Bidding behavior in the Indian solar sector not sustainable: Bridge to India
Solar power tariff may not have dwindled due to auctions and increased competition as being claimed by the government but because of falling equipment costs. According to research firm Bridge to India, changes in equipment costs and other factors are responsible for most of the decline and adjusted for these changes, tariffs haven’t trended down in the last 18 months. “As an example, in July 2015, weighted average successful tariff for the Madhya Pradesh 300 Megawatt state tender was Rs 5.35 (US ¢ 8.2)/kWh. But if that bidding were to happen in September 2016 in another state of Andhra Pradesh, the same tender would yield a weighted average tariff of Rs 4.29/kWh because of changes in capital expenditure, cost of debt, irradiation and land and transmission infrastructure costs,” Bridge to India said in a report. It said harmonised tariffs have stayed reasonably stable around the average level and projects tendered by NTPC and located inside the solar park were highly oversubscribed and subsequently had the lowest tariffs. “For other tenders, we see no material relationship between offtake risk and bid results except in some extreme cases – Gujarat (credit rating of A+ by ICRA; tariff discount of Rs 0.32/ kWh) or Uttar Pradesh (credit rating of C by CARE; tariff premium Rs 2.68/ kWh),” it said. Auction based tender process has forced developers to be very aggressive. The industry is trying to bridge the returns gap by improving technical execution and finding innovative, cost effective means of financing. But it is also becoming increasingly common place to build forward-looking, favorable assumptions for solar module prices, debt refinancing and many other parameters. “But the most relevant insight, in our view, is that the average harmonized tariff from our study gives an equity IRR (internal rate of return) of only 14.20 per cent, significantly below the benchmark expectation of 18-20 per cent and that too without any material risk contingencies,” Bridge to India said. The report, however, said steep module price declines pose critical threat to the financial health of module suppliers and a risk for winning project bidders. In general, risk pricing, particularly for capital cost, interest rate, offtake and transmission risks, appears inadequate. T.J. Lang Jersey
Uttar Pradesh power corporation asked to come up with new tariff plan
The UP electricity regulatory commission (UPERC) on Monday initiated the power tariff determination exercise for the new financial year. The electricity regulator asked the UP Power Corporation Limited to submit the new annual revenue requirement (ARR)—the document projecting revenue recovery through sale of power to consumers—for determination of the electricity tariff for the year 2017-18. Commission chairman Desh Deepak Verma said the corporation has been asked to submit the ARR as soon as possible so that the commission can announce a new power tariff. Normally, power tariff increases in at least one or other category of consumers. Last year, SP government, seemingly with an eye on state elections, did not effect an increase in power tariff for residential consumers but passed the burden on industries. With elections over, the new government will take the call on power tariff. UPPCL officials refused to comment but sources said the new ARR will be submitted to the commission only after consulting the new government. UPPCL sources said a team of officials is likely to meet the CM to appraise him about the power scenario before going ahead with the new tariff determination exercise. The power corporation normally submits the ARR with UPERC by the end of every year. It is followed by a tariff plan, which is then computed and endorsed by the commission before announcing it formally in the new financial year. The government did not let the corporation not submit the ARR last year in view of the UP elections despite the commission sending out reminders to the corporation. UPPCL officials said the corporation has to come up with a multi-year tariff plan, for up to at least next there years. Last year, UPPCL projected an ARR of around Rs 55,000 crore even as it promised 24-hour power supply to urban and 18 hours to rural areas. With the BJP government initiating its ambitious scheme of power distribution in UP, the UPPCL may face the challenge of maintaining a balance between power supply and revenue recovery. Byron Jones Womens Jersey
Punjab electricity utility proposes 20 per cent hike in power tariff
Electricity consumers in the state are likely to feel the pinch as the Punjab State Power Corporation Limited (PSPCL) has proposed a steep hike in tariff to shore up its revenues and improve its financial health. The power corporation has not raised power tariff in the past two years. The corporation has filed a petition seeking 20% hike in power tariff, but a final decision would be taken by the Punjab State Electricity Regulatory Commission (PSERC) after consulting the newly-formed state government. The new tariff may be announced in the next 10 days, said sources. They said PSPCL earnings took a dip as there was no hike in electricity rates in the past two years. Sources said that in its multi-year tariff petition (MYTP) for 2017-18, 2018-19 and 2019-20 filed before the PSERC, the PSPCL had sought a 20% tariff hike 2017-18, citing a total revenue deficit of Rs 11,575 crore, including Rs 5,998 crore carried forward from the previous years. In the multi-year tariff petition the PSPCL had shown a deficit of Rs 6,130 crore for 2018-2019 and Rs 6,406 crore for 2019-20. Last year, the PSPCL has sought a tariff hike of 19.72% to bridge the revenue gap. The corporation had estimated the revenue receipt of Rs 26,121 crore against the estimated expenditure of Rs 31,262 crores. However, the PSERC refused to change tariffs but reduced it for the industry. PSERC chairman Dhanbir Singh Bains while confirming the development said that the matter pertaining to tariff hike was under consideration and a final decision would be taken in consultation with the new government. “Once we are clear on the subsidies, we will take the final call,” he maintained. The new tariff was likely to be announced in the next 10 days, the chairman further added. Meanwhile, it is learnt that the present power subsidy bill of the state government has crossed Rs 6,463 crore, of which Rs 5,000 crore is farm subsidy and the rest is being given to other categories of consumers, including industry, dairies and weaker sections of society. At present, the state government has to make a payment of Rs 2,000 crore against the subsidy bill before March 31, failing which it will have to pay bank interest on the outstanding amount remaining.
Electrification drive: REC averages 30,000 new connections per week
India is in electrification overdrive, with about 30,000 new electricity connections being granted every week. The Union power ministry is mapping the progress live on a website and is also measuring changes in lifestyle in the recently electrified villages, collecting largest data of its kind. NITI Aayog, the Centre’s premier think tank, has advocated that other ministries use this data for other social welfare schemes. As per the Garv-2 portal, 23,000 new electricity connections were given last week and 41,000 in the previous week. In the ninth week of this calendar year, 28,000 power consumers were taken on board. State-run Rural Electrification Corporation is targeting to scale up the drive to grant 100,000 connections every week, its executive director Dinesh Arora said. India has never seen electrification at such large scale earlier, and neither have details been made available on electrification at household level. Electrification data was only captured for families below poverty line earlier. The Garv-2 portal was launched on December 20, 2016. “We expect it to stabilise and accelerate the drive by March 31,” Arora said. Power ministry officials said the Aayog has recommended Garv-2 application be used for sanitation and other social schemes. In February, 66,000 new customers were registered and in March so far 86,000 new connections have been granted. The new connections are uploaded live on the website with meter and contact details. The government has also kick-started an electrification impact survey on villages that have been electrified for more than six months. Brian Urlacher Womens Jersey
ONGC’s bonanza to KVIC: Rs.140 million sales in 2 months
A deal between Khadi and Village Industries Commission (KVIC) and ONGC has brought cheers to Khadi institutions in Gujarat which have seen never-before sales of over Rs.140 million in just two months. ONGC usually distributes bonus and gifts to its employees in the form of cash, recognising their services and rewarding their work. In January 2017, however, ONGC had reached an agreement with KVIC and rewarded its staff in kind. V K Saxena, Chairman, KVIC, said here on Monday that following the deal, ONGC rewarded its employees in kind, at a value higher than the cash value of bonus or gift. Accordingly, ONGC provided Khadi vouchers worth Rs. 10,000 each to its regular employees and Rs. 5,000 each to its non-regular employees. KVIC allowed an additional 35 per cent incentive on these vouchers, thus enhancing the value of ONGC bonus to 135 per cent of its cash value for its staff. These Khadi vouchers can be used by ONGC staff over a period of 2 months. KVIC will get Rs 350 million from ONGC due to this initiative. The total sale of KVIC products will be more than Rs. 500 million, including Rs. 100 million as wages. Saxena said the artisans attached to this special sales drive will be given an additional 5 per cent reward directly in their accounts through DBT. KVIC provided quality Khadi products through 16 special exhibitions within the ONGC premises in Gujarat, so that its employees get the products at their doorsteps. KVIC, though this partnership, is likely to generate 0.650 million extra man days for its Khadi artisans, increasing employment opportunities. Albert Wilson Jersey
Indian gasoil supply weighs
High sulphur gasoil supply appeared from India, helping to offset spot demand from Indonesia for the fuel and keeping differentials for the fuel steady, traders said on Monday. Indonesia’s Wilmar Trading required a spot cargo for April but Indian Oil Corp offered term cargoes of the fuel, they added. Pakistan State Oil bought just one of four gasoil cargoes it was seeking for delivery in April, industry sources said. It bought 55,000 tonnes of 500ppm sulphur gasoil for delivery in April from Swiss Singapore at a premium of $1.88 cents a barrel to the Middle East quotes, they said. Inventory of the fuel is adequate and the company did not need as much volumes as it initially thought, one of the industry sources said. PSO is yet to award a 10,000-tonne jet fuel cargo it was seeking for delivery in April but will likely buy the cargo from Renish Petroleum, the source added. Sri Lanka’s Ceylon Petroleum Corp has cancelled a tender seeking 160,000 barrels of jet fuel and 150,000 barrels of gasoil for delivery over April 11 to 12. The reason was not immediately clear. Egyptian Petroleum Minister Tarek El Molla said on Sunday his country had received two cargoes of diesel fuel from Saudi Arabian state-owned oil company Aramco on Friday and Saturday. Saudi Arabia agreed in April last year to provide Egypt with 700,000 tonnes of refined oil products a month for five years, but the cargoes stopped arriving in early October. Dalvin Tomlinson Jersey
Oil tanker workers begin indefinite strike for minimum wages in Assam
Oil tanker workers affiliated to Assam Petroleum Mazdoor Union (APMU) today began an indefinite strike demanding minimum wages and other benefits like provident fund. Oil marketing companies, including IOC, BPCL and HPCL, have termed their demands as “illogical and baseless” as they are employed by transporters and not the PSU firms. “We have started the indefinite strike against IOC, BPCL and HPCL. We are demanding minimum wages, PF, insurance and ESI benefits,” APMU general secretary Ramen Das told here. He said APMU held talks with the three companies in November last year, but did not yield any result. When pointed out that APMU workers are employed by the transporters and not the retailers, Das said: “We went to the transporters and they refused to pay us. IOC and others have not been able to implement the tender conditions with the transporters. The companies must force the transporters.” Reacting to the demands, IOC Executive Director (IndianOil-AOD) Dipankar Ray said the company is always proactive to resolve the issues and has been asking the workers for specific complaints to take action against the erring transporters, but nobody has come to them. “Their demands to us are illogical and baseless as they are not our employees. How can we pay to them? They are hired by the transporters, whom we engage trough a tender process. “The company’s contracts with the transporters take into account the government notified minimum wages to workers. Now if some transporters are not paying the minimum wages to its employees, we can force them to pay provided the workers give us specific complaints,” he added. He informed that IOC follows the government norm of minimum wages of Rs 450.62 per day for drivers and Rs 309 for the helper in each truck. Ray said the striking workers have physically prevented some willing truck drivers, who wanted to come and take supplies from the depots. Talking about the scenario, he said: “Though locations outside Assam are by and large unaffected by this strike, but it will choke other places in North East soon as all the four refineries of the region are in Assam. So we have sought intervention from the government. Around 4,500 tankers for both LPG and petroleum products are registered with IOC in entire North East. BPCL Territory Manager (Retail) Suresh Chandra Jha said loading and offloading at their sites have also been affected today. Greg Van Roten Jersey
RIL’s KG-D6 gas output drops to 9% of target: Pradhan
Reliance Industries’ flagging KG basin D6 block has seen natural gas output slip further, leading the government to disallow USD 2.756 billion in cost, Oil Minister Dharmendra Pradhan said. RIL and its partners BP plc of UK and Canada’s Niko Resources produced less than 16 per cent of the 31,793.28 million standard cubic meters (mmscm) target from KG-DWN-98/3 or KG-D6 block in 2013-14. Output fell to 4,461.91 mmscm or 13.75 per cent of the targeted 32,458.72 mmscm in 2014-15 and to 3,939.97 mmscm or 12.24 per cent of the target in the following year, he said in a written reply to a question in the Lok Sabha. In the current fiscal 2016-17, RIL and its partner have produced 2,641.67 mmscm of gas till February as against target of 29,316.69 mmscm, he said. Pradhan also said the Gujarat government firm GSPC too has produced much less than target in the three years but no penalty has been levied on it. Gujarat State Petroleum Corp (GPSC) produced 23.44 per cent of the targeted 470 mmscm of gas from its KG-OWN-2001/3 block in 2014-15 which when down to 11.09 per cent of the targeted 1210 mmscmd in the following year. In the current fiscal, just 6.29 per cent of the targeted 1,850 mmscm gas has been produced. “The gas production from D1 and D3 fields in this (KG-D6) block (of RIL) is much less than the production rates approved in addendum to Initial Development Plan (AIDP),” he said. He added that RIL set up facilities to produce gas of 80 million standard cubic meters per day but “failed to adhere to approved field development plan in terms of drilling and putting on stream the required number of wells and consequent achievements of projected gas production profile in AIDP”. This, he said, has led to under-utilisation of facilities and surplus inventories. “Government of India issued notice for proportionate disallowance of cost of production facilities based on cumulative shortfall in gas production vis-a-vis AIDP targets,” Pradhan said. Consequently, he said, the government has disallowed USD 2.756 billion from the cumulative development cost incurred by RIL and its partner as on March 31, 2015. “This disallowance was computed based on the cumulative shortfall in production of gas vis-a-vis production estimates under the approved AIDP till March 31, 2015. “The additional profit petroleum payable to the government by the contractor (RIL) for the period up to FY 2014-15 is approximately USD 246.9 million,” he said. RIL and its partners have disputed the cost disallowance and have initiated arbitration. Adam Butler Authentic Jersey