Tangedco under pressure to buy power from private producers
Independent power producers (IPPs) in Tamil Nadu are pressurising the government to instruct Tangedco to evacuate power generated by them at Rs 5.50 per unit, which is much higher than the cost of electricity in power exchanges. Tangedco officials told TOI that IPPs were putting pressure through various ‘sources’ to evacuate power from them. But Tangedco has to go by the merit order released by TNERC on evacuating power, which says it has to utilize its potential fully before purchasing power from other sources. The utility also has to prefer cheapest sources to fulfil its needs. There is also pressure on the discom to import coal. The corporation has stopped import of coal to cut down costs and a section that was hugely benefitted from coal imports in the past is up against the corporation. “The total capacity of all IPPs within the state is around 4000MW. Most of them use coal as fuel. The maximum capacity per unit is 600MW. Power from these companies will be evacuated only when the demand exceeds 14000MW. Only during summer the demand crosses 15,000 MW,” a senior Tangedco official told TOI. As per the merit order issued by the TNERC, power at lower cost will come from Tangedco’s own units as it gets coal from Coal India Limited. “The cost at which we generate power comes to Rs 3. We will have to evacuate the entire capacity from our units and then look at other sources. Similarly, the cost is pretty cheap when we buy form Central units. Wind power between May and September costs less than Rs 4 per unit and nuclear power is available at Rs 4.50 per unit,” said the official. “We have invested several crores to set up our thermal units and we cannot keep the units in limbo. We are not pressurising Tangedco, but we are only asking Tangedco to evacuate power generated by us,” said MD of an IPP. Tangedco sources said the utility was all set to break even this year because of not purchasing power from IPPs. Except for the total outstanding debt, the Tangedco’s financials have been looking better in the last few years. “After a record loss of Rs 13,985.03 crore in 2013-14, the loss came down to Rs 5,000 crore in 2015-16. This year we have saved Rs 2,000 crore owing to stopping coal import,” the official said. Carl Soderberg Womens Jersey
Greece plans trading exchange to help reform power market
Greece plans to launch a power trading exchange next year to reform its electricity market in line with European plans for an interconnected energy grid which will help cut costs and improve energy security, it said on Tuesday. Greece’s wholesale electricity market is currently based on a mandatory pool system. Power producers may enter into bilateral contracts but those are constrained within the pool. The trading exchange would help boost competition, secure transparency in power sales and eventually lower prices for households and businesses, Energy Minister George Stathakis told a news conference. “We are hopeful that the transition to the new model will take place… in mid-2018,” he said. Greece and the European Commission have been preparing a study, expected to be ready by the end of the year, on how the new market will operate, he said. The country’s market operator (LAGIE) and the Athens Stock Exchange agreed last week to jointly help set up the exchange, which will be based on a day-ahead, an intraday, a forward and a balancing market. Initially, they plan to set up a clearing house. Chief Executive Officer at LAGIE, Michael Philippou, said the aim was also to boost liquidity for businesses which would be siphoned into investments. Under its bailout with euro zone lenders and the International Monetary Fund signed in 2015, Greece has agreed to open up its electricity market. Last year it launched power auctions to help cut the dominance of state-controlled power utility Public Power Corp. (PPC), which controls about 90 percent of the country’s retail market. The effectiveness of the measure has been a sticking point in drawn-out negotiations between Greece and its creditors for the conclusion of a bailout review, which is crucial for new funding for the cash-strapped nation. Rashard Robinson Authentic Jersey
After 8-year-long legal tussle, Centre to pay Rs 63.20 billion as oil royalty to Assam
The Centre on Wednesday agreed to pay Rs 63.20 billion to the Assam government as crude oil royalty as part of an out-of-the-court settlement after eight years of protracted legal battle. The amount will be paid by the central government to the Assam government over a period of three financial years commencing 2016-17. Assam chief minister Sarbananda Sonowal thanked Prime Minister Narendra Modi, finance minister Arun Jaitley and petroleum minister Dharmendra Pradhan for the “proactive and bold steps” which led to the out of the court settlement. “The Central and state governments were fighting in courts over the oil royalty issue since 2008 when both the governments were ruled by the Congress. “But within nine months of the BJP government coming into power in Assam, we have resolved the dispute and the central government agreed to pay Rs 63.20 billion as oil royalty. We are thankful to the Modi government,” Sonowal told PTI here. While in 2016-17, the central government will pay Rs 9.48 billion; in 2017-18 it will pay Rs 28.44 billion and in 2018-19 will pay Rs 25.28 billion. This is in addition to the Rs 14.50 billion already received. The Oil India Limited produces 3.2 million tonnes crude oil in Assam annually, while Oil and Natural Gas Corporation Limited produces 1.1 million tonnes crude oil every year in the state. The OIL and the ONGC have been paying royalty to the central and the state governments in terms of statutory provisions of oilfields (Regulations and Development) Act 1948 and Petroleum and Natural Gas Rules, 1959. The Petroleum Ministry on October 30, 2003 had directed upstream companies, including ONGC, to give discount in price on sale of crude oil to the Oil Marketing Companies. The notional price of the crude oil produced by upstream companies is initially derived on the basis of the average international price and then discounts are fixed as decided by the central government. Case Keenum Authentic Jersey
Petronet LNG’s impressive showing
Shortage of domestically produced gas leading to better demand prospects for liquefied natural gas, or LNG, is what has fundamentally propelled Petronet LNG’s stock. Shares of Petronet LNG Ltd have increased an impressive three-fifths so far this fiscal year. Shortage of domestically produced gas leading to better demand prospects for liquefied natural gas (LNG) is what has fundamentally propelled the company’s stock upwards. The LNG importer’s profit growth has been robust each quarter so far in fiscal year 2017 and the December quarter results are no exception. Net profit increased spectacularly, more than doubling compared to the same quarter last year to Rs 3.97 billion. Operating profit increased 114% year-on-year to Rs 6.07 billion. The Petronet LNG management told analysts in a conference call that the Dahej (Gujarat) capacity expansion to 15 million tonnes (from 10mt) was fully operational during the December quarter. The company said that the volume of 187 trillion British thermal units regasified at the Dahej terminal in December quarter is a marginal increase over the September quarter and a 36% increase over the December 2015 quarter. However, Petronet LNG’s Kochi (Kerala) terminal continues to operate at miserably low utilization levels—6% during the December quarter. Pipeline infrastructure problems have adversely affected utilization levels at the Kochi terminal and that has been a worry. “On the Kochi pipeline issue, Petronet LNG management shared that work on the first phase (Kochi-Mangalore pipeline) has started,” point out analysts from IIFL Institutional Equities in a report on 15 February. According to the brokerage firm, once this line is complete, utilization of the Kochi terminal would increase to 40%. However, further ramp-up in utilization would depend on completion of Kochi-Bangalore, the second pipeline, which is likely to be completed only by 2019. Needless to say, developments on this front will be an important trigger for the stock. It helps that spot LNG prices are expected to remain subdued in the coming years on account of higher supply in global markets thanks to capacity additions. The Petronet LNG stock’s remarkable appreciation reflects that it captures this good news including the recent commissioning of expanded capacity. But further outperformance could be difficult. Incremental expansion at the Dahej terminal to 17.5mt is expected to be completed by fiscal year 2019. “Given we already assume further capacity expansion benefit of 2.5mmt with full utilization by FY19/FY20 and earnings growth post-FY20 would be minimal, we expect stock would be de-rated going forward,” wrote analysts from Elara Securities (India) Pvt. Ltd in a report on 14 February. Currently, one Petronet LNG share trades at about 17 times estimated earnings for the next fiscal year based on Bloomberg data. Derrick Henry Jersey
Oil giant: Govt mulls merging HPCL or BPCL with ONGC
The Oil and Natural Gas Corporation may take over either Hindustan Petroleum Corporation Ltd or Bharat Petroleum Corporation Ltd if the Centre’s idea of an ‘integrated oil major’ materialises. An official involved with the development said the plan is to transfer the government’s holding in one of the companies to ONGC, making the latter the holding company. This will enable the creation of an integrated oil major. The Centre holds 51.11 per cent stake in HPCL, and 54.93 per cent in BPCL. “The other oil companies — Oil India, in the upstream sector, and Indian Oil Corporation in the downstream sector — will operate unchanged,” he added. The concept of the holding company was first proposed in 2005 by a committee headed by V Krishnamurthy. The committee, while concluding that the merger of oil PSUs may not be an advisable option, had suggested two alternatives, namely, creation of a holding company or a coordination body. According to RS Sharma, former Chairman and Managing Director, ONGC, a holding company concept may work out better. Sharma, who also is Chairman of FICCI Hydrocarbon Committee, said creating a holding company will result in optimisation of resource-sharing and upfront cost-savings of 10-15 per cent. The total market capital of listed oil-sector PSUs is over ?7000 billion. The holding-company mechanism will also yield huge disinvestment proceeds to the government, Sharma said, adding that this concept will result in minimum disruption to the existing corporate structure. Danton Heinen Jersey
Bengal decides to enter into joint venture with GAIL
West Bengal government today decided to enter into a joint venture with the Gas Authority of India Limited to supply natural gas to every household in greater Kolkata. Chief Minister Mamata Banerjee gave her approval to the joint venture at a meeting of the Cabinet’s standing committee on industry held at the state secretariat today, state finance minister Amit Mitra said. “It’s been a long time since we are talking about city gas supply and now today the decision has been taken by the chief minister,” Mitra told reporters. He said that GCGSC, which is a 100 per cent state-owned company, will have an equity of 26 per cent while GAIL will hold 74 per cent stake for the Rs 3,000-crore project, the minister said. GAIL would invest for the project while the state government would provide various assets like the land and infrastructure support, he said. The minister said that urban areas would first have the supply and thereafter it which would be supplied all over the state including the small towns. The pricing of the gas was yet to be decided, he said. In another important decision, the government as part of its city beautification drive has taken a decision to pass on the innumerable electrical wires, cables, telephone lines hanging overhead via underground ducts. According to a source at the secretariat, a committee under Chief Secretary Basudeb Banerjee has been formed for the purpose. It was also learnt that at today’s meeting Chief Minister Mamata Banerjee asked her ministers to be at their respective areas during the upcoming Holi and Shiv Ratri festivals to avoid any untoward incident. Greg Lloyd Authentic Jersey
Air India to raise $250 mn through sale-and-lease-back of 2 Dreamliners
State-owned carrier Air India has put on sale two more Dreamliners (Boeing 787—800) to raise $250 million (nearly Rs. 1,700 crore) for the repayment of short-term loan obtained earlier for purchasing these planes. The airline would also lease back these two Boeing 787—800s under an operating lease for a period of up to 12 years with a three—year extension option, the airline said in its Invitation of Offers document. These two aircraft were delivered to Air India between November last year and January this year. Under a Sale and Lease Back (SLB) arrangement, the seller of an asset leases it back from the purchaser for a long—term period and continues to use it without actually owning it. The airline has fixed a reserve purchase price at USD 125 million (Rs 836 crore) for each aircraft. Currently, the airline has 23 Dreamliners in its fleet. The airline has already sold and leased back the remaining 21 Dreamliners under the SLB arrangement. As part of its fleet expansion plan, the national carrier had in 2006 placed orders with Boeing for 68 aircraft —— 27 Dreamliners, 15 B777—300ERs, eight B777—200LRs and 18 B—737—800s. The sale and lease back transaction will be supported by the Government of India guarantee in favour of the bank/ institution/lessor, according to the document. Bo Scarbrough Jersey
Solar tariff crashes below grid power cost
Solar power tariff is likely to come down closer to the cost of conventional power sources due to technological advancement and increase efficiency. Recently, Rewa Ultra Mega Solar Ltd (RUMSL) has bid a record low tariff of Rs 3.3/kwh — levelised over power purchase agreement PPA period of 25 years — for a 750 MW plant through a reverse-auction. Solar power prices have been coming down over the years from `6.5 per kilowatt hour (kwh) or a unit in 2014 to Rs 5/kwh in 2016. As against this, the average feed-in tariff for wind energy and competitively bid thermal tariff (in the last 24 months) remains at `4.8/kwh and `4-5/kwh respectively. According to ICRA, solar photovoltaic (PV) projects are also more attractive with their relatively shorter construction periods within the renewable energy segment, while conventional thermal projects face much higher execution risks because of the possible delays in acquiring land and statutory clearances. However, this competitiveness was predicated on the state government’s guarantee for the contracted capacity by power utility in the Madhya Pradesh and provision for providing compensation for the deemed generation in case of non-availability of grid which in turn provide a mitigation against counter-party credit risk and the risk of grid back down to a large extent, respectively. This coupled with a 30 per cent drop in the solar photovoltaic module price level and scale benefits arising from location in a solar park with relatively lower execution risk profile favour project developers. Private developers will have to depend on timely long tenure debt (up to 18-20 year after the project completion date) at cost-competitive rates as well as their ability to keep the cost of PV modules within the budgeted levels to achieve the Rs 3.3/kwh and improve the plant load factor level, says ICRA. Gustav Forsling Authentic Jersey
Petronas considers $1 billion stake sale in offshore gas project
Malaysian state-owned oil and gas firm Petronas is aiming to sell a large minority stake in a prized upstream local gas project for up to $1 billion as it seeks to raise cash and cut development costs, two sources familiar with the matter said. Petroliam Nasional Bhd (Petronas) is looking to sell a stake of as much as 49 percent in the SK316 offshore gas block in Malaysia`s Sarawak state, the sources told Reuters, a move that would be among its first major recent sales as it grapples with oil prices that have slumped by half over two-and-a-half years. That slide has squeezed the cash flows of Petronas, hurt its earnings and forced it a year ago to announce a 50 billion ringgit ($11.2 billion) cut in capital expenditure over four years. Petronas, which accounts for a third of Malaysia`s oil and gas revenue, has also cut its dividend. Sources had told Reuters in September it is considering selling its majority stake in a $27 billion Canadian liquefied natural gas (LNG) plant, although the company denied it. It is now working with an investment bank on the SK316 gas block stake sale and kicked off the process this month, one of the sources said. Petronas did not respond to a request for comment. Petronas is currently gauging interest from potential buyers, said the sources, who declined to be identified as they were not authorised to speak about the matter. Gas from the NC3 field in the SK316 block feeds Malaysia`s LNG export project, known as LNG 9, Petronas` joint venture with JX Nippon Oil & Energy Corp that started commercial production in January. The sources said the stake is expected to include a combination of the producing NC3 gas field, the potential development of the Kasawari field in the same block and other exploration acreage in the block. The funds raised could contribute to the future development of the Kasawari field, one of the largest non-associated gas fields in Malaysia, which has an estimated recoverable hydrocarbon resource of about three trillion standard cubic feet. Petronas put on hold plans to develop the field in 2015 after oil and gas prices fell, according to media reports. Prasanth Kakaraparthi, senior upstream research analyst at consultancy Wood Mackenzie said overall capital expenditure for the 316 block is estimated at around $4 billion, of which the upcoming phase of development accounts for nearly 50 to 60 percent. “Given that the second phase of development will involve a significant amount of capital commitment, it`s not completely out of the question to think that they might want to bring in some partners to sort of share some of that burden,” he said. The stake could appeal to firms such as Indonesia`s state-owned Pertamina, Thailand`s PTT Exploration and Production PCL and some Japanese companies, the sources said. They said it might also appeal to the Kuwait Foreign Petroleum Exploration Company, which snapped up Royal Dutch Shell`s stake in Thailand`s Bongkot gas field for $900 million last month. A PTTEP official said the company is keen to invest in Southeast Asia but did not specify if it will invest in the SK316 block. Pertamina did not immediately provide a comment. As huge production comes online in Australia and the United States, LNG markets are oversupplied, resulting in an almost 70 percent slump in Asian spot LNG prices since 2014. Despite this, Malaysia’s LNG assets are viewed as attractive thanks to comparatively low production costs and due to their proximity to North Asia`s big consumption hubs of Japan, China, and South Korea. Mark Barberio Womens Jersey
Toll Operators Yet To Get Compensation For Demonetisation Loss
For 23 days after the prime minister announced the demonetisation exercise on November 8, toll collection remained suspended across the country. It has been two months since collections resumed but operators are yet to be compensated for their losses as promised by the government. “No, we haven’t received anything yet. Whatever we have lost (during demonetisation), has to be compensated. The fight is still on,” said Isaac George, director and CFO, GVK Power and Infrastructure Ltd. that runs the Jaipur-Kishangarh and Deoli-Kota expressways in Rajasthan The Ministry of Roads, Transport, and Highways and the National Highways Authority of India (NHAI) had decided to make the national highways toll-free to give relief to commuters facing cash crunch after the note ban. The government had then decided that the toll concessionaires would be reimbursed up to 75 percent of the total loss in collection. Vinayak Chatterjee, chairman, Feedback Infra, an infrastructure services provider, also tweeted that toll companies are yet to get compensation. Feedback Infra advises infrastructure companies like Larsen & Toubro, Indian Railways and Metro Rail. MEP Infrastructure & Developers Ltd., which operates 25 toll plazas across seven states, including all five entry points into Mumbai, has claimed about Rs 48 crore but hasn’t received anything, the company said in an email. IRB Infrastructure Developers Ltd., which runs the Mumbai-Pune Expressway, has claimed Rs 150 crore as toll revenue loss due to demonetisation, the company had said in a post-earnings conference call with analysts. Virendra Mhaiskar, chairman and managing director of the company, had said that the NHAI would reimburse interest expense and operation and maintenance revenue loss in cash. The profit and principal amount repayment would be compensated by extending the concession period, he had said. Mhaiskar had said the company would receive full cash reimbursement from the Maharashtra government as part of the concession agreement. When contacted by BloombergQuint, IRB Infrastructure refused to comment on the story. GVK Power and Infrastructure Ltd., however, wants full compensation in cash. The company has claimed about Rs 22.5 crore as total revenue loss during the demonetisation period. Issac George said the government has gone back on its word and has agreed to pay only the operation and maintenance costs instead of the total revenue loss. GVK Power wants more clarity from the government on the compensation, George added. Korbinian Holzer Authentic Jersey