Govt confident of meeting aggressive infra targets even without private investments
India’s infrastructure development is set to accelerate and meet global benchmarks even if the private sector is not in a hurry to grab the vast investment opportunities that are opening up, top cabinet ministers said at the Economic Times India Infra Summit 2017. The government is confident of meeting aggressive targets and wants private investment in infrastructure but it has enough resources and access to financing to implement projects, minister of road transport, highways and shipping Nitin Gadkari told the gathering of industrialists, chief executives and corporate leaders in NewDelhi on Thursday. “Our sector is moving and you all are welcome to participate. But don’t misunderstand me we don’t have any problems in investing. NHAI (National Highways Authority of India) is ‘AAA’ rated and investors want to invest in it. Our toll income is more than Rs 10,000 crore a year,” he said. “We already have a lot of offers from investors… We have 101 projects which we can monetise and get Rs 1.2 lakh crore.” He said the government will give the highest priority to local investors and contractors. Railway minister Suresh Prabhu said the government had inherited challenges as no investments were made by its predecessors in capacity building or improving services. “We have a huge historic backlog in which not only we have not invested, we have hardly done anything in the railways,” Prabhu said. The government expects a big pickup in investments. Urban development minister Venkaiah Naidu said investment of Rs 2.25 lakh crore is expected under the smart city mission, of which the central and the state governments would offer about Rs 1 lakh crore while the private sector is expected to bring in about a quarter of the total, Naidu said, adding that the smart city concept was not elitist and would benefit everyone. “The Smart City Mission is intended to be a game changer in respect of planning, execution and resource mobilisation,” Naidu said. India needs “political mainstreaming of the urban agenda” as population growth in cities has overtaken that in villages and better solutions are needed, Naidu told a diverse audience at the summit. Between 2001 and 2011, population rose by 91 million in urban areas as against 86 million in villages. In the next 15 years, about 250 million more people are expected to be added to cities. “The need of the hour is for political mainstreaming of urban agenda. We need to intensify political and public discourse about urban challenges so that meaningful solutions emerge,” Naidu said, admitting myriad challenges that Indian cities faced and illustrating how a government initiative like developing 100 smart cities across the country could elevate quality of life. BOOSTING RAIL SERVICES Prabhu said the government was working to bring rail services on a par with global standards. “We are trying to work on a holistic, all-pervasive plan of changing railways, not just creating infrastructure in a manner that will conform to the global standards to live up to the expectations of people. But unfortunately, it will take time,” he said. The railways was raising financial resources on an unprecedented scale and at the lowest coupon rates, he said. “We are raising these resources and putting them where required,” he said. Revenue from freight and passenger fares have been under serious threat and despite that the government has made reforms in the freight sector by reducing prices, executing long-term contracts and offering discounts. Indian Railways is also trying to raise revenue by introducing new services for passengers. It’s emphasising infrastructure investment, which is leading to more traffic, Prabhu said. A plan to save Rs 41,000 crore in 10 years by reducing energy costs has been prepared. Salaries and pensions are big costs over which the government does not have any control but the railways is conducting human resource audits that will improve productivity in the future. The railway dedicated freight corridor will be operational by the end of 2020 and that will ease freight traffic. The railways is also working on the development of stations. Prabhu said the government will bar the manufacture of conventional coaches from April 1 and focus on those with much better features and technology. Jamal Adams Jersey
Actis sets aside $500 million for renewable energy projects in India
Private equity fund Actis Capital, which has just completed raising $2.75 billion, has earmarked $500 million for investing in India’s wind and solar projects, according to industry sources. Actis completed its fourth energy fund a couple of days back. It had targeted $2 billion, but ended up with $2.75 billion upon oversubscription. In a press release, Actis’s Partner and Co-head of energy business, Mikael Karlsson, notes that “as the leading growth market investor in the energy sector, we have never seen a more compelling market opportunity.” In 2013, Actis had raised $1.5 billion for its ‘Actis Energy 3’. A substantial part of it has been invested in India. In a parallel development, it is learnt that Actis has appointed Gaurav Sood as its CEO. Sood was the Managing Director of SolaireDirect, the French company that made news when it won a 5-MW solar project in December 2011, quoting a then record low price of ?7.49 a kWhr. SolaireDirect has since been taken over by the French utility Engie. Actis is an old hand in India, and has funded several renewable energy projects in the country in the last decade. One of its larger investees is Ostro Energy, which was in the news last month, having won 250 MW of solar in Madhya Pradesh auctions last month, quoting a price of ?3.29 a kWhr, (averaged over 25 years.) Actis is very aggressive in India, said an industry source, who requested not to be named. It intends to build a renewable energy portfolio of 2 GW, mostly solar — in addition to Ostro. Colby Rasmus Jersey
Electricity And Elections In India
Prime Minister Modi’s ‘if electricity is supplied during Ramzan, it should also be supplied during Diwali’ remark during the Fatehpur rally in Uttar Pradesh received considerable flak from all sections of society, for its communal undertones. While of course the PM’s remarks are surprising, but what is unfortunately most amusing is how long ‘providing electricity’ has been on the agenda of political parties – for State and General elections. For a country aspiring to be amongst other developed nations in the world, it is ironic that in so many years since independence, government after government has failed to keep up its promise of providing electricity. Having grown up in a house where elections have always been closely followed and newspapers religiously read, I have during every State and General election heard contestants talk about providing electricity. Two decades later, it’s 2017 and parties are still promising the people of their constituencies the same. Not just local MLAs, but electricity is what even Chief Ministers and the Prime Minister of the country are making promises of in their campaign rallies and speeches. Electricity is a development indicator and critical for India’s economic growth. It is estimated that 7 per cent of the GDP is lost due power cuts, thus it is imperative that to keep the momentum of growth going, the country have uninterrupted power supply. Of the 1.4 billion people in the world who have no access to electricity, India accounts for over 300 million. It is the world’s third largest producer and fourth largest consumer of electricity. Despite poor hydro electricity generation, in 2015, India became a power surplus nation with huge electric power generation capacity, but despite that the country uses only half of what it generates. The provision of electricity is shared responsibility between the central and state governments, with states having considerable freedom to set electricity prices, the average subsidy level and the beneficiaries of the cross-subsidisation. Political parties in the past and for the ongoing State elections have been promising 24 hours of electricity supply in their respective constituencies. PM Modi during his campaign rallies for the 2014 General elections claimed that if elected, he would ensure ‘power for all.’ It was also in this year that the World Bank ranked India as having the world’s largest un – electrified population. While the present government has made some progress towards fulfilling its promise for ‘power for all’, India’s most marginalised citizens still have no access power. At present, 30 per cent of villages are yet to be electrified, with sharp variation across the country. Less than half of the rural households in Uttar Pradesh, Bihar, Nagaland and Jharkhand receive electricity; while Uttar Pradesh, in comparison to Bihar has more electrified rural households. In other big states such as Maharashtra and Rajasthan almost 75 per cent of rural households have electricity. Part of the explanation for this disparity among states is the varying income levels and population density; with low-income, densely-inhabited states performing worse than average. The AAP’s manifesto for the Punjab Elections too carries promises of cheaper electricity, in the State. While in UP, the SP seeking re-election has promised 24 hours of power supply to domestic consumers in urban and rural settings. There has also been news of the JD (U) planning to contest in the upcoming municipal elections in Delhi, with the hope of cornering AAP on the issue of electricity among others. From the manifestos of the various parties and the points raised during campaign rallies, it is evident how fundamental electricity is to the campaign rhetoric, as well as how it used to garner votes. Thus it is worth pondering upon why despite being a power surplus nation, large parts of the country are yet to be electrified. For over two decades, political parties in India have continued their vote bank politics over electricity, which is not just hitting the common man, but also hampering the GDP of the country. It is also important to note that not just false promises, but also infrastructural deficiencies such as poor metering, inefficient billing and collection, inadequate investment, high transmission and distribution losses and regular power outages are also contributing factors to why several parts of the country remain un-electrified. Theses infrastructural deficiencies are also a key weakness for the country’s energy sector. The World Energy Outlook Special Report (2015) concluded that ‘India’s ties with the international energy systems are set to deepen, intensifying India’s dependence and influence on international markets, through trade, investment, clean technology cooperation and other channels.’ However, these energy systems which are ‘set to deepen’ do not seem to improve within the country. Thus the question arises of whether energy systems in India are incapable of providing electricity for all its systems or is it the lack of political will which hampers the electrification of the entire country. Union Minister of State for Power, Piyush Goyal following the 2017 budget proudly claimed that India has become a ‘power surplus’ nation, despite 30% of rural households remaining un – electrified. It now remains to be seen whether the Narendra Modi led government will fulfil its promise of ‘power for all’ before the 2019 general elections or if electricity for all will continue to remain only an ‘election campaign’ for another two decades.
Electronic Tags for Toll Collection at National Highways
The National Highways Authority of India (NHAI) has incorporated Indian Highway Management Company Limited (IHMCL) to expedite the implementation of Electronic Fee Collection (EFC). Minister of State for Road Transport and Highways Shri Pon. Radhakrishnan said in a written reply to a question in Lok Sabha today that National Payments Corporation of India (NPCI) has been engaged to work as Central Clearing House (CCH) to implement inter-operability so that several banks could participate in the EFC programme. As on 03.03.2017, the participating banks are SBI, KVB, ICICI, AXIS, IDFC and Equitas SF Bank. As on 03rd March 2017, total 3,47,200 electronic tags have been issued for fee collection on National Highways. The Road users are being encouraged to use electronic means for payment of user fees for seamless travel through fee plazas. Government has also notified the use of pre-paid payment instruments vide Notification G.S.R 1114 (E) dated 02nd December, .2016 for collection of user fee from road users. This is to permit road users to opt for available cashless modes of payment. NHAI has facilitated the Concessionaire and Contractor to use POS machines for collection of user fees through credit & debit card. Since, FASTag is not mandatory for payment of user fees for use of National Highways; therefore, no target/deadline has been fixed. Malachi Richardson Authentic Jersey
Total 6,604 KM National Highway Constructed till February, 2017
The target of construction of National Highways is 15,000 km, of which 6,604 km have been completed till Feb in the current financial year 2016-17, the Minister of State for Road Transport and Highways Pon. Radhakrishnan said in a written reply to a question in Lok Sabha today. The slow speed of construction of National Highways(NHs) are mainly due to land acquisition, utility shifting, non-availability of Soil/Aggregates, Poor performance of contractors, Environment/ Forest/Wildlife Clearance, ROB & RUB issue with Railways, Public agitation for additional facilities, Arbitration/contractual disputes with contractors etc. There is a well-established mechanism for monitoring and testing of quality of construction and development of work of National Highways (NHs) by engaging a Consultancy firm of International and National repute for every project to ensure quality construction. They supervise, monitor and conduct tests as per procedures laid down in various codes published by Indian Road Congress, manuals & MoRT&H specifications for Road and Bridge works and National Highway Authority India Quality Manuals etc. Apart from this, field units and Quality Division of Ministry, NHAI and State PWD also conduct inspection at various project sites regularly to monitor the quality of work. Quality Auditors are also engaged from time to time for conducting Quality Audits of the project work. On observation of any violation, action against the defaulter is taken as per provision in the agreement. The Ministry has empaneled National Level Project Monitors for monitoring of critical and languishing National Highways projects all over the country. Brice Butler Womens Jersey
ONGC’s proposed HPCL acquisition needs more thought
The Government had announced in this year’s Budget its intention to strengthen its oil PSUs through a mega merger so that they could ostensibly compete with some of the largest global petroleum companies. Such a merger would ostensibly increase their capacity in terms of risk taking, availing economies of scale, creating better value for the stakeholders, improving efficiency etc. More recently, it appears that the acquisition of Oil Marketing Company (OMC) HPCL is being considered by the flagship upstream PSU ONGC. This might be the easiest of the possible combinations given the Government’s share in HPCL is just a tad over 50 percent and the firm was earlier considered for divestment (before the Supreme Court put a spanner in the works). However, the question to be asked is whether such a development would help the companies in question and help achieve the objectives outlined by the Finance Minister.This is especially relevant as the acquisition will be expensive for ONGC. It is expected, for example, that the Government could get around $4-4.5 billion; and ONGC will also likely have to fork out funds to pay the public for an open offer besides what it pays the Government for its stake (or part of it). The Government, while propounding the idea of a merger, drew reference to the global oil majors such as Exxon, Shell, BP etc besides the large Chinese firms which have out-competed ONGC in the past while acquiring assets outside India. But whether ONGC would be left with the financial muscle to compete with these firms after paying billions of dollars to acquire HPCL and consequently witnessing very substantial increase in its debt, remains to be seen. It is quite likely that after paying for HPCL, it could struggle to raise funds for any other major acquisition, or have to pay higher interest rates in line with a lower credit rating given the higher debt on its Balance Sheet. The bottom line is whether ONGC would actually be strengthened to take on the might of Chinese firms or an Exxon post the proposed acquisition is certainly questionable. ONGC would be far better served by instead acquiring a technically competent mid-sized foreign upstream player. This would help it get more from existing fields, some of in which it is struggling (Imperial comes to mind), or bid for higher stakes and operatorship when it makes acquisitions abroad (currently it has largely taken minority stakes and is not the operator; its technical competence in deepwater fields needs to be better). It is also worth noting that ONGC will have to grapple with the acquisition of the ‘Deendayal’ gas field from GSPC. ONGC’s energy and funds could well end up being spent into managing and integrating these two acquisitions instead of focusing and growing its core business, where its production has been stagnating. It is true that a downstream firm such as HPCL would be somewhat insulated from higher oil prices through a combination with an upstream firm (although the Government was compensating it earlier and with the recent reforms in pricing of petrol, diesel, LPG and kerosene, it should be already in a better position to tide over commodity cycles than earlier). In that case, one may say that since it would be the beneficiary, it should be leading the acquisition. Therefore, should not HPCL be looking to acquire an upstream firm itself rather than be acquired? The time is right because HPCL’s balance sheet is looking far better after the recent few years of relatively subdued oil prices. There is upside potential for HPCL should crude oil prices rise- it could pay relatively less at present for an acquisition and see the value of the acquired firm rise with a possible increase in crude prices. Following this line of thought, while HPCL could look to acquire PSU firm Oil India Ltd (OIL), it seems a better strategy for it to acquire a mid-sized foreign crude oil producer to diversify its risks. All in all, the Government needs to perhaps think more carefully before pushing ahead with the plans announced in the Budget regarding combining one or more of its PSUs. Size may matter, but the right combinations also do. Else, far from meeting the objectives, the Government may find its flagship PSUs weakened rather than strengthened. Joe Looney Authentic Jersey
Why Oil Demand Forecasts Have Become A Guessing Game
Get yourself a ruler, a pencil and a piece of paper. Place the ruler at about 45 degrees and draw a line upward across the page. That was easy. Now think about how to draw oil consumption over the next three decades. Plenty of pundits are scrubbing their spreadsheets and fidgeting with their rulers to show us the answer. Some forecasters are economists who work for multinational oil and gas companies and government agencies. Most of their oil outlooks extend upward. The biggest uncertainty is the angle of their rulers. The steepest slope assumes that our prevailing consumption habits and government policies are extended out a few more decades. Oil demand reaches nearly 120 MMB/d at the top of this cluster, up almost 25 percent from today. More moderate trajectories in the group are based on pledges made pursuant to the November 2015 Paris Climate Change Conference; but tallying up country commitments still suggests modest growth to between 100 and 105 MMB/d by 2040. A group of weaker outlooks tilt downward like a loosely held hockey stick. Clustering between 73 and 80 MMB/d by 2040, this collection of prognostications assumes more aggressive global efforts to limit carbon loading in the atmosphere and the faster adoption of innovations like electric vehicles. The International Energy Agency’s 450 Scenario is the most bearish demand outlook among these peers. Environmental groups don’t equate fossil energy usage to classroom instruments or clichéd sports equipment. Slick oil charts from naysayers with green-coloured glasses look more like a BASE jump gone badly. The most catastrophic scenario appears to come from Greenpeace, which proposes that pipelines will trickle in the range of 35 MMB/d by 2040. What and whom to believe? The range of consumption estimates 25-years out is wider than the tailgate of a Ford F350; on one end is 35 MMB/d, on the other 120 MMB/d. Even the top cluster varies by 20 percent Given the 80 MMB/d range in opinions and analyses (each convincing on their own), stakeholders in the oil business may feel a tendency to adopt a, “the truth lies in the middle,” forecast. This method instructs us to believe a midpoint somewhere between denial and exuberance. Taking the median of all expert opinions and calling it the “consensus” of wisdom suggests oil demand will drop by 20 percent over the next quarter century. I don’t find this approach satisfying. Looking through a row of ten cloudy crystal balls doesn’t yield a new one of greater clarity. For over 100 years, the oil industry and its stakeholders have believed that the market for their products will continue to grow ad infinitum without competitive challenges. Today, that thesis is about as useful as a bent ruler and a broken pencil. Never in my 35-year career following energy markets has there been so much widespread disagreement about future demand for oil. And it’s a relatively recent confusion, one that’s been emerging over the past decade, but heightened in the past couple of years due to the potential forces of technological change and carbon regulation. An 80 MMB/d disagreement in various outlooks says to me that there is little value to add by uploading yet another spreadsheet into an already foggy cloud of forecast charts. I’m only confident in one fact and one forecast. Fact: There is widespread ambiguity in expert outlooks for oil consumption, one of the world’s most vital commodities. Forecast: The uncertainty is not going to diminish over the next five years at least. In other words, trends in technology, policy, economy and social factors are going to put wider and wider error bars on every pundit’s numbers. In my mind, the fuzzy question of, “How much oil is the world going to consume by 2030 and beyond?” must now yield to sharper, qualitative thinking. Pencils and rulers down, the questions going forward are, “What type of decisions will be made—relating to investment, corporate strategy, government policy and so on—under unprecedented uncertainty, and how will these near-term decisions affect the world’s long-term energy future?” I’ll be pondering answers to these questions during my commute to work and back – in my new electric vehicle. DaQuan Jones Womens Jersey
Solar-powered trains are closer to reality than we might think
How can we connect solar photovoltaics (PV) directly to railways to power electric trains? That’s the question my charity 10:10 and researchers at Imperial College’s Energy Futures Lab are trying to answer. Electric trains are by far the best long distance transport mode when it comes to carbon emissions – at least when their electricity comes from renewable sources like solar or wind. But the UK’s ageing power network poses a significant challenges to any bid to decarbonise road and rail that relies on the grid. There are now swathes of the British countryside where it is impossible to plug in any new solar, wind or hydropower without being hit with a whopping bill for the full costs of local network reinforcement. Faced with this constraint, and squeezed by government subsidy cuts, UK solar developers have started to focus on ways to generate power directly for consumption, rather than exporting it to the grid. With the right customers, solar developers can offer lower tariffs than the grid, while still earning more for their power than they would get from exporting it. Solar giant Lightsource, for example, recently signed a 25 year power purchase agreement (PPA) with Belfast airport that underwrote a neighbouring £5m solar farm, using a private wire to supply a quarter of the airport’s electricity needs. Why solar and trains are perfect match As an industrial client with high on-site daytime energy use and a structural reason to stay put, Network Rail has all of the features needed to support this kind of approach. The UK’s electrified rail routes have all of the features needed to support this kind of PPA-based renewable development, and more. Network Rail is the UK’s single largest electricity consumer, with internal decarbonisation targets and a strong incentive to reduce operational energy costs. Alongside Transport for London (London’s largest electricity consumer), these companies spend around £500m every year on traction power for their trains. There are already over 5,500km of electrified tracks in the UK, with a major electrification programme building or converting hundreds more over the coming decades. Early indications suggest it should be possible to connect virtually anywhere on the approximately one-third of this network that uses the direct current (DC) traction power system, unlocking access to thousands of potential new sites that have previously been out of bounds to new renewables. What’s more, the universe apparently wants this to happen: the standard operating voltage of the third and fourth rail DC routes is 630v-750v, while the standard output voltage of a solar PV array tends to be between 600v and 800v. This serendipity makes the engineering challenge of connecting the two look very manageable, and the likely cost of the power interface equipment competitive with typical grid connection costs. Conversion of renewable DC to grid alternating current (AC) results in something like 3% of the electricity being wasted, so supplying DC power direct to trains saves that loss too. Some of these DC routes already suffer from “under-powering”, meaning train operators cannot add more passenger capacity to these routes because the grid cannot supply the extra electricity needed to power the trains. At scale, our innovation could solve this problem as well. Solar trains in India While our project has been driven by the UK context, direct connection of solar to railways will be a world first that has far wider potential application. Globally, most city metros around the world run on rail systems at 750V. If connection to AC overhead lines also proves viable through our work, then the market potential goes well beyond city metros. For instance, analysts have identified inadequate distribution and transmission infrastructure as a key obstacle to realising India’s aggressive target of 100GW of solar PV capacity by 2022. But India already has over 25,000km of electrified tracks, and an electrification target of 2,000km of new tracks every year. If our innovation means India can power its railways directly with trackside solar then we will have made a huge contribution to the global project to keep fossil fuels in the ground. In the UK, if our feasibility study proves successful, the next step will be to prove the concept with a handful of real-world pilot projects. For this, we’re working with members of the Community Energy South umbrella group of renewable energy co-operatives to identify promising sites where they could install a megawatt or two of trackside solar. Our vision here is to bring local people, commuters and rail employees together to crowdfund investment in these pioneering projects, sharing the financial rewards of progress in the low carbon transition as widely as possible. Andrew Whitworth Authentic Jersey
Single window clearance for women starting airline ventures
Women entrepreneurs will get “single window clearance” and other benefits to start an airline under the regional air connectivity scheme, a top official said. The remarks were made by Civil Aviation Secretary RN Choubey in a video message at an event here to celebrate International Women’s Day today. “Regional Connectivity Scheme is an opportunity whereby women can set up a brand new airline… I assure that women will get special treatment. We will give them single window clearance,” he said. Women should come forward to start aviation companies, Choubey said in the video message recorded for the non-profit group Women in Aviation International (WAI). The event, organised by WAI, was also attended by Choubey and Civil Aviation Minister Ashok Gajapathi Raju. As part of efforts to make flying more affordable as well as connect unserved and under-served airports, the government has unveiled the ambitious regional connectivity scheme UDAN (Ude Desh Ka Aam Naagrik). Under UDAN, various incentives would be extended to the participating airlines, including viability gap funding, while fares would be capped at ?2,500 for one-hour flights. Helicopter services are also covered under the scheme. Speaking at the event, the Civil Aviation Minister said there is some way to go in addressing gender inequality. “We do have some way to go in addressing gender inequality but the silver lining in the cloud is that everybody has started accepting that gender inequality must be a thing of the past,” he said. Raju also felicitated the all-women crew of Air India that flew around the world on a Delhi-San Francisco flight. WAI unveiled the slogan ‘Beti Ki Udaan, Desh Ka Swabhimaan’ as part of International Women’s Day celebrations. Anthony Mantha Jersey
Qatar Airways plans first fully foreign-owned airline in India
India may soon get its first fully-foreign owned airline after the Modi government allowed 100% FDI in the sector last June. Qatar Airways CEO Akbar Al Baker said in Berlin Wednesday that he plans to start an airline in India with the investment arm of Qatar government. A Qatar Airways spokesperson quoted the CEO saying that since India now allows 100% FDI, he plans to do so with Qatar Investment Authority. Baker also said that he will be making an application to launch a domestic airline in India soon. Qatar Airways has for many years been eyeing a stake in IndiGo but the Indian budget carrier has not done so. Last June, the Modi government had allowed Indian carriers to be fully owned by foreign entities. While foreign carriers will still be required to have up to 49% stake in airlines here, they can now get a foreign partner — like a sovereign wealth fund or an institutional investor — and not look for an Indian partner to put in the remaining 51%. However, India is yet to review the issue of “substantial ownership and effective control (SOEC)” in the fully-foreign owned airlines it had allowed last June. Currently, flying licences are given to an airline in India only if its chairperson and two-third of the directors are Indians and if the SOEC is with Indian nationals. The issue of SOEC being with Indians arises at two times — issuing the operating licence and giving bilateral rights that India has to its airlines for flying abroad. Harold Carmichael Authentic Jersey