SpiceJet’s mega order: Indian aviation market set to surpass Japan, become 3rd largest
SpiceJet today announced an order for 100 new Boeing 737 Max aircraft for $11 billion at list prices, the second highest aircraft order ever from India. Combined with an earlier order, this means it will receive 155 narrow body jets between 2018 and 2024, besides also having purchase rights for 50 more wide body aircraft from the same manufacturer. The narrow bodies will be used to service the domestic market as well as select international destinations. The wide body fleet of 50 Boeings – when SpiceJet does firm up the order for it – will enable the airline to launch a long haul low cost service like Singapore Airlines’ subsidiary Scoot and Norwegian Air. Anyhow, the new aircraft are 8 percent more economical on a per seat basis and about 20 percent better in fuel efficiency. Chairman and MD Ajay Singh said today the new aircraft will allow the airline to fly for an hour longer, which means new international destinations will anyway be added to its network. As of now, one in four SpiceJet flights or 25 percent of the network flies to international destinations, with 10 daily services to Dubai alone. So why is SpiceJet going out on a limb to place a mega aircraft order which will require mega bucks? Singh said today that the domestic market has been growing at about 25 percent in recent years. “Indian airlines together have about 400 aircraft now, even if we take growth at 20 percent going forward, this means 80 more aircraft are needed each year….as the market grows, appetite for fleet expansion also increases.” Kyzir White Jersey
J&K:Huge power deficit
Will there be a day when we in J&K shall have the luxury of supply of electric power without interruption round the clock and of reasonably good voltage. The answer is mystifying. State’s power deficiency and erratic supply have become proverbial. The Finance Minister in his power budget speech said that investment in various power generating projects has become like water over duck back. There is no death of mind boggling figures brought out by power authorities including the Minister in charge of power pertaining to financial investments made in major as well as minor power projects in the State. One can name at least a dozen of them in line. However, no official in the hierarchal structure of PDD is able to pronounce the time frame of these projects. The only reason given by the Power Department for a big gap between supply and consumption is that either there is pilferage on very wide scale or there is transmission problem. Singing the tune of his predecessors, Dr, Nirmal Singh, the Deputy Chief Minister and In-charge of Power Department, exuded the dream of the State having large scale water resources capable of producing 20,000 MW of hydroelectric power which would not only meet our 24×7 requirement but we would also be left with surplus to sell to other states. It is a soothing dream and there is hardly a person who is not swayed by imaginary prosperity that is going to befall our people in the State. The reality is that we have been able to harness only 3263 Mega Watt till date. This is barely one-sixth of production that we enjoy. We vainly wish that our State so rich in water resources could have the good luck of making this vast resource useful to our people. If previous regimes have not been able to make any headway in this direction, the PDP-BJP coalition, too, has not fared better. We know that this time FM presented separate power budget in the Legislative Assembly and follow up action is promised, yet the bare fact is that he, too, has not been forthcoming on the question of time frame for each project. There may be cogent reasons for not disclosing the time frame but it is this component that is dearer to ordinary consumer. Though he made mention about the plans of tapping 8917 Mega Watts in future by JKSPDC, NHPC, Chenab Valley Power Projects Ltd (CVPPL), which is a joint venture between JKSPDC, NHPC and PTC, in the ratio of 49:49:2, yet he failed to specify any time-frame for the same. He simply mentioned that under State Sector 23 projects with the capacity of 3867 Mega Watts will be constructed and under Joint Venture mode, four projects with the installed capacity of 2714 Mega Watts will be constructed. Similarly, he informed the House that 2 projects with capacity of 1130 Mega Watts, one project with 850 Mega Watts and 34 small projects with installed capacity of 356 Mega Watts have been planned to be constructed. The Deputy Prime Minister, Dr, Nirmal Singh expressed hope that the day was not far away when the State would become self sufficient in power because, as he said, big and small projects for gendering units were in the process of completion. It is true that many projects are in the process the point is when would these be available for use. Indefinite delay dampens the spirit and escalates construction cost. PDD’s lethargic in regard to harnessing solar power, too, has biome a joke of the day. The Minister In-charge Power also admitted failure of the Government to tap solar power potential, which has been assessed at 111 GW by the National Institute of Solar Energy. Inability of the Government to avail benefit of available solar power was exclusively highlighted by EXCELSIOR in its edition dated December 17, 2016. Great media hype was given to Leh as having considerable potential for the use of solar energy but when the cost of generating solar power was found to be exorbitant, the plan was put in cold store. Now, according to the statement of the Minister given on the floor of the House, the State PDD is approaching the Union Ministry of Renewable Energy for support in production of solar power in the State. The hard fact is that harnessing of solar energy in our State seems to be a distant dream and that is not going to give the people any consolation. The Minister has no alternative but to impress upon the PDD that expediting power generation capacity is the only and most important activity that must be pursued and brought to its logical conclusion. Derrick Henry Authentic Jersey
Odhisa:State Govt forced to buy costly central sector power
Even after repeated request to deallocate its share of power from NTPC’s Barh Super Thermal Power Station in Bihar, the cash-starved Grid Corporation of Odisha Limited (Gridco) is forced to buy costly power from central sector. While the average cost of power from the central thermal power stations (Odisha’s share) is estimated at Rs 4.38 per unit, power from Barh STPS-II will cost Rs 6.36 per unit. Tariff of central generating power stations are fixed by the Central Electricity Regulatory Commission (CERC). With the state’s share of 14.79 percent from the two units of Barh-II with an installed capacity of 1320 MW (2X660MW), Gridco will draw 1105.83 million unit (with central sector loss of 1.98 percent) during 2017-18. The total cost of power has been estimated at Rs 704.30 crore. The state government has been requesting the Ministry of Power (MoP) from 2012 for de-allocation of power from NTPC stations outside the Odisha including the Barh-II STPS. The MoP notified on August 31, 2015 for surrendering of the allocated power by different States including Odisha and sought willingness from other States to avail such surrendered power. “The proposed de-allocation in favour of Odisha is yet to take effect as no alternative buyer has offered willingness to purchase the power from Barh-II. Power from the NTPC plan is being thrust upon Gridio in spite of any requisition from Gridco to draw power from the two units,” sources in Gridco said. The state trading utility Gridco has projected the energy availability from Barh STPS-II of NTPC as per the share allocation in favour of Odisha in its annual revenue requirement (ARR) application for 2017-18 financial year. This is bound to increase the power tariff in the state as Gridco will pass on the high tariff to consumers, the sources said. Earlier, the Ministry of Power had de-allocated 155 MW from New Nabinagar STPP in Bihar last year following request from the State Government. The state’s share has been asllocated to Uttar Pradesh. Gridco has projected power procurement of 7371.37 million unit at estimated cost of Rs 3227.39 crore from central sector thermal generating station for the ensuing financial year.
Not enough investment in renewables: IRENA
Money invested in renewable energy is not enough to reach a climate goal of limiting global warming to 2.0 degrees Celsius, an Abu Dhabi-based green energy organisation said Sunday. Investment in renewables has increased dramatically in the last decade, but “the rate of growth is not sufficient yet to meet the climate goals”, Adnan Amin, the head of renewable energy agency IRENA said. His comments come less than a week before the inauguration of US President-elect Donald Trump, a climate sceptic who has promised to “cancel” a 196-nation deal to curb global warming. The landmark climate pact signed in December 2015 sets the goal of limiting average global warming to 2.0 degrees Celsius (3.6 degrees Fahrenheit) over pre-Industrial Revolution levels, by cutting greenhouse gases from burning fossil fuels. Countries, including the United States, have pledged to curb emissions under the deal by shifting to renewable energy sources. But a recent IRENA report said the current share of renewable energies in the global energy mix of 18 percent should double by 2030 to keep global warming under 2.0 degrees. To achieve this, “investments must be scaled up from some $305 billion in 2015, to an average of $900 billion per year between 2016 and 2030,” Amin said at the agency’s annual conference. Renewable energies have become drastically cheaper thanks to recent developments in technology, he said, allowing them to become a “preferred solution”, even despite a decline in fossil fuel prices. The IRENA report said solar panels “costs — now half of what they were in 2010 — could fall by another 60 percent over the next decade”. “Off-grid renewables provide electricity to an estimated 90 million people worldwide,” it added. Jakub Kindl Womens Jersey
Surplus power in India: Now heavy users to pay lower tariffs
Major reforms of power tariffs are on the horizon as an official committee has recommended lower tariffs for heavy users to encourage electricity consumption as the country moves from a deficit to surplus situation. In India, power consumers have always been paying higher bills for higher consumption. Slabs are fixed and if you fall in the higher consumption range, you pay more. It’s time the country doles out incentives for high power consumption, a committee constituted to advise the government on ways to increase electricity demand has said. “The present tariff structure has been designed for power shortage scenario in states and has not been changed since Independence. Since India has excess electricity generation capacity now, the existing framework needs to be changed to address the capacity generation glut,” said a member of the committee constituted by the power ministry in September last year to suggest innovative schemes for raising power demand. The committee comprises of chairman of the Central Electricity Authority, secretary of the Central Electricity Regulatory Commission (CERC), president of industry body Ficci, energy secretaries of Bihar and Tamil Nadu and principal energy secretaries of Madhya Pradesh, Gujarat and Uttar Pradesh. The committee is in the process of finalising its report and is likely to present it to the power ministry by January-end. The official said the committee is of the view that to boost electricity demand, rebates and incentives in electricity bills be extended to consumers. The state electricity regulatory commissions should revise the tariff design for all consumers, particularly industry, commercial and service sectors, the official said. Presently, consumers are penalised by way of higher tariffs for higher consumption. The committee also opines in the draft report that more states can offer power at lower rates to industries during night and off-peak hours. Such system of differential tariff is in place in some states and Madhya Pradesh has seen increase in power consumption. The committee has also explored other short term and long term options for enhancing power consumption. These include promoting manufacturing under Make in India through electricity assurance, encouraging use of electric vehicles and electric equipment in construction activities. ET on December 25 reported that the government planned to introduce a new tariff structure to charge more from large domestic power consumers rather than industrial units that currently share the cross subsidy burden. Most states categorise households consuming more than 800 units of power a month as large domestic consumers. Kroy Biermann Authentic Jersey
25 States Fail to Meet Solar Capacity Target This Fiscal
With six years left for India to achieve its goal of generating 100 GW of electricity from solar projects, 25 states have fallen short of adding capacity by some 2,000 MW so far in 2016-17. The biggest laggards are Maharashtra, Uttar Pradesh, Haryana, Jharkhand, Odisha, J&K and West Bengal, each of them missing the mark by more than 100 MW. In terms of renewable power purchase obligations during 2015-16, only Andaman & Nicobar Islands, Meghalaya, Karnataka, Nagaland, Himachal Pradesh and Andhra Pradesh exceeded their targets, according to the government. Tamil Nadu, Maharashtra, Rajasthan, Gujarat, Haryana, Madhya Pradesh, Chhattisgarh and Punjab managed to meet about 60% of their obligation. The remainder achieved up to 59% of their targets, with Manipur and Goa not meeting any. “Considering the actual renewable purchase obligation level specified by the state electricity regulatory commissions for the year 2016-17, it is estimated that 25 states/UTs require over 2,030 MW solar power capacity to fulfil the solar purchase obligation,” the Ministry of New & Renewable Energy said in a recent document. Similarly, it is estimated that 22 states and UTs require over 9,080 MW of non-solar power capacity to fulfil their obligations to purchase energy from other renewable sources. Promotion of renewable generation sources has now been added as an objective of the new tariff policy. The policy has provisions such as 8% solar purchase obligations by 2022 and renewable energy generation obligation on new coal/lignite-based thermal plants. Fully depreciated power plants whose purchase obligations have expired can now bundle their output with renewable energy. Renewable energy has also been exempted from inter-state transmission charges. Jon Halapio Authentic Jersey
US reservoir evaluation firm puts gas reserves in Deen Dayal West field at about 1trillion cubic ft
Oil & Natural Gas Corporation, India’s biggest energy exploration company, has invested about $1 billion to operate what could turn out to be the toughest field on its hands, where the reserves have been drastically scaled down and the potential output is pegged lower than the initial estimates. ONGC acquired an 80 per cent stake held by Gujarat State Petroleum Corp (GSPC) in the Deen Dayal West field and six other areas in the Krishna Godavari Basin off the country’s east coast, the state-owned explorer said on December 23. While the company said the acquisition of operatorship rights in the block “fits well with the strategy of ONGC to enhance natural gas production from domestic fields” at a faster pace, there are indications that the field was not a viable option. ET has followed the at-times tense negotiations between the two companies over the past few months. Now, there is evidence that the road ahead for ONGC will indeed be difficult and at variance with the lofty claims that have been made. The challenge for ONGC lies in the findings by Ryder Scott Petroleum Consultants, a Houston-based reservoir evaluation firm hired to certify the hydrocarbons present and recoverable in the KG-OSN-2001/3 block. In a 100-page report submitted in November, Ryder Scott placed the gas reserves in the Deen Dayal West field at about 1 trillion cubic feet (tcf), a top official with direct knowledge of the matter told ET. One tcf of natural gas is enough to heat 15 million US homes for one year or generate 100 billion units of electricity. “Initially, we were told by GSPC that gas reserves were around 14 tcf, then asked to work around 7 tcf. There is now an indication that around 1 tcf of gas present in KG-OSN-2001/3 block,” the official said, requesting anonymity. Still, the gas may not be easy to recover as it is a difficult field, with extremely high temperature and pressure, the official said. “We have done due diligence for this deal,” AK Dwivedi, Director (Exploration) at ONGC, said after the board approved the acquisition. “We worked around reserves of 1.05 tcf and did due diligence around that. These were our estimates also.” According to senior ONGC officials, Ryder Scott has also projected a gas recovery rate of about 19 per cent, against ONGC’s estimate of about 24 per cent. GSPC defended the deal, saying the field holds potential that ONGC is capable of exploiting. “Yes, I know that it is a high temperature field, but with potentiality and gas recovery is possible with technique of hydro fracking. We have done that in adjoining field D4,” said JN Singh, Managing Director of GSPC. “This is a fair deal for both ONGC and GSPC. Our infrastructure only is worth about .Rs 8,000-9,000 crore with undersea pipelines and onshore infrastructure. ONGC has the technical expertise and financial muscle, which we lack.” However, GSPC wasn’t able to start commercial gas production at the field even after investing over $3 billion and amassing Rs 20,000 crore of debt. The road to the deal was a rocky one. ONGC will pay $995 million for the 80 per cent stake and operatorship rights for the field in KG-OSN-2001/3 block and $200 million for the six other discoveries. Both ONGC and GSPC had differences over the quantity of reserves in the block, the amount of capital and the operating expenditure needed, prices for gas and condensate from the block and the discount rate to calculate the net asset value, according to official sources. According to Singh of GSPC, who spoke to ET in October, the differences between the companies would be resolved because both “are government bodies.” Top ONGC and GSPC officials confirmed to ET that meetings were held with petroleum ministry officials in December to work out the modalities of the deal. The main worries were the volume of gas reserves and the viability of the field, even as GSPC maintained that ONGC had the technical capability to develop the asset. “We shared our concerns that gas reserves are less than 2 tcf against claims of 14 tcf – that also very difficult to recover. That it is not an economically viable option for us,” according to an ONGC official familiar with the developments in the deal. T Natarajan, joint managing director of GSPC, said, “ONGC has the capability and resources to develop DDW field. They have also done their internal study.” Jake Rudock Jersey
Petrobangla moves to sign deal soon
The government has moved afresh to initiate a deal with Qatar’s Ras Gas to import expensive LNG six years after inking a MoU, said sources. A high-level government team is expected to visit Qatar within this month to discuss elaborately on issues regarding the quantity of liquefied natural gas (LNG) to be imported from Qatar and its pricing, LNG Cell Chief of Petrobangla Md Quamruzzaman told the FE Saturday. State-run Petrobangla earlier had inked a memorandum of understanding (MoU) with Qatar in January 2011 to import around 4.0 million tonnes of LNG annually. It later extended the deadline of the MoU twice due to delaying of works to build LNG import terminal. Petrobangla inked a ‘confidentiality’ deal with Qatar’s Ras Gas in Doha in October 2015 to facilitate import of LNG. Inking the initial agreement would be a follow-up deal after signing of the ‘confidentiality deal, said Petrobangla official. Officials said, Petrobangla has now been ‘liberal’ to award deals to private sector for building LNG terminals under Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010 bypassing competitive tendering process. Petrobangla, also known as Bangladesh Oil, Gas and Mineral Corporation, inked the first final deal with US-based Excelerate Energy Bangladesh Ltd for construction of the South Asian country’s first LNG terminal – a FSRU (floating, storage and re-gasification unit) – at Moheshkhali island in the Bay of Bengal on July 18, 2016. Excelerate is now working to implement the project having the LNG import handling capacity of up to 700 million cubic feet per day (mmcfd), said Mr Quamruzzaman. It later inked a MoU on December 29, 2016 with India’s Petronet to build another LNG import terminal at Kutubdia island having a capacity to handle around 1,000 mmcfd of imported LNG. Petrobangla again initiated a deal with Summit LNG Terminal Company Pvt Ltd on January 4, 2017 to build another FSRU at Moheshkhali island having the capacity to handle around 500 mmcfd of gas. It has now moved to sign another deal with Indian Reliance to build another LNG terminal at Moheshkhali island, said a senior Petrobangla official. State-run Power Cell has also planned separately to build a LNG terminal in the same area at Moheshkhali, said officials. Under the deals, Petrobangla would have to pay charges and fees to the LNG terminal builders even if it does not import LNG through the terminals, said Petrobangla sources. Excelerate would charge around US$0.59 per unit (1,000 cubic feet) of natural gas as service charge and costs for tag boat operation, port facility etc. Costs for Petronet, Summit and Reliance are almost similar to that of Excelerate. Petrobangla has estimated that the government would have to spend around $1.57 billion annually to import LNG only through the terminal to be built by Excelerate at an estimated cost for LNG at US$8 perMcf. Bangladesh is now reeling under acute natural gas crisis with daily average output of around 2,700 mmcfd of gas against the demand for over 3,300 mmcfd, according to Petrobangla. The country started facing natural gas crisis from 2009 with rapid industrialisation forcing Petrobangla to ration natural gas supplies to gas-guzzling industries, power plants, CNG (compressed natural gas) filling stations and households. Micah Hyde Authentic Jersey
Turkmenistan sets up company for TAPI project financing
Turkmenistan has established a company for financing Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project and allocated US $2 billion from its own resources to implement the project, which will be completed by end-2019 to export gas to Kabul, Islamabad and New Delhi. The four nations as part of the gas pipeline project had already registered the company in November 2014 in which Afghanistan, Pakistan and India would have five percent shareholding each and the remaining 85 percent stake would be held by Turkmenistan. The investment agreement pertains to five percent shareholding of each of the three gas-importing countries, which means an initial investment of around $200 million. The National Assembly”s Standing Committee on Petroleum and Natural Resources in its last meeting expressed serious reservations over Pakistan government” imposition of a levy for financing of the project. The committee members argued that there was no need to imposition of levy, when 85 percent stake was held by Turkmenistan. Sources said there were two types of investment in Tapi project as $15 billion for developing field. This project had been awarded to Japanese companies that were working to extract gas against service fee and they would not become shareholders in gas field. Other portion was the pipeline project, which requires pipeline material and compressors as well as around $10 billion fund to lay pipeline. Earlier, Asian Development Bank (ADB) was playing role of transaction advisor. Therefore, it had expressed inability to join this project as financier due to conflict of interest being transaction advisor. However, it had surrendered its role as transaction advisor now and offered $1 billion to finance this project. The ADB is being dominated by Japan and the bank made offer of financing after Japanese companies” consortium won contract of developing gas field in Turkmenistan from where gas is to be supplied to Pakistan, Afghanistan and India under the Tapi pipeline project. Islamic Development Bank (IDB) dominated by Saudi Arabia had also offered $500 million to finance Tapi pipeline project. The Tapi Company is to achieve financial close of the project by end of this year. Sources said security survey in Afghanistan work completed, adding the mine swiping work had been initiated. Turkmenistan will invest around $25 billion to deliver 3.2 billion cubic feet of gas per day (BCFD) to energy-hungry Afghanistan, Pakistan and India by December 2019, which will continue for 25 years. A gas sale and purchase agreement had already been signed in 2013 to set the pricing mechanism, under which the gas price at Turkmenistan border would be around 20 percent cheaper than Brent crude. Pakistan and India will receive 1.325bcfd of gas each, while Afghanistan will get 500mmcfd. Slater Koekkoek Authentic Jersey
2,288 tons of diesel arriving from India
Bangladesh Petroleum Corporation (BPC) is paying $5.5 per barrel to the Indian supplier while other international suppliers charge $4. BPC Chairman Abu Hena Md Rahmatul Muneem told the Dhaka Tribune: “The deal is a part of a cooperation plan between the two neighbours. “The diesel shipment will arrive by rail on Sunday.” The purchase of 2,288 tonnes of diesel was confirmed in late 2015, ahead of another 2,200 tonnes of diesel shipment in 2016. The deal was made between BPC and Numaligarh Refinery Ltd (NRL), a subsidiary of Indian state-owned Bharat Petroleum Corporation. Forty coaches will ship the fuel from Siliguri to Parbatipur in Dinajpur – a 516km journey over three days, beginning on January 12 and arriving on January 15. The previous shipment in March 2016 had Bangladesh pay $7 per barrel for the 2,200 tonnes of diesel purchased from NRL. Officials said the price has come down from $7 to $5.5 per barrel this time because of the fall in international market prices. The costs of fuel transportation and the loss from evaporation will be covered from the premium. Tom Kuhnhackl Womens Jersey