InfralinePlus December 2012 by Gopal Thakur

December 2012 Volume 1 | Issue 8 | `100 www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

The Great

LNG RUSH

...terminals coming up on both the shores

PSU selloff

FM undeterred by poor market conditions

BHEL Bottomline Glut leads to decline in profits

Exclusive

BP’s Sashi Mukundan Talks about the global energy major’s roadmap for India

Wartsila’s global Vice President, Vesa Rihimaki and India head, Rakesh Sarin on flexi-cycle power plants

Vikram Mehta in his CIL chairman S. final interview as Narsing Rao says companies should Chairman Shell India - Doing business be allowed to mine coal-rich forests in here is difficult, not impossible a big way

Haridas Menon, GM Renewable Energy, GE India, spoke on the urgency to streamline land acquisition processes

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InfralinePlus

December 2012 | Volume 1 | Issue 8

The Complete Energy Sector Magazine for Policy and Decision Makers

Editor’s Letter The growing need for gas to fuel growth has driven India in many directions in the recent past. There was a time when there used to be talk of laying a pipeline across the hostile territory of Pakistan to bring the precious commodity from Iran via Baluchistan. More than two decades later, that idea remains a pipe dream. But the provocation behind that thought remains unchanged even today. As nations prosper, their consumption of fuel, as of all other commodities, also grows. If the demand cannot fulfilled by domestic sources then imports are the only option. This has been specially true in the case of fuel supplies in India, where over 80 per cent of our needs are met through imports. So far limited to crude oil and coal, fuel imports are soon going to comprise a major chunk of liquefied natural gas (LNG) in the country with companies such as Petronet LNG and Shell having started imports in large quantities from Qatar on the western side and Australia and Singapore on the eastern side of the Indian peninsula. Our cover story in this issue traces how from being considered a risky venture till a few years ago, LNG business is fast growing in the country. To cater to the great rush of imports, a number of terminals are coming up on both sides of the peninsula and the count is expected to hit 14 in some years, from a paltry two at present. From buying we come to selling. It is interesting to see how despite poor market conditions and lackluster performance of one stock sale, the finance ministry is moving ahead with its plans of offloading stake in major public sector units. Last year, against a target of Rs 40,000 crore the government was able to garner only about Rs 14,000 crore. This year, the target is Rs 30,000 crore and the intake so far is Rs 610 crore but there is no deterring Mr Chidambaram’s resolve. Way to go. May the FM’s dreams come true, Amen. We also bring you an analysis of the dwindling fortunes of power equipment behemoth Bharat Heavy Electricals Limited in light of increasing competition and glut in the power equipment market. Read how a single man—Amory B Lovins’s—vision can change the pattern of energy consumption in a fuel-guzzling nation such as the US and how other nations can follow this lead. On the fuel shortage side for power sector, Coal India has long been suggesting that the only solution to overcome the acute shortages of coal is to allow companies to mine forests in a big way. How soon will the government move on that front remains to be seen.

Editorial Shashi Garg, Editor Alok Sharma, Assistant editor Pallavi Karan Chakravorty, Assistant Chief-sub editor Neeraj Dhankher, Principal Correspondent Ankita Sharma, Business editor News Team Pankaj Bhagat Ankit Bhatnagar Design Team Gopal Thakur, Art Director

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December 2012 www.InfralinePlus.com

InfralinePlus

Contents Editorâ&#x20AC;&#x2122;s Letter

Cover Story

37 Realising the LNG dream India seems to have finally realised the importance of LNG to achieve energy security. Companies are making a beeline to set up terminals to receive carriers coming from various parts of the world and as many as 14 LNG terminals are expected to come up in the next few years.

Power News Brief

4 p4

In Conversation: Vesa Rihimaki, group vice-president, Wartsila and Rakesh Sarin, managing director, Wartsila India p6 In Conversation: Pratik Agarwal, Head - Infrastructure Business, Sterlite Technologies Limited In Depth: Poor market conditions hits governmentâ&#x20AC;&#x2122;s disinvestment target for 2012-13

p8 p10

In Depth: Kudankulam remains an unrealised dream even after 11 years of inception p13

Expert Speak: DM Desai, CEO, Ethical Energy Petrochem Strategies p42 Expert Speak: RK Batra, Distinguished Fellow, TERI p44

Coal News Brief

22 p22

In Depth: Coal India says sluggish growth to continue p24 In Depth: Row against price pooling continues; after Chhattisgarh and West Bengal, Odisha too joins the bandwagon

p26

Expert Speak: Jaganath Prasad Panda, MD of Priya Mining Consultancy and Services Pvt Ltd

p30

Statistics

p34

In Depth: BHEL loses monpoly due to foreign competition and plummeting revenues p16 Statistics p18

Topics Covered:

Flexi-cycle plants

Coal production

Disinvestment in the energy sector

Coal price pooling

Nuclear Power E&P manufacturing

Coal exploration Extractable reserves

December 2012 www.InfralinePlus.com

Oil and Gas

News Brief

p46

In Conversation: Sashi Mukundan, Country Head, BP India

p48

In Conversation: Hirak Dutta, Executive Director, OISD p50 In Conversation: Vikram Mehta, former Chairman, Shell India

p53

In Depth: US-based clean energy icon promises to turn US into “oil and coal free” by 2050

p56

Statistics

p58

Topics Covered: LNG terminals Oil and gas production Safety equipment

Renewable

News Brief p60 In Conversation: Haridas Menon, general manager, Renewable Energy, Water & Power, GE India p62 In Conversation: Dr Ananda M. Chakrabarty, member Scientific Advisory Committee, Dept of Biotechnology p64 In Conversation: Sarah Butler-Sloss, founder director of Ashden p66 In Conversation: Sameer Gupta, Managing Director, Jakson Power Solutions p68 In Depth: Right schemes and strategies needed to channelise farm waste and push biomass potential p71 Expert Speak: Pär Almqvist, Chief Marketing Officer, OMC Power p74 Expert Speak: Ing Volker Hinrichsen, professor of electrical engineering, Technical University of Darmstadt p75 Statistics p76 Topics Covered: Biomass Hydro power Solar power Potential of Re in India

Lubes and bitumen

Interviews

Plus - Photo Essay

Take a photo-tour of Petronet LNG’s terminal at Dahej and see its progress Vesa Rihimaki, group vice-president, Wartsila

Pratik Agarwal, Infrastructure

Sashi Mukundan, Country

Haridas Menon, GM, RE-

Head, BP India

Water & Power, GE India

Business, Sterlite Technologies

December 2012 www.InfralinePlus.com

NewsBriefs | Power

NTPC stake sale Govt invites bids from bankers

Mundra Ultra Mega Power Project CAO’s audit report likely by March 2013

Lanco-China Development Bank deal $2 billion debt to be raised

The Government initiated the process of disinvestment in NTPC by inviting bids from merchant bankers for 9.5 per cent stake sale in the power major, which may fetch the exchequer over `12,000 crore. The merchant bankers are required to submit their application by December 14. The Government holds 84.50 per cent stake in NTPC and post disinvestment Government’s holding would come down to 75 per cent.

World Bank’s auditing arm CAO, which is reviewing the $450 million for Tata Power’s 4,000 MW Mundra project in Gujarat, is expected to submit its audit report y March next year. The Compliance Advisor Ombudsman, an independent arm of the World Bank group, is assessing whether the investment in Mundra project is in compliance with various environmental and social norms.

Lanco Infratech Ltd has signed up with the state-owned China Development Bank to raise $2 billion debt for two power projects - Anpara Phase II and Himawat, each with a capacity of 2x660 MW. Of the $2 billion required to be raised, $600 million will be contributed by the China Development Bank and it will syndicate the balance from Chinese banks and financial institutions.

NTPC’s foray into distribution RInfra, Tata Power make beeline

Himachal Pradesh hydro project ADB offers $315 million loan

Indonesian coal mine Tata Power Company acquires stake

Reliance Infrastructure, Tata Power and Crompton Greaves have placed bids to partner state-run NTPC, the country’s largest power producer, in its foray into electricity distribution. NESCL had in September invited bids for the joint venture from power distribution licensees with five years of experience and a minimum average net worth of `500 crore in the three preceding financial years.

The Asian Development Bank has offered $315 million loan to fund 450-megawatt Shongtong Karcham Hydroelectric Project in Kinnaur, Himachal Pradesh. The loan is the fourth tranche of an $80- million multi-tranche financing facility called the Himachal Pradesh Clean Energy Development Investment Program aimed at expanding the supply of power in the hill state.

Tata Power Company has acquired 26 per cent stake in Indonesian coal mine PT Baramulti Sukses Sarana Tbk, to ensure fuel security for its upcoming power plants. The transaction would help the company source coal from BSSR and its subsidiary PT Antang Gunung Meratus, which together have reserves of 1 billion tonne of coal in mines located in south and east of Kalimantan in Indonesia.

Karnataka plans gas power plant To invest `37.5 billion

Odisha’s ultra mega power projects: PFC seeks commitment advance

OPGC’s 1,320 mw expansion project: PFC, REC to extend `86.6 billion loan

Karnataka will build a gaspowered plant at Bidadi near Bangalore to meet the ever-increasing demand for power by the corporate giants. The 1,400-Mw combined gas cycle plant will have four units of 350 Mw each. Sourcing for the gas is under finalisation. The project is estimated to cost `3,750 crore.

Power Finance Corporation has sought commitment advance from Odisha government on two more UMPPs proposed in the state, each with capacity of 4000 Mw. Since Odisha is one of the nine beneficiary states for the two upcoming UMPPs, PFC sought commitment advance from the state. Each beneficiary state has to give an advance of `1 crore per 100 Mw.

Odisha Power Generation Corporation has tied up the funds for 1,320 Mw expansion project at its 420 Mw Ib Valley power station. Two Central PSUs- PFC and REC, have jointly agreed to equally share `8,660 crore loan component of the expansion plan whose total cost is pegged at `11,547 crore. The project is being funded on a debt equity ratio of 3:1. The equity component of `2,880 crore will be borne by OPGC.

Power ministry wants inking of PPAs mandatory for coal block holders

Imported coal-based UMPPs No benefit from price pooling

Dabhol in lurch RIL, GAIL fail to supply contracted gas

Already hit by the Coalgate scandal, the Government’s plan to give out blocks to power companies through tariff-based bidding before the end of this calendar year seems to have hit a spanner as the Power Ministry has insisted that while it is mandatory for all block owners to participate in it, at the same time they should enter into long-term power purchase agreements within a stipulated time frame.

The MW power projects of Tata Power and Reliance Power may not benefit from the proposed pooling of imported and domestic coal prices by CIL, as they may not feature in a list prepared by India’s apex power sector planning body. Both Tata Power and Reliance Power’s imported coal-fired projects were envisaged as fast-tracked plants requiring investments of around `20,000 crore each.

Ratnagiri Gas and Power Private Limited is in a bad financial shape because the Dabhol power plant is operating at one-third capacity due to shortage of gas. Both its suppliers, Reliance Industries Limited and GAIL, have failed to supply the contracted quantum of gas so far. Against a requirement of 9.2 mmscmd, the plant is getting only around 3 mmscmd.

December 2012 www.InfralinePlus.com

InConversation

â&#x20AC;&#x2DC;Flexi-cycle plants can change face of power sector in Indiaâ&#x20AC;&#x2122;

It was in 1983 that Finnish power company Wartsila Diesel supplied the first power engine in India. Since then, over a period of more than 25 years, the company has gained experience of providing complete lifecycle power solutions for the Indian market through its local arm Wartsila India. Group Vice-President of the parent company, Vesa Rihimaki, who was in India recently, and Rakesh Sarin, Managing Director, Wartsila India spoke to Pallavi Karan Chakravorty on smart power generation and the need for peaking power plants in the country. Excerpts: What are the challenges in functioning in a country like India? RS: The biggest challenge is that the universal service obligation is not followed in this country. There was a commitment from the government of India that there would be power for all by 2012, but that promise is nowhere being fulfilled. Today the industry is suffering because of this; companies are forced to install captive power plants to ensure regular power supply. If we have that sorted out and the utilities are asked to provide reliable power then it will solve many of our

provides investment support. In this regard there is a big difference. RS: We are not able to provide basic infrastructure in terms of land, roads, power, port etc. to companies which want to invest in India. But I must add that the entrepreneurship of India despite all these odds is showing tremendous growth. Imagine if we have 24/7 power, what kind of growth we can achieve. Data shows that we have invested close to `100,000 crore in generator sets, inverters and other means of alternative power back-up.

Vesa Rihimaki Group Vice-President, Wartsila Corporation

problems. Electricity is the biggest multiplier and one unit lost means a loss of `32 to `122, which means we need to make our system much more robust. VR: There is also a need to reduce bureaucracy in import and export activity; it is not really supportive at present. If the decisions are taken faster and there is less paper work, operations can become more effective. How different is functioning in India compared to other developing countries? VR: Compared to India, Chinese are far more driven towards getting and attracting investment and they really invite people. Land is allocated if you really want to establish an industrial activity and you can very easily start an activity. The government in many areas

Wartsilla has been in India for the past couple of decades. Has it achieved the desired target? RS: Most of India Incâ&#x20AC;&#x2122;s biggest companies have our captive power plants including Tatas and Birlas. At present we generate close to 3,500 mw of power through our various plants.

Rakesh Sarin Managing Director, Wartsila India

December 2012 www.InfralinePlus.com

The bulk of it is HFO and about 700 mw is gas-based, but now we see an opportunity in peaker plants. The baseload capacity is almost there, earlier we were deficit even in that. So the company strategy is to make people aware about the benefits of a peaker plant so that regular power supply can be achieved. VR: It started with captive power plants in India but now we have a large project management automisation in India. Apart from Finland, India is the second country which is a major project management centre for Wartsila. We also have a manufacturing centre here which is providing supplies globally as well. Also, our solutions have two other dimensions, sustainability and affordability. What is your latest innovation and product mix for India? RS: We have the data for a peaking power plant model and it has been presented to various authorities but for them to work together we need a proper regulatory authority. Otherwise no one will put such an expensive mechanism into place. After all, who will take care of the capital expenditure of a plant which would operate for only about six hours a day? So, a sound regulatory framework is important to roll out such ideas in the country. VR: I think now we are actually coming to the bottleneck as to why such a model has not been implemented yet. People see power generation only in terms of base load, but if we really look at the whole curve of the day then it is peaking power plants that we need to solve our problems. So, we need to average out the cost as both systems would be supporting each other. There should be some regulatory requirements about a certain amount of peaking power in the system. The faster the changes are made, the faster the model can be implemented.

There is a need to reduce bureaucracy in import and export activity. If the decisions are taken faster and there is less paper work, operations can become more effective. Has this model been custommade for India or has it been experimented with in any other country? VR: I’ll quote the example of Brazil which is generating 90 per cent of its power from water. If you have such a large number of hydro power plants then it is very difficult to have thermal plants in the system unless they study their architecture. Brazil is now using thermal power plants as back-up for power in case the water levels see a drop and is using 15-20 mw of thermal power as back-up. In India where thermal power is the base load factor, we can opt for LNG based peaker plants with very low capital expenditure. These peaker plants can be installed within a year and require an investment of a mere `3.5 crore per mw against `5-6 crore per mw for thermal plants. These plants are multipurpose plants; they can pitch in for power during peaking hours and become an integral part of the power system in future. What is the biggest issue facing this model? RS: We don’t have a regulatory framework in place for peaker plants which is why this LNG-based peaker plant model is yet to be implemented. We are saying that even LNG costing $16-18 per mmbtu optimises the cost as against HSD which is priced close to $40 per mmbtu (this cost is subsidised but the end cost to consumers is still very high) and which is being used in

the unorganised sector. If we replace HSD with LNG in an organised way, it would be much more cost-effective and also improve the efficiency of the plants. The average cost to consumer would also come down drastically. What is Wartsila’s strategy in India? RS: We want to showcase to the government and to the people the things happening around the world. As India’s 80 per cent infrastructure is yet to be built in the next 15 years, so with our global experience we are trying to add more value into the system and once that is added, it’s a win-win situation. Fuel is a major problem for the power sector today. How has it affected your company? RS: We are trying to offer solutions, for example we are not into coal and gas has become scarce and is also expensive. We are trying to utilise gas for peaking plants and saying that you can utilise for four times the capacity but only for hours when the demand is at its peak. So, we are trying to give a solution to the country about how to utilise gas properly. That way we will also use less coal and the efficiency of coal plants would improve. Our study says that we could save 6.9 per cent energy if we deploy these flexible power plants. Which has been your most successful project in India? RS: In 2003, we did a project for RK Energy and it functions in a manner very similar to flexible power plants. They operate at low plant load factor but their efficiency is the highest. They started with 80 mw and they kept extending when more gas was available to them. For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InConversation

â&#x20AC;&#x2DC;Government has to be careful in picking transmission developersâ&#x20AC;&#x2122;

Pratik Agarwal, Head Infrastructure Business, Sterlite Technologies Limited says that transmissionâ&#x20AC;&#x2122;s sector is the core focus of the company at the moment. In a candid conversation with InfralinePlus, he emphasises that lenders must not club power transmission and power generation together and instead consider transmission as a separate entity. He insists that planners should carefully look at the quality, background and transmission experience of the developer before allotting the project. He also says that transmission is a growing opportunity in India and anyone who has a good capital access and an expert project management team in place, can quickly scale up in this business. What is the present situation of the transmission sector in the country? Have the recent reforms been of any help? The regulatory framework under which we operate is quite progressive and supportive of competition in the transmission sector. The regulators have recently implemented a pooling mechanism by which all the transmission tariffs in the country are getting pooled and all the transmission

project getting stalled could lead to thousands of megawatts of power getting bottle-necked. The Government, while awarding projects, needs to be careful in selecting only those developers who have demonstrated sound project management and execution skills so that the projects are implemented in time. Huge transmission investments are required in the country in the next 5-10 years and the right developers can give a fillip to the much needed investments in this sector.

developers like us would get a part of that pool every month. This reduces the revenue risk for transmission developers substantially, given the current issues faced by the power sector. Also, the government has notified that all future transmission projects would be awarded under the competitive bidding route, which has given the much required boost to investments in this sector. We have found that through the competitive bidding route, tariffs have reduced by 20-40 percent compared to the erstwhile cost plus route. This will help the overall health of the Indian power sector. What are the measures you expect from the government to remove present roadblocks in the sector? Although the cost of a transmission line project is a fraction of the cost of the entire power system, it is the most crucial link as it can evacuate thousands of megawatts of power. An important

There are certain apprehensions among lending institutions for the sector; can you throw light on these and going forward, how do you plan to address them? There are a few concerns, but we believe these will be allayed over a period of time. Sometimes we find that people do not view power transmission and power generation differently and consider them as similar although their risk profiles are vastly different. For example in generation during construction, there are issues relating to environmental clearances, land and water availability; during operation there are fuel issues as well as issues relating to payment security. Transmission is relatively risk free. Once constructed, all the risks in a transmission project are eliminated. The only remaining risk, i.e. payment security has now been taken care of by the transmission tariff pooling mechanism, making transmission projects completely risk free. Because of pooling, even if some of the customers associated with the network have

December 2012 www.InfralinePlus.com

financial difficulties or face project delays, it has a minimal effect on the transmission developers. Many of the lenders have understood this, which is why we have been able to financially close all our projects in record time. The other typical concern is the execution risk. Many believe that the Right of Way & clearances is a serious problem. However, this is not the case always. First and foremost, we must remember that the Government allows transmission providers (under Section 164 of Telegraphy Act) to put the line in someone’s land as long as the crop compensation is paid as per the given guidelines. What then remains to be dealt with, are the local issues which can be dealt with in a favourable manner. Forest clearance isanother thing that people worry about. First of all, all lines typically don’t have forest. For lines that do have forest, on day one itself, we take all the necessary steps to apply for clearances.As the typical construction period is for 36 months, this gives us a 20-month bufferto get a clearance. This also gives us enough time to complete the part of the line within the forest and do the compensatory afforestation, which is very important. We strongly believe in long term sustainability of our operations and take measures to protect and conserve the environment in all possible ways. Could you throw light on a few of the projects that you are working on currently? Has the investments been lined up? Sterlite currently has a portfolio of three projects with a total value of about `40 Billion (~US$ 0.9 Billion). These transmission systems would evacuate and transmit power through a network of about 2,200 km of transmission lines and 2 substations; in the states of Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, West Bengal, Bihar and Assam.The first project was awarded to us in 2010 and it will be completed

in March 2013. The other two projects were awarded in 2011 and will be completed in March 2014. All the debt has been fully tied up with banks and the equity would be coming from the internal accruals of the group. Apart from the lenders’ apprehensions, what are the other challenges people in this sector are facing? Bidding for a transmission line, typically requires around six months of pre-bid work. Sometimes scores of people have to survey the area to estimate the projectrisks and costsso as to be able to bid in a realistic manner. Those players who do not perform sufficient studies pre-bid can end up submitting an unviable bid and abandoning the project mid-way. So, as mentioned earlier,the government should be careful and select only capable developers. What is the importance of renewable energy for transmission sector? Do you see the focus of your sector shifting towards renewable energy now, considering the dwindling coal sources? Firstly, renewable energy in general – regardlessof transmission or not – isextremely important and India,in particular, has taken a very strong potential for renewable energy. Being a cleaner source of energy than thermal, we feel that adequate investments in generation and transmission of renewable energy can go a long way in meeting India’s energy requirements. I am sure that the grid planners are taking measures to ensure transmission investments in areas where wind or solar capacities are coming up. Tell us something about your company? What are its business verticals? What is the contribution of transmission business in your total turnover?

Sterlite Technologies Limited is a leading global provider of transmission solutions for the power and telecom industries. The company is equipped with a product portfolio that includes power conductors, optical fibers, telecommunication cables and a comprehensive telecom systems / solutions portfolio. Sterlite is also executing multi-million dollar power transmission system projects, pan-India, and it’s just early days in this vertical. We entered this segment two years ago, so our first revenues will start in March 2013. Can you give us an estimate about the size of the sector and the rate at which thissector is growing? In the transmission space, investments to the tune of `35-40 thousand crore are required every year over the next five years. Around 50% of this would be done by Power Grid and the State Transmission Utilities. The balance would be done by private sector players like us.So, in the twelfth plan (2012-17), aggregate investments to the tune of `2,00,000 crores are being planned in thisspace. Are you also planning to diversify into other business models? Currently, transmission is the core focus of my team as the scale and the opportunity size available is quite huge. As I mentioned earlier, we have good access to capital and have world class project management expertise in-house, which makes it easier for us to focus on projects involving infrastructure building. As a group, we keep looking at other infrastructure opportunities as well. Currently, we are also exploring opportunities in building broadband infrastructure, which we believe would be the next revolution in the country.

For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InDepth

FM’s strong push for selloff despite opposition from parent ministries ►► Poor market conditions, lukewarm response to HCL stake sale fetches only `610 crore ►► Government way short of achieving disinvestment target of `30,000 crore for 2012-13 by Team InfralinePlus

Strong opposition over the timing of disinvestment in some of the already listed navratna and mahanavratna public sector units (PSUs) due to poor market conditions and lack of investor interest notwithstanding, Finance Minister P Chidambaram is moving ahead with his plans and is believed to be confident of meeting the disinvestment target set for the current fiscal. The PSUs on the block include National Thermal Power Corporation (NTPC), PowerGrid Corporation, Oil India Ltd (OIL), Engineers India Ltd (EIL), Minerals and Metal Trading Corporation (MMTC), Hindustan Copper and National Mineral Development Corporation (NMDC). The sale of 12.5 per cent government equity in NMDC would in fact have happened by now but it was deferred sometime back on the ground that the company’s second quarter financial performance was not reflective of its true financial position. Now the government is targeting this sale by end-December or early January. To test the water, a small stake of 4 per cent was sold in Hindustan Copper Ltd (HCL) recently which fetched the government `610 crore. The issue was over-subscribed but the market buzz is that a large part of the shares were bought by none other than government-owned entities such as Life Insurance Corporation, State Bank of India and others.

Oil ministry opposes sale of Oil India

All for sale: P Chidambaram

Against sale now: Veerappa Moily

The forthcoming issue of NMDC is being awaited as it will show how much are the investors interested. “If NMDC issue is accepted by the market, chances of OIL also sailing through become brighter,” a senior market analyst told InfralinePlus.

Now following the Cabinet approval, preparations are on for a 10 per cent stake sale in OIL--a `10,000-crore oil and gas exploration company with a market capitalization of `27,000 crore, second biggest after the Oil and Natural Gas Corporation (ONGC). The sale can fetch the government close to `2,500 crore. However, going by the lukewarm response to the HCL issue despite its small size, the oil ministry has shot off a letter to the finance ministry expressing concerns over a similar situation arising in case stakes were sold in OIL and EIL now. It has asked for an issue only after successful stake sale in at least two more companies through the offer for sale (OFS) route. The forthcoming issue of NMDC is now being awaited as it will show how much are the investors really interested. “If NMDC issue is accepted by the market, chances of OIL also sailing through become brighter,” a senior market analyst told InfralinePlus.

Power ministry opposes NTPC sale On its part, the power ministry has also opposed stake sale in NTPC and PowerGrid. InfralinePlus has in its possession letters written by former power minister (who recently became the petroleum minister) to the

December 2012 www.InfralinePlus.com

OIL INDIA LIMITED NTPC POWERGRID

company. The paid up equity capital of the company, as on March 31, 2012, is `8,245.46 crore. The disinvestment would also help NTPC to comply with the minimum public shareholding norms. It became a listed company in 2004. Thereafter in 2009, government further diluted its stake in the power producer.

Opposition to sale of PowerGrid

finance minister opposing the sale of government’s equity in the two PSUs. In its response to a draft Cabinet note from the Department of Disinvestment (DoD) for a 9.5 per cent stake sale in India’s leading power producer NTPC, the power ministry has opposed any immediate sale on the grounds that the current stock price of NTPC (at `166 per share) is much below its 2010 FPO offer price of `205 per share, and that any sale at this juncture would go at a massive discount. However, an undeterred finance ministry has decided to go ahead with the sale. After the nod from the Cabinet on November 21, the government has begun the process of inviting bids

from merchant bankers for the 9.5 per cent stake sale in NTPC. This is the government’s big ticket investment, which alone is expected to garner over Rs12,000 crore for the exchequer-almost 45 per cent of the targeted `30,000 crore. “Proposals are invited from reputed merchant bankers with experience and expertise in public offerings or OFS in capital markets to act as merchant bankers and to advise the government in the process,” DoD said in its public notice on November 27. The merchant bankers are required to submit their application by December 14. At present, the government holds 84.5 per cent stake in NTPC which is India’s largest power generating

The sale of government’s equity in PowerGrid has also met with opposition from the parent ministry. In an October 10 letter to P Chidambaram, the outgoing power minister Veerappa Moily had said that disinvestment in PowerGrid had already taken place twice—5 per cent in September 2007 and 10 per cent in November 2010 which had fetched `994 crore and `3,721 crore, respectively, for the government. “Any further disinvestment in PowerGrid (proposed at 5 per cent for this fiscal out of the government stake of 69.42 per cent) may be deferred by the government at this stage as it may be detrimental to the company’s growth and power sector as a whole,” Moily had written to Chidambaram in his letter. Stating that the current debt-equity ratio of PowerGgrid is 70:30--with debt at `58,000 crore and equity at `24,300 crore, Moily said that of all the 15 listed major PSUs, PowerGrid was the highest leveraged company with a debt of 70 per cent debt. “In view of this, I strongly recommend that the disinvestment in PowerGrid may be deferred by the government at this stage.” Moily also told Chidambaram that PowerGrid had chalked out an investment plan of more than `1,00,000 crore during 12th Plan to

December 2012 www.InfralinePlus.com

InDepth

NO TAKERS

(figures in rupees crore) Year 2012-13 (in first three quarters) 2011-12 2010-11

Selloff Achieved 610 13,894 22,144

Selloff Target 30,000 40,000 40,000

OIL Paid-up equity Market Capitalisation Present government stake Stake to be sold Expected return

`10,000 crore `27,000 crore 78 per cent 10 per cent `2,500 crore

NTPC Paid-up equity Market Capitalisation Present government stake Stake to be sold Expected return

`8,245.46 crore `1,35,000 crore 84.5 per cent 9.5 per cent `12,000 crore

PowerGrid Paid-up equity Debt Present government stake Stake to be sold

`24,300 crore `58,000 crore 69.42 per cent 5 per cent

meet the transmission requirement of the country for which internal resource requirement will be of `30,000 crore. Out of this, about `22,000 crore is expected to be generated internally and balance `8,000 crore may be met through fresh equity from the market in the coming years. To meet its investment needs, Moily said the company would like to go for fresh issue of at least 10 per cent equity in the next year or two, when the government may also like to go in for 5 per cent disinvestment of capital, after which the Centre’s holding in the company will come down to 53.36 per cent. “This will happen within a span of two years and after that there may be no scope for further raising of fresh equity to meet the investment requirement by PowerGrid,” Moily said, adding that a further additional requirement of capital would bring down the government’s holding below 50 per cent which may not be desirable it being a strategic

company functioning as central transmission utility. Repeated slips in achieving the disinvestment targets year after year have led to widening of India’s fiscal deficit. Eight months into the fiscal year, the government has been able to raise only `610 crore from disinvestment in HCL, which is hardly anything against the `30,000 crore target. In 2011-12, the government could garner only `13,894 crore against a target of `40,000 crore and the year before that it raised `22,144 crore against a target of `40,000 crore. It remains to be seen how Chidambarm and his boys at finance ministry will fair with this year’s targets of `30,000 crore amidst strong opposition from within the government as also lukewarm response from investors.

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Rs 932 crore garnered through sale so far, Chidambaram informs Rajya Sabha The government has, so far, garnered Rs 932 crore through diluting its stake in the Public Sector Units during the current financial year and is working towards achieving the Rs 30,000 crore target set for the year. “During the current financial year, government disinvested 10 per cent of NBCC and 5.58 per cent of Hindustan Copper (HCL) out of its shareholding and realised an amount of Rs 124.97 crore and Rs 807.02 crore respectively totalling to Rs 931.99 crore,” finance minister P Chidambaram told the upper house. In response to another question, Chidambaram said the fiscal deficit target for the current year “will be reassessed after mid-year review depending on the pace of expenditure and resource position of the government”. The fiscal deficit for the current financial year has been projected at over Rs 5.13 lakh crore or 5.1 per cent of GDP. In the April-September period of 2012-13 fiscal, the deficit has touched 65.6 per cent of the full year target. The government has already initiated the process of disinvestment of 10 per cent of its stake in NMDC, 9.3 per cent in MMTC and 9.5 per cent in NTPC. Besides, the Cabinet has also approved disinvestment of 12.1 per cent in Nalco.

December 2012 www.InfralinePlus.com

InDepth

Kudankulam: Still an unrealised dream ►►`14,000 crore spent on construction over a period of 11 years

►► Fears of a Fukushima-like disaster and protests by locals holding the project by Pallavi Karan Chakravorty

It was a move that could have changed the face of the Indian power sector forever. Prime Minister Rajiv Gandhi and his Soviet counterpart President Mikhail Gorbachev signed an agreement on the ambitious Kudankulam nuclear power project in November 1988, with an initial agreement for the construction of two nuclear reactors. Sadly, the dream power project even after 11 years – its construction began in 2001 – has failed to see the light of day. Initially, the project remained in limbo for a decade due to the political and economic upheaval in Russia after the post 1991 Soviet breakup. Later, there

were also objections from the US, on the grounds that the agreement did not meet the 1992 terms of the Nuclear Suppliers Group. Finally, after a gap of more than a decade, the construction of India’s biggest nuclear dream project began in 2001 in Tamil Nadu, with an initial plan for building two VVER pressurised water reactors of 1 GW each. Much later in 2008, four more reactors were set to be added to this plant under a memorandum of intent, but the setting up of just two more reactors was cleared. Already facing delays and several implemental hiccups since its inception, the final blow to the project came when on 11 March 2011, the Fukushima

In limbo: Kundankulam nuclear power plant is under construction in Tirunelveli district of Tamil Nadu

Daiichi nuclear disaster struck Japan. The disaster, said to be the largest nuclear disaster since the Chernobyl disaster of 1986, changed the face of nuclear power sector across the globe, more so in India. Thousands of protesters, residing in the vicinity of the plant, have used various means to voice their concern against the plant since then. The result is that the completion of unit 1 and 2 of the project has got further delayed. Protesters claimed that more than 1 million people lived within the 30 km radius of the plant which far exceeded the Atomic Energy Regulatory Board (AERB) stipulation.This claim has been denied by the Nuclear Power Corporation

December 2012 www.InfralinePlus.com

InDepth Views and Counterviews

NTPC Chairman, Arup Roy Choudhury, “The only thing in India that goes against nuclear power development is our population. There is hardly any place here, which is not thickly populated, so when it comes to choosing between human safety and economic development, the choice is obvious. But then it also right that for how many days can we run thermal power stations. What are we ultimately going to do? We have some nuclear fuel also available, so we have to see how long we can import petroleum. This debate would continue though I don’t know what will happen in future.” of India (NPCIL), repeatedly. Recently, the Supreme Court too questioned as to how NPCIL intended to transport nuclear waste out of the plant and store it in a safe place without affecting the environment. Protests against the power plant have only intensified over the past year, while nuclear fuel has already been loaded in the plant and is awaiting approval from the AERB for commissioning. The initial schedule date of commercial operation for unit 1 was December 2007 and for unit 2 it was December 2008; these dates have been on constant postponement cycle and the latest dates are said to be December 2012 and July 2013, respectively.

Siding with Science The biggest issue in this debate is whether the plant is safe enough to start operations. What are the chances of a Fukushima like disaster repeating? Should India do away with nuclear power and projects altogether? These questions have been perturbing people

Harry Dhaul, Director General, Independent Power Producers’ Association of India (IPPAI), “After the Fukushima disaster, everyone got scared. After the accident, Germany has switched off its nuclear programme, Japan has reduced and backed down but France has not, in fact, 80 per cent of France’s power supply comes through nuclear. Logically speaking, it’s about perceptions and concerns we in India have about private sector participation, and we think everything should be done by NPCIL, which means slow progress, delays, limited money and no transparency. There are also issues about spent fuel and decommissioning. We have always had heavy water reactors wherein we have a three-stage process; however, the reactors that are coming from the US are single-cycle light water reactors, so there will be a lot of spent fuel lying around. How will that be dealt with? Unlike the US, we have one-fifth the land mass and probably four times the population.”

for long and the fear psychosis is only adding to the protests. Dr M.R. Srinivasan, former chairman of AERC, however, in his report on the Kudankulam Project has given a clean chit to its safety standards and also stated that the plant is constructed on a solid terrain, which anyway doesn’t make it tsunami prone. In his report he says the plants in Kudankulam have a double containment system which can withstand high pressure. In his own words: “There is a safety provision for an extreme situation of the fuel in the core melting and breaching the pressure vessel. In such a situation, the core catcher below the pressure vessel will ensure that the molten core mixes with a large quantity of neutron absorbing material and thus prevent the possibility of a nuclear explosion. Only the most modern designs have such a provision. There are 154 passive hydrogen-recombines to prevent any explosive mixture forming in any zone of the primary containment.”

Lending support to Dr Srinivasan’s theory, former President, Dr A.P.J. Abdul Kalam, who recently visited the Kudankulam project site, asserted that there was no need for anyone to panic as it had state-of-the-art safety features. Later he told the media that he was completely satisfied and happy with the sophisticated safety features of the reactors and hence there was no need to worry. These assurances and the fact that close to `14,000 crore have already been spent on the Kudankulam project give a logical push to the fact that we should go ahead with the power project. It would be a big boost to our economy and particularly beneficial to the state of Tamil Nadu. In fact, our biggest competitor on the world stage, China too has hinted to resume work on building nuclear power projects. It has approved a small number of nuclear power projects along its coast by 2015 as it seeks to “steadily” resume normal construction of nuclear power facilities. The Asian giant

December 2012 www.InfralinePlus.com

won’t plan for nuclear power projects inland and will raise entry requirements for the industry. China had earlier banned new nuclear power projects and had ordered a nationwide inspection of existing plants after the Fukushima disaster. Also, technological advancements have been immense since nuclear plants first came into inception in the 1950s; they have got much better and safer with time. The World Nuclear Association website states that there are 430 commercial nuclear power reactors in 31 countries that provide 13.5 per cent of the world’s electricity. Not to forget that India’s demand for power is likely to soar from around 120 gw at present to an estimated 315-335 gw by 2017, which makes the project all the more important for us.

LT & HT Motors Market in India (2011-12) November 2012

The Fear Factor Despite assurances by experts and various approvals by apex agencies, there remain doubts about the safety and viability of nuclear power projects. One of the first countries to have banned nuclear power post Fukushima was Germany. It decided to close down all its 17 nuclear reactors by 2022. Reports also suggest that Poland, another European nation might decide to close down its nuclear programme soon. The nation is expected to concentrate more on gas-based power plants. However, it’s important to understand that these countries are technologically advanced and don’t face the huge deficits in power that India faces. The future of nuclear power does seem cloudy given the risks involved, and even though the government might blame US NGOs to be fuelling anti-nuclear protests, the fact remains that the probability of a nuclear catastrophe may be very low but it is not zero. So, can we expose people to such a risk? Another question is about emergency preparedness and liability. In the event of a disaster at Kudankulam, it is impossible to evacuate such an area rapidly, also considering that medical facilities are inadequate. Locals, who would be affected directly by the project, shouldn’t their consent be taken before? This is perhaps the trickiest point of all as the needs of the many can conflict with the needs (and rights) of the few. It’s a now or never situation for Kudankulam. With protests gathering momentum like never before and the government trying hard to push back the protestors, it has become a fight for survival. But what is worth pondering is what if the Fukushima disaster had never happened? Would there still have been as many protests? And people who are actually carrying out these protests, are they even aware of the ground situation? The debate about to be or not to be might continue even after the Kudankulam project finally becomes operational. Perhaps, it is about weighing the positives against the negatives. Whatever it is, here’s hoping it is in the best interest of India and its people. Despite repeated attempts NPCIL refused to speak on the issue. For suggestions email at feedback@infraline.com

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InDepth

Rosy days over for BHEL

16 ON THE DECLINE: Problems of power sector and the slowing down of economic growth have started taking a toll on the company’s balance sheet.

►► Inventories piling up, payments delayed, revenue and profits stagnant ►► Increased competition from MNCs forcing PSU monolith to lower costs by Alok Sharma

The country’s power equipment behemoth Bharat Heavy Electricals Limited (BHEL) is slowly losing its monopoly on the supply side due to increasing competition and the glut in the equipment market. It has not been able to convert its huge order book into revenues due to the lack of fuel and client side issues. Revenues have remained stagnant in the past four quarters. The company’s new order inflow for the second quarter has declined by as much as 78 per cent compared to the corresponding period last year. Problems of the power sector and the slowing down of economic growth have started taking a toll on the company’s balance sheet. According to sector analysts, the company’s income for the current financial year is expected to remain flat

or suffer a marginal decline. At present, the company boasts of an order book of Rs 1,22,000 crore, which is about two-and-a-half folds its current turnover but, analysts believe that the order book looks healthy because the firm had received those orders before competition began to surface on the Indian soil. However, the trend in new order flows and progress of existing projects will soon start reflecting on its growth. For example, inventory levels are moving north and clients are delaying payments, and the negative development has led to higher working capital requirements for the power equipment supplier. In 2011-12, the additional working capital requirement more than doubled to about Rs 8,000 crore compared to 2010-11.

Hit by imports Heavy Industries and Public Enterprises Minister Praful Patel has admitted that domestic manufacturers, including BHEL, are facing problems on account of cheaper imports mainly from China. Going by an estimate, Chinese entities have a share of about 57 per cent of solar equipment using crystalline technology. “This is affecting photo-voltaic manufacturers worldwide,” Patel said. Chinese equipment makers controlled 29 per cent of the Indian market in the five years ended March 31, 2012, as per a presentation on BHEL’s website, as compared with almost nothing in the previous Plan period. BHEL, for the first time in many years reported a negative cash flow from

December 2012 www.InfralinePlus.com

operating activities in the last financial year. Its cash balance also fell 30 per cent to Rs 6,700 crore in the previous financial year. Even the turnover ratio in the financial year ended March 2012 stood at 264 days compared to 241 days in the comparable period in the previous financial year. The top management has indicated that existing orders from the private sector could face execution delays at the customers’ end. Analysts feel that BHEL also runs significant risk of its order being cancelled. Developer of two power projects, Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUN) annulled a three-year tender in April, seeking lower costs after BHEL emerged winner among three bidders. BHEL, though, intends to participate in the new round of bidding but will have to quote a substantially lower price, a company official said without elaborating on the reduction in price. Rajasthan Rajya Vidyut Utpadan Nigam hopes to start placing orders by the end of this year. The previous tender had got bids from three ventures, including a partnership between Gammon India Ltd. and Ansaldo Caldaie Boilers India Pvt., a unit of Italy’s Ansaldo Caldaie SpA. BHEL, along with partner Siemens Ltd., had emerged the lowest bidder, while BGR Energy Systems Ltd. and its partner Hitachi Ltd. came second. For the new round the company may have to face other bidders as this time the bidding process may see JSW Energy Ltd., which has a venture with Toshiba Corp. to build power plants in India, and Larsen & Toubro Ltd. partnering Japan’s Mitsubishi Heavy.

Stalled projects Fuel shortages, stricter environmental checks and hurdles in acquiring land have stalled at least $35 billion worth of power projects in India. But India’s power-equipment making capacity will reach 36,000 megawatts in the next nine months, compared with average projected annual orders of about

10,000-15,000 megawatts, according to an industry analyst. The government has a target of seeking $254 billion of investment in the power sector by 2017 to cut outages and revive economic growth. BHEL’s order book declined to Rs 1,22,000 crore at the end of the quarter, a 24 per cent drop over the previous year. Its revenue from the industry business, which includes captive power plants and transportation, plunged 31 per cent in the quarter ended September 30 because of lack of orders from steel, cement and aluminum projects. It won orders worth Rs 3200 crore in the three months ended September 30, compared to Rs 14,300 ONE OF ITS KIND BHEL is a mammoth organisation with 50,000 employees across 15 manufacturing divisions, 15 regional centres and eight overseas offices. It is India’s largest power equipment maker, with a turnover of nearly Rs 50,000 crore, and among the top 12 of its kind in the world. EYE ON OTHER SEGMENTS The company is aware of the long winter it may have to face due to the challenges posed by competition and issues at fuel supply side. It has already started looking for orders outside power segment. “We are working with the Defence Ministry to identify a technology partner for increasing the size of the gun... They have identified BHEL for other areas,” BHEL Chairman and Managing Director B P Rao said in a recent interview to an agency. The company is also pursuing with Ministry of Power regarding the feasibility of having condition of phased manufacturing programme in case of orders for super-critical power plants, Rao said.

crore of orders in the year-ago period. The company may fail to meet its order forecast of as much as Rs 60,000 crore for this fiscal year, Ambit Capital’s Buddhadev said. “Until issues like coal shortages are resolved, banks will be hesitant to fund power projects and power producers will be extremely cautious in placing new orders… It’s going to be a hard, long wait before the order cycle revives,” Buddhadev said. Bharat Heavy Electricals Ltd may have to cut prices by about 15 per cent, because of increased competition from the local ventures of Hitachi and Mitsubishi Heavy Industries. Besides, delay in power projects is prompting the public sector company to reduce tariffs to improve sales, Lakshminarayana Ganti, an analyst with Standard Chartered Securities India Ltd said. “There’s no doubt BHEL and other vendors will have to offer lower prices than last time to get the project,” Ganti said. “Due to slow down of order inflow and due to increasing exposure towards working capital intensive engineering, procurement and construction business, the company’s working capital has come under pressure,” Rabindra Nath Nayak of SBICAP Securities said. According to industry experts, the thermal power equipment segment is in a relatively long downturn, and, it will take some time to revive owing to fuel supply and power pricing issues and also delays in project execution. The country plans to add 118,000 megawatts of generation capacity in the five years ending March 2017, while it erected about 55,000 megawatts of power generation capacity in the previous five years, the most in a period. Of the current five-year target, 30,000 megawatts will be generated from renewable sources like sun and wind, I.A. Khan, energy adviser at the Planning Commission said.

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December 2012 www.InfralinePlus.com

StatisticsPower State and Project-wise Status of Hydro Electric Projects Pending for Environment Clearance (October 2012) SI. No

Name of project/Executing agency/I.C

CEA Concurrence

Kuther (Private sector) JSWEL/ 3x80=240 MW

31.08.2010

Himachal Pradesh Environment clearance: Cleared on 5.7.2011

Bajoli Holi (Private sector) GMR/ 3x60=180 MW

30.12.2011

Forest Clearance: Stage-I approval: 22.6.11. Diversion of land: 61.4083 ha. Delinking of River Basin studies with St-II forest clearance ordered. Same was kept in abeyance on 13.9.11 and revoked on 1.08.12. Environment clearance: Cleared on 24.072011

Baglihar St-II (State Sector) 29.12.10 JKSPDCL/ 3x150=450 MW

Kotlibhel-IA (Central sector) 03.10.2006 NHPC/ 3x65=195 MW

Kotlibhel-IB (Central sec31.10.2006. tor) NHPC/ 4x80=320 MW

Kotlibhel-II (Central sector) 30.11.2006 NHPC/ 8x66.25=530 MW

Alaknanda (Private sector) 08.08.2008 GMR 3x100=300 MW Rupsia Bagar Khasiabara (Central sector) NTPC/ 3x87=261 MW

16.10.2008

Vyasi (State Sector) UJVNL 25.10.2011 2x60=120 MW Devsari (Central Sector) SJVNL (3x84=252 MW)

7.08.2012

Status of Environment and Forest clearance

Forest Clearance: Stage-I approval: 8.7.2011. Forest clearance is pending at State level for compliance for Stage-II clearance. J&K Environment clearance: JKSPDCL submitted a copy of MoEF letter dt. 24.05.10 according clearance for pre construction activities at the proposed site. Developer has to prepare EIA/EMP report as per TOR indicated in said letter and submit to SPCB for conducting Public Hearing for Env. Clearance. Forest Clearance: Forest clearance was accorded to Baglihar Stage-I HEP. No additional forest land is required for Baglihar Stage-II. Uttarakhand Environment clearance: 09.05.2007 Forest Clearance: Stage-I approval: 13.10.11 for 261.047 ha. Appeal against In- principle forest clearance of the project has been filed before National Green Tribunal by Vimal Bhai & Ors. The appeal was heard a number of times and is again listed for 20.11.12. Environment clearance: Accorded on 14.082007. However, the clearance has been quashed by National Environment Appellate Authority in Sep., 2010. MoEF has withdrawn Environment clearance on 22.11.10. Appeal against NEEA was filed by NHPC in Supreme Court on 22.11.10. The appeal was heard on 14.01.2011, 12.9.11, 17.10.11,29.11.11 and 30.11.11. Next date of hearing has not been announced. Forest Clearance: Study report by IIT Roorkee and Wildlife Institute of India, Dehradun has been submitted. FAC in its meeting on 30th & 31st May 2011, has denied clearance based on the recommendations of WII, Dehradun regarding significant ecological & wildlife issues. MoEF on 7.7.11 have declined permission for diversion of forest land NHPC has approached MOEF to reconsider its decision. NHPC has requested MOP to take up the matter with MOEF for reconsideration of the project. GoUK has requested MoEF to take up the case for reconsideration of forest proposal of Kotlibhel Stages-IB & II. Project was listed for discussion by FAC on 30-31” October, 2012 however, meeting was postponed by MoEF at the last minute. Environment clearance: 23.08..2007 Forest Clearance: Study report by IIT Roorkee and WII, Dehradun has been submitted. FAC in its meeting on 30th & 31st May 2011, has denied clearance based on the recommendations regarding significant ecological & wildlife issues. MoEF declined permission for diversion of forest land on 5.7.11. NHPC has approached MOEF to reconsider its decision. NHPC has requested MOP to take up the matter with MOEF for reconsideration of the project. GoUK has requested MoEF to take up the case for reconsideration of forest proposal of Kotlibhel Stages-IB & II. Project was listed for discussion by FAC on 30-31st October, 2012 however, meeting was postponed by MoEF at the last minute. Environment clearance: 12.03.2008 Forest Clearance: Stage-I approval accorded on 8.11.11 for 60.513 Ha. A group of NGO’’s has filed a petition in NGT against the grant of Forest clearance. Environment clearance: 26.032009 Forest Clearance: FAC discussed the proposal on 20.05.10/17.06.10 and denied approval due to location of project being in Highly Sensitive Wildlife Habitat. MoEF rejected proposal for diversion of forest land. Case for reconsideration submitted by NTPC through State Govt to MoEF on 17.09.10. FAC reconsidered the matter and a sub-committee of FAC visited site on 20-21 April, 12. The assessment of sub-committee would be considered in next FAC meeting. MoEF sent lette to Nodal Officer, GoUK with a copy to NTPC asking summary of new facts. The same has been submitted on 26.5.11 Environment clearance: Environment clearance transferred in favour of UJVNL which was earlier accorded in favour of NHPC. Forest Clearance: MoEF approved the release of 868.08 Ha of forest land for Lakhwar Vyasi MPP. There are further issues relating to forest clearance. Environment clearance: EAC on 27.12.11 recommended project for environment clearance. Formal letter will be issued after stage-I forest clearance. Forest Clearance: Forest land: 211.57 Ha. Case for diversion of forest land cleared by High Power Committee (HPC) of Uttrakhand Govt, in Sep, 2011.

Matnar (State sector) CSEB/ 3x20=60 MW

Gundia St-I (State sector) KPCL/ 1x200= 200 MW

19.082004

25.04.2008

Detailed case of forest clearance recommended by State forest deptt. to Govt. of Uttrakhand for onward transmission to MoEF. Chhattisgarh Environment clearance: Presentation was made to EAC on 16.07.03 and desired clarifications were submitted to EAC on 27.08.03. Issue of identifying degraded catchments area and catchments area treatment plan is required for final clearance. Study of CAT plan and Bodhghat Hydro Power Project assigned to Indian Council of Foreign Research and Education which also covers the CAT plan of Matnar HEP. Socio economic survey is being carried out through NGO. Progress is slow due to Naxalite activities. Forest Clearance: The case for diversion of forest land was submitted to forest deptt. of Govt, of Chhattisgarh in March, 2004. On completion of socio economic survey the case for diversion of land will be revised and submitted to Govt, of Chhattisgarh. Chhattisgarh State Power Gen. Co. Ltd has informed that for reduction of submergence area and affected people, change in parameter such as FRL etc are envisaged. Karnataka Environment clearance: EAC meeting held on 30.06.10 decided to recommend clearance with some conditions. Western Ghats Ecology Expert Panel (WGEEP) was constituted who visited the project area on 16.09.10. WGEEP submitted report to MoEF recommending not to permit the execution of project as loss of diversity and environmental impacts would be significant. MoEF sought opinion of State Govt on the report and the same has been submitted by State Govt Decision of MoEF is awaited. Forest Clearance: KPCL has submitted the application to State forest Deptt for diversion of forest land on 25/ 26.03.10.

December 2012 www.InfralinePlus.com

Teesta St-IV (Central sector) NHPC/ 4x130=520 MW

13.05.2010

Tipaimukh (Central sector) 02.07.2003 NHPC, Govt of Manipur, SJVNL/ 6x250=1500 MW

Loktak D/s (Central sector) 15.11.2006 NHPC & Govt, of Manipur/ 2x33=66 MW

Kolodyne-II (Central sector) 14.09.2011 NTPC 4xll5=460MW

Dibang

23.01.2008

(Central sector) NHPC 12x250=3000 MW

19 20

Demwe Lower (Private sector) ADP IV 5x342+1x40=1750 MW

20.11.2009

Dibbin (Private sector) KSK 04.12.2009 Dibbin HPPL/ 2x60=120 MW Lower Siang (Private 16.02.2010 sector) JAPL 9x300=2700 MW

Sikkim Environment clearance: Public hearing was conducted successfully on 29.3.12. Proceeding of hearing issued on 5.4.12. EIA/EMP studies along with Form-I submitted to MoEF on 11.05.12 for consideration of Environment clearance. The project was discussed by EAC in its meeting held on 8.09.12, wherein they desired certain additional information. Additional information submitted to MoEF on 18.10.12 and to all EAC members on 26.10.12. The project is listed for discussion for 24.11.12. Forest Clearance:. Forest proposal for 143.49 ha of forest land submitted to State Govt, on 11.1.10 and same was forwarded by State Forest Deptt to MoEF on 03.05.11. Site inspection was carried out by MoEF regional office on 1â&#x20AC;?, 2nd May, 2012 and the site inspection report submitted by NHPC to MoEF, New Delhi on 18.05.12. MoEF on 8.08.12 has requested State Forest Dept. to provide information pertaing to trees from submergence area, distance from protected area, etc. State Govt, has furnished the requisite information to MoEF on 17.09.12. Project was listed for discussion by FAC on 30-31st October, 2012 however, meeting was postponed by MoEF at the last minute. Manipur Environment clearance: 24.10.2008 Forest clearance: Manipur: Forest proposal forwarded by Manipur State forest deptt. to MOEF on 31.05.2011 for diversion of 22777.50 Ha of forest land falling in Manipur. Proposal discussed by FAC on 12.01. 2012. As per minutes of meeting uploaded at MoEF website, FAC has recommended mat a sub-committee of FAC alongwith domain experts in field of ecology, wildlife, hydrology etc. may visit the project site to suggest FAC on appropriate measures including reduction in dam height, minimize requirement of forest land for the project etc. Constitution of sub-committee is under process by MoEF. In a meeting dated 15.05.12 CM of Manipur assured to take up the matter with MOEF. NHPC has requested MoEF for expediting forest clearance of the project. Mizoram: Forest Proposal submitted to State Govt, on 14.3.11 and same has been forwarded by Govt, of Mizoram to MOEF on 11.07.2011 for diversion of 1551.30 ha of forest land falling in Mizoram. Proposal was resubmitted by State Govt, on 7.10.2011. NHPCÂ has requested MoEF for expediting forest clearance of the project. Environment clearance: Public hearing conducted successfully on 7.6.11. Form-I for Env clearance submitted to MoEF on 18.72011. Project discussed by EAC on 12.11.2011. NHPC has been asked to submit some additional information on lean season flow, power potential study etc. and Muck disposal sites. Consolidated reply submitted by NHPC on 25.05.12. Project was discussed by EAC on 21.07.12 in which EAC members desired modifications of biodiversity management plan after including wildlife aspects, etc. and submit revised EIA/ EMP reports for review . EIA/ EMP modified reports submitted to MoEF and all EAC members on 8.09.12. The reply to the comments of MoM has been submitted to MoEF on 20.09.12. Project was discussed by EAC on 12.10.2012. EAC has desired increased provision for environmental flow and fund for Social Development Plan etc. Reply submitted to MoEF on 15.10.12. MoM awaited. Forest Clearance: Stage-I approval: 3.3.11 for diversion of 211.57 Ha. In a meeting dated 15.05.12 CM of Manipur was apprised of the issues and he assured to take up the matter with the concerned authorities. Mizoram Environment clearance: Terms of Reference (TOR) cleared on 10.07.2009. EIA studies awarded to WAPCOS Ltd. on 14.09.2010 and the same is under finalization and shall be submitted after incorporation of land details to SPCB for public hearing. The land details yet to be finalized. Forest Clearance: Submitted to State forest department on 20.12.2010. DFOs of Lunglei, Saiha and Lawngtlai submitted the forest land details to conservator of forest on 7.10.11, 11/2011 and 26.6.12 respectively. However, all the proposals were returned to concern DFOs for further clarifications. Arunachal Pradesh Environment clearance: Deputy Commissioner, Lower Dibang Valley District addressed to Member Secretary, APSPCB, expressed inability to approve a date and venue for conducting public hearing of the project. The matter has been taken up by NHPC with MOEF and with Chief Minister of Arunachal Pradesh for early conductance of Public Hearing. APSPCB has issued notice for conducting public hearing on 28.10.11 for Dibang Valley District and on 31.10.11 for Lower Dibang Dist. Public hearings were postponed on 27.10.11 due to law & order problems. NHPC on 19.06.12 requested Member Secretary (APSPCB) for confirming the dates of public hearing. In a meeting held on 28.06.2012 Arunachal Pradesh government assured that it shall look into the matter for early conductance of Public hearing. Forest Clearance: Forest proposal has been forwarded by State Govt, to MOEF on 18.08.2011. MOEF requested Regional Office of MOEF to carryout site inspection of the project area and submit its report. Regional office (RO), MoEF, Shillong on 06.01.2012 has requested State Forest Dept. to confirm the distance of project area from Mehao Wildlife Sanctuary (MWLS). Chief Conservator of Forest (Cons.) & Nodal Officer (FC) on 11.05.12 intimated MoEF Regional office that 170.56 Ha area is coming within 10 Km of MWLS. NHPC on 02.062012 informed CCF (Cons.) & Nodal Officer (FC) that out of 170.56 ha area, 136.902 ha is non-forest land, which is not part of forest proposal and only 33.658 ha forest area is coming within 10 km range. During the meeting on 21.05.12 with NHPC, Addl. PCCF has informed that the map enclosed with letter dated 11.05.2012 of State Forest Deptt. is not authenticated and also asked that the map should be on topo sheet showing contours, river and project components and should be duly authenticated by State Forest Deptt. State Forest Deptt. on 16.07.12 has submitted requisite map and information to Regional Office of MoEF. NHPC requested Regional Office, Shillong to communicate the date for site inspection. Environment clearance: Cleared on 12.2.2010 Forest clearance: Stage-I approval: 1.3.2012. However, various aspect of Stage-I clearance have been challenged by Shri Bimal Gogi & others before the National Green Tribunal (NGT). The matter is sub-judice before the NGT. Environment clearance: Cleared on 23.07.2012 Forest clearance: Stage -1 clearance accorded on 7.02.12. Environment clearance: MoEF approved additional ToR for EIA/EMP study for the downstream areas w.r.t. enhanced capacity of 2700 MW in August, 2010. The additional studies w.r.t Downstream Impact Assessment has been carried out and draft report submitted to State Pollution Control Board in July, 2011. The public hearing scheduled on 17th 18th & 20th April, 2012 in three Districts could not be held due to law and order problem. Further matter is pursued for fixing a new date. Forest Clearance: The revised proposal for forest land diversion was submitted to Nodal officer of State Government in Feb. 2010, who has forwarded the case to three DFOs for site verification and report submission. All three DFOs have submitted their report to Conservator of Forest who has forwarded the same to Nodal Officer, Itanagar on 13.04.2011. Nodal officer raised certain observation and case has been referred to DFOs for certain clarifications.

Nyamjang Chhu (Private sector) BEL 6x130=780 MW

24.03.2011

DFO West Siang Distt has issued letter certifying non-availability of non-forest land for compensatory afforestation. Draft R&R plan submitted to Distt Administration &state Forest Deptt. Environment clearance: cleared on 19.04.2012. Forest Clearance: Stage-I approval: 9.4.12. Out of total land requirement of 254.5526 ha, 244.4697 ha is community forest land and rest is pvt. Land.

December 2012 www.InfralinePlus.com

StatisticsPower 22

Nafra (Private sector) SNPCPL 2x60=120 MW

11.02.2011

Environment clearance: Cleared on 17.1.2011

Tawang I (Central sector) NHPC 3x200=600MW

10.10.2011

Forest Clearance:. Stage-I approval: 12.7.11 for diversion of 78.45 Ha Environment clearance: Cleared on 10.6.2011 Forest Clearance: Forest proposal for diversion of 187.20 ha forest land has been forwarded by State Govt, to MOEF on 21.09.2011. MoEF on 28.11.11 requested Regional Office to carryout site inspection. MoEF undertook site visit on 15/16.01.2012 and submitted report on 1.3.2012. Project was discussed by FAC meeting on 02.04.12 and FAC desired mat a cumulative bio diversity management plan be prepared for Tawang Basin and also desired from State that a perspective plan for river basin and possible future impacts in next 15-20 years be prepared. This was communicated to Govt of Arunachal Pradesh. CCF (cons.) & Nodal Officer (FC), GoAP on 05.06.12 requested NHPC to get the basin study conducted through reputed Institute. NHPC on 19.06.12 requested GoAP to award the study by them and expenditure incurred be proportionally charged from NHPC and other developers in the basin. NHPC on 20.06.12 also requested MoEF that basin study may be taken as follow up study and not to be linked to the clearance of project. In a meeting held on 28.06.2012, CM of Arunachal Pradesh indicated that the matter has been taken up by the State Govt. He also ensured to take up the matter with MOEF for early of forest clearance.

Tawang II (Central sector) NHPC 4x200=800MW

22.09.2011

PCCF has requested WII, Dehradun for undertaking the Biodiversity study. NHPC requested State Forest Dept. for taking up the matter with MoEF that Biodiversity of Tawang Basin may not be linked with the accord of Stage-I clearance of the project. Forest proposal was reconsidered by reconstituted FAC in its meeting on 17th-18th September, 2012. FAC adhered to its previous decision mat the forest clearance will be reconsidered only after completion of Biodiversity of Tawang basin. NHPC requested Principle Secretary (E&F), GoAP to expedite the award of cumulative biodiversity study. NHPC has requested MoEF to accord forest clearance (stage-I) to the project and take up basin study as follow-up studies. Environment clearance: Cleared on 10.6.2011 Forest Clearance: Forest proposal for diversion of 187.20 ha forest land has been forwarded by State Govt, to MOEF on 21.09.2011. MoEF on 28.11.11 requested Regional Office to carryout site inspection. MoEF undertook site visit on 15-16.01.2012 and submitted report on 1.3.2012. Project was discussed by FAC meeting on 02.04.12 and FAC desired that a cumulative bio diversity management plan be prepared for Tawang Basin and also desired from State that a perspective plan for river basin and possible future impacts in next 15-20 years be prepared. This was communicated to Govt of Arunachal Pradesh requested NHPC to get the basin study conducted through reputed institute. NHPC on 19.06.12 requested GoAP to award the study by them and expenditure incurred be proportionally charged from NHPC and other developers in the basin. NHPC on 20.06.12 also requested MoEF that basin study may be taken as follow up study and not to be linked to the clearance of project. In a meeting held on 28.06.2012 CM of Arunachal Pradesh indicated that the matter has been taken up by the State Govt. He also ensured to take up the matter with MOEF for early of forest clearance.

Tato-II (Pvt Sector) THPPL 4x175=700MW

Total:

22.05.2012

PCCF has requested WII, Dehradun for undertaking the Biodiversity study. NHPC requested State Forest Dept. for taking up the matter with MoEF that Biodiversity of Tawang Basin may not be linked with the accord of Stage-I clearance of the project. Forest proposal was reconsidered by reconstituted FAC in its meeting on 17th-18th September, 2012. FAC adhered to its previous decision that the forest clearance will be reconsidered only after completion of Biodiversity of Tawang basin. NHPC requested Principle Secretary (E&F), GoAP to expedite the award of cumulative biodiversity study. NHPC has requested MoEF to accord forest clearance (stage-I) to the project and take up basin study as follow-up studies. Environment clearance: Cleared on 27.6.2011 Forest Clearance: The proposal for the forest clearance was considered by Forest Advisory Committee (FAC) on 31.05.2011 which advised additional Govt, studies. The report of advised additional studies and the proposal was put up before FAC in April, 12 who proposed site visit DGF & SS MoEF visited project site in April, 12. Based on finding of visit, in May, 12 DGF & SS observed that project need to be considered for clearance and FAC agreed to process the matter further and sought response from State Govt, on 15-20 years perspective and biodiversity management plan. The proposal for diversion of forest land was again considered by FAC on 17.09.12. The committee took note that basin cumulative study for Siang basin is being done by CWC and since the Siyom basin is part of Sing basin, no separate basin study is needed for Siyom basin. The committee desired mat proposal may be placed before it for further deliberations on submission of cumulative study report of Siang basin and the information desired by the committee earlier.

16224 MW

December 2012 www.InfralinePlus.com

State and Project-wise Status of Hydro Electric Projects Pending for Environment Clearance (October 2012) S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Name of the Project

State

Installed Capacity (MW)

Kutehar Bajoli Holi Baglihar Stage-ll Kotli Bhel 1A Kotli Bhel 1B Kotli Bhel-ll Alaknanda Rupsiabagar Khasiyabara Vyasi Devasari Matnar Gundia Teesta Stage-IV Tipaimukk Loktak Down Stream Kolodyne-ll Dibang Demwe Lower Dibbin Lower Siang Niyamjangchhu Nafra Tawang-I Tawang-ll Tato-ll Total (25 Nos.)

Himachal Pradesh Himachal Pradesh J&K Uttarakhand Uttarakhand Uttarakhand Uttarakhand Uttarakhand Uttarakhand Uttarakhand Chhattisgarh Karnataka Sikkim Manipur Manipur Mizoram Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh Arunachal Pradesh

3x80 =240 3x60=180 3x150=450 3x65 =195 4x80=320 8x66.25 =530 3x100=300 3x87=161 2x60=120 3x84=252 3x20=60 1x200=200 4x130=520 6x250=1500 2x33=66 4x115=460 12x250=3000 5x342+1x40=1750 2x60=120 9x300=2700 6x130=780 2x60=120 3x200=600 4x200=800 4x175=700 16224

Pending for Environment/ Forest Clearance (EC/FC) FC FC EC FC EC and FC FC FC FC FC FC EC and FC EC and FC EC and FC FC EC and FC EC and FC EC and FC FC FC EC and FC FC FC EC FC FC

Central Sector Power Projects Pending for Forest and Wildlife Clearance with MOEF as on October 31, 2012 S. No. I 1

Project

2 II 3

Dibang (Arunachal Pradesh) 3000 Pending for issue / letter post FAC/SAG meetings Talaipalli Coal Mining (Chhattisgarh) 18 MTPA

4 5 6 III 7 8 9 10 11 IV 12 13 14 V 15 16 17 18 19

Dhukwan (Uttar Pradesh) 24 THDC Silchar-Melriat (Mizoram) PGCIL VindhyachaI SS (Madhya Pradesh) PGCIL Pending for FAC meeting for Stage-I Forest Clearance Devsari (Uttarakhand) 252 SJVN Teesta-IV (Sikkim) 520 NHPC Rupsiabagar Khasiabara 261 NTPC Pooling Station (Bilaspur, Ranchi) PGCIL Silchar - Purba Kanchan Bari (Tripura) PGCIL Pending for Stage-ll Forest Clearance Kameng-Balipara (Arunachal Pradesh) PGCIL Kameng-Balipara (Assam) PGCIL 220 KV Mejia -Gola -Ramgarh Line DVC Pending for listing in agenda for meeting of Standing Committee of NBWL Visnnugad Pipalkoti (Uttarakhand) 444 THDC Kol Dam HEPP (Bilaspur, Himachal Pradesh) 800 NTPC Vapi-Navi Mumbai (Maharashtra) PGCIL Indore-Dahod (Madhya Pradesh) PGCIL Gwalior- Jaipur (Rajasthan) PGCIL

Pending for Site Inspection for Stage-I Forest Clearance Tipaimukh 1500

Company No. of months pending NHPC

10 (Manipur)

NHPC

13 (Mizoram) 14

NTPC

Status

Inspection by Sub-Committee of FAC since 11.01.2012. Inspection by Regional Office since 07.10.2011. Inspection by Regional Office since 14.9.11.

3 2 1

FAC recommended proposal for Stage-I clearance on 17.08.12. Desired information submitted on 31.8.12. FAC meeting held on 16.08.12. Proposal forwarded to MoEF on October 05, 2012

4 17 7 4 2

Proposal submitted on 30.6.12. Proposal submitted on 3.6.11. Sub-Committee of FAC visited site on 21-22.04.12. Site visit completed by AIG on 30.06.12. Proposal submitted on 21.09.2012.

4 3 2

Compliance submitted on 11.07.12. Compliance submitted on 09.08.12. Compliance submitted on 10.9.2012

9 8 15 2 3

Proposal submitted on 9.2.12. Proposal submitted on 07.03.12. Proposal submitted on 01.08.11. Proposal submitted on 21.9.12. Proposal submitted on 7.8.12.

December 2012 www.InfralinePlus.com

NewsBriefs | Coal

Chhatrasal coal block RPower receives Stage-1 clearance

Mine Development Australian cos show interest for CIL

Goa’s coal import terminal Gammon appears top bidder

The Chhatrasal coal block in Madhya Pradesh has received Stage-1 clearance from the Environment Ministry. It is one of the three captive coal blocks allotted to Reliance Power’s Sasan Power in 2006. The clearance was pending since 2009.The Chhatrasal coal block has reserves of over 160 million tonne. It will fuel Reliance Power’s 4,000 MW Sasan and 4,000 MW Chitrangi power projects.

At least two Australian mining companies have shown interest in developing mines for Coal India Ltd., which plans to harness the private sector for developing 13 greenfield projects with a 65 million tonne annual capacity. The tender for this is expected to be floated by mid-January 2013. CIL bills this initiative as a path-breaking one which will allow it to make headway during the current plan period.

Gammon Infrastructure has emerged the top bidder for developing and operating a mechanized coal import terminal in Mormugao Port, Goa. The company has offered a revenue share of 33.66 per cent to the Port Trust to mechanise and operate the coal berth terminal, which will have a capacity of 2 million tonnes a year. The project involves a concession period of 30 years.

International Coal Ventures Indonesia, Mozambique on radar

Visa Steel-Sun-Coke Energy Aim to sell 49pc stake to its subsidiary

Coal mine stake sale Monet Ispat looks at Colombia

International Coal Ventures Ltd, a consortium of state-run firms with the mandate to acquire coal assets abroad, has said it has received two proposals of thermal coal mines in Indonesia and is also examining a coal asset in Mozambique. ICVL is also currently examining a promising asset adjoining Riversdale (Canada) stated to have the Chipanga Seam.

Visa Steel Ltd signed an agreement with NYSE-listed SunCoke Energy Inc to sell 49 per cent stake in its wholly-owned subsidiary Visa Coke Ltd. The deal value is `368 crore or $67 million. The deal, which is being structured by KPMG, would bring in `355 crore to VSL and the balance would go to the equity of VCL, Vishal Agarwal, Managing Director, Visa Steel, said.

Monnet Ispat and Energy Ltd is set to soon acquire majority stake in a 25-million tonne coal mine in Colombia. The `1,960-crore MIEL wishes to feed its steel and captive power plants in India using the coal made available through the acquisition. Annual production capacity of the mine is 50,000 tonnes p. a. Company wishes to feed its steel and captive power plants in India using the coal acquired.

Nava Bharat-Essar deal Odisha law dept on scrutiny

Poor response to spectrum sale Coal blocks to carry realistic price tag

Meghalaya PSU eyes Odisha Shows interest in 1320 mw power plant

The law department is vetting the deal to check if it was in the ambit of the law even as Essar Power has filed a fresh application to take possession of land for the power project earlier proposed by Nava Bharat. The promoters of Nava Bharat Power had sold 100 per cent shares of the company to Essar Power in two tranches soon after being allocated coal blocks.

Spooked by the poor response to spectrum auctions, government has decided to keep the reserve price for coal blocks at realistic levels as it prepares to allocate 22 coalfields next month to state-owned cos. These will be the first set of coal mines to be allocated for captive mining after the publication of a CAG report earlier this year claiming enormous gains to the private sector.

Meghalaya Mineral Development Corporation is keen to set up a 1,320 MW pithead power plant in the vicinity of the Mandakini-B coal block in Odisha. MMDC has been awarded the coal block with reserve of 1,200 million tonne, jointly with Odisha Mining Corporation, Tamil Nadu Electricity Board and Assam Mineral Development Corporation.

Coal price pooling mechanism CIL & CEA working together

India’s coal import bill touches the sky 249 mt imported at $29 billion

Coal mine auction NTPC stresses on pre-clearance

The government said CIL and CEA are reworking the coal price pooling mechanism and will submit the revised scheme to Power Ministry for consideration. The government would formulate its views upon the receipt of the revised scheme. The Commission had earlier said that to offset the impact of high import costs, CIL should adopt a pooling formula on prices by combining rates of imported and domestic coal.

India’s coal import bill was standing at $29-billion as the country imported some 245-million tons of coal over the past three years. However, quick calculations by analysts indicated that India’s annual bill would skyrocket to $18-billion a year by 2017, based on an import requirement of 185-million tons a year and at current international coal prices and a 5% growth in domestic production.

NTPC said it is important to have in-principle green clearances when coal blocks are auctioned. “Environment clearances, land acquisition should be done beforehand, otherwise the companies may not be interested in bidding for those blocks,” said Arup Roy Choudhury, Chairman and Managing Director of NTPC .Government proposes to allocate 54 mines.

Power Back-up Solutions Market in India 2012 November 2012

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InDepth

CIL says sluggish growth here to stay; seeks nod to mine forests ►► Lack of railway infrastructure in mining areas forcing company to underperform ►► Demand-supply gap in coal forecast to hit 192 million metric tonne this year

Coal India started talks for building and expanding railway infrastructure in its mining regions with Railways in the 1990s but little has happened by Team InfralinePlus

Prime Minister Manmohan Singh’s direct intervention in the matter of boosting coal production is not going to change the situation anytime soon as state monopoly Coal India Limited (CIL) says it will continue to face sluggish growth in output for at least next three years. Its chairman S. Narsing Rao says the only solution to overcoming the acute coal shortage is to allow companies to mine coalrich forests in a big way and grant them faster clearances to do the

same. Also, he says, lack of railway infrastructure in mining areas has forced the company to underperform. The biggest rail problems are in three of India’s top coal-producing states, Jharkhand, Orissa and Chhattisgarh, which together account for over half of national output which is also forest rich. Mining regions also lack good road connectivity. Companies usually prefer using rail to road for transporting coal to avoid theft of raw material. Blaming the current situation on

the slow pace of environmental and forestry approvals needed for new mining projects, Rao says, “There is no overnight solution to the problem. For the past four-five months there has been hype about this, but there is no quick fix.” The Prime Minister’s assurances, says Rao, had “set the ball rolling” but it will only be by 2015 that improved rail connectivity, allowing Coal India to boost output by about 300 million tonne, will be in place. The less than enthusiastic

December 2012 www.InfralinePlus.com

words of Rao, do not augur well for India’s embattled power sector which is heavily reliant on coal. The consequences of inadequate coal production have been frequent power cuts and some major blackouts, like the two that hit large parts of India earlier this year, denting the country’s reputation as an investment destination. India, the world’s third largest coal producer, mined about 550 million metric tonne of coal in the financial year ended March 31, 2011, and imported more than 100 million tonne to bridge the domestic supplydemand gap. Imports have more than doubled from about 50 million tonne in 2007-08. The demand-supply gap in coal is forecast to hit 192 million metric tonne this year, almost double the level two years ago. Some power distribution companies have been passing on the higher price of imports to consumers, a politically unpopular move. Many refrain from buying the costly electricity, leading to power cuts and a financial crunch. Coal shortage also threatens longrange plans to increase generation capacity. The government intends to raise capacity by 44 per cent, to 288 gigawatts, by 2017--most of which will come from new coal-fired plants. Many of India’s coal-fired power stations now have very low stocks, with nearly half below the comfort level of seven days of consumption, which increases the possibility of power cuts. “I am forced to not realize my true mining potential. If the coal cannot be transported, why should I raise production at the mines?” says Rao. Coal India started talks for building and expanding railway infrastructure in its mining regions with state-owned India Railways in the 1990s but little has happened, he says. A senior railway ministry official declined to comment on why rail projects to mining areas had not been fast-tracked. Analysts say opening up

Local issues need to be sorted out to raise coal output

The Prime Minister’s assurances had “set the ball rolling” but it will only be by 2015 that improved rail connectivity, allowing Coal India to boost output by about 300 million tonne, will be in place. mining and rail transport to the private sector is the answer but political opposition as well as resistance from labour unions would make any such task tougher for the government. Rao says his focus is on sorting out local issues to raise coal output rather than on acquiring overseas coal mines. The only overseas assets the company has are two Mozambique blocks it acquired in 2009, although it is in talks on a possible project to produce coal in South Africa and ship it back home.

Forest of controversies Allowing mining in forest areas is a controversial subject in India. Citing environmental reasons, former environment minister Jairam Ramesh had restricted coal mining in dense

forest areas in 2009, a decision that was overturned this year by his successor, Jayanthi Natarajan with a go-head from a group of ministers to overturn the policy. Ramesh had classified dense forest areas as no-go areas for mining projects. While it’s technically allowed, getting approvals to mine coal in forests is not easy. Delays in environmental clearances, among other bureaucratic and infrastructure hurdles, are a burden for Coal India, which meets more than 80 per cent of the country’s coal requirement, making it crucial to India’s economic growth. The state monolith has sought the intervention of Prime Minister’s Office for 178 projects from state governments of Orissa, Jharkhand and Chhattisgarh. More than half of India’s total coal resource of 285 billion tonne falls in forested areas. However, delays in environmental clearances prevent companies from realizing their output potential. Getting a green light to mine in forest areas can take as much as four years in India. Elsewhere, this is something that typically takes between two to six months. For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InDepth

Chorus against coal price pooling grows louder ►► After Chhattisgarh and West Bengal, it is Odisha’s turn to oppose the move by Coal India ►► Experts blame opposition to financial precariousness of state power purchasing utilities

Price pooling is likely to increase the input cost for power plants located at the pithead

by Alok Sharma

The ongoing dialogue between the ministries of power and coal to reach common ground on coal price pooling seems to have run in rough weather with the Odisha government opposing the move saying it would only benefit the private power producers. The Centre has been pushing for a pooling strategy as a temporary measure to offset shortfall of domestic coal supply to power producers. Earlier, the state governments of Chhattisgarh and West

Bengal had objected to price-pooling of coal. Shooting off a letter to the Union power ministry against the price pooling formula proposed by the Central Electricity Authority (CEA) and Coal India Ltd (CIL), the Odisha government has said that the pricing mechanism is aimed at subsidising private power generators. Odisha is the second biggest producer of coal in the country.

“If pooling of price is followed, it will ensure subsidy to those power plants which do not have coal linkage. Private power generators will benefit at the cost of the state and the general public,” writes Pradip K Jena, state energy secretary in a letter to the power ministry. He says the proposal to transport domestic coal from the pitheads of coal bearing states to non-coal bearing states and transporting imported coal to different

December 2012 www.InfralinePlus.com

pithead plants does not appear to be economically prudent. Earlier, principal secretary in West Bengal power department, Malay K De, had said, “The state government is opposed to the move for price-pooling and we have already written to the coal and power ministries opposing the move.” De had said there was no question of agreeing to the proposal in which common people of the state would have to pay additional electricity tariff. In September, the coal miner had sought state governments’ views on price pooling of coal. Industry experts believe that the states are opposing the move because their power-purchasing utilities are already in a “financial mess”. Any extra load can trigger defaults and would only aggravate the impending crisis. What power-purchasing utilities need is stiff tariff hikes over the next few years to align with purchase costs which account for as much as 70 per cent of their bills, says an expert. The Planning Commission had also suggested the pooling mechanism, under which domestic and imported prices were to be averaged out to allow consumers to avail uniform

“Experts believe that the states are opposing the move because their power-purchasing utilities are already in a “financial mess”. Any extra load can trigger defaults and would only aggravate the impending crisis. What they need is stiff tariff hikes over the next few years to align with purchase costs which account for as much as 70 per cent of their bills.”

rates of coal irrespective of the source. However, the state governments are of the view that price-pooling will mostly benefit the new power plants which would be able to procure imported coal at prices lesser than what they are paying at present. At the same time, plants located at the pithead will have to pay higher price for coal.

Price pooling will raise input cost, admits CIL CIL has admitted to the government that price pooling is likely to increase the input cost for power plants which are located at the pithead. In a letter to the Coal Ministry, CIL Chairman S Narsing Rao had written recently, “Spreading of additional cost will result in an increase of domestic coal price to an extent of around eight per cent, 21 per cent, 16 per cent and seven per cent during the years 201213, 2013-14, 2014-15 and 2015-16, respectively.” As of now, notified price of coal stands at `1,682 per tonne. A seven per cent increase would push up the price to `1,799 per tone, on the lower side while the average coal price will jump to `2,035 per tonne, on the higher side. The Kolkata-based company plans to raise production to 615 million tonne (mt) by 2016-17, compared to 464 mt in 2012-13. According to the Planning Commission, country’s coal imports are likely to go up to 185 mt by 2017. CIL has fixed a production target of 464 mt for 2012-13. The company had achieved 435.84 mt output in 2011-12 against a scaled-down target of 447 mt. During the 12th Plan, CIL has planned to raise production by another 180 mt. Yet, additional requirement for the power sector alone would be above 240 mt, for a capacity addition of 35,000 mw. It is not for the first time that Coal India is at the receiving end. Its earlier proposal had also received a lukewarm response from power generators. It

C. Rangarajan

Allow private players, says Rangarajan Chairman of the economic advisory council of the Prime Minister, C. Rangarajan, has suggested Coal India to enter into an arrangement with private players to increase coal production. His advice comes at a time when the government is battling hard with the growing current account deficit fuelled by high imports of commodities. “For the power sector, constraints such as availability of coal, land acquisition and environmental issues need to be tackled… Coal India and its subsidiaries can use the private sector as an agent. Private players can supply coal to Coal India at some agreed price,” he said adding that it could act as a temporary measure to boost production. had earlier suggested sharing 25 per cent of imported coal cost by all power generators, while 75 per cent will have to be borne by individual generators. As per a directive issued by the President of India, Coal India is expected to supply 80 per cent of the total amount of coal it has agreed to provide under Fuel Supply Agreement (FSA) to power generators who had set up plants between 2009 and 2015. Struggling to increase output, Coal India realised it can only supply 65 per cent of the agreed quantity. According to the new proposal, Coal

December 2012 www.InfralinePlus.com

InDepth

Notified price of coal stands at `1,682 per tonne

“CIL has admitted that price pooling will lead to increase in the input cost for power plants which are located at the pithead. CIL Chairman had said recently that spreading of additional cost will raise domestic coal price to an extent of around 8%, 21%, 16% and 7% during 2012-13, 2013-14, 2014-15 and 2015-16, respectively.”

New Fuel Supply Agreement

The key points of the new Fuel Supply Agreement (FSA) announced by CIL in April 2012 for supply of coal to power plants commissioned after March 31, 2009, up to March 31, 2015, are: • Signed for a period of 20 years and will be reviewed after every five years. • 80 per cent of assured contracted quantity (ACQ) of the committed coal supply • Penalty at 0.01 per cent of the value of the shortfall quantity and will be applicable only after three years of signing the contract • In case of shortfall, CIL will import coal for power companies after their consent and supply it at the unload port on a cost-plus basis, including service charges. • Included additional force majeure circumstances to cover the risks arising from third parties, global shortage of imported coal, lack of response to enquiries, the breakdown of equipment, delays by contractors, power shortages, and obstruction in the transportation of coal, from pithead to sidings, by agitations/mob-violence/riots The power ministry and power producers were not happy and raised concern over the proposed penalty clause, force majeure clause and trigger level of new FSA. CIL proposed supply of coal at disincentive trigger value of 65 per cent of LOA in first three years of 12th Plan, 72 per cent of LOA in fourth year and 80 per cent of LOA in fifth year of 12th Plan. The Ministry of Power was unwilling to accept the 65 per cent commitment level and highlighted that banks were not accepting the 65 per cent trigger level as against the earlier directive of 80 per cent supply assurance. Ministry of Power and power producers approached Prime Minister Office (PMO). A Presidential directive was issued to CIL by the government to sign fuel supply agreements (FSAs) with power producers, committing at least 80 per cent assured supply. CEA suggested to CIL to meet the normative requirement of power plants for which if required they may need to import coal. In order to offset the impact of high import costs Planning Commission suggested CIL to adopt a price pooling formula on domestic and imported coal.

India suggested that it could import 15 per cent of the FSA quantity and pass on the extra cost to the stakeholders. In case the power producer does not want Coal India to import the rest 15 per cent, it would be considered “deemed supply,” Coal India Chairman had recently proposed. While it is to be seen whether the Centre is able to convince state governments to agree to the price pooling formulae, it is aiming to ensure coal supplies to over 60,000 mw capacity so that the projects become operational. Union Power Minister Jyotiraditya Scindia had recently said that his first priority was to get in place coal linkages for nearly 60,000 mw capacity. “The whole issue of pooling of coal and taking fuel as a pass through is something that we are evaluating ourselves in the Power Ministry, once we have clarity on the guidelines that we are going to put in place, we will take it forward,” Scindia had said. As per the Power Ministry estimates, it would facilitate additional electricity generation of about 32 billion units in 2012-13; 44 billion units in 2013-14 and 57 billion units in 2014-15. For suggestions email at feedback@infraline.com

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• Comprehensive access to Road sector Knowledge Base with real time updates on company profiles, Present status of Roadways in India, Over 300+ project profiles- ongoing and upcoming, Land Acquisition details, Finance Mechanism and profile of funding agencies, Policies and Regulatory Changes, Details of Toll plazas and revenue collected, Key statistics related to sector, State-wise Profile of Projects and Public Works Department and much more • Daily Newsletter delivered to your inbox at 9:00 A.M • Real time News alerts with JUST IN feature • Don’t miss out on our Special Membership Benefits - 10% discount on Infraline Reports & Publications - 10% discount on Infraline passes for Conferences • Precise and efficient reach to desired information using InfraSearch • Access to knowledge of Industry stalwarts in road sector through exclusive interviews, debates and guest articles in Industry Expert section

Infra-Search: Advanced Filter options to further tune search results according to different parameters; Sector, Location, Length in km, Year, Project type, Context type and Content type

Introducing first ever Knowledge Base on Roads Sector, covering recent developments and exclusive updates on critical information for developers and other organizations involved in the value chain. Content Coverage Sector Overview: Detailed overview of the Indian Road Sector, including its present status, recent developments, policy changes, and a glimpse of key statistics related to the sector. Funding Agencies: Detailed profile of funding agencies actively involved in the sector with the projects executed like world Bank, Asian Development Bank, Japan Bank for International Corporation. Finance Mechanism: Financing mix of Debt- Equity with the additional information on various funding option Project Profile: The comprehensive coverage of Proposed, under implementation and Operational Projects. Details comprising of location, length, cost, concessionaire/Client, financial closure etc. Major Players: Company profile of the major players in the road sector with the details of the projects, their financial snapshot, future plans for development, Joint Venture Project Updates, JV Agreements, MoUs , Progress and Plans, Presentations etc. Demand-Supply Analysis: The existing demand-supply gaps, density of roads and increasing number of automobiles. This section consists of data related to density in terms of area and population National Highway Development Programme: The government of India embarked upon the grand policy of National Highway Development Programme (NHDP) for the development of roadways in the country. The Roads Knowledge base covers the NHDP projects from implementation till execution. Acts, Policies, Guidelines & Important Documents and Notifications, Regulations, Orders issued by Central Government, State Government, Central and State Public Works Department and other relevant authorities. Special focus on Public Private Partnership (PPP) as the government has initiated development of roads as a priority there is a huge

investment required by the sector. The knowledgebase would provide first hand information on PPP projects plus insight to the sector. Traffic Data related to growth in passenger motor vehicles/ LCVs/ MCVs etc. in states and union territories. Incentives to Private Investors: Focus on the favourable policies and incentives for private players while investing in road projects. Tolling in India Number of Toll plazas in the country and the amount of revenue generated from it. Detailed Regulatory Framework encompassing updated profiles of MoRTH, NHAI, Border Road Organisation ,and the Planning Commission etc with latest details on Regulatory Acts, Performance Reviews, Proposals & Papers, etc. State wise details of Public Works Department with projects, funding through multilateral agencies, land acquisition details, propose state highway projects etc. Industry Connect Column featuring Interviews, Guest articles and excerpts of the key people in Road Sector Important Reports and Presentations on Road Sector Performance, Reports on Specific Reforms, Transport Sector Studies, Special Committee Reports and General Reports, Presentations and Deliberations of Infraline Energy’s Conferences and Round Table Discussions, Presentations made by MoRTH, NHAI and other industry stalwarts. Minutes of Meeting: crux of the meeting conducted by NHAI/MoRTH/High Level Committee on various issues/ Sectoral Developments. NHAI Manuals: various manuals published by the authority in a easy to download format. Contact addresses of all the all the Key Govt. officials and Private Players

For any further information, kindly contact us on below mentioned coordinates:

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Ruchi Sharma, Manager - Marketing Ph. 011-66250023, 46250038 (D), 4625 0000 (B), Mobile: 9560626589 Email: ruchi.sharma@infraline.com

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ExpertSpeak

Dynamics of black gold-II

The first in this two-part series (InfralinePlus November 2012) on coal and its related issues had focused on key facts and figures on the sector—the importance of Coal India in the country’s energy scenario and the importance of private players. In this second and last part of the series, Jaganath Prasad Panda, Managing Director of Priya Mining Consultancy and Services Pvt Ltd, highlights the importance of land and related regulatory issues in mining. Mining, an essential activity for the creation of primary wealth of a nation, is a site-specific activity and requires land where mineral is available. There can no concept of “alternative site” for mining. It can only either be curtailed or shelved forever or for a future date when some technique to exploit resources without disturbing land and environment is developed. Large acreage of contiguous land which may be forest land or revenue land, whether government or private, is required for efficient exploitation of minerals.

Obtaining land rights in India In India, surface rights for exploration, prospecting and exploitation of mineral deposits can be obtained from any of the following agencies depending on the nature of land being considered for acquisition:i) As per the guidelines issued by the respective state governments for government / community land. ii) In case of private land holding

Central government for right to use land for the purpose of Petroleum and Mineral Pipelines. The Central government may direct by an order in writing to vest the land in the state government or a corporation.

Private Revenue Land

(revenue land), land rights can be obtained by direct negotiations with land owners and / or through the concerned state government on requisition by the proponent, as per the Land Acquisition Act 1894 and as per various Acts and Codes of the state governments. iii) From the Ministry of Environment and Forest (MoEF), government of India, for “dereservation or use of forest land for non-forest use” (including “mining”), as per the guidelines issued and updated, time to time, by the MoEF. iv) Under the Coal Bearing Areas (Acquisition & Development) Act, 1957, by the Central government for unworked land containing or likely to contain coal deposits. The Central government has the power to direct, vest land or rights in a government company only. v) Under the Petroleum & Mineral Pipelines (Acquisition of Rights of Uses in Land) Act, 1962, by the

Acquisition of large acreage of private land through direct negotiation poses innumerable challenges because of the extremely fragmented nature of landholdings and lack of clear titles, difficulties in ascertaining the actual ownership of land, land owners being not available (sometimes even in the country), identification of share croppers who also claim to be compensated, holding out land expecting higher price after development work in the area, etc. Local people or organisations are employed as facilitators and / or consultants who tend to use strong arm tactics with the help of land mafia or local politicians. Sometimes, resentment of such an action may grow into a full-fledged agitation by an NGO or a political group. Still, private negotiation is the only route for small-scale mining. Some recent successful land acquisitions by direct negotiations have been made by JSW for steel plant in Kharagpur (West Bengal) and DLF for realty sector. Here, they involved the Panchayat (local body) and offered lucrative sops viz, share of the company, employment to one member of the family, medical and educational facility; part payment in terms of LIC annuity etc.

Land acquisition through state government

December 2012 www.InfralinePlus.com

For acquisition of land through the above route, the company, the proponent, has to apply to the collector giving particulars of the lands it needs, explaining that it is one which falls within section 4(1) of the Act, part VII â&#x20AC;&#x201C; quoted below : 1. Such consent shall not be given unless the appropriate government be satisfied, either on the report of the collector under section 5A, sub Section (2), or by an enquiry held as hereinafter provided, a) That the purpose of acqui sition is to obtain land for erection of dwelling-houses for workmen employed by the company or for provisions of amenities directly connected therewith, or b) That such acquisition is needed for the construction of some building or work for company which is engaged or is taking steps for engaging itself in any industry or work which is for public purpose, or c) That such acquisition is needed for the construction of some work and that such work is likely to prove Lack of clear titles and extremely fragmented nature of landholdings poses several difficulties in ascertaining the actual ownership of land

useful to the public. The purpose of the requisition should justify the benefits including those accruing to the Project Affected Persons (PAPs). If on the report of the Collector, the appropriate government authority is satisfied that work is prima-facie so, a notification under section 4 of the Land Acquisition Act, including invitation of objections for the purposes of section 5A should be published; or the appropriate government may direct that an enquiry should be made according to the special procedure laid down in section 4.0.

Where the notification is for acquisition for a company, it is necessary to comply with section 7 of the Act. Objections to acquisition as above may be made on the following ground: 1. That the work does not fall within the scope of section 4.0 (1) of the Act; 2. That the particular land notified is not the best adopted for the purpose intended, or 3. That its area is greater than is actually required for the purpose. After considering the enquiry report by the Collector, the appropriate government

December 2012 www.InfralinePlus.com

ExpertSpeak

satisfies itself and then the company would be required to executive an agreement. The agreement stipulates that all costs would be borne by the company and the terms on which the works by the company will be for a public purpose. After execution of the agreement and depositing the estimated cost of acquisition, a declaration under Section 6 would be published. Thereafter, other procedures of the Act will follow and possession of the land will be taken by the collector under section 16. A deed is executed between the government and the company conveying the land to the latter specifying the terms of agreement on which the land would be held by the company. The company cannot be permitted to direct the use of land for some other purpose than stipulated in the agreement & the conveyance deed. 32

Coal Bearing Areas (Acquisition and Development) Act 1957 Land for coal projects is acquired by government companies under Coal Bearing Areas (Acquisition and Development) Act 1957 or CBA

(A&D) Act 1957. The provisions are similar to LA Act 1984 except that it is a centrally administered Act. Under the provisions of the Act, the lease for coal is automatically vested with the government coal company. Coal companies provide employment as per certain norms against vacancy, but invariably the demand is more than the norm and hence physical possession becomes very difficult due to agitation The CBA Act provides for time limit

A deed is executed between the government and the company conveying the land to the latter specifying the terms of agreement on which the land would be held by the company. The company cannot be permitted to direct the use of land for some other purpose than stipulated in the agreement & the conveyance deed.

There are four-five different agencies from which land rights can be acquired depending on the nature of land use

for completion of acquisition process but these time limits are seldom adhered to. As a result, the process lapses at different stages due to time bar and the entire procedure has to start afresh. The following legislations are also applicable for acquisition of land, mining rights of the coal mines and conduct of coal mining operations in India. The Nationalization Act 1973 has vested large parts of the erstwhile colliery land with Coal India. 1. Coal Mines Nationalization Act 1973 2. Coking Coal Mines Nationalization Act 1972 3. Coal Mines (Taking Over Management) Act 1973 4. Coking Coal Mines (Emergency Provision) Act 1971 5. Land acquisition Act 1984 6. Coal bearing areas(Acquisition and Development ) Act 1957 7. Coal India ( Regulation of Transfers and Validation) Act 2000 8. Mines and minerals ( Development and Regulation) Act 1957 9. Coal mines (Conservation and Development ) Act 1974

Important rulings by the Supreme Court i) The government has sole and absolute discretion in acquiring land for â&#x20AC;&#x153;public purposesâ&#x20AC;? which cannot be and should not be precisely defined, and its scope and ambit be limited as far as acquisition of land for the public purpose is concerned. ii) Land acquisition cannot be challenged once the owner has accepted compensation and the government has taken possession of the land. iii)When the land acquired by the government is not required for a particular project after acquisition, the same cannot be returned back to the owners, but should be handed over to the government department for other projects meant for public purpose. But a recent High court judgment has upheld the Ordinance by state of West Bengal which allowed return of

December 2012 www.InfralinePlus.com

changes in policies for allotment of mining lease and other legislations related therewith.

Suggestions regarding land acquisition

Land issue led to the closure of the Vedanta mining project in Orissa

400 acres out of 1000 acres acquired land to the land losers acquired at Singur and which was challenged by Tatas. However, the high court decision has been reversed again in the Supreme Court. The recent spate of unrest on the issues of land (including forest land) acquisition for development in various parts of the country is a clear indication that the development of regions is not inclusive and mineral rich states remain poorer in social indicators. Population at large is disillusioned over the so called economic growth of the nation and disparity in income is glaring. Hence, inclusive growth of people and winning over their confidence are the first priorities of the mining community. It is essential to have uniform code / law for land acquisition both for private land and to some extent for forest land with full transparency and involvement of the local (regional) people and public at large. The social and environmental impact should be studied at length. The benefits and necessity of having project (mining activities) and the proposed actions to mitigate the social and environmental impacts

should be transparently available and discussed at local and state levels with administrative bodies through public hearing which should be well recorded (even videotaped) . Recent guidelines in Environment Impact Assessment and Environmental clearances; and in obtaining forest land for non forest use, have spelt such steps. It should be made clear that mining would be temporary land use, which would be reverted back for other land based uses and that the mine closure would dovetail the infrastructure for perpetual use of the community. Over and above these steps, the implementation of all mitigation actions should be honestly and sincerely monitored through an empowered body of the local population including NGOs, government agencies and the industry. The indicators of monitoring should also be easily available through websites and through notices at authorized local administrative bodies, in easily understandable local languages. Thus the approach should be holistic and can be achieved by allowing only large-scale mining on region basis. This may also need some

Seeing the importance of land acquisition for the very survival of Coal India, it is suggested 1. To build up a strong land acquisition team at company HQ for compiling all data including computerized land records. 2. Interact and follow up with the Land acquisition officer of state and collector/district magistrate constantly. 3. The chief executives or CMDs of the companies should meet the Chief Minister of the state and chief secretary of the state as often as necessary for constant follow up and request for monthly structured meeting with the chief secretary at the chair and following officials from state a) Revenue Development Commis sioner b) Collector of the district c) Land acquisition officer d) Superintendent of Police of the district e) Chief executive of coal company and his team. f) Representative of coal ministry/ power ministry g) Members of state pollution control board h) Members of state forest department when forest land is involved i) Any other member 4. Since the matter is of extreme importance for the coal company, the liaison with state government should not be left to junior officers only. As a matter of fact, a strong cadre of senior officers with liaising skills should be selected and posted at the state capital for this job.

For suggestions email at feedback@infraline.com

Gondulpara Jharkhand

Talaipali Chhattisgarh

Dulanga Odisha

Tara Central (Non-CIL) Chhattisgarh

Gidhmuri and Chhattisgarh (Hasdeo Arand)

Paturia Chhattisgarh (Hasdeo Arand) Tadicherla-I Andhra Pradesh

Amelia MP.

Block allocated and State Talabira II & III Odisha

SI. No.

Date of Allotment

25.01.2 006

393.6 MR 287.96

47.93 Mineable 45.36

350 Gidhmuri 80.27 Paturia 269.25 Total Mineable Reserve = 281 Mt

12.1.06

06.12.2 005

23.09.2 004

14.8.20 03 317.33 Mineable Reserves revised to 166.92 from 212 as earlier estimated

245 (Mineable Reserve 156.75)

13.01.2 006 166.185 (74.87 3 + 91.312) (extend ed pit) Mineabl e Reserv e (116.69h 62.290 + 54.40 (extend\ ed pit) 1267 MR 843.68 25.01.2 006

589.21 (MR 553.98) 10.11.2005

Geological Reserves (MT)

End-Use

MPSMCL

Andhra Pradesh Power Generation Corpn. Ltd.

CSPGCL

Chhattisgarh Mineral development corporation Ltd.

NTPC

DVC/TVNL (Share ratio 50: 50) JV Company Tenughat Emta Coal Mines Ltd.

Power

MCL/ NLC / Power Hindalco 70:15:15 U+CPP Joint venture company MNH Shakti Ltd.

Name of Party Mine Plan (original) approved for 20 MTPA on 21.4.2008 Revised Mine Plan has been approved on 13.1.2012 Environment Clearance Public hearing completed. Final EIA/EMP submitted to MoEF on 30.3.2011. MoEF intimated the coal block is in No Go area. MNH shakti requested MoEF to enlist the project as the Go/NoGo categorization has been done away with by GoM. Environment Clearance is still awaited. Forest Clearance: Proposal submitted to DFO (N) on 26.5.10. Following activities related to FDP are completed/ under progress: • CA land identified and approved Gram sabha under FRA.200 6 complete d in 3 out of 5 villages • Demarcation of interdivision boundary work complete d Tree enumeration completed. • DGPS survey completed Mining Plan (4MTPA) approved on 24.6.2009. Environment Clearance Application submitted to MoEF on 18.8.2012 Forest clearance Application for diversion of forest land (119.27Ha) submitted to DFO on 20.9.2010. The same has been sent to PCCF by RCCF on 12.7.2011.

Status

Kakatiya TPP St-ll (600 Mining Plan approved (2.5 MTPA) on 6.8.2008. Environment Clearance: The Final E/A Report MW) submitted to MOEF on 27.06.2009. Presentation made on 28.04.2010, MoEF directed APGENCO for specific R & R Plan which has been got approved on 27.09.2012 .Forest Clearance: 132.33 Acres of land comes under Tadichera Reserve Forest. CA land identified and DFO on 06.10.2012 confirmed the suitability of the area. Enumeration of trees in forest land completed. (i) Shree Singaji TPP Mining plan for 8.4 MTPA approved on 19.10.2006. Environment clearance obtained from MOE&F on Phase II (2x660 MW) of 27.03.2008. Forest clearance Application for forest clearance was forwarded by State Govt. to MOE&F MPPGCL on5.8.2007. Revised proposal for stage-l forest clearance submitted on 21.05.2009. Comments sought by MoEF has been submitted by Govt, of MP, forest department on 6.9.2012. (ii) To meet shortfall in coal supply to existing power plants of MPPGCL namely ATPS (450 MW) STPS 1142.50 MW SGTPS 1340 MW

(ii) DVC Chandrapura TPS U7&8 Lara (1600 MW) Super Mining Plan Detailed exploration(3 9855 m) drilling & GR preparation was done by NTPC (through critical units. MECL). Mining plan (18 MT per year) was approved by MoC on 31.03.2010) Environmental Clearance MoEF accorded in principle environmental clearance on 25.1.2012. Formal clearance after stage-l forest clearance. Forest clearance: Application submitted to State Forest Deptt. on 05.03.2009. Forest proposal cleared by Govt, of C.G. and forwarded to MOE&F on 15.3.2012. FAC recommended proposal for Stage-l Clearance on 17.8.2012. Stage-I Forest clearance approved by MoEF Minister on 5.10.2012 Darlipalli (1600 MW) Mining Plan: Approved (7 MTPA) on 30.07.09. Revised mining plan As required by MOE&F for NO Go Area clearance, Reserve forest area excluded during Mining Plan revision. Approval received from MoC on 6.9.2012. Environmental Clearance MoEF accorded in Principle clearance on 22.3.2012. Formal EC will be issued after FC stage-l. Forest Clearance Stage-I Application submitted to PCCF on 31.08.2009. Enumeration of trees and demarcation of forest land completed. Proposal cleared by DFO and RCCF and forwarded to PCCF on 22.3.2012. NoC on FRA etc. submitted to CCF on 31.8.2012. FC stage-l awaited. Revised Mining Plan approved (6 MTPA) in 26.4.2012. Forest Clearance MoEF granted on 5.7.2011 IFFCO Chhattisgarh Power Ltd. (2x660 MW) stage-l clearance for diversion 1324.38 hectares of forest land. Compliance of conditions for obtaining stage-ll clearance is under progress. Environment Clearance: TOR issued and Public hearing held in at Salke, Premnagar, District Surguja March 2009. EAC meeting held in Sept 2009 for final Env. Clearance and Committee’’s observation (Chhattisgarh) complied on 15.1.2010. After stage-l forest clearance final presentation was again made before EAC on 19.7.11. Bhaiyathan TPP 2x660 Mining Plan (5.6 MTPA) approved on 6.9.2007. Environment Clearance : Public hearing conducted MW on 2.3.09. Revised presentation made before EAC (MOEF) on 24.11.2009 after inclusion of queries raised by EAC for obtaining final clearance. Clearance is awaited. Forest Clearance Application for forest diversion proposal under FC Act, 1980 for 2076.532 Ha area was put up before FAC, MOE&F on 28.8.09 for stage-l clearance. FAC did not recommend the proposal as the tree density is quite high. MoEF communicated the decision in Dec, 09. Application for reconsiderat ion submitted to Principal Secretary (Forest), GoCG on 5.2.2010.

(i) TV NL Tenughat T.P.S. Extension plant (2x660 MW)

TPP at Jharsugoda (2000 MW) And 900 MW CPP of Aditya Aluminium Project in Sambalpur, Orissa

End Use Project

Status of Captive Coal Blocks Pending for Environment & Forest Clearance (October 2012)

December 2012 www.InfralinePlus.com

StatisticsCoal

Parsa East Chhattisgar h

Kante Basan Chhattisgar h Gare Pelma Sector III (Bajarmuda Mine) Chhattisgarh

Chhatrasal Madhya Pradesh

Kerandari B&C 972 Jharkhand

Mahan Madhya 144.2 (Mineab le = 12.04.2 006 Pradesh 122) (Life 15 years)

Chakla Jharkhand

Tubed Jharkhand

Durgapur ll/ Sarya Chhattisgarh

17.7

Manoharpur Odisha

25.06.2 007

532.86 Mineabl e = 452.46)

91.67 MR 66.962

189 Mineabl e = 140)

81.3 (MineabIe 71.4)

150

06.11.2 007

01.08.2 007

20.02.2 007

20.07.2 007

26.10.2 006

210.20 MR 134.10 12.11.2 008

25.06.2 007

25.07.2 007

181.68 Mineral s 153.45

2.8.06

Dongrital-ll M.P. 175 Mineable reserves 42 (Ph-I)

12.1.06

123.54

Amelia (North) MP.

Power

DB Power Ltd.

Hindalco/T ata Power (60: 40) JV company Tubed coalmines Ltd.

Essar Power Jharkhand Ltd,

PowerU+CP P Hindalco captive power plant of Jharkhand Aluminiurn Project Power

Power

Mine Plan approved. Environment Clearance: EAC(T&C) of MoEF considered the proposal in its meeting held on 28-29 April, 2010. Clarification sought on R&R, PH, CSR and WL Conservation plan. Forest clearance: Application submitted on 16.7.2009 at state level. Presentation to FAC of MoE&F made on 25.11.2009. MoE&F queries replied. Environment al & Forest Clearance for Chhatrasal Coal Block is awaited. Mine Plan approved (40MTPA) on 29.10.2010. Environment Clearance: TOR obtained on 29.7.2010. Public Hearing conducted on 16.5.2012. Proposal for EC submitted to MoE&F Forest Clearance: Forest diversion proposal has been processed at District forest Deptt. and forwarded to PCCF Ranchi and pending at State level since July, 2011. Forest land involved is about 4495 acres. Mining Plan approved (8.5 mpta) on 14.6.07. Environmental Clearance: Received clearance on 23.12.2008. Forest Clearance: Application submitted for 1182.35 Ha of forest land on 13.7.2007 (Originally applied) which was revised downward during Environment at clearance to 1072.35 Ha. After State Govt recommendation to MoEF on 29.12.07, Forest Diversion Proposal had been under consideration by FAC. Minister of MoEF referred the matter to GoM on 8.7.2011 EAC made a site visit of the coal block on 14/15 March 2012. GoM considered the site visit report on 30.5.2012. Stage-I Forest Clearance is awaited. Mining plan: (4.5 MT) approved On 10.6.2008. Environmental Clearance: EC received. Forest Clearance: Forest clearance application was delayed due to process of surface rights transfer by Central Coal field Ltd. The surface rights transfer was completed on 4.9.2009. The application was submitted on 11.12.2008. PCCF, GoJH has queried about status of NOC of GM land & certificate under Forest Right Act,2006. Mining Plan approval (6 MTPA) on 12.10.09. Environmental Clearance: EC has been approved subject to Stage-I Forest Clearance. Forest Clearance Application submitted on 29th July, 2009, FDP has been forwarded by PCCF to Secretary (Deptt. of Forest & Env.), Jharkhand on 19.4.2012.

Due to reduction in ML area, EIA/EMP report resubmitted on 4.10.2011. Third presentation made before EAC on 18.6.2012. EC awaited. Forest Clearance: Application for forest clearance was submitted on 11.11.2008. The same was resubmitted on 9.8.2011 due to change in Forest land. Application under process at Office of AIG(F), MOEF since 24.5.2012. On AIG(F)’’s advice, ACCF, Bhopal carried out site inspection on 29.6.12.

Hindalco CPP (6x150 MW) ofJharkhand Aluminium Project at Sonahatu in Jharkhand Tata Power Tiruldih Power Project (3x660 MW) comprising 2x660 MW IPP and 1x660 MW CPP 2x600 MW TPP Super Mining Plan (2.0 mt/year) approved on 24.06.09. Due to reduction in ML area from 693.326 Ha Thermal Power Project to 540.75 Ha, Revised Mining Plan submitted to MoC along with Revised Mine Closure plan on 31.3.2012 and 31.5.2012 respectively. Approval of MoC is awaited. Environmental Clearance During PH conducted on 28.2.2011, the point came up about existing in habitated areas on Northern part of block hence ML area was reduced accordingly land use changed.

Tori Super thermal Power Plant (Phase-D 2x600 MW (order for main plant placed)

Hindalco: Captive Power Plant of Mahan Aluminum Ltd.

Essar: Mahan TPP 2x600 MW

Tilaiya UMPP

Power

Mining Plan (5 MTPA) approved on 17.5.2010. Env. Clearance - MoEF issued Modified TOR on 23.06.2011. Public hearing has been completed on 18.4.12. Final EIA/EMP report has been submitted to MOE&F on 28.5.2012. Forest clearance Stage-I Clearance issued by MoEF on 11.4.2011. The compliance report of Stage-I forest clearance has been forwarded by DFO, Raigarh to CF, Bilaspur on 28.10.2011.

Mining plan approved Production capacity is estimated at 2.5 MTPA Environment clearance obtained on 20.7.2007. Forest clearance Stage-I forest clearance received on 27.2.2009. Stage-I I clearance proposal submitted to MoEF in July 2011. MoEF has directed to prepare wild life managemen t plant as per the condition stipulated in stage-l clearance which has been prepared and submitted to CWLW, M.P. for approval. Jayapee Nigree STPP Mining Plan Mining plan submitted to MoC on 15.6.2010. Rated capacity 2.9 MTPA. The same is (2x660 MW) in Sidhi approved. Environme ntal Clearance: ToR for EIA study obtained from MoE&F on 28.5.2010. EMP district (MP) presentation made before EIA Committee, MoEF on Sept, 2011. There is no forest land in Phase-I and no forest clearance is required at this stage. lb TPP -U:3&4 2x660 Mining Plan approved (8 MTPA) on 11.08.08. Environment clearance : Public hearing held on MW 28.2.2012. Final EIA report submitted to MoEF on 28.5.2012. Forest Clearance Application submitted on 25.07.2008. State Govt. recommend ed the FDP to MoEF on 9.6.2011. The proposal was discussed in the FAC meeting on 26.12.2011. Some clarification/ querries raised by FAC are under process of compliance by Govt, of Odisha Chhabra U:3&4 (2x250 Mining Plan approved (10 MTPA) in July’’09. Env. clearance -Presentation given to MOEF on 23.9.09. and recommended for Env. Clearance. Details required by EAC submitted on 8.12.09. MoEF has MW) Kalisindh U:1 further sought information for forestry and wildlife issues. Forest clearance :MOE&F has given Final &2 (2x600 MW) The Forest clearance (Stage-ll) in March, 2012. projects are under construction

Jayap ee Nigree STPP (2x660 MW) in Sidhi district (MP)

3x600 MW TPP in Chhattisgarh being implemented by KSK Mahanadi Power Co. Ltd. at Nariayara village Distt. Janjgir Champa Sasan UMPP

Power

Essar Power Ltd,/ Power U+ Hindalco Industries CPP (60:40) JV Company Mahan Coal Ltd.

Jharkhand Integrated Power Ltd.

Sasan Power Ltd.

Goa Industrial Development Corpn. Ltd.

RRVUNL

Odisha Power Power Generation Corpn. Ltd. (OPGCL) eration Corporation

MPSMCL

December 2012 www.InfralinePlus.com

StatisticsCoal Captive coal blocks which have been shifted from No Go Area to Go Area S. No. Central sector 1 State sector 1 2 3 4 5 6 UMPP 1 2 3 4

Name of Coal Block

Allottee

Dulanga

NTPC

245

Tara Central Parsa Manoharpur Dipside Manohar Parsa East Kante Basan

CMDC CSPGCL OPGCL OPGCL RRVUNL RRVUNL

317 150 181.68 350 532.86

Moher Moher-Amlori Extn. Meenakshi B Chhatrasal Madhya Pradesh

SASAN UMPP SASAN UMPP ODISHA UMPP Sasan Power Ltd.

402 198 250 150

Total

2776.54

Captive coal blocks earlier categorized as Category ‘’A’’ block are still to be brought in Category ‘’B’’ S. No. Name of Coal Block State sector i) Gidhmuri ii) Paturia iii) Amelia iv) Amelia (North) v) Morga I vi) Morga II vii) Mara II Mahan Private Sector i) Mahan Madhya Pradesh ii) iii) iv) v)

Chakla Jharkhand Ashok Karkatta Central Jharkhand Sayang Chhattisgarh

vi)

Lohara West & Lohara Extn. Maharashtra Fatehpur Chhattisgarh

UMPP i)

Pindrakhi

ii)

Puta Parogia

Allottee

CSPGCL CSPGCL MPSMCL MPSMCL MPSMCL GMDC NCT of Delhi/ HPGCL

350 393.6 123.54 250 350 955

Essar Power Ltd,/ Hindalco Industries Essar Power Jharkhand Ltd, Essar Power Ltd,,

144.2

AES Chhattisgarh Energy Pvt. Ltd Adani Power Ltd.

150

81.3 110

169.832

SKS Ispat and Power Ltd/ Prakash Industries

120

Power Finance Corporation /Akaltara Power Ltd.- SPV of Chhattisgarh UMPP

421.51

Total

692.16 4311.142

December 2012 www.InfralinePlus.com

CoverStory

14 new terminals to make India an LNG hub soon Business conglomerates are making a beeline to set up LNG receiving terminals in the country

►► Gujarat gears up to become gateway for supply of gas to North India ►► East coast wakes up to the potential, targets Singapore for imports by Neeraj Dhankher

Liquified natural gas (LNG) will soon be pouring by gallons in India and companies are rushing to set up terminals to receive carriers coming from various parts of the world. This is the hot new territory where everybody is rushing now and where everybody had feared to tread earlier. Not too long ago, LNG business in

India was considered a risky venture. Reason—there were uncertainties over its prospects given the high cost of converting natural gas into liquid and then regassifying it to be used as piped or compressed natural gas. It also needed to be stored and transported in expensive cryogenic sea vessels. But this situation is fast

changing and from a paltry two LNG terminals in the country at present, the number is expected to reach 14 in the next few years. The reason behind the change of heart is a realization in the investor community that the goal of energy security in the country cannot be accomplished without access to natural

December 2012 www.InfralinePlus.com

CoverStory

gas. With domestic gas supply scenario looking bleak, import of LNG appears to be the only and most viable option, both in short and long term.

Destination Gujarat

Business conglomerates are making a beeline to set up LNG receiving terminals in the country and Gujarat has emerged as a leader in this due to its aggressive planning and investorfriendly polices. The Narendra Modi governed state, which accounts for nearly 40 per cent of all gas being consumed in India, has aggressive plans to double this consumption for which it plans to import gas. The state’s huge appetite for gas is being fueled by the ongoing industrialization and upcoming projects such as the DelhiMumbai Industrial Corridor (DMIC), and its needs cannot be fulfilled by relying solely on domestic gas. To begin with, two LNG terminals are already operational in the state, one by Shell at Hazira (3.5 mmtpa) and another by Petronet LNG Ltd (PLL) at Dahej (10 mmtpa). The capacity of both these terminals is being augmented to 5 mmtpa and 15 mmtpa, respectively. Further, a 5-mmtpa terminal is being implemented at Mundra by state-owned Gujarat State Petroleum Corporation (GSPC) in partnership with Adani Enterprises, while talks are on between Larsen & Toubro (L&T) and GSPC to set up a fourth terminal (of around 5 mmtpa capacity) near Okha in Jamnagar district. Further, infrastructure major Shapoorji Pallonji has firmed up plans to set up an LNG import terminal in joint venture with Hindustan Petroleum Corporation Ltd at Kodinar in Junagadh, along with an integrated deepwater port and a power plant. Moreover, Pipavav – which hosts the country’s first private port – is also being looked as a preferred location for setting up a land-based LNG terminal with a capacity between

2.5 to 5 mmtpa. While the 5-mmtpa Dabhol LNG terminal in Maharashtra is expected to be fully commissioned by early 2013 by Ratnagiri Gas & Power Private Limited (RGPPL) – a joint venture promoted by NTPC Limited and GAIL-- PLL is also setting up a 5-mmtpa gas import terminal at Kochi in Kerala.

So far limited to the western coast--catering to LNG coming from the Gulf region through the Arabian Sea--LNG terminals are also coming up fast on the eastern coast--to handle the liquified gas coming via the Bay of Bengal from Singapore and Australia. While PLL is setting up a terminal along the coast of Andhra Pradesh, IOC is constructing a terminal near Chennai. Frenzy on eastern front So far limited to the western coast— catering to LNG coming from the Gulf region through Arabian Sea—LNG terminals are also coming up fast on the eastern coast—to handle the liquidified gas coming via Bay of Bengal from Singapore and Australia. While PLL has joined hands with Gangavaram Port to set up a 5-mmtpa land-based LNG terminal along the coast of Andhra Pradesh, Indian Oil Corporation (IOC) is constructing a 5-mmtpa integrated LNG terminal at Ennore Port near Chennai in Tamil Nadu. The Hiranandani Group has also expressed interest in setting up a 4-mmtpa LNG terminal at Haldia in West Bengal. Apart from land-based LNG terminals, Floating Storage

Regassification Units (FSRUs) are fast becoming a viable alternative for sourcing imported LNG. While a 4.5 mmtpa FSRU is being set up by Swan Energy Ltd (SEL) at Pipavav in Gujarat, Royal Dutch Shell, Reliance Power and Kakinada Sea Ports Limited (KSPL) have joined hands to set up a 5-mmtpa floating liquefied natural gas (FLNG) import terminal off the coast of Kakinada in Andhra Pradesh. Even PLL is exploring the possibility of setting up an FSRU at the Gangavaram Port to receive LNG ahead of schedule.

Enter new players Even companies which had hitherto restricted their operations to exploration and development of crude oil and gas, are now smelling business opportunity in the LNG sector. “We plan to get into everything concerning LNG, right from sourcing, transportation and setting up of regassification plants. We are keenly looking for opportunities in the entire value chain of LNG if it makes commercial sense”, said Sudhir Vasudeva, Chairman of India’s biggest public sector upstream company Oil and Natural Gas Corporation (ONGC). But what has triggered the rush to invest in LNG business all of a sudden? The answer to this question partly lies in the deficiencies inherent in the domestic gas market. It is an open secret that domestic production of gas has not kept pace with the demand. While production from the KG-D6 block has dipped to a low of around 25 mmscmd against the original target of 80 mmscmd, production from other domestic assets has also fallen short of target. Then, the government’s ability to draw in investors through auctioning of oil and gas blocks has not had the desired result. All of this has created a huge mismatch between demand and actual supply of gas. An analysis carried out by Crisil has projected the supply

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demand gap to be around 172 mmscmd between 2013 and 2020.

Top 10 RLNG consuming countries in the world 1

Japan (292.21 mmscmd)

S. Korea (134.72 mmscmd)

UK (69.15 mmscmd)

Spain (66.01 mmscmd)

India (46.72 mmscmd)

China (45.41 mmscmd)

Taiwan (44.56 mmscmd)

France (39.80mmscmd)

US (27.36 mmscmd)

Italy (23.89 mmscmd)

Source-BP Statistics 2012

According to Managing Director and CEO of PLL, Dr A K Balyan, “A realistic five-year scenario indicates that while demand is going to grow

rapidly, the domestic production will increase only marginally. Even after taking into account the gas from likely future discoveries, it would still be short of demand in the country. So in about six years it is expected that the demand may almost double and the gap in demand and supply would be between 150 and 200 mmscmd”. Given the vast gas appetite of a growing economy like India’s, this gap is expected to widen even further and the only way to bridge it is by importing LNG. Not just demand, the supply side is also looking equally robust. According to Shell India’s former Chairman, Vikram Mehta, “The supply side (of LNG) is robust. There have been huge discoveries offshore. East Africa and the countries on the Indian subcontinent also have resources.” A similar view is held by Dr Balyan.

“Today, Qatar is leader in the world with a capacity of 77 mt of LNG per annum. It is believed that Australia, in next 8-10 years, may surpass Qatar as number one in LNG production. In Africa, there have been huge gas finds and a number of LNG projects are being conceptualized…Even Russia is coming up with some major projects. So we see a number of new sources are coming up which will lead to good availability of LNG in coming years. Also, Iran has huge gas reserves and is constructing a LNG Liquefaction Terminal,” says Dr Balyan.

Piping glory Growth in pipeline network is expected to be another driver of LNG business. India currently has 13,000 km of gas transmission pipelines and another 13,000 km of pipelines are likely to be added by the end of 12th Plan (201239

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CoverStory

17). This, as per experts, is likely to open up new demand centres which, hitherto, have remained unconnected to regular gas supplies. “Expansion of pipeline network will lead to substitution of liquid fuel demand with natural gas demand,” feels Dinesh Menon, Team Leader, Crisil. According to Menon, unmet gas demand from core sectors (power and fertilizer) and high affordability of customers in city gas distribution and industrial sectors will also act as drivers of LNG business in India. With the price of D-6 gas expected to come up for revision in 2014, reduced price differential between LNG and domestic gas may alter LNG dynamics in the country. According to Menon, “Increase in domestic prices will result in more acceptance of LNG”. Experts have also identified global factors that may have bearing on the natural gas market in India. The US-basking in the Shale Gas revolution – is projected to become a major exporter of natural gas in few years from now which will open up immense opportunities for the world, including India, that too at a price cheaper than the one benchmarked to the Japanese Crude Cocktail (JCC) index. According to Dr Balyan, “The US, which used to be an importing country, may turn in to an exporter by 2017-18. It is not clear as to how much gas would be permitted to be exported from US but there are around 14 companies which have applied for LNG liquefaction and export licence which are in different stages of approval.” Experts believe that India has to be ready to leverage this opportunity as and when it presents itself. Having adequate LNG infrastructure in place is considered a step in this direction.

on its way to becoming a major hub for LNG trading in Asia. The city-state is close to commissioning Asia’s first multi-user, open access LNG terminal at Jurong Island. Riding on the strategic advantage of Singapore, the 6-mmtpa terminal will import, store, re-gasify and market LNG for consumption in the region and is expected to be the gateway to LNG trading for Asia. Further, plans are underway to set up yet another storage terminal which could catalyse business opportunities such as LNG trading, break-bulk services and LNG bunkering for Singapore.

Singapore as LNG hub

In such a scenario experts feel that India can also leverage LNG trading opportunities in Singapore as it would help save transportation cost. According

While all eyes are on the west and north to tap developments in the gas market in the US, Singapore is quietly

Asia’s first open-access LNG terminal • Singapore LNG Corp. is building Asia’s first multi user, open-access LNG terminal at Jurong Island at a cost of S$1.5 billion. The facility will be used for importing, reloading and regassification and storage of LNG. • The first phase of the terminal (3.5 mmtpa capacity) is expected to become operational by the second quarter of 2013. The terminal will have a total capacity of 6 mmtpa after completion of a third storage tank by first quarter of 2014. • The terminal’s total storage capacity is planned to be increased up to 9 mmtpa by 2016 or 2017 after completion of fourth storage tank. • Oil and gas majors such as BP, BG Group, Gazprom, Royal Dutch Shell, Vitol Group and GDF Suez S.A. have already touched base in Singapore to make use of business opportunities in LNG trading, break-bulk services and LNG bunkering.

Growth in pipeline network is expected to be another driver of LNG business. India currently has 13,000 km of gas transmission pipelines and another 13,000 km of pipelines are likely to be added by the end of 12th Plan (2012-17). This, as per experts, is likely to open up new demand centres which, hitherto, have remained unconnected to regular gas supplies. to DM Desai, CEO of Gujarat-based Ethical Energy Petrochem Strategies, “Proximity of Singapore to east coast of India with large number of small ports and potential gas consumers along coastline offers a unique business opportunity to hire storage capacity at Singapore LNG terminal and bring LNG to east coast of India by loading small LNG ships at Singapore” With Singapore becoming an LNG trading hub, countries may come up with various strategies to make use of the opportunities. According to Rakesh Jain, Associate Director, Feedback Infrastructure Services Private Limited, transportation cost of LNG may reduce as LNG cargoes from Qatar, while returning from Japan, Korea or Taiwan, may re-fill LNG from Australia and deliver it to Singapore, which can then be traded. Similarly, break-bulk services may also receive a boost as the Singapore terminal can strategically take LNG from Qatar in 250,000 cubic metre vessels, and then supply LNG to Japan, Korea and Taiwan in 150,000 cubic metre vessels, thereby resulting in savings in LNG shipping logistics.

EPC firms set to make merry With LNG terminals set to mushroom

December 2012 www.InfralinePlus.com

all over the Indian coastline, the biggest gainer in the whole business is likely to be the engineering, procurement, and construction (EPC) industry. The future will see EPC firms such as Larsen & Toubro, Punj Lloyd, Jaypee Associates, Lanco Infratech and Nagarjuna Constructions competing to grab front-end engineering and design (FEED) contracts for LNG terminals. The booming growth in LNG in India may also see some additional global EPC firms entering the Indian market.

The challenges Despite the upcoming boom, the LNG industry in the country faces some stiff challenges such as lack of clarity over gas pricing, regulatory issues and infrastructure constraints. According to Desai, “Unpredictable and selective intervention of the government in gas markets to regulate allocation and pricing does not inspire confidence in investors. Now there are talks about regulating LNG terminals which raises serious concerns about its future prospects”. Similarly, Menon of Crisil feels that regulatory mechanism should be such that it ensures registration of only serious and capable entities, no control on commodity pricing

New rules for registration of LNG terminals notified On November 16, 2012, the petroleum ministry notified the rules for eligibility of registration of LNG terminals. As per the new norms, a company willing to set up an LNG terminal will have to: • Offer at all times, after registration, 20 per cent of its short term (less than 5-year contract) uncommitted re-gassification capacity or 5 lakh tonne per annum, whichever is higher, as common carrier capacity. • Adhere to the technical standards and specifications including safety standards in activities relating to petroleum, petroleum products and natural gas, as prescribed by the Board by regulations, which are in force, including those prescribed by the Oil Industry Safety Directorate. • Furnish a bank guarantee for an amount equal to one per cent of the estimated project cost of the liquefied natural gas terminal or `25 crore, whichever is less. and higher utilization of the facility in a transparent manner. There is also a pressing need to develop the national gas grid – being undertaken by the gas PSU, GAIL -- so that consumers are able to access this gas. According to Desai, “There is an urgent need to develop national gas grid to provide access to potential gas demand centres across the length and breadth of the country. This needs to be planned with a long term strategic view of the gas markets and needs to act as a bridge between all the major supply centres, all major demand centres and all the pipeline networks already laid and/or planned to be laid.

3.5 mmtpa LNG terminal is being built by Samsung in Singapore

This is required to be planned and implemented on a pan India basis. Such an infrastructure would address the evacuation issues faced by LNG terminal developers and, also, help in developing a mature gas market by ensuring competition amongst various buyers and sellers of gas”. Gas pricing confusion is also seen as a dampener for long term contracts. Similarly, reforms in the power sector and a new policy direction in the fertilizer sector are long due which have muddled up the growth of the LNG industry. The challenges notwithstanding, investor sentiments continue to remain upbeat. While international gas majors like Gaz de France (GDF) and Total have already planted their feet in the Indian LNG market by picking up stakes in the Dahej and Hazira terminals respectively, other players are also entering the fray. The oil and gas behemoth, British Petroleum has joined hands with Reliance Industries Limited to form a new company by the name of “India Gas Solutions” to venture into the LNG trade. With the influx of additional investments and technology by foreign investors, the future of India’s LNG market appears to be bright.

For suggestions email at feedback@infraline.com

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CoverStory | ExpertSpeak

‘There should be no controls on setting up LNG import terminals’ Importing LNG to meet the growing domestic for fuel is not an option but a necessity, feels D.M.Desai, CEO of Ethical Energy Petrochem Strategies

The demand for gas in India is known to be driven by the supplies. Even at current demand level almost 30 per cent of gas is required to be imported. All the projections available for most optimistic indigenous gas production are far less than the projected demand. Hence, gas imports are unavoidable. The option of cross-border pipeline for imports of gas has been pursued for long and current geopolitical situation does not give confidence in possibilities of such imports materializing in near future. Thus, if gas supplies in India are to be augmented, to fulfill projected demand for meeting emission reduction targets, large scale LNG imports have to be planned.

Challenges Though there is a very large demand potential for LNG imports, and therefore a strong business potential, there are a few challenges which need to be addressed in gas market for LNG business to grow to its potential. These are: ▪▪ Gas pricing confusion discourages long term contracts. ▪▪ Lack of infrastructure in terms of number of LNG terminals. ▪▪ Limited gas pipeline network limits demand potential because of limited reach to potential demand centres. ▪▪ It takes very long time in developing conventional land based LNG receiving terminals.

large scale use of gas in power, emission reduction targets are impossible to achieve.

Opportunities

▪▪ Desire of large gas importers to import LNG directly but not having access to LNG import infrastructure. ▪▪ Unpredictable and selective intervention of Government in gas markets to regulate gas allocation and pricing does not inspire confidence in investors. Now there are talks about regulating LNG terminals which raises serious concerns about its future prospects. ▪▪ Abuse of regulatory regime by players leading to litigations and making regulator ineffective. Further, the idea of regulating grant of permissions for development of ‘distribution networks’ through a central agency is impractical and not conducive to its rapid development. ▪▪ There is a lack of a holistic energy sector policy with a clear focus on achieving emission reduction targets. Unless appropriate ‘carbon price’ is charged there is no way to promote use of cleaner fuels such as gas in power sector and without

Strategies are all about converting challenges into opportunities. Some of the opportunities we see for LNG business, in particular, and gas business, in general, are as follows: ▪▪ There is potential for developing many more LNG import terminals. There is a very strong case for development of FSRU projects due to inherent advantages of FSRU in terms of speed of implementation, cost, flexibility etc. Concept of ‘Tolling terminal’ is a very promising business model whereby many prospective buyers will have opportunity to consider LNG imports on their own. ▪▪ There is an urgent need to develop national gas grid to provide access to potential gas demand centres across the length and breadth of the country. This needs to be planned with a long term strategic view of the gas markets and needs to act as a bridge between all the major supply centres, all major demand centres and all the pipeline networks already laid and/or planned to be laid. This is required to be planned and implemented on ‘panIndia ’ basis. Such an infrastructure would address the evacuation issues faced by LNG terminal developers and, also, help in developing a mature gas market by ensuring competition amongst various buyers and sellers of gas. ▪▪ Till the time pipeline infrastructure is developed as mentioned above,

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there is need to develop quick ‘Virtual pipeline’ connectivities between demand and supply centres of gas. This can be achieved by developing LNG transport business in following areas: – LNG transport by road tankers – LNG transport by rail (This is a- huge potential as there is vast rail infrastructure already available in India) – LNG movement along coastline by-‘hub and spoke model’ wherein small ports along the coastline can be developed as spokes using small LNG ships to transport LNG. ▪▪ There is huge potential for use of gas as automotive fuel. A large scale initiative to develop nationwide infrastructure for dispensing LNG and LCNG would give rise to a huge demand for gas in automobiles as people will see nationwide availability and the automobile manufacturers will start offering large number of gas based vehicles as OEMs. ▪▪ City gas distribution has large potential. It is possible to plan 300-400 towns/cities to have distribution network based on gas supplies through existing/planned pipeline infrastructure and also through virtual

1570 Nm 10 days round trip

pipeline network discussed above. ▪▪ There is a potential to develop online trade of gas, to be settled based on physical delivery rather than cash settlement, to develop a transparent price discovery mechanism in Indian market. One of the options is that such a trade platform is planned for delivery mechanisms along the national gas grid. This will go a long way in developing a matured gas market. ▪▪ Singapore is developing a large ‘Tolling terminal’ which is expected to be operational in 2013. This terminal is, also, going to have specific jetties to load small LNG ships. Proximity of Singapore to east coast of India with large number of small ports and potential gas consumers along coastline offers a unique business opportunity to hire storage capacity at Singapore LNG terminal and bring LNG to east coast of India by loading small LNG ships at Singapore.

Enabling policy initiatives needed In order to realize full potential of LNG business, we think following policy initiatives from Government would help

creating the right business environment: ▪▪ The government should liberalise the gas sector by withdrawing from its current role of allocation and pricing of gas. There should be no controls on development of LNG import terminals. ▪▪ A national gas grid should be developed on a pan-India basis as basic enabling infrastructure for promotion of gas industry. The entity entrusted with this infrastructure development should have no other business interest in entire gas value chain. This could also be developed on PPP model. ▪▪ Government should introduce the concept of minimum gas based power purchase obligation (GPO) for all utilities and consumers, on the lines of renewable purchase obligation mechanism. Introduction of GPO and related GEC trading mechanism will go a long way in creating the right market environment for investment in gas based power generation. ▪▪ Government should also think in terms of evolving the corporate tax structure linked to emission intensity of industry so as to provide incentives for use environment friendly fuels like gas. ▪▪ The Regulations in terms of authorizing ‘Distribution network’ development needs to be modified and the Regulator’s role should be only to frame standard guidelines for design, installation, operations and maintenance of such networks which are required to be followed. Grant of authorization needs to be decentralized at local body level (say municipalities and or gram panchayats) subject to the standards to be followed as per the Regulator’s guidelines. This is the only way to promote large scale development of distribution networks, simultaneously, across the country. Views expressed in this article are personal. For suggestions email at feedback@infraline.com

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CoverStory | ExpertSpeak

‘Future of LNG in India’s energy mix is bright’ The rapid growth of LNG business in the country is being hailed as the next big thing in the oil and gas industry. While experts are optimistic on the future of LNG, they have also cautioned on the need to weed out the challenges to ensure sustainable growth. R K Batra, Distinguished Fellow, The Energy and Resources Institute (TERI), however, feel that there are more opportunities than challenges in the LNG industry today. 44

When Petronet LNG commissioned its 5.0 Mtpa LNG storage and regasification facility at Dahej on the west coast in 2004, it was the dawn of a new phase in the natural gas scenario in India. In the following year, Shell commissioned a smaller unit of 2.5 Mtpa at Hazira near Surat, again on the west coast. These two terminals, after expansion, currently account for the import of nearly 14 Mtpa of LNG every year. The future of LNG in India’s energy mix is projected to grow even brighter with further expansion of the Dahej and Hazira terminals, the commissioning of a dormant facility at Dhabol and new terminals at Kochi, Ennore and Gangavaram, the latter two on the east coast. These projects will raise total capacity to 42 Mtpa. This optimistic outlook is due to various factors which draw from past experience, national and international responses to India’s energy demand and global developments in LNG supply around the world. These are: ▪▪ Demand is outstripping supply

and India needs not just more gas but also diversity of sources and supply modes, which will enhance energy security. ▪▪ The two terminals at Dahej and Hazira were developed without a hitch. For Petronet LNG, it was an introduction to a totally new technology, product and markets. It was able to sign an extremely competitive contract with RasGas ▪▪ of Qatar, erect and commission the facilities on schedule and create a market for regasified gas. Shell, on the other hand, adopted the merchant model with spot purchases of Foreign cargoes delivered gas to those who companies have were willing demonstrated to pay a price the willingness higher than to take a stake the contracted in the LNG price by market Petronet. At $13-14 per MBtu regasified LNG can compete and replace a product like naphtha at current crude oil prices of around $100 per barrel. There are also many industrial customers who, for technical and other reasons, have made the switch from petroleum products to regasified LNG. ▪▪ Foreign gas companies have demonstrated the willingness to take a stake in the LNG market. Gas de France has an equity stake in the Dahej terminal and TOTAL in the Hazira terminal. BP has tied

up with RIL in a new company “India gas solutions” to import and market LNG. This reflects the confidence of foreign investors in the developing gas market where they are able to contribute, not only with their investments, but by bringing in proprietary technology and setting operational standards in line with global practices. Till a few years earlier it was hoped to lay a cross-border pipeline bringing gas from Iran to Pakistan and India. This proposal is now off the table due to geopolitical and security concerns. Progress on the TurkmenistanAfghanistan-Pakistan-India (TAPI) pipeline is tardy and gas may not be available till 2017-18. India can expect to receive 38 mscmd (equivalent to 10 Mtpa of LNG) at a delivery price of around $13 per MBtu which is the current spot price for LNG.

December 2012 www.InfralinePlus.com

However, security will continue to be a major concern. ▪▪ RIL’s production from its D-6 offshore fields in the KG Basin was projected to be as high as 80 mscmd; whereas it peaked at 60 mscmd and thereafter has dropped to as low as 25 mscmd, attributed to certain technical problems. This has created a space for LNG imports especially as heavy additional investments will have to made by RIL to try and reach somewhere near the originally targeted figure after various contentious issues between RIL and the Government are resolved. Ramping up of production should take till at least 2016-17 at which point in time domestic demand would have gone up further. ▪▪ The RIL gas price is currently pegged at $4.20/MBtu till April 2014 and the government has clearly said that they will not consider any revision till then. However, this price was fixed when crude oil was selling at $60/ bbl and it was not possible at that time to clearly determine an arm’s length market price. A substantial rise in the RIL price can be expected to take place in 2014. Discussions need to start as soon as possible, so that RIL is able to plan the necessary additional investments. By 2017-18, there should be a convergence of domestic gas, cross-border piped gas and LNG prices. ▪▪ The global gas market has undergone a sea change with shale gas production in the USA rising substantially. From being an LNG importer, producers in the USA are looking to export LNG, especially as domestic prices, are as low as $3/ MBtu. However, there is a view that allowing LNG exports could result in an increase in domestic gas prices. So far, only one proposed terminal of Cheniere Energy at Sabine Pass on the Gulf coast has been permitted for export of LNG to countries that have not signed a free trade agreement

At $13-14 per MBtu regasified LNG can compete and replace a product like naphtha at current crude oil prices of around $100 per barrel. There are also many industrial customers who, for technical and other reasons, have made the switch from petroleum products to regasified LNG. with countries such as India. GAIL however has been quick off the mark seeking a 20-year contract for LNG supplies. New and substantial sources of LNG are coming up in Australia, Indonesia etc. Petronet has signed up for 1.5 Mtpa LNG from the Gorgon gasfield in Australia and more contracts can be expected. The general view is that LNG terminals should sign up long term contracts for about 80% of their requirements, allowing for spot purchases of around 20%. ▪▪ The future mix of coal and gas based thermal power plants need to be urgently addressed. At present, India’s

power sector is heavily dependent on coal. Coal India Limited is not able to meet demand and imports are projected to rise rapidly. The future of ultra mega power projects has already been impacted by unforeseen tax increases in coal supplies from Indonesia and Australia. Also the sourcing of coal is going to be increasingly difficult, despite large investments by Indian companies in equity coal, as projected imports could almost touch the total quantum of international coal that is traded today. Gas based power plants must therefore be given an increasing share. Further gas based plants have a lower capital costs and are more environmentally friendly. Coastal plants based on LNG would be the best option. Further, LPG tankers are being developed that will regasify the LNG onboard and pump the gas directly into supply pipelines, thereby obviating the need for a land based facility. In conclusion, the prospects for LNG in meeting a rising share in India’s energy portfolio are bright and face fewer challenges than domestic gas and crossborder gas pipelines. Views expressed in this article are personal. For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

NewsBriefs | Oil & Gas

ConocoPhillips’ Kashagan field ONGC Videsh to acquire stake

IOC to double capacity plans New 15 million tonne refinery

KG-D6 investment Government refuses permission

ONGC Videsh will pick up stake in ConocoPhillips in the North Caspian Sea Production Sharing Agreement that includes the Kashagan Field, in Kazakhstan. The acquisition will mark ONGC Videsh’s entry into the largest oil proven North Caspian Sea of Kazakhstan.

Indian Oil Corp is planning to build a new 15 million tonne refinery in Gujarat as part of its plans to almost double its refining capacity. IOC, at present, has seven refineries with a cumulative capacity of 54.2 million tonnes per annum capacity. The company, which already has a 13.7 million tonnes refinery at Koyali in Gujarat, is planning another 15 million tonness unit in the state.

The government has disallowed $1 billion expense of Reliance Industries on the flagging KG-D6 gas fields for not implementing the approved field development plan, Oil Minister M Veerappa Moily said. The average gas production from KG-DWN-98/3 (KG-D6 block) during the current year was about 29.81 million standard cubic metres per day.

Four gas pipelines PNGRB to invite fresh bids

Western offshore basin ONGC discovers gas

New Hope Gas availability to improve by 2015

The downstream oil and gas regulator is preparing to invite fresh bids to build four gas pipeline projects originally authorised to Mukesh Ambani’s Reliance Gas Transportation Infrastructure. Petroleum and Natural Gas Regulatory Board chairman S Krishnan said fresh interest will be sought to build four trunk pipelines - Kakinada-Haldia, Kakinada-Chennai, Chennai-Tuticorin and Chennai-Bangalore-Mangalore.

ONGC has discovered gas and condensate in India’s shallow-water Western Offshore basin. Well MBSO51NBA#1 was drilled in NELP block MB-OSN-2005/1 to a depth of 4,181 m (13,717 ft). The location is respectively southwest and northeast of the C-37 and B-9 finds, opening a large area for future exploration.

The availability of natural gas will improve by 2015 as the production will go up and four terminals will be established in the east and west by then for import. Meanwhile, due to shortage, power plants will continue to face difficulty. The implementation deadline of piped gas network across 200 cities by 2015 is unlikely to be met due to gas shortage, lack of infrastructure, policy issues and pricing.

Commissioning of refinery HP to go with Rajasthan first

Oil refinery at Barmer block in Rajasthan Cairn India may tie-up with OIL

Shale gas exploration ConocoPhillips to tie-up with ONGC

Hindustan Petroleum Corporation has decided to put Rajasthan ahead of Maharashtra in its refinery commissioning dates. The original plan was to get in place a nine million tonne facility in Ratnagiri (called the Maharashtra Refinery) by 2016 whose capacity would be doubled in due course of time. HPCL now believes it makes more sense to fast-track the more recently planned Rajasthan refinery where ONGC is its ally.

Anil Agarwal said that Cairn India might tie-up with Oil India for setting up an oil refinery at it’s Barmer block in Rajasthan. Cairn India will continue to focus on oil production, “We have both on-shore and offshore assets. We have Rava, which has a lot of potential and we will take it forward.” added Agarwal. He also said that Cairn is looking at Rajasthan, Africa and Sri Lanka for more projects and expanding production capacity.

US energy giant ConocoPhillips may next month finalise a partnership with ONGC for exploration of shale gas resources in India. ONGC and ConocoPhillips had earlier this year signed a MoU to jointly explore and develop shale resources in India, North America and other geographies. A team of officials from ConocoPhillips is likely to visit ONGC next month to discuss collaboration in shale gas development.

KG basin field RIL denies allegation of hoarding gas

Fuel subsidy Oil min seeks `1.05 lakh crore for FY13

BPCLRe finery expansion Government gives clearance

Reliance Industries has denied allegation that it is hoarding gas by keeping KG-D6 output low saying it was technically impossible to store gas in the KG basin fields, and sought appointment of independent international experts to verify its claims. Gas production from D1-D3 started declining from a plateau level of about 55 million standard cubic meters per day in August 2010.

The Oil Ministry has sought `105,525 crore from the Finance Ministry this fiscal to subsidise diesel and cooking fuel. State-owned fuel retailers are likely to end the fiscal with a revenue loss of over `1,63,000 crore on sale of diesel, LPG and kerosene at governmentcontrolled rates that are way lower than cost. Of this, close to `60,000 crore will come from upstream companies ONGC, OIL and GAIL.

The Environment & Forests Ministry has granted environment clearance to the `14,225 crore Integrated Refinery Expansion Project of Bharat Petroleum Corporation to be implemented at Kochi Refinery Ltd. BPCL, Kochi Refinery, has a refining capacity of 9.5 million tonnes per annum, producing Euro-III/ IV compliant auto-fuels and various other Petroleum Products.

1st Annual Conference on

Open Access in Power Sector

Concept, Challenges & Recommendation December 18, 2012, Le Meridien, New Delhi

The conference aims to highlight the success/failure of implementation of open access, running challenges faced by various stakeholders in Power and Energy Sector and underlying facts beneath over the arena of Open Access. Conference will discuss current constraints and recommendations to the successful execution of open access regime in the country and will try to address the regulatory issues and the technicalities cost structure in open access eg. POC, AMT, UI, and inter and Intrastate tariff. objective of the progrAm: ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪

Open▪Access▪in▪Electricity-Postulates▪from▪the▪Electricity▪Act▪2003 Understanding▪of▪the▪concept▪and▪areas▪of▪coverage▪in▪the▪power▪sector Factors▪influencing▪the▪significance▪of▪Open▪Access▪in▪the▪present▪power▪market.▪ Changing▪Structure▪of▪Power▪Industry▪-▪SEB▪Model,▪Single▪Buyer▪Model▪&▪ Multi▪Buyer▪Model Regulation▪realistic▪of▪network▪of▪power▪transmission▪and▪distribution Feasibility▪and▪viability▪of▪open▪access▪for▪power▪procurement/disbursement▪in▪ comparison▪with▪the▪conventional▪options Cross▪Subsidies▪Surcharge▪–▪Hurdle▪to▪successful▪implementation Deterrents▪to▪stakeholders▪–▪Structural▪&▪Regulatory▪hurdles,▪Challenges,▪ Inconsistency▪across Open▪Access▪charge▪:▪Point▪of▪Connection▪(POC),▪Availability▪Based▪Tarrif▪ (ABT)▪&▪UI Fuel▪Surcharge▪Agreement▪in▪tune▪with▪Open▪Access

To Register Contact: Aparna Sharma, Conference Cell Ph.: +91 11 66250012, +91 8527212859 Email: aparna.sharma@infraline.com

A must Attend for ▪▪ Power▪companies-▪Gencos,▪ Transcos▪and▪Discoms▪ ▪▪ Equipment▪Manufacturers ▪▪ Policy▪makers▪and▪administrators▪ ▪▪ Technology▪Providers ▪▪ State▪Electricity▪Boards▪ ▪▪ Banks▪and▪Financial▪Consultants ▪▪ Captive▪/Merchant/▪Independent▪ Power▪Producers ▪▪ Legal▪and▪Consulting▪Firms ▪▪ Power▪Generators ▪▪ Central▪and▪State▪Government▪ Agencies ▪▪ Utility▪Engineers ▪▪ Regulatory▪Bodies▪and▪ Monitoring▪Agencies ▪▪ Distribution▪Companies ▪▪ Financial▪Institutions/Banks ▪▪ Prospective▪Investors ▪▪ Consultancy▪Organization

For Conference Updates & Online Registration please visit: http://infraline.com/Events

December 2012 www.InfralinePlus.com

InConversation

‘We need clarity over gas pricing’ British Petroleum, today, has the largest international oil company presence in India. Not only does the company has a foothold in E&P segment, it also has a strong presence in segments such as lubricants, petrochemicals and oil and gas trading. BP is also investing highly in advanced deepwater technology so as to bring value to its E&P ventures in India. Speaking to InfralinePlus, Sashi Mukundan, Region President & Head of Country, India, BP Group Companies, talks of various facets of the company’s presence in India as well as its future roadmap. Edited excerpts: 48

Please give a brief overview of BP’s businesses in India today With an investment of $8 billion and employing over 8500 people, BP today has the largest international oil company presence in India. Apart from E&P, BP’s India activities include lubricants (through Castrol), petrochemicals, oil and gas trading, offshoring into India, staffing and training its global marine fleet as well as recruiting Indian talent

for its global businesses. BP is investing in technology and talent development in India. In E&P, we are bringing advanced deepwater, giant field and gas value chain technology and expertise to India. In Castrol, a global R&D centre for developing advanced technology for its global operations is planned in Mumbai. For Petrochemicals, BP licensed state of the art technology to manufacture Purified Terephthalic Acid to JBF Petrochemicals in Mangalore and Paraxylene for use by RIL for the world’s largest aromatics complex in Gujarat. In addition, BP is a partner to the Indian Fund for Sustainable Energy (INFUSE) at the Centre for Innovation, at IIM, Ahmedabad. Last year, you decided to partner with Reliance Industries Ltd. (RIL) in a landmark

agreement. What does this agreement mean for both companies and India’s oil sector? In a historic partnership with Reliance Industries Ltd (RIL) in 2011, BP took a 30% stake in 21 oil and gas production sharing contracts in India, including the producing KG-D6 block and the formation of a 50:50 joint venture to source and market gas in India – India Gas Solutions Private Limited (IGS). This positions BP as the only international energy company present across the full gas value chain in one of the fastest growing markets in the world. More than a year later, our technical assessments continue to support strong resource potential. The BP – RIL partnership leverages on unique synergies and creating a win-win scenario for India, RIL and BP. With this deal India gets single largest foreign direct investment, a positive signal for international investors, recognition of its potential oil & gas reserves and more gas in support of India’s growth. For RIL, it provides deepwater technology and experience, access to BP’s integrated gas value chain skills and share exploration risks. And for BP, this partnership offers a distinctive position in India to build on its deepwater leadership and an access to the fast growing Indian gas market. What has been your experience so far in India? Has the partnership with RIL and your investments worked out the way it was envisaged? It has been an interesting journey and our

December 2012 www.InfralinePlus.com

experience clearly shows that to succeed in this market, partnerships, perseverance and patience are the key. The highpoints have been agood working relationship and alignment with RIL; rapid buildup of capability to get ready for increased activity and leveraging on unique synergies to create value. At the same time, challenges exist including the pace of regulatory approvals, gas market reforms, policy framework and tough operating conditions (weather windows, deepwater, high pressure/temperatures). It has been an exciting journey and we are really keen to partner India in its quest for energy security. What is your assessment of the potential of oil and gas market in India? How does one go about unlocking this potential? India clearly has the potential to find more oil and gas if it can attract the investment, technology and capability to find and develop the resources, however changes will be needed. Market distortions need to be removed, fiscal and contract stability is required, and the right incentives need to be put in place to attract more energy investment. India’s significant untapped oil and natural gas resources hold real potential to make an ever increasing contribution in the future. To bring this resource to market will require a never before experienced investment inflow along with technology transfer, infrastructure, and capability build-ups. What are the few key things needed to kick-start the Indian E&P sector? Across the globe we see governments stimulating growth by addressing policy issues in key sectors. First, they provide absolute clarity on the regulatory regime, and honour the contracts they put in place. Second, they make the government approval process as efficient as possible, focused on partnering with

the industry to drive development. Third, when trying to attract major investment, they put in place a generous fiscal regime with globally competitive pricing. Last, they push local talent towards it – putting in place scholarships, encouraging entry, so that they can make this both a local and international sector. I believe that if India took these steps, the E&P sector could expand rapidly and help bring clean, affordable energy to Indian consumers. The critical synchronization of resource supplies, infrastructure build-up, and market development need enabling factors and policy consistency to drive activity. The momentum for all this can come from better energy policies, regulations, and administrative capabilities to enhance the existing risk/return balance more in favor of India as opposed to other parts of the globe. Better collaboration between the Government of India, its energy regulators, and both domestic and global industry players, is the need of the hour. What is the future roadmap for BP’s upstream venture into India? What would you need to achieve this? Since forming the partnership in 2011, the BP-RIL combination has been working to increase E&P activity across different basins in India. We have so far developed options to extract more from the existing fields under production in the D6 block and are poised to execute the “Next Wave” of projects to bring over 5 tcf (trillion cubic feet) of discovered gas resources to market. We are getting ready to restart exploration drilling to discover more resources. In addition, to import LNG, IGS would leverage BP to secure global supply and set up infrastructure to receive and market gas in India. To be able to unlock this prize and facilitate further investments there are a few areas that require clarity and support from the Indian government.

We need clarity around gas pricing in order to enable the very material ($10 billion gross) investments to bring the “Next Wave” of already discovered gas to market, enable new exploration, and provide flexibility to manage the risk/ reward balance in a dynamic oil price world. An oil-linked price as in the case of oil, petroleum products or LNG will provide the incentive and economics to explore and develop the deep water and frontier basins since E&P costs closely track oil prices. We also need more proactive and enabling decision making to support accelerated activity to bring discoveries to production. In terms of operations in India, how would you surmount challenges in India? Beyond 2014, we expect a market-linked gas pricing regime to prevail. This recognizes that a transparent, arms-length and competitive pricing framework is essential for India to enhance exploration and production activity and develop its own energy security. To date we have an approved Field Development Plan for the first new satellite development in D6 and also approval for the KG D6 seabed survey work to progress the “next wave” of projects. We will continue to work with the Indian government, authorities and regulators to demonstrate the value that BP brings to oil and gas operations in the country. Overall how do you see BP getting long term value from its presence/ investments in India? Firstly, from the substantial medium-term opportunities for developing the already discovered gas; secondly from finding new oil and gas through the re-start of exploration activities; and thirdly from establishing our gas marketing joint venture in one of the fastest growing markets in the world. For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InConversation

‘Safety is not expensive, it is priceless!’

India has one of the densest oil and gas installation network in the world, both upstream and downstream. Managing safety of these installations is no mean task. As safety is of paramount importance, there is a move within the government to give more teeth to the Oil Industry Safety Directorate (OISD) by converting it into a statutory body. OISD’s Executive Director, Hirak Dutta talks to Neeraj Dhankher on what needs to be done to make installations safe and reliable. Excerpts:

What is the status of talks over granting statutory status to OISD? Talks are going on to provide statutory power to OISD, particularly for the downstream sector, by transferring part powers of the Petroleum and Explosives Safety Organisation (PESO) related to the petroleum sector. Currently, we have statutory power in upstream offshore as per petroleum rules, but we don’t enjoy a similar power in the downstream sector, although there are a total of 111 safety standards of OISD (of which 11 are mandatory) which are part of petroleum rules and are to be followed in the entire hydrocarbon value chain.

OISD is a technical wing of the ministry and is managed by people deputed from oil companies. We don’t have a regular cadre of OISD. Our infrastructure is not spread out across the country. Once we have the statutory power in the downstream sector as enjoyed by PESO, we need to have adequate infrastructure and manpower. Therefore, the entire aspect needs to be studied by a consultant to firm up requirements for manpower, infrastructure and other areas. We have broadly finalized the terms of reference and by November 2012 we will be able to line up the consultant. Thereafter, the findings of the study upon submission of consultant’s report have to be discussed with Petroleum Ministry, DIPP and PESO. The consultant will not look at the legal aspects. Once OISD is made a statutory body, what will be its implications on the oil and gas sector? Even today we have the technical competence in monitoring safety practices in the petroleum industry. Therefore, since we make standards, once we have statutory authority, the overall objective of enhancing safety in oil installations can be achieved. At the moment, out of 111 OISD standards, 11 standards are mandatory in nature. These have to be followed by oil companies in the hydrocarbon sector. Even in case of other standards, there is a broad acceptance and oil companies do follow them strictly. To make standards mandatory,

we have to take the approval by the Safety Council which is headed by Secretary, Ministry of P&NG and its members include heads of private and public companies and other statutory bodies these are to be included in petroleum rules. Are OISD standards applicable to private companies as well? Earlier these standards were not applicable to private companies. But now both public and private companies come under the gambit of OISD’s safety audit. For example, we have audited RIL’s Jamnagar refinery complex and HMEL’s refinery at Bhatinda for precommissioning checks. Similarly we have carried out audits of private sector companies in oil exploration & production. We carry out External Safety Audits, Surprise audits and Precommissioning audits for both private and public sector. The aim of these audits is not

December 2012 www.InfralinePlus.com

to find faults but to actually bring out some of the weaknesses in the system which might have escaped the attention of the company and thus improve upon it so as to fulfill the goal of energy security. So these audits are focused to help the oil companies. These audits are conducted under a favourable environment where the oil companies are receptive to our suggestions and whatever observations are made by us are adhered to. Once statutory status is granted to OISD, do you think there will be any overlap in functioningwith PESO? I don’t think so. As once petroleum functions of PESO are given to OISD, I don’t think there will be much of a problem. But process of transfer will take some time after detailed deliberations at appropriate levels. How does OISD reward top performers? Do you also have any mechanism to deter companies from violating safety guidelines? We have both. We present oil industry safety awards every year to companies that meet and qualify our safety performance parameters. All companies submit the data to us. We have a committee, which examines the various safety parameters in great detail. Based on that, companies are rewarded, both public and private. We are also encouraging individuals. For the last two years we are giving awards to individuals who have made significant contribution for enhancing safety in their installations. Similarly, about deterrence, when we find some installations are violating or not meeting OISD standards, we take up the issue with respective oil companies. There have been instances where oil installations have actually been stopped at the site, relocated or taken appropriate measures

immediately to correct the situation. Does OISD have a role in monitoring safety practices before the actual project execution takes place? Safety is inbuilt in design. When a new refinery is coming up, the process licensor in the design incorporates various safety features. Various safety considerations pertaining to process, instrumentation, process safety interlocks based on HAZOP and HAZARD study are incorporated in the design. The mechanical standards following API, ASEM standards are followed. In case inbuilt safety features in design fail, there is secondary system like fire fighting which helps in mitigating the unsafe situation. Therefore, the important part is safety during design stage. Oil companies in India have a very robust system. Now days, we have a 3D model review of P&I diagrams by multi-disciplinary group, along with process licensors and consultants.

At the moment, out of 111 OISD standards, 11 standards are mandatory in nature. These have to be followed by oil companies in the hydrocarbon sector. Even in case of other standards, there is a broad acceptance and oil companies do follow them strictly. Please explain how safety audits are conducted by OISD? We have three kinds of audits- the External Safety Audit, Surprise audit and Precommissioning audit. The external audits are carried out once in

three years, while in case of surprise audits, we don’t tell the installations about the audit. We go randomly to check whether they are following OISD standards. Precommissioning audits are conducted at the request of the oil company when its plant is ready for commissioning. The ESA team is also highly experienced team of 5-6 people. Each year, we have Safety Council meeting where we discuss the number of audits to be conducted every year. Along with OISD audits, oil companies also carry out their respective internal audits to correct deficiencies, if any. There have been cases when the oil companies have found to have violated OISD’s recommendations. Why is it so? It is not willfully they do not do it. If you look at the history of many installations, some have come up two to three decades back. The technology is constantly being upgraded. Design has changed a lot over the years. When we go and audit old and aging installations, we make some recommendations which were not incorporated in design at that point of time. Therefore those changes have to be incorporated now. It is not that oil companies do not do it, just that it takes time. Refining, Exploration & Production operation is highly complex and any technology up-gradation is a time consuming process. Do you think that in India we attach the same importance to safety as in developed countries like USA? I can tell you that safety standards in India are robust. But one shouldn’t compare India with that of other country as environment and work culture are different. We take inputs from other international standards, technological developments taking

December 2012 www.InfralinePlus.com

InConversation

place and we have principal panellists from various public and private companies who sit over a period of time before a safety standard is made. So there is an elaborate process of formulating a standard. Standards in India are quite good and they are also followed religiously to the extent possible. There will always be some gaps in any system, be it in the East or West. There has been lot of improvement in safety culture in India. Managers are looking at operational integrity, asset management integrity and hardware and software issues. Don’t you think that OISD’s decision to make standards 116 and 117 mandatory was a controversial one as oil companies were asked to replace existing fire fighting systems with new ones leading to unnecessary expenditure? Please elaborate. With technological developments you have to undertake modifications, put new systems. In today’s era of technological developments you can’t look back at what has been done earlier. As and when technology improves we have to bring in new features. That’s what happens universally. As per me there was no controversy. In some areas there were some deliberations and debate and we have included their feedback based on discussions in Safety Council.

With technological developments you have to undertake modifications, put new systems. You can’t look back at what has been done earlier. Sometimes someone creates some noise which is blown out of proportion. The Safety Council approves the standards only after building a consensus with oil companies and statutory bodies. We are not saying that perfectly functioning equipment should be replaced with the one mandated by the standards. Infact, the oil companies themselves are more sensitive than OISD as their stakes are very high. Hence whatever technological advancements we suggest, or otherwise also, the oil companies incorporate changes in their process. Acquiring state-of-the-art technology is a must for improving production, profitability and safety. And as per me, there are no differences of opinion on this. Safety is not expensive, it is priceless. There are enough suppliers in the market to procure the equipment recommended by us. Amendments are done from time to time. This world is a changing world; only thing which is constant is change. Developments in science and technology move at a rapid pace, and we have to catch up and incorporate those.

With the MB Lal committee coming out with its own set of safety recommendations for oil and gas industry, how has it impacted OISD’s owns set of guidelines? The MB Lal Committee was set up in the aftermath of a fire incident at IOC’s Jaipur POL terminal in October 2009. The committee had recommended various safety measures. Around 70% of its recommendations have been implemented so far and the balance is under various stages of implementation. Based on these recommendations, OISD has also modified its standards to incorporate some of the measures which were not included previously. What, according to you, are the key challenges in the functioning of OISD today? Managing rapid changes in technology up gradation, dealing with old and aging assets and thick population growth around installations are some of the major challenges faced by oil & gas industry. Upgrading skill is another important issue, along with assimilation of technology. After all it is the people who manage the technology. Employee engagement is a must.

For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InConversation

â&#x20AC;&#x2DC;Doing business in India is difficult, but not impossibleâ&#x20AC;&#x2122; Vikram S Mehta, the man who single handedly built the Shell empire in India, bid adieu to his office. A man known for his no-nonsense attitude, his commitment and values were instrumental in shaping the vision of Shell India. In his capacity as the Chairman, Mehta not only transformed the company into an important LNG player in the country but also guided it in gaining a strong foothold in the downstream marketing business. With a career spanning 24 years in Shell India, Mehta is all set to play a new inning in his professional life. He spoke to Neeraj Dhankher, about his experience in Shell. Edited excerpts:

Shellâ&#x20AC;&#x2122;s retail plans have not been successful. What are the reasons and future strategy in maintaining presence in the retail segment? Retail plans have not been successful because of the pricing policy of the government, which has not allowed private companies to market petrol or diesel profitably. All private companies have put a stop to their expansion plans. Shell has around 70 outlets currently operational. It remains in the retail business is because it believes the government will sooner rather than later level the playing field. This has happened now in petrol. The price of petrol has been deregulated. There is still a constraint in diesel. The gap between the trade parity price of diesel and the current public sector price is about `12 a litre on an average. However, Shell is bullish about its future retail plans because of various

reasons. One, its retail network is located in cities where the ratio of petrol sales to diesel sales was higher than in other places. As petrol is deregulated, the profitability of retail outlets is therefore relatively robust. Second, it believes the government will slowly but surely align the domestic market price to international prices. Three, it has a very strong customer value proposition because of the quality and service of our products. And four, it has a strong brand. The location, service, quality and brand and customers response is the key issue, not the number of outlets. For example, in 2009-10, Shell had only 13 outlets in Bangalore; yet it had 18% of the market share because all these were very well located and were very popular with the customers. Shell India has a strong market base in the lubes market in India. How do you see the company growing in this segment in the near future?

Lubes is the only business in the petroleum products area in India, which is totally deregulated. There is no constraint on any company. We are the largest lube marketing company in the world. Our strategy is to grow profitably. We have a very strong brand and portfolio of products. We can meet the needs of all segments of customers, be it retail or industrial. We have strong technical base. So all these factors, along with a strong sales and distribution network, is the basis on which our objective is to double our volumes within next three years. There is a synergy between lubes business and retail. As we grow our retail network, the lubricant sales will also increase. We have already acquired land on the east coast in Andhra Pradesh and are looking at developing a lubes plant. What are your strategies for increasing presence in the bitumen market? We have a small presence in the

December 2012 www.InfralinePlus.com

InConversation bitumen market right now. The presence is focused on specialized bitumen, called polymer modified bitumen. We have plants in Bengal and Gujarat. Specialized bitumen accounts for a very small proportion of the total bitumen market in India. The largest share is accounted for by the commodity grade bitumen. We don’t have the access to the raw material i.e. commodity grade bitumen as we don’t have a refinery in India. That is why we are constrained in our growth plans. Our plans to grow in bitumen business will depend on how quickly and successfully we are able to access the commodity grade bitumen. Is Shell looking to enter the E&P business in India? My personal hope is that we will establish a position in the E&P business in the coming years. It 54

depends on my successor and the management of Shell. I am somewhat disappointed that we do not have a presence in E&P. There is no specific reason for that. India has oil and gas resources, but a global company like Shell has to choose between many options and opportunities. A choice has to be made on basis of geological and technological reasons as well as good prospects. So one has to allocate your scarce and finite resources in all these various opportunities. The reason why we have not invested in India so far is because we have had other bigger, better prospects elsewhere. Is Shell looking at opportunities to acquire stake in existing refineries? India is surplus in refining capacity right now. So, logically there is no need to put up any refining capacity

The biggest challenge for anyone starting a business in India is to first overcome the entry hurdles without breaching business or personal principles. We are satisfied that we could build a business without compromising on our principles.

in India. On the other hand, one could argue that maybe we need to take a stake in refinery in order to provide all our downstream marketing businesses competitive access to molecules. What has been the biggest challenge for you at Shell? Biggest challenge for anyone starting a business in India is to first overcome the entry hurdles without breaching business or personal principles. The biggest source of satisfaction is we have built up a large business without compromising our principles. The businesses Shell is involved with have had a positive impact on India’s energy situation. We were among the first to actually introduce LNG into this country. We are the first energy multinational to do primary research in India. We have helped the government formulate an integrated energy plan. All of this makes me very satisfied. How do you assess the LNG market in India? Please elaborate on Shell’s strategy in this regard.

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I am bullish about the LNG prospects in India for various reasons. One, there is a shortfall of domestic gas. So there is need for importing gas. Second, gas is cheaper than oil. Today, for example, you can import LNG at around $12 per MMBTU, while the equivalent price of imported diesel would be around $19 a MMBTU. Third, gas is cleaner than oil. A shift from oil to gas has environmental benefits. Fourth, the supply side is robust. There have been huge discoveries offshore. East Africa and the countries on the Indian subcontinent also have resources. Shell will increase the capacity of its LNG terminal at Hazira from 3.6 to 5 MMTPA by end of this year or the first quarter of next year. The plan for further doubling the terminalâ&#x20AC;&#x2122;s capacity 10 MMTPA is also under review. Shell is also contemplating a Floating Storage Regasification Unit (FSRU) in Kakinada. Once approvals are secured, the project could be completed within 16 to 18 months. When we put up the terminal at Hazira, there was resistance from the consumers to pay the market price. It took time and logic to persuade customers to shift to LNG. The same

effort will have to be expanded on customers for the East Coast gas. How has been your experience of doing business in Indian conditions? Doing business in India is difficult, but not impossible. You have an example of Shell. We have created it from scratch. Today 3000 people work for Shell and it has over `12,000 crore of business in India. We should not constantly criticize the Indian regulatory environment, or red tapism. It is difficult, but if you have the patience, and if you work with the interest of the company and the public interest also, the decision makers are receptive. Please throw light on your experience in Shell. I started my career with Shell in London. I was in head office as an executive with shareholder responsibility for Shellâ&#x20AC;&#x2122;s investments in the Middle East and South Asia. I was on board of several Shell companies in the region. I spent about two years in this job. I then went to Egypt as the MD of the Shell Marketing Company and the Shell Chemical Company, and

then back to London for a year and eventually started the operations in India. I was the first employee of Shell in India. I have been chairman of Shell in India for 17 years. Shell India is today the most diversified and amongst the largest of the energy multinationals in India. It is involved with four different kinds of activities. One, marketing. It is the only multinational with a license to sell main fuels (petrol /diesel). It also markets lubricants, ATF and bitumen. Second, is gas. It has built one of the two LNG regasification terminals in India in Hazira, with a capacity of around 3 MMTPA, which will be increased to 5 MMTPA in a few months. Third, technology. Shell has created a technology centre in Bangalore. This Centre currently has around 700 technocrats, who are providing technical support to Shell group around the world across the full range of petroleum activities, from E&P to refining, to petrochemicals and marketing. This group is also doing primary research in its own laboratory. Finally financial services. Shell has around 1700 chartered accountants and cost accountants located in Chennai and these people provide support to the finance function across the world. These four legs were created over the last 15 years. It makes Shell the most diversified of the energy multinationals in India. What are your future plans? I have worked for Shell for 24 years. So I am looking forward to something different. My plans are to work in the non-corporate world. I will take a few non-executive board positions that will represent my continuing involvement with the corporate world. But over and above that, I will spend time working with a not-for-profit organization and I also hope to get more involved with the academic and think tank world. For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InDepth

Leading American energy icon calls for fuel without fear Clean and green can become a reality soon

►► Promises to turn US into “oil and coal free” by 2050 ►► Calls for other nations such as China, India, Japan too to be part of this revolution by Team InfralinePlus

Game changing technologies, advanced and innovative materials which are already available today can help make energy systems across the world more efficient. That day in not far when nations would be able to forego dependence on oil and coal as fuel sources completely, feels world energy leader---Amory B Lovins, who is an American physicist and environmental scientist. According to him, the United States will become “oil and coal free”

by 2050 through total reliance on renewable energy and other nations such as China, India, Japan all can be part of this revolution. Considered among the world’s leading authorities on energy—especially its efficient use and sustainable supply—and a fertile innovator in integrative design, Lovins was in India recently to talk about how the leading economies of the world were planning to become oil-free by moving to alternate and environment friendly fuels.

The US going “oil and coal free” may sound a little far-fetched and ambitious to many, considering the amount of oil the US guzzles every year, but the country has been working on shifting to gas from oil and coal for some time, according to Lovins. The aim is to reduce dependence on West Asia and its oil--given the unrest and turbulence surrounding the Gulf nations. While it remains to be seen how Lovins’s plans pan out in the US, they

December 2012 www.InfralinePlus.com

Greenman: Amory B Lovins

Richer, fairer, cooler, safer world is possible because saving and replacing fossil fuels now works better and costs no more than burning them. Lovins latest offering to the world shows how business sped by smart policy can get the US completely off oil and coal by 2050, and later beyond natural gas as well.

make sense for a country like India which meets almost 80 per cent of its fuel requirement through imports and spends close to $150 billion annually on the oil bill. With fiscal deficit and current account deficit being the country’s biggest worries, Lovins’s recipe for turning oil-free is something that India needs to seriously look at. In his latest book---“Reinventing Fire: Bold Solutions for the New Energy Era”, Lovins links oil and its environmental impact with fear and says, “Imagine fuel without fear. No climate change. No oil spills, dead coal miners, dirty air, devastated lands, lost wildlife. No energy poverty. No oil-fed wars, tyrannies, or terrorists. Nothing to run out. Nothing to cut off. Nothing to worry about. Just energy abundance, benign and affordable, for all, for ever.” That richer, fairer, cooler, safer world is possible, practical, even profitable-because saving and replacing fossil fuels now works better and costs no more than buying and burning them. Lovins latest offering to the world --Reinventing Fire --shows how business-motivated by profit, supported by civil society, sped by smart policy-can get the US completely off oil and coal by 2050, and later beyond natural gas as well. Authored by a world leader on energy and innovation, the book maps a robust path for integrating real, comprehensive energy solutions in four industries. This includes transportation, buildings, electricity, and manufacturing-melding radically efficient energy use with reliable, secure, renewable energy supplies. Popular in tone and rooted in applied hope, Reinventing Fire shows how smart businesses are creating a potent, global, market-driven, and explosively growing movement to defossilize fuels. It points readers to trillions in savings over the next 40 years, and trillions more in new business opportunities. Whether you care most about national security, or jobs and

competitive advantage, or climate and environment, this major contribution by world leaders in energy innovation offers startling innovations will support your values, inspire your support, and transform your sense of possibility. Pragmatic citizens today are more interested in outcomes than motives. Reinventing Fire answers this transideological call. Whether you care most about national security, or jobs and competitive advantage, or climate and environment, its startling innovations will support your values, inspire your support, and transform your sense of possibility. While this may sound utopian and desirable, how practical and feasible is the thought really? As per Lovins, the energy systems today are built on costly and inefficient fuels and a time has come to look at more energy efficient technologies for making a shift to better sources of fuel which include solar, wind and hydro power. Lovins is not the only one talking about an oil free nation. The awareness to reduce dependance on oil and other fossil fuels is growing by the day and leading economies across the glove are ready to join the race for cleaner and alternative energy resources. Transportation systems all over the world use almost 80% of the total oil consumption and this is where Lovins calls for a shift to cleaner sources such as hydrogen as a fuel, electric cars and other technically innovative ways to cut dependence on oil. The world is also looking at environmentally cleaner fuels like the natural gas and biofuels ---through Jatropha plantations for diesel and jet fuel and ethanol (derived from sugarcane that is found in abundance in India) based petrol. So to make the world a better place, a beginning has to be made towards a cleaner and better future.

For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

StatisticsOil & Gas Crude Oil Production (Qty: ‘000’ Ton) Name of the Undertaking / Unit

A. Production of Crude Oil 1. Oil & Natural Gas Corp. Ltd. Onshore Gujarat Andhra Pradesh $ Tamil Nadu Assam Tripura Mumbai High Offshore Oil Condensates 2. Oil India Ltd. (OIL) Assam Arunachal Pradesh 3. DGH (Private / JVC) Onshore Arunachal Pradesh Assam Gujarat Rajasthan Offshore GRAND TOTAL (1+2+3) Onshore Offshore

Planned Production. during September 2012

Production. during September 2012

Production. during September 2011

Production. during August 2012

1937.400 577.400 440.000 22.000 17.000 98.000 0.400 1360.000 1168.000 192.000 324.300 322.300 2.000 990.655 741.018 10.150 0.000 11.590 719.278 249.637 3252.355 1642.718 1609.637

1810.000 566.000 418.000 23.000 21.000 102.000 2.000 1244.000 1082.000 162.000 305.029 303.237 1.792 951.520 732.612 8.205 0.000 11.938 712.469 218.908 3066.549 1603.641 1462.908

1957.000 608.000 467.000 24.000 20.000 97.000 0.000 1349.000 1192.000 157.000 320.150 317.710 2.440 841.290 543.570 7.600 0.140 11.330 524.500 297.720 3118.440 1471.720 1646.720

1900.100 591.100 441.000 24.000 21.000 105.000 0.100 1309.000 1135.000 174.000 321.439 319.596 1.843 1006.621 757.899 7.490 0.000 12.022 738.387 248.722 3228.160 1670.438 1557.722

*: Provisional. $: Includes production from offshore east coast Reasons for shortfall as indicated in the note.

Refinery Production (In terms of crude throughput) (Qty: ‘000’ Ton) Name of the Undertaking / Unit

Planned Production. during September 2012 B. Refinery Production (In terms of crude throughput) Public Sector 10008.5 1. IOC, Guwahati 84.0 2. IOC, Barauni 463.5 3. IOC, Koyali 1190.0 4. IOC, Haldia 630.0 5. IOC, Mathura 620.1 6. IOC, Digboi 55.0 7. IOC, Panipat 913.0 8. IOC, Bongaigaon 200.0 Total IOC 4155.6 9. BPCL, Mumbai 834.1 10. BPCL, Kochi 840.0 11. BORL, Bina 525.0 Total BPCL 2199.1 12. HPCL, Mumbai 630.7 13. HPCL, Visakh 795.5 Total HPCL 1426.2 14. CPCL, Manali 753.2 15. CPCL, Narimanam(CBR) 59.4 Total CPCL 812.6 16. NRL, Numaligarh 260.0 17. MRPL, Mangalore 1150.0 18. ONGC, Tatipaka 5.0 Private Sector $ 4216.9 1. RIL, Jamnagar 2556.0 2. Essar Oil Ltd.(EOL), Vadinar 1660.9 TOTAL(B) $ 14225.4

Production. during September 2012

Production. during September 2011

Production. during August 2012

9398.054 73.491 468.724 1121.163 526.968 665.129 54.036 984.291 180.416 4074.218 943.846 902.633 102.350 1948.829 706.225 648.472 1354.697 515.499 50.742 566.241 251.720 1198.128 4.221 4731.068 3042.667 1688.401 14129.122

9040.848 91.321 435.024 965.459 638.030 460.731 57.638 1279.138 160.357 4087.698 882.991 761.504 0.000 1644.495 622.121 766.691 1388.812 767.025 51.801 818.826 249.608 845.184 6.225 3644.627 2928.000 716.627 12685.475

10438.902 5.178 579.332 1194.969 543.192 732.937 58.136 1307.257 213.502 4634.503 1101.870 920.943 604.200 2627.013 746.605 414.136 1160.741 483.116 61.816 544.932 269.407 1198.125 4.181 4765.683 3044.000 1721.683 15204.585

*: Provisional., Reasons for shortfall as indicated in the note. $: RPL(SEZ) Planned targets & production (in terms of crude throughput) not reported by the refinery.

December 2012 www.InfralinePlus.com

Refinery Production in terms of Crude Throughput (August-2012) (Qty: ‘000’ Ton) Name of the PSU / Private Co.

Prorated Installed Capacity $ C. Refinery-wise Capacity Utilisation Public Sector 10360.000 1. IOC, Guwahati 82.000 2. IOC, Barauni 493.000 3. IOC, Koyali 1126.000 4. IOC, Haldia 616.000 5. IOC, Mathura 658.000 6. IOC, Digboi 53.000 7. IOC, Panipat 1233.000 8. IOC, Bongaigaon 193.000 Total IOC 4454.000 9. BPCL, Mumbai 986.000 10. BPCL, Kochi 781.000 11. BORL, Bina 493.000 Total BPCL 2260.000 12. HPCL, Mumbai 534.000 13. HPCL, Visakh 682.000 Total HPCL 1216.000 14. CPCL, Manali 863.000 15. CPCL, Narimanam 82.000 Total CPCL 945.000 16. NRL, Numaligarh 247.000 17. MRPL, Mangalore 1233.000 18. ONGC, Tatipaka 5.000 Private Sector $ 4191.000 1. RPL, Jamnagar 2712.000 2. Essar Oil Ltd.(EOL), Vadinar 1479.000 TOTAL $ 14551.000

September, 2012 September, 2011 Actual Crude % utilisation of I/C Prorated Installed Actual Crude % utilisation of I/C T’’put * Capacity T’’put 9398.054 73.491 468.724 1121.163 526.968 665.129 54.036 984.291 180.416 4074.218 943.846 902.633 102.350 1948.829 706.225 648.472 1354.697 515.499 50.742 566.241 251.720 1198.128 4.221 4731.068 3042.667 1688.401 14129.122

90.7 89.6 95.1 99.6 85.5 101.1 102.0 79.8 93.5 91.5 95.7 115.6 20.8 86.2 132.3 95.1 111.4 59.7 61.9 59.9 101.9 97.2 84.4 112.9 112.2 114.2 97.1

9584.000 82.000 492.000 1123.000 615.000 656.000 53.000 1230.000 193.000 4444.000 984.000 779.000 0.000 1763.000 533.000 680.000 1213.000 861.000 82.000 943.000 246.000 969.000 6.000 3566.000 2705.000 861.000 13150.000

94.3 111.4 88.4 86.0 103.7 70.2 108.8 104.0 83.1 92.0 89.7 97.8 0.0 93.3 116.7 112.7 114.5 89.1 63.2 86.8 101.5 87.2 103.8 102.2 108.2 83.2 96.5

*: Provisional. I/C: Installed Capacity. $: RPL(SEZ) refining capacity 27 MMT but crude throughput not reported by the refinery and not included in total prorated installed capacity

Natural Gas Production (Qty: Million Cubic Meter) Name of the Undertaking / Unit D. Natural Gas Production 1. Oil & Natural Gas Corp. Ltd. Onshore Gujarat Rajasthan Andhra Pradesh Tamil Nadu Assam Tripura Offshore 2. Oil India Ltd. (OIL) Assam Arunachal Pradesh Rajasthan 3. DGH (Private / JVC) Onshore Arunachal Pradesh Assam Gujarat Rajasthan West Bengal $ (CBM) Madhya Pradesh (CBM) Jharkhand (CBM) Offshore TOTAL (1+2+3) Onshore Offshore *: Provisional. $: Coal Bed Methane production. Reasons for shortfall as indicated in the note.

Planned Production. during September 2012

Production. during September 2012

Production. during September 2011

Production. during August 2012

1941.134 422.066 104.444 1.219 83.239 111.230 37.381 84.553 1519.068 254.000 232.000 1.600 20.400 1198.835 11.099 1.938 0.000 9.026 0.000 0.000 0.135 0.000 1187.736 3393.969 687.165 2706.804

1924.277 439.641 150.320 1.379 98.107 99.851 41.815 48.169 1484.636 225.229 204.600 1.762 18.867 1213.258 64.166 1.322 0.000 15.942 37.364 8.838 0.506 0.194 1149.092 3362.764 729.036 2633.728

1912.488 471.495 160.660 1.270 110.207 106.658 41.369 51.331 1440.993 227.922 207.058 1.823 19.041 1808.590 58.344 1.904 1.236 20.678 28.044 6.084 0.064 0.334 1750.246 3949.000 757.761 3191.239

1996.080 460.576 159.838 1.458 107.098 97.257 42.747 52.178 1535.504 234.368 211.605 1.653 21.111 1316.905 67.268 1.441 0.000 17.391 38.888 8.930 0.386 0.232 1249.637 3547.353 762.212 2785.141

December 2012 www.InfralinePlus.com

NewsBriefs | Renewable

Debt recast Lenders ask Suzlon to bring in `2.5 bn

PTC India to raise $40 million from IFC for wind projects

Suzlon Energy Global installations crosses 20 GW

Suzlon Energy’s lenders have asked its promoter to bring in `250 crore in two equal instalments if they are to restructure the company’s `10,829-crore debt. Even as its debt recast proposal under the corporate debt restructuring mechanism has been approved, lenders also want Suzlon to sell its non-core assets and realise receivables from debtors, said a banker clued in to the development.

PTC India Financial Services Limited will raise around $40 million from International Finance Corporation to fund various wind power projects, which can generate around 75-125 MW of power in the southern states and Maharashtra. The Project will allow PFS to utilise funds to increase investments in wind-based power projects in the state of Maharashtra and Tamil Nadu.

Suzlon Group said its portfolio of projects around the world had crossed 20 GW. The fleet, spanning generations of products and technology from 1995 includes turbines ranging from 300 KW (0.30 MW) to the largest commercially available offshore turbine of 6.15 MW. Company has grown into the world’s fifth largest wind turbine maker with a global fleet of over 20,500 MW operating across 32 countries.

Veer Energy to invest in capacity augmentation, diversification

Bhoruka Power Plans 50-mw wind farm near Belgaum

Gamesa India Mulls solar power entry

Veer Energy & Infrastructure Ltd, a Mumbaibased wind power developer, plans to invest `5 billion to augment capacity on its existing projects and also to diversify into solar energy. The company has successfully completed a 200Mw wind farm project and another 115-Mw project is currently in pipeline. The firm also plans to launch a 200-Mw solar project in Kutch, Gujarat.

Bhoruka Power Corporation plans to put up a 50-MW wind farm near Belgaum, Karnataka. The project will cost `4.12 billion and will go on stream in the first quarter of 2014. Bangalore-headquartered Bhoruka Power is among the leading renewable energy companies in India with a total capacity of 150 MW, of which 110 MW is small hydro and the rest, wind.

Wind turbine manufacturer Gamesa is evaluating the prospects of foraying into the solar power industry in the country, a move intended to create a new stream of revenue and strike synergies between two renewable energy sources. Company wants to also explore the possibility of harnessing solar power at its wind farms.

Damodar Valley Corporation Plans 1,000 mw solar power plant

SEI Solar Power To raise loan of $34.3 million from IFC

Satluj Jal Vidyut Nigam’s wind energy Project to be commissioned next year

Damodar Valley Corporation proposes to set up solar power plant atop 2,494 kilometres long network of canals that has the potential to generate up to 1,000 mw green solar power. Setting up solar power plant atop water canal eliminates the need for land acquisition and water evaporation from the canal that is quite high in India with sunshine for nearly 300 days in a year.

SEI Solar Power is planning to raise loan of $34.3 million from IFC to support 24 MWp greenfield solar PV power plant project in Rajasthan. The total output of the project will be sold to the state owned power trading company, NTPC Vidyut Vyapar Nigam Ltd, under a year 25 PPA signed on January 2012.

Satluj Jal Vidyut Nigam Ltd has entered into an agreement with Spanish renewable energy company Gamesa Corporation Tecnologica on a turnkey basis in Maharashtra. The 47.6 MW project in Ahmednagar district is expected to be commissioned by next year with an investment `300 crore. Company would install 56 turbines of 850 KW.

Model solar cities 41 cities to be developed as models

Grid connected solar power Target to install 20,000 mw by 2022

Orient Green Power urges wind farms to stop due to grid congestion

New and Renewable Energy Ministry has given sanction for 41 cities to be developed as solar cities and Gandhinagar, Nagpur, Chandigarh and Mysore are being developed as model solar cities. The Ministry has approved the master plans for the 28 cities and the project installations have already started in a few cities.

India would see additional 1,100 MW of grid connected solar power installed in the national solar mission soon, said G.B. Pradhan, Secretary, Ministry of New and Renewable Energy. The country targets to install 20,000 MW of solar power under the national mission by 2022. Till now, it has renewable energy capacity of 27,000 MW.

An overcongested grid in India’s Tamil Nadu state, which has the nation’s biggest installed wind capacity, is forcing farms to stop generating electricity, Orient Green Power Co. said. The cleanenergy developer, backed by Bessemer Venture Partners, has cut generation at wind farms in the southern state by as much as 15 percent.

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InConversation

‘Cheaper funds can give the right push to wind power’ Wind power is the second biggest source of renewable energy in India after hydro power. Accounting for roughly 6 per cent of the country’s total installed power capacity, wind energy has gained momentum in India in recent years. General Manager, Renewable Energy, Water & Power, GE India, Haridas Menon spoke to InfralinePlus about the need to continue the momentum on policy front, the importance of feed-in tariffs set by CERC and the urgency to streamline processes involved in land acquisition. Excerpts from e-mail replies: 62

Until a few years ago, India’s annual wind generation capacity addition competed with even conventional sources. What according to you went wrong? India is focusing on building the power generation capacity using diverse set of fuel resources, including renewable energy. Wind energy is a key contributor to the overall energy mix, where last year’s capacity addition was 3100 mw. India has the right policies in place to support long term wind energy growth. The critical aspect here is to continue the momentum on the policy front as well as ensure timely enforcement to achieve sustained growth. The country has the potential to harness 300,000 mw energy through the wind route, against the prevailing 45,000 mw. What kind of policies can the government roll out to attract investment in the sector?

India has the right policies and regulations in place to support long-term wind energy growth. This includes feedin-tariffs where the Central Electricity Regulatory Commission (CERC) has released guidelines for states to follow. CERC has also put in place the renewable purchase obligations which will be a key driver for the growth of India’s wind sector. It’s important that these policies and regulations are strictly enforced. In addition, the government can help streamline the processes around land acquisition, land and project permitting etc., which will make the sector more investor-friendly and encourage more Independent Power Producers (IPP) to engage in the wind sector. Facilitating access to funding at lower cost of debt will support growth momentum. How do you see the input cost panning out in the near future? We already have over 18 gw of wind energy installed in India. So this is a mature technology and industry. As more wind projects are developed and more local suppliers are able to produce local components at world class quality, the

input costs would come down. At the same time, it is important to develop new technologically advanced wind turbines, which are capable of harnessing wind energy from lower wind speed sites. New technology development will always come at some cost, but the overall benefits of the new technology will significantly out-weigh the costs. Will the implementation of generation-based incentive model help the industry? What do you think is the best revenue model to push growth in this sector? The implementation of generation-based incentive will help the industry in the short term. In the long term, with CERC guidelines for feed-in-tariffs as well as enforcement of renewable purchase obligations, the industry should be able to sustain itself. Today, the developers have various revenue models available – ranging from power purchase agreements (PPA) to trading renewable energy credits (RECs)-- potency of which will be driven by the enforcement of RPOs. It is important that the developers have such a choice of revenue models – the

December 2012 www.InfralinePlus.com

best revenue model really depends on the project-specific parameters. From long term project viability and lender acceptance perspective, PPAs based on CERC tariff guidelines would be the best revenue mode. What major reforms are required in the present policies to ensure a better future for the industry? Continued monitoring of the existing policies should provide the right boost for the sector. Adoption of CERC tariff recommendations by all wind-rich states would be helpful for the industry. Kindly share the details of the projects that you plan to do. Why is Tamil Nadu so attractive for companies in the sector? Can other states replicate the same model? GE is engaged in projects in several states including Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh, essentially those developed by our customers. States can create the right environment for wind energy growth by providing progressive regulations, right feedin-tariff structure, enforce renewable

“The government can help streamline the processes around land acquisition, land and project permitting etc., which will make the sector more investorfriendly and encourage more Independent Power Producers (IPP) to engage in the wind sector. Facilitating access to funding at lower cost of debt will support growth momentum.”

New generation turbines will be able to harness wind energy from lower wind speed sites

purchase obligations and remove any project bottlenecks in land and project permitting. What is the scenario on lending front? Are banks and institutional lenders willing to lend money given that it is a capital intensive sector? Banks and institutional lenders are willing to lend money to projects that have good viability and long-term prospects. For a wind project with 20 years’ life, it is important that developers invest in the right kind of technology and track record – focusing on both performance and reliability and on services, parts and any future upgrades. What is the project pipeline of your company and what is the capacity that you plan over the next two years? Also share the current capacity. The target for us at is to continue to be committed to being a growth partner to India by providing our expertise and

diverse product palate to help India meet some of its priorities. GE is a global leader in wind energy technology and has invested in wind energy in India for the long term. In early 2011, in line with our commitment, we set up our local assembly wind unit in Pune. The plant assembles GE’s 1.5 -77, 1.6-82.5 & 1.6 -100 models of wind turbines, which are most suitable for India’s low wind regimes. GE India has also announced that its new manufacturing facility in Pune would develop localized products and solutions for the energy sector in its first phase of operation commencing in 2013. The focus on manufacturing is in line with the need for localised products and solutions suited to Indian customers across GE’s various businesses present in the country. The facility, to begin with, will focus on Energy products and technologies driven by the industry needs for power generation, transmission & distribution, oil and gas as well as measurement and control. For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InConversation

â&#x20AC;&#x2DC;Government will have to take the lead in biofuel energyâ&#x20AC;&#x2122; The biofuel energy sector in India in recent years has been high on hype and low on output. Low investment in research and development, lack of collaboration between academia and industry for creation of new technologies and the absence of government investments in creating role models for private sector are some of the reasons pointed out by Dr Ananda M. Chakrabarty, member of the Scientific Advisory Committee of the Department of Biotechnology (DBT) under the Ministry of Science & Technology. InfralinePlus asked some of these questions over e-mail from the Distinguished Professor at the University of Illinois College of Medicine at Chicago and got the following candid replies: 64

The biofuels industry has seen a number of ups and downs. From very positive projections until a few years ago, the expectations are now no more than 2000 mw till 2017. What according to you went wrong? I think the promoters vastly underestimated the complexity of collecting the biomass substrates from varied sources, separating the fermentable ligno-cellulosic wastes and then pre-treating the wastes before digestion and fermentation by appropriate bacteria or yeast. Given a lack of experience in conducting such studies at large scales, the nascent biofuel industry in India faced difficult technical problems over which they had very little control.

Given the nascent state of the technology in India, even in well-established areas involving producing ethanol from cane sugar or other food grains, the Indian Government will have to take a lead in demonstrating pilot plant feasibility and certain amount of cost effectiveness before the investment community or the industrial sector will chip in. Note that Indian investors are risk-averse and are not known to invest in technology that are new, emerging and increasingly patent-protected. Indian investors will only invest when a technology is no longer patent-protected and can be legally copied. Thus any early development of biofuel technology will need generous support from the Government, as the Department of Biotechnology (DBT) is providing right now.

energy, the near-term contribution by the biofuel industry is minimal, principally due to lack of technological innovations. Old technologies of producing ethanol from starchy foodgrain are the only recourse now.

The country has planned a capacity addition of 30,000 mw through the renewable route. How do you feel the government can create a conducive environment to attract investment in the sector?

How do you see the input cost panning out in near future? How much can biofuel industry contribute in terms of power generation in the short-term? Compared to petroleum or nuclear

What kind of reforms are required in the present policies to ensure a better future for the industry? The present culture of lack of entrepreneurship in the academic or industrial sector needs to be changed,

Will the implementation of generation-based incentive model help the industry? What do you think is the best revenue model to push growth in this sector? Again, given the fact that DBT has set up three new centers devoted to bio-energy generation, a beginning has been made. To achieve real growth, the academic and the industrial sectors will have to work together for a common purpose of biofuel production from biomass, which rarely happens in India.

December 2012 www.InfralinePlus.com

not only for the biofuel industry, but for encouraging industrial productivity in India. There is very little evidence of entrepreneurship in the Indian academic sector. How many start-up companies in India have been founded by university professors, as opposed to, say, that in the United States? Essentially, negligible. So this will be a start. With continuous feed supply being a major concern, what measures do you suggest to ensure financial viability of the generation plants throughout the year? Do you suggest any government effort to aid a solution for this problem? In the United States, a major effort is being directed to cultivating fastgrowing weeds in marginal or arid lands for year round use of such weeds as biomass. Genetic improvements in the composition, stress-resistance and growth rates of the weeds are being accomplished. Being a country of high bio-diversity, India has a variety of weeds that can be grown in marginal lands with a favorable ligno-cellulose composition for their rapid enzymatic degradation and fermentation. The Indian Government needs to encourage such efforts.

Marine or fresh-water algae, which can be easily grown in shallow ponds, can be an alternative to biomass

Technology for producing ethanol from corn and sugar cane is nascent in India

â&#x20AC;&#x153;The near-term contribution by biofuel industry is minimal, principally due to lack of technological innovations. Old technologies of producing ethanol from starchy foodgrain are the only recourse now.â&#x20AC;? What other issues are plaguing this industry? Alternatives to biomass as a source, such as marine or fresh-water algae, that can be grown in shallow ponds under sunny skies, is an area that needs attention, given the favorable weather conditions all over India. Algae can not only produce oily products, known as biodiesel, but can be genetically improved to sequester large amounts of carbon dioxide from the atmosphere in the form of insoluble inorganic carbonates, which can be stored underground forever. This will lead to both algal oil production and sequestration of millions of tonnes of carbon dioxide from the atmosphere, thereby potentially contributing to reducing global warming.

What is the scenario on the lending front? Are banks and institutional lenders willing to lend money given that it is a capital intensive sector? As stated earlier, Indian institutional leaders are risk-averse and will rarely invest in an effort that is not simply copying. Indian industries, pharmaceutical industry for example, thrive on copying. Innovation is a buzz word in India, but there is no evidence of any major industrial innovation, including in the energy sector, in India. Thus raising capital for a truly innovative idea, product or enterprise is a difficult goal to attain in India. For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InConversation

‘India has the potential to be a world leader in green energy’ Founder director of Ashden, Sarah Butler-Sloss, an internationally recognised philanthropist and an authority in the field of green energy, talks to Pallavi Karan Chakravorty about India’s relevance to the Ashden Awards, and how viable is renewable energy for India. The expert also talks about the success story of Ashden and why is it essential to promote green energy as one of the sources of power generation.

What has been your biggest achievement as a pioneer in the field of green energy? After setting up the Ashden awards in 2001, it has been incredibly inspiring for me to witness the achievements of our award winners throughout the years. To date, some 140 winners from India and across the globe have helped transform the lives of over 33 million people. They have also made major inroads in the battle to tackle climate change, saving 4 million tonnes of CO2 every year. In India, where the share of renewable energy is just about 10.63 per cent, how do you think off-grid power should be made available to the poor? There is huge potential and capacity available in India to provide decentralised renewable energy solutions that meet the needs of the poor, as several Ashden award winners have demonstrated. For example, AG Bank has provided the finance for 52,000 solar home systems in Uttar Pradesh; Selco has provided 135,000 solar home systems in Bangalore and other areas; and Husk Power has brought electricity

to 200,000 people in Bihar. The models these organisations have created could be replicated across India. I am very encouraged to hear Prime Minister Manmohan Singh making such promising statements in support of How would you rate India as a sustainable energy at the International renewable energy destination? Energy Access Seminar in The fact that there are 20 Ashden Delhi on 9 October: India award winners in India – a far what’s important already has greater number than in any now is that words the knowledge, other country outside the UK – are translated entrepreneurial demonstrates that the knowledge, into action. spirit and business entrepreneurial spirit and models for business models already exist Though, the renewable that could propel India to world government projects. leadership in this field. through the This could help change the lives Jawaharlal Nehru of millions of poor people, particularly National Solar Mission those in the ‘darkest’ states like Bihar, aims to generate 1,000 MW of Uttar Pradesh, Bengal and Orissa. power by 2013, it is doubtful We have now closed applications for whether this would be of any our 2013 Ashden Awards – the deadline benefit to the poor… Your take? was 23 October – and I can’t wait to hear Along with the 1,000 MW solar grid about more inspiring stories from India. electricity programme, I understand that the government is focused on providing It has been more than a decade electricity in the off-grid sector. I believe since the Ashden awards were the target for the Jawarharlal Nehru instituted by your trust. Do you National Solar Missioni is for 20 million think they have been able to serve homes to be given access to solar power.

December 2012 www.InfralinePlus.com

the purpose of their inception? We are proud of our achievements so far, but there is still a long way to go. A fifth of the world’s population still lacks access to modern forms of power and a third are cooking on traditional stoves and open fires, the smoke from which is causing nearly two million premature deaths per year. The Ashden Awards are doing a lot to bring renewable energy and particular organizations that are pioneering schemes into the public eye. Going a step further, do you think that there’s anything that foundations can do as a sector to bring climate change to the centre of public debate, and right onto the political agenda where it needs to be? Our role at Ashden is to communicate about the huge potential of renewable energy to transform people’s lives. We work with our winners to share their stories as widely as possible, so that others can replicate them. In terms of driving climate change up the political agenda, it’s important to us that we don’t just sit and criticise, but that we offer a vision of a different future that our winners collectively provide. We also work hard to get the message across to governments that supporting sustainable energy will also help them achieve other goals: including reducing poverty, creating jobs and improving health and education outcomes. India is the only country that, with Ashden’s support, has created its own organisation made up of former Ashden award winners called by the name of ASHDEN India Sustainable Energy Collective (AISEC) - a team comprising Ashden awardees from India. Can you elaborate on the projects that the team is working on and their practical implementation?

With our support, AISEC is working to break the vicious cycle of energy poverty in India by engaging in policy dialogue with government, private and social sector stakeholders on key sustainable issues, sharing experiences and engaging in debate on solutions. It’s really exciting to see AISEC already becoming a major force for change in India: for example it recently joined forces with others to successfully represent the case for the Reserve Bank of India to include renewable energy for households as a priority sector lending. This is a very exciting development, and will help extend the reach of sustainable energy across the country.

The reality is that fossil fuel supplies are finite. Finding alternatives is not an option, it’s essential. But if we if we work together to reduce demand and create a stable investment climate for renewable energy, we’ll be well on our way to securing our energy supply without the need for nuclear or fossil fuels. Despite various debates and attempts to create awareness about the importance about green energy, the world is still majorly functioning on thermal-based power. What is the feasibility of renewable energy to take a lead in power generation in future? The reality is that fossil fuel supplies are finite. Finding alternatives is not an option, it’s essential. But if we if we work together to reduce demand and create a stable investment climate for renewable energy, we’ll be well on our way to securing our energy supply

without the need for nuclear or fossil fuels. And sustainable energy doesn’t just cut greenhouse gases – it also boosts economies and changes lives. In a power-starved country like India, which is abundant in coal, is it practical to spend money on green energy, which is also expensive? Coal alone will not power India – as is sorely evident from the lack of reliable grid energy and the millions of people who live without access to electricity. Coal sources will also eventually run out and its extraction will become much more expensive. Many types of renewable energy are just as competitive as grid energy and coal, and even cheaper and more reliable in the long-term. While renewable energy services and products may have higher up-front costs, there are increasing numbers of innovative finance schemes available in India to help end-users and energy providers with the costs. One of these is Shri Kshethra Dharmasthala Rural Development Project in Karnataka, which won the Ashden International Gold Award this year. This is a wonderful example of the vital role a well-run microfinance organisation can play in meeting the energy needs of the poor. How has the attitude of people on a whole changed about green energy over the years? Public attitudes are changing, but very slowly. We need to move away from frightening people with apocalyptic scenarios and offering them a vision of a sustainable future that everyone can take part in. The good news is, people around the world are realising this: only this week, the BBC reported that the EU has decided to emphasise the need to ‘inspire people’ to join the challenge to cut greenhouse gas emissions. For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

InConversation

‘Price controls and subsidies are hampering investments in power’ He became part of the family-owned business in 1990 and What is your view of the future of was instrumental in Jakson Power Solutions’ foray into areas nuclear power in India? I feel a sizeable portion of our total spanning from manufacturing of generating sets, control capacity addition would come from panels, high-tension switchgear, acoustic enclosures to nuclear power, it being the fourth undertaking of turnkey EPC contracts, solar power projects largest source of electricity. Plus, we and now its venturing into hospitality sector. An alumni have sufficient reserves of uranium of the Indian Institute of Management, Sameer Gupta, which can be used for Managing Director, built a strong foundation of the group producing power. “We with his far sightedness and business acumen. In a recent As per will be interview with InfralinePlus, he gave his views on estimates, producing around 5000 mw we will be various issues pertaining to the energy sector. 68

Our power sector is largely dependent on thermal power. However, with the recent issues in coal block allocation and increase in import duty on coal, we need alternatives. Which can be the best alternative in your view? Though the dominance of coal in power production would continue, the alternatives to coal are gas, renewables and nuclear energy. Almost 60 per cent of power in India is produced by thermal plants. We are at number three position worldwide in coal production and our coal reserves are enough to serve us in the foreseeable future. The limitations on harnessing the full potential, however, are environmental concerns, the need to preserve forests and the dependency on governmentowned companies. Subsidies and price controls which result in the selling price of power being lower than its cost of production are hampering investments in this sector. We foresee popularity and

from nuclear sources very soon and it will be around 45,000 mw within the next 10 years.”

producing around 5000 mw from nuclear sources very soon and it will be around 45000 mw within the next 10 years. Nuclear reactors which would contribute to 5000 mw are ready and should get commissioned within one year. There have been protests about atomic energy being clean and safe but necessary steps are being taken to address these concerns. The Indo-US Nuclear Agreement will also help us to enhance our power generation capacity.

acceptability of renewal power in years to come as we approach grid parity and the government increases its focus on environmental issues. Nuclear energy had taken off on a good note, but Fukushima brought everything to a halt.

How much should we invest to increase our nuclear capacity? And what can we learn from Fukushima? India has a vision of generating close to 65,000 mw power from nuclear sources by 2032. This translates into sizable investment in this area. The learning from Fukushima should be that significant focus should be around safety including evacuation plans and creating awareness.

We are producing over 25,000 mw from renewable sources at present. Can it play a bigger role in future? Renewable power contributes to around 10 per cent of the total power generation capacity in India. This is expected to be at around 15 per cent by 2020 or in other words close to 45,000 mw would be generated from renewable sources within the next 10 years. The main source of renewable power would be wind and solar though there are initiatives to focus on other non-conventional energy sources as well.

Indian Coal Washing Industry: Present & Future Developments Key drivers with detailed profiles of Coal Washeries December 2012

Solution Driven

Renewable sources would contribute to about 15 per cent to the total power generation capacity of India by 2020. The main source of renewable power would be wind and solar though there are initiatives to focus on other non-conventional energy sources as well. The ambitious Jawaharlal Nehru National Solar Mission aims to deploy 20,000 mw of solar energy in India by 2022. Do you think such initiatives may help us achieve grid parity? JNNSM is one of the major initiatives of the government to promote solar power and would help establish India as a global leader in this segment. Its first phase has been a huge success and would add to 1000 mw capacity on the grid by 2013. The technological advancements and the fact that the price of solar cells have globally come down drastically has already brought down power cost from around `15 per unit a few years back to `8 today. Government policies such as antidumping duty or Indian content policy would have a significant role to play in achieving grid parity. We believe that the government should encourage introduction of modern and efficient technology for new solar power plants which will help the nation in times to come. At current rate of price reduction and the fact that power cost from SEBs is going up, grid parity can come within five years.

For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com

Indian Coal Washing Industry: Present & Future Developments Key drivers with detailed profiles of Coal Washeries December 2012

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InDepth

Crop burning: Biomass potential going up in smoke ►► Right schemes and strategies needed to channelise farm waste in right direction ►► Burning also releases harmful gases and soot in the air which create health problems

Residue harvesting needs to be synchronised with grain harvesting to avoid burning of fields

by Ankita Sharma

Burning of residue crop in fields after harvesting is a common sight across villages and fields in India. Early morning train journeys are replete with images of smoking fields across vast swathes of land. Despite a government ban on this action, burning of residual crop to clear the field for the next crop remains almost always the only option for farmers in the absence of mechanisms to collect the residue to be utilized in a more efficient and productive manner.

There are both technological and policy hurdles to this such as the absence of appliances to improve reaping and baling operations and land development, particularly for supporting more efficient deployment of harvesting machinery. Major equipment used for harvesting are aimed at preserving the crop. In this process, a large portion of the residue is mowed which makes it difficult to cut these parts through reaping. There are other issues in

harvesting of different types of residues. The collection efficiency of paddy straw is affected due to the paucity of time in between the collection of residue and the sowing of next crop—in other words, the need to synchronize residue harvesting with grain harvesting. Farmers initiate the preparatory work for wheat sowing within three-four days of paddy harvesting. If straw is not harvested in this period, the only option to clear the residue is to burn the field.

December 2012 www.InfralinePlus.com

InDepth

A ban on this can only be enforced if a methodology is developed for synchronizing residue harvesting with grain harvesting.

No collection of bio-waste

There is no government-mandated or regulated collection and distribution of agricultural or household biomass waste in India. Although farmers are slowly getting organized and collecting and selling their agricultural waste, lack of transport facilities and poor access to industrial townships act as a deterrent. Even after residue harvesting, there is a very small window of time when the collected paddy husk can be utilized as it catches fungus in around two weeks, if not stored properly. Mostly it is not commercially viable for farmers as well as owners of biofuel plants to transport this waste to the plants which are not regionally located. Improved contact between civil bodies, farmers and biofuel industry to collect biomass, screen and reject non-degradable materials and transport the bio-waste to the right place are, therefore, essential.

Burning of residual crop to clear the field for the next crop is a common practice among farmers in India

Burning issues Besides loss of fodder for cattle, burning also creates harmful gases such as carbon monoxide and releases fine particles of ash and soot in the air which lead to many health problems for those who inhale these gases at regular intervals every year. The smoke emanating from burning fields can even alter weather pattern by blocking out sunâ&#x20AC;&#x2122;s rays over prolonged periods of time. This is in fact what Delhi is witnessing this year with a thick blanket of smoke and haze enveloping it for the past many weeks. The gravity of the problem can be gauged by the fact that as per the estimates, over 20 million tonne of paddy was burnt in the states of Punjab and Haryana alone in the past one month. For a developing country like India, this is a huge opportunity loss since an achievable 10000 mw of biomass-based power generation capacity can meet the energy requirements of nearly 60 million rural households--many of which are yet to see the light of an electric bulb.

Bio panacea for rural ills Over 40 per cent Indian population lives below poverty line with millions unemployed across the country. There is a huge influx of people from villages to towns and cities every day. Paucity of options to earn livelihood in rural areas forces this migration of people to metros. The enormous burden on already overcrowded cities can be checked and minimized if rural energies are harnessed in the entire value chain of biomass-based power--from resource management to conversion and mini industrial activity based on available commercial energy. Key biomass sources include agricultural and agro-industrial waste, plantation and waste generated from habitations. The availability of this surplus waste as fuel for power plants depends on factors such as the yield

December 2012 www.InfralinePlus.com

and harvesting efficiency, captive consumption and competitive use by other industries.

Harvesting efficiently Most of the wheat straw is used as fodder and there is practically no surplus. In comparison, there is no captive demand for paddy straw and industrial demand is also negligible. If the harvesting efficiency--the ratio of the volume of biomass actually harvested as a percentage of the total availability in the field—is improved, significant benefits can accrue to farmers who at present have no option but to see their hopes going up in flames. Harvesting efficiency varies across locations based on the harvesting practices and economic returns. Collection efficiency depends on time availability and resources for harvesting. The harvesting efficiency of wheat straw varies from 30 per cent for mechanized processes to 60 per cent for manual processes. In comparison, the manual harvesting efficiency for paddy husk is over 75 per cent over mechanized processes. However, compared to the 90 per cent collection efficiency of wheat straw, paddy straw collection efficiency is almost nil as most of the yield is burnt in the fields. The scope to improve, therefore, is immense.

Energy plantations Energy plantations in wasteland can significantly increase fuel availability for biomass-based power plants. The Planning Commission’s Vision 2020 document states that in order to utilize 50 million hectares of degraded wasteland which lies outside the areas demarcated as national forests, and another 34 million hectares of protected forest area in which the tree cover has severely degraded, a major programme for energy plantation should be undertaken. It expects the

Development of regional power generation plants can ensure that residual crop harvesting and transportation become financially viable for farmers as well as plant owners. An incentive scheme to set up such plants by the government for plant owners and equitable prices for the harvest for farmers will ensure a momentum on both sides. Benefits of biomass • Biomass-based power can help in reducing the diesel demand for irrigation pumps by about 2.5mt per year. • Pollution arising due to field burning of residual crop waste can be eliminated. Potential reduction of greenhouse gas emissions and CO2 emissions will be immense. • Availability of power and clean energy will go a long way in promoting education, hygiene and better standards of living in rural areas. Improving investments Several large investors had shown interest in biofuel projects some years back but are now concerned over sustainability issues. Some critical policy and technology related concerns which need urgent attention are: • Establishment of rationales and principles for feed-in tariffs • Additional financial support for different types of biomass energy projects till the market matures • Policy and financial support for technology up-gradation and business pilots • Stress on development of regional plants for localized processing of biomass • Stringent policy enforcement against field burning with state level initiatives • Improvement of policy environment for energy plantations

programme to utilize fast growing tree crops such as bamboo, casuarinas and eucalyptus as the raw material for establishing a national network of small, decentralized biomass power plants. The document says it is feasible to target the development of over 15000 mw of capacity based on energy plantation in the next two Five Year Plan periods. However, there are several policy barriers at both at the Central and the state levels which need to be removed for expediting the development of energy plantations. States such as Tamil Nadu, Gujarat, Madhya Pradesh and Rajasthan have taken initiatives towards this. Similarly, the Union government’s Green India Mission can be effectively leveraged for the same. In the short term, survival of existing plants and attracting new investment in the sector will depend on changes in regulatory policies particularly with respect to tariffs and adjustment principles. In the long run, sustainability will depend on availability of quality waste. In the coming decades, the rural populace will also start adding to the pollution which is already at a significantly high level. However, if biofuel industry is given the right support, the country could bypass the phase of becoming a big polluter and move straight to renewable resources rather than conventional sources of energy.

For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

ExpertSpeak

‘Micropower will do what recharge coupons did in mobile telephony’ Passionate about bringing power to rural India, Pär Almqvist, Chief Marketing Officer, OMC Power has lived and worked in India for many years – among other things doing marketing and branding within the rural telecom industry. He has also worked in Sweden, Turkey, Canada and the US. Here he talks about micropower and how it can do what mobile telephony did to empower the masses in the field of communications in India.

To those of us in India who have electricity, the word means a power socket on the wall. And beyond it, cables with electricity running inside them. Perhaps–zooming out even further–the idea of an electricity grid that transports electricity to us from a power plant somewhere far away. Essentially, power is generated somewhere, transmitted over long distances, and then distributed across cities, factories and homes. The problems in India related with electricity are well documented—almost 400 million people are not covered by the grid and there are serious inefficiencies throughout the system. One of the biggest problems is that up to 50 per cent of the electricity generated at a power plant in India is lost in transmission. When high-voltage electricity is transmitted over long distances, it loses power. The electricity grid leaks like a broken dam which is a major problem throughout the world, not just in India. In India, transmission losses often exceed 30 per cent. And when electricity is converted from high voltage into 230V or 110V to be distributed across the length and the breadth of the country, it

where electricity is generated, rural electrification also needs a new charging model. Villagers not only do not have the money to spend on power, they also do not have the money to spend on cables. So, electricity has to become portable, to be sold in a sachet, “pay as you go” model. Villagers can hire a fully-charged lantern or a PowerBox to run lamps, fans and other electrical devices. Items are returned for charging and a fee paid per day, week or month.

“Change is the only constant” MICROMAN: Par Almqvist

loses 10-20 per cent more of its power. So the idea of an enormous electricity grid where so much power is lost in transmission does not make sense. We need to look at energy production and distribution in a whole new way: ▪▪ Energy needs to be produced where it’s consumed so that there is no loss in transmission. ▪▪ Energy production should be renewable and non-polluting. OMC is totally focused on rural electrification – supplying affordable electricity or micropower to homes, schools, health centres, watersupply systems and local businesses. As compared to coal-based plants which take five-seven years to build, micropower plants take only about 30 days from start to finish. We also have a 10-year contract with Bharti Infratel – largest telecom infrastructure provider – to supply power to telecom towers in rural and remote locations.

New charging model Along with changing the location

To early Internet adopters, it was evident that the Internet would some day be everywhere. Today, it really is. Even in rural Indian villages that don’t have electricity yet, there’s mobile Internet (albeit slow and provided by telecom towers running entirely on diesel, but we’re working on fixing that.) One of the most powerful and recent transitions from old to improved, centralized to decentralized, is mobile telephony’s replacement of grid-bound telephony. Similarly, sooner than we would have imagined, we will have a power plant close to home. If not in our backyard, perhaps in the neighbourhood. Because the era of centralization is ending and because our resources are limited, our energy needs are increasing, and the electricity grid is not going to get efficient. So we need to go local. Micropower – small-scale energy with local generation and distribution – has implications far beyond India. The approach of local generation and distribution is highly needed everywhere, and will eventually be adopted throughout the world. For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

ExpertSpeak

‘India should be more active on international forums’ German professor of electrical engineering at the Technical University of Darmstadt, Prof Ing Volker Hinrichsen, was in India recently to address the issues of high-voltage arrestors and circuit breakers. His areas of specialization include lightning and overvoltage protection in electrical power systems, new insulation and field grading materials for high-voltage applications and development of new sensors, diagnostic tools and condition monitoring in electrical power systems. Here he talks about the perils of India’s absence from international forums on standards. Indian power engineering society is not a consolidated body right now. Standards take into account most recent findings of research organized and performed by international working groups. We are working and collaborating together in these working groups, where there is no Indian presence on the international stage. We send out committee drafts for comments, feedback and votes and there is no participation by the Indian society there as well. India in itself is a technologically developed country with so many skilled engineers. The need of the hour for India is to present its point of view at the international level so that when such new standards are being created, the Indian point of view is represented. Standardization is not a national issue, it is done on an international level; so to have an impact on the making of these standards and their working,

are based on well known designs and knowledge, but impose some additional and new challenges. IEC will publish IEC 60099-4 in its third edition very shortly, in which all relevant UHV issues are addressed. IEC will publish standard 60099-9, the world‘s first standard on HVDC arresters as well.

Requirement of standards

There is a great need for product standards which define the minimum requirements for a certain device. When you are going to develop new surge arresters for, let’s say, the 1200kV systems, and there are no standards available in the market, every manufacturer will do it in its own way. Standards help unify the requirements and help improve the reliability of a system. Every device India needs to be an active When of a system, let it be member in the process. new a transformer or an I hope in the coming standards are being created, the insulator that fails, years, there is more Indian point of view is the cause of a participation of Indian should be potential black out. engineers at the international represented and for The overall system level so that their viewpoints that India must stability is a point of are represented as well. raise its voice at forums. importance. Usually an overall system should be Metal oxide arresters able to handle a failing device, We have made very extensive research but in a moment of instability, a failing in the field of energy handling system could be a cause of a grid capability. We tested more than 3000 failure or a blackout. oxide arresters from manufacturers Hence, complete IEC worldwide for their energy handling standardization is available for all types capabilities and the inputs were of line arresters: the basis of the new concepts of ▪▪ Distribution line arresters (DLA) standardization. All the findings we ▪▪ Transmission line arresters (TLA) made regarding dependency of energy ▪▪ Non-gapped line arresters (NGLA) on different variables, were directly ▪▪ Externally gapped line arresters incorporated in the upcoming standards (EGLA) of International Electrotechnical Commission (IEC). For suggestions email at feedback@infraline.com UHV (in India: 1200 kV) arresters

December 2012 www.InfralinePlus.com

StatisticsRenewableEnergy Monthly Electricity Generation in Karnataka through renewable sources: April 2011-June 2012. S. No.

Month

Wind Power

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

117.44 260.6 627.12 602.11 502.91 399.16 132.58 267.12 224.28 128.689 180.022 154.82 134.32 376.19 649.04

Electricity Generation in MU Small Hydro Biomass Bagasse Power Power Cogeneration 69.051 19.491 249.943 63.936 18.098 127.714 120.923 13.834 44.619 228.75 17.916 2.687 322.34 15.182 3.472 291.041 15.05 26.21 230.736 15.562 72.729 207.65 14.198 208.229 142.41 20.253 287.883 73.072 18.162 302.476 62.285 23.962 284.858 49.256 22.483 284.309 35.567 18.711 207.12 34.45 16.98 142.016 44.94 18.25 35.958

Industrial 65.507 32.119 24.655 24.714 33.997 23.675 50.124 38.696 68.114 49.496 85.21 93.173 79.978 82.205 99.064

Solar Power (SPV) 0.703 0.988 0.528 0.52 0.548 0.607 0.589 0.618 0.688 0.747 0.902 1.042 1.039 1.002 0.937

Total 525.135 503.455 831.679 876.898 878.449 755.743 502.320 736.511 743.628 572.642 637.239 605.083 476.735 652.843 848.189

Source: Infraline Research/KPTCL

Electricity Generation (in MU) in Erode generation circle, Urachikottai, Tamil Nadu through SHP Sl. No.

Duration

1 2 3 4 5 6 7 8 9 10

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Electricity Generation (MU) Micro Hydal Right Bank Canal PH Installed PH Installed Capacity 4X2=8 Capacity 4X2=8 MW MW 17.89 0.37 8.70 0.62 38.48 23.30 37.95 25.05 51.80 36.07 46.42 36.71 43.60 34.50 39.51 24.15 33.10 20.78 41.56 23.81

Sathanur Dam PH Installed Capacity 1X7.5=7.5 MW 1.58 2.43 10.21 23.36 8.51 5.18 12.92 6.55 10.31 10.71

Source: Infraline Research/TANGEDCO

Electricity Generation (in MU) in Tirunelveli Circle (Tamil Nadu) Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Small Hydro Power Duration Electricity Generation (MU) Apr-11 0.1877 May-11 0.0 Jun-11 4.3078 Jul-11 3.4745 Aug-11 1.5094 Sep-11 3.2325 Oct-11 2.6728 Nov-11 6.5404 Dec-11 11.3355 Jan-12 8.7406 Feb-12 7.0516 Mar-12 1.7942 Apr-12 0.2006 May-12 0.1491 Jun-12 0.0

Source: Infraline Research/TANGEDCO

Electricity Generation in Mizoram through renewable sources Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12

Small Hydro Power Month Electricity Generation (MU) Apr-11 0.135 May-11 0.45 Jun-11 2.66 Jul-11 3.41 Aug-11 3.71 Sep-11 2.69 Oct-11 1.82 Nov-11 0.46 Dec-11 0.17 Jan-12 0.12 Feb-12 1.71 Mar-12 5.45 TOTAL 22.78

Source: Infraline Research/Mizoram SLDC

December 2012 www.InfralinePlus.com

Summary of XII plan Hydro Capacity Additions Particulars

2012-13

Central Sector Private Sector Sub-total ‘’A’’

231 70 301

Central Sector State Sector Private Sector Sub-total ‘’B’’-Under Execution Total ‘’A’’ + ‘’B’’ (MW)

414 87 501

2013-14 2014-15 A. Commissioned B. Under Execution 1779 270 15 646 845 1627 2639 2543

802*

2639

2543

2015-16

2016-17

Total

231 70 301

520 350 743 1613

2790 510 3300

5773 1608 3215 10596

1613

3300

10897

* RFD Target

Hydro Electric Projects for benefits during 2012-13 (as per RFD Target) Particulars

Implementing Agency Central Sector Uri-II, 4x60 MW NHPC Chutak, 4x11 MW NHPC Chamera-II, 3x77 MW NHPC Parbati-III, 4x130 MW NHPC Sub-total-Central Sector State Sector Bhawani Kattlai-II, TANGEDCO 2x15 MW Bhawani Kattlai-III, TANGEDCO 2x15 MW Sub-total- State Sector Private Sector Budhil, 2x35 MW LANCO Sub-total- Private Sector Total: 2012-13

State

Benefits (MW)

J&K J&K H.P. H.P.

240 44 231 (Ach.) 130 645

T.N.

15 45

H.P.

70 (Ach.) 70 802

Hydro Electric Projects with best efforts for likely benefits during 2012-13 Particulars

Implementing Agency Central Sector

Nimoo Bazgo, 3x15 NHPC MW Teesta Low Dam-III, NHPC 4x33 MW Parbati-III, 4x130 MW NHPC Sub-total- Central Sector State Sector Bhawani Kattlai-III, TANGEDCO 2x15 MW Sub-total- State Sector Private Sector Chujachen, 2x49.5 MW GATI Sub-total- Private Sector Total: 2012-13

State

Benefits (MW)

J&K

W.B.

132

H.P.

130 307

T.N.

15 15

Sikkim

99 99 421

Hydro Electric Projects for benefits during 2012-13 (as per RFD Target) Particulars Central Sector Nimoo Bazgo, 3x15 MW Parbati-III. 4x130 MW Teesta Low Dam- III, 4x33 MW Kol Dam, 4x200 MW Rampur, 6x68.67 MW State Sector Bhawani Kattlai-III, 2x15 MW Private Sector Sorang, 2x50 MW Shrinagar, 4x82.5 MW Phata Byung, 2x38 MW Maheshwar, 10x40 MW Chujachen, 2x49.5 MW Total: 2013-14

Implementing Agency

State

NHPC NHPC NHPC NTPC SJVNL

J&K H.P. W.B. H.P. H.P.

TANGEDCO

T.N.

Himachal Sorang GVK Industries LANCO SMHPCL GATI

H.P. Uttarakhand Uttarakhand M.P. Sikkim

Benefits (MW) 1779 45 390 132 800 412 15 15 845 100 330 76 240 99 2639

December 2012 www.InfralinePlus.com

PhotoEssay

Petronet LNG: Surging ahead on the back of Dahej & Kochi

Petronet LNG Limited, a joint venture of two maharatna and two navratna oil and gas companies-ONGC, IOCL and BPCL, GAIL India, established its first LNG terminal at Dahej with a capacity of 5 mmtpa which was later expanded to 10 mmtpa. At present, Dahej terminal is operating in excess of 10 mmtpa, of which 7.5 mmtpa is sourced through long term contract with RasGas (Qatar) and additional LNG is being sourced through spot/short term contracts. Petronet’s Dahej terminal meets approximately 26 per cent of India’s total gas requirement. The capacity of the terminal is being further expanded to 15 mmtpa and as risk mitigation to port operations, second jetty is also being constructed. Dahej terminal is connected to major trunk pipelines HBJ, DUPL and GSPL. The existing pipeline network is proposed to be expanded by 14,000 km by 2016 from current 11,600 km. The expansion of pipeline networks will play a very vital role in the development of natural gas market in India. The company has touched a turnover of Rs 23,000 crore within a span of eight years. The Kochi terminal is slated to be operational by the first quarter of 2013 and this will further add to the turnover. The last quarter results have been the best in the history of the company. The company has been ranked 58th by Fortune 500 (India). It has already tied up 1.5 mmtpa LNG on long term basis from Exxon Mobil’s Gorgon Project (Australia) for Kochi terminal and also signed a memorandum of understanding (MoU) with Singapore affiliate of Gazprom Global LNG for a long-term supply of 2.5 mmtpa LNG. The company

is in discussion with global LNG producers for sourcing additional volume. The company is also setting up a third LNG terminal on the Eastern Coast at Gangavaram with operational target by the end of 2015. The company is

planning to set up power plants at both Dahej and Kochi and also venturing into marketing through LNG satellite stations and hubs. For suggestions email at feedback@infraline.com

December 2012 www.InfralinePlus.com

2 3

December 2012 www.InfralinePlus.com

PhotoEssay

1. An arial view of import terminal at Kochi. The 5 mmtpa unit would be commissioned by the first quarter of 2013 calendar year 2. Even a dark night would fail to take the sheen away from the glittering LNG terminal 3. Sincere workforce toiling hard to commission the unit by the given deadline of December end 4. Assem - Petronet LNGâ&#x20AC;&#x2122;s biggest carrier. It would be used to import large quantities of gas 5. The company donated a bus to a blind school as part of its Corporate Social Responsibility 6. The company also maintains mangroves along the coastline to help sustain the ecology near its unit 7. Unloading energy resources: A ship stationed at jetty

RNI No: DELENG/2012/45441