March 2017

Volume 5 | Issue 11 | `100

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The Complete Energy Sector Magazine for Policy and Decision Makers

Has India achieved

grid parity?

Stalled hydro sector Time to fast track

back on Centres radar evacuation infra for RE projects

Anil Razdan Alok Perti RS Sharma

Former Power Secretary Former Coal Secretary Head - Hydrocarbon Committee
Government of India Government of India FICCI
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InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
March 2017 | Volume 5 | Issue 11

Editors Letter Editorial

Shashi Garg, Editor
India took a giant leap towards grid parity in February
as tariffs for solar and wind fell to a record low under
the competitive bidding route, igniting hopes that the News Team
country is well and truly on course to provide cheap Ashok Kumar
and affordable power to its citizens. Despite being a
regional energy giant, India has one of the lowest per
capita electricity consumption in the world due to the Analyst
fact that a vast majority of the population does not Kalyan Verma
have access to modern energy sources to deliver basic Shubhendra Singh
energy needs. Now with solar tariffs falling to below Rs
3 per unit as witnessed recently in the case of Rewa
solar park, and wind power tariffs setting a new benchmark and dipping below Rs Content Consultant
3.5 per unit, the countrys quest for affordable power seems to be over. News Monster
This trend also augurs well for India given its commitments on climate change.
For a coal-dependent country such as India, the urgency is clear on the need
for alternative solutions such as energy efficiency, natural gas, and renewable
energy to play their role in reducing Indias carbon footprint. However, the Business Development
sustainability of an aggressive capacity addition target for renewable energy will
depend on balancing cost, efficiency of thermal generation, grid management, Manoj Narang, Director
and investments in hydro- and gas-based power to meet peak demand. This is Tel.: 0120-6799106 / 100
where the next round of investment is going to be and India needs to move fast Email: manoj.narang@infraline.com
on this to leverage the renewable space.
While renewables have upped the ante, the narrative for coal is also witnessing
changes. No doubt, coal is a critical element of Indias energy basket,
supplying over half the primary commercial energy of the country. However, Advertisement
while the Government has repeatedly promoted the goal of tripling domestic Ashwini Solomon
coal production by 2020 to fuel a dramatic increase in coal power generation, Tel.: 0120-6799157/100
the goal looks increasingly fanciful. Further, recent assessments made by the Mobile: +91 9811708110
Central Electricity Authority reveals that the country does not need to build 3
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any new power plants for at least the next three years, while also projecting a
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subdued demand for power in 202627. Given the massive capacity addition
plans in the renewable sector, CEA estimates there is no requirement for new
coal plants in 2022-27.
In this scenario, India needs to produce every molecule of energy from Circulation & Subscription
other sustainable energy sources such as hydro and gas. Hydro, which was Sneha Pandey
neglected for long, has finally drawn attention of the government. A committee Tel.: 0120 6799125
of secretaries has suggested offering fiscal sops to attract enhanced investment Email: sneha.pandey@infraline.com
into the sector. It is heartening that the government is finally veering round to
the idea that hydropower potential must be harnessed at an expeditious pace
to bolster countrys energy security.
Similarly, as India struggles with rising dependence on oil imports and prepares
Form IV
to revive oil exploration activities, the successful auction of 44 small and marginal Periodicity of its Publication: Monthly
fields augurs well for the country. It will help monetise hydrocarbon reserves that Printers / Publishers /
have remained unlocked for decades in the absence of an attractive policy. Mrs Shashi Garg
Editors / Owners
With this, the government has tested the waters by holding auction of these Nationality Indian
blocks. It can now go for auction of bigger blocks under the newly formulated 14-D, Atmaram House, 1, Tolstoy Road
Address
Hydrocarbon Exploration Licensing Policy. New Delhi - 110001

With all these developments, Indias energy sector is an interesting place to be 14-D, Atmaram House, 1, Tolstoy Road
Place of Publication
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in. The government now needs to make sure that this momentum is sustained
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and long lived. Only then can we actually achieve grid parity in true sense.
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 March 2017
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InfralinePlus

Contents
Editors Letter
3

Cover Story 36
Has India achieved grid
parity?
World Economic Forums (WEF) latest
report on energy sector reveals that so-
lar and wind energy tariffs are finally at
par or cheaper than fossil fuel capacity
in more than 30 countries. For many
years in India, the biggest argument
against solar and wind energy was the
high cost of generation. However, what
has followed in 2017 may become the

36
catalyst for Indias success as a clean
energy powerhouse with bids falling
under INR 3/unit mark and putting the
4 country at par with those 30 countries.

Power
6 23
News Briefs p6
In Conversation: Anil Razdan, former power secretary,
Government of India p10
In Depth: Government treads a cautious path on
compliance to new emission norms for thermal
plants p13
In Depth: Stalled hydro sector back on Centres
radar p17
Statistics p21
Coal
News Briefs p23
Expert Speak: Alok Perti, former coal secretary,
Government of India p26
In Depth: Assessing coal demand for Indias power
sector for XIII Five Year Plan p31
Statistics p34

Topics Covered Topics Covered

Thermal power equipment Coal mine safety
Power demand Coal demand
Hydro projects Technology upgradation
 March 2017
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Oil and Gas Renewable

44 55
News Briefs p44 News Briefs p55
In Conversation: RS Sharma, Head - FICCI Expert Speak: Dev Arora, CEO, 8minutes Future
Hydrocarbon Committee p47 Energy Pvt Ltd p60
In Depth: HELP curtain raiser: Auction of small fields In Depth: Time to fast track evacuation infra for RE
kicks off in style p49 projects p62
Statistics p53 Statistics p66

Topics Covered Topics Covered

E&P auctions Solar rooftop
Growth in retail Transmission infrastructure 5

Investment outlook Grid management

Expert Speak/Interview

Anil Razdan, Alok Perti,

former power secretary, former coal secretary,
Government of India Government of India

Off Beat
Financing woes hurting hybrid annuity model- 68
based highway projects

Reports & Studies

72
People in News
RS Sharma,
Head - FICCI Hydrocarbon
Dev Arora,
CEO,
73
Committee Future Energy Pvt Ltd
 March 2017
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NewsBriefs | Power National
NTPC drops plan to exit BHEL JV, govt forms panel to revive it
After securing the board approval last
year to exit NTPC BHEL Power Projects
Pvt Ltd, the state-owned power generator
has now shelved its plan to turn its back
on the loss-making joint venture company.
The development comes in the wake of the
Centre clears Rs 5,700 crore hydro project in Nepal
The government recently approved a 900
MW hydro power project to be set up in
Sankhuwasabha district of Nepal at a cost
of Rs 5,723.72 crore. The decision to approve
6 the Arun-III project was taken at a meeting
of the Cabinet Committee on Economic
Affairs headed by Prime Minister Narendra
Modi. The project is expected to achieve fi-
nancial closure by September this year. The
projected will be implemented within five
years, Power Minister Piyush Goyal said.
The project is being implemented by a 100
percent subsidiary of state-run SJVN Ltd.
SJVN Ltd is joint venture between Central
and Himachal Pradesh governments with
shareholding of 64.46 percent and 25.51
Faced with challenges, power producers turn to group captive model
The more than a decade old group captive
model is attracting attention as power
producers in the country continue to
struggle with idle capacities, lack of long-
term power purchase agreements (PPA),
low merchant rates and pending dues
from the state-run distribution companies.
In October 2015, OPG Power Generation
Pvt Ltd made a major shift in terms of
sales from two of its power plants as it
began selling to group captive consumers
instead of the Tamil Nadu Generation and
Distribution Corporation Ltd (TANGEDCO).
The move, along with other factors,
helped OPG improve its credit profile. The
company, in fact, received higher ratings
ministry of power setting up a committee
to explore ways to infuse life into the
struggling equipment maker for power
plants. Bharat Heavy Electricals Chairman
and Managing Director Atul Sobti heads
the panel. The two companies have Rs. 50
crores each as equity invested in the joint
venture. It is learnt that the company had
little revenue visibility after 6 months and
hence would need a fresh injection of new
orders or a new blueprint to sustain itself.
But the government is against the idea of
giving up on the company, political factors
too playing a role here. The JV company
currently has around 80 employees on
its rolls, most of them at its factory at
Mannavaram in Andhra Pradesh.
percent, respectively. The subsidiary SJVN
Arun-3 Power Development Company Pvt
Ltd (SAPDC) was incorporated and regis-
tered on April 25, 2013 as a private limited
company under Nepals Companies Act.
Subsidy extension unlikely for
stranded gas-based power plants
The government is unlikely to extend the
subsidy support scheme for stranded
and under-utilised gas-based power
stations. The scheme is due to end by
March.The power ministry is of the view
that a long-term solution should evolve
for bailing out the 24,000 MW gas-based
power stations languishing for want
of fuel. Power companies have asked
the government to extend the scheme
for another two years.We have been
requesting to continue with this scheme
as a short-term solution till a longterm
solution can be evolved for making
gas-based generation viable, said Ashok
Khuarana, director general at Association
of Power Producers. This present
scheme helps stem interest accrual,
thereby keeping capital cost under
control. Non-extension of the scheme
would result in continued accrual of
interest, which may make it difficult to
turn around the projects subsequently.
The power ministry held two rounds
of imported gas auction starting from
June 2015 to September 2015 and from
October 2015 to May 2016.
from Icra following the transition. However,
thermal power producer OPG is not alone
in shifting gears. Wind Power producer
Echanda Urja Pvt Ltd, which also used to
supply power to TANGEDCO, switched
to a similar model in April, 2015. A group
captive scheme is where someone develops
a power plant for the collective use of
multiple commercial consumers. The
developer should have at least a 26 per
cent equity and has to consume at least 51
per cent of the produced power. According
to Central Electricity Authority (CEA)
data, around 40,726 megawatts of power
capacity in India was operating on the
captive model as on December last year.

NewsBriefs | Power National
Outlook for Indias power sector negative in FY18
India Ratings and Research (Ind-Ra) has
maintained a stable negative outlook on
power sector for the next financial year
despite an improvement in coal availability,
restructuring of distribution companies debt
and operationalisation of stuck projects. The
firm in its report said it is owing to large unde-
rutilised capacities, muted demand, bunched
capacity addition, soft merchant power prices,
continued investments in renewable capaci-
Standard formula for power data to end manipulation
The government will soon standardise
ways to foolproof the power sector of data
manipulation by states. Come April and all
states will calculate commercial losses gap
between cost and revenue on a standardised
formula while the data on the power supply
position and billing efficiency will be sourced
directly from electricity feeders without
manual intervention. This will limit the scope
of data manipulation by states. Experts say
such measures will help bring transparency to
the power sector that grapples with mistrust
on data provided by states. At present, state
distribution companies calculate the gap
between their average cost of supply and
average revenue realisation based on their
NTPC to shut down old power plants with capacity of 11,000 Megawatt
State-owned NTPC has decided to shut
down old polluting power plants of
capacity totalling roughly 11 GW and
replace those with new ones which are
highly efficient, Power Minister Piyush
Goyal said. The Minister said there is no
proposal to discontinue thermal power
plants and the older plants should be
gradually phased out, and new ones
should be set up.NTPC has already
decided to close down roughly 11,000 MW
of old thermal plants which are polluting
and causing distress in the local areas
also and not good for the country.We are
planning to replace these with new power
plants which are highly efficient...super
ties, lack of power purchase agreements and
weak discoms. India Ratings said while credit
profiles of large-sized power companies
appear to have stabilised, the sectors return
on capital employed remains unattractive
and small private companies are the worst
hit.With a sub-50 per cent plant load factor
(PLF), they have a high probability of debt de-
fault. Under the current scenario, the survival
of such players is not possible, the research
firm said. It said there is a possibility of sector
consolidation, which could be triggered by the
new bankruptcy code. Ind-Ra expects the
PLFs of coal-based power plants to decline
further in FY18 and rise thereafter, though
they would continue to remain sub-65 per
cent until FY22, it said.
own formulae. States do not follow standard
procedures in calculation of losses. While
some states calculate losses on the basis of
energy fed into the system, some do it on the
basis of energy sold to consumers.
critical technology power plants, Goyal
said. He also said there was international
ban on thermal plants.We are still
dependent on thermal power and will
March 2017
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CCI clears Reliance Infra-Adani
Transmission deal
The Competition Commission has
approved the acquisition of power
transmission business of Anil Ambani-
led Reliance Infrastructure by Adani
group firm Adani Transmission. As per
the deal, R-Infra will sell its Western
Region Transmission Gujarat project
(WRTG) and the Western Region
Transmission Maharashtra project
(WRTM) to Adani Transmission. The
company will also sell its 74 per
cent in Parbati Koldam Transmission
Company (PKTCL) in Himachal Pradesh 7
and Punjab to Adani Transmission.
The Competition Commission of India
(CCI) said it has approved asset
acquisition of WRTG, WRTM and
acquisition of shares of PKTCL by
Adani Transmission Ltd. In October
last year, Reliance Infrastructure
announced the signing of a binding
term sheet with Adani Transmission
Ltd (ATL) for 100 per cent stake sale of
its transmission assets.
continue to depend for some more years
to come until new technologies come in,
the Minister said. Regarding hydro power
projects, Goyal said there were issues like
land acquisition, forest and environment
clearances, local agitations and dispute
between states on water sharing. He said
Supreme Court has stopped 24 projects in
Uttarakhand from development in Ganga-
Bhagirathi basin.In such a situation, new
investment in the sector is very difficult to
attract till all the old issues are resolved
as investors are also wary about their
investments, the Minister said and added
We are very keen that hydro projects
should be promoted.
 March 2017
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NewsBriefs | Power States
Power Ministry releases Rs 1094 crore for J&K under two Central schemes
Union Power Minister Piyush Goyal has
sanctioned Rs 1094.10 crores for augmenta-
tion and strengthening of electricity supply
in Jammu and Kashmir under two different
Centrally Sponsored Schemes, which were
meant separately for rural and urban areas of
the State. The Government of India funding
would go a long way in improving power infra-
Delhi discoms buckle up to minimise power loss
With the peak power demand in the
national capital expected to touch
6,600 MW this summer, the authorities
have geared up to minimise outages by
reducing the faults due to transmission
8 issues. The Delhi government said that
the power distribution companies have
already submitted a summer action
plan, which needs to be examined for
its technical and financial aspects. For
this purpose, Delhi Transco Limited has
issued a circular for an external agency
to be roped in to examine the action plan.
Power department officials said that Delhi
already has a power purchase agreement
of 7,000 MW, which is much more than the
Sikkim gets on board for UDAY, Rs 356-crore benefit seen
Sikkim has become the 22nd state to join
UDAY -- the scheme designed to nurse
debt-laden electricity distribution companies
back to health -- which will in turn hand
it an overall benefit of Rs 356 crore. The
Government of India and Sikkim signed a
memorandum of understanding (MoU) under
the Scheme UjwalDiscom Assurance Yojana
(UDAY) for operational improvement of the
states Power Distribution Department, a
power ministry statement said. With the
signing of the MoU, the total number of
states covered under UDAY has reached 22.
According to the statement, Sikkim will earn
an overall net benefit of about Rs 356 crore
through UDAY by way of cheaper funds,
structure in the State. It is learnt that nearly
50 per cent of the amount has been released
by the Union Power Ministry under Integrated
Power Development Scheme (IPDS) for
which total sanctioned amount is Rs 444.5
crores. This scheme is exclusively meant for
urban sector of the State i.e. the towns. Under
rural sector scheme, Rs 649 crores have been
approved and nearly half of the amount has
been released. Piyush Goyal has informed
Deputy Chief Minister and Minister In charge
Power, Dr Nirmal Singh on release of about
50 per cent funds under both the schemes
and assured that balance funds would also be
released after the State Government initiates
works under the schemes and submit Utiliza-
tion Certificates to his Ministry.
peak power demand the city is expected
to touch this summer. The authorities are
better geared up this time to meet the
power demands of the city and minimise
the outages.
side interventions in UDAY such as usage
flatten load curve and reduce energy
reduction in AT&C (aggregate technical
and commercial) and transmission losses,
interventions in energy efficiency, etc during
the turnaround. The MoU paves the way
for improving operational efficiency of the
power distribution department of the state.
UP Power raises Rs 6,510 crore via
bonds on BSE e-book platform
UP Power Corporation has raised Rs
6,510 crore by issuing bonds on private
placement basis through BSEs electronic
book mechanism, making it the highest
ever fund raising by a PSU on such plat-
form. With this, total fund mobilsation by
companies reached to Rs 1.62 lakh crore
since the launch of this platform last July,
BSE said. We are delighted to raise Rs
6,510 crore (on February 16) from BSE
bond platform in the most cost effective
and competent manner. We acknowl-
edge BSEs efficient service support and
guidance for seamlessly executing this
historic deal on BSE bond platform, UP
Power Corporation CMD Sanjay Agarwal
said. The BSE-BOND was launched on
July 1 to facilitate online bidding for
private placement of debt securities.
Since then, 58 companies have raised Rs
1,62,731 crore through it. Some of the
firms that garnered funds through the
platform include NTPC, Axis Bank, HDFC,
Power Finance Corporation, REC, Yes
Bank, NHAI, IRFC, HUDCO and NABARD.
The reduction in AT&C and transmission
losses to 15 per cent and 3.50 per cent,
respectively, is likely to bring in additional
revenue of around Rs 328 crore. Demand-
of energy-efficient LED bulbs, agricultural
pumps, fans, air-conditioners and efficient
industrial equipment through PAT (perform,
achieve, trade) will help reduce peak load,
consumption in the state. The gain is
expected to be around Rs 25 crore. The
ultimate gainers will be power consumers of
Sikkim as reduced level of transmission and
AT&C losses means lesser cost per unit of
electricity.

NewsBriefs | Power International
Bangladesh willing to invest $1 billion in Nepals power sector
Bangladesh has shown a keen interest to
invest in Nepals hydropower sector. Accord-
ing to MashfeeBinte Shams, the ambassador
of Bangladesh to Nepal, Bangladesh is ready
to invest US$ 1 billion in Nepal.Bangladesh
is open to pursue every possible collabora-
tion in the power sector, be it investment or
US to invest US$1b in Nigerias power sector
Power Africa, an initiative by the United
States government to light up Africa, plans
to invest about one billion US dollars on the
power sector in Nigeria, says programme
co-ordinator Andrew Herscowitz. He said
the US was committed to strengthening
the power sector in Nigeria, adding that
Washington had already committed billions
of dollars in funding the nations energy
projects. Power Africa, which was launched
by former President Barack Obama in 2013
to increase access to electricity on the
continent, is aimed at adding more than
30,000 megawatts (MW) of cleaner, more
efficient energy development in sub-Saharan
Africa. Herscowitz said the project also
Japan power trading set to surge again from April
Trading on Japans power exchange is set
to triple in the financial year starting on
April 1 as the nations giant utilities aim
to put around 10 percent of their sales up
for competitive bidding, the next big step
in reform of the sector. Already 10 months
into a shake-up of the countrys power
industry that opened it to independent
electricity producers and suppliers,
trading on the Japan Electric Power
Exchange (JEPX) has surged around 50
percent and nine former regional power
monopolies have lost nearly 2.6 million
customers.Hundreds of new entrants
- gas utilities, manufacturers, trading
companies, oil refiners and others - have
power trade between the two countries,
she said. As the economy of Bangladesh is
growing at the rate of over 7 percent, it is a
power hungry country, the ambassador said,
adding that the current installed capacity
of Bangladesh is 15,000 MW but still it is
not enough. Bangladesh has projected its
electricity demand to reach 20,000 MW in
2021 and 34,000 MW in 2030, according
to the envoy. The Bangladesh government
has already proposed to sign an umbrella
Memorandum of Understanding (MoU) with
Nepal. Bangladesh is waiting for the positive
response from the Nepal government, she
added. Shams also informed that private
companies of Bangladesh are also interested
in investing in Nepals hydropower sector.
targets unlocking the substantial wind,
solar, hydro power, natural gas, biomass,
and geothermal resources on the continent.
Since Power Africa was launched, the US
Trade Development Agency has committed
approximately US$6.5mil in funding for 10
activities supporting Nigerias energy sector,
which could leverage up to US$2.7bil in
investment, he added.
piled in, buying electricity on the exchange
to sell to the residential and commercial
end-users that make up Japans $71
billion retail market for power. Electricity
March 2017
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China plans to build floating nuclear
plants in South China Sea
China has said it will develop floating
nuclear power plants on a priority basis
in the South China Sea as it seeks to
beef up electricity supply to the islands
in the disputed maritime region. China
will prioritise the development of a
floating nuclear power platform in the
coming five years, in an effort to provide
stable power to offshore projects and
promote ocean gas exploitation, said
Wang Yiren, vice director of the State
Administration of Science, Technology
and Industry for National Defence.
Wang noted that Chinese authorities
have already carried out research on 9
relevant core technologies as well as
the standardisation of maritime nuclear
power plants. The development of the
facility is a crucial part of the countrys
five-year economic development
plan, running through 2020.China is
expected to build 20 floating nuclear
power stations in the future, which will
significantly beef up the power and water
supplies on the South China Sea islands.
traded on JEPX still represents less than
3 percent of Japans power demand,
although Tokyos efforts to increase price
competition and efficiency will likely result
in volumes rising further over the next
two years. As trading volumes rise, the
retail businesses of former monopolies
and new power retailers would be placed
roughly on an equal footing, JEPX general
manager Ryoichi Kunimatsu said, fostering
the smooth trading and liquidity needed
for price discovery. As the utilities start
selling on the exchange power now locked
up in bilateral agreements, JEPX trading
as a proportion of total power will grow
threefold by March 31, 2018, he said.
 March 2017
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InConversation
We are heading for a mismatch between
renewables and balancing power
Anil Razdan, former power secretary, Government of India,
shares his views on the power sector scenario in India and future
roadmap. Excerpts:
There has been a lot of talk on
India being power surplus. How
do you analyse this situation?
Also share your outlook for the
power sector.
The energy sector overall has shown
comfort at the level of the consumer
because shortages have come down to
reasonable levels. But the worrying
part is that the demand is not going
10 up. Now if it is due to demand side
management it is a good thing. But
the demand side management has not
picked up to that extent yet. So we
can probably assume that the industry
and manufacturing demand has not
picked up and this needs to pick up
if the economy is to go on higher
growth path.
You see this year we have had a
mismatch between thermal and hydro
generation. Now we are heading for a
mismatch between the renewables and
balancing power as the power which
is from hydro or gas-based sources
cannot be ramped up and down at very
short notice. Under the 12th Plan, the
capacity addition for hydro has been
weak and so has it been for gas, but
gas is also troubled by a lot of idling
capacity because of non-availability
of gas. These are the areas that we
have to seriously look at. We need
to expedite hydro capacity addition
because renewables will come up in
very short time. The gestation period
for new renewable is around one-tenth
to that of hydro. So there could be a
worrying factor on account of grid
management and balancing issues. We
ought to be working on piped gas also.
Though TAPI and IPI have not picked
up, I think we should be looking
seriously at undersea pipeline from
Iran or the Gulf region to India as
these would give some assurance on a
reasonable gas-based price.
As far as cooking fuels are
concerned, the government has come
out with a very good scheme called
Ujjwala yojana for LPG connections.
Around 1.5 crore connections have
already been given and the target is to
reach 5 crore connections. While it is
good that we are providing clean fuel
for cooking particularly in rural areas,
I feel we should probably move out of
cylinders and move in a consolidated
way through gas grids. The cylinder
subsidy is huge. When you are talking
of energy efficiency, this is a very
wasteful way of conveying your
energy. Now when we are in a situation
where 80% of our hydrocarbons are
being imported, particularly oil, this
is a worrying scenario. We have been
very lucky that the global oil prices
have been less than half of what they
were about two years ago. And the
spurt may not be as much as was
expected. But the fact remains that with
weakening Rupee against the dollar,
our forex out go will go up and we
need to be careful on that account.
Now we do have a commitment for
providing clean cooking fuels. But I
Anil Razdan, former power secretary, Government
of India
would say that given the present PLF
of about 60% of the coal and lignite
based plants, we could be looking at
producing cheaper electricity and do
a cost benefit analysis on whether it
is cheaper to supply electricity for
cooking in some areas or do we go for
gas-based options.
Coming to capacity addition of
coal-based power, under the 12th plan,
we will be adding only 39% from
supercritical. Now this is not a very
good figure considering the issue of
emission control and also efficiency
in managing fossil fuel resources. We
should have added a higher proportion
of supercritical and ultra supercritical
ultimately, particularly in view of the
new emission norms that are being
implemented.
Another question mark I find is
our assessment of statistics on captive
power capacity, both in terms of coal
and diesel. Diesel-based capacity
has implications of higher cost and
environmental issues. If we have a

proper Census of the captive power
capacity we would also come to know
how authentic the figures of energy
and peaking shortage are. These
require deeper analysis and study. It is
very good that the energy and peaking
shortage are stated to be between 1%
and 2%, but we need to authenticate
these figures.
How do you assess the UDAY
scheme for power discoms?
The performance of distribution
companies continues to be bad in
spite of the UDAY scheme. What the
scheme does is it transfers the liability
to the state governments. Unless the
A&T losses come down drastically in
the distribution companies, we are in
for trouble because how long can you
keep subsidizing them or giving them
grants which are going to be ultimately
recovered from the consumers. We are
also reaching a stage because of cross
subsidy; the industry will probably
find it more reasonable to buy new
renewable power like wind which is
available between Rs 4 to Rs 5 a unit.
If we have grid connected power at
above Rs 5 or 6, then these distribution
companies would will be in a danger
of losing those client once we have
reasonable a good capacity of wind
and solar.
So looking at the economics of
distribution companies and their
business, if the better paying clients
move away then they would be just
left with the clients who need subsidy.
But cross subsidy is certainly hurting
the industry. I feel we need to take
a very balanced and healthy view of
the situation that industry is a highly
desirable activity for providing
The performance of
distribution companies
continues to be bad
in spite of the UDAY
scheme. What the
scheme does is it
transfers the liability to
the state governments.
Unless the A&T losses
come down drastically
in the distribution
companies, we are in
for trouble because
how long can you
keep subsidizing them
which are going to be
ultimately recovered
from the consumers
March 2017
www.InfralinePlus.com
employment and also giving impetus to
growth and trade in the economy. It has
to be competitive globally and power
is a vital input, so you have to try and
keep power cost low.
Dont you feel that power tariffs
across the country need to go
up as well to improve financial
performance of discoms?
There was about a situation about three
to four years ago when tariff hikes
were not taking place. Of late some
tariffs hikes have taken place. Now if
you push up the cost of this grid power
too much and with renewable power
also coming in at competitive rates,
power discoms may be losing clients.
So you cannot push power costs
beyond a certain limit also. You have
to tighten your own efficiency also and
not put the burden on the consumer.
These levels of 25 to 50% of AT&C
losses in some states across the country
are totally unacceptable.
11
Unfortunately we had a certain
political philosophy in many areas that
you should not privatise distribution.
The AT&C loss of privatised
distribution entities is often much
better than the state owned entities. In
Delhi, for example, there has been a
sea change. So why dont we look at
distribution with a very strict focus on
efficiency. We have to stop looking at
power as a political tool.
The draft National electricity
Plan talks of reducing
dependence on coal based
capacity in favour of renewable.
What is your view?
We need to look at other sources. After
all what does the plan say? That we do
not need capacity addition from coal
and fossil fuel sources. But the other
side is that you have a huge idling
manufacturing capacity of supercritical
power equipment in the country. We
have to look at export avenues for them
else they may start turning into NPAs.
 March 2017
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InConversation

I would seriously look at energy and Are we banking too much on working simultaneously on this issues
peaking shortages in a manner which renewable in the long term? or no? It should not happen that the
can be authenticated provided you have Renewables has to advantages. renewables land up first and the grid
information on what are the captive Environmentally it is a relatively management is still waiting. As far as
power sources and how much are they benign source. Secondly there are wind is concerned we are having good
being utilised and why are they being no fuel escalation costs or risks as local manufacturing capacity but for
utilised in preference to grid-based in case of oil or gas-based power. solar PVs, we are reportedly importing
power. Either it is cheaper or it is just So it is a zero inflation fuel like 80 to 85% from China. Does that
not available to people. If you have hydro. However, renewables is augur well for Make in India? We
surplus power on the one hand there different cattle of fish as far as grid need to do some balancing between
should not be diesel-based electricity management is concerned. We have local components and importing.
generators. This is absolutely criminal. to look at grid balancing. Are we When we are talking about renewable
capacity addition we got to think
It should not happen that the renewables land about energy storage. You also need to
go in for electric vehicles in a big way.
up first and the grid management is still waiting.
If that can reduce your oil imports
As far as wind is concerned we are having good then we need to utilise the surplus
local manufacturing capacity but for solar PVs, power that we have which will give us
we are reportedly importing 80 to 85% from energysecurity.
China. Does that augur well for Make in India?
For suggestions email at feedback@infraline.com

12
 March 2017
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InDepth
Govt treads a cautious path on compliance
to new emission norms for thermal plants

13

Not a single thermal power plant has managed to comply with the new standards: CSE
Lack of power purchase power agreements continues to keep plant load factor at its lowest

By Team InfralinePlus

In December, 2015, the Ministry of
Environment, Forest and Climate
Change (MoEF&CC) had announced
new norms for coal-based power
stations to cut down emissions of
particulate matter (PM10), sulphur
dioxide (SO2) and oxides of nitrogen
(NOx) and improve the ambient air
quality around power plants. The
ministry had for the first time fixed
SOx and NOx norms for power stations
and mandated that plants adhere to
these guidelines by December 2017.
However, it seems that the government
is willing to allow thermal power
producers an extension to the current
stipulated December 2017 deadline
for coal-based thermal power plants
to meet stricter emission norms.The
main reason for the relaxation in the
deadline is owing to the slow progress
on implementation of the revised
standards due to various reasons,
including apprehensions by the
industry over recovery of the additional
investment through power purchase
agreement (PPAs) from the off-takers
(mainly state DISCOMs) as well as
difficulties in securing additional
debt funding for such capex in case
of projects under construction, which
have already witnessed time and cost
over-run.
 March 2017
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InDepth

With solar and wind sector forming

an important part of governments new
energy policy, these can be testing
times for thermal power producers
especially at a time when grid parity
has more or less been achieved. The
robust capacity addition that the
government has been projecting has
actually aggravated the problem as
several independent power producers
(IPPs) have been forced to scale down
output as demand continues to be
muted from states.
At the 21st Conference of the
Parties to the UN Framework
Convention on Climate Change
(UNFCCC), COP 21 in Paris, a
resolution on limiting the use of
coal across countries was one of the
proposals put up for consideration Coal-fired power stations form the backbone
along with the increasing share of of the Indian power generation sector and will
renewables in the energy mix. In the continue to remain so in the foreseeable future,
Indian context, this is of particular the Centres concerted efforts to ramp up
14 relevance as coal-fired power stations renewables such as solar notwithstanding. Coal-
form the backbone of the Indian power
generation sector and will continue to
powered thermal power plants account for 70%
remain so in the foreseeable future, of total electricity generated in the country and
the Centres concerted efforts to represents 61% of the installed power capacity
ramp up renewables such as solar
notwithstanding. Coal-powered coal power projects already in dif- Current situation
thermal power plants account for 70% ferent stages of construction and Although India did not have any norms
of total electricity generated in the likely to yield benefits in 2017-22, for SO2, NOx and mercury emissions
country and represents 61% of the CEA does not foresee any imme- earlier for coal-based thermal power
installed power capacity (186 GW diate requirement for fresh capacity plants, it had standards for PM10 emis-
out of the total 308 GW). Though addition from coal-based source up to sion but those were said to be lax by
Indias commitments to the UNFCCC 2027. Still, it presents a great chal- global standards. Since the new norms
in the form of Intended Nationally lenge to the government in ensuring were notified more than a year ago, it
Determined Contributions (INDCs) compliance of emission standards for has been found thorough a study done
lay great emphasis on greater adoption ~210-240 GW of capacity based on by Centre for Science and Environment
of renewable energy, the country will coal (up to 2027-2030). (CSE) (Green Rating of Coal-based
still require coal-based power plants
Table 1: New Emission Standards and Compliance for TPPs
to generate 60 per cent of its energy
requirements in 2030. In order for the PM10 SO2 NOx Mercury
country to fulfill those obligations, it Old Norms 150-350 none none None
is essential that the policymakers take New Norms
this proposal to reduce emissions from Units installed till 2003 100 <500 MW600 600 >=500 MW0.03
these coal-fired plants very seriously. >=500 MW200
Based on recent demand projec- Units installed between 50 <500 MW600 300 0.03
tions, Central Electricity Authority 2004 and 2016 >=500 MW200
(CEA) estimates new coal-based Units installed after 30 100 100 0.03
capacity requirement of 44,085 MW January 2017
in 2022-27. Since, 50,025 MW of Source: MoEFCC
 March 2017
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Table 2: Estimated capital investment required for TPPs players apart from state-run power
equipment maker BHEL and multina-
Estimated capital investment required for TPPs for compliance with new
emission standards
tional Alstom, which presently have
the FGD technology in India. Chinese
Norms INR Crore/MW
machinery manufacturers may grab
Reduction in particulate matter (PM10) 0.50 0.60
the huge market being unfolded in
Reduction in SOx emissions (FGD) 0.10 0.25 India which will eventually result
Reduction in NOx emissions (SCR/SNCR) 0.10 0.15 in reduction in price of technology
Total Additional Expenditure 0.6 to 1.0 required for retrofitting.
Source: ICRA
Technology Update
Thermal Power Plants), that not a of theinstalled coal-based capacity as For the best part of 20 years, FGD and
single thermal power plant has man- on September 30, 2016. SCR have been two of the most im-
aged to comply with the new standards, The relevant selective catalytic portant technologies used for emission
even as the study reveals that coal- reduction (SCR) technology required reduction in a coal-based power plant
fired power sector was one of the most for reduction of NOx is expected to all over the world. However, questions
resource wasteful and polluting sectors require a capital investment of INR have been raised about the viability
in the world. 0.10 to INR 0.15 crore per MW. The of these technologies, particularly the
The new guidelines on emission proposed retrofitting in power plants FGD technology. Environmental lobby-
reduction have drawn distinct com- to ensure compliance to the norms ing groups are of the opinion that this
parison between plants commissioned will also present opportunities to new technology may be outdated under the
before 2003, those that came up
between 2003 and 2016 and the ones
going to be commissioned in 2017 & 15
beyond. The emission standards have
been made progressively stringent for
newer plants; hence, it would mean
additional equipment capital expen-
diture with revision in tariffs as a result
of Change in Law procedure in PPAs.
According to industry estimates,
the cost for technical changes at these
plants could be up to INR 0.6-1.0
crore per megawatt (MW). Besides,
the domestic capacity to manufacture
power equipment for the upgrade is not
more than 15 GW a year, compared to
demand of around 40 GW per annum
for meeting SOx norms alone.
To comply with the norms for
sulphur dioxide (SOx) emissions, units
with less than 500 MW capacity would
require installation of partial flue gas
desulphurisation (FGD), which is
estimated to cost INR 0.25 to INR 0.30
crore per MW as per a report by ICRA.
However, units with capacity of 500
MW and above would require full FGD
to meet the SOx emission norms. This
would entail capital investment of INR
0.50 to INR 0.60 crore per MW. Units
of 500 MW and above constitute ~56%
 March 2017
www.InfralinePlus.com
InDepth
present scenario and that MoEF & CEA
needs to expand the scope for next gen-
eration technologies in this area. It is
being felt that by retrofitting the system
with a single technology for removing
all the pollutants (PM10, Sox, NOx
and HG) could be more economic than
installing independent technologies for
removing each of these separately.
Rise in tariffs?
The technical feasibility of retrofitting
plants remains questionable, which
may make scrapping of old plants more
viable than upgrading them. Addition-
ally, the power industry and regulators
would have to deal with the expendi-
ture involved in the consequent tariff
hikes. Although the additional cost
for the comprehensive environmental
upgrade may be considered as Change
in Law and may be allowed to be a
pass-through, the power producers feel
16 that as Ujwal Discom Assurance Yojana
(UDAY) scheme itself entails timely tar-
iff increases, further spike in costs would
be stoutly resisted by the consumers.
There has been an increase in
private sector capacities without PPAs
in the last three years. If PPA signing
does not commence soon, by the end
of FY 16-17, nearly 15% of private
sector capacities (20-25 GW) without
PPAs will be exposed to the vagaries
of the short-term electricity market.
Many generating companies have high
variable costs because of high transpor-
tation costs, low operating efficiencies,
coal pilferage and corruption. Variable
cost ranges as high as INR 3-4/unit.
These plants do not get scheduled in
merit order dispatches. On the other
hand, new efficient merchant power
plants are able to supply power at total
cost as low as INR 2.2/unit. There is
nearly 14 GW of stranded capacity
without PPAs near coal mines in the
states of Madhya Pradesh, Chhat-
tisgarh, Odisha and Maharashtra. These
capacities have low variable cost and
they sell to states like Delhi and Raj-
asthan (where variable cost is high due
to transportation of coal) or to states in
the south that have to either pay high
transportation cost or import coal.
Conclusion
Even though power generation has in-
creased, lack of power purchase power
agreements (PPAs) continues to keep
plant load factor at its lowest. In the
last 13 years, generating capacity to the
tune of 150 GW has been successfully
commissioned, effectively doubling the
countrys installed capacity to 308 GW
At a time when several
Independent Power
Producers (IPPs) are
locked into PPAs that
have become unviable
because they do not
allow the high costs
of imported fuel to be
passed through. Indian
power generators
capacity utilisation is
likely be limited by the
financial weakness
of off takers, in turn
constraining
off-take electricity
demand
(by January 2017). However, recent
years have seen tardy growth in elec-
tricity demand, especially industrial
load, has led to a sustained drop in the
plant load factor (PLF) an indicator
of capacity utilisation of the coun-
trys power plants. In the last one year,
the average PLF of thermal capacity
has plummeted by about 8 percent-
age points, with the PLF of generating
stations in the central and private sector
estimated at just a tad above 60 per
cent. Low asset utilization is making it
difficult for power producers to service
debt. Lack of power demand from in-
dustries is causing ready capacities not
being able to find long term buyers and
sell at abysmally low prices at the pow-
er exchange. There is a huge amount of
generation capacity lying undispatched
due to unavailability of coal which is
due to the policy that only plants with
long term contracts will get coal link-
age, thereby rendering installed trans-
mission capacity under-utilised. On the
other hand, state electricity distribution
companies (DISCOMs) are not pursu-
ing long term contracts resulting in a
Catch-22 situation for the generation
and transmission capacity addition and
a utilization mismatch.
At a time when several Independent
Power Producers (IPPs) are locked
into PPAs that have become unviable
because they do not allow the high
costs of imported fuel to be passed
through. Indian power generators
capacity utilisation is likely be limited
by the financial weakness of off takers,
in turn constraining off-take electricity
demand. Due to Indias commitment
to reduce carbon dioxide emission
intensity by 33-35% by 2030, the
government has also come out with
stringent norms on sulphur oxides and
nitrogen oxides for thermal plants,
adding to the cost of setting up thermal
capacity. While the industry must brace
for more testing times ahead, it also
becomes imperative that in the view of
national interest, all stakeholders must
embrace this challenge, and set the
country on the goal to have emission
free power plants by 2030.
Coal-based thermal plants in the
country may have to spend massive
amounts over the next two years for the
technical upgrades to meet the stringent
and ambitious emission norms notified
by MoEF&CC. However, domestic
financial institutions are already
facing massive accumulation of non-
performing assets (NPAs) on account
of the power sector, and are unlikely to
lend given the uncertainties involved.
Presently, it seems the government and
the power producers are both treading
on a careful path together!
For suggestions email at feedback@infraline.com

InDepth
Stalled hydro sector back
on Centres radar
Share of hydropower in countrys power mix shrunk to 16 per cent in 2015 from 46 per cent in 1966
Govt looking to bring large hydropower projects under the ambit of renewable energy
By Team InfralinePlus
Despite Indias energy security being
vulnerable to price swings in the
global market, not much attention
has been paid to harnessing countrys
vast hydropower resources to build
generating stations wherein fuel costs
are nominal. Poor connectivity to areas
with the bulk of hydropower potential
and high risks of escalation in project
cost and tariff are factors that further
complicate challenges to building
hydel projects.
The 2012 floods in Uttarakhand have
also fuelled widespread concerns over
the ecological impact of hydropower
projects, giving more ammo to critics
which has further dented investors con-
fidence. Uncertainty about final project
cost and tariff has also made discoms
reluctant about buying electricity from
hydel projects under long-term con-
tract. It is because discoms are finding
it increasingly difficult to pass on
increased electricity cost to consumers.
March 2017
www.InfralinePlus.com
17
For example, BSES discoms in Delhi
had stated their inability 2014 to buy
electricity from SJVNLs Rampur hydro-
electric project in Himachal Pradesh,
which forced the developer to defer
commercial operations from the project.
The new land act passed by the pre-
vious UPA regime has also not helped
the matters. The Union power min-
istry wanted to introduce tariff-based
bidding for hydel projects. However,
it had to defer the plan till 2022 on
 March 2017
www.InfralinePlus.com

InDepth

industrys request. However, the moot

question is, will discoms buy power
from a project whose electricity tariff is
prone to wild escalation?

Hydro back in focus

But this neglected sector has finally
drawn attention of the Narendra Modi
government. A committee of secretar-
ies has suggested offering fiscal sops
to attract enhanced investment into the
sector. It is good that the government
is finally veering round to the idea that
hydropower potential must be har-
nessed at an expeditious pace to bolster
countrys energy security and that more
fiscal incentives would be in order to
attract investment. A committee of secretaries has suggested offer-
While the government will ing fiscal sops to attract enhanced investment
definitely pay due attention to the into the sector. It is good that the government is
panels suggestions, it should also finally veering round to the idea that hydropower
take note of the draft policy paper that potential must be harnessed at an expeditious
the previous UPA government had pace to bolster countrys energy security and
18 prepared in this regard. It would do that more fiscal incentives would be in order to
well to build on the draft document attract investment
instead of starting from the scratch.
What is assuring is that Union The share of hydropower in coun- Private sector remains a
power minister Piyush Goyal has trys power mix shrunk to 16 per cent marginal player
publicly stated that the Narendra Modi in 2015 from 46 per cent in 1966. Sector % share
government is deliberating on policy Hydel power capacity stood at 43,133
Central 27.01
amendments to bring large hydro- mw at the end of November, which is
State 65.75
power projects (greater than 25 MW) less than 30 per cent of countrys 1.5
under the ambit of renewable energy lakh mw generation potential. Private 7.2
Source: CEA
projects. Following this step, the target
of renewable energy capacity addition Alarming fall in share of Issues and challenges
would get increased to 225 GW by hydropower in countrys The problem is that the bulk of Indias
2022 from the present 175 GW and this power mix hydropower potential lies in remote, in-
would open a wider market for greater Year %share of hydropower in accessible areas of states like Arunachal
investments in the renewable energy Indias power mix Pradesh, Himachal Pradesh, J&K, Ut-
sector, he added. 1966 46 tarakhand and Sikkim. Private players
India has added coal-based gen- 1974 42 who paid premium price to get hydel
eration capacity at an unprecedented 1979 41 projects in Arunachal Pradesh have
pace in the current 12th Five-year Plan. 1985 34 failed to make headway. Now they want
However, capacity addition in hydro- 1990 29 to sell off those projects to state-owned
power has been rather slow. As much 1997 25 NHPC. However, due to differences
as 85,323 mw capacity based on coal 2002 25 over valuations, talks remain stuck.
2007 26
has been added up to November in Anyway, given that NHPCs decisions
2012 20
the current Plan while only 4,140 mw are subject to scrutiny by CAG, CBI
2013 18
hydropower potential was harnessed and CVC, the PSU management will
2014 17
during the same period, which has led to tread cautiously in this regard.
2015 15
a precipitous drop in the share of hydel One reason why private players are
power in the countrys electricity mix. Source: CEA unable to make headway on project
 March 2017
www.InfralinePlus.com

implementation is the fact that moving

plant and machinery, manpower and
raw materials to project sites remains
challenging due to lack of physical
infrastructure like road and highways.
If private developers build connecting
infrastructure on their own and add
cost to project, electricity tariff could
shoot up to prohibitive levels, poten-
tially denting the commercial viability
of projects.
The Prime Ministers Office
has asked NITI Aayog to prepare
a report on stalled hydroelectric
power projects wherein large-scale
investments are being held up. The
government think-tank has also been
asked to list the reasons delaying
projects. Salil Garg, an energy expert
with India Rating and Research,
favours sops to improve viability of
hydel projects and attract investment.
Investment into hydropower has
slowed due to structural issues, Garg 19
told Infraline Plus.
In order to revive interest in
the sector, the government needs
to solve issues relating to land and
rehabilitation and resettlement of
project affected people, he stated.
Garg added that the power ministry
could help the sector by playing a
lead role in the signing of multi-
state power purchase agreements
(PPAs) for large projects possible in
Himalayan states.
Under the previous UPA regime, a
panel set up by the then Union power
minister Jyotiraditya Scindia had
recommended excise duty exemption
for cement, steel and equipment used
for constructing hydel projects. It
had also suggested waiver of service
tax on construction activities. Such
exemptions have the potential to
substantially reduce project costs
and electricity tariffs and encourage
investors to bet on the sector.
The envisaged concessions look
need of the hour given that hydel
projects cost more than thermal plants
and take longer to build. They also
 March 2017
www.InfralinePlus.com
InDepth
face geological and hydrological
uncertainties during construction as
well as resistance from locals. All
these factors make hydel projects
unattractive in terms of higher tariffs
and other associated risks. As a result,
promoters are left struggling to tie up
funds. Lower capital costs are expected
to improve tariff and make hydel
projects more attractive.
To further boost project economics,
the panel recommended giving all
hydel projects renewable status. At
present, only plants with a capacity of
up to 25 mw are considered renewable
projects and enjoy easier funding
norms and other fiscal incentives. With
renewable tag, all hydel projects would
enjoy greater funding support, which
has emerged as a key roadblock.
The panel also suggested
simplifying bid documents to avoid
disputes with contractors over terms of
20 contracts. Disputes over bid terms have
emerged as a major problem holding up
hydel projects, which slows down the
pace of work and pushes up costs. The
panel has also suggested simplifying
the contract document to mitigate
risks associated with construction of
hydel projects that call for deviations,
compare the available information and
terms used in tender documents and
transparent mechanisms to settle rows
without involving litigations.
The committee also suggested a
tariff-based bidding system similar
to thermal projects. Hydel projects
are at present bid out on the basis
of a cost-plus formula, which does
not lay down a clear, transparent
evaluation criteria. In many cases,
states award projects on the basis of
upfront premium paid by developers or
quantity of free power, rather than their
experience and proficiency I building
such projects. Private companies like
Jindal Power, IL&FS and Lanco Power
that rushed to sign memorandums of
understanding to build hydel power
projects now want NHPC to take over
their projects.
Unfazed by implementation
issues, experts say hydro power
continues to have strong long-term
economic benefits for electricity
prices, especially as the Indian
market matures to offer ancillary
services as well as mainstream
power sales. According to a report
Hydropower @ Crossroads brought
by consulting firm PwC recently,
land acquisition remains a major
there was hardly any rehabilitation
The Narendra Modi
government will
have to sort out
land acquisition
issues if it wants to
expedite harnessing
of hydel projects.
In the absence of a
central law, states
cannot go out of
their way to support
land acquisition for
hydel project. The
government should
also help development
of hydel projects
by undertaking
development of
physical infrastructure
and transmission
lines in remote and
inaccessible areas
hurdle to implementing hydel
projects. Things have become more
complicated after The Right to Fair
Compensation and Transparency in
Land Acquisition, Rehabilitation and
Resettlement Act came into force in
January. It not only increases the cost
of land acquisition for projects but
also makes the process lengthy as
it requires social impact assessment
(SIA) and consent of landowners,
especially for private projects.
Previously, under the 120-year-old
prevailing act, most of the land was
acquired in the name of development
and little stake or benefits were given
to the people affected by a project.
Locals were neither given adequate
compensation or rehabilitation nor
did they get enough employment
opportunities. For example, in the
case of the Hirakud Dam project,
or compensation given to the project
affected people. This high-handedness
caused widespread resentment among
farmers against land acquisition. The
UPA government tried to address this
anger which was expressing itself in
the form of public resistance, especially
against large projects. However, the
new law, with its stringent SIA and
consent provisions, was found to be
unhelpful in land acquisition.
The Narendra Modi tried to dilute
the stringent provisions through an
amendment bill in 2015 but failed to
secure necessary political support to
push it through parliament. Later, it left
it for respective states to decide their
land acquisition policies.
Conclusion
The Narendra Modi government will
have to sort out land acquisition issues
if it wants to expedite harnessing of
hydel projects. In the absence of a
central law, states cannot go out of
their way to support land acquisition
for hydel project. The government
should also help development
of hydel projects by undertaking
development of physical infrastructure
and transmission lines in remote and
inaccessible areas. The government
will also have to guarantee purchase
of electricity through some sort of
financial arrangement that allows
developers to recover a reasonable rate
of return of their investments.
For suggestions email at feedback@infraline.com
 March 2017
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StatisticsPower
Financial Highlights of Gujarat Discoms (FY15 & FY16)

Total Cummulative
Net ARR AT&C T&D PAT Capex UDAY
Units Consumer Mix profit/
Year Discoms (Rs. Losses Losses (Rs. (Rs. Scheme
Sold Power Sale (FY16) (losses)
Crore) (%) (%) Crore) Crore) (Yes/No)
(MU) (Rs. Crore)
FY15 7700.15 16407 - 9.87 14.77 17.24 41.89 633.7
Industrial: 26.60% 9.1
UGVCL Residential: 11.57%
FY16 8008.83 16848 - - -149.76 878
Commercial: X%
Agriculture: 47.45%
FY15 9715.47 15572 - 15.09 13.69 50.83 -38.72 606.06
Industrial: 40.91%
DGVCL Residential: 17.98%
FY16 8988.65 13910 10.83 - - -23.79 -
Commercial: X%
Agriculture: 4.85%
Yes
FY15 4760.28 8294 - 16.64 16.87 28.85 62.5 515.17
Industrial: 30.90%
MGVCL Residential: 28.95%
FY16 4625.8 8001 15.8 - - -3.23 -
Commercial: X%
Agriculture: 14.51% 21
FY15 10511.11 19957 - 28.22 28.66 10.88 49.88 1570.1
Industrial: 28.95%
PGVCL Residential: 17.73%
FY16 10613.8 20028 25.68 - - -388.62 -
Commercial: X%
Agriculture: 29.98%

Financial Highlights of Rajasthan Discoms (FY15 & FY16)

Distri-
Net ARR AT&C Cummulative Capex
Dis- Total units Consumer Mix bution PAT (Rs. Uday
Year (Rs. Losses profit/(losses) (Rs.
coms sold (MU) (for FY16) Losses Crore) (Yes / No)
Crore) (%) (Rs. Crore) Crore)
(%)

3,48
FY15 13855 17493.86 - 32 24.5 -4734.57 1404
8

Industrial: 29.1%
Jaipur
Residential: 24%
FY16 16902.2 19295.72 28 22.5 - - -
Commercial: 10.5%
Yes
Agriculture: 30.4%

FY15 11195 - - 25 21.14 -4146.12 4,737 853

Jodhpur
FY16 - - - 22.4 19.22 - - -

FY15 10303 - - 26.06 19.6 -3592.88 2,928 586

Ajmer
FY16 - - - 24 18.5 - - -
 March 2017
www.InfralinePlus.com

StatisticsPower

Financial Highlights of Uttar Pradesh Discoms (FY15 & FY16)

Net ARR Cummulative Uday
Total units Consumer Mix AT&C Distribution
Year Discoms (Rs. profit/(losses) (Yes /
sold (MU) (for FY16) Losses (%) Losses (%)
Crore) (Rs. Crore) No)
FY15 20845 - 25.02 27.16 -
FY16 Industrial: 24.8%
Paschimanchal
Vidyut Vitran Residential: 35%
Nigam Limited 13047.1 24074 24.6 24.8 -82.5
Commercial: 5.3%
Agriculture: 15.7%
FY15 - - - 39 37.2 -
FY16 Industrial: 15.6%
Dakshinanchal
Vidyut Vitran Residential: 45.6% -3758
Nigam Limited 12358 17985 35.9 34
Commercial: 5.4%
Agriculture: 0.1%
FY15 Purvanchal - - - 42 42.6 -
Vidyut Vitran Yes
FY16 10316 17244 - 38.9 38.9 -2873
Nigam Limited
FY15 - - - 32.8 30.6 -
FY16 Kanpur Industrial: 15%
Electricity Supply
Residential: 50%
22 Company 2050.6 2907 35.3 28 111.1
Limited Commercial: 9%
Agriculture: na
FY15 9041.5 13001 - 35.5 37.3 -
FY16 Industrial: 12%
Madhyanchal
Vidyut Vitran Residential: 43.4%
Nigam Limited 10296 14435 33.1 34.1 1637
Commercial: 7.6%
Agriculture: 0.01%

NewsBriefs | Coal National
Govt in fresh push for power from clean coal technologies
The central government has invited proposals
on research, development and demonstration
of power generation with clean coal technolo-
gies. India is the worlds third largest coal
producing country and the fourth largest coal
importer. It is expected to increase its coal
production to about 1 billion tonne by 2020.
States free to supply coal to power plants
The power ministry has finally framed new
rules to get electricity supply from inde-
pendent power producers in lieu of dry fuel,
which is aimed at offering more freedom to
states to use their allocated coal. The new
arrangement will replace the rigid practice of
allocation of coal to state-owned generation
plants. The decision to give more freedom to
states to use coal assigned to them was taken
in a Union Cabinet meeting last year in May.
In continuation of the ministrys letter dated
June 2016 wherein it was suggested that the
methodology for use of transferred coal in
independent power producer (IPP) generating
stations will be done separately, the same has
now been finalised after detailed discussion
with all the stakeholders to bring in further
Coal to dominate power sector despite growth in renewables
Indias power sector will continue to
be dominated by coal over the coming
decade despite significant growth
in cleaner fuels or renewables, BMI
Research said. Indias power sector
will remain dominated by coal over the
coming decade despite significant growth
in cleaner sources - notably nuclear,
non-hydro renewables and natural gas,
BMI Research said. According to the firm,
the countrys efforts to bolster domestic
supply of coal and the loosening of the
global coal market over the coming
years will ensure that coal will remain
the power feedstock of choice for the
About 60% of Indias installed power capac-
ity is coal-based. As India aims to increase
its power capacity in the next 15 years, a
significant portion of the capacity is expected
to come from coal itself. However, India has
been focusing on clean coal technologies in
line with its commitments related to climate
change. Under the Paris climate agreement,
India has pledged to focus on clean coal tech-
nologies such as shifting towards supercritical
technologies for coal-based power plants. To
develop such technologies, the department of
science and technology of the central govern-
ment has on 7 February called for proposals
for clean coal research and development.
efficiency in utilisation of domestic coal.
According to the new rules, the energy gener-
ated under this arrangement will be treated as
transfer of coal. It is provided that the landed
cost of power from IPP generating station at
the buyers periphery should be lower than the
variable cost of the state generating station
whose power is to be replaced by that of IPP.
Indian market. Indias power sector will
remain dominated by coal over our 10-
year forecast period, with coal making up
a share of just less than 70 per cent to
the total power generation mix by 2026.
March 2017
www.InfralinePlus.com
MCL seeks reallocation of coal
blocks
The Mahanadi Coalfields Limited (MCL)
has urged the Union Ministry of Coal to
allot coal blocks immediately in order
to meet its production target in the next
fiscal. The company has specifically
requested for reallocation of Utkal-A
and West of Gopal Prasad block at
Talcher. Earlier, Utkal-A and Talabira 2
and 3 coal blocks at Jharsuguda district
were allocated to MCL. It is learnt that
the company had already made some
ground works on these two blocks and
a few land losers have got jobs in MCL
Hingula project. Following court orders, 23
these two blocks were deallocated in
2013. Now, Talabira block has been
allotted to Neyveli Lignite Corporation
while Utkal-A is yet to be allocated. As
the coal production target for MCL has
been fixed at a whopping 187 million
tonnes in 2017-18, it urgently requires
Utkal-A and West Gopal Prasad blocks
to meet its target. The company has
also demanded speedy forest clearance
for some projects.
This is roughly the same level as it is
currently, with growth underpinned by the
significant and continually growing project
pipeline for coal-fired power facilities in
the country, it said. Coal will continue to
be the feedstock of choice for the Indian
power sector given its widespread supply
and relatively cheap cost. Domestic coal
supply is expected to increase over the
course of the decade as Coal India ramps
up output, it added. We expect India to
surpass the US as the worlds second
largest producer of coal during 2016-
2020, increasing market share from 9.8
per cent in 2016 to 12.7 per cent by 2020.
 March 2017
www.InfralinePlus.com
NewsBriefs | Coal National
Indias coal woes continue as power demand fails to pick up
Indias coal-fired power sector continues
to suffer rising challenges posed by lack of
demand, improving price competitiveness
of renewable power and regulatory risk,
research firm Bridge to India said in a report.
In addition, despite governments various
initiatives to improve the sector, demand has
Western Coalfields gets green nod for Rs 263 crore expansion project
State-run Coal India arm Western Coal-
fields has received the environment clear-
ance for its Rs 263 crore expansion project
in Nagpur district, Maharashtra. The pro-
posal is to enhance the production capacity
24 of the Gokul open cast mine to 1.875 million
tonnes per annum (MTPA) from the existing
1 MTPA. The mine, located in 767.17 hectare,
has a mineable reserve of 14.50 million
tonnes. Based on the recommendations
of the expert advisory committee, Union
Environment Ministry has given environment
clearance (EC) for the expansion project
of Gokul mine in Nagpur. The clearance to
the project is subject to certain conditions.
Total cost is estimated to be Rs 263 crore.
Among conditions specified, the company
India to produce additional 20-mn tn coking coal in 3-4 years
To reduce imports, India will wash certain
grades of coal to make available 20 million
tonnes of coking coal in the next 3-4 years
mainly for domestic steel industrys, Power
Minister Piyush Goyal said. I am given to
understand that there are certain grades of
coal which, if washed, can be upgraded to
coking coal. We are trying to get additional
20 million tonnes (of coking coal) within the
next 3-4 years by processing this coal for
domestic steel industry, Goyal, who is also
Coal Minister, said. Criticising the earlier
governments for doing precious little, he
said, It was Congress lethargy to increase
production in India and they did not have the
failed to pick up, the report said. The Indian
governments aggressive electrification
policy with electrification of over 12,000
villages of the 18,452 un-electrified villages
since 2015 and UDAY reform package
for DISCOMs (distribution companies) are
failing to bolster power demand, it said. In
January 2017, Indias coal imports declined
by 22 per cent to 14 million tonnes because
of lukewarm demand from power generating
stations. Bridge to India said private inves-
tors planning long-term investments in coal
mining or thermal power generation are likely
to be put off by the combination of demand,
offtake, regulatory and environmental risks.
has been asked to get Consent to Operate
certificate from the State Pollution Control
Board for the existing production capacity of
1 MTPA and also the Consent to Establish
for the proposed capacity of 1.875 MTPA
prior to enhancing the production capacity.
With regard to transportation of coal, the
company has been asked to carry out by
covered trucks and take mitigative measures
to control dust and other fugitive emissions
all along the roads by providing sufficient
numbers of water sprinklers.
confidence in the ability of our own people.
They depended on foreign coal. Therefore,
they permitted power plants to import coal.
A good government should have said that
NTPC makes a debut in coal
mining
NTPC Ltd, the countrys largest power
producer, has made a debut in captive
coal production. Its first rake of coal from
Pakri Barwadih coal mine was flagged
off recently in Jharkhand. The mine has
estimated mining annual capacity of 15
million tonne and has been allotted by
the Union government to NTPC as basket
mine to meet the fuel shortfall of its
power stations. One of the contentious
coal mines of the state-owned power
generating major NTPC Pakri Barwadih in
Jharkhand it commenced operations after
seven years of allotment. Pakri Barwadih
has block area of 46.26 sq km with a mine
capacity of 15 million tonne per annum
and mineable reserve of 641 million tonne.
Coal mining is integral to NTPCs fuel
security strategies. NTPC realizes that
greater self reliance on coal will go a long
way in ensuring the sustained growth of
generation, said the company. NTPC last
year appointed Thriveni-Sainik JV as Mine
Developer cum Operator (MDO) for Pakri
Barwadih Coal Mining Project for a period
of 27 years of mining operation.
you have 300 billion tonnes of coal. Why
should there be a single plant dependent on
imported coal? Elaborating, he said, There
is a lot of coking grade coal but they are not
fully suitable for power plants. Power cost
also becomes expensive and we have to
import coking coal. But if we wash this, it can
be used as coking coal and I can give some
other (grade) coal for the power plants which
is cheaper. On Indias overseas coal assets
aspirations, he said, In coking coal, I will be
happy if I get good mines (abroad) because
India still needs coking coal. I am not looking
for too many assets. India has so much coal
that we dont need to look overseas.

NewsBriefs | Coal International
Trump administration blocks changes on coal mining royalties
The Interior Department has put on hold
changes to how the federal government values
huge volumes of coal extracted from public
lands, primarily in the Western United States,
EU needs to shut all coal plants by 2030 to meet climate goals
In 2015, almost all countries of the world
signed a treaty; called the Paris Agreement,
in which they agreed to limit global warming
to maximum 2 degrees Celsius (3.6 degrees
Fahrenheit).They said this is necessary to
reduce the amount of climate catastrophes
and to protect human lives, especially
those of future generations. Part of the
Paris Agreement is the swift reduction of
CO2 emissions and the quick phase-out
of fossil fuels. For the first time ever, a
study by climate research institute Climate
Analytics calculated what a cost-effective
fossil fuel exit strategy would look like. To
fulfill Europes climate commitments, the
study focused on keeping global warming
at 1.5 degrees Celsius until the end of this
Rio said to seek bank pitches on $1.5 billion coal mine sale
Rio Tinto Group has asked banks to pitch
for a role advising on the divestment
of its last remaining coal operations in
Australia. The London-based company
has decided to pursue a sale of its Hail
Creek and Kestrel mines after receiving
unsolicited approaches from potential
buyers. Queensland States Bowen Basin,
which mainly produces coking coal used in
steelmaking, could fetch as much A$2 bil-
lion ($1.5 billion). Rio, the worlds second-
biggest miner, has been divesting coal
assets since dismantling its energy divi-
sion in 2015 and in January 2017 agreed
to sell $2.45 billion of Australian mines to
after mining companies challenged the agency
in federal court. The move by the Trump
administration means current rules governing
the industry will remain in place pending deci-
sions in the courts. The changes, crafted under
the administration of President Barack Obama,
were aimed at ensuring companies dont short
change taxpayers on coal sales to Asia and
other markets. Coal exports surged over the
past decade even as domestic sales declined.
Yet federal lawmakers and watchdog groups
have long complained that taxpayers were
losing hundreds of millions of dollars annually
because royalties on coal form public lands
were being improperly calculated.
century. But as it turns out, achieving this
goal wont be easy. Not only would there
need to be zero global CO2 emissions
by 2050. Additionally, CO2 would need
to be removed from the atmosphere, for
example by massive reforestation. Climate
Analytics isnt alone with these calculations;
many other studies also say negative CO2
emissions by 2050 are necessary to fulfill
the climate goals.
a company controlled by Chinas Yanzhou
Coal Mining Co. The producer is focus-
ing on key divisions including iron ore,
which generated more than 60 percent
of profit last year, as well as copper and
March 2017
www.InfralinePlus.com
Australias $5 billion bet on clean
coal
The Australian government has
opened the door to using a $5 billion
fund designed to attract investment
in northern Australia, to develop
clean-coal projects. The Northern
Australian Infrastructure Facility
(NAIF), introduced last year, would
offer loans of at least $50 million
to projects in undeveloped regions
of northern Australia, which covers
40% of the Australian continent but
hosts just 5% of the population. But
Resources Minister Matt Canavan 25
stirred some controversy when he
suggested the fund could be tapped for
clean-coal projects. Clean coal refers
to a collection of technologies that
mitigate the environmental impacts
of coal-generated electricity, including
carbon capture and sequestration. While
there are a number of demonstration
projects in place throughout the world
and especially in the United States, the
technology is still relatively nascent.
aluminium, according to Chief Executive
Officer Jean-Sebastien Jacques. Theres
no certainty the deliberations will lead to
a transaction, and Rio could still decide to
keep Hail Creek and Kestrel. Mine sales
appear to be accelerating under Jacques,
who took the helm in July, amid a drive
to reshape the producers portfolio, UBS
Group AG analysts including Glyn Lawcock
wrote in a February 13 research note.
Rio has announced $7.7 billion of assets
sales since 2013, according to a filing last
month. While Rio likes coking coal as a
commodity, the producer no longer has a
meaningful position in the material.
 March 2017
www.InfralinePlus.com

ExpertSpeak
Safety in coal mines: Aspect
requiring urgent attention
In the wake of an increase in accidents at coal mines in India, the
most recent being at Lalmati mine in Jharkhand, Alok Perti, former
coal secretary, Government of India, examines the past record
and efforts made by Coal India and its subsidiaries in reducing
the human interface with mine and ensuring adequate measures
for safety of miners. According to him, the recent accident should
be an eye opener and set the alarm bells ringing for the coal
company when it comes to ensuring safety at its coal mines.

On 30th December 2016, several (DGMS), which is an establishment

newspapers carried the story of the
mine accident which occurred on 29th
evening in Pahria Bhodaye village of
Lalmati mine under the Rajmahal open
26 cast coal mining project. This is under
the Eastern Coalfields Limited (ECL),
a subsidiary company of Coal India
Ltd (CIL). The Indian Express reported
that a 300 meters long and 110 meters
wide solid floor of the over burden slid
35 meters resulting in a displacement
of 9.5 million cubic meters of earth and
resulting in death of several labourers.
This sliding of the overburden also
resulted in burying 26 Volvo trucks
and 6/7 dumpers. Subsequent reports
indicated that as many as 18 dead bod-
ies have been recovered and several
people injured. The labourers working
on the site were of Mahalaxmi com-
pany which had been outsourced some
mining operations by the management
of ECL. Apparently rescue operations
were initiated only on 30th morning at
about 6.00 am. This incident seems to
expose the unprofessional and careless
attitude the coal mining company has
towards mine safety.
Legal provisions
The main organization responsible for
ensuring safety in mining operations
is the Director General of Mine Safety
under the Ministry of Labour. The
DGMS derives its power of con-
trol and supervision
from the Mines
Alok Perti, former coal secretary, Government
Act 1952 and of India
rules made Ensuring
there under. safety of all such inquiries and take appro-
This is be- miners in a priate remedial action, which may
cause the include in some cases closure of
mine cannot be
administra- the mine or registering a criminal
tion of the compromised case against the management. The
Mines Act government under section 24 also
1952 is within has the powers to institute a court of
the purview of the inquiry. The Mine Rules and the Coal
Ministry of Labour. The important Mines Regulations elaborately defines
rules promulgated in relation to mines and indicates the specific responsibility
safety are: of the mine managers, whenever any
1. Mine Rules 1955 accident occurs in their mine.
2. The Coal Mines Regulations 1957
3. Mine Rescue Rules 1985 Past record of accidents at
4. Mine Vocational Training Rules CILs mines
1966 While the recent accident mentioned
Section 22 of the Mines Act above is an eye opener and should set
confers the required power to the chief the alarm bells ringing for the coal
Inspector and other inspectors to take company, it is necessary to examine the
cognizance of any mine accident, past history of accidents in CIL and the
issue notice to the mine manager measures the company has been taking
and also conduct inquiry. Under the to improve safety at its mines.
prevalent law, the mine manager is As per records, there were 1456
bound to report every incident which serious accidents in 1975 resulting in
may cause injury or death to any 1515 injuries and in the same year there
worker in the mine to DGMS. DGMS were 177 fatal accidents resulting in 233
is under the law obliged to conduct deaths. The real decline in accidents was
 March 2017
www.InfralinePlus.com

Trend ofTrend
average fatalities
of average fatalitiesininmines
mines ofof
CILCIL (1975-2014)
(1975-2014) tons of production has also declined
from 0.43 in 2013 to 0.27 in 2015.
250 This trend is likely to see a reversal in
196 2016 because of the recent accident in
200
Lalmati. However, these statistics need
143 150 145
150 124 to be interpreted keeping in mind the
increased production. In other words,
100 82 80 one needs to see where the accidents
62 Average Fatalities
occur and with what frequency.
50 Coal India has an elaborate
arrangement to manage safety mea-
0
sures in mines and there are constant
attempts to improve. Right from the
CMD to the officer in-charge at the
mine level is part of a system which
is intended to manage affairs relating
In CIL more than 90% of the production is from to safety. Emergency Management
open cast mines and these are considered safer Plans have been prepared for all mines
in comparison to underground. Further it should in CIL with safety committees set
also be noted that in CIL about 70% of mining up at each level. CIL has also done
operations have been outsourced to private risk assessment based on the Safety
contractors. This has helped the company to Management Plan, but this is in most
rapidly increase output and reduced costs cases only for underground mines.
Measures have also been taken to 27
noticed after 1984 when 123 fatal acci- serious accidents in which 141 persons bring in appropriate instrumentation to
dents took place in which 134 persons were injured. Unfortunately this year enhance safety preparedness mostly in
died. In the same year, 603 serious acci- (2016) is going to see a rise in deaths underground mines. Some measures
dents took place in which 605 persons occurring in fatal accidents mainly due like training on simulators of heavy
were injured. Only in 1996 did the to the recent incident in Lalmati. machinery have also been introduced
figure reach below 100 fatal accidents The trends noticed over the last but in very small measure.
(96) with 110 deaths. In 2015 there were three years does show an improvement
only 38 fatal accidents resulting in 38 in mine safety. The average rate of Problems of safety with
deaths. In 1996 there were 484 serious serious injuries per 300,000 man-shifts outsourced operations
accidents in which 505 persons got has declined from 0.75 in 2013 to 0.56 The recent accident mentioned earlier
injured. In 2015 this was reduced to 134 in 2015. Similarly the rate per million was in an open cast mine. In CIL
more than 90% of the production is
from open cast mines and these are
considered safer in comparison to
underground. Further it should also be
noted that in CIL about 70% of mining
operations have been outsourced to
private contractors. This has helped
the company to rapidly increase
output and reduced costs. The cost
of departmental operations vis--vis
outsourced operation could be as high
as five times. In the enthusiasm to
rapidly increase production there will
be growing trend to outsource min-
ing operation and the possibilities of
weak and poor supervision increase.
Invariably accidents which occur in
 March 2017
www.InfralinePlus.com

ExpertSpeak

Accident Statistics of CIL (1975-2015)

Year Fatal Accidents Serious Accidents Fatality Rate Serious Injuries Rate
Accident Fatalities Accident Injuries Per Million Per 3 Lakh Per Million Per 3 Lakh
Tonne Man-shifts Tonne Man-shifts
1975 177 233 1456 1515 2.62 0.52 17.03 3.41
1976 177 249 1194 1248 2.72 0.56 13.63 2.81
1977 177 197 1198 1255 2.23 0.45 14.19 2.88
1978 139 154 1180 1227 1.73 0.35 13.78 2.77
1979 114 147 1090 1143 1.61 0.33 12.55 2.57
1980 112 129 1132 1202 1.35 0.28 12.54 2.65
1981 127 145 1214 1276 1.35 0.32 11.90 2.81
1982 123 148 1161 1218 1.32 0.31 10.86 2.56
1983 127 160 980 1026 1.36 0.33 8.70 2.09
1984 123 134 603 605 1.05 0.27 4.73 1.20
1985 136 152 507 524 1.15 0.31 3.97 1.07
1986 133 154 508 525 1.08 0.31 3.68 1.06
1987 130 141 558 577 0.90 0.29 3.69 1.18
1988 137 151 552 576 0.91 0.30 3.44 1.13
1989 131 150 626 654 0.85 0.31 3.72 1.33
1990 121 135 590 633 0.75 0.28 3.53 1.32
1991 115 120 476 508 0.58 0.24 2.51 1.02
28
1992 131 150 443 492 0.69 0.31 2.20 0.98
1993 118 132 441 461 0.61 0.28 2.14 0.97
1994 113 186 673 697 0.84 0.40 3.14 1.50
1995 113 192 575 612 0.83 0.45 2.65 1.14
1996 96 110 484 505 0.44 0.24 2.02 1.11
1997 99 111 486 519 0.43 0.25 1.99 1.15
1998 91 104 395 427 0.40 0.24 1.64 1.02
1999 93 102 467 502 0.40 0.25 1.98 1.26
2000 80 100 547 583 0.37 0.25 2.16 1.50
2001 70 105 529 564 0.38 0.28 2.06 1.56
2002 62 69 482 509 0.24 0.19 1.74 1.44
2003 60 64 447 467 0.21 0.18 1.48 1.35
2004 66 70 491 508 0.21 0.21 1.55 1.50
2005 76 97 391 405 0.29 0.28 1.20 1.18
2006 51 106 317 336 0.30 0.32 0.96 1.02
2007 59 61 326 340 0.16 0.19 0.92 1.05
2008 61 73 356 363 0.19 0.23 0.91 1.15
2009 55 62 285 290 0.15 0.21 0.60 0.82
2010 75 94 292 308 0.22 0.32 0.64 0.95
2011 50 52 242 256 0.12 0.19 0.60 0.90
2012 57 60 212 219 0.13 0.22 0.48 0.79
2013 55 59 196 200 0.13 0.22 0.43 0.75
2014 43 45 183 186 0.09 0.18 0.38 0.72
2015 38 38 134 141 0.07 0.15 0.27 0.56
 March 2017
www.InfralinePlus.com

record of accidents indicated that the

measures taken are very inadequate
as several accidents resulting in many
deaths continue to take place.
There are mine safety training
facilities in India as well, but they are
fairly inadequate. Attempts have been
made by CIL to collaborate with the
best institutions in the world to develop
good training facilities but somehow
the matter has not progressed. Perhaps
the importance this subject deserves
has not been forthcoming. This is
not surprising as in most government
departments or ministries training is a
low priority subject.

open cast mine are due to careless
use of heavy machinery (HEMMs),
particularly dumpers and dozers. The
main reason is poor training and lack
of proper instrumentation on these
machines which can significantly help
to prevent accidents. It is quite com-
mon to notice a relaxed approach when
several mine accidents
Comparison with China and
China seems to have USA
a fairly dismal record China seems to have a fairly dismal
of mine safety. Even record of mine safety. Even in the last
in the last two months two months of 2016 there were several
mine accidents in which a good number
of 2016 there were
of deaths took place. 32 people died in
a major accident in Xinhua in Decem-
29

such operations are out sourced and
this may result in serious accidents.
In the Lalmati case it is very clear
that the management was not moni-
toring the condition of the over burden
nor the mining activity being carried
out near the overburden. The result
was that the contractor continued his
operations without taking due precau-
tions coupled with a lax attitude of
the management of the coal company,
resulting in the accident. While in
such a case immediate inquiries are
instituted and FIRs lodged with Police,
there were some delays in taking that
action promptly. The government has
the powers to set up a court of inquiry
but so far there appears no such move.
Normally in incidents where such
large number of deaths take place it
is noticed that government institutes
a court of inquiry. Since the incident
involves workers of a private con-
tractor, the action of the government
would reflect the attitude of both CIL
and the government towards non-
departmental miners.
in which a good
number of deaths took
place. 32 people died
in a major accident in
Xinhua in December
2016. In the same week
another accident in
Heilongjiang province
took place where
another 22 died.
Lack of training facilities
Training facilities for mine safety have
been created in countries where large
scale mining takes place. One of the
best facilities is in Australia which is a
large coal producer. The management
of mines and training is considered to
be the best and today Australia has an
excellent record of safety in mines.
They have reached almost zero fatalities
in mine accidents. There are very good
facilities even in the USA but we find
that the record of accidents is not so
good. In China there are a large number
of good facilities for training but their
ber 2016. In the same week another
accident in Heilongjiang province took
place where another 22 died. Similarly
in November 33 people died in the city
of Changquing in the Jinshangou mine.
While the production in China is about
3.9 billion tons, we can expect higher
number of casualties, but the number of
accidents seems to be proportionately
higher when compared with countries
having largely underground mines.
In the early years of the twentieth
century there were a very large number
of workers in the coal mine in the
USA. In 1923 it reached a figure of
862,536. That year there were 2,462
deaths in coal mine accidents in the
US. By 1948 the number of workers
came down to 507,337 and the number
of casualties reduced to 999. The real
decline was witnessed after 1985 when
deaths in coal mine accidents reduced
to 68. In 2016 the number of workers
has come down to 102,813 and the
number of fatalities is only 9. In the
US the number of miners has reduced
but production has increased, which
 March 2017
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ExpertSpeak

Trend of average fatalities

Trend of average in USA
fatalities (1975-2014)
in USA (1975-2014) and there should be no chances of any
160 OB slipping unless the management is
137 careless. The fact that labourers of a
140
121 private contractor were victims of this
120 accident raises some very pertinent
100 issues. Firstly, was the company over
80 68 pressed to increase production without
55 being mindful of safety. Secondly,
60 Average Fatalities
36 had it been a departmental operation
40 33 30 25 involving regular CIL workers would
20 the management been so lax. Thirdly,
0 was the training of the officers in
charge of safety inadequate or that
posting on jobs which deal with safety
are considered lower on priority both
by the management and the person
indicated that human interface with the concerned. Fourthly, is the private
mine front has reduced drastically and Since, in India we are operator aware of the precautions
mechanization increased. having mainly open required to be taken to ensure safety of
When we compare the position with cast mining operations the labourers. Are the managers of the
India we find that while we may not it becomes the private companies involved in mining
be doing as well as USA or Australia trained on safety matters or not? Last-
in matter of mine safety, we are
responsibility of both ly, are there adequate training facilities
comparable with China. The difference the mining company as in India for training on mine safety,
30
is that in these countries the majority well as Government, particularly for open cast mines?
of mines are under-ground, while in which works through Since, in India we are having
India 90% of our production is from DGMS, to develop mainly open cast mining operations
open cast mines. proper courses and it becomes the responsibility of
both the mining company as well as
Conclusion institutional facilities Government, which works through
Open Cast mining is generally con- in the country for DGMS, to develop proper courses and
sidered to be safer. Management of training on safety institutional facilities in the country
overburden is expected to be done in in open cast mining for training on safety in open cast
a proper way. There are scientifically operations mining operations. This would provide
developed models which are known opportunity to both government as
well as private companies to have
their staff properly trained. As of date
this is fairly inadequate. The other
action which should be taken is to
reduce human interface with mines by
increasing mechanization. This would
probably be opposed by the existing
labour groups. Some private operators
may also oppose as they may lose
business, particularly transportation
through trucks within the mine.
Ensuring safety of miners in a mine
cannot be compromised. Ultimately,
everyone should value human life
more than anything else.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com

InDepth
Assessing coal demand for Indias
power sector for XIII Five Year Plan
Country does not need to build any new power plants for at least the next three years: CEA
Goal of tripling domestic coal production by 2020 appears fanciful
By Team InfralinePlus
Coal is a critical element of Indias
energy basket, supplying over half
the primary commercial energy of
the country. It is likely to play an
important role in the Indian energy
sector for the near to medium term,
in spite of increasing concerns about
climate change& growing preference
of renewable energy, especially solar
power. Coal powered thermal power
plants (TPPs) account for 70% of total
electricity generated in the country and
represents 61% of the installed power
capacity. Indias dependence on coal
can be seen in its electricity genera-
tion mix. As of December 2016, 186
GW (approximately 61% of the total
installed capacity) came from coal
powered thermal generation.
While the Central Government
has repeatedly promoted the goal of
tripling domestic coal production by
2020 to fuel a dramatic increase in
coal power generation, the goal looks
increasingly fanciful. Coal Indias
(CIL) expansion plans are part of
March 2017
www.InfralinePlus.com
31
Indias overall efforts to ensure energy
security by cutting crude oil imports
by 10 percentage points over the next
six yearsthe country now imports
80% of its crude oil requirement
and boosting domestic production of
natural gas.
Current coal supply
scenario
CILs supply to the power sector has
dropped by 3.6 percent during the peri-
od between April and December 2016.
 March 2017
www.InfralinePlus.com
InDepth
While the state-owned miner supplied
288.2 mt of coal to the power genera-
tion companies during the period, it
had supplied 299.1 mt of coal during
the same period in FY 2015-16, thus
registering a decline in supplies in the
current financial year (FY 2016-17).
However, an improvement in domestic
coal availability in the past 6 months
has substantially mitigated coal supply
risk and the risk of under-recovery in
fuel costs due to a reliance on costlier
coal imports for thermal independent
power producers (IPPs).
In the longer run, state electricity
distribution companies (DISCOMs) are
expected to benefit from the lower cost
of power purchases, due to improved
domestic coal availability, and
flexibility provided by the Ministry of
Power (MoP) to generating companies
for the optimal utilization of coal.In
order to achieve flexibility in utilization
32 of domestic coal and for reducing the
cost of power generation, the proposal
of the Ministry of Power was approved
in May last year. The flexibility in
utilization of domestic coal will result
in reduction of cost of electricity to the
consumers. The broad methodology
would promote use of coal in a flexible
manner amongst power plants of
Central generating stations, State
generating stations, power plants
of other State power utilities and
Independent Power Producers (IPPs).
Current coal production
scenario
Coal India reported record production
of 538 million tons for the year ended
March 2016, up from 494 million tons
the previous year. However, a subse-
quent fall in demand has forced Coal
India to reduce production growth, and
it is likely to fall short of the current
years target of 724 million tons.
CIL plans to achieve
one billion tonne of
coal production in five
years. Government has
set the 2016-17 coal
production target for
Coal India at 598 MT.
While the production
has been increasing
continuously there has
not been many takers
of coal. Coal demand
has remained subdued;
it did not increase as
per the increase in the
production.
CIL plans to achieve one billion
tonne of coal production in five years.
Government has set the 2016-17 coal
production target for Coal India at
598 MT. While the production has
been increasing continuously there has
not been many takers of coal. Coal
demand has remained subdued; it did
not increase as per the increase in the
production. CIL has achieved 8.6%
increase in production this year so
far vs an average of 1-3% production
growth between 2009-10 & 2013-14.
Coal production grew by 6.9% in
2014-15.
At the same time, electricity
demand from financially beleaguered
DISCOMs has not shown similar
corresponding increase. The peak
deficit between power demand and
supply during last year was 3.2 per
cent. The government in its estimates
expects it to come down to 2.5 per
cent in the current year.Weak demand
from the power sector, subdued price
realizations and lack of price hikes are
some factors that have kept sentiment
muted for the stock. There are several
factors at play: financially crippled
distribution companies (DISCOMs)
and a patchy economy has resulted in
slowing power demand growth.
Coal requirement in future
With the provisional demand projec-
tions and likely Renewable Energy
Sources (RES) capacity addition,
the coal based generation has been
estimated and accordingly provisional
coal requirement has been worked out
by CEA in the draft national electricity
plan. The likely capacity addition of
RES has been considered in three cases
viz., Case-I: 1,15,326 MW, Case-II:
90,326 MW and Case-III: 65,326 MW
by the terminal year 2021-22. With
this estimate, the total capacity of RES
would be 175 GW in Case-I, 150 GW
in Case-II and 125 GW in Case-III
respectively.
Accordingly, in the year 2021-22,
the estimated generation from coal
 March 2017
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Figure 1: Coal Requirement vs. Availability for XIII

& XIV Plans Recent assessments
made by the Central
Electricity Authority
1246
1122 (CEA) in drafting the
921 901 national electricity
851
797 747 plan reveals that the
600 552 country does not need
to build any new power
plants for at least the
next three years, while
2016-17 2021-2022 2026-2027
also projecting a sub-
Coal based generation (in BU) Total coal requirement (in MT)
dued demand for pow-
Likely coal availability (in MT)
er with a 20.7 per cent
lower peak demand in
Source: CEA Draft National Electricity Plan
202627
based power plants would be around and is being supplemented by coal of coal power projects already in
1018 BU, 1071 BU and 1122 BU based generation. different stages of construction and
respectively. The details of coal likely to yield benefits in 2017-22, 33
requirement for the year 2021-22 CEA projections: No need CEA does not foresee any immediate
have been worked out by CEA for coal power plants in requirement for fresh capacity
considering 30% reduction in Hydro future! addition from coal-based source up to
generation due to failure of monsoon Recent assessments made by the 2027. Seeing the muted demand from
and being supplemented by coal based Central Electricity Authority (CEA) state electricity distribution companies
generation. in drafting the national electricity (DISCOMs) owing to recurring
During 2026-27, the total capacity plan reveals that the country does not financial troubles and increasing
of RES has been estimated to 275 need to build any new power plants preference towards buying power
GW capacity, considering 175 GW for at least the next three years, while through the exchange route, it will
of total capacity at the end of the also projecting a subdued demand become impossible for the government
year 2021-22 and 100 GW capacity for power with a 20.7 per cent lower to auction all the cancelled coal blocks
addition of RES during 2022-27. peak demand in 202627. Given the while also factoring in the record
With the capacity addition of 50,025 massive capacity addition plans in the production by CIL.
MW coal based power plants, the renewable sector, CEA estimates there Amid an improving trend in
generation from coal based power is no requirement for new coal plants domestic coal production and the
plants is estimated as 1246 BU. The in 2022-27. measures being taken by CIL to
details of coal requirement for the Based on demand projections, augment domestic coal output,
year 2026-27 have been worked out CEA estimates new coal-based the dependence on coal imports is
considering 30% reduction in hydro capacity requirement of 44,085 likely to remain moderate (though
generation due to failure of monsoon MW in 2022-27. Since, 50,025 MW it will steadily decrease) in the near
to medium term (till FY19), due to
Coal imports decline amid increased domestic production the overall challenges in coal mine
development along with risk of delays
Coal imports fell by 25% to 14.31 million tonnes in December, due to higher avail-
in ramping up of coal output by the
ability of domestic fuel. The country had imported 19.15 million tonnes of coal in
allottees of schedule II and schedule
December 2015. Coal import (all type of coals) in December 2016 stood at 14.31
III mines.
million tonnes (provisional) against 19.15 MT in December 2015, as reported by
mjunction, an online procurement and sales platform.
For suggestions email at feedback@infraline.com
 March 2017
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StatisticsCoal
Indonesian Coal Prices - HBA - FY 2016-17 (till Feb17)

HPB MARKER (kcal/kg GAR) (USD/Ton)

HBA 6322
Gunung Pinang Indominco Melawan
Month kcal/kg Prima Coal Envirocoal Jorong J-1 Ecocoal
Bayan I Coal IM East Coal
(USD/ton)
7000 6700 6150 5700 5400 5000 4400 4200

Apr-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

Jul-16 53 62.42 63.97 57.8 47.95 47.6 45.45 36.57 33.64

Aug-16 58.37 56.61 58.53 52.9 43.61 43.74 42.04 33.8 31.18

Sep-16 63.93 68.45 69.61 62.87 52.45 51.6 48.99 39.43 36.18

Oct-16 69.07 74.01 74.82 67.55 56.6 55.3 52.26 42.07 38.53

Nov-16 84.89 91.15 90.85 81.97 69.39 66.68 62.32 50.21 45.77

Dec-16 101.69 109.35 107.88 97.28 82.98 78.77 73.01 58.85 53.46

Jan-17 86.23 92.6 92.21 83.19 70.48 67.65 63.18 50.9 46.39

Feb-17 83.32 89.45 89.26 80.54 68.13 65.55 61.32 49.4 45.06

34
Port-wise Coal Imports in India (in MT)
S.No. Ports Imports (FY 2014-15) Imports (FY 2015-16) Imports (FY 2016-17) - till Jan17*
Coking Coal
1 Paradip 8,992,360 7,233,877 6,375,255
2 Vizag 5,887,886 4,611,482 3,211,265
3 Goa/Marmagoa 5,839,993 6,163,132 4,283,124
4 Dhamra 5,560,774 4,844,386 6,940,264
5 Gangavaram 5,318,145 5,506,715 4,048,610
6 Kolkata / Haldia 4,998,623 4,949,814 4,773,426
7 Krishnapatnam 1,289,343 4,510,943 2,689,356
8 Mundra 1,044,334 1,056,048 854,390
9 New Mangalore 812,391 121,659 16,259
10 Kandla 431,878 358,952 351,623
11 Ennore 398,202 347,039 221,871
12 Magdalla 383,983 978,695 961,802
13 Karaikal 118,833 533,575 756,807
14 Jaigarh 82,100 30,000 44,870
15 Tuticorin/VOC 49,100 0 0
16 Chennai 1,628 1,288 971
Non-Coking Coal
1 Mundra 38,914,325 14,667,996 11,486,528
2 Krishnapatnam 25,360,804 21,938,131 15,397,886
 March 2017
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S.No. Ports Imports (FY 2014-15) Imports (FY 2015-16) Imports (FY 2016-17) - till Jan17*
Non-Coking Coal
3 Dahej 13,207,450 11,232,142 7,628,273
4 Ennore 11,586,516 10,758,859 6,594,344
5 Tuticorin/VOC 9,965,779 12,001,649 8,108,971
6 Vizag 9,931,812 7,666,590 4,672,614
7 Paradip 9,631,993 7,321,302 5,199,762
8 Gangavaram 9,447,943 8,560,804 5,235,335
9 Kandla 8,804,707 11,654,689 8,364,499
10 Navlakhi 7,359,030 6,119,175 2,188,974
11 Kakinada 6,045,996 2,822,054 1,483,936
12 Dhamra 5,768,643 7,597,423 3,198,791
13 Magdalla 5,484,802 5,225,930 4,276,610
14 Bedi 4,995,030 4,561,545 2,329,664
15 Mumbai 4,565,464 3,432,878 1,959,049
16 New Mangalore 3,859,485 5,053,589 4,444,617
17 Goa/Marmagoa 2,613,456 4,896,621 3,600,961
18 Adani Hazira 2,472,140 2,657,841 2,862,345
19 Pipavav 1,969,786 1,501,845 959,677
20 Kolkata/Haldia 1,897,477 2,552,225 2,782,696 35
21 Karaikal 1,232,716 2,199,504 3,433,428
22 Jaigarh 1,174,264 1,902,981 1,224,392
23 Bhavnagar 1,047,030 967,807 780,853
24 Okha 646,030 612,491 522,513
25 Porbandar 570,030 570,596 388,349
26 Muldwarka 337,630 682,916 331,715
27 Jafrabad 271,030 354,413 403,990
28 Jakhau 244,030 291,090 355,026
29 Cochin 48,034 113,850 63,000
30 Sikka 44,330 64,197 113,929
31 Chennai 247 843 1,194

* January 2017 is provisional data

 March 2017
www.InfralinePlus.com
CoverStory
Has India achieved grid parity?
36
Solar park bid at Rewa witnessed one of the lowest first year tariff of INR 2.97/unit
Recent wind auction too saw tariffs dipping to a record low of Rs 3.46/unit
By Infraline Bureau
World Economic Forums (WEF) latest
report on energy sector reveals that
solar and wind energy tariffs are finally
at par or cheaper than fossil fuel capac-
ity in more than 30 countries. For many
years in India, the biggest argument
against solar and wind energy was
the high cost of generation. Solar and
wind is not viable without government
subsidies was the popular argument
amongst many stakeholders and still
continues to divide opinions, notwith-
standing recent developments in the
sector. However, that narrative changed
dramatically in 2015 and 2016 with ag-
gressive bidding from industry majors
resulting in tariffs breaching the INR
4/unit mark last year. However, what
has followed in 2017 may become the
catalyst for Indias success as a clean
energy powerhouse with bids falling
under INR 3/unit mark and putting the
country at par with those 30 countries,
as given in WEFs report.
Last month, following a bidding
process, Mahindra Renewables, Sole-
nergi Power and Acme Solar Holdings
were awarded the contract to build and
operate a 750 MW REWA ultra mega
solar park in Madhya Pradesh. The
solar park is expected to be com-
pleted by April next year. Rewa Ultra
Mega Power Ltd. is a joint venture
between Solar Energy Corp. of India
Ltd. (SECI) and Madhya Pradesh
Urja Vikash Nigam Ltd. (MPUVNL)
and has awarded this solar project
capacity through a reverse-auction
based bidding route held on February
10, 2017.The auction saw the record
low bids and tariffs from previous bids
being smashed.The previous lowest

record was NTPCs Badla solar park
for 70 MW unit, in Rajasthan where
the tariff bid was INR 4.34/unit, won
by Finland-based energy firm Fortum
Finnsurya Energy.
Recent solar park bid (REWA)
in MP witnessed one of the lowest
first year tariff of INR 2.97/unit, and
a levelized tariff of INR 3.30/unit
over the course of power purchase
agreement (PPA) tenure. The lowest
first year tariff for unit I of the solar
power plant has been quoted by
Mahindra Renewables at INR 2.979/
unit while for the second unit, Acme
Solar became the successful bidder
with a tariff quoted at INR 2.970/unit.
Solenergi won the bidding round with
a first year tariff quote of INR 2.974
a unit, for the third unit of the solar
ultra-mega power plant.
Reasons for drastic fall in
solar tariffs
Recent advancements in technology,
sharp reduction in global module
prices, decline in domestic interest
rates and the structure of the auction
process were all expected to lead to
very competitive bidding and decline in
tariffs, but only the most optimistic of
the sorts could have predicted of such
outcome from the bidding process.
The main reason for aggressive
bidding in the recent set of auctions
was because the projects were bid
March 2017
www.InfralinePlus.com
Figure 1: Salient Features of the Bid
Payment Security Mechanism
Credit risk of the developer has been
substantially mitigated due to the involvement
of the state government, which guarantees for
78% of counter-party exposure (in this
case, the offtaker i.e. state utility)
Deemed Generation Clause
The deemed generation clause in the Power
Purchase Agrrement (PPA) has provided an
added assurance to the developer, in case the
project is forced to back down to non-
availability of the grid/ other reasons
under the government-provided solar
Recent advancements
parks, which meant the developers get
in technology, sharp ready-to-use infrastructure, such as
reduction in global land and transmission facilities, leading
module prices, decline to low project risk and lower costs.
in domestic interest Foreign firms, looking to make big 37
rates and the structure bang announcements in India, see this
of the auction process as an attractive bet compared to state-
were all expected level auctions, which would require
to lead to very them to acquire land and build infra-
competitive bidding structure support, hence, increasing
and decline in tariffs, payment security risks.
but only the most While the top-tier developers were
expected to attract debt financing,
optimistic of the sorts
it was expected that projects with
could have predicted tariffs below INR 4-5/unit levels will
of such outcome from face difficulties in debt financing as
the bidding process the lenders are becoming increas-
ingly risk averse, particularly in the
current environment when there is so
much scrutiny around NPAs (non-
performing assets) and quality of bank
loan books. Hence, there was a fear
that some of the developers looking at
investing in India may be put off by
the Indian market due to the unviable
tariffs and returns. However, those
concerns have been offset by the
recent success owing to the nature of
the bidding mechanism and features as
shown in Figure 1.
Apart from these, inclusion of
renewable energy projects in priority
sector lending norms of commercial
 March 2017
www.InfralinePlus.com

CoverStory

banks will prove beneficial in the long

run. Reserve Bank of India vide its
circular dated 23rd April, 2015 on Pri-
ority Sector Lending: Targets and Clas-
sification had issued revised guide-
lines for all scheduled commercial
banks making significant inroads for
renewable energy in the priority sector
lending: Inclusion of renewable energy
in categories of priority sector, in
addition to existing categories.

A close look at Rewa

model
Apart from payment security mecha-
nism (PSM) and provision of deemed
generation in the power purchase
agreement (PPA), which have resulted
in the drastic reduction in tariffs, a
sizeable fall in global PV module price
levels by about 30% since December
2015 have also benefited the project
developers. Due to temporary overca-
38 pacity in China resulting from delayed
projects in several key markets, solar
module costs in second half of 2016
and early 2017 have fallen faster
than expected. Besides this, favor-
able domestic policies as announced
in the recent budget has also brought
a sense of vigor amongst the inves-
tors/ developers. As part of the Union
Figure 2: Downward Trend in Solar Module Prices
during Dec15 Dec16
Price Reduction in Solar Modules
(in USD/Watt)
0.552
0.6
0.5
0.4
0.3
0.2
0.1
0 Pradesh. Further, deemed generation
Dec-15
Price Reduction in Solar
0.552
Modules
Price Reduction in Solar Modules
Source: Bloomberg New Energy Finance (BNEF)
Budget 2017-18 announcements,
Apart from payment solar tempered glass, used in solar
security mechanism equipment, have been exempted from
(PSM) and provision duty. The countervailing duty on raw
of deemed generation materials used in solar equipment has
in the power purchase been brought down from 12.5 percent
agreement (PPA), to 6 percent. Crystalline modules in
which have resulted in European spot market also saw a big
the drastic reduction in decline in one year, owing to key de-
tariffs, a sizeable fall in velopments in emerging markets such
global PV module price as India, Chile and Argentina.
After falling over 30 percent last
levels by about 30%
year, the price of ordinary multi-
since December 2015 crystalline silicon modules is expected
have also benefited the to fall by another 20 percent by the
project developers end of 2017, according to London-
based Bloomberg New Energy Finance
(BNEF).It also expects that price for
these may eventually fall down to
$0.32/watt by the end of 2017.
Sustainability of falling
solar tariffs
0.501 Based on industry sources and reports,
0.354
the project PPA structure has a few
unique provisions such as a state
government guarantee for the contracted
capacity (250 MW each in this case)
by the utility in the state of Madhya
Jun-16 Dec-16 is allowed which means if there is
no offtake of power due to various
0.501 0.354
factors, then the developer would be
Linear (Price Reduction in Solar Modules )
compensated for the power generation.
Guaranteed generation is the additional
key feature which enables each off

takers to get the supply. This is an
unprecedented step as renewable power
projects cannot be asked to back down
over thermal power generation factoring
in the Central Electricity Regulatory
Commission (CERC) guidelines. But,
despite the legislation, state electricity
distribution companies (DISCOMs)
of southern states such as Telangana
and Tamil Nadu with higher renewable
energy penetration have been ramping
down energy generated from clean
energy projects.
Despite the new tweaked structure
under which the projects have been
bid out, there are still questions on
sustainability of tariffs for developers
because of the low costs and low
margins. This is mainly because,
even though capital cost is getting
lesser, manufacturing costs can grow
which poses a risk. Besides financials,
technical issues pose a big threat to
Indias capacity addition plan in the
clean energy sector. Integration of
such large quantum of infirm power
from RE projects which have been
accorded must-run status would lead
to backing down of cheaper thermal
power. This may lead to increasing
cost of scheduled power and possible
losses for thermal power producers on
account of unscheduled, hence unsold
power. Since fixed charges for the
thermal power would still have to be
paid by DISCOMs, it would lead to
still more financial pressure on them.
Backing down long term thermal firm
must run power for accommodating
infirm power is unsustainable both
technically and financially, and will be
a big challenge for system operators to
deal with, besides attracting penalties
for under supply in existing long term
power purchase contracts.
The returns from these solar projects
or project IRR remain sensitive mainly
to: (a) the project cost, which in turn
would remain linked to solar module
prices and the subsequent foreign
exchange rates, and (b) the Capacity
Utilization Factor (CUF), which would
in turn depend on the project location
and the quality of solar modules used
in the project.
Impact of project location- Rewa
in Madhya Pradesh happens to be
an excellent solar location, with
high fraction of DNI (direct normal
irradiance).
Impact of interest rates on IRR-
Though short term interest rates in
India have declined by about 90 bps
last year, it is not clear how long term
(i.e. 20 years and above) interest
rates will impact the finances of the
Despite the new
tweaked structure
under which the
projects have been
bid out, there are
still questions on
sustainability of
tariffs for developers
because of the
low costs and low
margins. This is mainly
because, even though
capital cost is getting
lesser, manufacturing
costs can grow which
poses a risk
developers and eventually the IRR.
While higher interest rates affect all
business activity, the clean energy
sector is even more sensitive espe-
cially considering capital intensity.
Counterparty risks arising due to
the financial troubles of DISCOMs
is a critical bottleneck for lending
to the energy sector in general. For
instance, almost 85% of DISCOMs
in India have a credit rating of B+ or
less (as per CRISIL/ICRA reports).
In the case of RE power devel-
opment, this translates to a situation
where despite being payment security
risks associated with individual states
discourages commercial bankers
from lending to the sector.
March 2017
www.InfralinePlus.com
Renewable Purchase Obliga-
tions (RPO)- Although the solar
power industrys prospects in
India are bright, there are certain
challenges ahead. Notable among
these are the lack of enforcement
of the renewable purchase obliga-
tions (RPOs). The RPO mandates
DISCOMs to purchase a fixed
percentage of total electricity
supply from renewable resources.
However, many DISCOMs are
failing to meet the required RPO,
and they have not been penalized
either. The lack of enforcement is
undermining the intent of the RPOs
and could impact investments in
the solar power market. The poor
compliance is reflected in the sharp
increase in unsold Renewable
Energy Certificates (RECs) over
the years. The REC is a mechanism
available for States with lower
renewable energy potential to 39
meet their RPOs through pur-
chase of these certificates on the
power exchange.[Enforcement of
Renewable Purchase Obligations
(RPOs) has been strengthened by
judgement of Supreme Court (order
dtd. May 13 2015) for captive
power generators, open access
consumers and Appellate Tribunal
Judgement on fulfilment of RPO
obligation by State regulators.]
Falling tariffs in wind
sector
Amid the euphoria surrounding the
solar auction, wind sector managed to
sneak quietly into the history books
with the first ever tariff-based reverse
auction which took place at the fag
end of February.
Four project developers were
allocated 250 MW capacity each at a
tariff of INR 3.46/unit in the auction,
which was conducted by the Solar
Energy Corporation of India (SECI).
Mytrah Energy, Green Infra, Inox Wind,
and Ostro Energy were the successful
bidders. As the case with solar, the most
 March 2017
www.InfralinePlus.com
CoverStory
striking feature about the wind auction
process was that it allowed existing
wind power units with no buyers to bid
for a 1 GW of generation units along
with new potential investors. Successful
bidders will sign 25-year PPAs with
power trading company PTC India,
which will sign back-to-back PPAs with
distribution companies.
Like solar, wind auction too saw
aggressive bidding from leading
players such as Adani Green Energy,
Hero Future Energies, ReNew Power
Ventures, Inox Wind, Mytrah Energy
India and Gamesa Renewable for the
exclusive right to set up projects in the
states of Tamil Nadu and Gujrat. This
was despite a word of caution issued by
the Indian Wind Turbine Manufacturers
Association (IWTMA) requesting
developers to be prudent in bidding
and learn from aggressive solar auction
that saw tariffs falling to historic low
40 levels earlier.
According to the International
Renewable Energy Agency (IRENA),
tariff bids for wind energy projects
have converged around 4 cents/unit, in
emerging markets. Recent auctions held
in Mexico, Egypt, Chile, and Morocco
were around the 4 cent mark (compared
to Indias 5.2 cents/unit). Interestingly,
tariff bids in developed countries the
United Kingdom, Italy, Australia, and
Canada were above 6 cents/units.
The recent developments in
Table 1: Global solar tariffs in emerging markets
Recent global solar prices
Country Year Price (cents) Price (INR/unit)
Jordan 2015 6.13 3.98
Dubai 2015 5.98 3.89
Germany 2015 10.09 6.56
Brazil 2015 8.42 5.47
India 2017 4.85 2.90
(Levelized)
Source: Bloomberg New Energy Finance (BNEF)
Like solar, wind auction too saw aggressive
bidding from leading players such as Adani
Green Energy, Hero Future Energies, ReNew
Power Ventures, Inox Wind, Mytrah Energy India
and Gamesa Renewable for the exclusive right
to set up projects in the states of Tamil Nadu
and Gujarat
the wind sector is set to alter the Global trends for solar
structure of the domestic power and coal prices
market. States currently have been The most remarkable feature about
awarding wind energy contracts renewable energy investments in 2016
and signing electricity purchase has been the predominance of the
agreements on a preferential basis developing and emerging economies in
and tariff as determined by state the area. A report from Climate Policy
electricity regulatory commissions Initiative (CPI) shows that in order to
(SERCs). The current feed-in tariffs meet the target of 175 GW of renew-
(FiT) vary between INR 4-6/unit able energy by 2022, the renewable
in most wind richresource states. energy sector in India will require $189
However, post the reverse bidding billion in additional private investment,
process, it is expected that states may a significant amount. The potential
follow this route soon. amount of investment in the renewable
energy sector in India is $411 billion,
which is more than double the amount
of investment required. It is noteworthy
that Indias Intended Nationally Deter-
mined Contributions (INDC) document
(ratified and signed on October 02,
2016) lays out a 2030 target to achieve
about 40% cumulative electric installed
capacity from RE sources, with the
help of technology transfer and low
cost international finance.
A report by BMI Research pointed
that despite the tremendous rise of
renewables, Indias power sector will
remain dominated by coal over our
10-year forecast period, with coal

making up a share of just less than
70percent to the total power gen-
eration mix by 2026. This is roughly
the same level as it is currently, with
growth underpinned by the significant
and continually growing project
pipeline for coal-fired power facilities
in the country.
According to data provided by S&P
Global Platts, the price of petcoke
delivered to India is currently at $79/
tonne. Similarly, prices of thermal
coal, Richards Bay 5,500 kilocalorie/
kg net as received, a grade bought by
Indian buyers, has cooled off from
its high of $78.05/tonne last year
to $73.61/tonne in January 2017.
However, with government giving a
serious thought of buying coal mines
aboard again, a volatility in coal prices
may be expected in future, all of
which will play right into the hands of
RE developers.
Comparison with thermal/
gas-based power
While the jury is still out whether
the country has finally achieved grid
parity, the government seems increas-
ingly confident that this will be the
trend going forward. Immediately after
the REWA auction process, Minister
for Power, Coal, New & Renew-
able Energy, Piyush Goyal said, We
have achieved grid parity. We dont
get power at INR 3 per unit. We have
withdrawn subsidy on large scale solar
plants. Now, solar power industry can
stand on their own.
Indias massive capacity addition
in renewables strengthens countrys
position against climate change and
its commitment to the United Nations
Framework Convention on Climate
Change (UNFCCC); it also raises
concerns for thermal power producers,
especially in the wake of National
Electricity Plan (NEP) drafted by the
Central Electricity Authority (CEA).
The central governments push for
renewable energy capacity addition
(proposed 175 GW by 2022) and the
states obligation to include solar in
According to data
provided by S&P
Global Platts, the price
of petcoke delivered
to India is currently at
$79/ tonne. Similarly,
prices of thermal coal,
Richards Bay 5,500
kilocalorie/ kg net
as received, a grade
bought by Indian
buyers, has cooled
off from its high of
$78.05/tonne last year
to $73.61/tonne in
January 2017
March 2017
www.InfralinePlus.com
their total energy mix is driving long-
term contracts to solar. It is noteworthy
that all long-term contracts spanning
more than 25 years, were all signed
by solar power companies in 2015-16
and up to in the second quarter of the
current fiscal year (FY 2016-17).
Stranded power capacities of 22-28
GW (industry estimates) may have
to wait for 2-3 years for securing
PPAs. During the present period, both
government and industry are relying
on UDAY scheme for the demand to
pick up and kick-start the growth in
the sector.
As per CEAs draft, In view of a
large capacity addition programme
from renewable energy Sources, hydro
and gas based power stations are
required to play vital role by providing
balancing power to cater to the vari-
ability and uncertainty associated with
RES. Therefore, suitable measures to
ensure timely completion of capacity
addition from hydro and adequate
41
supply of natural gas to stranded gas
based power plants may be taken.
Coal power plants are one of most
water-intensive industrial users of fresh
water across the world and in India. The
water consumption of coal power plants
has not received sufficient attention,
even during a drought affected year.
Coal power plants require large volumes
of water for their operations. Water is
mostly consumed for cooling, with addi-
tional water going into scrubbing the air
pollutants from power plant emissions
and handling coal ash.
A Greenpeace India analysis of
a report released in March last year
estimates that the total freshwater
consumption of coal power plants in
India is 4.6 billion cubic meters per
year. This is enough to meet the basic
water needs of 251 million (25.1 crore)
people. This figure will more than
double if all proposed plants are built.
According to the report, the water
consumption for solar and wind energy
is negligible in comparison to coal and
the governments ambitious 175 GW
 March 2017
www.InfralinePlus.com
CoverStory
target for wind and solar energy holds
the key to securing both water and
electricity supplies in water stressed
regions. The total capacity of power
plants operating in Maharashtra which
use fresh water in cooling towers and
cooling ponds is 14,660 MW while
these coal power plants altogether
consume about 350 million cubic metres
of water each year. On the other hand,
the total capacity of power plants in
Madhya Pradesh which use fresh water
in cooling towers is 9344 MW and these
coal-based power plants altogether
consume about 222 million cubic metres
of water each year. In view of all of this,
thermal power industry will have to
brace for a transitional shift in future.
The recent solar auction makes an
interesting case for it to be counted as
a firm favorite for powering Indias
growth in future. Successful bids for
new thermal power plants in India in
the past two years have been between
42
INR 3.93-4.98/kWh. For wind power,
most states are still offering FiTs of
about INR 4-6/kWh, although recent
auction has brought the tariff down to
about INR 3.60/unit. Power generation
from gas-based power plants is simply
not viable in India due to high cost
(INR 4.5-5.5/unit) and short supply of
domestic natural gas, despite govern-
ments efforts to kick start stranded
Figure 3: Fuel-wise cost of generation (in INR/Unit)
BID FOR REWA
SOLAR PROJECT
COMPETITIVELY BID TARIFF FOR SOLAR PV (FY 2016)
WIND TARIFF (REVERSE AUCTION)
WIND TARIFF (FIT REGIME)
BASED ON IMPORTED LNG (WITH SUBSIDIES)
COMPETITIVELY BID CASE-1 BIDS DURING 2011-2015
BASED ON 100% IMPORTED COAL
BASED ON 100% DOMESTIC COAL (LINKAGE)
0 1
Fuel-wise Cost of Generation (in INR/unit)
Source: ICRA
capacity through gas-auction mech-
The recent solar anism based on subsidies.
auction makes an While Coal Indias(CIL) stellar
interesting case for it performance over the past two years has
to be counted as a firm taken away fuel-related worries to some
favorite for powering extent, legacy issues such as new coal
block auctions at aggressive prices still
Indias growth in haunt some generators. The uncertain
future. Successful bids
future of Indian domestic gas production
for new thermal power has cascading effects on the overall role
plants in India in the of gas in the countrys energy sector.
past two years have The impacts have already been felt
been between INR 3.93- in the power sector where the PLF of
gas-fired plants during the year averaged
4.98/kWh. For wind only 18.64% in May last year and more
power, most states are recently at 23.73% (December 2016)
still offering FiTs of due to unavailability of gas.
about INR 4-6/kWh Recent trends indicate that short
term (including day ahead) prices have
remained lower in comparison to the
prices under LTPPAs. With the onset of
ambitious renewable energy (RE) pro-
2.9
gramme in the country, DISCOMs will
4.3 now have to tie-up significant portion
3.6 of the RE capacity in order to fulfil their
renewable purchase obligations (RPOs).
4.8
This leaves very little scope for devel-
5.5 opers to sign LTPPAs (based on thermal
4.6 power) with utilities.This clearly makes
4.4
solar power a clear favorite for future
capacity addition in the country.
3.4
2 3 4 5 6 What it means for Indias
energy security?
Despite being a regional energy giant,
India has a low per capita electricity

consumption (1075 kilowatt hours
(kWh) per person per year) compared
to China (4,034 kWh per person) and
the US (13,532 kWh per person). The
low per capita energy consumption in
India is primarily due to the fact that a
vast majority of the population does not
have access to modern energy sources
to deliver basic energy needs.
One in four Indians does not have
access to electricity; about two thirds of
the population use traditional biomass
for cooking. Energy poverty the
inability to access sufficient energy is
one of the reasons for the low levels
of development in some regions, as
energy deprivation has significant
health, social, environmental and eco-
nomic implications. The government
is relying on coal-fired power plants to
reduce the energy deficit and lift people
out of energy poverty.
Indias dependence on coal can be
seen in its electricity generation mix.
As of January 2017, 188 GW (approxi-
mately 61% of the total installed
capacity) came from coal powered
thermal generation. The balance con-
sists of a combination of hydro (15%),
other fossil fuel (9%) nuclear (2%) and
non-hydro renewable energy sources
(13%). In recent years, Indias elec-
tricity sector has grown at a rapid pace.
Installed generation capacity has grown
phenomenally post-independence
from some 1.4 GW in 1948 to about
314 GW by January 2017. Electricity
consumption in the last decade rose
approximately 3.8% per annum, and is
continuing in a rapid upward trajectory.
This growth has been fueled in part by
increased private sector participation in
the sector mainly in coal-based thermal
power projects, enabled by the reforms
initiated by the Electricity Act of 2003.
Due to strong policy, generation
gained largely and witnessed role in the overall energy mix.
Indias dependence
on coal can be seen
in its electricity
generation mix. As of
January 2017, 188 GW
(approximately 61%
of the total installed
capacity) came from
coal powered thermal
generation. The
balance consists of a
combination of hydro
(15%), other fossil fuel
(9%) nuclear (2%) and
non-hydro renewable
energy sources (13%)
March 2017
www.InfralinePlus.com
significant participation from private
players. The result being that the
magnitude of capacity being added
each year has increased manifold
when compared with previous plan
periods. The introduction of price
based competitive bidding for power
projects and the use of new and
more advanced technologies (super
critical) has indeed rejuvenated the
entire generation segment. Renewable
energy is slowly assuming a central
Favorable Renewable Energy (RE)
policies and incentives to developers
are driving growth and private
participation in the renewable sector.
However, questions remain whether
it would be able to replace thermal as
a major source of power in the longer
run as coal & gas-based stations can
act as suitable mechanisms for better
integration of renewables into the grid.
As the coal plant construction 43
boom from five years ago fizzles out,
leaving tens of thousands of mega-
watts of underutilized or stranded
coal plants dotting the landscape,
the government is hoping that the
ever-increasing volumes of coal will
find a home somewhere, anywhere
before even more mines are forced to
have regulated production. For a
coal-dependent country such as India,
the urgency is clear on the need for
alternative solutions such as energy
efficiency, natural gas, and renewable
energysolar thermal electricity and
off-shore wind to play their role
in reducing Indias carbon footprint.
However, there is a need to safeguard
against overly aggressive tariff bids
so that there is sufficient profit for all.
For India to become a global leader in
renewable energy, state governments
have a big role to play in providing a
supportive framework with adequate
fiscal and/or regulatory incentives to
move the renewable market toward a
mature self-replicating phase.
For suggestions email at feedback@infraline.com
 March 2017
www.InfralinePlus.com
NewsBriefs | Oil & Gas National
Odisha withdraws tax sops to IOCs Paradip refinery
In a big jolt to Indian Oil, the Odisha govern-
ment has withdrawn tax incentives given
to the Rs 34,555-crore Paradip refinery,
making the company reconsider its plans to
invest another Rs 52,000 crore in the State.
Less than two months after serving the first
show cause notice, the Odisha government
Refiners may start BS VI fuel sale ahead of deadline
Oil refineries have less time than earlier
expected for shifting to BS VI grade fuel.The
oil ministry and state-owned refiners have
agreed to start marketing BS VI grade fuel
44 from September 2019, at least six months
prior to the government deadline of 1 April
2020, as it takes months to clear out existing
fuel with higher sulphur content from the
entire supply chain up to the farthest filling
station in the country. The idea is to make
sure the higher grade fuel aimed at reducing
emissions doesnt miss the original 1 April
2020 deadline anywhere in the country,
while auto makers are making changes to
engine designs to suit the new fuel quality
requirement. Companies agreed to supplying
ONGC board approves pact to acquire GSPC stake for USD1.2 bn
The Board of state-owned ONGC has ap-
proved signing of definitive agreements for
buying debt- laden GSPCs entire 80 per cent
stake in KG-basin natural gas block for USD
1.2 billion. ONGC will pay USD 995.26 million
for three discoveries in the KG-OSN-2001/3
block that are under trial production since
August 2014. Another USD 200 million will
be paid for six other discoveries for which
GSPC has been finalising an investment plan
to bring them to production.ONGC Board
has approved execution of farm-in/farm-out
agreement with GSPC in respect of acquisi-
tion of 80 per cent Participative Interest
(PI) and Operatorship in the NELP-III block
on February 22 wrote to its single biggest
investor saying it is withdrawing the promised
11-year deferment on payment of sales tax
on Paradip refinery products sold in the State.
The withdrawal will cost Rs 2,000 crore to
Indian Oil Corporation (IOC) this year and
will progressively increase every year as
more petrol and diesel as also petrochemi-
cals are sold within the State. Besides leading
to levy of sales tax on 2 million tonnes of pet-
rol and diesel sold in the State annually, the
withdrawal is threatening viability of invest-
ments in downstream petrochemical plants
as products from it will be consumed by an
array of synthetic fibre and plastic industries
and now tax will also be levied on them.
BS VI grade fuel ahead of the deadline as
the fuel that remains in the storage tanks
starting from the ones at refineries to the
underground storage at petrol pumps and in
transportation pipelines gets mixed with the
superior quality fuel, resulting in a fuel that
has sulphur content somewhere in between.
KG-OSN- 2001/3, a company statement
said. ONGC had on December 23 last year
agreed to acquire the stake of Gujarat State
Petroleum Corp (GSPC). Thereafter, the two
companies, after several rounds of discus-
sions and legal due diligence, have agreed to
ONGC gets board nod for Rs 7,327
crore investment in 5 fields
The board of state-owned Oil and Natural
Gas Corp (ONGC) has approved invest-
ments worth Rs7,327 crore to develop
five hydrocarbon fields and notified two
new discoveries. The fresh investment in
the fields are likely to see 14.969 million
tonne (mt) of oil and 2.972 billion cubic
metre of gas. The investments will go in
developing or redeveloping R-Series (in-
cluding revival of R-12 or Ratna), Santhal,
B-147 and BSE-11 Block fields, and the
fourth-phase development of NBP field.
The highest investment, Rs4,104 crore,
has been allocated for the Ratna field,
which has been languishing for long as
a private consortium that took the fields
could not monetise the field. In March
2016, the government reverted the Ratna
and R-Series fields to ONGC for develop-
ment and production. The field is expected
to start production by 2018-19, with a
peak production rate of 14,583 barrels per
day expected to be achieved in 2019-20.
The cumulative production during the life
of the field is expected to be 8.39 mt of oil
and 1.696 billion cubic metre of gas.
the terms and conditions to be incorporated
in the Farm-in / Farm-out agreement, the
statement said. The Farm-in/Farm-out agree-
ment sets forth the modalities to be followed
to effect the assignment of PI and change
of Operatorship with the approval of the
Government as per the existing Production
Sharing Contract (PSC) and Joint Operating
Agreement of the block. Besides the payout
to GSPC, ONGC will have to pay for the entire
development cost of the six discoveries which
may run into at least a couple of billion dol-
lars.GSPC, which had a debt of Rs 19,716.27
crore as on March 31, 2015, has so far made 9
gas discoveries in the Bay of Bengal block.

NewsBriefs | Oil & Gas National
Indian oil firms keen to bid for assets in Myanmar
Indian upstream oil companies plan to
participate in the forthcoming bid round for
hydrocarbon assets in Myanmar. This was
conveyed by Minister of State Dharmendra
Pradhan to Myanmars Minister of Electricity
and Energy U PeZin Tun. Pradhan also put
Centre agrees to pay Rs 6,320 crore as oil royalty to Assam
The Centre has agreed to pay Rs 6,320
crore to the Assam government as
crude oil royalty as part of an out of the
court settlement after eight years of
protracted legal battle. The amount will
be paid by the central government to the
Assam government over a period of three
financial years commencing 2016-17.
While in 2016-17, the central government
will pay Rs 948 crore, in 2017-18 it will
pay Rs 2,844 crore and in 2018-19 will pay
Rs 2,528 crore. This is in addition to the
Rs 1,450 crore already received. The OIL
and the ONGC have been paying royalty
to the central and the state governments.
The Petroleum Ministry on October 30,
Natural gas price in India likely to be hiked by 8 per cent by April
Natural gas price in India is likely to be
hiked by 8 per cent from April 1 driven by
an increase in rates in reference markets
including US Henry Hub. Price of natural
gas, used for generating power and making
fertiliser and petrochemicals as well as
CNG for automobiles, is likely to rise to
USD 2.7 per million British thermal unit for
the period from April 1, 2017 to September
30, 2017 from current USD 2.5 per mmBtu.
This will be the first increase in domestic
gas prices in two years. Rates may further
rise to USD 3.1 per mmBtu in second half of
2017-18 fiscal (April to March). As per the
mechanism approved in October 2014, the
forward various proposals on participation by
the Indian oil and gas companies in the mid-
stream and downstream sector of Myanmar,
including in refurbishment and upgradation of
refineries in Myanmar, developing down-
stream market though supply of petroleum
products, LPG, wax and petrochemicals. In-
dia has also proposed integrating the Indian
natural gas grid with Myanmar for develop-
ing their cities through city gas distribution
network and also in the area of sourcing LNG.
Pradhan also extended proposals to assist
Myanmar in training and capacity building
its hydrocarbon officials. At present, ONGC
Videsh Ltd (OVL) and GAIL have invested in
gas producing blocks in Myanmar.
2003 had directed upstream companies,
including ONGC, to give discount in price
on sale of crude oil to the Oil Marketing
Companies. It had also been provided
that the discount offered by upstream
companies would not affect the royalty
payable to the state governments.
March 2017
www.InfralinePlus.com
RIL to halt heavy naphtha exports
after start of its paraxylene plant
Reliance Industries (RIL), owner of the
worlds biggest refining complex, will
halt heavy naphtha exports in 2017/18
after the full-scale start of its 2.2 million
tonnes per year (tpy) paraxylene plant.
The plant, located in western Gujarat
state, is currently operating at about
800,000 tpy capacity, and the rest of
the projects capacity is set to come on
stream before the end of this financial
year (FY) in March. The petrochemical
is primarily used in polyester and
polyethylene terephthalate (PET). The
main feedstock for paraxylene is heavy
naphtha, a crude-based product which 45
can also be converted into reformates,
a blending component for high-octane
gasoline.At full capacity, Reliances
paraxylene plant would require 2.7
million tpy of heavy naphtha reducing
its ability to export the product and
making it likely to resort to imports of
heavy naphtha. Of Indias total 730,000
tonnes of naphtha shipped out in
January, over 220,000 tonnes were from
Reliance and most of it in paraffinic form.
price of domestically produced natural gas
is to be revised every six months -- April 1
and October 1 -- using weighted average or
rates prevalent in gas-surplus economies
at Henry Hub of US, National Balancing
Point of the UK, rates in Alberta (Canada)
and Russia with a lag of one quarter. So,
the rates for April 1, 2017 to September 30,
2017 period will be based on average price
at the international hubs during January
1, 2016 to December 31, 2016. Rates were
last changed on October 1, 2016 when they
were cut by 18 per cent to USD 2.5 per
mmBtu from USD 3.06. This was the fourth
six-monthly reduction.
 March 2017
www.InfralinePlus.com
NewsBriefs | Oil & Gas International
Laugfs Gas to invest $120m in Bangladesh in four years
Laugfs Gas Bangladesh Ltd, a leading lique-
fied petroleum gas supplier, will invest $120
million in Bangladesh in the next four years
to expand its footprint and meet the growing
energy demand, said the chairman of its par-
ent company. Since starting its journey in the
country in 2015, the Colombo-based company
has invested $40 million.We have almost
Iran plans to issue $4.5bn in bonds for energy projects
Iran is looking to offer up to $4.5 billion in rial
and foreign currency-denominated bonds by
March 2018. Iranian authorities have been
keen to attract foreign investors after the end
46 of sanctions on the country, where interna-
tional bond issuance has been virtually non-
existent since the late 1979 Islamic revolu-
tion. Parliament recently approved an item in
the state budget for the Iranian year starting
on March 21, which allows the oil ministry to
issue $3 billion worth of the rial and foreign-
currency-denominated bonds said. Under
another budget line passed, the ministry can
issue up to 50 trillion rials ($1.5 billion) worth
of the bonds. According to the text of the
proposed budget, the $3 billion in bonds are
Goldman says global crude stocks likely to keep falling
Goldman Sachs expects global crude oil
inventories to keep falling due to production
cuts and strong growth in demand, although
stocks are likely to rise in the United States.
We do not view the recent U.S. builds as
derailing our forecast for a gradual draw in
inventories, with in fact the rest of the world
already showing signs of tightness, analysts
at the bank said. Given our unchanged 1.5
million barrels per day growth forecast
for 2017, this higher base demand level
should fully offset higher U.S. output.The
Wall Street bank reiterated its forecast for
Brent and U.S. crude prices to rise to $59
and $57.50 per barrel respectively in the
$120 million in the pipeline for investing in
Bangladesh within next four to five years,
said WKH Wegapitiya, chairman of Laugfs
Holdings Ltd. Laugfs Holdings Ltd acquired 69
percent share of Petredec Elpiji Ltd two years
ago in its first overseas venture. Last year,
it acquired the remaining share from Elpigi
SdBhd Malaysia. The company operates LPG
import, bottling and distribution facilities at
Mongla port having storage capacity of 1,800
tonnes now. The company is in the process
of extending the capacity. The companys
own LPG carrier vessel, Gas Courage, will be
parking for the first time at Mongla port in the
first week of March which would increase the
storage capacity to over 3,800 tonnes.
to be used to repay ministry debts for existing
projects and the $1.5 billion bonds are to be
used to finance new oil and gas projects. After
being passed by parliament, the entire budget
has to approved by a clerical body that vets
legislation before it becomes law.
second quarter, before dropping to $57 and
$55 for the rest of 2017. Surging U.S. output
has pushed crude and gasoline inventories
to record highs, keeping a lid on prices after
Russia overtakes Saudi Arabia as
worlds largest crude oil producer
Russia overtook Saudi Arabia as the
worlds largest crude producer in
December, when both countries started
restricting supplies ahead of agreed cuts
with other global producers to curb the
worst glut in decades. Russia pumped
10.49 million barrels a day in December,
down 29,000 barrels a day from Novem-
ber, while Saudi Arabias output declined
to 10.46 million barrels a day from 10.72
million barrels a day in November, ac-
cording to data published on the website
of the Joint Organisations Data Initiative
in Riyadh. That was the first time Russia
beat Saudi Arabia since March. Saudi
Arabia and fellow producers from the
Organization of Petroleum Exporting
Countries decided at the end of Novem-
ber to restrict supplies by 1.2 million
barrels a day for six months starting Jan.
1, with Saudi Arabia instrumental in the
plan. Non-member producers, including
Russia, pledged additional curbs. Brent
crude prices have climbed about 20 per
cent since the end of November.
they climbed following an agreement by the
Organization of the Petroleum Exporting
Countries (OPEC) and other producers to
cut output by about 1.8 million barrels per
day (bpd). While the production cuts have
so far reached a historically high level of
compliance at 90 percent, the rebound
in U.S. drilling activity has exceeded
even our above consensus expectations,
Goldman said. However, the increase in
U.S. drilling points to factors including
further improvement in shale productivity
and funding for the industry, rather than
expectations of an increase in prices, the
bank said.
 March 2017
www.InfralinePlus.com

InConversation
Indias policies for inviting overseas
investments in E&P still arrogant
The oil and gas sector has failed to attract lot of investments
in the past. While the industry has been waiting for various
policy interventions to improve the investment climate,
things have not moved as per expectations. In this regard,
RSSharma, former ONGC Chairman and current head of
FICCI Hydrocarbon Committee, shares his views on some of
the recent developments in the sector and what we need to
do to improve E&P industry.

Are you happy with the Union
Budget announced on February 1?
There was hardly any mention of oil
and gas sector in the Budget. The
decision to increase energy storage
capacity is not a very big thing. Exist-
ing reserves are for about 12 days, with
further addition it will become 20 days.
Reduction in customs duty for LNG is
welcome. There is nothing else apart
from this. However, there were lots
of expectations relating to cut in cess
on crude oil, clarifications relating to
service tax etc. So how we are going to
promote the E&P sector? Unless there
is conducive environment, Indias quest
to reduce its oil import dependence is
wishful thinking and a pipe dream.
Some radical measures were
expected to be announced, but there
is no announcement of these in the
budget. There is no roadmap as of now.
It was disappointing. Unless the gov-
ernment announces an implementation
roadmap, what is the message going to
potential investors?
How do you assess the recent
small fields auction?
Discovered small fields response has
been miserable. ONGC and OIL were
asked not to participate. One-third was
then cornered by other PSUs and their
subsidiaries. Then, none of the interna-
tional players came, despite measures
and packages announced which were
definitely lucrative enough. I feel that
Indias policies for inviting overseas
investments are still arrogant on the lines
of Russia and Venezuela. These countries
are hydrocarbon rich countries; they can
afford to be arrogant. We need to ap-
proach the global community with folded
hands and request them to invest in India.
In lieu of this, we should provide various
facilities, ease of doing business, etc. Un-
less you do this, who will come?
But there were lot of new
players?
Definitely. See, some of these fields are
really very small and it is not worth for
biggies to bid for that. And lots of oil
field service providers have intention to
become E&P players. Those companies
have come for this. They can have
global partners. So there has been some
activity which needs to be welcomed.
Now the government plans to
come out with auction of oil
exploration rights by June. What
is our take on this?
Yes, they are saying that in two or three
months the government will come out
with Open acreage licensing policy. But
before that we need to create a conduc-
tive environment to attract big players,
RSSharma, former ONGC Chairman and current
head of FICCI Hydrocarbon Committee
which, currently is not there. There has 47
to be a radical reforms package to be
announced by the government and they
have to address that credibility will be
honoured, there will be no mid-course
changes in definitions etc. That has to be
conveyed. We need to be more aggres-
sive in our marketing and sending out
word to the global community to come
here and invest. E&P per se is a highly
capital intensive and risk oriented indus-
try. It has to be made clear to everybody
that intention of the government is not
to increase the current revenue but to
promote E&P sector so that produc-
tion will increase, which will increase
governments revenues in future and
also reduce import dependence, promote
Make in India and employment in India.
Who do you see the investment
climate in the oil and gas sector
today?
Oil and gas sector has not attracted any
FDI in the last 7 years. Only FDI right
now is Rosneft acquiring Essar. Because
India is the only market globally which
is growing, where demand is increasing.
 March 2017
www.InfralinePlus.com
InConversation
For them it makes lot of sense to capture
the market here. In the retail business,
they will evacuate crude, and refine and
sell it here. But there is nothing in E&P.
In downstream, Shell is there, BP has
given its intent, Total is also reaching
out. So all of them are sitting on the
fence to jump this side as retail is a
growing market. But due to various rea-
sons, it is still favourable to PSU retail-
ers. Even RIL and Essar are complaining
that OMCs are being patronized.
The government is keen to have
an integrated oil and gas major
in India. There are talks of ONGC
acquiring a majority stake in
HPCL. What is your view?
The first and foremost thing is it is a
cool divestment collection exercise by
the government as the government has
50% holding in HPCL worth Rs 29000
crore. If that is taken over by ONGC, the
48 government will receive its divestment
proceeds. Also, it makes lot of logical
sense for ONGC to get integrated in
the entire value chain of business. Until
now, ONGC was an upstream major
with some downstream presence. With
acquiring HPCL, ONGC will come into
retail marketing and will have presence
in the entire value chain.
When you prepare the consolidated
balance sheet, it helps in equalization
owing to business volatility in upstream
and downstream segments. So like
any other international oil major,
ONGC will become a truly integrated
company. So t is an advantage to
ONGC. Also, there is no downside
for HPCL. Only disruption will be
that CMD would get re-designated as
MD and CEO, and there will be non-
executive chairman from ONGC. The
board and management remains as it is.
Benefit to HPCL is they will be able to
leverage ONGCs balance sheet for their
expansion programs and fund raising
requirements. I feel this is synergy. It is
Definitely,
renewables should
be the first option but
unfortunately even
globally, renewable
contributes only 14-
15% to the energy
basket. In India it is 6 to
7%. So even if it grows
exponentially, it will not
be enough as its base
is small. This will not
be enough to address
growing energy needs
of the country
win-win situation for the government,
ONGC and HPCL. For ONGC to garner
Rs 29000 crore for this acquisition will
not be a big deal. With this, ONGCs
credibility will go high because of being
a truly integrated oil company globally.
The renewable sector in India
is fast picking up. Where do you
see natural gas in this talk of
clean fuels?
Definitely, renewables should be the first
option but unfortunately even globally,
renewable contributes only 14-15% to
the energy basket. In India it is 6 to 7%.
So even if it grows exponentially, it will
not be enough as its base is small. This
will not be enough to address growing
energy needs of the country. In fossil
fuel, most preferred fuel should be gas.
So intention is good that we should have
a gas-based economy. But domestic
producer of crude oil gets import parity
price, while gas producers do not get
it. His benchmark price is that of gas
surplus economies which are exporting.
Why dont we not give the same price to
domestic producers at the rate at which
we are importing LNG. It will increase
domestic production and reduce import
dependence. Only logic seems that
there is a very strong consumer lobby
from power producers and fertilizer
companies and the government may be
considering higher subsidy burden due
to increase in input costs.
Where does oil and gas sector
figure in the GST roll out?
GST rollout is planned from July 2017.
But again there is huge apprehension
in the oil and gas sector. Gas is out
of GST, so are some of the major
petroleum products, but input costs of
the companies are in GST. How will
they get cenvat caveat? Then, Fuel Oil,
naphtha and ATF are part of GST, others
are not. So how will accounting be
done? There is lot of uncertainty.
For suggestions email at feedback@infraline.com
 March 2017
www.InfralinePlus.com

InDepth
HELP curtain raiser: Auction
of small fields kicks off in style

49

Sops like duty free import of equipment and freedom to price natural gas production offered
Out of the 42 companies that bid for marginal fields, more than 35 were start-ups

By Team InfralinePlus

As India struggles with rising
dependence on oil imports and
prepares to revive exploration
activities in a big way, the successful
auction of 44 small and marginal
fields augurs well for the country.
It will help monetise hydrocarbon
reserves that have remained unlocked
for decades in the absence of an
attractive policy. While production
from these blocks is unlikely to make
a difference on Indias crude imports,
the government has tested the waters
by holding auction of these blocks.
It can now go for auction of bigger
blocks under the newly formulated
Hydrocarbon Exploration Licensing
Policy (HELP). The last round of
auction was conducted under NELP by
the then United Progressive Alliance
government in October 2010 when
the crude oil price benchmarked to the
Indian basket was $81 a barrel.
Many analysts have questioned
the Narendra Modi governments
decision to shift to HELP from New
Exploration Licensing Policy (NELP),
 March 2017
www.InfralinePlus.com

InDepth

which served India so well and thirds of blocks put up for auction. billion rupees [$6.93 billion], the
helped attract more than $10 billion Oil majors like ONGC, RIL and BP DGH added.
in cumulative investment into the skipped the auction but it was only The assets previously belonged to
hydrocarbon sector. It is an excellent natural given the small size of blocks state-run ONGC and Oil India, which
start, said Debasish Mishra, an energy on offer. did not take initiatives to develop
consultant with Deloitte, referring Of 44 small and marginal fields them due to viability concerns in
to the recent auction of small and awarded under the recent auction, 28 the absence of adequate sops. These
marginal fields. Mishra added, It may are onshore and 16 offshore. Upstream blocks not only lack economies of
not add any significant quantity of regulator Directorate General of scale, but are also located in remote
domestic production but would work Hydrocarbons (DGH) said the fields areas where finding customers would
as a curtain raiser to the bigger HELP held in-place reserves of 62 million be difficult. Nor is there any pipeline
regime, which is crucial for reducing tonnes of oil equivalent (454.5 million connectivity in these areas to transport
Indias dependence on oil imports. boe) and, combined, could produce production to consumption centers.
The government has offered around 15,000 bpd of oil and 2 mcm
various sops including duty free per day of gas at peak. Those figures Start-ups rule the roost
import of equipment and freedom to represent around 2 per cent of current Indian Finance Minister Arun Jaitley
price natural gas production through national oil and gas production. It said: Single bids were received for
an arms length methodology. It has been estimated that the indicative 14 contract areas; multiple bids were
is reassuring that start-ups bid gross revenue over [their] economic received for 17 contract areas. Only
aggressively and won nearly two- life would be approximately 464 three of the 23 winners are state-
backed, with the rest being private
firms and start-ups. A third of the
The government has offered various sops leases were won by state-run Indian
50
including duty free import of equipment and Oil, Bharat Petroleum Corporation
freedom to price natural gas production through Ltds (BPCL) Bharat PetroResources
and Hindustan Petroleum Corpora-
an arms length methodology. It is reassuring tion Ltds (HPCL) Prize Petroleum.
that start-ups bid aggressively and won nearly However, only five of the 45 com-
two-thirds of blocks put up for auction. Oil panies involved in the auction were
majors like ONGC, RIL and BP skipped the from overseas, despite government
roadshows in the US, the UK, Canada,
auction but it was only natural given the small Singapore and the UAE. Of those
size of blocks on offer five, the DGH has listed South Asia
Consultancy as the only successful for-
eign bidder. Other winners included:
Sun Petrochemicals; Adani Welspun
Exploration; Ramayna Ispat; Oilmax;
Hindustan Oil Exploration (HOE) and
Gem Laboratories. The bidding cri-
teria and process has been extremely
smooth for players. For the first time,
we are participating in an online bid-
ding process, said HOE managing
director P Elango.
Out of the 42 companies that bid
for these marginal fields, more than
35 companies were start-ups. At least
134 bids were submitted for the fields
on offer for the bidding that kicked
off on May 25. Although the last
date of submitting the bid was earlier
slated as October 31, the government
 February
March 2017
www.InfralinePlus.com

decided to extend it till November 21

to give more time for small companies
and private equity players to form
joint venture.
Among companies that bid for these
blocks were state-owned players IOC,
Oil India, GAIL India, Bharat Petro
Resources Ltd and private companies
such as Anil Agarwal-led Cairn India,
Adani Welspun Exploration and
Hindustan Oil Exploration Company.
Dilip Shanghvi of Sun Pharma, one of
Indias richest persons, too submitted
a bid through Sun Petrochemicals.
Subhash Chandras Essel Group also
entered into the sector through Essel
Group Middle East.
Out of the total 134 e-bids received,
120 e-bids were received for onland
areas and 14 for offshore areas. As Out of the total 134 e-bids received, 120 e-bids
many as 42 companies (Individually or were received for onland areas and 14 for
as member of the bidding consortium)
participated in the bid round. For offshore areas. As many as 42 companies
the current round, only five foreign (Individually or as member of the bidding 51
companies also showed up. According consortium) participated in the bid round. For the
to norms, companies that win onshore
fields must start production within
current round, only five foreign companies also
three years, while those that win showed up. According to norms, companies that
shallow water and deep water blocks win onshore fields must start production within
must start production in four and six
three years, while those that win shallow water
years, respectively.
Despite smaller contract areas and deep water blocks must start production in
on offer in the DSF bid round, the four and six years, respectively
response from private companies was
overwhelming; around 37 private take the limited risk of investing in price environment, said Kalpana Jain,
sector players submitted e-bids as fields with discoveries. senior director at Deloitte in India.
against 27 private companies, during The bid round took place The government is keen to cut down
the NELP-IX, petroleum ministry in a challenging global market import dependence of oil and gas by
said in a statement. All the 26 onland environment when oil and gas prices 10 percentage points to 67 per cent by
contract area received e-bids while 8 have been volatile and investment 2022. Getting 134 bids for 34 of the 46
out of 20 offshore contract areas have in the exploration and production contract areas on offer is a very positive
received e-bids. sector has seen a substantial decline. outcome given the prevailing price levels
The liberal licensing regime Despite the above challenges, the and scarcity of capital, said Anish De,
for the small and marginal fields response to the discovered small fields partner and head of oil and gas at KPMG
approved by the union cabinet on 2 bid round has been very favourable in India. In 2015-16, India consumed
September last year allowed entities and exceeded expectations, the oil 184.6 million tonnes of petroleum
without prior experience in the sector ministry said in a statement. products, 11.5 per cent more than what
to participate in the auctions in a Complexity as well as cost of the country consumed a year ago.
departure from the previous auctions operations are significantly high in
aimed at attracting capital. This has offshore fields compared to onshore Reviving E&P sector
enabled new players with aspirations fields, which explains the investor Following several years of stagnation,
to get into the hydrocarbon sector to preference for onshore fields in a low Indias government is attempting to
 March 2017
www.InfralinePlus.com
InDepth
revive its upstream exploration sector
under the newly formulated HELP
regime, whose important features a
single licence for conventional and
unconventional hydrocarbons, open
acreage licensing, a revenue sharing
model, and commercial and marketing
(pricing) freedom.
According to the government,
the policy is aimed at reducing
administrative costs, preventing
the recurrence of past disputes
and arbitration, and recognising
countrys limited capacity to regulate
and administer Production Sharing
Contracts (PSCs).
Significantly, India is trying to
revive exploration activities at a time
when global oil prices are below half
of their highs prior to crash in July
2014. Moreover, the government
is already focused on stepping up
renewable energy capacity, especially
52 in solar power.
The Oxford Institute for Energy
Studies (OIES) says that part of
the answer is that the two potential
energy sources (renewables and
hydrocarbons) are not seen as
being mutually exclusive by Indian
policymakers.
The underlying goal for Indian
energy policy is to meet its massive
predicted expansion in primary
energy demand as the country enters
a threshold level ($4,000$10,000)
of per capita income (beyond this
point, energy consumption begins to
grow exponentially, before eventually
plateauing), the private think tank
says. Another goal is to resolve
government concerns over a potential
rise in energy imports (and their
associated fiscal costs) concurrent
with rising demand.
The underlying goal for
Indian energy policy
is to meet its massive
predicted expansion
in primary energy
demand as the country
enters a threshold level
($4,000$10,000) of per
capita income (beyond
this point, energy
consumption begins
to grow exponentially,
before eventually
plateauing), the private
think tank says
The International Energy Agency
predicts that Indias primary energy
demand will more than double by
2040, accounting for a quarter of the
rise in global energy demand by the
same time. The shares of coal and oil
(the two largest commercial energy
sources) in primary energy demand
are predicted to continue to rise (to
49 and 24 per cent, respectively)
marginally from 2013 levels. Barring
a massive injection of investment
into upgrading Indias energy
infrastructure, supported by extensive
electricity reform, the share of
renewables (excluding hydro and bio-
energy) is predicted to rise from below
1 per cent in 2013 to 3 per cent within
primary energy demand by 2040
very low relative to other sources.
These shares are out of line
with current policy ambitions on
renewables, implying that India could
default to a continuing dependence
on fossil fuels. These long-term
forecasts show a continuing role
for hydrocarbons in Indias future
energymix.
Indian motorists have taken
advantage of the low international
oil prices to splurge on fuels, driving
up demand for petroleum products
and raising hope that India is on
its way to overtaking China in oil
consumption growth. In this context
OIES says that although some of the
upsurge can be attributed to lower
prices (and hence the increased
affordability of oil to consumers),
this has occurred despite the removal
of oil product subsidies and the
imposition of excise duties on oil
consumers, which implies that Indian
consumers had been paying prices
at the pump that were higher than
the international crude price. This
assessment has led analysts to wonder
if the explosive growth in Indias oil
demand is a long-term trend.
For suggestions email at feedback@infraline.com
 March 2017
www.InfralinePlus.com

StatisticsOil & Gas

Production and consumption of petroleum products (Million Metric Tonnes)
April 2015-March April 2015-January April 2016-January
Jan-16 January 2017 (P)
2016 2016 2017(p)
Products
Con- Con- Con- Con- Con-
Prod" Prod" Prod" Prod" Prod"
sump" sump" sump" sump" sump"

LPG 10.6 19.6 1 1.7 1 2 8.7 16 9.2 17.9

MS 35.3 21.8 3.1 1.8 3.1 1.8 29.1 18 30.2 19.8

NAPHTHA 17.9 13.3 1.6 1.2 1.7 1.1 14.7 11 16.3 11.1

ATF 11.8 6.3 1.2 0.5 1.2 0.6 9.4 5.2 11.4 5.8

SKO 7.5 6.8 0.7 0.6 0.5 0.4 6.3 5.7 5.1 4.6

HSD 98.6 74.6 8.7 6.3 8.5 5.8 81.5 61.5 85.1 63

LDO 0.4 0.4 0.04 0.03 0.09 0.03 0.3 0.3 0.5 0.4

LUBES 1 3.6 0.09 0.3 0.1 0.3 0.8 2.8 0.9 2.8

FO/LSHS 10.7 6.6 0.8 0.6 1.1 0.6 9.1 5.3 10.6 6.1

BITUMEN 5.2 5.9 0.5 0.6 0.5 0.5 4 4.5 4.2 4.6

OTHERS 32.2 25.6 2.9 2.7 2.9 2.5 26.6 20.6 28.5 25.4 53

ALL INDIA 231.2 184.7 20.6 16.2 20.6 15.5 190.4 150.9 202 161.4

Growth (%) 4.80% 11.60% 8.30% 16.50% -0.10% -4.50% 3.50% 10.40% 6.10% 7.00%

Natural gas at a glance (MMSCM)

January April-January
2015-
Details 2014-15
16(P) 2016 2017 2015-16 2016-17 2016-
2017 (P)
(Actual) (Target)* (Actual) (Target)* 17(P)

(a) Gross production 33,657 32,249 2,447 3,049 2,738 27,145 28,201 26,624

-ONGC 22,023 21,177 1,531 2,040 1,922 17,803 18,765 18,342

-Oil India Limited (OIL) 2,722 2,838 246 234 249 2,366 2,495 2,460

- Private / Joint Ventures (JVs) 8,912 8,235 671 774 567 6,976 6,942 5,821

(b) Net production 32,693 31,138 2,364 2,645 26,199 25,732

(c) LNG import 18,536 21,309 1,927 1,644 17,564 20,399

(d) Total consumption including internal

51,229 52,448 4,291 4,289 43,763 46,132
consumption (Net production+lmport) (b+c)

(e) Total consumption (in BCM) 51.23 52.45 4.29 4.29 43.76 46.13

(f) Import dependency based on

36.18 40.63 44.91 38.33 40.13 44.22
consumption {c/d*100}
 March 2017
www.InfralinePlus.com

StatisticsOil & Gas

Gas pipelines under execution / construction as on January 2017
Design Cap.
Network/ Region Entity Length (KM) Pipeline Size
(MMSCMD)

Kochi-Kottanad-Bengaluru-Mangalore GAIL (India) Ltd 1,063 16 24/18/12

Dabhol - Bengaluru (DBPL) GAIL (India) Ltd 315 16 36/30/24/18

Surat- Paradip GAIL (India) Ltd 2,112 74.81 36/24/18

Jagdishpur- Haldia-Bokaro Dhamra GAIL (India) Ltd 2,539 16 30/24/18/12/874

Mallavaram - Bhopal - Bhilwara GSPC India Transco Ltd 2,042 78.25 42/36/30/24/18/12

Mehsana - Bathinda GSPC India Gasnet Ltd 2,052 77.11 36/24/18/12

Bathinda - Jammu - Srinagar GSPC India Gasnet Ltd 725 42.42 24/18/16/12/8/6

Kakinada - Vizag - Srikakulam AP Gas Distribution Co. 391 90 24/18/8/4

Shahdol - Phulpur Reliance Gas Pipelines Ltd 312 3.5 16

Ennore - Nellore Gas Transmission India Pvt. Ltd 250 36 24/18

Ennore-Thiruvallur-Bengaluru- Indian Oil Corporation Limited 1,385 84.67 28/24/16/12 /10

Puducherry-Nagapattinam-Madurai-
Tuticorin

Jaigarh-Mangalore H-Energy Pvt. Ltd. 635 17 24

Total 13,821
54

Capital Expenditure of PSU oil companies

April-January
Company 2013-14 2014-15 2015-16 (P)
Target* 2017 (P)

ONGC Videsh Ltd (OVL) 35,357 7,172 6,783 14,843 16,960

ONGC Ltd 32,470 29,997 29,502 29,307 21,361

Oil India Ltd (OIL) 9,351 3,774 3,550 4,020 9,541

GAIL (India) Ltd 4,070 1,632 1,880 1,929 1,539

Indian Oil Corp. Ltd. (IOCL) 16,661 14,314 14,368 15,395 16,317

Hindustan Petroleum Corp. 2,642 2,670 5,459 6,862 4,116

Ltd (HPCL)

Bharat Petroleum Corp. Ltd 4,374 6,875 10,926 13,097 13,330

(BPCL)

Mangalore Refinery & 1,449 2,747 1,550 600 186

Petrochem Ltd (MRPL)

Chennai Petroleum Corp. Ltd 229 466 1,318 1,148 892

(CPCL)

Numaligarh Refinery Ltd 372 103 237 352 322

(NRL)

Balmer Lawrie Co. Ltd (BL) 120 80 38 50 40

TOTAL 107,095 69,830 75,611 87,603 84,603

* Targets are for full financial year 2016-17 and actual is for April-January, 2016. Budget Estimates are for both Plan and Non-Plan


NewsBriefs | Renewable International
More wind power projects to go under hammer next fiscal
Buoyed by drop in tariff to record low of
Rs 3.46 per unit in the first auction of wind
power, the government is mulling putting
on the block more such projects next fiscal.
Transparency which is the hallmark of the
Modi government, has brought down the
tariff of wind power. There will be more and
more such projects on the block, Power,
Coal, Mines and New & Renewable Energy
Low cost solar imports from China hurting Centres Make in India mission
Cheap Chinese imports and the prevailing tax
structure in India are making it increasingly
attractive for solar manufacturers to choose
imports over manufacturing the parts them-
selves, which could hurt the governments
Make in India mission.The basic components
that are used are panels and invertors,
Sanjeev Aggarwal, Managing Director & CEO,
Amplus Energy Solutions said. But the pan-
els make up about 50% of the cost of the en-
tire system. From the developers perspective,
when they have to quote low tariffs during the
bids for units, then what would make sense
for them, using cheaper Chinese imports,
or relatively costlier Indian made ones?
Manufacturing in India is sub-optimal, espe-
Suzlon to focus on wind-solar hybrid model
Suzlon Energy is keen to explore the hybrid
model combining the strengths of both wind
and solar. Tulsi Tanti, chairman and manag-
ing director, Suzlon Group, recently said,
One must understand that wind and solar
energy do not compete and rather comple-
ment each other. Solar in India is in addition
to wind and not a substitute. Both technolo-
gies are required for ensuring the energy
security of the country and to bring down
the levelised cost of energy (LCoE). Due to
complementary generation profile of wind
and solar, a combination of both the technol-
ogy is required even from optimum utilisa-
tion of grid infrastructure. Wind is already at
Minister Piyush Goyal said. Asked whether
he is expecting wind power tariff to fall
further in a more competitive environment,
he said: That is the beauty of tariff based
competitive bidding. We cannot predict the
tariff. It is the bidders who decide what price
should be quoted. I cannot interfere in that.
Goyal was of the view that the average wind
tariff was hovering above Rs 5 per unit earlier
due to feeding of rates and lack of transpar-
ency. We will be looking at more wind power
projects auction in the next financial year.
We will formalise it. We have not decided
yet on the quantum as it all depends upon
the states demand because the projects are
backed by them, New & Renewable Energy
Secretary Rajeev Kapoor said.
cially if customers demand lower and lower
tariffs, Aggarwal added. Solar tariffs recently
touched a historic low of Rs 2.97 per unit in a
reverse auction bid in Madhya Pradesh, which
works out to Rs3.3 per unit over the 25- year
power purchase agreement period.
grid-parity and with over 28 GW installa-
tions, it is a proven and mature technology.
Central government has set individual
targets for Wind and Solar. The target is the
same for both, wind and solar at 60 GW with
an additional 40 GW in solar coming from
March 2017
www.InfralinePlus.com
National
India to announce policy for
competitive domestic solar equipment
manufacturing
India is working on a plan for making
domestic manufacturing of solar power
generation equipment competitive vis--vis
other countries such as China. As part
of this strategy, the National Democratic
Alliance government plans to come out
with a policy to promote manufacturing of
the entire range of solar power generation
equipment in the country. This comes at
a time when the country has seen record
low-winning bids of Rs2.97 per kilowatt-
hour (kWh) at Rewa in Madhya Pradesh.
Currently, most of the solar power develop-
ers in India have been sourcing solar mod-
ules and equipment from countries such as
China as they are cheaper. The develop- 55
ment assumes significance given India,
worlds third-largest energy consumer af-
ter the US and China, plans to achieve 100
GW of solar power generation capacity by
2022 as part of its global climate change
commitments. Also, this comes in the
backdrop of the World Trade Organisations
(WTO) Appellate Body, the highest court
for resolving trade disputes, striking down
Indias local content requirements for solar
cells and modules last year.
rooftop installations. Wind employs over two
million individuals in the manufacturing and
projects side of the business. He said, India
has exported wind products and technolo-
gies to over 30 countries, so the sector itself
is truly Make in India not only for domestic
market but also for the export market.
You must appreciate that no other Asian
country has achieved this feat in wind and
the products are predominantly sold in the
developed markets, like the US and Europe.
There is a huge opportunity in wind-solar
hybrid solutions given the complementary
cycles of generation and the better utilisa-
tion of the installed infrastructure.
 March 2017
www.InfralinePlus.com
NewsBriefs | Renewable National
UKs CDC group plans renewable energy platform for India,South Asian countries
CDC Group Plc, the UK governments
development finance institution, is
planning to set up its own renewable
energy platform focussed on east India
and neighbouring countries. This dedicated
platform will focus on eastern states such
as Bihar, Odisha and Assam, and also set
Solar power capacity to be doubled to 40,000 MW in new projects
The government recently approved doubling
of capacity to 40,000 MW in solar parks and
Ultra Mega Solar Power Projects (UMSPP).
The Cabinet Committee on Economic Af-
fairs, chaired by the Prime Minister Narendra
56 Modi, today approved the enhancement of
capacity from 20,000 MW to 40,000 MW of
the Scheme for Development of Solar Parks
and Ultra Mega Solar Power Projects, an of-
ficial statement said. The enhanced capacity
would ensure setting up of at least 50 solar
parks each with a capacity of 500 MW and
above in various parts of the country.Smaller
parks in Himalayan and other hilly states,
where contiguous land may be difficult to
acquire in view of the difficult terrain, will
also be considered under the scheme. The
$1.8 billion of Coal Tax invested in renewable energy so far
Renewable energy has been the largest
beneficiary of the coal tax revenue
collected in India over the last seven years.
The Ministry of Finance in India recently
revealed that it has allocated Rs 12,430
crore ($1.8 billion) from the National
Clean Energy Fund to the Ministry of New
& Renewable Energy between 2010-11
and 2016-17. The National Clean Energy
Fund (NCEF) is replenished by coal cess
(tax) levied on every tonne of coal mined
or imported in to India. Coal cess was
introduced in 2010 at Rs 50 per tonne and
was subsequently increased a number of
times to the present level of Rs 400 per
Green certificate sales dip 30percent to
up clean energy projects in neighbouring
countries such as Bangladesh, Nepal
and Myanmar.We can confirm that in
the coming months, we are planning to
launch a new independent renewable
energy company, that will be 100% funded
by CDC, said a CDC spokesperson. The
company will be focused on developing
hundreds of MW of high-quality greenfield
generational capacity for underserved
Indian states and neighbouring countries,
including Bangladesh, Nepal and Myanmar.
The CDC Group has invested $1.3 billion
in India since 1987, including in IDFC
Alternatives-backed clean energy firm
Green Infra Ltd.
capacity of the solar park scheme has been
enhanced after considering the demand for
additional solar parks from the states. Solar
Parks and UMPPs will be set up by 2019-20
with central governments financial support
of Rs 8,100 crore.
tonne. Other areas where the coal cess
revenue has been utilized are for water
resources and river development, drinking
and water sanitation, and environment and
10.93 lakh in February
Sales of renewable energy certificates
(RECs) dropped 30 per cent to 10.93 lakh
this month against 15.68 lakh in January
this year. Power distribution companies
as well as open access and captive
consumers are under obligation to buy
RECs from renewable energy producers
under renewable purchase obligations
(RPOs) as mandated by central and state
regulatory commissions.RECs are aimed
at providing an easier avenue for various
entities, including power distribution
companies, to meet their green energy
obligations. Two power exchanges --
Indian Energy Exchange (IEX) and Power
Exchange India Ltd (PXIL) -- approved
by the Central Electricity Regulatory
Commission (CERC) hold auction of RECs
last Wednesday of every month. As per
available data, the sale volume of RECs
at the two exchanges in February was
10,93,779 as against 15,68,192 in Janu-
ary this year.
forests. These sectors have collectively
received Rs 5,039 crore ($750 million) over
the last seven years. The total revenue
from coal cess raised over the last seven
years is Rs 54,336 crore ($8 billion) but
only 40% of this has been transferred to the
National Clean Energy Fund. This is among
some of the reasons the government is
being criticized for misusing the coal cess
revenue.With the government having a
target of 100 gigawatts of operational solar
power capacity by March 2022, it is really
surprising as to why more revenue is not
being diverted toward rooftop solar power
systems as well as solar power parks.

NewsBriefs | Renewable International States
Karnataka has more solar power than it can use
Barely 2% of the ambitious five-year target
for roof-top solar power generation has
been achieved; prompting the State govern-
ment to tweak the rules to encourage
more participation.P. Ravikumar, Additional
Chief Secretary of the Energy Department
Solar power tariff in Tamil Nadu drops 40 per cent to Rs 4.4 per unit in a year
Solar power generation tariff was recently
fixed at Rs 4.40 per unit by Tangedco. With
this, the tariff came down from Rs 7.10
to Rs 4.40 within a year.The Tamil Nadu
Generation and Distribution Cooperation
(Tangedco) opened the bids for 300MW of
solar power to be set up during 2017-18 and
found a bid for 100MW at Rs 4.40 per unit
and the upset tariff fixed by the discom was
Rs 4.50 per unit.This is the lowest bid out
of 22 bids which we received for 300MW .
There are other bids at Rs 4.48 or higher
but they will have to reduce their bids and
match the lowest tariff of Rs 4.40, a senior
Tangedco official said. The Tamil Nadu
Electricity Regulatory Commission (TNERC)
permitted Tangedco to set up solar projects
Gujarat to develop hybrid project using solar, wind energy
At a time when the demand for solar
projects is dwindling, the Gujarat Energy Re-
search and Management Institute (GERMI)
is developing a hybrid technology using solar
and wind energy to generate power. The
institute is doing research on developing a
hybrid rooftop solar-wind tower amid rising
concerns over land utilisation and infrastruc-
ture costs. According to GERMI, this will not
only improve land utilisation, but also reduce
the cost of transmission infrastructure. The
institute is planning to conduct a trial run
for the project this year. We are working on
developing a hybrid technology that enables
both solar and wind power generation
recently said just 57MW of solar roof-top
energy is being produced in the State - a far
cry from the 2,400MW target for 2022.The
process is too technical for citizens. We need
simpler procedures and active participation
from the residents - and one way to achieve
this is by making the process online, he said.
However, when it comes to solar plants and
open access grid production, production
has far exceeded demand from companies
and industries who directly buy solar power.
This has led to closing of a few plants to
avoid redundancy. Access to these solar
grids necessitates negotiating a lot of red
tape, which is difficult for corporates. This
will be rectified, he said.
to the extent of only 500MW for the coming
year. Out of this Tangedco received bids for
300MW. In November last year, Tangedco
received 20 bids for only 116MW and with
the latest tenders; the discom has a total
of 416MW out of 500MW. Though there are
states where the solar tariff is much less
compared to Tamil Nadu, land price prevents
the solar tariff from falling further. In Tamil
Nadu, the land price is exorbitant. Most of
the capital cost is invested on the land.
at a single place. This will help in proper
utilisation of land which is currently not
being fully achieved, said T Harinarayana,
Director General, GERMI. The institute also
maintained that the new technology will
address several other issues including grid
connectivity and infrastructure-related chal-
March 2017
www.InfralinePlus.com
Pacts during Resurgent Rajasthan
fail to light up solar sector
Agreements signed in the solar sector dur-
ing the Resurgent Rajasthan are proving
to be a major disappointment for the state
government. Despite big promises, the
major firms have failed to back their com-
mitments.As per the figures available, nine
firms signed memorandum of understand-
ing (MoU) worth Rs 190,000 crore during
Resurgent Rajasthan. Most of the agree-
ments were for the investments in solar
parks while rest was for power generation.
However, despite making promises, some
firms are yet to turn up for fulfilling their
commitments. Along with them, the two 57
international firms expressed their inter-
est and signed MoUs of total Rs 36,000
crore. Officials claim that very little has
happened on these agreements. Though
there has been some advancement by
three firms and Rajasthan Renewable
Energy Corporation. Adani Enterprises Ltd,
Essel Infraprojects Ltd and IL&FS Energy
Development Company Ltd, have made
significant advancement and bought land
where development is underway.
lenges, besides cutting down costs. Under
the new technology, GERMI is looking to
develop a windmill that would be 5 metres
to 125 metres tall. While mills on small tow-
ers would be connected with solar rooftops,
the big ones would be attached to ground-
based solar generation. The institute has
recently also launched a mobile application
that will enable users to find viable locations
for setting up a wind power project across
India. By entering a location, the application
provides instant climatic and geographical
data of a particular place, thereby, suggest-
ing the viability of power generation using
wind energy.
 March 2017
www.InfralinePlus.com
NewsBriefs | Renewable International
Greensync launches world-first exchange to trade stored household solar power
The Australian energy market is set for a
major shake-up with the launch of a major
new government-backed initiative to create
an open marketplace for locally generated
and stored rooftop solar power to be
traded between households, businesses,
communities and network utilities.
Unveiled recently, the Decentralised Energy
Saudi invites bids for 700MW renewable energy projects
Saudi Arabia has invited pre-qualification bids
from leading global and regional construction
companies to develop 700MW renewable en-
ergy projects under the first phase of its Na-
tional Renewable Energy Programme, said a
58 report. The Phase One projects include a 300
MW solar facility at Sakaka in the kingdoms
northern Al Jouf province and a 400 MW
wind plant at Midyan in north western Tabuk
province. The Ministry of Energy, Industry
and Mineral Resources has set March 20 as
deadline for submitting the pre-qualification
bids. Those selected will be announced by
April 10 and qualified bidders will be able to
present their offers for the projects starting
on April 17 through July. The kingdom has
embarked on a massive $50 billion renew-
Chinese solar exports fall in 2016 with global anti-dumping measures
Chinese solar equipment exports fell 10 per-
cent between 2015 and 2016. The statistics
came from Zhang Sen, the secretary general
of the solar division within Chinas Chamber
of Commerce for Imports and Exports of
Machinery and Electronic Products.Zhang
attributed the drop to anti-dumping and
anti-subsidy policies from the US, the EU,
Australia, Canada, India, and Turkey, as well
as to Chinas One Belt, One Road initiative,
which was designed to encourage Chinese
investment in neighbouring economies. Ac-
cording to Caixin, the result of that initiative
was that solar power equipment such as
panels and batteries have been manu-
Exchange or deX is being hailed as a
revolutionary digital marketplace that will
change the way energy is produced, traded
and consumed at a local level in Australia.
The project, which is currently at the pilot
phase, is being funded by the Australian
Renewable Energy Agency (ARENA) and
led by energy tech startup GreenSync,
in collaboration with network operators
United Energy and Actew AGL, energy
management start-up Reposit Power, and
new energy retailer Mojo Power. It will,
for the first time in Australia, create an
open marketplace for the value of energy
generated by solar panels and stored in
battery packs to be traded on a mass scale.
able energy plan with focus on solar and wind
power to temper domestic oil use in meeting
growing energy demand. It is the first stage
to reach 3.45 gigawatts by 2020 and 9.5 GW
by the year 2023.Later rounds of projects
will include other forms of renewable energy
such as concentrated solar power (CSP) and
waste-to-energy schemes.
factured and exported by other countries
and thus dont count as exports as such.
Pakistan fares better than India,
Bangladesh in renewable energy
Pakistan has fared improved in terms
of adopting renewable appetite than in
indicators of entrance to appetite and
appetite efficiency, finds a report of World
Bank. The report titled, Regulatory
Indicators for Sustainable Energy
(RISE) showed that Pakistan did better
than regional peers such as Bangladesh
and India in adopting renewable and
green energy, scoring 77 points to land
a place in the green zone. India and
Bangladesh scored 67 and 57 points,
respectively. Position in the green zone
indicates strong legal and regulatory
frameworks for renewable energy
are in place. Additionally, basic policy
measures to support renewables are
in operational, with more technical or
costly measures far less common. With
27 indicators covering 111 countries and
representing 96% of the world population,
RISE provides a reference point to help
policymakers benchmark their sector
policy and regulatory framework. RISE
classifies countries according to whether
they score in the green zone (67-100),
yellow zone (34-66) or red zone (0-33).
The US and other countries have imposed
tariffs on Chinese solar products for years.
A large jump in tariffs came in 2012 when
the US Commerce Department decided
that Chinese manufacturers were wrongly
undercutting US solar manufacturers. That
year, many Chinese solar companies were
hit with punitive tariffs of around 30 percent
on equipment imported by the US. American
solar panel manufacturers complained that
Chinese manufacturers were taking advan-
tage of massive loans from Chinas state-run
banks and counting on demand from foreign
countries whose governments subsidized
solar panels.
 Magazine SubScription forM
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 March 2017
www.InfralinePlus.com
ExpertSpeak
Union Budget 2017-18: Positive
spinoffs for Renewable Energy
Dev Arora, CEO, 8minutes Future Energy Pvt Ltd shares his views
on Union Budget 2017-18 and what it means for the renewable
energy sector.
The 2017 Union Budget will give
a positive boost to the renewable
energy sector due to numerous
direct and indirect benefits. The
allocation of Rs396,000 crore for
infrastructure development will benefit
the industry in the short as well as
long term. Infrastructure shortfalls
over the decades have been one of
the biggest barriers for all sectors,
including power. Healthy usage of this
allocation and robust implementation
60
of beneficiary projects could give an
immense fillip to the economy.
Although the Budget has a heavy
rural tilt, this is understandable,
as rural regions need to keep pace
with urban areas where the 100
Smart Cities programme is already
underway. Increased allocation for
rural electrification has to be viewed
in this perspective. The Rs4,814 crore
outlay is a 25% hike over the previous
allocation, with 100% electrification
of villages planned by 01 May 2018.
Power Boost
Renewable energy, in particular solar
power, has received a major boost
with the announcement of another
20,000 MW solar park development
in phase II. Moreover, a series of
duty reductions have been extended
to components for fuel cell-based
power generation and biogas systems,
including wind energy equipment.
There are additional benefits for
the solar segment. While solar power
supply has already been put in place
at 300 railway stations in India, in
the medium term there are plans for
supplies at around 7,000 railway
stations.Work on 2,000 railway
stations will be implemented under
the 1,000 MW solar mission. With
renewable energy costs having fallen
steadily over the years, the sector has
been gaining more attention. Import
duty cuts on solar, wind and biogas
plants can accelerate Dev Arora, CEO, 8minutes Future Energy Pvt Ltd
this acceptance High
across the Similarly, a major problem for
investments
country. renewable energy companies
Having in railways, is storage prior to integrating
said that, roads and housing this power into the Grid.
one believes should stoke more To address this challenge,
some demand for allocations for research and
opportunities development could have been
power
to provide increased. But only Rs144 crore
additional has been allocated for R&D, which
incentives were is almost half the previous years
missed. For example, Affordable outlay. With lakhs of telecom towers
Housing has been provided support across India relying on highly-
by being accorded Industry status. In polluting diesel to ensure 100%
sync with this, the Finance Minister power backup for 24/7 operations, the
could well have extended direct Government could have incentivized
support for rooftop solar systems. By solar power usage for the telecom
2022, 15 GW of clean energy capacity sector and other segments. Not having
could have been created via residential done this, the problems in storing
rooftop projects. This would have clean energy and the challenge of
ensured a tremendous fillip for rooftop combating diesel pollution will
solar power generation. continue to remain an irritant.
This slip has been compounded by
the fact that financial support for the Bright Spots
Solar Energy Corporation of India has These misses apart, there are other
been reduced by 50% to Rs50 crore. bright spots. For instance, waste-to-
The Corporation being the nodal energy plants will come up at railway
entity for commissioning solar and stations. Such plants will hold the
wind projects, the allocation should dual benefits of addressing waste
have been hiked. disposal issues while simultaneously
 March 2017
www.InfralinePlus.com

contributing their mite in reducing the propel market sentiment, which is which will lead to further reduction
nations energy deficit. especially imperative since the quarter in module prices. If solar tariffs dip
The Amendment in the Arbitration after demonetisation saw growth below Rs4.00 per kWh, it would see
and Conciliation Act for swiftly momentum slowing in many sectors. the emergence of solar as the most
resolving PPP (public private Demonetisation will, however, bring cost-effective power source.
partnership) disputes is another smart in major benefits in the days ahead, Backed byproper implementation
move that can benefit the energy despite the temporary lag in demand it of UDAY (Ujjwal Discom Assurance
sector. Speedy resolution is important may have induced in various verticals. Yojana) in the days ahead, the
to ensure stalled power projects could Meanwhile, there are concerns in financial health of various power
then move faster towards becoming some quarters about the tepid power distribution companies could
operational. demand and the rising cases of grid then improve. In turn, this will
Lower tax (from 30% to 25%) on curtailment because these could hold make it feasible for them to
companies earning less than Rs50 negative implications for solar power honour their annual solar power
crore annual turnover and abolishing growth. But solar energy will continue purchaseobligations.
FIPB (Foreign Investment Promotion its upward trajectory due to the High investments in railways, roads
Board) are other steps that could incentives announced in the Budget, and housing infrastructure, among
others, should stoke more demand
for power. Additional liberalisation
There are concerns in some quarters about the
in the FDI policy will also benefit the
tepid power demand and the rising cases of grid renewable energy sector, considering
curtailment because these could hold negative the immense investments needed for
implications for solar power growth. But solar such projects. In essence, although
major reforms are missing, the series
energy will continue its upward trajectory due to of initiatives will go a long way in 61
the incentives announced in the Budget, which boosting the economy.
will lead to further reduction in module prices The views in the article of the author are personal.
For suggestions email at feedback@infraline.com
 March 2017
www.InfralinePlus.com

InDepth
Time to fast track evacuation
infra for RE projects

62

Variability of RE sources has led to concerns regarding the reliability of an electric grid
Integration of large amount of fluctuating RE in the grid a serious technical challenge

By Team InfralinePlus

With solar and wind tariffs at record
low levels in India with recent auc-
tions, this is a perfect opportunity for
the policymakers to put in place suit-
able policy and regulatory framework
to allow the country to ramp up renew-
able energy capacity and fight climate
change simultaneously. It is expected
that by 2020, annual solar power ca-
pacity additions and investments could
surpass those in coal power projects
and with 9 GW of capacity expected to
come online by FY 17-18, the priority
is to shift the goal post from capac-
ity addition to mainstreaming such
planned capacity addition.
The integration of this planned
RE generation capacity with the
national grid requires expansion
and modernization of the intra- and
interstate distribution as well as
transmission grid. This is mainly due
to the geographical distance between
centers of generation and consumption
as well as due to the intermittent
availability of RE sources and the
necessary means for grid stabilization.
A bigger problem is how to handle a
higher share of solar or wind in terms
of its impact on managing the grid!

Recently, this problem has
aggravated prompting strong reaction
from all stakeholders, particularly the
power producers who have been asked
to back down their projects in wake of
non-availability of the grid among a
host of other reasons. Ministry of New
and Renewable Energy (MNRE) is
said to be contemplating a fixed-cost
component to the tariff for electricity
generated from renewable energy
sources such as solar or wind. The idea
is to prevent distribution companies
(DISCOMs) shying away from
procuring electricity generated by such
projects, as they will have to pay the
fixed tariff component even if they do
not buy the electricity contracted for.
Conceptually there is no deemed
generation clause in the Power
Purchase Agreement (PPA) right now.
As per the PPA clauses, renewable
power projects cannot beasked to back
down over thermal power generation.
But, despite the legislation, DISCOMs
of southern states such as Telangana
and Tamil Nadu with higher renewable
energy penetration have been ramping
down energy generated from clean
energy projects.
Backing down of RE projects
The variability of RE sources has led to
concerns regarding the reliability of an
electric grid that derives a large frac-
tion of its energy from these sources as
well as the cost of reliably integrating
large amounts of variable generation
into the electric grid.
A back-down can happen due
to availability of cheaper power
elsewhere, lack of transmission
infrastructure or lack of demand. Grids
usually reserve the right to unplug
power because of the variations in
Conceptually there is
no deemed generation
clause in the Power
Purchase Agreement
(PPA) right now. As
per the PPA clauses,
renewable power proj-
ects cannot beasked to
back down over thermal
power generation. But,
despite the legislation,
DISCOMs of southern
states such as Telanga-
na and Tamil Nadu with
higher renewable en-
ergy penetration have
been ramping down
energy generated from
clean energy projects
March 2017
www.InfralinePlus.com
the amount of power generated. This
practice, called power back-down,
leads to heavy losses for RE developers
(for e.g. In the high wind season, the
wind produces energy which at times
is more than the requirement of the
grid, and therefore the wind energy
generators are asked by the state
load dispatch centers to back down
generation, which goes against the
must run status accorded to renewable
energy as per central and state
regulations in India.)
In August last year, MNRE secretary
highlighted the concern of the power
producers to the Central Electricity
Regulatory Commission (CERC)
by stating that matter must be taken
up with Forum of Regulators (FoR).
It was stated that since solar power
projects have been mandated with must
run status (since there is no fuel cost
involved) and if any backing down
is to be done, thermal power projects 63
must be asked to be back down so that
some fuel is saved. But thats easier
said than done. In actual practice when
solar power projects asked to back
down they do not even get the benefit
of two-part tariff and no compensation
is provided for the loss of energy
suffered. With competitive bidding
regime in full swing at the moment,
this can be unsettling for the investors/
developers and that too at such a stage
when India is being touted as one of
the leaders in clean energy generation.
Forecasting & Scheduling
Issues
The availability of solar and wind ener-
gy is largely determined by the weather
conditions, and therefore characterized
by strong variability. As a result, power
generation from these sources cannot
easily be matched to the electricity
demand, such as power generated from
conventional plants (coal-fired unit
and gas stations). Integration of large
amount of fluctuating RE in the grid is
a serious technical challenge for grid
managers to ensure smooth operations
 March 2017
www.InfralinePlus.com

InDepth

of the Indian grid the fifth largest in

the world. To compound matters, RE
generation forecasting in the country is
in its early days.
As there are large solar & wind
power capacity additions envisaged
to come on track in several states in
2016; however, the lack of assurance
on the evacuation infrastructure and
the grid availability can affect the
credit profile of the upcoming projects.
Technical and commercial challenges
are emerging for the DISCOMs
because of changes in the energy mix.
Efforts to address these challenges are
trailing behind what would be required
to mainstream the envisaged pace of
capacity addition. Moreover, deviation
settlement in situations where infirm
power is scheduled in 15-minute time
blocks as firm power in reference to
the CERC order of February 2014. The
person/consumer buying the power
which caused deviation will have to
64
pay penalty charges on deviating from
schedule and preferential tariff. The
person/consumer procuring solar/
wind power as per the provision of
power purchase agreement (PPA) with
the state DISCOM or a private player
shall pay the UI Charges (Unscheduled
Interchange) as per the Deviation
Settlement Mechanism (DSM) on
deviating from the actual schedule in
addition to the preferential tariff on that
quantum of power procured from the
distribution licensee.
Green Energy Corridors:
Corridor of Uncertainty?
Another challenge is whether Indias
electricity grid has the capacity to take
intermittent power surges that will oc-
cur because of renewable energy. The
grid should also have the capacity to
carry power from regions where power
is generated to the regions where power
is needed.
In 2012, the Indian government said
it would build a green energy corridor
to augment existing transmission
infrastructure both within and across
transmission lines and an associated
In 2012, the Indian 765/400kV substation and associated
government said it equipment, and (ii) four high voltage
direct current (HVDC) terminals (two
would build a green at 800 kV and two at 320 kV) as part
energy corridor to of increased inter-regional connectivity
augment existing between Indias western and southern
transmission regional power grids.]
infrastructure both More recently,it has been announced
within and across that for the funding of green energy
corridors in both intra and inter State
states. The INR 38,000 transmission projects, under the
crore green energy framework of cooperation between the
corridor was expected Indian and the German governments,
to be on track and KfW Germany will provide soft loan
to be completed by to the tune of Euro 1 billion. Intra
2019 and transmission State transmission schemes under
Green Energy Corridors (GEC) are
infrastructure will be to be funded as 20% equity of the
built within states as state government, 40% grant from
renewable energy National Clean Energy Fund (NCEF)
capacity grows and 40% soft loan, whereas, the inter
State transmission schemes are to be
states. The INR 38,000 crore green funded as 30% equity by the Central
energy corridor wasexpected to be on Transmission Utility, POWERGRID
track and to be completed by 2019 and 70% as soft loan.
and transmission infrastructure will In order to integrate solar parks
be built within states as renewable with the grid, Ministry of Power
energy capacity grows. [Green Energy assigned POWERGRID to implement
Corridor is an initiative to facilitate the Inter-State transmission scheme for
transfer of power from the renewable evacuation from 8 solar parks (7200
energy (RE) rich areas to other parts MW). Transmission scheme for 6
of the country, consisting of 765 solar parks (5750 MW) is already
kilovolt (kV) and 400 kV high voltage under implementation [Ananthapuram
 March 2017
www.InfralinePlus.com

and Inter State, along with setting up of

Inter-state transmission projects Renewable Energy Management Centre
Loan agreement for financial assistance of Euro 500 million from KfW, (REMC) and the control infrastructure
Germany has been signed by POWERGRID and the projects are likely to be is being implemented. However, it
completed by 2018. remains to be seen when the projects
will get kick started as 4 years have
For implementation of transmission schemes under other projects, POW- already passed since the announcement
ERGRID has taken loan assistance from Asian Development Bank (ADB). of the scheme.
Intra-state transmission projects
Conclusion
States of Tamil Nadu, Rajasthan, Himachal Pradesh, Andhra Pradesh, Inordinate delays in signing of power
Gujarat and Madhya Pradesh have signed the loan agreements with KfW, purchase agreements, timely payments
Germany for financial assistance of Euro 448 million. and DISCOMsshying away from
procuring electricity generated from
(1500MW), Pavagada (2000 MW), Further, to evacuate power from wind energy projects as some of the
Rewa (750 MW), Bhadla-III (500 the renewable energy projects in issues plaguing the renewable energy
MW), Bhadla-IV (250 MW), Essel renewable rich states, transmission sector. However, with UDAY scheme
Saurya (750 MW)]. system strengthening, both Intra State envisaging a financial turnaround of the
DISCOMs, lot of those are expected to
Inordinate delays in signing of power purchase be resolved in the longer run. However,
mainstreaming intermittent energy at
agreements, timely payments and DISCOMs the level planned is the most important
shying away from procuring electricity generated aspect in the short run. It is manda-
from wind energy projects as some of the issues tory that government speeds up the 65
execution of the green energy corridor
plaguing the renewable energy sector. However, and encourage massive investments in
with UDAY scheme envisaging a financial upgradation and creation of new trans-
turnaround of the DISCOMs, lot of those are mission and grid infrastructure.
expected to be resolved in the longer run
For suggestions email at feedback@infraline.com
 March 2017
www.InfralinePlus.com

StatisticsRenewableEnergy
Year Wise Renewable Energy Cumulative Capacity in India (in MW) as on 31.12.2016
FY FY FY FY FY FY FY FY FY FY FY FY FY
Sector
16-17 15-16 14-15 13-14 12-13 11-12 10-11 09-10 08-09 07-08 06-07 05-06 04-05
Wind
28700.44 26743.61 23444 21136.3 19051.45 17352.66 14156 11807 10242.5 8757 7093.99 5340.6 3595
Power
Solar
9012.66 6762.85 3743.97 2647 1686.44 941.28 37.66 10.28 2.12 2.12 2.93 2.74 2.8
Power
Small
Hydro 4333.85 4273.9 4055.36 3803.7 3632.25 3395.31 3042.63 2735.42 2429.67 2180 1975.6 1826.43 1705.63
Power
Biomass 1365.2 1264.8 1150.1 997.1 865 703.03 606 524.8 302.53
7856.94 4831.33 4418.35 912.53
Cogen 2648.4 2337.43 1985.23 1667.53 1334.03 1048.73 800 615.83 447
Waste to
114.08 115.8 115.08 106.6 96.08 89.68 72.46 64.96 58.91 55.25 43.45 45.78 46.5
Power
Total 50018 42727.5 35776.8 31707.2 28068.5 24914.26 19973.38 16816.69 14484.96 12400.37 10256.6 8128.08 6099.46

Indian Energy Exchange

Cleared Cleared No. Of
Year | Month Type Buy Bids (REC) Sell Bids (REC)
Volume (REC) Price(Rs/REC) Participants
Solar 45,613 3,609,894 45,613 3,500 584
February' 2017
Non-Solar 815,357 9,341,462 815,357 1,500 950

PXIL
66
MCV (No. of
Buy Bid (No. of Sell Bid (No. of MCP (Rs. /
Year | Month Type certificate)
certificates) certificates) Certificate)
Qty (MWH)
Solar 3,931 1,132,512 3,500 3,931
February' 2017
Non-Solar 228,878 3,686,689 1,500 228,878

Status of Funds received, Claims processed and Released under GBI Schem as on
31.01.2017
Status of Funds received, Claims processed and Releasedunder WIND GBI
Schemes(Rs in Crores)
Receipt of Funds Claims Processed and
Amount Released
Scheme from MNRE Pending for Release
Amount Date Amount Date Amount
GBI I 1605.34 31/01/2017 40.51 31/01/2017 754.62
GBI II 31/01/2017 287.13 31/01/2017 846.96
Demo 30.29 31/01/2017 0.89 31/01/2017 28.64

Status of Funds received, Claims processed and Releasedunder Solar GBI

Schemes(Rs in Crores)
Receipt of Funds Claims Processed and
Amount Released
Scheme from MNRE Pending for Release
Amount Date Amount Date Amount
Demo Solar GBI 150.97 31/01/2017 12.21 31/01/2017 149.44
RPSSGP (Solar GBI) 646.55 31/01/2017 3.90 31/01/2017 622.47
 March 2017
www.InfralinePlus.com

Grid Connected Solar Power Capacity as on 31.01.2017

Sr. Total cumulative capacity Capacity commissioned in Total cumulative capacity

State/UT
No. till 31-03-16 (MW) 2016-17 till 31-01-17 (MW) till 31-01-17 (MW)
1 Tamil Nadu 1061.82 529.15 1590.97
2 Rajasthan 1269.93 47.71 1317.64
3 Gujarat 1119.17 40.58 1159.76
4 Telangana 527.84 545.57 1073.41
5 Andhra Pradesh 572.97 406.68 979.65
6 Madhya Pradesh 776.37 73.98 850.35
7 Punjab 405.06 187.29 592.35
8 Maharashtra 385.76 44.7 430.46
9 Karnataka 145.46 196.46 341.93
10 Uttar Pradesh 143.5 125.76 269.26
11 Chhattisgarh 93.58 41.61 135.19
12 Bihar 5.1 90.81 95.91
13 Odisha 66.92 10.72 77.64
14 Haryana 15.39 57.88 73.27
15 Uttarakhand 41.15 3.95 45.1
16 Delhi 14.28 24.5 38.78
67
17 West Bengal 7.77 15.3 23.07
18 Jharkhand 16.19 1.33 17.51
19 Chandigarh 6.81 9.4 16.2
20 Kerala 13.05 2.81 15.86
21 Assam 0 11.18 11.18
22 Andaman & Nicobar 5.1 0.3 5.4
23 Tripura 5 0.02 5.02
24 Daman & Diu 4 0 4
25 J&K 1 0 1
26 Lakshadweep 0.75 0 0.75
27 Dadar &Nagar 0 0.6 0.6
28 Nagaland 0 0.5 0.5
29 Himachal Pradesh 0.2 0.13 0.33
30 Arunachal Pradesh 0.27 0 0.27
31 Mizoram 0.1 0 0.1
32 Goa 0 0.05 0.05
33 Puducherry 0.03 0 0.03
34 Manipur 0 0.01 0.01
35 Meghlya 0 0.01 0.01
36 Sikkim 0 0.01 0.01
37 Other/MoR/PSU 58.31 3.39 61.7
TOTAL 6762.85 2472.39 9235.24
 March 2017
www.InfralinePlus.com

OffBeat
Financing woes hurting hybrid annuity
model-based highway projects
Public sector lenders are reluctant to finance hybrid annuity model-based
highway projects
Out of the 28 HAM projects awarded this fiscal, about four-five could get scrapped

68

by Team InfralinePlus

The Narendra Modi government
in January 2016 introduced hybrid
annuity model (HAM) to derisk
highway projects for private
developers and attract enhanced
investment. But public sector lenders
are apparently not on board. After
burning their fingers, private banks
have been keeping away from
infrastructure financing. With public
sector lenders too turning reluctant
now, the sector is likely to feel the
pinch in coming days, said analysts.
Industry sources said public
sector lenders are reluctant to
finance hybrid annuity model-based
highway projects because they fear
losing money if projects are left
incomplete. Consequently, developers
are struggling to tie up finances,
leaving uncertainty hanging over
the future of projects worth over Rs
25,000 crore awarded by National
Highways Authority of India (NHAI).
Developers had bid aggressively to get
HAM projects.
Hybrid annuity is an innovation that
builds on the more widely used build-
operate-transfer (BOT) model. In the
BOT annuity mode, the government
bears the commercial risk of toll
collection. The government pays the
private operator the project cost along

with interest in the form of a half-
yearly annuity. Out of total project cost,
the balance 40 per cent is invested by
the government during the construction
period in equal installments linked to
milestones. The developer also gets
biannual O&M payments over 15 years
against the initial investment of 60 per
cent made by it
In addition, up to 10 per cent of the
project cost has to be paid by NHAI
as a mobilisation advance following
the example in sectors like power
and oil and gas. The Toll collection
responsibility on the stretches
developed under HAM lies with the
authority. The authority pays the
developer annuity payments over 15
years along with interest thereon as
30 bi-annual annuity payments. The
developer will also receive bi-annual
O&M payments. All project payments
are inflation indexed.
Out of the 28 HAM projects
awarded this fiscal, about four-five
could get scrapped due to inability
of the developer to invest equity or
bring in debt, said analysts. Large
banks such as State Bank of India
(SBI) and Axis Bank are selectively
funding HAM projects even as many
companies continue to bid for and win
such projects, they added. Under the
terms of agreement, if the road project
March 2017
www.InfralinePlus.com
is terminated midway, the lenders will Although this new hybrid model
not be entitled to receive the money lowers the responsibility of contractor
they have lent. to 60 per cent of project cost to raise
The government has set target to the money, the question of sufficient
award 25,000 km of road projects promoter participation by contractors
in FY17 under the ministry of road with 25 to 30 per cent equity
transport and highways and National component within 60 per cent project
Highway Authority of India (NHAI), cost will be expected by banks, which
compared to 10,000km achieved in would mean arranging 15 to 18 per
FY16. Against that, it had awarded cent participation of overall project
projects worth 5,688km only till cost by promoters before the balance
November end. amount of 40 to 45 per cent are granted
by public sector banks or financial
Out of the 28 projects institutions, says Ajit V Patwardhan, an
awarded by NHAI infrastructure expert.
under HAM as of Out of the 28 projects awarded by
NHAI under HAM as of September,
December, only Delhi-
only Delhi-Meerut expressway
Meerut expressway package-I had received financial
package-I had closure (although later a few more
received financial projects have tied up finances but their
closure (although later number is still very low). The 8.72 km
a few more projects Delhi-Meerut Expressway Package-I
have tied up finances has been awarded to Welspun Enter- 69
but their number is prises for a bid value of Rs.735 crore.
We have received financial closure of
still very low). The
the Delhi-Meerut package I within a
8.72 km Delhi-Meerut short time frame. Led by a consortium
Expressway Package-I of Punjab National Bank, State Bank
has been awarded to of Hyderabad and the Union Bank
Welspun Enterprises of India, we have received a loan of
for a bid value of Rs.400 crore, out of which Rs.200
Rs.735 crore crore came from the Punjab National
Bank and the other two will contribute
Rs.100 crore each, said Sandeep Garg,
managing director of Welspun said.
In the current financial year, the
target for awarding contracts for
national highway projects is 25,000km
compared with 10,000km in 2015-16.
Of these, 15,000km will be awarded by
the NHAI and the balance 10,000km
by the ministry of road transport and
highways, and National Highways
and Infrastructure Development
Corporation Ltd (NHIDCL).
Experts feel that Delhi-Meerut
expressways financial closure will
encourage more banks to come forward
and fund hybrid annuity projects. This
financial closure was overdue for some
time but it was more because banks
 March 2017
www.InfralinePlus.com

OffBeat

were asking for certain clarifications

and those clarifications have been
provided to them now. In terms of
overall BOT (build-operate-transfer)
scenario, the hybrid annuity structure
is the least risky proposition for the
banking sector, said Kushal Singh,
director at Deloitte Touche.
It is well known that the balance
sheets of most of the leading
Infrastructure groups are stressed and
overleveraged. They may not have
the spare capacity to bring in equity
participation in new projects, nor will
the banks grant further project funding
unless the balance sheets of these
groups are deleveraged, by the existing
projects or selling the stressed project
assets. This will take some time (say 2
to 3 years), Patwardhan said.
He added, This stress of new equity
on Infrastructure groups can be eased,
if banks and financial institutions agree
70 to offer full borrowing of 60 per cent
of the project costs, since annuity pay-
ments are fully secured by government
commitment in this HAM model (this
really means banks giving loans to
infrastructure groups due to government
guarantee of annuity payment).
Other concerns
The other concerns expressed by
financial experts is about pricing of
these projects under HAM. Since
Contractors taking up such project
will have to line up promoters equity
and loan component of this project,
keeping in mind project execution
and long term O & M risks, apart
from making profit on the promoters
equity, these projects may be priced
up at least 25 to 30 per cent more than
the price obtainable under full EPC
model. This will result into higher
annuity payouts and matching higher
values of toll which government
will have to charge to recover high
annuity payouts, which is committed
to promoters.
High toll collection may not be
easy to recover for any democratically
High toll collection may
not be easy to recover
for any democratically
elected government.
Recently, Maharashtra
had to close down many
small and medium
sized toll collection
plazas due to political
pressure and they
are now struggling to
compensate the private
concessionaire to
honour the contractual
commitment made to
those Special Purpose
Vehicles (SPVs) created
by private contractors
elected government. Recently,
Maharashtra had to close down many
small and medium sized toll collection
plazas due to political pressure and
they are now struggling to compensate
the private concessionaire to honour
the contractual commitment made to
those Special Purpose Vehicles (SPVs)
created by private contractors., said
industry experts
The O & M payouts provided in
this model are well identified in new
model concession agreement (MCA)
but the rates provided are modest.
These amounts might be sufficient
for maintaining really high quality
road over long period of time. But the
problems of quality of construction
are complicated due to misuse by road
users, pointed out analysts.
The private participation increased
in road project picked up after 2005
when several national highway
projects were awarded under National
Highways Development Project
(NHDP) on a BOT basis. However,
post 2012-13, reasons like economic
slowdown, aggressive bidding by the
developers and drying up of funding
from financial institutions made the
public-private partnership (PPP) format
unviable and unattractive. That was
the reason the government introduced
hybrid annuity model to unclog the
road sector.
Road projects in India have always
been awarded in one of the three
formatsBOT annuity, BOT toll and
EPC. In BOT annuity, a developer
builds a highway, operates it for
a specified duration and transfers
it to the government, which pays
the developer annuity over the
concession period. Under BOT toll, a
concessionaire generates revenue from
the toll levied on vehicles using a road.

In EPC, the developer builds with
government money.
Emergence of small players
Execution of highway projects under
NHAI picked up speed in 2015-16, and
the momentum has continued through
2016-17. The execution is up 20 per
cent this year in terms of length up to
December 2016.
The erstwhile Planning Commission
developed the first version of the
Model Concession Agreement (MCA)
for highways in 2006. This was done
considering the need to standardise
documents and processes for the PPP
framework in the country for ensuring
uniformity, transparency and quality
in development of large-scale infra-
structure projects including highways.
Subsequently, the Planning Com-
mission had developed various other
versions of the MCA for highways
considering the different PPP modes
like BOT (Toll), BOT (Annuity) and
OMT to meet the changing needs of
the sector. Balance sheets of leading
developers like Larsen and Toubro
Ltd, IL&FS Transportation Networks
Ltd (ITNL), GVK Power and Infra-
structure Ltd, GMR Infrastructure Ltd,
IVRCL Ltd, Gammon Infrastructure
Projects Ltd and Hindustan Con-
struction Company are stressed and
they are no longer actively partici-
pating in road construction bids. This
has created space for small players in
the road sector.
Analysts said HAM projects have
led to the emergence of a number of
The erstwhile Planning
Commission developed
the first version of the
Model Concession
Agreement (MCA)
for highways in
2006. This was done
considering the need to
standardise documents
and processes for
the PPP framework
in the country for
ensuring uniformity,
transparency and
quality in development
of largescale
infrastructure projects
including highways
March 2017
www.InfralinePlus.com
small companies who have added to the
competitive pressure in the sector. The
increase in awards of projects under
the government-funded engineering,
procurement, and construction (EPC)
model too has driven up bidding
aggression, said analysts. Some of
these projects might not be viable. That
is the reason banks are unwilling to
finance these projects, they added.
Meanwhile, India Ratings and
Research has maintained a negative
outlook on toll roads for FY18, on the
expectation of sluggish traffic growth
compounded by a subdued Wholesale
Price Index. Ind-Ras analysis reveals
the vulnerability of projects, especially
the ones with a short operational track
record (less than three years), to a
200bp reduction in base case growth
rates, which would lead to impairment
in debt serviceability. The pace of
financial closures under the hybrid
annuity model is marred, due to low 71
termination payments and less equity
contributions; consequently, lenders
exercise caution before lending,
the credit rating agency has said in a
recent update.
For suggestions email at feedback@infraline.com
 March 2017
www.InfralinePlus.com
Reports & Studies
Smart power grid technology may be prone to hacking
Smart grid technologysuch as manage-
ment systems in power plantsmay be
prone to hacking, say scientists who delved
into nightmare scenarios where hackers
exploit security weaknesses and execute a
disruptive plan of cyberattacks. Reliability
measures of electrical grid have risen to a
new norm as it involves physical security
GST could increase solar tariffs by nearly 10%
Indias emerging solar sector could see
tariffs rise by nearly 10% if current tax
72 exemptions were curtailed in the roll-out
of the Goods and Services Tax (GST), said a
study by the Council on Energy, Environment
and Water (CEEW), a Delhi-based climate
think tank. It could also boost domestic
manufacturing and jobs. The study comes
just days after India witnessed record lows
in solar power tariff, which fell to below Rs3
per kilowatt-hour (KwH). According to the
study, GST could possibly increase capital
cost of a solar project by Rs4.5 million per
megawatt if current tax exemptions were
curtailed, setting back the sector in terms of
Oil and coal demand could peak by 2020
A drop in the cost of solar and electric
vehicle technology could see demand for
coal and oil peaking by 2020, according to
a new report from the Grantham Institute
at Imperial College London and the
Carbon Tracker Initiative. The analysis
cautions that large energy companies
adopting a business as usual attitude are
underestimating the advances of low carbon
technologies. The report proposes a new
starting point scenario that takes in cost
reduction projections for electric vehicles
and solar photovoltaic technology, as well
as emissions commitments made under
and cybersecurity. Threats to either can
trigger instability, leading to blackouts and
economic losses. Most of us take turning
the lights on for granted. In reality, the
energy we draw from the electrical grid to
brighten homes, freeze food and watch TV is
part of a complicated and widespread sys-
tem, researchers said. Understanding that
systems vulnerabilities and reliability is a
crucial step towards improving its security,
they said. The fundamental problem is a gap
between physical equipment and intan-
gible software, said Chee-Wooi Ten, from
Michigan Technological University in the US.
Advances in smart grid technologysuch
as smart meters in homes, management
systems for distributed energy resources
like wind and solar production along with
instrumentation systems in power plants,
cost competitiveness by about 18 months.
The study said that, multiple GST rates
and their uncertain applicability to different
equipments and services for solar projects
is a growing concern from solar project
developers and investors. GST could also
the historic Paris Climate Agreement. The
research sees, among other things: solar
photovoltaic technology providing 29 percent
of global power generation by 2050, phasing
out coal in the process; electric vehicles
making up more than two thirds of the road
substations or control centrescreate
improvements in entry points for hackers.
Ten years ago, cybersecurity simply didnt
existit wasnt talked about and it wasnt a
problem, Ten said. Now with events like in
Ukraine last year and malware like Stuxnet,
where hackers can plan for a cyberat-
tack that can cause larger power outages,
people are starting to grasp the severity of
the problem, he said. Ten points out that
hackers target specific parts of the control
network of power infrastructure and they
focus on the mechanisms that control it. Au-
tomated systems control much of the grid
from generation to transmission to use. The
convenience and cost reduction of automa-
tion streamlines the process, but without
solid security measures, it also makes the
systems vulnerable.
impact the pace of the second phase of solar
park development for additional 20,000 MW
capacity announced in the recent budget, it
said. As per the study, the key contributors
to the increase in solar tariffs, as a result
of GST, would include increase in opera-
tions and maintenance cost, panel costs,
and financing costs. The increase in solar
tariffs would also vary across states; higher
for states such as Rajasthan where VAT
and Entry Tax exemptions are currently
provided for solar equipment, as opposed to
Andhra Pradesh and Gujarat where VAT and
Entry Tax exemptions are not provided, it
explained.
transport market by 2050; and demand for
coal and oil peaking by 2020. Furthermore,
growth in electric vehicles could result in the
displacement of around two million barrels
of oil per day by 2025 and 25 million barrels
per day by 2050. Electric vehicles and solar
power are game-changers that the fossil
fuel industry consistently underestimates,
Luke Sussams, senior researcher at Carbon
Tracker, said. Further innovation could make
our scenarios look conservative in five years
time, in which case the demand misread by
companies will have been amplified even
more, Sussams added.

People in News
MK Goel appointed as JERC chairperson
Tata Power appoints N Chandrasekaran as Chairman
Tata Power Company has appointed N Chan-
drasekaran as the chairman and additional
director of the company following Tata Sons
announcement declaring him the chairman
designate. Prior to this, on January 4, Tata
Power had appointed S Padmanabhan as
the chairman of the company after Cyrus
Mistry resigned from the post following his
ouster from Tata Sons. I am honoured to
be appointed as the chairman of the board
of this historic organisation which has been
serving the nation for the past 100 years with
dedication. It will be my endeavor to help
the management team fulfil Tata Powers
commitment to light up the lives of our future
generations, said Chandrasekaran. He is cur-
rently chief executive officer and managing
director of Tata Consultancy Services, where
he joined in 1987. In December, Tata Power
Adani appoints Jennifer Purdie as CEO for renewable energy unit in Australia
Indian energy giant Adani Group has
appointed Jennifer Purdie as the chief
executive officer (CEO) for its renewable
energy business unit in Australia in a
bid to drive its plans to become the
largest renewable energy player in the
country. Adani Australia country-head
and CEO, Jeyakumar Janakaraj, said the
appointment of Purdie is a significant step
for the company in Australia. Adanis aim
is to become the largest renewable energy
industry participant in Australia with a total
capacity of 1,500MW in the near term,
Janakaraj said. To help us realize this
ambition, Adani has established the Adani
Australia Renewable business unit, and
Former chairman of Power Finance Corp
MK Goel has been appointed as chair-
person of Joint Electricity Regulatory
Commission (JERC) for Goa and Union
Territories. Goel, an electrical engineer,
has over 36 years of varied power sec-
tor experience. Power Minister Piyush
Goyal administered the oath of office and
secrecy to Goel in presence of senior of-
ficials of the Ministry of Power and PFC.
Before joining JERC, Goel was the CMD
of Power Finance Corporation, the largest
NBFC in the country.
brought back S Padmanabhan, who has been
with the group for 34 years and was execu-
tive director of operations at the company
until 2014, as an additional director on the
board. He is also the executive chairman of
Tata Business Excellence Group and has also
been recently appointed as the head of group
for human resources for Tata Sons.
appointed Purdie as its CEO, he said. Purdie,
who will report directly to Janakaraj,
has extensive global experience in the
resources and engineering sector, and is
recognised as one of Australias leading
engineers. Purdie has worked for rail freight
group Aurizon (executive vice president,
enterprise services), Rio Tinto (chief advisor
March 2017
www.InfralinePlus.com
Sandeep Jajodia appointed
Assocham President
Monnet Ispat & Energy Ltd. CMD Sand-
eep Jajodia has been appointed the new
President of industry chamber Assocham.
Balkrishan Goenka, Chairman, Welspun
Group and Kiran Kumar Grandhi, vice-
chairman of GMR Infrastructure Ltd, have
taken over as senior vice-president and
vice-president respectively. Assocham
will continue to play a transformational
role both nationally and globally and the 73
chamber will empower Indian enter-
prises by focusing on the most critical
and relevant issues in a highly impact-
oriented manner, said Jajodia who took
over from Sunil Kanoria, vice-chairman,
Srei Infrastructure Finance Limited. It
was a memorable experience and a great
learning curve to head the organisation
representing four lakh members across
the country, said the outgoing president.
projects; global practice leader, technology
delivery, innovation; diamonds and minerals
executive), and has Board experience with
a number of companies and institutions
including the Solar Flagships Panel which
advised the Commonwealth Government
on solar generation. Her most recent
position was executive director of Nexion,
a technology solutions provider for the
mining industry. Stating her new role
presented an exciting challenge, Purdie
said, Renewable enery presents great
opportunities for Australia, particularly
for remote communities but also as a key
component of balanced energy supply
solutions across the nation.
 March 2017
www.InfralinePlus.com
People in News
Sudhir Kumar takes charge as ED of IOCs Gujarat refinery
Indian Oil Corporation (IOCL)s Gujarat refin-
ery informed that newly appointed executive
director Sudhir Kumar has taken the charge
at the companys third largest refinery near
Vadodara. Prior to this assignment, Kumar
IRB Infra appoints former NHAI chief as board chairman
IRB Infrastructure, a wholly-owned
subsidiary of IRB Infrastructure Develop-
ers Ltd has appointed former The National
Highway Authority of India (NHAI) chief
Rajinder Pal Singh as chairman to the board.
74 An IAS, he has worked in various areas like
finance, industry, urban development and
infrastructure development. Singh has also
been the chairman & managing director,
Punjab & Sind Bank and served as secretary,
department of industrial policy & promo-
tions. He was NHAI chairman from 2012
to 2015. Currently, he is on the board of
directors of Maruti Suzuki India Ltd; Bharati
Infratel Ltd and Lodha Developers. IRB
Infrastructure Developers CMD Virendra
D Mhaiskar said: We are confident that his
rich domain knowledge and expertise will be
Sanjib Kumar Roy appointed as Nalco director
Sanjib Kumar Roy, Executive Director
(Production), National Aluminium
Company (Nalco) assumed office as
the new Director (Projects & Technical)
of the company with effect from
February 3, 2017. His elevation comes
on the superannuation of the earlier
incumbent N.R. Mohanty. Roy began his
career in Nalco as a Graduate Engineer
Trainee, of the first batch in 1984, after
completing his engineering course from
Calcutta University. He was posted in the
companys Alumina Refinery Complex in
Damanjodi since inception of the project.
served as General Manager (Technical) at
IOCs Panipat refinery and petrochemicals
complex. A mechanical engineer from the
University of Roorkee, Kumar has over three
decades of experience in the hydrocarbon
industry. He has worked in various positions
at Indian Oils Mathura, Haldia and Panipat
refineries as well as at the Refineries Head-
quarters and Indian Oils Corporate Office.
Kumar takes charge at the Gujarat refinery
at a crucial time when it is gearing up to
meet petrol & diesel quality improvement,
and new fuel norms under Auto Fuel Vision
& Policy-2025, for supply of Bharat stage IV
and VI fuels. The refinery has a name plate
capacity of 13.7 mt per annum (MTPA).
of great help to the IRB Group in achieving
new heights of success. IRB Infrastructure
Developers Ltd is one of the largest private
roads and highways infrastructure develop-
ers in India.
commissioning is expected to come in
CleanMax Solar appoints Gajanan
Nabar as CEO
CleanMax Solar has appointed Gajanan
Nabar as its Chief Executive Officer. Prior
to joining CleanMax, Nabar was serving
as Managing Director and CEO of Praj
Industries. He was also CEO at Praxair
India for eight years. Our business has
grown exponentially over the past several
years, and Nabar is the right person to
manage our growth as we consolidate
our position as countrys number one
solar and sustainability partner for
Indian corporates and MNCs, CleanMax
Solar Founder and MD Kuldeep Jain
said. Mumbai-headquartered CleanMax
Solar is one of Indias largest providers
of on-site solar power. Since 2011 the
company has successfully delivered
more than 200 solar rooftop projects,
with a combined capacity of 55 MWp.
The company claims to have a market
share of 27% as indicated by India Solar
Rooftop Map 2016.
He held different key positions including
two stages of expansion before becoming
the General Manager (Refinery). Later
he was posted as General Manager
(Smelter) at the companys Smelter Plant
in Angul before his elevation as Executive
Director (S&P). Roy moved to Nalcos
corporate headquarters in Bhubaneswar
as Executive Director (Production) in April
2015. His experience in the companys
plant & operations as well as managing
projects from conceptualization to
handy in his new position.
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