic natural gas
it is at 19 per cent. Besides, service
tax is levied at 14.5 per cent on input
service availed such as engineering,
August 2016
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CoverStory

procurement and construction; oper-


ation and maintenance services; and
electricity duty is levied at one per cent
of cost of generation and 17-20 per cent
across states on consumption of power.
It is estimated that a GST rate of 18 per
cent for the power sector could result in
15-20 per cent reduction in retail tariff.
Further, a cut in power cost will also
improve payment by end-consumers
and reduce incentive for theft and
losses. This will also help distribution
utilities to reduce their problem of
revenue deficit, the analyst said.
There will be no difference between
inter and intra states with the launch
of GST and the benefit of availing
CST will be done away with, which is
expected to result in lesser movement as naphtha, light diesel oil, kerosene,
of goods, thereby reducing logistics
There will be no furnace oil, etc, will be under the GST
costs. The government should not put difference between inter regime. This arrangement will lead
electricity in the exempted category of and intra states with to avoidable multiple tax regimes for
goods under GST regime so that the the launch of GST and petroleum sector, extra burden on the
38 cascading impact and burden of tax the benefit of availing consumer and add to the tax burden on
does not fall on electricity consumers. consumers, warn tax experts. It will
CST will be done away
The inclusion of power and coal also increase compliance work for state
sectors in GST regime will result with, which is expected governments and the industry, they add.
in lowering of bulk power, retail to result in lesser They suggest that a State Con-
tariff and support the Make in India movement of goods, trolled Specific levy can be levied
initiative, said another tax expert. thereby reducing by state governments over and above
Industry players want the government logistics costs. The standard SGST on petro, diesel, ATF
to announce extension of e-bid LNG and natural gas which will address
scheme by another five years to take
government should revenue concerns of the states. The
advantage of low crude oil prices not put electricity in levy will be a single point levy
and extend Ujwal Discom Assurance the exempted category perhaps at the point of sale from an oil
Yojana (UDAY) scheme to private of goods under GST company to a dealer or consumer on
owned discoms. regime so that the which no input credit will be available
at subsequent stages.
cascading impact and
Oil and Gas: Consensus Tax experts suggest that the
yet to emerge burden of tax does proposed amendment to the
There is still no consensus over bring- not fall on electricity Constitution be confined to empowering
ing oil and gas within the GST ambit. consumers Centre and the states for levy of GST
However, there is provision for includ- on all goods and services. Exclusion
ing the sector in GST at a later stage natural gas will be outside the proposed of petroleum products through the
when political consensus is achieved. tax net. Crude oil, which is input for proposed Constitution Amendment Bill
Analysts have pointed out various refinery, will be outside the purview of is not desirable since it will require
inconsistencies in GSTs provisions. GST whereas other inputs for refineries another Constitutional amendment
For example, they have pointed out will be under GST. to levy GST on these products, even
that while input (goods and services) Crude oil, natural gas, petrol, diesel, if the Centre and the States were to
consumed in exploration and produc- and jet fuel will be outside GST and reach a consensus on full or partial or
tion of crude oil and natural gas will be will remain under existing taxation stage-wise implementation of GST for
under the GST regime, crude oil and system. Other petroleum products, such the sector, in future, they pointout.
August 2016
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States concerns on revenue The specified petroleum products Infrastructure benefits


buoyancy and autonomy on taxation would be subject to the current regime may go
of petroleum products can be met by a on the output side and to the GST Under the current policy, infrastructure
state-controlled specific additional levy regime on the procurement side, with projects enjoy concessional duty ben-
on petrol, diesel, ATF and natural gas, GST also applying to non-specified efits under various indirect tax laws,
experts suggest. If crude petroleum, petroleum products. Availability of thus bringing down the cost for infra-
natural gas, petrol, diesel, aviation credit of input GST against output structure projects. However, there is no
turbine fuel and electricity are kept out excise and VAT on specified petroleum clarity on concessions/ exemptions for
of GST, it would result in cascading. products and vice versa seems unlikely, infrastructure projects under the GST
Since petroleum products play an say experts. regime. A project owner engaged in
important role in Indias energy use, setting up of a power plant or engaged
and are used directly or indirectly as If crude petroleum, in power transmission or distribution
inputs in most sectors, the proposed can currently procure goods under
natural gas, petrol,
design would result in cascading in inter-state sales at a concessional CST
various sectors of the economy. diesel, aviation turbine rate of 2 per cent against Form C and
However, bringing these goods fuel and electricity structure some of the procurements as
into the GST regime, without any are kept out of GST, in-transit sale to reduce tax incidence
other changes in the economy, would it would result in on the project. However, there is no
imply that GST has to be levied at such concession provided under the
higher rates for revenues to be pro-
cascading. Since Model GST law. In the absence of such
tected. Since contribution of taxes on petroleum products exemptions, there is a possibility of
petroleum products generate substantial play an important role significant increase in project cost.
revenues for state governments, the in Indias energy use, There is a concept of deemed
latter have expressed apprehension that and are used directly export defined under the Model GST 39
switchover to GST will lead to loss of law. It is yet not clear which types
flexibility that they currently enjoy to
or indirectly as inputs of projects will be eligible for the
increase revenue. in most sectors, the deemed export benefit. To ensure that
They also point out that col- proposed design would there is limited tax burden on infra-
lection is currently easy because of a result in cascading in structure projects, it is important that
limited numbers of assesses (only oil various sectors of the all key types of infrastructure projects
companies). The 10 per cent SGST (including roads, highways, ports,
envisaged on petrol, diesel, jet fuel
economy airport, railways and power) should
and natural gas is lower than the VAT
rates across many states. Promise of
compensation from the Centre is at best
for a limited period and cannot solve a
structural problem, say states.
As per the Amendment Bill, certain
petroleum products (petroleum crude,
high speed diesel, petrol, natural
gas, and aviation turbine fuel) would
remain outside the ambit of GST until
a date to be determined by the GST
Council. Until that date is confirmed,
existing indirect taxes would continue
to apply on petroleum products. This
means that production/manufacture of
petroleum products would continue
to attract excise duty, as currently
applied, and sale of these products
would be subject to VAT/ CST, as cur-
rently applied.
August 2016
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CoverStory

be made eligible for deemed export for any services provided between service. This is a welcome move and
benefits, say experts. group companies, such as royalty for should provide certainty on taxability
Free of cost (FOC) supplies by access to global brand, group company of the construction sector, says Anita
project owners to contractors appears cost allocations, etc, it needs to be Rastogi, Partner-Indirect Tax, PwC.
to be liable to GST. Thereafter, the demonstrated that the transaction is at The concern is however from the as-
contractor may need to include value arms-length. If this cannot be demon- pect of valuation as currently no deduc-
of such free supplies in the value of strated, the value will be determined tion is provided under GST for value
his services, thereby increasing the tax based on the GST valuation rules, that of land, or no abatement/ composition
incidence, especially in scenarios where is, based on services of like kind and is provided. This may lead to signifi-
the project owner is not eligible to take quality, or the cost of providing the cant increase in tax burden, especially
credit, or where the contractor avails services, including profit. if such services are taxed at Standard
any exemption. Else, the FOC supplies Implementing these provisions GST rate (which is expected to be 18
would create a cash flow issue, warn may be challenging to implement in per cent), she adds.
experts. Project cost may be impacted respect of cross-border transactions, as Even if such services are subjected
due to GST credit restrictions in many it may not be feasible for the resident to lower tax rate (expected to be
sectors, depending upon the end use. entity to obtain the value of similar around 12 per cent) considering that
Place of provision for services in there is additional tax incidence in the
relation to immovable property would In case of infrastructure form of Stamp duty on value of land/
be location of the immovable property. immovable property, it would need to
There may be possible issues
projects, Indian entities be evaluated whether the tax incidence
where a single contract is entered into do procure significant would be higher than the current
for provision of services related to amount of services, regime (in absence of any deduction).
immovable properties across two or especially pertaining Additionally not all expenses incurred
40 more states. For example, in case of to technical know-how, are allowed as credits and this restric-
highway construction services, railway tions under credit rules could have sig-
track laying project, typically a single
designs from their nificant adverse impact on Real Estate
contract may be entered into with parent companies. industry. The industry was expecting a
the vendor, for which consolidated Under the GST Model much more liberal credit regime where
invoices may be raised at one location. Law, the concept of it could get the credit of the con-
Such a contract may involve execution struction services acquired in relation
valuation for services
across multiple states. to commercial property which would
Under the current regime, contractors in related party be subsequently leased, Rastogi says.
are required to segregate contract values transactions has been However, the draft law could be
(for sale of goods) for the purpose of introduced interpreted to mean that there may
determining VAT/ CST liability in dif- not be any credit available either to a
ferent states. However, considering that services, or to provide the details of contractor or the developer involved
there would be no distinction between their cost of supply of services, to in construction of immovable property
goods and services under the GST substantiate that the price is at arms (whether sold as underconstruction
regime, the same would need to be done length. Additionally, the Model GST property or leased). This does not
for services as well, and hence, there Law provides that if there is a reason seem to be the intent of the lawmaker
may be a requirement for the vendor to doubt the accuracy of the transaction and hence would need significant
to raise separate invoices, for which value declared by the supplier, then the revision, experts point out. Consid-
separate contracts may also be required, authorities can determine the trans- ering the absence of valuation rules and
warn tax consultants. action value as per the GST valuation the restrictions under credit rules, the
In case of infrastructure projects, rules. Such an unfettered power to proposed law as it stands today could
Indian entities do procure significant question the transaction value can lead have a negative impact on the industry,
amount of services, especially per- to litigation, warns PwC. says PwC. It now remains to be see
taining to technical know-how, designs when the GST bill will be passed and
from their parent companies. Under the Real estate to see in what form.
GST Model Law, the concept of valu- additional tax burden
ation for services in related party trans- The Model GST Law specifies that
actions has been introduced. Therefore, works contract would be taxed as a For suggestions email at feedback@infraline.com
August 2016
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


Government set to start talks on merging 13 state oil companies to create behemoth CAG audit nails Centres claim on
LPG subsidy saving

which competes with US conglomerate


General Electric in the Fortune-500 ranking.
It is learnt that the Cabinet Secretariat has
referred the idea of the integrated giant, which
would also absorb various institutions related
to safety, development and analysis, to the oil
ministry. Following this, the oil ministry has
begun the process of evaluating the prospects
of creating the conglomerate, which will have
a bigger market value than Russian state oil
giant Rosneft and Indias Reliance Industries The Centre claims it would end up
Ltd. It plans to consult all stakeholders in- saving almost Rs. 22,000 crore in the
The government is set to start consultations cluding the state firms that may be combined financial years of 2014-15 and 2015-
for an ambitious plan to merge 13 state oil to create the mega corporation that will be 16 since launching its two-pronged
firms to create a giant corporation whose the countrys No. 1 in turnover, net profit, capi- approach on cooking gas subsidy
revenue dwarfs global energy major Chevron tal expenditure and market capitalisation. introducing direct bank transfers
of the subsidy and asking better off
In a first, natural gas hydrates discovered in the Indian Ocean consumers to voluntarily give up theirs.
However, a CAG report could seriously
A large natural gas discovery has been puncture the claim. The audit has found
made in the Indian Ocean following a joint that the saving from people voluntarily
expedition by India and the U.S., opening giving up LPG subsidy and direct bank
up a new resource to meet energy needs. transfers adds up to less than Rs.
Indias Oil Ministry and the US Geological 2,000 crore. The remaining saving is 41
Survey made the discovery of large, highly actually thanks to the dramatic fall in
enriched accumulations of natural gas the prices of LPG that India annually
hydrate an icy form of the fuel in the imports. The audit has also found
Bay of Bengal. This is the first discovery substantial systemic problems with
of its kind in the Indian Ocean that has the the Direct Benefit Transfer in LPG
potential to be producible, the US agency scheme which is called Pahal by the
said. India had in September 2014 agreed to of natural gas and water found in oceans government. Among them are diversion
collaborate to explore gas hydrates potential and polar regions. The amount of gas within of domestic subsidy for commercial
in the country and identify sites for pilot the worlds gas hydrate accumulations is use and commercial consumption LPG
production testing. Natural gas hydrates are estimated to greatly exceed the volume of being diverted to domestic use.
a naturally occurring, ice-like combination all known conventional gas resources.

India, US to forge closer ties in oil, gas sector

India and the US have decided to and gas. Over the last decade, several
forge closer institutional and technical areas of cooperation, such as technology
co-operation in the energy sector for for production from marginal fields,
re-assessment of conventional and shale structures, developing gas pipeline
unconventional hydrocarbon reserves network, improving refinery efficiency etc.
in India, including its offshore areas. Oil had been identified. GAIL has contracted
minister Dharmendra Pradhan discussed 5.8 million tonne per year of liquid gas
the contours of a way forward during his from shale gas projects in the US, from
meeting with US energy secretary Ernest where delivery is expected to start from
Moniz in Washington. The two ministers 2017-end. Other Indian companies have
reviewed bilateral energy cooperation, also invested in shale oil and gas projects
especially in oil and gas sector, between of petroleum storage. The bilateral energy in the US. GAIL has 20% equity in Eagle
the two countries. The two sides also cooperation between the two countries Ford basin; Indian Oil and Oil India have
decided to share new technologies in had started in the form of an energy 10% equity in Niobrara basin project.
development of biofuel and development dialogue in 2005, which also includes oil
August 2016
www.InfralinePlus.com

NewsBriefs | Oil & Gas National


Iraq becomes Indias top oil supplier IOC in talks to buy GSPCs stake in
Mundra LNG terminal

main supplier to India and Riyadh could


face pressure to deepen crude price cuts to
regain market share, particularly ahead of
the planned listing of Saudi Aramco. Iraqi
oil accounted for about a fifth of Indian
imports in the second quarter, up from 16
per cent a year ago. The Saudi market share
in India over the period fell to about 18 per
cent from a fifth last year, marking the first
Iraq overtook Saudi Arabia for the first time time Iraq has overtaken Saudi Arabia in an Indian Oil Corporation (IOC) is in talks to
to become Indias top oil supplier in the entire quarter. Facing inroads into its market buy debt-laden Gujarat State Petroleum
June quarter, helped by sales of discounted shares, Saudi Aramco this month slashed Corps (GPSC) stake in the under-
heavy crude that refiners have also been the August official selling price (OSP) of its construction Rs 4,500 crore Mundra
using to make bitumen to build roads in the benchmark light crude grade to Asia by the LNG import terminal in Gujarat. GSPC
worlds No.3 oil consumer. State oil firm most in nine months but analysts warned it is looking to exit the 5 million tonnes a
Saudi Aramco has traditionally been the may need to make deeper cuts. year LNG import terminal project, which
is likely to be completed by mid-2017. It
ONGC should merge with a refining firm to stay competitive has offered its 50 per cent stake in the
terminal to IOC. With a view to expand its
Oil and Natural Gas Corporation (ONGC) gas business, IOC is keen to buy a stake in
should merge with a refining corporation Mundra terminal but does not want GSPC
such as Indian Oil, Bharat Petroleum or to exit the project completely. IOC, the
Hindustan Petroleum to weather price countrys largest oil company, wants the
42 volatility, stabilise its income and stay state government entity to remain as a
competitive, a director at the state-run part of the project for smooth operations.
company said. As an integrated company, The terminal is not connected with any
during price fluctuations ONGC can make up pipeline for shipping gas to consumers. To
in its refining and petrochemicals business lay a pipeline to the nearest grid, it would
whatever it loses as a crude oil producer. require state government support and
This will help stabilise the companys with GSPC on board, it could be done eas-
revenue and profit, Tapas Kumar Sengupta, ONGC already has presence in refining and ily, according to IOC. IOC is keen to take
director (offshore) said. Major oil firms petrochemicals through its units Mangalore half of GSPC stake and wants the Gujarat
across the world are better able to deal Refinery and Petrochemicals Ltd and ONGC government entity to keep the remaining
with the cyclical nature of the oil markets Petro additions Ltd but Sengupta said the 25 per cent. GSPC LNG - a unit of GSPC -
because they are integrated, he said. scale has to be much bigger. holds 50 per cent interest in the project.

RIL, BP spend Rs 4,500 crore to maintain gas output at KG-D6

Reliance Industries and its partner BP plc of producing 8.7 mmscmd. Currently, RIL-BP
UK have invested over Rs 4,500 crore in the are in the process of sidetracking (drilling)
flagging eastern offshore KG-D6 block to two of their existing wells and drilling away
maintain gas output at current level despite from the water to increase recovery of gas.
the steep natural decline that has set in the Side-track campaign has also been initiated
seven-year old fields. RIL-BP are currently in MA field. Sources said the existing and
producing from Dhirubhai-1 and 3 gas field enhanced production from these fields only
and MA oil and gas field, three of the over get the price as per the formula that was
one-and-half dozen discoveries made in the approved in November 2014. Price according
Bay of Bengal Block KG-DWN-98/3 or KG- to this formula currently is USD 3.06 per
D6. The fields, which began gas production million British thermal unit and is expected
in April 2009, hit a peak output of 69.43 on steep natural decline and RIL-BP have to be revised lower in October 2016. At
million standard cubic meters per day in spent over Rs 4,500 crore arrest the decline these prices, leave alone new investment,
March 2010 before water and sand ingress and continue to increase the ultimate even the base business will struggle to yield
shut down well after well. The fields are recovery of gas. The block is currently any profits, they said.
August 2016
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NewsBriefs | Oil & Gas International


Total lands LNG deal with Japan BP profits plummet 44% as oil prices
continue to fall

Chugoku Electric for the direct supply of


LNG sourced from the French companys
global portfolio. Strengthening our
presence in Japan, the worlds largest
LNG importer, through long-term
cooperation with leading LNG buyers such
as Chugoku Electric is a key component
of Totals strategy, Laurent Vivier, the
president of Totals gas portfolio, said.
Japan started taking on more natural gas
to make up for the loss of nuclear power Profits at BP plunged 44% to $720m
French energy company Total said it has in the wake of the Fukushima Daicchi (550m) in the second quarter of
landed a 17-year agreement to supply reactor meltdown in 2011. With the restart 2016, as the collapse of crude prices
liquefied natural gas to the Japanese of some reactors, however, demand for continues to affect the energy sector.
market starting in 2019. Total signed a gas could start moving lower on sector Oil companies have rushed to cut
binding agreement with Japanese utility diversity and economic grounds. costs and curtail investment after oil
prices fell to a 12-year low in January,
China plans 70 million cubic meters for strategic oil storage resulting in tens of thousands of job
losses in the UK alone. BP boss Bob
China plans to construct a total of 70 million Dudley said: Compared with a year
cubic meters of storage for its strategic earlier, the underlying second-quarter
petroleum reserve (SPR) in three construc- result was impacted by lower oil and
tion phases. Equivalent to 441 million barrels, gas prices. Dudley said concern about
that would equal about 60 days of Chinas over supply because of the rising 43
current crude imports of about 7.4 million number of rigs being drilled in the US
barrels per day. Though it is not known when was overdone. BP is working on the
the 70 million cubic meters of storage would assumption that oil prices will be in the
be completed, the China Securities Journal range of $50-$55 a barrel next year.
reported that the government plans to build Oil prices fell to a three-month low
44.6 million cubic meters, or 281 million would add to the countrys existing strategic amid concerns of a global oversupply
barrels, of SPR storage sites by 2020, citing a reserves held in seven above-ground facilities of crude and natural gas. Dudley said it
draft government plan for 2016-2020 for the at Zhoushan, Zhenhai, Dalian, Huangdao, was a huge relief that the group was
energy sector. The storage sites being built Dushanzi, Lanzhou and Tianjin, as well as one finally able to draw a line under the
over the next four years would equal roughly underground facility also at Huangdao, with a Deepwater Horizon oil spill in the Gulf
38 days of Chinas current oil imports. It total capacity of 28.6 million cubic meters. of Mexico in 2010.

Bangladesh in first LNG import terminal

Excelerate Energy, Petrobangla, and the power reliability, industrial development,


Government of Bangladesh executed and job creation in the region. Moheshkhali
an agreement for the construction and FLNG will be the worlds first fully
operation of Bangladeshs first liquefied integrated turnkey floating LNG terminal
natural gas LNG import terminal whereby a single provider Excelerate, will
Moheshkhali Floating LNG (FLNG). Located provide all services under a single contract.
offshore near Moheshkhali Island in the Excelerate will fully develop, design,
Bay of Bengal, the FLNG will provide construct, install, finance, and operate the
the crucial infrastructure required for terminal. This structure will allow for a
the country to access natural gas from single point of interface and responsibility
global markets. It is expected to be in to Petrobangla and provide seamless
operation in 2018. The new terminal Bangladeshs ability to reliably use the operations for the Bangladeshi market.
will enable Petrobangla to procure LNG countrys domestic natural gas reserves. Excelerate will operate the terminal for
from international gas markets, which Expanding access to diverse and abundant 15 years, after which the company will
will further complement and enhance sources of natural gas supply will promote transfer ownership to Petrobangla.
August 2016
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InDepth
A long road ahead for CBM
to be a potential star

44

India estimated to have a CBM resource potential of 28 BCM


CBM needs higher price realization to be successful

By Team InfralinePlus

Indias Coal Bed Methane resources It is also way above the 2015-16 which is similar to the levels for Con-
are said to have the potential to provide CBM production level of a mere ventional Onshore, Shallow Offshore,
as much as 28 BCM, or about 76 mil 0.4 BCM, or just above 1 mil sm3/ and Deep Offshore. Only Shale Gas is
sm3/day, of natural gas by 2040. That is day (Table 1). Reaching even this significantly higher (Table 2).
almost as much as the 2015-16 domestic low level has taken 8 years to reach, Clearly, CBM has a long journey
production of natural gas of 32 BCM, or after production of CBM started in ahead to reach its full potential. A lot
88 mil sm3/day. This future projection 2007-08. of exploration still needs to be done.
for CBM is given in the India Energy The IE Outlook document According to the Directorate General
Outlook document brought out by the bases its optimism for CBM on its of Hydrocarbons, the prognosticated
International Energy Agency in Dec estimate that, at end of 2014, Indias CBM resources in the country are
2015, with inputs from various interna- Remaining Recoverable Reserves about 2,600 BCM, spread across 12
tional and Indian government agencies. (RRR) of CBM were 1,230 BCM, states of India, over 26,000 sq.km of
August 2016
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Table 1 Annual CBM Production by Block, in mil sm3


Block 2011-12 2012-13 2013-14 2014-15 2015-16 Operator
Jharia, Jharkhand 3.56 2.95 3.38 2.48 2.04 ONGC
Raniganj East, W.Bengal 9.07 12.83 35.36 91.33 236.50 Essar Oil
Raniganj South,
70.04 88.02 121.13 132.35 152.93 Great Eastern Energy
W.Bengal
Sohagpur East, MP 0.38 2.24 4.50 0.57 0.02 RIL
Sohagpur West, MP 1.14 1.20 1.15 1.51 1.38 RIL
Total mil sm3 84.19 107.24 165.52 228.24 392.87
Total in mil sm3/day 0.23 0.29 0.45 0.63 1.08
Source: MoPNG

Table 2 Natural Gas Resources in India, end 2014 in BCM


Ultimately Remaining
Cumulative Remaining Proven
recoverable recoverable
production % of URR reserves
resources resources
Conventional onshore 1 570 280 1 280 82% 290
Shallow offshore 1 810 500 1 300 72% 340
Deep offshore 1 480 70 1 400 95% 770
Coal Bed Methane 1 230 0 1 230 100% 20
Shale gas 2 720 0 2 720 100% 0 45

Total India 8 810 850 7 930 90% 1 420

in Raniganj South in West Bengal,


For the IE Outlook projections to be attained, the some four years before Government
CBM would have to come from the 8,000 odd sq formulated a CBM policy. GEECL
kms still under exploration, plus the 10,000 sq kms was formally allocated the 210 sq km
that has not yet been awarded for exploration. In block through the FIPB route in 2001.
It has invested over Rs. 1500 crore on
order to gauge the prospects, it is useful to exam-
the block, which produced about 0.4
ine the experience of some of the parties operating mil sm3/d in 2015-16, from about 150
blocks producing CBM wells. This is halfway to the target of
total 300 wells.
total available coal bearing areas. Of Thus, for the IE Outlook projec- GEECL estimates the quantum of
this area, about 16,613 sq.km has been tions to be attained, the CBM would Original Gas-In-Place (OGIP) to be 74
awarded across 33 blocks for explo- have to come from the 8,000 odd sq BCM, which is almost double of that
ration under four rounds of bidding for kms still under exploration, plus the estimated in 2005. Proved Reserves
CBM held (including two nomination 10,000 sq kms that has not yet been were reported at 49 BCM as on March
blocks, and one through Foreign awarded for exploration. In order to 2015 - just a little less than the 54
Investment Promotion Board route). gauge the prospects, it is useful to BCM of Proved Reserves reported by
However, half of the 33 blocks examine the experience of some of Reliance for its Reserves Outside India
have been relinquished (or in that the parties operating blocks pro- (viz North America), or the 66 BCM
process), covering 8,407 sq kms. Only ducing CBM. reported for India, which are princi-
16 are under exploration, as of 31 pally from its conventional fields, such
March 2015. Thus, one-third of the Preset experience as KG D6 field and PMT.
total prospective area of 26,000 sq Great Eastern Energy Corporation Ltd GEECL has another block (667
kms has been relinquished, with no (GEECL) started exploration for CBM sq kms) in Mannargudi, Tamil Nadu
CBM output. in 1993 with Coal India Limited (CIL) in India, with 28 BCM Gas-in-Place.
August 2016
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InDepth

allocation in 2001. The blocks (area


46 There is so much confidence in the CBM potential 995 sq km) are targeted to produce
of the block that Matix Industries Ltd has invested about 3.5 mil sm3/d, from about 1,000
over Rs 4,000 crores in a 1.25 mil mtpa Urea plant wells. Test Production recently started
nearby, in expectation of drawing about 2.5 mil from Sohagpur West block. Reliance
sm3/day from this CBM source. SAIL already has enough confidence in the blocks
to invest in a 302 km gas pipeline to
draws about 0.4 mil sm3/ day. Essar is also
transmit the gas from Shahdol to reach
continuing work on the remaining four blocks the national grid at Phulpur. Reliance
(area 2,233 sq kms) has relinquished 3 blocks from bidding
Round 2.
However, progress is stymied due the life of the block, which is expected The fourth party active in CBM is
toobjections from farmers. to produce CBM for about 25 years. ONGC, which holds three blocks in
Another major player is Essar Oil, There is so much confidence in the Jharkhand, plus one in West Bengal,
which has 5 blocks across Jharkhand, CBM potential of the block that Matix which were estimated to have 62 BCM
Madhya Pradesh, Odisha and West Industries Ltd has invested over Rs Gas Initially In Place at the time of
Bengal, on which it has invested Rs 4,000 crores in a 1.25 mil mtpa Urea allocation in 2001, from total area of
2,270 crores, till March 2015. It has plant nearby, in expectation of drawing 870 sq kms. Only the Jharkhand field is
made the most progress on the 500 about 2.5 mil sm3/day from this CBM in production, but at a very low level.
sq km Raniganj East block in West source. SAIL already draws about 0.4 The company may give up the West
Bengal, which was estimated to have mil sm3/ day. Essar is also continuing Bengal field, as an airport has been
Gas Initially In Place of 61 BCM at the work on the remaining four blocks constructed that prevents exploration. It
time of allocation in 2001. The block (area 2,233 sq kms). has relinquished 5 blocks from bidding
currently produces about one mil sm3/ The third player making progress Round 2.
day, making Essar Oil the largest CBM is Reliance industries Ltd, at its two A few other companies are also
producer in the country. Essar plans to blocks in Sohagpur West and Sohagpur active in CBM exploration, though not
reach 2 mil sm3/day by March 2017, East, in Madhya Pradesh, which in production yet. Coal India Limited is
and later go upto 3.5 mil sm3/day. were estimated to have 103 BCM also naturally interested in CBM. It has
About 500 wells are to be drilled over Gas Initially In Place at the time of been granted permission by MoPNG
August 2016
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to extract CBM from its coal mines, under exploration, or from the yet to objections, and enable CBM explo-
subject to complying with various pro- be awarded blocks, or from the coal ration to commence.
cedures applicable to CBM activities. blocks that CIL may explore for CBM. Another crucial aspect is sale
CIL may extract CBM prior to coal They could also be from some of the price. Present policy allows CBM
mining operations, or do both activities blocks that have been relinquished. producers the price under the
simultaneously. Some blocks are given up because Domestic Pricing Guidelines of
of poor prospectivity for CBM. October 2014, which is USD 3.06/
Way forward Changes in technology or data analysis mmbtu (GCV) for April to Sep-
From the foregoing, it is seen that four may bring these blocks back into the tember 2016. The exception is
blocks together are able to produce reckoning - as often happens in the GEECL, whose PSC allows it to
about 8 mil sm3/d on long term basis. Exploration business. Other blocks charge higher prices: its average
So, the output of 76 mil sm3/d pro- may have been given up for non-CBM price for FY 2016 was $ 10.26/
jected in the IE Outlook would require reasons, such as lack of permission mmbtu, compared to $11 plus for
about 32 more similar blocks. These from various authorities. A change the previous two years. It may be
could be from the blocks presently in perspective may be able to resolve noted that the DGHs Hydrocarbon
E&P Activities Report for 2014-15
Another crucial aspect is sale price. Present policy indicates that CBM requires higher
breakeven price than conventional
allows CBM producers the price under the Do-
gas. The Indian Energy Outlook also
mestic Pricing Guidelines of October 2014, which assumes higher price realisation for
is USD 3.06/ mmbtu (GCV) for April to September CBM. In sum, unlocking the potential
2016. The exception is GEECL, whose PSC allows of CBM requires a lot more work
it to charge higher prices: its average price for FY on the ground, as well as a review
2016 was $ 10.26/ mmbtu, compared to $11 plus onpricing. 47
for the previous two years
For suggestions email at feedback@infraline.com
August 2016
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InDepth
LNG imports critical to rescue
gas-based capacity

48

Power and fertilizer sector are the leading end users of natural gas in India
Indo-Australian sub group to help in supplying cheap LNG for power plants

By Team InfralinePlus

With natural gas accounting for just will push up LNG terminal capacity to to their high efficiency, low gestation
about 9% of its overall energy mix, In- 47.5 million metric tonne per annum period, environmental factors, and
dia is trying hard to increase domestic (mmtpa) by 2022 from the current 21.3 requirement of less water and land
production. Indias Liquefied Natural mmtpa, according to the Ministry of compared to other fuel based power
Gas (LNG) sector is undergoing a ma- Petroleum and Natural Gas (MoPNG). plants. Various other policies such
jor transformation as it is set to occupy The power sector is the leading as recent updates in Gas Allocation
a crucial part in the countrys energy end user of natural gas in India along Policy have also been implemented
portfolio after the central government with the fertilizer sector and consumes to encourage use of gas in different
approved the use of imported gas for nearly one third of the total natural gas end user segments. Other policies that
power generation and fertilizer produc- produced in the country. Moreover, are expected to have a positive impact
tion. Now, Indias plans to set up new central government is increasing its on the countrys LNG market include
terminals and expand existing facilities focus on gas based power projects due E-bid RLNG for smoothing the supply
August 2016
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of imported spot RLNG to power Figure 1: Grid Connected Gas-based Power Plants:
plants and fertiliser industries. Ownership, Consumption and Plant Load Factor (PLF)

LNG imports on the up as G rid C onnected G as -based Power Plants:


domestic production falls Ownership, C ons umption and PLF (As of May 2016)
50
Falling production of natural gas in
45
India has forced companies in the oil 45
41
and gas, fertiliser and gas-based power 40
generation sectors to rely heavily on 36
35
imported LNG in recent years. In the 30
31
29
last decade, domestic natural gas pro- 30

duction has grown by just 10%, while


Percent

25 24

imports of LNG have risen by 335%.


20 18
The volume of gas import is expected 15
to grow further in future. Currently, 15

the countrys gas demand stands at 10


120 million standard cubic meters per 5
day (mscmd), while the volume of
0
domestic supply is 80 mscmd. Cur-
C entral S ec tor S tate S ec tor Private S ec tor
rently, there are four LNG terminals at
Ins talled C apacity G as C ons umption Plant Load F actor
Dahej and Hazira in Gujarat, Dabhol in
Maharashtra and Kochi in Kerala. The Source: Central Electricity Authority (CEA)
recently-built Kochi terminal is barely This may spell good news for
functional due to the delay in the con- In the last decade, developers of gas-based power 49
struction of pipeline planned to connect domestic natural gas plants and already Essar Power Ltd.
the terminal with the consumers. is seeking liquefied natural gas to
production has grown
Recently, India and Australia supply two power plants (Hazira and
decided to form a sub-group, to prepare
by just 10%, while im- Bhander) after a global glut cut prices
a roadmap on streamlining issues that ports of LNG have risen for the fuel by two-thirds since Sep-
would help in providing cheap LNG by 335%. The volume tember 2014. The price for spot LNG
for power plants in the country. The of gas import is ex- to Asia was at $4.808 per mmbtu as
move will lead to committed LNG pected to grow further of June end, down 66 percent since
supply to gas-based power plants, in future. Currently, the September 2014. The company is
which are running below their capacity countrys gas demand said to be in discussions with sup-
due to lack of availability of gas. pliers including Royal Dutch Shell
stands at 120 million
The grid connected gas-based power Plc and state-run GAIL India Ltd. to
generation capacity in the country is
standard cubic meters supply the two plants in the state of
around 24,508 MW. Of this, a capacity per day (mscmd), while Gujarat. The Bhander Power-Hazira
of 14,305 MW had no supply of the volume of domestic plant was commissioned in 2006 and
domestic gas. supply is 80 mscmd commenced full commercial opera-
tions in October 2008, but due to
Will this rescue Ratnagiri (Dabhol) power plant? high price of the primary fuel, the
company had kept the operations sus-
Ratnagiri Gas & Power Private Limited (RGPPL) is being restructured with the pended since the past three years. The
5 million tonne LNG regasification unit being spun off into a special purpose Essar Power-Hazira is a multi-fuel
vehicle (SPV) which will take on 50% of the total debt of INR 6,981 Crore. (naphtha, high-speed diesel, natural
State-owned insurer Life Insurance Corporation (LIC), which had loaned the gasoline liquid and/or natural gas)
project INR 1,400 crore by subscribing to government -guaranteed bonds, is combined-cycle power plant. The
willing to continue to fund the project provided the government extends the company has signed Power Purchase
Agreements (PPAs) with Essar Steel
guarantee. The project is being refinanced via the 5/25 route which allows the
(captive purposes) and Gujarat Urja
borrower to pay back the loan over a longer time period.
Vikas Nigam Limited (GUVNL) to
August 2016
www.InfralinePlus.com

InDepth

Plans to shelve gas-based power plants along DMIC? and trade nearly 50 million tonnes,
accounting for about a sixth of global
The central government is said to have asked the state governments of
trading volume. Global output capacity
Madhya Pradesh, Maharashtra and Gujarat, along the Delhi-Mumbai Industrial
is expected to rise by half by 2020,
Corridor (DMIC) to consider using land allotted for five gas-based power
potentially adding some 150 million
plants to set up industrial areas or renewable energy projects following the
tonnes of LNG to the market.
non-availability of gas.
Increasing focus on expansion
The gas-fired projects, each with capacity of 1,000-1,200 MW, were to come of gas pipeline infrastructure in the
up in Madhya Pradesh, Maharashtra and Gujarat as part of the corridor. country, rising demand for natural
The gas-based power projects in the DMIC were to come up at Indapur in gas from power and industrial sectors
Pune (Maharashtra), Ville Bhagad in Raigad (Maharashtra), Vaghel in Patan and favourable government policies
(Gujarat), Rajpur-Shahpur in Mehsana (Gujarat) and Chainpura Industrial makes LNG a commercially viable
Area in Guna District (Madhya Pradesh). and suitable fuel for various end users
in India. As a result, LNG demand is
sell power from the plant commis- forecast to witness robust growth over
sioned in October 1997. Increasing focus on the next 5-10 years in India and project
expansion of gas developers will have an abundant
Spot purchase replacing pipeline infrastructure supply to run their plants not just at
term contracts in the country, rising 25-30% Plant Load Factor (PLF) but at
Mideast Gulf states are among the the required optimal levels of 80-85%.
demand for natural
worlds largest LNG producers and The uncertain future of Indian
Middle Eastern and Indian buyers
gas from power and domestic gas production has cascading
are turning away from term contracts industrial sectors and effects on the overall role of gas in the
50 to the spot market to procure gas for favourable government countrys energy sector. The impacts
power generation and fertilizer and policies makes LNG a have already been felt in the power
chemical production. The ability of commercially viable and sector where the PLF of gas-fired
buyers in the Middle East and India suitable fuel for various plants during the year averaged only
to import gas from around the world 18.64% in May last year and more
has encouraged growth in the regions
end users in India. As recently at 23.73% (May 2016) due to
spot LNG trade. Cargoes from a range a result, LNG demand unavailability of gas. As the economy
of traditional suppliers have moved is forecast to witness expands and industries and households
to the region, as has gas from some of robust growth over the increase their consumption of natural
the newest LNG producers, including next 5-10 years in India gas, the dependence on imported LNG
coal-bed methane operations in Austra- will only increase since the domestic
lia and one of the first exports from the worlds top LNG trader after buying output has been declining for years.
new US liquefaction plant at Sabine BG Group, expects to produce around
Pass on the Gulf coast. Shell, the 30 million tonnes of LNG this year For suggestions email at feedback@infraline.com
August 2016
www.InfralinePlus.com

StatisticsOil & Gas


LNG Cargo Imported (2016)
Date Quantity(CBM) Quantity (MMT) Cargo Type LNG Price ($/MMBTU) Foreign Country Indian Port
16-Jun
3-Jun-16 156796 0.073 Spot/Short-Term 6.21 EQUATORIAL GUINEA MAGDALLA
6-Jun-16 135918 0.065 Long-Term 5.57 QATAR DAHEJ
8-Jun-16 152331 0.073 Long-Term 6.18 QATAR DAHEJ
8-Jun-16 211851 0.098 Long-Term 5.6 QATAR DAHEJ
9-Jun-16 135858 0.065 Long-Term 6.18 QATAR DAHEJ
13-Jun-16 134336 0.062 Spot/Short-Term 7.11 QATAR MAGDALLA
14-Jun-16 155266 0.073 Spot/Short-Term 4.19 NIGERIA DAHEJ
14-Jun-16 135965 0.065 Long-Term 6.16 QATAR DAHEJ
16-Jun-16 72808 0.033 Spot/Short-Term 6.26 AUSTRALIA DAHEJ
16-Jun-16 584 0.0007 Spot/Short-Term 5.69 AUSTRALIA DAHEJ
16-Jun-16 87892 0.04 Spot/Short-Term 5.69 AUSTRALIA DAHEJ
17-Jun-16 140320 0.066 Spot/Short-Term 5.22 NIGERIA MAGDALLA
17-Jun-16 152361 0.071 Long-Term 6.19 QATAR DAHEJ
20-Jun-16 136040 0.065 Long-Term 6.18 QATAR DAHEJ
20-Jun-16 140508 0.065 Long-Term 4.85 QATAR DAHEJ
20-Jun-16 146022 0.068 Spot/Short-Term 4.12 QATAR MAGDALLA
21-Jun-16 137049 0.066 Spot/Short-Term 4.68 UNITED ARAB EMIRATES DAHEJ
23-Jun-16 84213 0.04 Long-Term 6.18 QATAR DAHEJ
23-Jun-16 51712 0.025 Long-Term 6.18 QATAR DAHEJ
25-Jun-16 135380 0.061 Spot/Short-Term 5.07 AUSTRALIA COCHIN
28-Jun-16 152410 0.071 Long-Term 6.19 QATAR DAHEJ
28-Jun-16 142853 0.067 Spot/Short-Term 6.29 NIGERIA MAGDALLA
29-Jun-16 136824 0.066 Spot/Short-Term 4.23 UNITED ARAB EMIRATES DAHEJ
29-Jun-16 135934 0.065 Long-Term 6.18 QATAR DAHEJ
30-Jun-16 135129 0.064 Spot/Short-Term 5.5 NIGERIA DAHEJ
30-Jun-16 144400 0.069 Spot/Short-Term 5.58 OMAN MAGDALLA
51
Month Wise Import/Export of Crude Oil and Petro-Products (2016-17) (As on June, 2016) (TMT)
IMPORT/EXPORT April May June
IMPORT*
CRUDE OIL 17960 17527 17667
PRODUCTS
LPG 795 827 772
MS/ Petrol 74 157 38
Naphtha 238 304 221
ATF/Aviation Turbine Fuel 23 21 21
SKO/ Kerosene 0 0 0
HSD/ Diesel 503 225 4
LOBS/ Lube oil 179 160 160
Fuel Oil 81 87 72
Bitumen 122 78 69
Others 1060 997 965
PRODUCT IMPORT 3075 2855 2321
TOTAL IMPORT 21035 20382 19988
PRODUCT EXPORT
LPG 27 29 30
MS/ Petrol 1368 1561 1491
Naphtha 494 593 602
ATF/Aviation Turbine Fuel 674 598 643
HSD/ Diesel 2119 1437 2248
SKO/ Kerosene 2 1 1
LDO 0 0 0
LOBS/ Lube Oil 1 3 0
Fuel Oil 88 118 182
Bitumen 9 0 0
Others 158 256 166
TOTAL PRODUCT EXPORT 4940 4595 5363
NET IMPORT 16096 15786 14625
Note:
POL imports by private parties taken from raw data of DGCI&S which is with a 2 month lag period.
IOCL: Nepal sales taken in exports of IOCL. For Nepal exports, average US$ exchange rate considered .
BPCL: For Nepal and Bhutan exports, average US$ exchange rate considered
*LNG import not included
August 2016
www.InfralinePlus.com

StatisticsOil & Gas


State-wise sales of selected petroleum products (As on June 2016) (TMT)
LPG MS SKO HSD Total (All products)*
State/UT Per capita Per capita Per capita Per capita Total Per capita
Sales Sales Sales Sales
sales (Kg) sales (Kg) sales (Kg) sales (Kg) Sales sales (Kg)
Chandigarh 45.7 43.4 100.7 95.5 0.7 0.7 114.7 108.7 440.3 417.4
Delhi 776.7 46.4 901.6 53.8 0.7 0 1508.3 90 4995.8 298.2
Haryana 629.5 24.8 782.7 30.9 57.7 2.3 5013.8 197.8 10772.3 424.9
Himachal Pradesh 130.6 19 162.9 23.8 22.7 3.3 575.7 84 1549.2 225.9
Jammu and Kashmir 169 13.5 199.6 15.9 141.7 11.3 635.4 50.6 1341.5 106.9
Punjab 779.7 28.1 745.2 26.9 66.5 2.4 3302 119.2 5961.5 215.2
Rajasthan 995.2 14.5 1183.5 17.2 377 5.5 5315.9 77.5 11217.7 163.5
Uttar Pradesh 2351.4 11.8 2164.4 10.8 1215.9 6.1 7098.5 35.6 15011.6 75.2
Uttarakhand 232 22.9 252.9 25 30.9 3.1 746.7 73.8 1519.4 150.2
SUB TOTAL NORTH 6109.8 16.6 6493.5 17.6 1913.9 5.2 24311 66 52809.2 143.3
Andaman & Nicobar Islands 8.7 22.8 14 36.8 4.6 12 124.3 327.2 179.7 473
Bihar 769 7.4 545.4 5.3 618.6 6 2254.8 21.7 4632.8 44.6
Jharkhand 215.9 6.5 349.4 10.6 202.8 6.2 1602.2 48.6 2768 84
Odisha 391.9 9.3 553.8 13.2 299.8 7.1 2231.7 53.2 4464.4 106.4
West Bengal 1226.3 13.4 654.6 7.2 736 8.1 2955.2 32.4 7191.8 78.7
SUB TOTAL EAST 2611.7 9.7 2117.1 7.8 1861.7 6.9 9168.1 33.9 19236.7 71.1
Arunachal Pradesh 16.5 11.9 31.4 22.7 14.2 10.3 118.5 85.7 199.8 144.5
Assam 294.7 9.5 267.5 8.6 251.6 8.1 851.7 27.3 2115.4 67.9
Manipur 23.6 8.7 43.5 16 18.6 6.8 87.8 32.3 179.5 66
Meghalaya 17.1 5.8 65.3 22 19.9 6.7 294.5 99.4 418.5 141.2
Mizoram 21.6 19.8 23.7 21.7 5.2 4.7 57.1 52.4 113.1 103.7
Nagaland 18.7 9.4 26.3 13.3 13.2 6.7 59.4 30 127.3 64.2
Sikkim 12 19.8 16.1 26.4 11.8 19.4 57.5 94.6 100.2 164.9
Tripura 35.4 9.6 37.9 10.3 29.9 8.1 93 25.3 212.1 57.8
SUB TOTAL NORTH EAST 439.6 9.6 511.6 11.2 364.2 8 1619.6 35.5 3465.8 76
Chhattisgarh 197.7 7.7 418.2 16.4 124.1 4.9 1461.4 57.2 2872.6 112.5
52 Dadra & Nagar Haveli 16 46.8 16.8 49 1.4 4.2 150.8 410.9
Daman & Diu 9.5 39 18.6 76.6 0.8 3.2 81.4 334.9 181.1 745.5
Goa 57.9 39.7 151.3 3.9 2.7 308.8 211.8 729.9 500.7
Gujarat 868.2 14.4 1526 25.3 515.3 8.5 5076.8 84.1 18954.3 313.9
Madhya Pradesh 751 10.3 1037.7 14.3 452.8 6.2 3282.8 45.2 7008.1 96.5
Maharashtra 2425.2 21.6 2836.5 25.2 486.4 4.3 7814 69.5 18223.1 162.2
SUB TOTAL WEST 4325.4 15.8 6005 22 1584.8 5.8 18175.9 66.6 48379.9 177.3
Andhra Pradesh 923 18.7 844.9 17.1 183.2 3.7 3298.3 66.8 6179.2 125.1
Karnataka 1330.4 21.8 1664 27.2 379.2 6.2 5747.2 94 11051 180.8
Kerala 774.1 23.2 1129.7 33.8 97.1 2.9 2536.7 76 5551.3 166.3
Lakshadweep 0.3 4 0 0 0.8 12.1 13.8 214.2 15 232.7
Puducherry 38.8 31.2 113.1 90.9 3.3 2.6 330.4 265.5 520.8 418.5
Tamil Nadu 1818.6 25.2 2052.1 28.4 304.7 4.2 6311.8 87.5 12698.9 176
Telangana 762.5 21.6 915.4 25.9 133.5 3.8 3077.5 87.2 5705.2 161.7
SUB TOTAL SOUTH 5647.6 22.4 6719.2 26.6 1101.7 4.4 21315.6 84.4 41721.2 165.1
All India 19134.2 15.8 21846.4 18.1 6826.3 5.6 74590.2 61.6 165612.8 136.8
Note:1. Per capita sales figures are based on provisional sales figures for the April 2015- March 2016
2. Population figures have been taken from Census of India, 2011
* Total (all product) sales include other petroleum products such as Naphtha, FO, ATF, Lubricants, Bitumen etc.

Sectoral Demand and Consumption of Natural Gas (June, 2016) (MMSCMD)


Domestic gas Total Consump-
Sectoral Demand R-LNG consumption
Sector consumption tion (Domestic gas
2016-17* May , 2016
May 2016 +RLNG) May,2016
Fertilizer 113 21.89 21.61 43.5
Power 207 23.79 6.25 30.04
City Gas 46 11.19 6.57 17.76
Industrial 27 0.54 1.4 1.94
Petrochemicals/ Refineries/ Internal
consumption/LPG Shrinkage/ 72 9.92 30.68 40.61
manufacture/ Miscellaneous
Sponge Iron/Steel 8 0 1.34 1.34
Total 473 67.33 67.85 135.19
August 2016
www.InfralinePlus.com

NewsBriefs | Renewable International National


PFC, REC will drop interest rates to double lending in three years Govt seeks bids for 300 megawatt of
will have to sanction Rs 1.5 lakh crore solar projects with storage
loans and REC Rs 1 lakh crore by 2019.
Both the companies are likely to make
formal announcements very soon. In a
recent review meeting with Piyush Goyal,
minister for power, coal, renewable energy
and mines, the two companies were asked
to grow their businesses by 100 per cent
by 2019, with specific focus on renewable
State-run power financiers Power Finance energy projects. The minister prodded the
Corp (PFC) and Rural Electrification Corp companies to take up smaller renewable India has invited its first-ever bids
(REC) will slash rates to single digits when projects and asked the two firms to reduce for solar energy projects that include
lending to renewable energy projects cycle time for loan evaluation to disbursal to storage as a requirement as part of
following the governments order setting 60-90 days for renewable energy projects a trial program aimed at making the
tough targets for the two companies to that take about a year to get commissioned. renewable resource a more reliable
double their exposure in the next three The companies take about 170 days for the source of power. Solar Energy Corp. of
years. In order to achieve the targets, PFC same which has been constantly reducing. India (SECI), the implementing agency
for clean-energy projects, sought bids for
India reveals plan for implementation of 10 Solar Zones 300 megawatts of solar power to be built
in Andhra Pradesh and Karnataka. SECI
The Ministry of New and Renewable Energy is seeking bids for two projects of 50
(MNRE) has moved forward with its plan to megawatt each in Andhra Pradesh with
develop 10 special Solar Zones designed to a battery energy storage system of 5
accelerate the development of large-scale megawatt/2.5 megawatt-hour attached.
solar PV capacity in the country. Eyeing 2022s In Karnataka, it has invited bids for four 53
100 GW of solar PV target, the ministry has solar projects of 50 megawatt each with
sanctioned the implementation of these the same storage specifications. The cost
zones, which will each cover approximately of the project will go up only marginally
10,000 hectares of government-owned or since the size of the storage component
privately owned wasteland, uncultivable being sought is small, Tarun Kapoor, joint
land or fallow land in one or more than one purpose of each Solar Zone is to act as a flag- secretary at the ministry of new and
patches. Development of the first of these ship demonstration facility highlighting the renewable energy, said. A Rs.500 crore
10 zones will begin this year, with the project efficacy and affordability of solar power, with solar project will become costlier only by
expected to span five years. Funding for each the aim being to encourage project developers about Rs.10 crore and the government is
zone will be provided by the government to and investors to pour more funds and effort also extending support, he said.
the tune of INR 440 million ($6.5 million). The into Indias growing solar industry.

Grid-connected solar generation capacity touches 7.8 GW

Total installed solar power generation concessional loan of USD 500 million,
capacity in the country touched 7,805 Clean Technology loan of USD 120 million
MW mark by June-end this year and Clean Technology Fund grant of USD
with Rajasthan topping the charts five million to State Bank of India for the
with 1,294.60 MW. Tamil Nadu and grid connected rooftop solar projects. As
Chhattisgarh followed Rajasthan with on June 30, 2016, estimates show that
grid connected solar power generation states will invest Rs 6,254 crore on solar
capacity of 1,267.41 MW and 1,123.36 power projects in the current fiscal, Goyal
MW respectively as on June 30, 2016, said. The estimated investments by states
New and Renewable Energy Minister on solar projects was Rs 18,113 crore in
Piyush Goyal said in a written reply to 2015-16 and Rs 6,672 crore in 2014-15.
Lok Sabha. In another reply, the Minister Government has planned to add over
said the government has taken several 10,000 MW of solar power generation
initiatives to achieve this target. He capacity during the current fiscal.
further said the World Bank has approved
August 2016
www.InfralinePlus.com

NewsBriefs | Renewable National


National lab policy for renewable energy soon Solar power capacity addition outstrips
and define the infrastructure required for wind in Q1
testing centres. The policy document is
in the final stage of being prepared and is
expected to be complete in a months time.
A committee headed by ministry of new
and renewable energy (MNRE) director
BS Negi and National Institute of Solar
Energy (NISE) director OS Sastry has
already prepared a draft policy document.
Noting that there are no existing standards
for products such as solar pumps, solar
The ministry of new and renewable batteries, solar lanterns and solar thermal Solar power has overtaken wind power
energy is in the process of finalising systems, the draft said these need to be in new capacity addition for the first
a national lab policy to set norms for quickly put in place. It also spelled out the time in the country. During the first
testing, standardisation and certification highly technical standards that each of quarter of current fiscal, solar power
of renewable energy related products, these products should adhere to. sector added 1,031 MW of new capacity
when compared with 374 MW of new
capacity added by the wind segment,
India-US solar dispute: WTO appellate bodys ruling expected by mid-Sept
according to Union Ministry of New and
In April, India had appealed against WTOs Renewable Energy (MNRE). However,
panel ruling that the countrys power total capacity addition by the renewable
purchase agreements with solar firms are sector in the first quarter was modest
inconsistent with international norms. WTOs at 1,465 MW given the huge target set
appellate body is expected to give its ruling for the current fiscal. MNRE has fixed a
54 by mid-September in the solar mission total capacity addition target of 16,600
dispute between India and the US. In April, MW for 2016-17 and solar is expected
India had appealed against WTOs panel rul- to be the major contributor with about
ing that the countrys power purchase agree- 12,000 MW of new capacity, followed
ments with solar firms are inconsistent with by wind (4000 MW), biopower (400
international norms. The appellate body is a MW), small hydro (250 MW) and waste
standing body of seven persons. It listens to once adopted by the Dispute Settlement to power (10 MW). As on June 30, total
the appeals from reports issued by panels in Body, must be accepted by the parties to the grid connected installed renewable
disputes involving WTO members. The body dispute. If the body would give ruling against power capacity in India stood at 44,237
can uphold, modify or reverse legal findings India, the government would have to imple- (MW). Total capacity of wind power
and conclusions of a panel and its reports, ment the order in the next 6-7 months. stood at 27,151 MW.

Centre nod to floating solar panels to meet 22 target

The ministry of new and renewable adequate land in many states. In Bengal,
energy has agreed on a proposal by solar around 300 acre of land is required for the
power expert SP Gon Chaudhuri to have necessary solar installations to gener-
land-neutral solar power installations ate the power but scarcity of land is the
on water bodies. There is a major dearth main hindrance, he said. The solar power
of adequate land in states like Bengal, expert said that to make up the unavail-
Bihar, Odisha and Assam to generate solar ability of land, floating solar panel instal-
energy to meet Indias target of 60,000 lations on water bodies is the only option.
MW of land-based solar energy under It is found that around 3 lakh MW of
the National Solar Mission by 2022. The solar power could be generated by tapping
National Institute of Solar Energy along around 10-15% of waterbodies. States like
with the city-based NB Institute of Rural stadiums to install floating solar panels in Bengal, Bihar, Kerala, Odisha and Assam
Technology headed by Gon Chaudhuri will Bengal. We expect the study to start off are the most potential ones for develop-
conduct a study to identify water bodies after the monsoons, Gon Chaudhuri said. ing land-neutral solar power technology,
and huge structures like rail stations and The problem is the non-availability of he said.
August 2016
www.InfralinePlus.com

NewsBriefs | Renewable International States


Delhi discoms can meet green power quota
Countrys 1st grid rooftop solar
had filed the petition, argued that power project in Odisha
from small hydro power projects was in
the consumers interest as their cost of
power was the lowest. There are eight
hydro projects from where the discoms
want to procure power but couldnt due to
lack of guidelines by the regulatory author-
ity. According to discom officials, bids were
invited from small hydro projects as their
tariff was the lowest among all non-solar
The discoms will now be able to meet their sources of energy. The current tender
annual renewable purchase obligations has been floated to meet the renewable
(RPO) with the Delhi Electricity Regula- purchase obligations and it would be wise
tory Commission (DERC) finally approving if the same is met with the minimum cost The Green Energy Development
power purchase obligations (PPAs) from possible. The low cost will ultimately ben- Corporation of Odisha Limited (GEDCOL)
hydro projects. Tata Power Delhi, which efit the consumers, said an official. and the Central Electricity Supply
Utility (CESU) recently signed a 25-year
Gujarat HC notice to govt on PIL on Santhalpur solar park project implementation agreement
with Azure Power Mercury Private
The Gujarat High Court has issued notice Limited to develop the countrys first
to the state government in response to a grid connected rooftop solar project.
PIL alleging corruption in contracts for The project, with a minimum installed
the development work at the countrys capacity of four MW, will be set up
largest solar power project in Santhalpur across more than 100 Government
tehsil of Patan district. A division bench buildings in Bhubaneswar and Cuttack. 55
of Chief Justice R Subhash Reddy and As many as 114 Government buildings
Justice V M Pancholi issued notices to the in Bhubaneswar and 85 buildings in
government, Gujarat Power Corporation Cuttack are found suitable for generation
Limited (GPCL), Anti-Corruption Bureau of rooftop solar energy. The project will
and thirteen contractors. The government mobilise around Rs 35 crore of private
recently filed an affidavit as per an The petition, filed by former Congress investment and to be implemented by
earlier direction. GPCL had awarded the MLA Farsu Goklani, alleged that the availing Central financial assistance
contracts and, therefore it should file reply government did not follow due procedure from Ministry of New and Renewable
in the matter, it said. But not satisfied while awarding contracts worth Rs 550 Energy (MNRE), GEDCOL Managing
with this stand, the HC issued notices to crore for development work at the solar Director Hemant Sharma said.
all the respondents seeking their reply. park at Charanka in Santhalpur tehsil.

Solar power plants installed atop warehouses to generate 162 MW in Karnataka

With Karnatakas ambitious project of be placed before the cabinet for approval
harnessing 400MW of power through shortly. A total of 1.8 crore sqft warehouse
grid-connected rooftop solar plants rocked space will be available for installing
by scams, the government has come up photo-voltaic solar panels. Spread across
with an uncommon solution to fast-track 193 places across the state, while 1 crore
the project: Install solar power plants on sqft is readily available to start rooftop
rooftops of warehouses. Were lagging projects, the remaining 80 lakh sqft is
behind in meeting the 2018 deadline; under construction and will be readied
we have hardly managed to harness shortly. The cost of the warehouse solar
5MW of solar rooftop power so far. The projects is around Rs 1,200 crore. The
warehouses (godowns used for storing idea of using warehouses for solar power
agricultural commodities), operated by the to generate 162MW of solar power from generation was mooted by senior KAS
Karnataka State Warehousing Corporation these warehouses on the public private officer Rajesh Gowda, who moved out
(KSWC) and spread across the state, will partnership (PPP) model, officials said. as the managing director of KSWC, to
now have solar power plants. We hope A proposal to this effect is expected to promote clean energy.
August 2016
www.InfralinePlus.com

NewsBriefs | Renewable International


ADB approves $115m loan to enhance Sri Lanka power reliability
Biggest sale of clean energy finds no
Fund for Poverty Reduction and $1.8m buyer for all of SunEdison
from the Clean Energy Fund under the
ADB-managed Clean Energy Financing
Partnership Facility. The funding will be
used for a five-year project, which includes
development of hybrid renewable energy
systems and installation of a renewable
energy micro-grid in the countrys Western
Province. Featuring a combination of wind,
solar and efficient diesel generation, along
The Asian Development Bank (ADB) with energy-storing long life lithium-ion Three months after filing for Chapter
has granted $115m loan to Sri Lanka batteries, the hybrid renewable energy 11 bankruptcy protection with $16.1
to help the country achieve its goal of systems will provide a reliable electricity billion in liabilities, SunEdison Inc. has
100% electrification and improving power supply for communities on three isolated yet to field any bids to take over the
reliability. The country also secured islands in the Jaffna area of the Northern entire business. Instead, its received
grants including $2m from the Japan Province. more than 100 indications of interest
for specific assets, Rothschild Inc.,
Europeans keen to invest in Irans renewable energy sector which is managing the sales process,
said. That includes bids for individual
Giles Dickson, the CEO of the European projects, for bundles of wind and solar
Wind Energy Association (EWEA), said that farms, and for its entire commercial
renowned European companies are keen and industrial unit. The developer also
to invest in Irans renewable energy sector, received at least one inquiry about its
especially in wind energy sphere. Dickson said controlling stake in TerraForm Power
56 that Iran has the potential to generate more Inc., one of its most valuable holdings.
than 30 gigawatts (GW) of electricity from Potential buyers are looking to cherry-
wind energy. EU members are interested and pick the companys best assets, or
ready to seize this opportunity to transfer may be pursuing low-ball bids for the
their knowledge and technology to Iran and most speculative ones. SunEdison is
of course to invest in the countrys energy the challenges facing foreign investors in marketing most of its assets and will
sector, he stressed, recommending that Iran Iran, Dickson said that since there are still entertain offers for all of them. At least
could facilitate the presence of European some obstacles in banking transactions with 50 projects on five continents, from the
companies by providing them with straight- Iran, the most important challenge facing U.S. and the U.K. to India, South Africa
forward contracts in which land registry, foreign investors is to overcome such hurdles and Chile, are available with more than
conditional lease and Power Purchase Agree- and to find resources and export credit agen- 5 gigawatts of capacity.
ments (PPAs) are clearly stated. Mentioning cies to finance their projects.

China launches new alert system to tame wind power investments

China has launched a risk alerting system to year, official data shows. However, a national
prevent further investments in wind power average of 26 percent of wind power gener-
generation in certain locations, after large ated in the first quarter of 2016 was wasted.
amounts of power were wasted due to inad- Jilin, Gansu and Xinjiang provinces were the
equate power transmission infrastructure. worst offenders with about half of their wind
The National Energy Administration (NEA) power generation wasted while Ningxia and
has given a red alert, or the highest warning, Heilongjiang lost a little more than one-third
to five provinces where new construction of their wind power, according to the NEA.
approvals and access to grid connections We estimate that over the course of the first
will be put on hold. Among the restricted six months, 4.2 billion kilowatt hours of wind
regions are Jilin and Heilongjiang in northeast user has seen a surge in new installations and solar power has been wasted, which is
China, along with Gansu, Ningxia and Xinjiang in the last decade, with 136 gigawatts of equivalent to New Zealands electricity use in
province in western China, all with high installed capacity as of May. Wind genera- the whole year of 2015, said Peng Peng, an
concentration of wind farms but only limited tion capacity increased by 32 percent during analyst with the Chinese Renewable Energy
grid connectivity. The worlds top wind power January to May against the same period last Industries Association.
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InConversation
LED market size in India to
reach Rs 21,600 crore by 2020
India is all set to become the biggest market for LED lighting in
the world, thanks to the regulatory and policy initiatives taken by
the NDA government as well as the path breaking work done by
Energy Efficiency Services Limited (EESL) - a Joint Venture of NTPC
Limited, PFC, REC and POWERGRID. Saurabh Kumar, Managing
Director, EESL, shares his vision on the energy efficiency industry in
India and what lies in store in the future. Excerpts:

Please share your outlook on the technology in India and fostered its
LED lighting industry in India, in subsequent demand in the country.
terms of market size, demand When we started out, LED bulbs were
and growth potential. quite expensive compared to CFLs
A phenomenal growth has been regis- or incandescent bulbs, each bulb
tered in the Indian LED market since was somewhere around Rs. 300-350. Saurabh Kumar, Managing Director, EESL
58 the launch of the UJALA programme Moreover selling a comparatively
as it has created demand for afford- costlier lighting option i.e. LED in a demand of 3,365 MW and is helping
able LED bulbs in the country. As price sensitive market such as India reduce over 37,296 tonnes of CO2
per estimations, the market size of was a challenge. EESL overcame emissions per day. With a vision of
the Indian LED industry will reach as this challenge with bulk procure- including 100 cities under the UJALA
high as Rs. 21,600 crore by the year ments from LED manufacturers in the scheme, EESL has now successfully
2020. In the year 2013, out of the country and benefitted from volume spread to more than 125 cities and will
Rs. 13,000 crore turnover of Indias discount. Interestingly, within one cover the whole country by 2019.
lighting industry, LED industry stood year of running this scheme, due to
at Rs. 1,925 crore. The UJALA pro- bulk procurements from indigenous What are the savings envisaged
gramme has played a significant role manufacturers the prices of LED due to the LED bulb program of
in creating awareness about LEDs in plummeted to about Rs. 55 per bulb. the Government in terms of peak
every nook and corner of the country This way we were able to effectively demand and reduction in carbon
and made the LED lighting technol- implement Government of Indias footprint?
ogy more popular in India. idea of efficient lighting throughout As already stated, with the distribu-
the country. tion of over 13 crore LED bulbs, the
Please outline the challenges country is saving 4,60,43,066KWh
in promoting LED as an energy Please update on the UJALA of energy every day. Avoiding peak
efficient source of lighting in scheme and progress achieved demand of 3,365 MW, it is further
India. How can we overcome so far. reducing over 37,296 tonnes of CO2
these? Under UJALA scheme, we have emissions per day.
The biggest roadblocks in LED light- distributed to over 13 crore LED bulbs
ing adoption in India have already in India, which are leading to energy What other initiatives are being
been taken care of by EESL. Prob- savings of about 4,60,43,066 KWh implemented by EESL towards
lems and bottlenecks are now not as every day. The total estimated cost sav- energy efficiency?
dominating as they used to be about ings per day through the distribution is Following are some other initiatives:
one year ago. EESL effectively cre- about INR 18,41,76,523. The scheme National Energy Efficient Fan Pro-
ated awareness of energy saving LED has further successfully avoided a peak gramme (NEEFP): National Energy
August 2016
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Efficient Fan Program (NEEFP) was with street lights which consume less ones at its own cost ,i.e., without any
implemented by EESL for consum- energy, illuminate only the path- investment from Urban Local Bodies
ers under demand side management, ways, reduce light trespass and have (ULBs). The new lights being put
with the aim of benefitting the people improved colour rendering index. A in place consume less energy, have
from all socio-economic bands. Under way forward was planned and EESL drastic colour rendering index and
NEEFP, EESL aims to replace 35 began replacing the conventional illuminate only the focused area.
crore inefficient regular ceiling fans street lights with new energy efficient The street light contracts that EESL
across households with BEE 5 Star enters into with ULBs or municipali-
rated efficient ceiling fans by 2018. Under NEEFP, EESL ties is typically of a 7-year duration,
With the intent to give a significant wherein EESL not only guarantees a
thrust to the expansion of market for
aims to replace 35 minimum energy saving (usually of
efficient fan technologies in India, crore inefficient regular 50%) but also provides free replace-
EESL through its procurement of fans, ceiling fans across ments and maintenance of lights at
has brought the price of a fan down by households with BEE no additional costs to the municipal-
33 per cent to Rs. 955, when com- 5 Star rated efficient ity. In this scheme, EESLs invest-
pared to the market price. ment is recovered through the long
Streetlight National Programme ceiling fans by 2018. terms energy savings resulted by the
(SLNP): Street lights in India were With the intent to give new street lights. More than 878,319
recognised as the second most po- a significant thrust inefficient street lights have already
tential group resulting in significant to the expansion of been replaced with LED lights across
energy savings. The conventional the nation and work is in progress
lighting is not only a burden on
market for efficient fan wherein EESL has signed MoUs, en-
current energy production but the technologies in India, tered into agreements for SLNP with
insufficient lighting levels and bad EESL through its pro- state governments. The overall energy 59
colour rendering indices is a public curement of fans, has savings estimated from the completed
problem. It has been theoretically cities is about 318829.79 kWh per
stated that if illuminated street light
brought the price of day. The combined reduction of CO2
structures are visible from the sky, it a fan down by 33 per emissions taken from completed
is nothing more than light pollution cent to Rs. 955, when ULBs of different states is about 264
in the night sky. Here, the concept of compared to the mar- tonnes. EESLs business model for ef-
dark sky initiative was imbibed and ficient street lighting benefits munici-
ket price
research was carried out to come up palities by reductions in energy and
maintenance costs.
Agriculture Demand Side
Management (AgDSM): Indias
agricultural sector takes about 18%
of the total national electricity
consumption. As per the Central
Electricity Authority (CEA), there
are about 20.27 million pump sets
installed in agricultural sector. As
electricity supply is inconstant in the
rural regions, the farmers frequently
have to spend money on pump
repairs. This results in adoption of
rugged, locally manufactured pumps,
which are highly inefficient. The
average efficiency of existing in-
efficient pump sets is in the range of
20% - 30% whereas efficiency range
of new star rated Energy Efficient
August 2016
www.InfralinePlus.com

InConversation

Pump sets (EEPS) is 40% - 50%. no upfront cost to farmers and farmers, but also holds the potential
Therefore, there is a need to tap utilities and there is free repair and of transforming into a big business
the huge energy savings potential maintenance during project period. opportunity, where investments
promised in agriculture pumping EESL recovers costs from DISCOM can be recovered through monetary
sector. Under AgDSM proposition, through the annual energy savings energy savings.
replacement of inefficient agricultural achieved and there is reduction in EESLs Buildings Efficiency
pump sets is done with BEE star power purchase costs, peak load Programme: The way to sustainable
rated energy efficient pump sets to and load-shedding to DISCOMS. future lies in having smart infra-
reduce the energy consumption. It This opportunity not only reduces structure, that consumes less energy
has been experienced that the simple the costs of Government and the yet works better than the existing
payback period in these projects is setup. It has been estimated that on
2-3 years and total project duration an average, a building wastes about
EESL began installing
is 4-5 years. Here, EESL enters 30% of energy and if nothing was
into an understanding with the energy efficient lighting ever done to improve its efficiency,
farmers and DISCOMs to provide in government build- there is lot of room to bring about
with free BEE star labled pump set ings which not only a big change. What if we devise
and later recovers its investment methods to secure the 30% energy
resulted in improving
through received energy savings. loss in buildings and not let it go
Under AgDSM, about 4,423 pump the overall energy con- waste? The obtained savings can be
sets have already been replaced sumption but also gave used to add to the energy production
in Andhra Pradesh and Karnataka a better lighting output. and help to realise the dream of 24
combined. The AgDSM initiative X 7 uninterrupted power supply. In
This project is driven
has resulted in estimated savings of a fresh move to initiate this change,
about 229.7 lakh kWh of electricity by the inculcation of Government of India appointed EESL
60
per annum. In the above regions of Buildings Manage- to not only help make the existing
Andhra Pradesh and Karnataka, it ment Systems or the buildings energy efficient but also
was noted that well designed and improve their overall energy perfor-
BMS, which provides
targeted DSM programmes have mance. To start with, EESL began
proven to set examples and can be a comprehensive view installing energy efficient lighting
replicated at a large scale. The EESL into buildings energy in government buildings which not
model for Agricultural Demand Side consumptions through only resulted in improving the overall
Management (AgDSM) is beneficial energy consumption but also gave a
data driven live reports
for customers because there is better lighting output. This project is
driven by the inculcation of Buildings
Management Systems or the BMS,
which provides a comprehensive
view into buildings energy con-
sumptions through data driven live
reports. The BMS is supported by a
user-friendly software system that
exhibits energy trend analysis and
helps to optimize energy management
strategies to further reduce the
operational costs. EESLs buildings
programme has successfully been
completed at Niti Ayog, Shram
Shakti Bhawan, India Habitat Center,
UPSC building, IP Bhawan along
with others. Currently, work is being
carried out in more than 18 buildings
to make them more energy efficient.
August 2016
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It was observed that on an average, Efficient Fan Program (NEEFP), was However, do you feel the same
EESL has successfully received implemented for consumers under has happened in the open
energy savings of about 19% on bills demand side management, with the market? Has the benefit of
with its completed buildings projects. aim of benefitting the people from all price reduction reached the end
socio-economic bands. Under NEEFP, consumer?
Please elaborate on your plans EESL aims to replace 35 crore inef- Before the initiation of LED bulbs
on energy-efficient fans. What ficient regular ceiling fans across under UJALA scheme the penetration
progress has been achieved households with BEE 5 Star rated of LEDs, the most efficient lighting in
under this initiative? efficient ceiling fans by 2018. With the market was less than 1%. How-
EESLs fan distribution scheme is the intent to give a significant thrust ever after the tremendous success of
also going on in Andhra Pradesh and to the expansion of market for effi- the scheme the penetration now raised
UP and we have huge distribution tar- cient fan technologies in India, EESL to 15-18%. The LED programme un-
gets in both the regions. With over 32 through its procurement of fans, has der UJALA is the largest in the world
million fans sold every year at a 20% brought the price of a fan down by 33 and the success of the programme is
annual growth rate, ceiling fans are per cent to Rs. 955, when compared visible through the daily uptake of our
one of the most economical options to the market price. LED bulbs which is now 350,000 to
(as and when compared to the Air 400,000. Government of India created
Conditioning Units). Reports suggest The price of LED bulbs has a conducive regulatory institutional
that almost every electrified house- come down drastically due to framework for fostering Energy Ef-
hold in India has at least one unit the Governments strong push ficiency initiatives. Under regulatory
for their summers. National Energy towards energy efficiency. perspective EESL was set up as the
market aggregator. LED has become
popular to the extent that small scale
Before the initiation of LED bulbs under UJALA LED industries have come up in India. 61
scheme the penetration of LEDs was less than Their prices are today as low as Rs.
1%. However after the tremendous success of the 65-75 per LED bulb. This model
scheme the penetration now raised to 15-18%. which is fundamental to National LED
programmes holds promise for other
The LED programme under UJALA is the largest appliances as well. Having said that
in the world and the success of the programme is need of the hour is to replicate the
visible through the daily uptake of our LED bulbs LED model to other appliances which
which is now 350,000 to 400,000 will help us achieve a higher scale and
I am glad to say that EESL is already
moving towards that.

Do you feel India has the


potential to be the biggest
market for LED in the world?
With the pace we are treading for-
ward, we are hopeful that we can
achieve this and it is not a far spot in
future. We are running the worlds
largest LED bulb distribution pro-
gramme and the governmental push
has led to the growth of indigenous
manufacturers in LED bulb industry,
which is only flourishing. I definitely
foresee India exporting LED bulbs to
other countries in abundance.

For suggestions email at feedback@infraline.com


August 2016
www.InfralinePlus.com

InDepth
Coming together of solar and wind:
Govt announces draft Hybrid policy

62

Policy aims at generating 10 GW of hybrid capacities by FY 2022


Timely finalisation and clarity on regulatory front remains key to achieve the objectives

By Team InfralinePlus

Indias Intended Nationally Determined meet those targets includes a National cum- demonstration project of 25 KW
Contributions (INDC) document to Wind-Solar Hybrid Policy, which capacity will be installed at the wind
United Nations Framework Convention aims to encourage new technologies turbine test station of National Institute
on Climate Change at Paris (COP21) involving combined operation of of Wind Energy (NIWE) at Kayathar,
last year signified a 2030 target to wind and solar plants. In June, 2016, Tootikudi District, Tamil Nadu. Under
achieve about 40% cumulative electric the Ministry of New and Renewable the programme, MNRE provides
installed capacity from non-fossil fuel Energy (MNRE), Government of Central Financial Assistance (CFA)
based energy resources, with the help India, had issued a draft national wind to community users for installation
of technology transfer and low cost in- solar hybrid policy with a target of of such systems. The total installed
ternational finance. Accompanying this implementing 10 GW of such hybrid capacity as on March 31, 2016 is 2.69
is a domestic goal to achieve 175 GW capacities by FY 2022. MW. There are 6 small wind turbine
of installed generation capacity through MNRE is also implementing a manufacturers and 9 models empan-
renewable energy (RE) sources by 2022. programme to promote the instal- elled under this programme. These pro-
The slew of measures the central lation of small wind energy and hybrid grammes have been highly successful
government is planning to undertake to systems (SWES). The first-such pilot- in the US and EU countries.
August 2016
www.InfralinePlus.com

Both Solar and wind sector than the transmission capacity/grid in the draft policy, given the eligibility
are complimentary connectivity allowed/sanctioned for of hybrid RE to meet the renewable
The draft policy comes in the wake of existing wind/solar project, according purchase obligation norms (RPO, both
how recent studies have revealed that to the draft policy, placing the onus of solar and non-solar) by the obligated
wind and solar projects can comple- size restrictions on the utility owner entities as well as continuation of
ment each other by minimizing the rather than on the government, which is all other policy & financial benefits
variability of the power output and responsible for transmission capacity. which are currently made available
easing pressure on the grid. The policy This will ensure that no augmentation to existing wind & solar projects. For
aims to encourage new technologies of transmission capacity is required, new hybrid wind-solar projects, the
and methodologies for such hybrid according to the policy statement. draft policy proposes to provide the
systems. Superimposition of wind and Policy & regulatory support is also developer with the option of using the
solar resource maps shows that there proposed towards the hybrid projects hybrid power for captive use, third
are large areas where both wind and so- party sale or sale to state electricity
lar have high to moderate potential. Ex- distribution utilities at prices deter-
isting wind farms have scope of adding
The draft policy comes mined by the state electricity regu-
solar PV capacity and similarly, there in the wake of how latory commissions for the project.
may be wind potential in the vicinity recent studies have The policy states, In case of
of existing solar PV plant... Suitable revealed that wind and new wind-solar hybrid projects, the
policy interventions are required not developer have option to use the
only for new wind-solar hybrid plants solar projects can com- hybrid power for captive use or third
but also for encouraging hybridization plement each other by party sale or may sell the hybrid
of existing wind and solar plants, the minimizing the variabil- power to Distribution Company (ies)
draft policy added. at a price determined by the respective
The main aim of the policy is to lay
ity of the power output SERC for that hybrid power project. 63
a framework for promoting large grid and easing pressure The hybrid power so purchased by
connected wind-solar PV system. This on the grid. The policy Distribution Company may be used
will be helpful for creating optimal and to offset both solar and non-solar
efficient transmission infrastructure
aims to encourage RPO. The hybrid power may be pro-
and land, reducing the variability in new technologies and cured through a transparent bidding
renewable power generation to achieve methodologies for such process under different mechanisms.
better grid stability. The hybrid power hybrid systems Parameters that may be considered
injected in to the grid will not be more for bidding could be total capacity
delivered at grid interface point, CUF
and unit price of electricity.

A step in the right direction


The variability in generation profile
is likely to be reduced to some extent
by the hybridization of wind and solar
projects at same site, given that genera-
tion from both the sources is at dif-
ferent intervals and in complimentary
seasons. This in turn would partially
address the concerns of distribution
utilities over the grid stability arising
due to the intermittent nature of wind
or solar. The existing wind farms have
scope for adding solar capacity and
similarly there could be wind potential
in the vicinity of existing solar plant.
Hence, it is believed that new policy
will be a great boost to the state of
August 2016
www.InfralinePlus.com

InDepth

MNRE announced a scheme to set up 1 GW of wind power


connected to transmission network of CTU Government through
the draft policy has pro-
MNRE recently announced a scheme to set up 1 GW of wind power con-
nected to transmission network of Central Transmission Utility (CTU) with
posed that the Central
an objective to facilitate supply of wind power to the non-windy states at Electricity Regulatory
a price discovered through transparent bidding process. According to Commission (CERC)
the ministry, the scheme will encourage competitiveness through scaling should lay down the
up of project sizes and introduction of efficient and transparent e-bidding
guidelines for determi-
and e-auctioning processes. It will also facilitate fulfilment of Non-Solar
Renewable Purchase Obligation (RPO) requirement of non-windy states. nation of generic tariff
The Scheme will be implemented for setting up 1000 MW capacity of for wind-solar hybrid
CTU connected Wind Power Projects by Wind Project Developers on system. Further, the
build, own and operate (BOO) basis. However, the capacity may go Commission is required
higher than 1000 MW, if there is higher demand from distribution com- to frame regulations for
panies (Discoms) of non-windy states. The introduction of tariff based
bidding for awarding wind projects under this scheme is expected to
forecasting and sched-
encourage competition and lead to efficient tariff discovery which would uling for the hybrid
be favourable for the discoms. systems
Tamil Nadu considering its leadership incentives available to wind and solar may be either feed-in tariff based
position in wind installed capacity. The power projects may also be made or competitively bid based, as is
64 country has already crossed 26,700 available to hybrid projects. Low cost proposed in the policy. In our view,
MW of wind and 7,600 MW of solar financing for hybrid projects may be overall regulatory clarity in terms of
power installed capacity till May 2016. made available through IREDA and tariff norms for hybrid projects re-
Tamil Nadu leads in wind installation other financial institutions including mains a key. The Central Electricity
capacity with 7,613 MW and comes multilateral banks, it added. Regulatory Commission is required
close second to Rajasthan with an to lay down generic tariff principles
installed solar capacity of 1267 MW. Issues to be addressed as well as scheduling & forecasting
Government through the draft policy According to ICRA, timely finalisa- framework norms for such projects
has proposed that the Central Elec- tion and clarity on regulatory front which would in turn provide guid-
tricity Regulatory Commission (CERC) remains key to achieve the objectives ance for State Electricity Regulatory
should lay down the guidelines for underlined in the draft policy. In a Commission (SERCs) to follow.
determination of generic tariff for recent report, ICRA said, While While hybrid systems are viewed
wind-solar hybrid system. Further, the there are inherent advantages in as a good step forward for the
Commission is required to frame regu- hybrid projects in optimal utilization renewable energy sector as they stand
lations for forecasting and scheduling of resources, the project economics to facilitate the efficient use of both
for the hybrid systems. The policy for such projects would be critically land and transmission infrastructure,
also states that all fiscal and financial dependent upon tariff levels which the draft policy is not detailed enough
when it comes to tariff structures and
financial incentives. The success of
draft hybrid wind and solar energy
policy would depend on the tariff
(rate) level, which might be feed-in
rate-based or competitively bid-
based. Besides, overall regulatory
clarity in terms of rate norms for
hybrid projects remains key for the
success of the draft policy.

For suggestions email at feedback@infraline.com


August 2016
www.InfralinePlus.com

StatisticsRenewableEnergy
Programme/ Scheme wise Physical Progress in 2016-17 Commissioning Status of Grid
(During the month of June, 2016) Connected Solar Power Projects
(as on 30-06-16)
FY- 2016-17 Cumulative
Total com-
Achievements
Sector Achieve- Sr. missioned
Target (as on State/UT
No. capacity till
ment 30.06.2016) 30-06-16 (MW)
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW) 1 Andhra Pradesh 878.97
2 Arunachal Pradesh 0.27
Wind Power 4000.00 373.95 27151.40 3 Bihar 45.10
4 Chhattisgarh 93.78
Solar Power 12000.00 1031.48 7805.34 5 Gujarat 1,123.36
Small Hydro Power 250.00 30.32 4304.27 6 Haryana 15.39
7 Jharkhand 16.19
BioPower (Biomass & Gasification 400.00 29.50 4860.83 8 Karnataka 153.32
and Bagasse Cogeneration) 9 Kerala 13.05
10 Madhya Pradesh 790.37
Waste to Power 10.00 0.00 115.08
11 Maharashtra 385.76
Total 16660.00 1465.25 44236.92 12 Odisha 66.92
13 Punjab 520.70
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ) 14 Rajasthan 1,294.60
15 Tamil Nadu 1,267.41
Waste to Energy 15.00 0.00 160.16
16 Telangana 795.84
Biomass(non-bagasse) 60.00 0.00 651.91 17 Tripura 5.00
Cogeneration 18 Uttar Pradesh 143.50
19 Uttarakhand 41.15
Biomass Gasifiers 2.00 0.00 18.15 20 West Bengal 11.77
- Rural 21 Andaman & 5.10 65
8.00 0.00 164.24
- Industrial Nicobar
22 Delhi 23.87
Aero-Genrators/Hybrid systems 0.30 0.00 2.69 23 Lakshadweep 0.75
24 Puducherry 0.03
SPV Systems 100.00 3.40 325.40
25 Chandigarh 6.81
Water mills/micro hydel 1.00 0.00 18.71 26 Daman & Diu 4.00
27 J&K 1.00
Total 186.30 3.40 1341.26 28 Himachal Pradesh 0.20
III. OTHER RENEWABLE ENERGY SYSTEMS 29 Mizoram 0.10
30 Others(PSU/chan- 100.92
Family Biogas Plants (in Lakhs) 1.10 0.00 48.55 nel partner )under
Rooftop
Source: MNRE
TOTAL 7805.21
Source: MNRE
REC Trading Volume and Price for July 2016
Through IEX
Buy Bids Sell Bids Cleared Volume Cleared Price No. Of Month of
REC Type
(REC) (REC) (REC) (INR/REC) Participants Auction
Solar 23,944 2,036,891 23,944 3,500 565
July 2016
Non-Solar 139,250 7,287,207 139,250 1,500 953
Source: IEX

Through PXIL
MCV
Buy Bid Sell Bid MCP
REC Type (No. of certificate) Month of Auction
(No. of certificates) (No. of certificates) (INR / Certificate)
Qty. (MWH)
Non Solar 95757 5637674 1500 95757
July 2016
Solar 14029 1447749 3500 14029
Source: PXIL
August 2016
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StatisticsRenewableEnergy
State-wise and Agency-wise Physical Targets under National Biogas and Manure Management Programme
(NBMMP) for the year 2016-17 for Family Type Biogas Plants (in Nos)

SL Name of the SNAs/SNDs/ Total Target


Target Allocated
No. KVIC/ BDTCs and States Allocated
Gen. S.C. S.T.
1 Andhra Pradesh (NEDCAP. Hyderabad) 7000 1800 1400 10200
2 Arunachal Pradesh (APEDA) 100 0 0 100
3 Assam (FDA) 6200 300 2500 9000
4 Chhattisgarh (CREDA) 1600 50 1400 3050
5 Goa (Dir. of Agri.) 100 0 0 100
6 Gujarat (GAIC) 2000 200 300 2500
7 Haryana (Dir. of Agri.) 1000 0 0 1000
8 Himachal Pradesh (Dir. of Agri.) 150 0 0 150
9 Jammu & Kashmir (JKEDA) 100 0 0 100*
10 Jharkhand (JREDA) 100 0 100 200
11 Karnataka (RD&PRD) 9000 1000 0 10000
12 Kerala (Dir. of Agri.) 1700 50 0 1750
13 Kerala (ANERT. Thiruvananthapuram) 1000 100 0 1100
14 Madhya Pradesh (MPSAIDC) 6600 400 1000 8000
15 Maharashtra (RD&WCD) 13500 1000 0 14500
16 Meghalaya (MNREDA) 200 0 0 200
17 Mizoram (Dir. of AH) 500 0 0 500
18 Nagaland (Dir. of NRE) 300 0 0 300
66
19 Odisha (OREDA) 2500 1000 500 4000
20 Punjab (PEDA) 4800 200 0 5000
21 Sikkim (SREDA) 250 0 0 250
22 Tamilnadu (RD&RD) 300 0 0 300
23 Telangana (TNREDCL) 9800 1100 1400 12300
24 Tripura (TREDA) 400 0 0 400
25 Uttar Pradesh (RDD) - - - -**
26 Uttar Pradesh (UPNREDA) 1000 100 0 1100
27 Uttarakhand (UREDA, Dehradun) 800 100 - 900
28 Uttarakhand (RDD, Pauri) 400 100 - 500
29 KVIC, Mumbai 6500# 1500 - 8000#
Sub total 77900 9000 8600 95500
30 BDTC. I IT Guwahati. (Assam. 500 0 0 500
Meghalaya. Tripura, West Bengal)
31 BDTC. MPUAT. Udaipur (Rajasthan) 800 100 100 1000
32 BDTC, 1 IT Delhi (UK. UP. Delhi. 500 0 0 500
Haryana)
33 BDTC. UAS. Bangalore (Karnataka) 1000 0 0 1000
34 BDTC. PAU. Ludhiana (Punjab. HP & 1500 0 0 1500
J&K)
Sub total 4300 100 100 4500
Grand Total 82200 9100 8700 100000

[* Subject to refund of outstanding amount of previous years lying with the State Govt. ]
[** Target not considered due to accounts from the year 2007-08 to 2014-15 are pending for settlement] [Targets to BDTCs considered as decided in the
Progress Review Meeting held under the Chairmanship of Secretary, MNRE on 29.03.2016 at MNRE, New Delhi]
[Note: Not exceeding the targets over 10% of the total as given in the last column]
[# For KVIC. Mumbai national target 8000 (6500 (5700 Gen.+800 NEZ) and 1500 SCP target}]

Source: MNRE
August 2016
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OffBeat
Prime Minister Narendra Modis
Cabinet gets some new faces
19 new faces inducted in the Union Council of Ministers of which 17 are
from BJP
Five ministers tendered their resignation to Prime Minister Narendra Modi

67

Prime Minister, Narendra Modi

By Team InfralinePlus

In a significant move, Prime Minister, Pradesh and Ramdas Athawale There is also fresh, young talent in
Narendra Modi, in July 2016, brought from Republican Party of India Apna Dals Anupriya Patel, 35, and
about a major reshuffle in the portfolio (Athawale) the Mansukh Mandaviya, who has
of Cabinet Ministers. The list of newly appointed worked in the agriculture sector in
Nineteen new faces have been ministers of state includes three Gujarat.
inducted in the Union Council from Uttar Pradesh, four from Five ministers tendered their
of Ministers by Prime Minister Rajasthan, three from Gujarat, resignation to Prime Minister
Narendra Modi, of which 17 two from Maharashtra (excluding Narendra Modi. They include
are from BJP, and two are Javadekar), two from Madhya Nihalchand, Ram Shankar Katheria,
representatives of allies -Anupriya Pradesh and one each from Sanwar Lal Jat, Manuskhbhai D
Patel from Apna Dal in Uttar Uttarakhand and Assam. Vasva and M K Kundariya.
August 2016
www.InfralinePlus.com

OffBeat

New portfolios of Cabinet Additional portfolios of


Ministers Cabinet Ministers

Chaudhary Birender Singh: Steel

Piyush Goyal: Power, Coal, New and


Prakash Javadekar Renewable Energy, Mines
The first minister to take oath in the
new Cabinet. He is the only leader
who was elevated to the Cabinet rank.
He is now the new Union Minister for
Human Resource. Earlier he was the
Minister for Environment & Forests.

Ananth Kumar: Chemicals and Fertil-


68 izers, Parliamentary Affairs
M. Venkaiah Naidu: Urban Develop-
ment, Housing and Urban Poverty Al- Ministers of State (MoS)
leviation, Information and Broadcasting

Smriti Zubin Irani


She is the new Textile Minister. Earlier
she was Minister, Human Resources
Development

Jayant Sinha, MoS, Civil Aviation


Ravi Shankar Prasad: Law and (earlier Finance)
Justice, Electronics and I&T

D.V. Sadananda Gowda


He is the new Minister of Stastitics
and Programme Implementation. He
previously served as Minister of Law
Narendra Singh Tomar: Rural De- Manoj Sinha, MoS, Communications
and Justice
velopment, Panchayati Raj, Drinking (earlier Railways)
Water and Sanitation
August 2016
www.InfralinePlus.com

Vijay Goel, BJP Anil Madhav Dave, Ajay Tamta, Lok


MP has been Rajya Sabha MP Sabha MP from
sworn in as MoS. represents Madhya Almora, Uttarakhand.
He was elected to Pradesh. He was first Portfolio: MoS,
Rajya Sabha from elected to the House Textiles
Rajasthan.Portfolio: in 2009. Portfolio:
MoS (Independent MoS (Independent
Charge), Youth Affairs and Sports Charge), Environment, Forest &
Krishna Raj , BJP
Climate Change
MP, represents
Faggan Singh Shahjahanpur
Parsottambhai
Kulaste represents constituency of Uttar
Rupala, a Rajya
the Mandla Pradesh.Portfolio:
Sabha MP from
constituency of MoS, Women & Child
Gujarat.Portfolio:
Madhya Pradesh. Development
MoS, Agriculture
Portfolio: MoS, and Farmers Mansukh
Health and Family Welfare, Panchayati Mandaviya, MP
Welfare Raj BJP who represents
Gujarat in Rajya
SS Ahluwalia is a MJ Akbar, former Sabha.Portfolio: MoS,
vice president of the journalist and Rajya Road Transport and
Sabha MP. He Highways, Shipping,
BJP and represents
represents Madhya Chemicals and Fertilizers.
Darjeeling.
Pradesh in the
Portfolio: MoS, Anupriya Patel,
House.Portfolio:
Agriculture and MoS, External Apna Dal MP
69
Farmers Welfare, Affairs representing
Parliamentary Affairs Mirzapur, Uttar
Arjun Ram Pradesh.Portfolio:
Ramesh Jigajinagi, Meghwal, the MoS, Health &
MP from Bijapur, BJPs chief whip Family Welfare
served on the in Lok Sabha. He CR Chaudhary,
consultation represents Bikaner, Lok Sabha MP from
committee at the Rajasthan and has Nagaur, Rajasthan.
Ministry of External been a member of Portfolio: MoS,
Affairs. Portfolio: the House for two terms.Portfolio: Consumer Affairs,
MoS, Drinking Water and Sanitation MoS, Finance, Corporate Affairs Food and Public
Distribution
Jasvantsinh
Ramdas Athawale, Sumanbhai PP Chaudhary,
Rajya Sabha MP Bhabhor, an MP Lok Sabha MP
from Maharashtra. representing Dahod, representing Pali,
Portfolio: MoS, Gujarat.Portfolio: Rajasthan. Portfolio:
Social Justice and MoS, Tribal Affairs MoS, Law and
Empowerment Justice, Electronics
and Information Technology

Mahendra Nath Dr Subhash Bhamre,


Rajen Gohains an
Pandey represents BJP MP representing
MP from Assam.
Chandauli in the Dhule, Maharashtra.
Portfolio: MoS,
16th Lok Sabha. Portfolio: MoS,
Railways Defence
Portfolio: MoS,
Human Resource
Development
For suggestions email at feedback@infraline.com
August 2016
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Reports & Studies


Indias Ease of Electricity rank jumped 29 points in one year, says World Bank report

India ranks 70 among 189 economies on processes. Another focus is to make


ease of getting electricity due to positive the process for getting a new electricity
reforms that have aided ease of doing connection simpler and faster. Toward
business in the country, according to a latest that end the utility in Delhi eliminated an
report by The World Bank. India has jumped internal wiring inspection by the Electrical
by a whopping 29 points from 99 last Inspectorateand now instead of two
year, the report said. Getting an electricity inspections for the same purpose, there
connection in India takes an average 90.1 is only one. The utility also combined the
days with nearly five procedural steps, the external connection works and the final
banks Ease of Doing Business Report 2016 compared to 142 a year ago in terms of switching on of electricity in one procedure,
said. Faster and enhanced convenience in the overall Ease of Doing Business. It the report said. It further said that utilities
Getting Electricity has been the biggest said power utilities in Delhi and Mumbai in Mumbai reduced the procedures and time
contributor in making India improve its have reduced time for getting electricity for connecting to electricity by improving
position by 12 ranks climbing to 130 as connections by improving internal work internal work processes and coordination.

Supreme Courts order on revision of tariff under PPA positive for Gencos: ICRA

that are uncontrollable. While these orders the Gujarat Urja Vikas Nigam (GUVNL). TIL
are a positive development for the indepen- operates two small hydro power projects of 3
dent power producers, it is assumed that tar- MW and 2.6 MW, while JPPPL operates a 10
iff re-determination or compensation-related MW biomass-based power project in Gujarat.
issues are unlikely to be resolved quickly. Supreme Court has also recently refused
Further, orders issued by power regulators - to stay proceedings by Central Electricity
whichever way they may favour - are likely to Regulatory Commission (CERC) in case of
70 be contested and Supreme Court has noted in tariff compensation matter for Coastal Gu-
one of the cases that the final orders issued jarat Power (CGPL) and Adani Power (APL).
by the regulators shall be subject to scrutiny, This is a positive for these power producers,
Sabyasachi Majumdar, Senior Vice President, given that CERC is currently evaluating tariff
ICRA believes that the recent Supreme ICRA said. On July 5, 2016, Supreme Court compensations, post APTELs order dated
Court orders upholding statutory powers of upheld an order issued by Appellate Tribunal April 7, 2016. The tribunal had directed CERC
state power regulators to review tariffs of for Electricity for re-determination of tariff to assess the extent of the impact of force
power purchase agreements is a positive de- by Gujarat Electricity Regulatory Commis- majeure events on the projects of APL and
velopment for generation entities. This would sion in case of power purchase agreements CGPL and provide them such relief as may
cover generation companies that are in dis- signed by IPPs - Tarini Infrastructure (TIL) be available under the respective power
pute with buyers over tariff review for events and Junagadh Power Projects (JPPPL) with purchase agreements.

Indian start-ups receive 50 per cent of global investments on wind energy

A wind energy start-up landscape study by ers and acquisitions in power sector had also
Traxcn has revealed that top investors bet on increased 1.5 times in India during the first
start-ups that are focused on power genera- half of 2016, according to EY. There were 17
tion, and then manufacturing. The study has deals worth $1.6 billion during the January-
also revealed that start-ups based in India May period compared to 15 deals worth
comprised 50 percent of start-ups across the $601million in the year-ago period. Greenko
world that received top investments in July Energy Holdings ($230 million), ReNew Power
2016. Power generation start-ups attracted Ventures ($265 million), Tata-owned Welspun
the highest investment - worth $7.08 billion, Renewables ($617 million) were cited among
while manufacturing received a total invest- the firms that received top investment since
ment of $1.68 billion over the last few years. category, Hyderabads Greenko Group ($737 2015. Traxcn, the research firm that curates
This trend in the start-up ecosystem coincides million) and ReNew Power Ventures ($655 and monitors start-up investments, also noted
with the governments target of generat- million) ranked first and second, respectively, that the average ticket size of investments
ing 175 MW of energy by 2022 out of which among the most funded companies. Suzlon per year was highest in 2016 at $115 million,
60 MW (or 34.3 percent) would be derived ($552 million) topped the manufacturing though 2015 saw the highest total funding in
from wind energy. In the power generation companies that raised funding last year. Merg- the sector at $2.7 billion worldwide.
August 2016
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Reports & Studies


UDAY unlikely to destabilise aggregate state finances but select states will feel the pinch Govt should not delay halting coal plant
expansion: Greenpeace
consolidation at an aggregate level. We
estimate aggregate fiscal deficit of states
at 3.2% of GDP in FY17. It is expected
to be marginally better than the 3.4%
recorded in FY16, said Devendra Pant,
chief economist, India Ratings & Research.
Five states incurring high distribution
losses that have yet not joined the UDAY
scheme are Telangana, Madhya Pradesh
Maharashtra, Tamil Nadu and West Bengal. Noting that the International Energy
Aggregate impact of UDAY on the fiscal Ind-Ras analysis shows that once they Agency (IEA) reaffirmed its position
deficits of 13 states that have joined the do, state finances of even Telangana, that thermal power plants contribute to
scheme will be 0.47% of gross domestic Madhya Pradesh and Tamil Nadu will come air pollution, Greenpeace India said the
product (GDP) in FY17 estimates India under stress. Ind-Ra notes that despite government should not delay halting its
Ratings. However, state finances of marginally better fiscal performance, expansion plans for coal plants. It is
Andhra Pradesh, Haryana, Jharkhand, states at the aggregate level are likely to clear that India needs an aggressive shift
Punjab, Rajasthan and Uttar Pradesh will miss the fiscal deficit target of 2.8% of GDP to clean energy now. There should be no
come under pressure. UDAY is unlikely in FY17 by a wide margin. delay in implementing the thermal power
to have a destabilising effect on fiscal plant emission standards and halting the
expansion of coal-based power. This is
India can gain hugely from regional power trade, says World Bank study the only way to keep our air quality within
breathable limits and reduce premature
ing all SAARC nations except the Maldives. deaths, said Sunil Dahiya, Campaigner,
Larger benefits will accrue through reduc- Climate and Energy, Greenpeace India.
tion in fuel cost and 6.5 per cent cut in green- He said the government should move 71
house gas emission. The savings should come urgently to meet the three recommen-
through replacement of thermal power with dations by the IEA - set an ambitious
hydro-electricity to be sourced mostly from long-term goal for reducing air pollution,
Nepal, followed by Bhutan and Afghanistan. create a comprehensive clean air policy
The study by World Bank economists Michael package for the energy sector includ-
Torman and Govinda Timilsina expects Nepal ing both emission controls and clean
to add 52.1 GW (giga-watt) in 2040, over and energy, and ensure effective monitoring
above the existing 1 GW. Bhutan will add 9.1 and enforcement of emission standards.
Regional trade in electricity can spare India GW and Afghanistan 3.6 GW. Without trade op- The IEA report suggests 85 per cent of
from investing in 35,000 MW coal-fired capaci- portunities, Nepal and Bhutan cannot maximise particulate matter and almost all of the
ties (at estimated $26 billion) over the next 25 hydro-electric generation potential because of sulphur oxides and nitrogen oxides result
years, according to a World Bank study cover- the smaller size of domestic economies. from fuel combustion.

Rs 10 lakh crore investments needed for 1.5 bn tonne coal output

Investments to the tune of more than report said. The government would need
Rs 10 lakh crore would be required in to take steps to promote smooth land
coal mining and allied sectors like power, acquisition, easy availability of water,
steel and cement to achieve the target augment infrastructure for logistics,
of 1.5 billion tonnes of coal production by develop coal washeries, capacity building
2019-20, according to the latest PwC-ICC and skill development to provide the
report. India has set an ambitious target support system for developing a cohesive
of 1.5 billion tonnes (BT) of domestic environment for achieving the target, it
coal production by FY 2020 and will need said. Additionally, focused efforts are
huge investments adding up to more than required from all stakeholders, especially
Rs 10 lakh crore in coal mining and its governments, industry players, investors,
allied sectors like power, steel, cement, funding agencies and infrastructure
infrastructure for logistics, and coal developers, it added.
washeries for achieving this goal, the
August 2016
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People in News
Utpal Bora made OIL chief amid Assam field auction protests Rani Singh Nair appointed CBDT
chairperson
India chairman comes amid mounting
protest from the BJPs allies against the
auction of 12 small discovered oil and gas
fields in Assam as part of the Centres
plan to attract private investments for
developing 67 such discoveries across the
country. These discoveries were made by
state-run ONGC and OIL, who returned
the fields because restrictive condition
made them commercially unviable. These
conditions have been relaxed for the
auctions. Bora is at present an executive Senior Indian Revenue Service (IRS)
director with ONGC and runs the flagship officer Rani Singh Nair has taken over as
The government has appointed Utpal explorers Mehsana field in Gujarat. It is the new chairperson of Central Board of
Bora as the full-time chairman of Oil companys largest onland asset with 1,552 Direct Taxes (CBDT), the policy-making
India Ltd after a gap of more than a operational oil and gas wells that produce body of the Income Tax department under
year, during which the countrys second- 6,000 tonnes of oil per day and 5.3 lakh the Union Finance Ministry. Her predeces-
largest oil producer has seen a steady cubic metre gas a day. sor Atulesh Jindal, who was appointed
decline in output. The appointment of Oil CBDT chief in February this year, retired
recently. Nair, a 1979-batch IRS officer of
D Rajkumar appointed CMD of BPC the Income Tax cadre, worked as member
(Legislation and Computerisation) at
(CMD) of Bharat Petroleum Corporation. CBDT. An order of her appointment was
Rajkumar is, at present, working as Man- issued by the Appointments Committee
72 aging Director of Bharat Petro Resources of Cabinet, headed by Prime Minister
Ltd, a unit of BPCL focused on exploration Narendra Modi. For Nair, who will be in
and production. He has been appointed to office till 31 October, an important task
the posts for five-year term, an order is- would be to oversee effective execution
sued by the Department of Personnel and of the ambitious one-time domestic black
Training (DoPT) said. Rajkumar will take money disclosure programme, also called
over the charge on or after October 1, 2016 the Income Declaration Scheme (IDS).
after retirement of BPCLs current chief S IDS is set to close on 30 September. Nair
Varadarajan in September. BPCL is a state has been instrumental in framing the pro-
refiner and retailer. cedures and protocols that led to the roll-
out of IDS on 1 June 2016. The scheme
Technocrat D Rajkumar has been appoint- aims at bringing undisclosed income and
ed as Chairman and Managing Director assets into the tax net.

Aruna Sharma appointed Steel Secretary in major bureaucratic reshuffle

In a major reshuffle at the secretarial of Civil Aviation, has been moved to the
level of the Central government, senior Ministry of Labour and Employment as
IAS officer Aruna Sharma will take Officer on Special Duty. She will take
charge as Secretary of Ministry of Steel, charge as Secretary after the incumbent
while Aruna Sundarajan will take over Shankar Agarwal retires. Sathiavathys
as Secretary, Ministry of Electronics replacement in the Directorate General
and Information & Technology. In other of Civil Aviation has not been announced.
changes, Bhanu Pratap Sharma, Secretary, Dinesh Singh, Special Secretary,
Department of Health and Family Welfare Ministry of Statistics and Programme
has been moved to the Department of Implementation, has been moved to
Personnel and Training as Secretary. AK Department of Land Resources as Officer
Dubey, Special Secretary, Ministry of Coal charge as Secretary after the incumbent on Special Duty. Singh will take over as
will join the Department of Youth Affairs Rajiv Gupta retires. Further, M Sathiavathy, Secretary once the incumbent VS Madan
as Officer on Special Duty and will take Director General, Directorate General retires.
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