India to get $60 bn funding for gas infra; demand to triple for achieving 15% share in energy pie: Pradhan
Oil Minister Dharmendra Pradhan today said that India’s natural gas sector will witness $60-billion investment in the coming days and added that the country will require 600 million standard cubic meter per day (mmscmd) of gas in order to push its share to 15 per cent in the energy basket. “If in the coming years we have to achieve a target of 15 per cent gas share in the energy basket then we will require 600 mmscmd of gas. We are currently producing around 80-90 mmscmd of gas, a similar quantity is imported by us. So, from 180-190 mmscmd currently we need to push it to 600 mmscmd,” Pradhan said in an event organised by FICCI. The minister said that the government will come out with a commercial model for converting domestic coal, high ash content coal and petcoke to syngas which would lead to industry players receiving syngas at the burner tip for around $6-$7, adding, that the first plant will be commissioned in Odisha soon. Pradhan highlighted that with India now moving towards achieving 450 GW of renewable energy capacity there is no doubt among industry players and government that natural gas will be the right fit to balance the power grid. The ministry expects compressed biogas plants being set up under the Sustainable Alternative Towards Affordable Transportation scheme to produce around 10-15 Million Tonne of oil equivalent gas in the coming years and added that the government has issued 500 Letter of Intent to set-up such plants across the country. Pradhan said that India’s gas market is moving towards market-based pricing and India Energy Exchange plans to start a natural gas trading hub soon, with Petroleum Natural Gas and Regulatory Board assisting the exchange with a regulatory framework. Pradhan said that the ministry expects natural gas and aviation turbine fuel to be included in the goods and services tax soon and added that while domestic natural gas production is projected to increase in the coming years, crude oil production will be flat.
India’s Petronet LNG says in talks with several firms on deals
India’s top gas importer Petronet LNG has been in talks with several companies including U.S.-based NextDecade LNG on deals for liquefied natural gas (LNG), said Vinod Kumar Mishra, Petronet’s head of finance, on Thursday. Mishra said Petronet is in the process of appointing a consultant to help guide the company to sign deals to buy LNG from overseas suppliers. Petronet is also in talks with Tellurian Inc and Qatar Gas to buy stakes in their LNG assets.
Adani Gas sells large stake to Total
Total and Adani have signed definitive agreements to deepen their partnership to supply and market natural gas in India. Total will acquire a 37.4% stake in Adani Gas for ₹61 billion (US$864 million). The acquisition forms the largest foreign direct investment in India’s city gas distribution sector. On the significant aspects of the deal, Cyril Amarchand Mangaldas (CAM) partner Ravi Kumar said: “The transaction involves acquisition of a significant stake by a non-resident in an Indian-listed company engaged in a highly regulated sector. Additionally, some of the promoter shareholders are non-resident.” Kumar said the transaction involved complex structuring and documentation, “given the interplay of various stakeholders and regulations including the Securities and Exchange Board of India [SEBI] Takeover Code, SEBI’s Listing Obligations and Disclosure Requirements (LODR) and foreign exchange regulations, tax, antitrust laws, Companies Act, and sector-specific regulations”. Total will first make a tender offer to public shareholders and then acquire the remaining shares from the Adani family. The Adani family and Total shareholders will ultimately hold 37.4% each and public shareholders will hold the remaining 25.2% in accordance with public shareholding regulations. Adani and Total plan to make significant investments in the next 10 years to develop India’s gas infrastructure and distribution in more than 15 states, reaching out to approximately 7.5% of India’s population. Adani and Total will also build a fuel retail network of 1,500 retail stations on the main roads of the country including highways and intercity connections. The equity support will help Adani Gas to accelerate project executions in all its new geographical areas. The partnership also includes the development of regasification terminals including Dhamra LNG, on the eastern coast of India. CAM advised Adani and its promoters on the structure, legal and regulatory issues connected with the transaction under Indian law and drafting, reviewing and negotiating definitive documents with Total. The firm was represented by managing partner Cyril Shroff, partners L Viswanathan, Ravi Kumar, Ruetveij Pandya, Paridhi Adani and Avaantika Kakkar, and the head of international taxation, Daksha Baxi. AZB & Partners advised Total and the firm was represented by managing partner Zia Mody, partners Ashwath Rau, Kashish Bhatia and Medha Marathe, and senior associate Armaan Patkar. Latham and Watkins also represented Total, while Clifford Chance represented Adani.
Union Petroleum Minister Dharmendra Pradhan approves gas pipeline project for Andhra Pradesh
Petroleum Minister Dharmendra Pradhan today said in a Rajya Sabha that Indian Oil Corporation (IOCL) has entered into an agreement with the government to supply cooking gas through a pipeline to 9,00,000 and 29,000 houses in three districts of North Andhra. The Union Minister on Wednesday replied to a question raised by Vijayasai Reddy and said IOCL will set up 211 compressed natural gas stations for this project, which will supply cooking gas to the home through the pipeline. He said the Petroleum and Natural Gas Regulatory Authority (PNGRB) has the authority to develop the City Gas Distribution Network (CGD) in designated areas. Also Read – CM Jagan Reddy graced the Navy Day Celebrations event at RK Beach in Visakhapatnam ADVERTISEMENT The Minister explained that IOCL had the right to develop and operate a piped gas network in Srikakulam, Vijayanagaram and Visakhapatnam districts during the 9th round of auction for gas distribution network rights. “As part of this, IOCL has already completed hook-up facilities, city gas station and piped gas Network design work,” the minister opined.
Government plans new scheme to revive 24,000-MW gas power plants
The government is working on a scheme to salvage 24,000 MW of stressed gas-based power plants, built at an investment of over Rs 1 lakh crore, by importing natural gas and bundling the output with cheaper solar energy. The power and petroleum ministries are working on the new proposal. The earlier scheme entailing subsidy has been shelved. The proposed new scheme will offer no subsidy and hopes to help operate the power stations at 90% capacity by selling the bundled power. A senior government official said the earlier proposed e-regasified liquid natural gas scheme (e-RLNG), which involved an e-auction, was successful when there was electricity shortage in the country. He also said that in the later tranches, the scheme did not garner much interest from the developers. He said bundling of solar power with an equal amount of gas-based power is expected to result in lower cost of production than blending domestic and imported gas-based power. Power Trading Corp of India (PTC India) has been asked to work on the proposal, an official said. The gas is proposed to be imported by GAIL India with concessions and haircuts by central and state governments, power companies and gas transporters to make it affordable. GAIL has indicated to the power ministry that it can import LNG for about $6 per unit, and deliver it to power plants for $8 a unit, which includes re-gasification, transit and taxes, sources said. With this, power can be generated at about Rs 4 per unit. The power ministry’ plan is to blend this with the assumed average renewable energy cost of Rs 2.75 per unit, expecting the blended rate will find enough takers among distribution companies under the merit order despatch rule, according to sources. LNG prices are under immense pressure this year due to oversupply. Spot LNG rates for delivery to Asia are between $5 and $6 per unit. Indiadelivered LNG rates had fallen to less than $4 a few months ago but has now risen due to winter demand. ET had earlier reported that the country’s largest lender, State Bank of India, has sought immediate government intervention to salvage the gas-based power plants from becoming non-performing assets. SBI sought a long-term policy intervention to revive gas-based plants, and has asked for financial support from collections of coal energy through the National Clean Energy and Environment Fund. It has also sought a ‘must-run’ status to gas-power stations, similar to renewable energy plants, and reimbursement of fixed costs from the clean-energy fund to power distribution companies that enter into long-term power purchase contracts with these gas-based facilities. The bank has also sought bringing natural gas under the ambit of goods and services tax. The previous revival scheme, an extension of the previous rounds of subsidised gas auction schemes to power plants, was recommended by a high-level empowered committee on stressed assets. The government had planned to aggregate power from these plants through reverse online auction and do away with the subsidy component. The proposed concessions include waiver of state and central taxes on imported LNG, waiver of GST on regasification and transportation of the fuel, reduction of pipeline tariff charges and marketing margin by GAIL. Electricity transmission charges for stranded gas-based projects are also proposed to be sacrificed. Power companies will not make any return on equity. Power companies have been demanding government intervention as about 8,000 MW capacity is stranded while the rest is stressed. According to data available with the Central Electricity Authority, gasbased power stations in India operated at 23.27% of their capacity till October this year.