Government’s ambitious power capacity target may lead to huge surplus
The government’s ambitious target of adding 261 gigawatt (GW) fresh capacity by 2022 may come at a price. According to experts, it will result in huge surplus, leading to dwindling capacity utilisation, stressed assets, more unpaid bank debts and a massive sectoral shakeout. India has total installed capacity of 303 GW at present, of which 211 GW is thermal and 42 GW renewable. The addition plan will take total generation capacity to 564 GW, achieved through 100 GW of solar capacity, 75 GW of other renewable sources and 86 GW thermal. According to Brookings India, the numbers for renewable energy, coal-fired capacity and power demand don’t quite add up upon triangulation. The targeted 1,500 million tonne of coal by 2020—mostly used by the power sector—and an added 175 GW of renewable capacity by 2022 will lead to supply overcapacity, as indicated by Washington DC-based Brookings Institution. “While renewable energy is worthy of support, one has to triangulate implications, not just on transmission network or finances, but also on alternative sources of supply. To scale sustainably, renewable energy needs not just improvements in costs but also improved frameworks for incorporating such power to the Indian grid,” noted a Brookings study. Santosh Kamath, partner & head of renewables at KPMG in India, said, “A 62 per cent plant load factor at present and exchange prices of Rs 2-3 per unit is in itself a manifestation there is surplus in the system.” “Yet over 200 million people do not have access to power and even those who have, witness several hours of power cuts. While the government is addressing network and affordability issues, which are an impediment to 24×7 power for all, it will take some time and it is expected that demand will grow only 6-7 per cent per annum.” “However, if 175 GW of capacity addition target is achieved and the 200 million get connected by power lines, demand will not rise suddenly because there are affordability issues. It will lead to further drops in capacity utilisation of thermal plants and there would be times in a day when there will be surplus. Adoption of storage technologies can mitigate some of the effects, but not completely, in this timeframe. Overall position will depend on other capacity additions as well,” said Kamath. Sabyasachi Majumdar, senior vice-president, ICRA, said, “The target of 175 GW of renewable energy capacity by 2022 appears challenging at the moment, given the trajectory of actual capacity additions and also the relatively modest energy demand growth being seen currently.” “Apart from underlying energy demand growth and financial position of utilities, which will determine offtake for renewable energy, other factors that could impact actual capacity addition would be availability of land and other execution challenges; ramp-up of transmission corridors and availability of long-term funds at reasonable rates,” he said. A Brookings study notes that renewable energy gets support by financial and non-financial means. Recently, the Cabinet approved amendments to the National Tariff Policy to push for 8 per cent of generation from solar by 2022. The approval also talks of free inter-state transmission of wind and solar. On the other hand, these amendments ask for maximising use of existing plants to save money. At some point soon, this will lead to a disconnect. Martin St. Louis Authentic Jersey
Two $1 billion funds in the works for stressed power assets, renewable energy: Piyush Goyal
The power ministry plans to set up two funds of $1 billion each to enable alternative financing options for stressed power assets and renewable energy projects. The two funds have been proposed under the ambit of the National Investment and Infrastructure Fund (NIIF). “NIIF is the fund of funds within which we will set up a sub-fund which will focus on renewable energy projects and give investment support for faster ramp up of renewable energy. It is under our active consideration and we may launch it in the near future,” power minister Piyush Goyal told ET in an interview. “We are also in dialogue with certain bankers to see if we could look at a stressed power asset fund. It may take us some more months to put its framework in place.” Asked about the size of the funds, Goyal said, “Each of these funds could easily be of the size of $1 billion.” The government set up the Rs 40,000 crore NIIF in December as an investment vehicle to fund commercially viable greenfield, brownfield and stalled projects. The power ministry’s renewable energy fund will be seeded with initial capital from a few state-run companies and will be driven largely by the private sector. “It will be run and managed by an investment manager who will be chosen through international bidding. We would like to keep the entire fund very professionally managed – something like a Temasek or a GIC model. We have the entire framework in place. We have also got investment commitments of REC, PFC and NTPC already lined up. This fund can be launched quickly,” Goyal said. Temasek and GIC are Singapore government-owned investment firms. Finance Minister Arun Jaitley had sought investment from Singapore in NIIF at a meeting on Friday with visiting Deputy Prime Minister Tharman Shanmugaratnam. Goyal said the Centre is working on a mega investment plan for the power sector that includes extending investment support to the tune of Rs 1.1 lakh crore to states under the Deen Dayal Upadhyay Gram Jyoti Yojana and the Integrated Power Development Scheme. Additional investments worth over Rs 1 lakh crore will materialise through the implementation of four planned ultra mega power projects of 4,000 MW capacity each. Goyal said the recent rationalisation of rail freight rates for coal transport and the cut in prices of higher-grade coal will help to ease costly imports of the fuel. “We have also regulated coal output in the past few months, resulting in some depletion of stocks at coal mines and power stations,” he said. The minister said he hoped distribution utilities in Haryana would start reporting profits next year and Rajasthan discoms would turn profitable in 2019 with the implementation of the Ujjwal Discom Assurance Yojana scheme. He said the controversy over the electrification of Nagla Fatela village in Hathras district of Uttar Pradesh was a “blatant attempt by the state government at misleading the centre.” Jason Myers Authentic Jersey
NHRC seeks energy secretary’s reply on electrocution deaths
The National Human Rights Commission (NHRC) has issued a notice to the state energy secretary and superintendent of police (Mayurbhanj) seeking an action taken report within four weeks on the death of a man and his elder son at Machapada under Betanoti block in the district on July 3. They were electrocuted after coming in contact with a live wire. The commission issued the notice on Sunday acting on a petition filed by rights activist Sangita Swain on July 3. Swain mentioned in her petition that the incident happened when an overhead electric wire snapped from the 11-KV line and fell on the field of Baisnab Patra, 45. “Baishnab along with his two sons, Mohan, 18, and Bhawani, 15, was busy plucking bitter gourd from their farmland when the livewire fell on them,” she added. The trio sustained serious injuries. Baishnab and Mohan were admitted to the Baisinga hospital, but later the doctors declared them dead. Bhawani was shifted to a private hospital in Bhubaneswar after his condition deteriorated. After the incident, the villagers had put up a road blockade demanding compensation for the kin of the deceased The petitioner said the duo lost their lives due to hanging 11-KV electric wire. She urged the rights body to take criminal action against the public authorities responsible for the incident. She also requested the commission to direct the state government to take departmental action against the guilty. “As the family members lost their breadwinner and a grown-up son, the government should provide compensation of Rs 10 lakh to the family and rupees five lakh towards treatment of Bhawani,” she said. Paul Postma Authentic Jersey
ONGC hires consultant to assess reserves in GSPC KG gas block
State-owned ONGC has hired US-based consultant Ryder Scott to assess natural gas reserves in Gujarat State Petroleum Corp’s (GSPC) Deendayal block before deciding to buy a stake in it. Since the BJP-led government came to power at the Centre, the Gujarat government firm GSPC has been seeking to sell a majority stake in its KG-OSN-2001/3 (Deendayal) block in Bay of Bengal to ONGC to avoid defaulting on loans. ONGC initially was not keen to buy stake in the block as it felt the block had reserves far less than what GSPC was claiming and the asking price for the stake was not commensurate with the returns. “There is tremendous amount of pressure on ONGC to buy stake in GSPC block,” a source with direct knowledge of the matter said. “Being a commercial organisation, it cannot throw away money so it has now decided to get the reserves in the GSPC block validated.” Ryder Scott Petroleum Consultants has been asked to evaluate gas properties in the GSPC block and independently certify the reserves quantities, the source said. “The consultant will submit its report by November,” he said. GSPC was to begin gas production from the block in 2013 but after sinking in USD 3.6 billion it was found that gas reserves are one-tenth of 20 trillion cubic feet claimed in 2005 and that too is technically difficult to produce. In the process it has amassed Rs 19,576 crore of debt, on which interest cost was Rs 1,804.06 crore in 2014-15, according to the CAG. And against this its revenue was Rs 152.51 crore in 2014-15. Sources said GSPC has been doing trial production of a very small volume of gas from August 4, 2014 and has not yet reached commercial production and in absence of revenue commensurate with the debt servicing obligations it risks becoming a defaulter. To bail out of the situation, it offered to sell 50 per cent stake to ONGC, they said. Money from ONGC can repay a part of the debt and the remaining would become a joint liability of the two firms. M.J. Stewart Jersey
Not overlooking aircraft maintenance: Centre to High Court
The Centre has refuted in Delhi High Court the claim that civil aviation authorities are overlooking the alleged violation of aircraft maintenance schedules by airlines, endangering passenger safety. The Civil Aviation Ministry and the Director General for Civil Aviation’s (DGCA) denied that various private airlines operating in the country were “violating/circumventing the mandatory provisions for airworthiness and air safety”. The submission was made before a bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal during hearing of a PIL alleging that aviation authorities were overlooking the prescribed maintenance schedules and sought directions to them to ensure safety of passengers on aircraft flying in and out India. The counsel for the ministry submitted that till date they have not received any complaint regarding any deficiency in aircraft services. It further said that the petitioner, advocate Alok Kumar, was a frequent flyer, yet he was alleging there were no safety measures in the flights. The bench then asked the petitioner to give suggestions with regard to safety requirements in aircraft and listed the matter for further hearing on October 19. Matt Paradis Jersey
Aviation fuel demand rebounds
State-run oil marketing companies (OMCs) are seeing a rebound in demand for aviation turbine fuel (ATF), with airline companies flying high on improved operations and profitability. Data on ATF consumption with the Petroleum Planning and Analysis Cell of the government show a jump of nine per cent in 2015-16 to 6.2 million tonnes. In the four years between FY12 and FY15, the consumption had an annual compound growth of only one per cent. Indian Oil Corporation (IOC) saw a six to seven per cent rise in FY16, said a company official. It is the largest ATF supplier. Consumption and sales volumes for oil companies might differ slightly, due to imported ATF volumes; also, the data for FY16 is provisional. In recent years, airlines had scaled down operations. In October 2012, Kingfisher Airlines stopped plying. Financial woes also forced SpiceJet to scale down between 2014 and 2015, before a new investor stepped in and improved both operations and performance. “The improvement in FY16 was due to SpiceJet scaling up operations and the entry of new airlines AirAsia and Vistara,” the IOC official said. “We expect the volumes to grow at six-seven per cent for the next two to three years.” Josh Donaldson Womens Jersey
ATF — cheaper but still dear
Earlier this year, in March, the country’s leading private sector airlines — IndiGo, Jet Airways, SpiceJet and GoAir — accused the public sector oil marketing companies — Indian Oil, HPCL and BPCL — of profiteering on aviation turbine fuel (ATF). These oil companies supply about 95 per cent of the ATF across India’s airports and reset the fuel’s price on the first day of each month. Urging disclosure of the “ambiguous” and opaque price discovery mechanism for ATF, the airlines alleged that the benefit of the sharp fall in crude oil prices since 2014 had not been passed on. The 12 per cent hike in ATF price in March was being paid under protest, the airlines said. Indian Oil, the largest ATF supplier, was quick to refute the allegations. There was no monopolistic situation in ATF supply and pricing, the oil major said, adding that airlines were free to import the product, and that it is inappropriate to compare ATF price in an oil importing country such as India with that in oil exporters. ATF price had reduced sharply since 2014, Indian Oil said, asking for good measure whether airfares had reduced commensurately. While the argument continues, the truth, as always, seems to lie somewhere in the middle. ATF prices have evidently come down over the past two years. At about ?47,200 a kilolitre in Delhi, the fuel is today about 32 per cent cheaper than it was in end June 2014 (about ?69,800). But the drop is much lower than the 60 per cent dip in the cost of the Indian crude oil basket over the same period — from $109 to $43.5 a barrel. Three factors account for this — the pricing mechanism, taxes and exchange rates. Germain Ifedi Authentic Jersey
CISF gears up to thwart terror strikes at Indian airports
The Central Industrial Task Force has deployed quick reaction teams (QRTs) at airports, trained its personnel and strengthened its capability to counter terror strikes. “We are gearing up to counter any attack in the manner of Istanbul or Brussels (terror attacks). Our people are already trained. We have deployed QRTs behind bullet-resistant (bullet-proof) ‘morchas’, so that if terror elements fire they will not be able to get us,” a senior CISF official said. After the Istanbul and Brussels incidents, the CISF has formulated strategies to thwart such attacks at Indian airports guarded by it. “With the recent attacks in Brussels and Istanbul, attacks from the city-side have become more prominent. So, we are devising ways and means to counter such attacks,” the official told PTI. “We have started checking at the ‘nakas’ now. Any suspicious vehicle going to airport will be stopped and checked with the help of sniffer dogs and electronic explosive detectors,” he said. In addition, QRTs have been deployed at the arrival and departure side of airports. “If they (QRTs) find any suspicious person coming out with weapon or attempting to fire, our teams have been instructed to fire back to counter the terrorist attack. We have the capability to fire back at them and neutralise them. We are going into that mode now,” he said. Coty Sensabaugh Womens Jersey
Punjab government’s move to increase length of Chandigarh airport runway draws a flak
Residents and city-based NGO Amritsar Vikas Manch have criticised the Punjab government’s decision to increase the length of Chandigarh airport runway to accommodate flights to the United Kingdom (UK). They were reacting to the statement of Vishavjit Khanna, secretary, Civil Aviation, Punjab, in which he stated that the government was trying its best to increase the length of the runway of Chandigarh airport to 10,500 feet so that long haul flights to destinations like UK may be started for the people of the state. A city resident Manmohan Singh said the SAD-BJP coalition government never evinced similar keenness to restart the withdrawn Amritsar – London – Toronto flights of Air India from Sri Guru Ram Das Jee International Airport. Amritsar airport is catering to international flights since 1960. At present five international airlines — Turkmenistan, Uzbekistan, Qatar, Malindo of Malaysia and Scoot of Singapore — are operating 42 international flights per week, along with Air India Express and Spice Jet, which have flights for Dubai from the holy city. Its popularity can be gauged from the fact that even now Air Inida’s Amritsar– Delhi – London indirect hub and spoke flight has won the distinction of being number one among its all international flights operating from Delhi in 2015-16. Rashaad Penny Jersey
Iran-Pakistan gas pipeline must be top priority
Economist and former finance minister Dr Hafiz Pasha believes that Iran-Pakistan (IP) gas pipeline project is the most viable and feasible energy project for Pakistan and needs to be completed at the earliest. In an Interview with IRNA, Dr Pasha said that the gas pipeline project should be the top priority in Iran-Pakistan relations. “This project has to be revived at the earliest, because it is most viable and feasible project for Pakistan,” he noted. Pasha said that as compared to other energy projects including Turk¬menistan-Afghanistan-Pakistan-India (TAPI), CASA-1000 and Qatar LNG, the IP gas pipeline is the most suitable project. “Price of the IP is very attractive and it should be the first priority for Pakistan,” he stressed. Expressing his views Pasha said that Pakistan should also try to sign bilateral trade agreement with Iran with special focus on the exports of rice and textile products from Iran and import of oil products and other things from Iran. “So far we don’t have any such agreement with Iran,” he noted. “We should take immediate steps to enhance our trade with Iran after removal of sanctions from the Islamic Republic,” he said, adding after the lifting sanctions, new opportunities are emerging in Iran and being first neighbour of Iran, Pakistan should take advantage of this situation. The economist added that strong economic and trade ties are in the interest of both Iran and Pakistan. He said that the current volume of trade between Iran and Pakistan is less than its potential and capacity of the neighbouring countries. “But I again insist that the IP gas pipeline should be the top priority in Iran-Pak ties, we are importing LNG from Qatar which is quite far away and expensive,” he said. The former minister went on to say that IP is more important for Pakistan because of its proximity and the price is very reasonable. Iran-Pakistan (IP) gas pipeline project, once known as the ‘Peace Pipeline’, is about 1,900-kilometre long pipeline which will transfer natural gas from Iran to Pakistan when completed. Tre Madden Authentic Jersey