Delays cost energy projects Rs 71,000 crore
hat could be the total cost of the bureaucratic delays in implementation of energy sector projects? The cost runs into a whopping Rs 71,000 crore, according to the government’s own assessment of the progress on major infrastructure projects currently being set up in the petroleum, coal and power sectors. According to the latest report by the Ministry of Statistics and Programme Implementation, this includes Rs 48,889 crore from power generation and transmission projects, Rs 5,120 crore from petroleum projects, Rs 11,476 crore from atomic power projects, Rs 4504 from petrochemical projects and Rs 1016 from coal projects. Power As many as 14 power generation projects and six power transmission projects have cost overruns due to delays. The list includes six projects of Power Grid Corporation, four projects on NHPC, four projects of NEEPCO, three projects of NTPC, two projects of DVC and one project of THDCIL. Of these 20 projects that ran into cost overrun, eight are hydro power projects with a total capacity of 3,640 MW. These projects, which have a total cost overrun of nearly Rs 16,000 crore have mostly been stuck due to environmental issues, protests from activist groups and agitation from locals. While some projects were approved as early as 2002 and 2003, NEEPCO’s 60 Megwatt Tuirial Hydro Power project was approved 18 years back in 1998. The project was scheduled to be commissioned in 2006. “However, the project work came to total stop w.e.f 9th June, 2004 on account of agitation launched by Tuirial Crop Compensation Claimant Association claiming payment of crop compensation for the Standing Crops in the Riverine Reserve Forest. Till June, 2004 prior to stoppage of work, 30% of the Project work and 95% of Design & Engineering work were completed,” according to information available on NEEPCO’s website. In terms of cost overrun, NHPC’s 8×250 MW Subansiri Lower Hydro electric project has the highest cost overrun at Rs 11,149.82 crore. The project was approved in 2003 with an estimated cost of Rs 6,285.33 crore and was expected to be commissioned in 2010. However, due to protests from activists and other groups claiming this project could be a harmful to the environment, construction work in this project has been stuck. NTPC, India’s largest power, has two of its thermal power projects and one hydel plant running into cost overrun. The company’s 3×660 MW Barh thermal power plant in Bihar, approved in 2005, has a cost overrun of Rs 6,402.7 crore followed by Bongaigaon thermal power plant in Assam, which has a cost overrun of Rs 2,373.83 crore. NTPC’s 4×130 MW Tapovan hydel project has also been delayed leading to a cost overrun of Rs 867.82 crore. Atomic Power Apart from these, the Kudankulam hydro power project also has a cost overrun of Rs 9,291 crores. The project, being set up by NPCIL, was initially approved in 2001 and was scheduled to commission in 2008. The project was delayed due to protests over the safety of a nuclear power plant. The first reactor of the plant attained criticality in 2013 and the first unit started production. The second reactor became critical in July this year and commercial operation of the unit is scheduled for 2017. Petroleum Four projects of Oil and Natural Gas Corporation, two projects of Indian Strategic Petroleum Reserves Ltd and one project each of Oil India Ltd and Bharat Petroleum Corporation Ltd. Of these, BPCL’s Integrated Refinery Expansion Project has the highest cost overrun at Rs 2,279 crore. The project, which was approved in 2012, was likely to be done by this year. The total cost overrun of ONGC’s four projects stand at Rs 1,317.73 crore which include on conversion of rig Sagar Samrat to mobile offshore production unit, Gamji field redevelopment, integrated development of B-127 fields and MH North Redevelopment Phase III. Coal The only coal project which features in the list is Singareni Collieries Company’s Adriyala Shaft Project in Telangana. Initially approved in 2009, the project now has a cost overrun of Rs 1,016.05 rupees. The mine is estimated to have 54.36 million tonne of deep-seated extractable coal reserves in five horizons and the coal would be used for NTPC’s Ramagundam project. Rodney McLeod Authentic Jersey
GAIL’s polyethylene facility in UP goes on stream
GAIL (India) Ltd said on Tuesday the company has started its first UNIPOL PE process line to produce 400,000 tonnes of polyethylene (PE) annually. With this, the total production capacity at the company’s petrochemical plant at Pata, Uttar Pradesh, is now 810,000 tonne per annum. “GAIL’s flexible high-density polyethylene (HDPE)/ linear low-density polyethylene (LLDPE) swing plant provides access to a full range of resin applications which will allow GAIL and its customers to capture new market opportunities as the PE market’s demands are changing,” the company said in a statement. “Introduction of UNIPOL PE Resin products in the Indian market has started receiving positive feedback from customers. The GAIL team at the project site appreciated the US-based Univation Technologies team for providing good support to the commissioning of the project, right from the hook up and start-up of the new plant,” the statement added. Tie Domi Jersey
French power major EDF plans $2 billion green bet on India
French state-run power major EDF will invest heavily in renewable energy in India, with projects worth $2 billion in the pipeline, and is bullish about the sector, where it sees electricity tariffs falling 30% in five years, EDF Energies CEO Antoine Cahuzac told ET. India is among the few countries EDF has chosen for a significant expansion of its global portfolio of renewable energy because the country has a huge demand potential, power scarcity and “fantastic” quality of wind and solar radiation, Cahuzac said. EDF is also interested in nuclear energy, for which it has initial agreements with Nuclear Power Corp, but regulatory issues are still under discussion, he said. EDF also has interest in hydropower generation in India and is looking at a few prospects, he said. Lou Brock Jersey
NTPC bullish on power demand, to add 24 GW at Rs 1.6 lakh crore
Amid global economic uncertainty, state-owned NTPCBSE -1.32 % remains sanguine about domestic electricity demand and has planned a total capacity addition of 24 GW entailing an investment of Rs 1.6 lakh crore. “Various projects of the company having an aggregate capacity of around 24 GW are under implementation at 23 locations across the country,” NTPC CMD Gurdeep Singh said while addressing the company AGM today. Singh said, “This (24 GW) includes 4,050 MW being undertaken by joint venture and subsidiary companies. This translates into a capex of about Rs 1,60,000 crore.” The installed capacity of the NTPC group today stands at 47,228 MW, which includes 800 MW of hydro and 360 MW of solar generation capacity. The company has planned an all-time high stand-alone capex of Rs 25,960 crore exceeding the MoU target of 23,000 crore (with the power ministry) and the NTPC group capex stood at Rs 32,091 crore last fiscal. Singh is of the view that the national trends suggest a promising future for NTPC despite the overall atmosphere of uncertainty in the global business scenario. “India is the fastest growing major economy in the world with a huge potential appetite for power consumption… on September 9, 2016, actual energy demand met in India was all-time highest at 3,539 MU and NTPC (with group entities) contributed 866 MU (million units),” he said. “Thus, green shoots are visible as far as upswing in power demand goes and this is in line with our long held expectations of growth.” NTPC has commissioned 10,125 MW in the Twelfth Five Year Plan (2012-17) so far and aims to commission around 4,500 MW more during 2016-17. He also said that under UDAY scheme for revival of debt-laden discoms, bonds worth about Rs 1.66 lakh crore have been issued, relieving the balancesheets of state utilities and thereby enabling higher capacity utilisation by generators. He further informed shareholders that with about 7 billion metric tonnes of geological reserves estimated at its 10 coal blocks, NTPC expects to produce about 107 million tonnes of coal per annum. He also told that the mining operations have commenced in Pakri Barwadih and the company has progressed well in other coal blocks too. The company has moved forward on coal freight rationalisation, thereby reducing coal transportation cost. With improved domestic coal supplies, NTPC has been able to minimise import of coal. With these steps, it has been able to reduce the tariff by 14 paise (4.3%) in the first quarter of 2016-17 from a year ago. Josh Bellamy Womens Jersey
India set to buy Iran oil for emergency reserves: Sources
India is set to buy 6 million barrels of Iranian crude for its strategic oil reserves as negotiations with the United Arab Emirates’ national oil company for supplies are stuck over commercial terms, industry sources said. Such purchases by the world’s No.3 crude importer would boost Iran’s drive to ramp up its oil shipments as it looks to regain market share following the lifting of sanctions over its disputed nuclear programme. Oil markets have been keenly focused on Iranian export volumes over the last few weeks as they get closer to pre-sanction levels – a milestone that Tehran has said is a precondition for discussing a global output freeze to boost crude prices. India, seeking to hedge against energy security risks as it imports about 80 percent of its oil needs, is building emergency storage in vast underground caverns to hold a total of 36.87 million barrels of crude, enough to cover almost two weeks of demand. Three industry sources with direct knowledge of the matter said India would buy 6 million barrels of Iranian Mix crude from the National Iranian Oil Co in October and November to fill half the Managlore storage facility in the southwestern state of Karnataka. They declined to be identified as they were not authorised to speak with media. State firm Bharat Petroleum Corp will buy 4 million barrels in two very large crude carriers (VLCCs) and Mangalore Refineries and Petrochemicals Ltd will import 2 million barrels, the three sources said. They did not give pricing details. “The two refiners decided to buy Iranian Mix as it suits their refineries,” said one of the sources. The step comes as Iran’s daily crude exports to India surged to the highest level in 15 years in August. India in 2014 began talks to lease part of its strategic storage to Abu Dhabi National Oil Co (ADNOC). Under such a deal, India would have first rights to the stored crude in case of emergency, while ADNOC would be able to move cargoes to meet any shift in demand. “Talks have not moved forward with ADNOC despite several rounds of discussion. We (India and the UAE) are stuck on commercial terms,” said one of the sources. ADNOC, India’s oil ministry, BPCL and MRPL did not immediately respond to requests for comment. To take advantage of falling oil prices pending the conclusion of a deal with the UAE, India’s oil ministry instructed BPCL and MRPL to select a grade to fill half the Mangalore facility, the sources said. They chose Iranian Mix. The Indian side last week discussed Iranian oil purchases with Safar Ali Keramati, Deputy Director at National Iranian Oil Company (NIOC) for Crude Marketing and Operations. “If (Indian customers) come to us for extra barrels, then we will do our best to accommodate their demand,” Keramati told Reuters. The 9.75 million-barrel Vizag storage facility in east India is being filled with Iraqi Basra oil. The start of operations at a third facility, at Padur in Karnataka, has been pushed back due to problems in acquiring land to lay a pipeline link to the local port. Elgin Baylor Womens Jersey
ONGC Videsh slapped with service tax demand of Rs 6,100 crore
The Tax Department has slapped a service tax demand of over Rs 6,100 crore on the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), a move that may potentially render its investments in oil and gas fields abroad infructuous. ONGC Videsh Ltd (OVL) has stakes in 37 oil and gas projects in 17 countries around the world. These stakes are held through subsidiaries, branches and joint ventures. For operations of these projects, those units and joint ventures would raise a demand for money on the parent, OVL, which would transmit the investments. The Service Tax Department now contends that the overseas units are rendering a service to OVL and as such the company is liable to pay service tax at the full rate, sources said. The department first issued a demand cum show-cause notice on October 11, 2011 requiring OVL to show cause why service tax amounting to Rs 2,816.31 crore plus interest on such amount and penalty should not be demanded and recovered. The tax amount was calculated based on foreign currency expenditure reported in the company’s financial statements covering period from April 1, 2006 to March 31, 2010. Subsequently, five more demand-cum-show cause notices were issued covering period up to March 31, 2015 to show cause why service tax amounting to Rs 3,286.36 crore, the interest on such amount and penalty should not be demanded and recovered from the company. The Service Tax Department, sources said, has contended that the expenses represent business auxiliary services rendered by the company’s foreign branches and operator of joint venture/consortium to the company. OVL however has contended that service tax is not payable and is contesting the same legally. According to OVL, investments made overseas through subsidiaries or branches or joint ventures do not constitute availing of any service. The company operates the projects at an internal rate of return on investments of 12-13 per cent and if it has to pay 14-15 per cent service tax on such investments, the projects will give negative returns and would become infructuous. Also, it contends that service tax by law can be levied on services rendered within the country. And even if one were to assume that its branches or subsidiaries were rendering any service, they were all overseas and not within India and so cannot be subject to any service tax, sources said. OVL had reported a net loss of Rs 2,093.5 crore in 2015- 16 fiscal on a turnover of Rs 12,772 crore. It had a net profit of Rs 1,904.2 crore on a turnover of Rs 19,148.9 crore in the previous fiscal. It produced 8.916 million tonnes of oil and oil equivalent gas in 2015-16 as compared to 8.874 million tonnes in the previous year. The overall gas production slightly increased from 3.341 billion cubic meters during 2014-15 to 3.406 bcm in 2015-16 and oil production was almost flat at 5.51 million tonnes. Dallas Stars Jersey
To boost regional connectivity, government may allow regional airlines to fly with one aircraft
In an attempt to make it easier for airlines that fly regional routes, the government is likely to allow them to fly for two years with just one aircraft. This will be part of aviation rules being formulated for scheduled commercial airlines — carriers that will also operate on regional routes under the government’s regional connectivity plans that aim at flying on such routes at the rate of Rs 2,500 per hour of flight. “Unlike rules for regional and national airlines, which have to increase their fleet size to three and five aircraft, respectively, within a period of one year, the scheduled commuter airlines will be allowed two years to increase their fleet size. The extra one year will provide that comfort level to these new airlines,” said an aviation ministry official, who did not want to be identified. These rules are being formulated by the Directorate General of Civil Aviation as part of the rules that will govern scheduled commuters airlines. The government, in June this year, had approved a regional connectivity scheme that aims to connect unserved airports in the country through flights with fixed fares atRs 2,500 for per hour of flight. Analysts believe that the government needs to also work on ensuring lower lease rentals for scheduled commuter airlines. “Other than the traffic risk in unused regional airports, potential RCS operators also face non-availability or high cost of leased aircraft. Leasing cost can be as high as 25-30% of the total operating cost of a small aircraft. Given this scenario, lowering the entry barrier and allowing single aircraft owners to register as Scheduled Commuter Operator (SCO) under RCS is a winwin proposition. The idle capacity available with NSOPs in India can be hitherto utilised to connect India’s interiors and the owners can earn additional revenue through the RCS subsidy, code shares and seat trading,” said Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG. Business Aircraft Operator’s Association of India (BAOA), however, says that the government should also ensure that the non-scheduled airport operators are allowed to fly on regional routes and simpler rules should be made to allow airlines to convert to scheduled commuter airlines category. A senior aviation ministry official said he has received a lot of queries from people, who want to launch scheduled commuter airlines. “I have received a lot of queries from business people, who want to launch new airlines. I would not like to name them now,” said the official, who did not want to be identified. Meanwhile, the government is also looking at launching first set of regional flights through Air India and SpiceJet, as these two already have suitable aircraft in their fleet to launch the project and provide air connectivity to towns and small cities. Both these airlines have 70-seater aircraft in their fleet. John Lynch Jersey
24 per cent growth in domestic air passenger traffic in August
Domestic air passenger traffic rose nearly 24 per cent in August to 83.81 lakh passengers from 67.60 lakh registered during the same period last year, according to official data, released today. The domestic air travel demand during the January-August period of this year, however, surged 23.14 per cent to 644.68 lakh fliers as compared to 523.55 lakh passengers flown by the domestic carriers in the same period of 2015. Civil Aviation Minister Ashok Gajapathi Raju, in a tweet, said that the 24 per cent growth in domestic air passenger traffic in August was the highest across the aviation markets. “Another month of record growth for Indian aviation. August records 24% – highest worldwide,” Raju tweeted. The DGCA data showed that no-frills carrier IndiGo carried the most number of passengers at 33.41 lakh with a market share touching almost 40 per cent, while another budget carrier SpiceJet had the highest passenger load factor (PLF) during the month under review at 93.2 percent. National carrier Air India also flew a total of 12.25 lakh passenger during August 2016 with a market share of 14.6 per cent, the lowest so far this year. Hampus Lindholm Jersey
NAL feels time is ripe to inject funds into its 70-90 seater aircraft
The Bengaluru-based National Aerospace Laboratories’ (NAL) efforts to make a 70-90 seater aircraft in India has got a new impetus with the emphasis that the new civil aviation policy lays on enhancing regional air connectivity and the Modi government’s emphasis on ‘Make in India’. NAL has already done the paper design and other analysis for the creation of such an aircraft. However, the project was shelved about three years ago because the government declined its request for close to ?9,000 crore for the project to be brought to fruition. When asked whether this was the right time to pump in funds into this project, Jitendra Jadhav, Director, NAL, told BusinessLine that he thought so as the new civil aviation policy is looking to revive 550 air fields. The aircraft that NAL is developing will be a short take-off aircraft which should be able to land on many of these airfields. Regional connectivity “The new civil aviation policy is talking about regional connectivity. Rather than having a foreign aircraft, we can have a private partnership with some foreign partner and NAL’s design which will be a good Make in India. NAL is good in design. We need a manufacturing partner,” he added . Senior NAL officials told BusinessLine that if the funds were sanctioned, the project could become a reality by 2023. “We are targeting connectivity between 250 and 500-600 km. The efficiency of turbo prop aircraft allows for short distance flying for which you really do not need to fly very high,” Jadhav pointed out when asked as to why NAL was looking at a turbo prop aircraft and limiting it to 70-90 seats. In July this year, the government unveiled its ambitious regional connectivity scheme which will cap airfares at ?2,500 for one-hour flights to unserved and under-served airports that are 476-500 km apart. Flying between airports that are 776-800 km apart will cost ?4,070, while travelling between metros will be a tad more expensive. Viability gap funding The government’s proposal includes providing Viability Gap Funding for fixed wing aircraft flights covering 200-500 km provided at least nine seats are priced at an all-inclusive fare of ?2,500. The government will provide the operator a viability gap funding of ?3,750 per seat sold under the regional connectivity scheme (RCS) up to a maximum of 40 seats per flight. The VGF has been capped at ?4,170 for 776-800-km. To be eligible for the VGF, an operator will have to operate regular services to at least one airport which at present does not have regular flights. Chris Wagner Womens Jersey
Naidu lays foundation for ₹202-cr expansion of Rajahmundry airport
The Andhra Pradesh government, with the assistance of the Union Government, will complete the first phase of the mega Polavaram project on the Godavari and release water even into the left canal by 2018, according to Chief Minister N Chandrababu Naidu. He was speaking here on Monday after laying the foundation stone for the expansion of the Madhurapudi airport at a cost of ?202 crore. The runway would be extended to facilitate the landing of the bigger aircraft and the other facilities would be upgraded at the airport. Land acquisition The Chief Minister said 857 acres had been acquired for the airport expansion works and he thanked the farmers of the area for co-operating with the government. He said ?300 crore had been spent for land acquisition. Airport expansion works would pave the way for the development of the two Godavari districts, he said. He said regardless of what the naysayers might say, he was determined to completing the Polavaram project and lay a firm foundation for the prosperity of the two Godavari districts in particular and the State in general. Centre’s assurance Union Civil Aviation Minister P Ashok Gajapati Raju thanked the Chief Minister for making the land available in quick time and said the Union Government would take all steps to improve the airports in the State. Union Urban Development Minister M Venkaiah Naidu spoke at length on the recent package sanctioned by the Centre for the State and how it would pave the way for its all-round development. He launched a scathing attack on the critics of the package, especially the Congress leaders. BEL facililty at Nimmaluru Earlier, Venkaiah Naidu also laid the foundation stone for BEL’s Advanced Night Visions Products factory at Nimmaluru, Krishna district. The project will see an investment of ?300 crore over the next four years and employment of nearly 1,000. “We will ensure that locals get a good share of the jobs”, he said. The State government has provided 50 acres in the village which is near Machilipatnam. The project is part of BEL’s diversification into night vision products. Hampus Lindholm Womens Jersey