InfralinePlus Oct12

October 2012 Volume 1 | Issue 6 | `100 www.InfralinePlus.
com
THE COMPLETE ENERGY SECTOR MAGAZINE FOR POLICY AND DECISION MAKERS
Reforms
ENERGISED
...summer of
discontent for discoms over
Oil reforms
Its economics over politics, at last
SPECI
ITI AL ED
ON
Left to Right: Sonia Gandhi, Manmohan Singh, P Chidambaram, S Jaipal Reddy, M Veerappa Moily, Shriprakash Jaiswal
PM and his team is back on the wheel as Reform-II gains momentum
IN CHARGE
Gregoire Poux-Guillaume, President, Alstom Grid talks of reasons behind grid failure
Coal India Chairman S. Narsing Rao rues that environmental clearance is holding up projects
ONGC Chairman Sudhir Vasudeva explains why the interest of foreign rms in NELP is on the wane
Ramesh Narayanan, CEOBSES Yamuna Power extolls the virtues of solar water pumps
INDIA'S 2ND LARGEST SINGLE LOCATION REFINERY
Vadinar, Gujarat
Refinery capacity 20 MMTPA , ~ 10% of India's refining capacity Amongst the most complex refineries in the world with 11.8 complexity Producing Euro IV and Euro V emission compliant fuels Over 1,400 Essar branded fuel retail outlets across the nation Largest CBM player in India with an acreage of over 2,700 sq kms
InfralinePlus
THE COMPLETE ENERGy SECTOR MAGAZINE FOR POLICy AND DECISION MAKERS
October 2012 | Volume 1 | Issue 6
Editors Letter
As the grand gestures of reforms go, September 2012 was probably not as seminal as July 1991. But the spirit behind both was the same, as was the chief architect--Manmohan Singh. As finance minister then and Prime Minister now, he was forced, virtually cornered, into taking actionsome action at least before the train of the economy which had hitherto been hurtling at good enough speed, if not top speed, came to a crashing halt. Interestingly, the last-minute push to move forward on both the occasions came not from within the country, but outside. At that time it was the International Monetary Fund (IMF) which tied a lot of conditions to bailing the government out of a balance of payments crisis. This time it was the combined condemnation by several international agencies including S&P , Fitch, Moodys and Morgan Stanley, and the downgrades which they accorded to India on its credit rating and GDP growth, which prompted the government to take action. Containing fuel subsidies at `43,000 crore and capping fiscal deficit at 5.1 per cent had been part of Budget proposals this year but nothing had been done to covert this intent into reality. Criticised from all sides, first on the telecom scam, then on the issue of growing corruption, then on the coal scam, a hapless government seems to have seized the opportunity to take some reformative actions. In one fell swoop, subsidy on diesel was cut by `5 which translated into a highest-ever increase in the price of this fuel of the aam aadmi. Supply of subsidized LPG cylinders was also capped and a debt restructuring package offered to state electricity boards. Our cover package analyses the pros and cons of the government announcement. In this issue we also bring you the interviews of ONGCs Chairmancum-Managing Director Sudhir Vasudev and GAILs Chairman-cumManaging Director BC Tripathi, among many others. Plus, read how islanding can help secure vital areas in case of power failure and the way fuel prices are burning the bottomlines of airlines. We are happy to be print partners for Petrotech 2012the mecca for oil and gas majors. Hope our readers enjoy this special issue as much as we enjoyed putting it together. Do write to us with your feedback and comments. We value your suggestions. Truely.
Editorial
Shashi Garg, Editor Alok Sharma, Assistant editor Pallavi Chakravorty, Assistant Chief-sub editor Neeraj Dhankher, Principal Correspondent Priyanka Singh, Senior Correspondent Analyst Richa Gautam News Team Pankaj Bhagat Shivangie Shrivastava Ankit Bhatnagar Design Team Gopal Thakur, Art Director
Registered Ofce
14th Floor, Atmaram House, 1, Tolstoy Road, New Delhi - 110001 Tel.: +91 11 46250000 Email: business@infraline.com
Branch Ofces
Noida
A-31, Sector 3, Noida Tel.:+91 120 3800000
Mumbai
Off No - D 513, 5th Floor, Floral deck Plaza Premises. CLS, Central MIDC RD, Opp SEEPZ, Andheri-E, Mumbai - 400 093 Keyur: 098205 40508
Place of Publication
Form IV 14-D, Atmaram House, 1, Tolstoy Road New Delhi - 110001
Periodicity of its Publication: Monthly Printers Name: Mrs Shashi Garg Nationality Indian Address Publishers Name Nationality Address Editors Name Nationality Address 14-D, Atmaram House, 1, Tolstoy Road New Delhi - 110001 Mrs Shashi Garg Indian 14-D, Atmaram House, 1, Tolstoy Road New Delhi - 110001 Mrs Shashi Garg Indian 14-D, Atmaram House, 1, Tolstoy Road New Delhi - 110001 M/s. Nutech Photolithographers B-240, Okhla Industrial Area, Phase-I New Delhi -110020
SHASHI GARG Managing Director and Editor InfralineEnergy Research and Information Services
For Advertisement and Subscription Please contact: Deepshikha Verma Tel.: +91 11 4625 0055 (D) | Mobile: +91 98997 52482 Email: deepshikha.verma@infraline.com Rakesh Ranjan Tel.: +91 11 4625 0078 (D) | Mobile: +91 99588 48386 Email: rakesh.ranjan@infraline.com
Printed at Address
Name and address of individuals who own the newspaper and partners or shareholders holding more than one percent of the total capital Owner: M/s Infraline Technologies (India) Private Limited, 14-D, Atmaram House, 1, Tolstoy Road, New Delhi - 110001 Shareholders holding more than one percent of total Capital of the owner Company 1. Mrs Shashi Garg, 60, Siddhartha Enclave, New Delhi-110014 2. Abhav Garg, 60, Siddhartha Enclave, New Delhi-110014 I Shashi Garg hereby declare that the Particulars given above are true to the best of my knowledge and belief. Sd Mrs Shashi Garg Signature of the Publisher
October 2012 www.InfralinePlus.com
Contents
Editors Letter
InfralinePlus
Cover Story
Oil and Gas
News Brief In Depth: Swapping of domestic gas with imported LNG would soon be reality In Conversation: GAIL, Chairman and MD, BC Tripathi In Depth: Shale gas policy draft riddled with loopholes
4
p4 p6 p8 p10 p14 p18 p20 p23 p28
38
Cover Package
Check Mate
In Conversation: Managing Director, ONGC Videsh Ltd, DK Sarraf Expert Speak: AK Arora, Additional Directorate, Oil Industry Safety Directorate In Conversation: BPCL Chairman and MD, RK Singh
38
Expert Speak: Shishir Priyadarshi, Director, World Trade Organisation Statistics Topics Covered: Shale Gas Gas swapping Oil & LPG reforms Gas grid
Government tries to rectify past, takes steps to rationalize oil and LPG subsidies p38
In Depth: Cut in diesel subsidy and rise in LPG prices upset people but Sensex soars p40
In Depth: Efficacy of bailout package for discoms remains unclear in the absence of clear-cut reforms p43 In Depth: Government advised/warned to frame policies sans any gaps p45 In Conversation: ONGC Chairman Sudhir Vasudeva p47
Expert Speak: Mukesh Anand, Assistant Professor, National Institute of Public Finance and Policy p51 Expert Speak: Anil Razdan, Former Secretary, Ministry of Power p53
Expert Speak: Alok Kumar, Former Director, Ministry of Power and Sushanta K. Chatterjee, Deputy Chief (Regulatory Affairs), CERC p55
Power
News Brief In Conversation: President of Alstom Grid, Gregoire Poux-Guillaume In Depth: Islanding is essential but still a long way to go In Conversation: CMD, Power Trading Corporation of India, Tantra Narayan Thakur Statistics
57
p57 p58 p60 p63 p66
Renewable
News Brief In Depth: BSES yamuna Reaps benefits with solar water pumps In Conversation: Director-Technical Support, Cerebra, Gururaja K. Upadhya Statistics
68
p68 p69 p72 p76
Topics Covered: Grid safety Transmission infrastructure Power trading Discoms financial restructuring
Topics Covered: Energy-efficient products E-waste handling Biomass power Solar and wind projects
3
Coal
News Brief Expert Speak: CMD, Coal India, S. Narsing Rao Statistics Topics Covered: Coal block deallocation Advance Mining Technology Coal Imports Washeries
30
p30 p32 p34
Plus - Photo Essay

A pictorial ride through ONGCs various projects
78
78
25
Offbeat
Aviation sector falls flat as ATF prices touches the roof
NewsBriefs | Oil & Gas

Overseas investment Oil India eyes foreign assets Oil India Ltd is planning an overseas investment arm on the lines of ONGC Videsh Ltd. OIL will soon be going to its board for appropriate approvals for the proposed OIL International. The company plans to get aggressive on acquiring overseas assets. The move comes close on the heels of the recent diktat to public sector undertakings from the Finance Minister, to make investments in India and abroad. Brazilian Discovery BPCL to drill nine wells Bharat Petroleum Corporation (BPCL) plans to drill around nine wells in its upstream discoveries in Brazil in line with its Mozambique discovery. The oil refiner plans to invest around `10,500 crore in next four to five years in exploration business, in its portfolio of 28 blocks across India, Africa, Brazil, Indonesia, Australia and the UK. The company is gung ho about the Brazilian prospects where it holds four blocks. Capacity Expansion BPCL to invest `45,000 crore BPCL plans to invest about `45,000 crore in the next four to five years to expand its refinery capacity and upstream operations. The company is riding high on its discovery in Mozambique and plans to monetise the gas finds by proposing to set up two LNG plant of 5 mtpa capacity each. Also on the anvil is its Integrated Refinery Expansion Project and diversification into the petrochemical sector. Oil & Gas Pipelines India offers expertise to ASEAN Minister of state for petroleum & natural gas RPN Singh offered to share Indias expertise in laying oil and gas pipelines and power transmission lines with ASEAN countries at his ministerial address in Cambodia. Singh also discussed investment opportunities with energy ministers of Malaysia, Brunei, Myanmar and Indonesia on the sidelines of the 30th ASEAN Energy Ministers on Energy Meeting. ONGC blueprint 2030 Plan to double production in 18 years State-owned Oil and Natural Gas Corp (ONGC) under its blueprint for the next 18 years, plans to pump in around Rs11 lakh crore by 2030 and double its production. ONGC Chairman and Managing Director (CMD) Sudhir Vasudeva informed that under the Perspective Plan 2030 of the company, they aim to at doubling production over the next 18 years at 4-5 per cent annual production growth rate. TAPI project Tremendous response from IFIs The TurkmenistanAfghanistan-PakistanIndia (TAPI) Gas Pipeline Project has received tremendous positive response from multinational and financial institutions. TAPI aims to export up to 33 billion cubic metres bcm) of natural gas per year through a proposed approximately 1,800-kilometre pipeline from Turkmenistan to Afghanistan, Pakistan and India. OIL - Third Indian company To make a play for US shale Oil India is set to aquire shale assets in the US. The company is in talks with Carrizo Oil & Gas to acquire stake in Niobrara Shale in North Eastern Colorado. The company is in advanced stage of discussions and will be announcing the deal soon. Since US shale gas prices are dipping, thanks to an uptick in production, the price at which Oil India enters will be crucial. Carrizo is in discussions with a number of companies. Reliance Industries, BP To surrender two more blocks Reliance Industries and its partner BP plan to surrender two more exploration blocks, reducing their tally to 14 from 21 a year ago, when the government approved the British oil majors $7.2-billion deal to pick up stakes in Reliances blocks, government and industry sources said. RILs exploration & production (E&P) portfolio is said to be shrunken to almost half from 29 in February 2011, when it announced the deal with BP . O&G exploration blocks On borders with neighbours India is making all out efforts to get a toehold in most oil and gas exploration blocks on borders with Sri Lanka and Myanmar. India has begun parleys with top officials of these countries to get allotment of these blocks on nomination basis. The ministry of external affairs and the ambassadors in these countries have been giving inputs on E&P blocks in neighbouring countries. Attempt to boost production RIL to drill a new gas well Reliance Industries plans to drill one gas well and convert two sick oil wells into gas wells on the MA oilfield in the predominately gas-rich KG-D6 block as part of its attempts to boost gas production. RIL and its partner BP Plc of UK submitted a Revised Field Development Plan for MA oilfield .The revised plan envisages drilling of a new gas well and conversion of two sick (or closed) oil wells to gas wells.
Oil block development PDVSA-RIL join hands Venezuela will partner with Reliance Industries to develop a block in its heavy crude belt. Venezuelas state oil company PDVSA had agreed to increase the amount of oil it sends to Reliance to 300,000 barrel-per-day, rising to 400,000 bpd, under a 15-year contract. The Venezuelan govt is pinning its hopes for its oil industry on a string of ambitious projects to develop the Orinoco belt. Diversification and Integration IOCL to invest `560 bn in 12th Plan Indian Oil Corporation plans to invest `56,000 crore during the current five-year plan. While over a quarter of the funds will be earmarked for diversification and integration, the rest would be used on its core business. The corporation has been pursuing with the government in this regard and it is expected that in the interim the government will continue to provide 100 per cent compensation.
InDepth
Swapping of domestic gas with imported LNG to become official

Cost differential between domestic gas and imported LNG to be borne by new customer Move to help fuel-starved units which do not have infrastructure to ship imported gas
by Neeraj Dhankher
What began as a piece-meal and temporary measure is soon going to become a regular feature of the India gas market. The Petroleum Ministry is about to come out with a set of guidelines on Gas Swapping to make the process smoother and efficient. Under the swapping mechanism, industrial units, which have not been allocated gas, will have the freedom to use domestic natural gas allocated to another consumer if they can replace it with imported LNG. The cost differential between domestic gas and
imported LNG, along with any other additional cost, would be borne by the new customer. The move will help fuel-starved units which do not have the infrastructure to ship imported gas to their plants. According to Ashok Khurana, Director General, Association of Power Producers (APP), Gas swapping is a rational decision as it reduces transportation cost and all parties stand to gain by it. Similarly, Harry Dhaul, Director General, Independent Power Producers
Association of India (IPPAI), feels, gas swapping is viable, both conceptually and practically. What other alternative do you have to meet demand of power sector? It is very good that ministry is taking a proactive position on this.
A timely move
A self-regulated swapping mechanism is the need of the hour in the wake of a significant fall in gas production from Reliances D-6 block in the Krishna Godavari basin. In such a scenario, domestic gas allocations of various
consumers have been either stopped or significantly reduced. As an alternative, some consumers are willing to pay more for LNG but are not able to do so due to lack of access. Domestic gas works out to be three to four times cheaper than the imported gas, which costs around $16-17 per MMBTU in spot market. The policy directs gas suppliers, consumers and transporters to cooperate in arriving at a cost-effective swap arrangement.
Situation thus far

In recent times, the Petroleum Ministry has permitted swapping involving KGD6 gas based on special dispensations by individual entities. Swapping has been permitted in case of Independent Power Producers in Andhra Pradesh during fuel shortage to propel power production. Even the City Gas Distribution company, Bhagyanagar Gas Limited has been allowed to swap D-6 gas with LNG to meet requirements of its PNG and CNG customers in the city of Shamirpet in Andhra Pradesh.
result, the transporters cannot levy transportation tariff twice. Another aspect which needs to be borne in mind is the applicability of tax to swap arrangements whether central sales tax or the local Value Added Tax. There have been instances in the past when some RLNG was swapped attracted double taxation owing to lack of clarity on the applicability of taxes. According to Ashok Khurana of APP, For rationalization of gas swapping, first step is to provide gas a declared goods status. That will remove tax differential in gas in different states. Thereafter, swapping would help to rationalize pricing.
Issues and challenges

Gas swapping arrangement, however, is not simple. There are multiplicities of issues raised by various parties involved. For one, gas transporters such as GAIL, Reliance Gas Transportation Infrastructure Ltd (RGTIL) and GSPC have cited operational issues which need to be addressed before implementing gas swapping. GAIL has also expressed qualms over signing a joint self-certification by all parties involved in the swapping arrangement. Instead, the gas major feels that the nodal party implementing the finalised arrangement may be asked to submit a confirmation to the petroleum ministry on behalf of all the parties involved. Then there are concerns over tariff to be charged by the transporters since the transportation tariff is calculated on the contractual agreement between a transmission company and a buyer and not on the source of gas. As a
Gas pooling is more important than gas swapping. Today we have less quantity of gas due to which power plants cannot operate at optimum capacity. Through pooling we can take advantage of cheaper gas.
Experts have also questioned the fact that is the Indian gas market mature enough to accommodate innovations such as gas swapping? It has been argued that the current tax structure in the country is not conducive and cost effective for entities engaged in swapping arrangement for natural gas. The Petroleum and Natural Gas Regulatory Board (PNGRB), for one, is learnt to have claimed that the market for swapping is still nascent since transporters are yet to be completely unbundled. In such a scenario, there is an increasing risk that the higher costs for the entities will be passed on to the customers. Therefore, according to PNGRB, it is imperative to keep a close tab on swapping arrangement till the time the market is fully ripe and tax
anomalies are rectified. Harry Dhaul of IPPAI, however, feels that the Indian gas market is mature enough for gas swapping to take place. Swapping is like a bank where you transfer gas from one account to another. It can be done so long as there is a buyer and seller on both sides. It is for the government to ensure a favourable environment for gas swapping. Another issue which seems to have escaped the attention of policy makers is the Gross Calorific Value (GCV) of gas. Experts have argued that it is the GCV which indicates the actual supply and not allocated volumes -- which should be the determining factor while calculating quantity of gas swapped. Not only are there different GCVs for domestic and imported gas, GCVs also differ for different categories of domestic gas.
Needed -- gas pooling

With depleting production from KG D6 fields, gas for power generation has become scarce. It is estimated that existing power plants would operate at about 40% Plant Load Factor (PLF) by March 2013. In addition, about 8,770 MW of new power plants are in various stages of commissioning. Investments of about `36,000 crore are committed, and need to be protected. In this regard, swapping mechanism can be employed as a vehicle to promote gas pooling. According to Khurana of APP, Gas pooling is more important than gas swapping. Today we have less quantity of gas due to which power plants cannot operate at optimum capacity. So through pooling we can take advantage of cheaper gas. Swapping of gas alone will not be able to provide adequate gas for gas-based power developers. The operational issues, transportation tariff and pooling of gas need to be addressed in order to successfully implement gas swapping scheme.
7
For suggestions email at feedback@infraline.com
InConversation
National gas grid will soon become a reality

Steering a gas distribution company of the size and magnitude of GAIL is not an easy task. Being a public sector undertaking, not only has GAIL been vested with the responsibility of transporting gas to various parts of the country to meet the goal of energy security, it is also required to stay competitive so as to be answerable to its stakeholders. GAILs Chairman & Managing Director, B.C. Tripathi, talks to Neeraj Dhankher on some key issues facing the gas PSU. Excerpts:
already been signed between the buyer and the seller. Once the consortium leader is finalized to implement the TAPI project, host government agreement amongst others will be signed which will expedite the process of project implementation. The Gas Sales and Purchase Agreement (GSPA) for Turkmenistan-AfghanistanPakistan-India (TAPI) pipeline has been signed, but a lot of thorny issues still remain. Do you think the project will become a reality? We believe the TAPI project will become a reality. Road shows that took place recently in Singapore, New York and London, have received encouraging response from 14 potential partners, including seven international oil companies for potential consortium leaders and another seven from financial institutions. This will culminate in selection of an implementation partner. The Inter-Government Agreement and the gas pipeline framework agreement signed by each of the participating countries is already in place. GSPA has Do you think the idea of pooling RLNG with domestic gas for the power sector is a workable one? What will be GAILs role in this regard? The concept of pooling of RLNG with domestic gas is aimed at enhancing the affordability and availability of gas for prospective customers. The applicability of pooling to specific sectors and its benefits will depend on the pooling mechanism to be followed and government policy in this regard. GAIL being the leading natural gas marketer, can facilitate successful implementation of the pooling mechanism. In case of power sector, pooling will facilitate level playing field for new power plants and encourage creation of new power generation capacity based on this lowcarbon and efficient fuel. Further it will encourage distributed power production across country resulting in avoidance of grid /power failures such as the one witnessed in recent past. What is GAILs stand on gas swapping? What are your suggestions to make the swapping mechanism smoother? GAIL has played a pioneering role in seeding and developing gas market in the country through various measures, and gas swapping is one of them. Gas swapping can help in meeting the requirements of prospective customers not connected to gas sources/trunklines. However, the swapping arrangement needs to ensure that the gas reaches prospective customers in a cost effective manner. A customer friendly Tax / VAT regime will further enhance the effectiveness of swapping. GAIL has already put in place gas swapping to meet the requirements of customers in the state of Andhra Pradesh. What is the status of the proposal to set up a national gas grid? How is the proposal likely to benet
the country and what are the major challenges? The concept of a national gas grid was mooted by GAIL to connect various demand centres with different gas supply sources. Wider trunk line connectivity across the country is beneficial for developing planned usage of gas and new market development. At present, pipeline infrastructure development in the country is being monitored by the downstream regulator i.e. PNGRB. GAILs existing pipeline network of over 9,500 km covers northern to southern part of the country, and this is being expanded to around 14500 km over the next 4-5 years. After the completion of these projects, GAIL would have a transportation capacity of around 300 MMSCMD. With other pipeline operators also implementing their pipeline projects, the entire country will be connected by a gas grid within a few years. What do you think will be the likely impact of the PNGRB-IGL verdict on the CGD sector? At this stage it would not be appropriate to comment as the matter is sub-judice. By when is the Jagdishpur-Haldia pipeline likely to be completed? Do you think you can tie up enough gas as well as customers to make the project nancially viable? It is proposed to implement the project in four phases synchronised with the availability of gas and coming up of the consumers. The main customers comprise new and existing fertilizer plants under the revival scheme proposed by the government. Power plants, steel, petrochemical and city gas distribution projects are expected to come up along the pipeline. The power, fertilizer and industrial projects will serve as anchor loads for this pipeline and ensure its financial viability. Other industrial customers will come up in due course of time in synchronisation with
gas availability and implementation of the pipeline project. By when do you plan to submit nancial bids for buying a stake in RGTIL? What are the reasons for going ahead on the proposal and what benets are envisaged? We keep examining various opportunities from time to time. At this stage, it may not be possible to comment upon any particular proposal.
The applicability of pooling to specific sectors and its benefits will depend on the pooling mechanism to be followed and government policy in this regard.
Is GAIL looking to tap new markets, other than Middle-East, for securing LNG on a long-term basis, such as the USA? Yes. GAIL has already signed a long term LNG sales and purchase agreement with Sabine Pass Liquefaction, LLC, USA for supply of 3.5 million tonne per annum (mtpa) LNG over 20 years. We have also signed mid-term and short-term gas sourcing agreements respectively with GNF for 36 cargoes over three years and with GDF for 12 cargoes over two years. We are simultaneously looking at other gas value chain opportunities in different parts of the globe. What has been the governments response to GAILs proposal for waiving customs duty on import of LNG by companies other than those producing power? GAIL is awaiting a positive response from the government in the matter. GAIL seems to have set its eyes
rmly on expanding its CGD business in the South. How much investments have been earmarked for CGD expansion, along with the time-frame? GAILs wholly owned subsidiary, GAIL Gas Limited, is keenly looking at city gas distribution projects in the states of Kerala, Karnataka, Tamil Nadu, and others. These are in initial stages and will pick up pace depending upon factors such as input cost of gas, support from local authorities and the regulatory framework. Mostly, these CGD projects will be taken up through JVs/alliances with state governments or strategic partners. For this purpose, investments will not be a constraint. Agreements with several state governments are already in place. GAIL Gas is planning for project conception and roll-out accordingly. At the same time, GAIL has been authorized to lay various trunk pipelines, which requires us to supply gas to the industries and customers falling in the catchment area of the pipeline within 50 Kms or so. GAIL is making efforts to expedite connectivity to various consumers. Do you plan to lay any new gas/ product pipelines in the near future? There are several proposals in this regard. Currently, we are implementing trunk gas pipeline projects such as 1430 Km long Dabhol Bangalore Pipeline and 1130 Km long KochiKoottanad Bangalore / Mangalore Pipeline. Besides, pre-project activities for other key projects like 1550 km Surat- Paradip natural gas pipeline are also going on. We plan to expand the existing LPG pipeline from Jamnagar to Loni from the existing 2.5 mmtpa to 4.5 mmtpa and are also looking at interconnectivity with various bottling plants of oil marketing companies to provide better service.
For full version of the interview, visit www.infraline.com For suggestions email at feedback@infraline.com
InDepth
Draft shale gas policy has many loopholes, deficiencies

Industry associations unanimous in terming the draft as very preliminary British Gas warns against simultaneous exploration of hydrocarbons
10
by Neeraj Dhankher
With shale gas proving to be a game changer in the USA gas market, efforts are underway to initiate, if not imitate, the exploration of this form of oil and gas in India. But challenges in India are immense. After the recent quagmire surrounding coal block allocation as well as the need to review the Production Sharing Contracts for oil and gas blocks in the face of scathing remarks of the Comptroller and Auditor General, the government is treading cautiously to get the Shale Gas Policy
right. To ensure that the policy addresses all major concerns, the ministry has invited comments on the draft version of the policy. Shastri Bhawan has been flooded with comments from some key players in the oil and gas sector on the draft version. Major amendments have been proposed by the industry.
Petrofed differs on royalty and cost recovery

Petrofed an apex society of entities in the hydrocarbon sector
- has established inadequacy of the provisions of the draft policy, especially those pertaining to fiscal regime. Petrofed has given a different set of recommendations on two key issues relating to exploration of shale oil and gas - royalty and cost recovery. While the draft policy recommends payment of royalty at the prevailing ad-valorem rate at well head, Petrofed has recommended introduction of sliding scale royalty to guard against lower production. A sliding scale
royalty provides for a lower royalty amount when production is lower and increases as the production goes up. This way there is more cash available with the parties for additional exploration and development despite production being low. Furthermore, as per Petrofed, the royalty rates should be lower than the rates for conventional oil and gas as risks and technological complexities in shale gas exploitation are much higher. It has recommended providing incentive on royalty on the basis of depth and production of shale gas. The draft policy does not provide for cost recovery by an investor as it leads to complexities. However, as per Petrofed, cost recovery with a cap of around 40 percent may be kept to attract bidders. The apex body has also sought various fiscal incentives for investors to develop the shale gas sector in India. In addition, Petrofed has also made some other important recommendations. The federation wants that the contractor should have complete marketing freedom in the sale of shale gas and oil, subject to Indian domestic market being given the first call. In other words, the contractor should have the freedom to also export the shale gas if he fails to sell gas in the domestic market. This, however, is against the provision in the draft policy which stipulates that there will be freedom to market shale gas within India on arms length basis within the framework of the government policies and that marketing of shale oil will be as per prevailing NELP guidelines for crude oil. On the provision regarding right of first refusal (ROFR) in favour of an existing contractor, the federation is of the opinion that such a right will provide undue advantage to the existing players, reduce competition and deny the government opportunity to get more competent and better terms. Petrofed has further recommended that pipeline network should be made available to the shale gas operators for
selling gas in the local market in the vicinity right from the beginning to avoid flaring of any small quantities of gas initially produced.
The AOGO has also raised strong objection to clause 4.4 of the draft policy which denies automatic extension to companies having disagreement with authorities or any issue, or companies seeking a third party intervention to resolve any difference of any interpretation.
AOGO says theres not enough data in the policy
Another industry body, AOGO has also made a set of recommendations which are in contrast to the draft policy. As per AOGOs Secretary General, Ashu Sagar, the current draft focuses essentially on PSC matters. We would recommend an integrated approach to ensure that modifications in all other policies (relating to Ministry of Environment and Forests, Revenue Departments, OISD and Petroleum Ministry) have been affected and suitable provisions are made to facilitate this work. The AOGO has also raised strong objection to clause 4.4 of the draft policy which denies automatic extension to companies having disagreement with authorities or any issue, or companies seeking a third party intervention to resolve any difference of any interpretation. As per Sagar, The draft (on shale gas policy) is very preliminary. It leaves out many areas that need to be defined to make the proposal complete. The AOGO has also conveyed its apprehensions with regard to lack of sufficient exploratory data on shale
oil and gas. We are presently not aware of existence and availability of adequate data to make a success of competitive bidding of such blocks, AOGO has claimed. The body has also called for overhauling the objectives and responsibilities of the Steering Committee in a PSC. As per AOGO, the objectives of the Steering Committee should be redesigned towards expediting projects and the facilitation of work, rather than continue with the current model of a regulating, approving and slowing down mechanism. We need to create a win-win position with congruent objectives and adequate trust, the association has remarked.
CII stresses on scal stability

A note of dissent has also been sounded by the CII on the draft policy on shale oil and gas. CII has urged the government to introduce a fiscal stability clause in the policy for exploration and exploitation of shale gas and oil in India. As per CII, the power of the government to change various levies, taxes and duties during the course of a long term contract for exploration of shale oil and gas would not allow the potential bidders to assess net revenue from a project thereby forcing them to recluse themselves from bidding. The federation has also suggested that, as the fiscal system is proposed to be royalty and PLP based, the scope of audit under the PSC should be strictly limited to financial audit of the revenues from sale of oil and gas and not extend to audit of associated costs. On the issue of land acquisition, CII has suggested that oil and gas operations should be declared Public interest project and the local authorities should be authorised to acquire the required land through a fast track process so as not to allow any delay in land acquisition. The federation goes one step ahead to suggest that there should only be moderate compensation for land acquisition so as to ensure financial
11
InDepth
Shale gas drilling
12
viability of a project. However, it says, the period of land acquisition should be co-terminus with the PEL/PML period. The CII has recommended that the government should provide, before bidding, a detailed list of all statutory, regulatory and security clearances to be obtained and the scope of the contractor to obtain such clearances should be clearly spelt out. Furthermore, it has suggested that, before bidding of a block is resorted to, the government should get the concerned state governments concurrence, including on provisional PEL. This step, according to CII, will enable the successful bidder to undertake exploration immediately.
BG against simultaneous exploration

The global upstream oil major, British Petroleum has also made some valuable suggestions on the draft policy on exploration and exploitation of shale gas. The company has identified land acquisition, water availability and its handling, appropriate fiscal regime and pricing, besides selection of the appropriate operator, as the critical areas which need to be resolved to
make the policy a success. BG has opposed the idea of the clause providing simultaneous exploration and exploitation of hydrocarbons. As per Rajeev Kumar, Director-Regulatory Affairs & Upstream Business Development, BG, simultaneous exploration of hydrocarbons can create environment and social challenges such as increased competition for scarce resources and health, security, safety and environment (HSSE) issues regarding two operators with different HSE management systems in same area, besides creating social tension due to greater land acquisition for large number of shale gas wells and associated export structure. The British oil major has also made a strong pitch for the need to have a single window clearance for a plethora of approvals, permits and clearances that a contractor needs to obtain. In this regard, the company wants the Director General of Hydrocarbons (DGH) to play the role of a channelizing agency to obtain all such clearances on behalf of contractors. The company has also suggested that experienced shale gas operator should be given additional technical weightage in the bidding parameter as is being done
in the case of bidding for conventional oil and gas fields. The draft policy in this regard stipulate that any consortium partner should have at least three years of operational experience in upstream conventional oil and gas/CBM/shale gas or oil, anywhere in the world. As far as fiscal and contract terms of concerned, BG has recommended ten years (as against seven years envisaged in the draft policy) to allow for investigation of subsurface layers and development of supply chain. Over and above the period of ten years, as per BG, there should be 30 years of production period making the total contract period duration to be 40 years as against 32 years mentioned in the draft policy. Another important recommendation made by BG pertains to having a pricing mechanism that should be Arms length, market driven and linked to international crude oil. As per BG, the pricing policy should be clear and transparent so as to be conducive to investment friendly environment. This is necessary as the risks for the prospective investors will be very high and only an attractive fiscal and pricing mechanism will be able to bring in capital and technology required for undertaking exploration of shale oil and gas. Time is running out for the Indian government. In recent years, hydrocarbon found in the form of shale gas has transformed the energy scenario in USA, the worlds biggest energy consumer. China may soon launch a second round of shale gas auctions and is targeting 6.5 billion cubic meters of annual production by 2015. India has to ensure that it does not lag behind in tapping shale gas as a vital resource to meet its future energy needs as well as reduce dependence on imported crude. Harmonizing the same with the socio-economic interests of the country, however, will be the biggest challenge.
(With inputs from Richa Gautam) For suggestions email at feedback@infraline.com
InConversation
Resource nationalism restricts acquisitions

ONGC Videsh Limited (OVL) is Indias second largest E&P company in India-- both in terms of oil production and oil and gas reserve holdings. A whollyowned subsidiary of Oil and Natural Gas Corporation Limited (ONGC), the flagship national oil company of India, OVL is projected to more than double its production of oil and oil equivalent of gas in the next five years. In doing so, the company will set about its acquisitions through a healthy mix of exploratory and producing assets across the globe. In a freewheeling interaction with Neeraj Dhankher, OVLs Managing Director, D.K. Sarraf talks about the companys roadmap and acquisition strategy. Excerpts:
What are the challenges faced by OVL today in conducting its E&P business? First, mergers and acquisitions (M&A) game is becoming increasingly competitive, since in most of the cases it is the sellers market. Then, due to volatile oil prices, valuation is difficult. Further, during operations, the safety and environment norms have also be viable given the existing fiscal regime. It means that even when oil price is US$100 per barrel, our netback realization is less than US$20 a barrel, after payment of taxes in Russia and oil transportation tariff to the Russian state entity. So the option for us is to either get a technology which produces at US$20 a barrel, or fiscal regime needs a change. So we are working on both fronts i.e. identification of the required technology and efforts are also being made to persuade the Russian government for optimizing the fiscal regime. We have had partial success in both. There was a big hue and cry over OVLs exploration activities in Block-127 in the South China Sea recently with the Chinese government conveying its unhappiness over the Indian presence in the region. What was the real issue? In Vietnam we had acquired two blocks--Blocks 127 and 128. In Block-127, we drilled a well but did not find success. So it was surrendered. In case of Block-128, we could not commence drilling operations as the sea bed was very hard due to which we were not able to anchor the floating rig. So we needed a different technology for anchoring, which we got. However, it was costlier technology. Re-evaluation of economics showed that the block would not have been economically viable with increased costs. This was informed to the Vietnamese authorties and they suggested that
14
become, and for good reasons, more stringent. And then, there is a wave of resource nationalism. The E&P business by nature is risky; the risks are increasing with time. What are the nancial problems faced by OVL in Russia? In Russia, we have two producing properties. Sakhalin-I has PSC regime, where we purchased 20 per cent participating interest in 2002, with Exxon Mobil as the operator. Operations in this field have been very successful with respect to production, project management and hence financial returns. There is stability due to the PSC regime. Then, in 2008, we acquired Imperial Energy. However, the fiscal regime in this case is Royalty and Taxation (R/T) regime. The difficulty here is that while there are significant oil reserves, they are held in very tight reservoirs. We are not able to produce these in absence of a technology which would
they would make available additional geological data from the near-by areas and asked us to hold on to the block for another two years and conduct a fresh view after that period. As far as we are concerned, the block was given to us by the Vietnam government, which confirmed their right over the area. I do not know where the reference to China comes from. There is a perception that India lags behind China when it comes to bidding for large scale E&P projects across the globe. Do you think we are short on nancial resources, technology, political environment or strategy as compared to the Chinese? There is no comparison and it is also not fair to set the two nations in contrast. Their policies and strategies are completely different. The type of returns they look at are also different. OVL approaches any project as a commercial company, while they have a country perspective. Their system also supports them to take a countrys macro-view they have financial support and offer an inter-sectorial package. Here, if OVL gets sovereign funding support and systems are put in place for inter-sectorial package, including services and infrastructure also, then things could be different. I do not think that we lack either financial resources, technology or political environment as compared to the Chinese; only our strategies are different. And we not only compete with Chinese, we cooperate with them as well. For example, we acquired producing assets in Syria and Colombia along with Chinese companies. We partner with them even in Sudan. Please throw some light on OVLs production prole as of today. Though OVL was incorporated in 1965, we first started production of hydrocarbons in 2002-03, when it
started gas production from Block-6.1 in Vietnam in January, 2003. Later, during the same year in March, we acquired 20 per cent stake in producing Greater Nile Oil Project in Sudan. From a modest start of 0.253 MMTOE of oil and oil equivalent of gas (OEG) in 2002-03, our production rose to 9.45 MMTOE in 2010-11.
production is expected to improve in the coming years. We are also looking at more acquisitions. How does the company arrange funds for managing its E&P operations? How is capex worked out? Our capex comprises maintenance/ committed capex which is for surveys, exploratory & development drilling, addition of facilities etc. in our existing exploratory, development and producing assets. This we estimate on a yearly basis keeping in view our work program. However, the major capex is for acquisition of new oil and gas properties. Acquisition is an uncertain business; it is hard to predict how many acquisitions we would be able to conclude during the coming year. So we keep the acquisition capex as flexible. It depends on how much success we get in our acquisition efforts. Most of the capex in existing assets is financed by ongoing revenue generation i.e. these are self-funded. However, the new acquisitions are financed partly from cash flows generated by existing producing assets and borrowings from ONGC and the market. We are the 100% subsidiary of ONGC, the national oil company of India, a company with highest profit in India, which is also a debt-free company with significant cash reserves. What is the acquisition roadmap and strategy for OVL for the future? What are the areas that you are looking to explore? Recently ONGC finalized the groups long-term strategic plan called the Perspective Plan-2030 which is the basis of our acquisition strategy. As per the Plan, OVL has been given lot of responsibility for ONGC groups growth. As per the Plan, OVLs current production of 8.753 MMTOE of oil and OEG is planned to be increased to 20 MMTOE by 2017-18 and up to 60
I do not think that we lack either financial resources, technology or political environment as compared to the Chinese; only our strategies are different. And we not only compete with Chinese, we cooperate with them as well.
In 2011-12, our production declined and stood at 8.753 MMTOE of oil and OEG due to geo-political difficulties faced in Syria and Sudan for part of the year. Our production in 2012-13 is likely to be still lower mainly because of continuing difficulties in Sudan and Syria, and also somewhat due to aging fields. The satisfaction is that some of our other assets which are underdevelopment will start producing in 2013-14. These include blocks-A1 and A3 in Myanmar where we would produce gas. Similarly, the Carabobo oil field in Venezuela will also start producing during the next fiscal. This would see our production looking up. In addition, we recently made an announcement for our proposed acquisition of 2.72% stake in one of the worlds largest producing fields Azeri-Chirag-Gunashli (ACG) in Azerbaijan from Hess Corporation, a US energy company along with 2.36% of Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline for US$1 billion. So our
15
InConversation
MMTOE by 2029-30. The production would be added by new exploration assets as well as producing assets. Exploration blocks give more value addition because acquisition cost is lower, but it takes longer to reach the production stage and is risky. In case of producing assets, one has to pay more, but production can be added in near-term and is more certain. We intend to continue to have an optimal mix of exploration and production. For our short term target (2017-18), we will stress more on producing assets. At the same time, to achieve our long term target (2029-30), we are emphasising on acquiring exploration assets. We have identified certain focus areas for acquisitions. These include the oil sands of Canada, shale gas in USA which can be brought to India as LNG and heavy oil in Latin American counties. We believe that these are the places where worlds most of tradable reserves are available. In addition, there are multiple LNG opportunities in East Africa, Australia and the Arctic. Being an E&P company, our focus is just not only on LNG terminals, but on upstream natural gas fields also - so we produce gas, convert it to LNG and then transport LNG to India. Most of the major recent hydrocarbon discoveries have been in deep-water, like Brazil, Mozambique, Angola, Nigeria, the KG basin of India, to name a few. So we also plan to look at opportunities in deepwater in coming years. To start with, we would like to be a non-operator in deep-waters. Then, we are also looking at opportunities in old brown fields, making process for E&P acquisitions? We have an excellent and robust system of decision making on acquisitions. We form an in-house team for each opportunity we examine. It comprises regional, technical, financial experts. We engage consultants to give us independent advice on various domain areas of expertise technical, legal, financial and tax & accounting. Once the proposal is fully gone through internally, it is examined by a Project Appraisal Committee (PAC) of the Board, comprising of the independent directors, Government nominee on our Board and functional directors. The recommendations of the PAC go to our Board for approval, if it is within its empowerment, else it recommends the proposal to ONGCs Board in case it is within ONGCs empowerment. In case of large value proposals, the approval of the Government is sought, first at the level of a Committee of Secretary and then at the level of a Cabinet Committee. Though final approval goes through various stages, it works quite fast. With regard to empowerment of our board, we have requested the Government for enhancing the level. How would you rate OVLs performance over the years? In 2001, we had only one asset and no production. Today, we have 30 assets in 15 countries, 10 of which are producing and five are discovered. It is not easy to develop an E&P company from the scratch. The figures speak for themselves.
Our production in 2012-13 is likely to be still lower mainly because of continuing difficulties in Sudan and Syria, and also somewhat due to aging fields
16
?
where decline has already set in. Our parent company, ONGC has extensive expertise in managing and adding value to such fields, demonstrated by maintaining the production of Mumbai offshore fields even after more than three decades of production. We plan to leverage ONGCs expertise in this area in our quest for acquiring depleting fields, especially those in offshore. We would like to have presence in exploration in the Arctic region as well. What suggestions would you give on improving the decision-
Infraline Energy Coal Research 2012

Competitive coal block allocation:
Strategies for bidding and detailed proling of 54 earmarked coal blocks
First Perspective
August 2012
September 2012 Price: `50,000
Mapping Global Coal Assets:
October 2012 Price: `50,000
Information, Insight and Analysis of Top 15 Coal bearing nations October 2012
Included:
Monthly update on development on Competitive Coal Block Allocation for next 3 Months Post launch session with the author
InfralineEnergy Business Report Series
Includes: Monthly update on development on Competitive Coal Block Allocation for next 3 Months Post launch session with the author
Includes:
Quarterly updates for one year
Post launch session with the author
InfralineEnergys Opportunity Assessment Business Research Report
InfraIineEnergy through this report analyses various bidding options, the best international practices, eligibility criteria, bid evaluation parameter and profiles of captive coal blocks identified for auctions. The report provides insights into captive coal mining opportunities in upstream expansion for industries. The report also compares the coal block allocation through the screening committee route, with the new concept of auctioning and analyses possible issues and risks associated with it.
The report is structured with profiling of the top 15 destinations where coal can be found, providing there in the current business and regulatory environment, coal production and consumption trends, details of major mines ot top 15 mining companies, the available infrastructure & logistics facilities and projections on future expansion plans. Landed cost analysis in case of import into India is being adequately captured.
Coal Washeries in India

INDIAN COAL OUTLOOK 2020
Block-wise Supply Estimation & Non-traditional Sourcing Strategies under Transforming Policy Regime
Factors Driving Washed Coal Market and Detailed Profiling of Operational and Upcoming Projects
October 2012
June 2012 Price: `35,000 Includes: Quarterly updates for one year Post launch session with the author
October 2012 Price: `35,000
June 2012
InfralineEnergy Outlook Series Report
InfralineEnergy Business Report Series
Includes: Half Yearly updates for one year
The report features exclusive data on Coal Blocks Development Status, Coal Imports, Inland and Seaborne Infrastructure Development Status, Players and Contracts and other detailed information that stakeholders need for formulating business strategies in the dynamic risk environment.
This report would serve as an Investment/ Information advantage to tap the future opportunities. Prospective business entities can formulate their plans, device strategies and take proactive measures to position suitably in the market.
For any further information, kindly contact us on below mentioned coordinates:
Manoj Narang, Director - Business Development
For exhaustive list of our products and services
Ph. +91 11 4625 0038 (D) 4625 0000 (B), Mobile: 9811991174 Email: manoj.narang@infraline.com, rs@infraline.com
http://store.infraline.com
ExpertSpeak
Hydrocarbon infrastructure needs constant upgradation

AK Arora, Additional Director, Oil Industry safety Directorate, writes about what all measures India needs to take handle a surplus of hydrocarbons. He elaborates on the challenges in setting of infrastructure facilities and what are the strategies to construct and run a hydrocarbons plant.
India is one of the largest importer and consumer of petroleum products in the world, after US, Russia and China. At the time of independence, our refining capacity was only 0.25 MMTPA with only one operating unit at Digboi in Assam. Today we have 25 operating refineries with net processing capacity of 215 MMTPA. This is expected to rise to 267 MMTPA by 2015-16, with the commissioning of projects presently under construction or under planning stage. For handling such huge quantum of hydrocarbons, more and more infrastructure and processing facilities need to be developed on continued basis. These include on-shore and offshore exploration/ production facilities, large and ultra large marine tanker unloading and loading facilities in sea and at ports, huge storage tanks, refineries and petrochemical plants, petroleum depots, LPG bottling plants, gas processing plants, cross-country pipelines for transportation of crude and finished products. Construction of hydrocarbon infrastructure facilities poses variety of challenges in the field of contract management, quality assurances, Human Resource Management, land acquisition and Right of Way (ROW), and safety in construction and change over from construction to operation. Efficient contract management is of utmost importance for achieving the successful execution till commissioning. Project costs are increasing year after year, and so are the complexities with handling of contracts. Just three decades back in early 1980s the refineries were built within the cost of about `200 crores, whereas in present time the cost for Refinery with similar configuration is be around `30,000 crores. Hydrocarbon plant construction requires variety of materials, equipment, instruments and speciality items like catalyst, which are sourced risks associated with the products from hundreds of to be handled and processing. Apart vendors located from being highly inflammable Being across the and corrosive, the temperatures one of the globe. Timely encountered in the systems largest importers delivery of go upto 600 degrees and consumers of each item Celsius and pressures up petroleum products, as per the to 120 Kg/ Sq.cm. The India needs to develop more and more construction strict mechanisms of QAP infrastructure and sequence (Quality Assurance Plan), processing facilities requirement, ITP (Inspection and Test on a continued governs the Plan), PMI (Positive materials basis. success of the Identification) for parent materials project. Different and weld electrodes, hydrotesting contracting strategies and system wise completion, like LSTK (Lump Sum Turn Key), checking and acceptance are adopted Cost plus basis, BOOT (Build, by the industry. Own, Operate & Transfer), BOO For hydrocarbon projects, the and convention SOR (Schedule of construction period generally ranges rate) basis are being practiced by the up to 30 to 36 months. Workforce of industry depending upon the individual variety of skills ranging from unskilled strategies and logistics. labors to highly skilled technicians, Quality assurance of hydrocarbon welders, heavy crane operators are plant gets very high significance required in varying numbers during because of the very high potential life cycle of project. For a grass root
18
refinery project, the maximum numbers of workforce at any point of time shall be in the range of 40,000 to 50,000. Sourcing and retaining the right persons in adequate numbers during the desired phase for the required period of time governs the success of a project. Adequate facilities, perks, incentives are provided by execution agencies as per the need of the hour. Safety during construction is of paramount importance. As all the work force is engaged in small geographical area, any untoward incident or fatality severely impacts the workforce sentiments and hence jeopardizes project progress. One day job stoppage by workmen amounts to nonretrievable loss of 30,000 to 40,000 mandays, apart from legal harassments and loss of image. Hydrocarbon projects construction risks are varied and many like fall from heights, fall of machinery and materials from height, electrocution, radiation, getting trapped
in excavated pits and confined spaces etc. Commitment and involvement of highest management plays most vital role in mitigating risks apart from good safety practices, policies and plans. For hydrocarbon projects the transition phase from construction to commissioning is of vital importance. During this phase the plant and equipment are subjected to operating
Safety during construction is of paramount importance. As all the work force is engaged in small geographical area, any untoward incident or fatality severely impacts the workforce sentiments and hence jeopardizes project progress.
parameters for the first time and are expected to perform round the clock. Any wrong operation of plant, equipments or control systems causes huge damages resulting in time and cost overruns. Through training and understanding of the plant and its control systems by operation and maintenance crew and immediate response by services departments governs the success of this phase. Timely land acquisition and right of way through state government authorities is the main contributor for the success of any cross country pipeline project. Apart from above issues, the commitment, integrity and honesty of the project members plays the most vital role for the success of any project whether in Hydrocarbon sector or any other sector.
Views expressed in this article are personal. For suggestions email at feedback@infraline.com
19
InConversation
Mozambique gas find will prove to be a game changer for India

Despite incurring losses on account of rising under-recoveries on sale of petroleum products, the second largest oil marketer in India, Bharat Petroleum Corporation Limited (BPCL) has set ambitious targets. Over the next few years, the company is looking to consolidate its core business of refining and marketing so as to maintain its competitive edge, and also plans to move aggressively in developing major oil and gas finds within and outside India. Speaking to Neeraj Dhankher, BPCLs Chairman & Managing Director, R.K. Singh talks about how the companys fortunes are on the upswing after the recent gas find in Rovuma basin in Mozambique. Excerpts:
Now that the price of diesel has increased by `5 per litre, how has it impacted your under-recovery position? Do you feel the current round of price hike is sufcient to mitigate the losses? The under recovery on the sale of diesel by the public sector oil marketing companies was around `17 per litre prior to the announcement of an increase in the price by the Government. Out of the increase of `5 per litre, `1.50 is on account of excise duty. As such an amount of `3.50 per litre will go towards reducing the extent of the under recovery that is currently being suffered. As the burden of under recoveries is shared by the upstream companies, the Government and the downstream marketing companies, this increase in price will mitigate the losses to some extent. As can be seen, the increase in the price will not totally eliminate the under recovery on the sale of diesel. However as diesel impacts all major economic activities and hence affects all sections of society, any increase in the price of diesel has a major impact on the rate of inflation. As such decision on revision of prices will need careful consideration by the Government. At the same time, any downward trend in international prices and any strengthening of the Indian rupee will help in reducing the extent of under recoveries and thereby provide relief to the oil companies. The recent dieselisation of economy has been attributed to excess use of diesel by customers receiving supplies through Retail Pumps as against consumption by bulk consumers. What is your analysis of the situation? Is there is a need to check retail sales by increasing diesel prices? The increase in the use of diesel in the transportation sector can be attributed to the growing popularity of diesel vehicles. The difference in the prices of petrol and diesel is leading to increase in the sale of diesel vehicles. Increase in diesel prices will remove the price differential and would make the option of using motor cars running on diesel unattractive. Increase Similarly in diesel there is a prices will preference remove the price for diesel differential and would as a fuel make the option of using motor cars for running running on diesel machines unattractive. and equipment which can be
20
corresponding increase in selling price of sensitive petroleum products, the quantum of under recoveries suffered by the downstream marketing companies has increased. Although the upstream companies have contributed their share of the under recoveries by way of discount on crude oil purchased, the compensation from the Government is What is the progress on the received after a time lag. Consequently, Integrated Renery Expansion the downstream oil marketing companies Project at Kochi? have seen their level of borrowings go The Integrated Refinery Expansion up substantially. The interest cost has Project at Kochi is an ambitious also shot up. This has had an impact on project undertaken by BPCL. With an their ability to raise funds and also the estimated cost of `14, 225 crores, this cost of such funds. Notwithstanding is the biggest project to be undertaken these aspects, Oil by BPCL. On companies have completion, the Although the upstream been able to raise refining capacity companies have the required funds in Kochi will increase by contributed their share for meeting their 6 MMTPA. of the under recoveries capital expenditure The project by way of discount on requirements. Oil companies are has ambitious crude oil purchased, also looking at timelines for the compensation innovative means completion by from the Government is of funding their December 2015. projects with a The process received after a view to reduce of securing time lag. the extent of Environmental funds needed. clearance has Common User Terminals (CUT), Build started and the same is expected to be Own Operate & Transfer (BOOT) etc received shortly. Site grading work are some examples in this regard. The is currently underway. Some of the increase in selling price of diesel and initial contracts have been awarded and capping of the number of cylinders per process packages have been released. household will help in reducing the The Licensor selection for major units extent of under recoveries and thereby has been completed. BPCL is also improve the liquidity position. As a planning to enter the petrochemicals growing economy, energy demand in segment by using the raw material India is rising. Oil companies will need to be produced at Kochi after the to ensure that infrastructural facilities are completion of the IREP project. put up to meet the growing demand. All this will call for substantial investments. How has the increase in crude This can be achieved without any price and depreciation of problem once the issue of under Indian Rupee impacted your recoveries on sale of sensitive products funding plans? is addressed at the earliest. The increase in the crude oil price and depreciation of the Indian rupee BPCL has been asked by ministry has an impact on the cash outgo on to adopt a cautious approach to procurement of crude oil. Without any attributed to the fact that it is cheaper when compared to alternate fuels like Furnace oil. This arises mainly because the prices of the alternate fuels are market driven. In these cases also the diesel consumption will come down once the diesel prices are increased.
future capital expenditure as the company was unable to spend its budgeted capital expenditure in 2011-12. Your comments. BPCL has drawn up an ambitious capital expenditure programme for the next few years. Several large projects like the capacity expansion at Kochi have been initiated. In marketing also a large number of infrastructural projects are being planned. The company will also be spending large sums of money in the upstream sector as the major oil and gas finds are monetized. BPCL is confident of being able to raise the required resources for undertaking these projects. At the same time BPCL is looking at different innovative models for funding the capex plans. Your public sector rival, HPCL, is pursuing an aggressive expansion of its rening capacity. What is BPCL doing to maintain its competitive edge over its other public sector cousins, both in rening and retail segments? BPCL has drawn up an ambitious five year corporate plan covering its core areas of operations in refining and marketing and also in the upstream sector. As on date, the BPCL group has a total refining capacity of around 30 MMTPA. With market sales volumes having already crossed this level, BPCL has drawn up plans to expand the capacity at Kochi refinery and also to undertake low cost creeping expansion at the newly commissioned refinery at Bina. This will enable BPCL to have access to higher volume of finished products from its own sources in line with the growth in the sales volume. BPCL has also focused on making investments in building up its marketing and distribution infrastructure. In 2011-12, over 1000 new retail outlets have been commissioned. In addition, investments have also been made in upgrading a large number of the existing outlets. A lot of emphasis is being put on
21
InConversation
new outlets in rural areas. Investments are also being made in setting up LPG bottling plants, depots and terminal and airfield stations. BPCL is also looking at strengthening the gas business by having a stake in new pipelines and LNG terminals. These investments will enable BPCL to retain its competitive edge in the market. Apart from these, BPCL is moving forward aggressively in developing the major oil and gas finds announced in exploration blocks where BPCLs exploration arm ie Bharat PetroResources Limited has participating interests. Work on BPRLs shale gas block (EP413) in Australia seems to be coming up nicely. Do you have plans to bid for shale gas block next year? Is the company looking to increase presence in shale blocks elsewhere across the globe? One well (Arrowsmith 2) has so far been drilled in the shale gas block (EP413) in Australia, in the Perth basin, and results have been encouraging so far. Five zones were targeted for fracturing, and all five zones have shown presence of hydrocarbon. Currently flowback is in progress. Further studies are to be conducted for firming up future plan of action. BPRL is looking forward with keen interest to the shale gas bidding round in India and depending upon the evaluation of the data available during the bidding round, will be able to finalise its strategy and bid accordingly. BPRL has currently invested in Australia and is open to evaluating shale gas opportunities outside India, but would proceed only after proper evaluation and if the project is attractive and robust enough to merit investment. BPCLs E&P foray in the Offshore Area 1 of the Rovuma Basin in offshore Mozambique seems to be coming up nicely. Do you think
22
India being geographically proximal and with a huge demand for gas, would obviously be a logical market to explore for selling this gas.
natural gas reserves in the basin can be a game changer when it comes to meeting Indias energy security? When are you expected to start exporting gas? Experts are already talking of East Africa being the next energy frontier. Gas in Mozambique alone is said to be in excess of 100 tcf. LNG exports are the only option. India being geographically proximal and with a huge demand for gas, would obviously be a logical market to explore for selling this gas. However there are other options also and a final decision will be taken by the consortium partners in due course. As per present estimates, the first LNG cargo is expected to be by end 2018. What, according to you, are the takeaways from Petrotech. How has been your experience so far?
It is by far one of the biggest professional conference and exhibition which showcase the Oil & Gas opportunities in India and abroad. It focuses on the global trends in the development of technology in the field of Petroleum and Gas. The Petrotech exhibition provides a platform to showcase the companys capabilities and exchange knowledge on emerging technologies. It also gives an opportunity for networking and expand business prospects. It is also a means of promoting bilateral relations with other nations through close cooperation in the energy sector. As a country, India is looking at attracting foreign investment in the energy sector. Similarly Indian companies are seeking to acquire participating interest in promising exploration blocks. The event provides a means for all the stakeholders to come under one roof and have an understanding of all the relevant issues. Similarly service providers get an opportunity to share their offerings which in turn facilitates the entry of the latest technology and practices in the oil and gas sector into the country.
ExpertSpeak
International norms on oil and gas remain a non-starter

Shishir Priyadarshi, Director, World Trade Organisation, Geneva, heads WTOs Development Division. The division works towards facilitating work on all trade related developmental issues in the WTO.
Because of their strategic importance, gas and especially oil have been treated as special cases in international trade relations. This has given rise to a widely held notion that they fall outside the ambit of global trade rules. In tariff terms, few importers place high duties on oil and gas. There is also presumably also be very relevant. a historical element: when the GATT GATS commitments could be made was agreed in 1947, many oil to cover cross-border pipeline and producing countries The maritime transport, or Modes were still under applicability 3 and 4 in oilfield services colonial control, of WTO rules such as exploration. Other or their oil was to oil and gas has agreements such as the controlled never been seriously by western tested, leading UNCTAD Agreement on Subsidies and to posit the existence Countervailing Measures companies. of a gentlemens have implications for policy It took the agreement to leave in fossil fuel producing expansion of alone the oil and countries (indeed, dual OPEC (the oil gas trade. pricing schemes intended to give producers cartel low costs to domestic users, including founded in 1960) as industry, were a point of contention in well of WTO membership (Saudi Russias WTO accession). Arabia only acceded in 2005) to bring That said, the applicability of WTO many leading oil exporters into the rules to oil and gas has never been multilateral trading system (Algeria, seriously tested, leading UNCTAD to for instance, is still in accession talks). posit the existence of a gentlemens Nevertheless, there is nothing in agreement to leave alone the oil WTO rules that explicitly exempts the and gas trade. oil and gas sector. Indeed, a swathe This gentlemens agreement has of existing WTO rules could be seen come under pressure. For instance, to apply to oil and gas trade. GATT some US lawmakers, notably New rules for goods trade would cover oil Jersey Senator Frank Lautenberg, -- and its general and national security have pushed for using the WTO, exceptions in Articles 20 and 21 would specifically GATT Article XIs disciplines on export restrictions, to attack OPECs supply restrictions. While US presidential administrations have not pursued such calls with regard to OPEC, it is worth noting that Saudi Arabia was a third party in the recent China-Raw Materials case, where Chinas restrictions on the export of some primary commodities were deemed to conflict with commitments in its accession protocol. In addition, beyond the notion that WTO disciplines would broadly apply to oil and gas trade, there are differing views in the scholarly literature about precisely what this would entail. For instance, gas trade often involves transit countries between importers and exporters. Gas transit could be said to be covered under both GATT Article V (on transit) and GATS (if the countrys commitments cover the pipeline transportation of fuels). In the absence of spare pipeline capacity, the notion of transit raises questions about a countrys obligations to facilitate transit: is there a right to establish new pipeline capacity? Others say there is nothing explicit in GATT Article V obliging WTO Members to allow infrastructure construction or even to provide third-party access. In terms of international legal norms, it seems that much depends on whether pipelines are considered to be general infrastructure and whether the regulation of access to pipelines is called a government measure. In terms of countries views on cartels in energy trade, it is possible that if WTO Members had chosen to negotiate global rules on competition,
23
ExpertSpeak
24
cartels would have become an issue. However, the issue was dropped from the WTO agenda in 2003, after many developing countries opposed launching negotiations on competition. Not sure what Indias position has been on whether there should be new WTO rules on energy trade. Presumably importers and exporters would have very different views on the shape of such rules, making consensus difficult. There is a set of international -though far from multilateral -- rules that seek to govern trade, transit and investment in energy: the Energy Charter Treaty. Its origins lie in a 1991 political declaration signed mainly by western developed countries and former Soviet republics, with the intention of matching the formers need for energy with the latters need for predictable, affordable capital. The treaty was signed in 1994, and entered into force in 1998. Its investor
protections have been invoked in several cases. But the Treatys promise remains compromised by the fact that Russia has not ratified it, and has periodically threatened to withdraw (rising commodity prices in the second
In terms of countries views on cartels in energy trade, it is possible that if WTO members had chosen to negotiate global rules on competition, cartels would have become an issue. However, the issue was dropped from the WTO agenda in 2003, after many developing countries opposed launching negotiations on competition.
half of the 2000s left Moscow feeling empowered to be flippant about the importance of foreign investment in its energy sector). The US, too, has not signed the treaty. India did not sign the 1991 accord and is not an observer to the ECT. Pakistan and Iran are observers. The experience with the ECT underscores the point made above, namely that getting importers and exporters to agree on rules governing energy trade is difficult. It is worth adding that the Doha Round launched the worlds first ever environmental negotiation in the context of a round of trade negotiations. The environmental component of the Doha Round has three distinct chapters. The first is the chapter of accelerated trade opening for environmentally-friendly technologies. The second is the chapter that calls for mutual supportiveness between WTO rules and Multilateral Environmental Agreements. The third chapter aims at the reduction or elimination of environmentally harmful fisheries subsidies, which are depleting the worlds fisheries. Each of these chapters will make a unique contribution to a greener global economy. This is another reason for the Doha Round to be concluded as early as possible. In so far as the Doha Round negotiations on environmental goods and services have dealt with energy, they have done so primarily in the context of renewables. Indias original stance in those negotiations favoured a project-based approach liberalising market access for products needed for particular environmental projects, as opposed to a list-based approach permanently cutting tariffs on listed products. Brazil has periodically sought the inclusion of ethanol as an environmental good, but this has been a non-starter.
OffBeat
Aviation sector on a wing and a prayer

High ATF prices bleeding domestic airlines
25
by Team InfralinePlus
It had all the ingredients of a blockbuster-average annual growth rate of 20 per cent for the past few years, 17 per cent growth in traffic in 2011, passenger traffic of 60 million in 2011, increase of 10 million passengers in a single year yet it is one of the biggest flop stories in India today. Once touted as South Asias next big hub, Indias aviation story seems to have got lost in the plot. Growth in passenger traffic has failed to translate into profits for domestic airlines and all major carriers, except IndiGo, are incurring losses mainly due to high fuel costs. Global economic slowdown, intense competition among players, high service tax, wrong government policies, depreciating rupee and high aircraft rentals have only added to their woes. India has five big private operators IndiGo, Kingfisher Airlines, Go Airlines, SpiceJet, Jet Airways and a loss-making national carrier, Air India. Together
they have approximately $20 billion in debt, including outstanding payments to vendors, of which $6-7 billion is for aircraft-related loans. Lending banks are now increasingly concerned about their exposure to the troubled sector at a time when financing requirements are significant and the net worth of the airlines has declined substantially. As per estimates of aviation consultancy firm Centre for Asia Pacific Aviation (CAPA), Indian carriers will together lose $2.5 billion in the 12 months ending March 31, 2012. This is on total revenues of just under $10 billion worse than even 2008-09, when traffic was declining and fuel prices had spiked $150/barrel. In the domestic market, Indian airlines lose $25-30 every time a passenger boards an aircraft.
Fuelling losses
High ATF prices have taken a toll on the health of the sector which otherwise
has remained one of the fastest growing domestic markets in the world. The countrys fleet has grown from 119 aircraft in 2000 to 437 now. It has seen passenger growth for 30 consecutive months, with 15 consecutive months of double-digit growth. Domestic traffic has increased 85 per cent in the past five years since November 2006 and is today 41 per cent above November-2007 levels, 80 per cent above November-2008 levels and 32 per cent above November-2009 levels. But between the growth and the profit comes the ATF which is priced almost 60 per cent higher in India than elsewhere. While it accounts for 40-50 per cent of the operating cost of domestic airlines, internationally this figure is only 20-30 per cent. The average turbine fuel price at airports in India is significantly higher than prices in other hubs such as Singapore, Hong Kong, Dubai, London, and Abu
OffBeat
26
Dhabi, says a London-based analyst. As a result, the industry is burdened with higher operating costs than its counterparts globally. The high cost of jet fuel has been hijacking the competitiveness of the Indian air transport industry for over a decade, says Tony Tyler, Director General and CEO of the International Air Transport Association (IATA), an international trade body that represents over 240 airlines comprising 84 per cent of the worlds total air traffic An expert agency appointed by the civil aviation ministry attributes a high taxation regime, particularly ad valorem Value Added Tax (VAT) levied by states (ranging between 20-30 per cent in most states) and 8.24 per cent excise duty as the reasons behind high jet fuel prices. Indian carriers pay an estimated `2,500 crore annually as sales tax to state governments on ATF with Air India alone paying around `700 crore. To add to high ATF prices, India remains amongst the few countries in the world that levy service tax on air tickets. In the present financial year alone (201213), service tax has been increased four times. It is today levied on 40 per cent of the gross ticket value. To contain losses, airlines resort to aggressive, and, at times predatory pricing, which has resulted in an unsustainable yield-cost imbalance. A depreciating rupee is leading to increased payments for fuel and aircraft rentals. The government continues to micromanage issues such as the rights of airlines to sell exit row seats or charge for additional checked-in luggage. Seasonal increases in demand which result in higher fares trigger scrutiny by the regulator yet there is no intervention in the case of predatory pricing. The inability of airlines to charge higher fares during peak season to counter losses during the leaner months makes their operations unviable.
Can they keep going?

All three listed carriers Kingfisher Airlines, Jet Airways and SpiceJet have been weak performers, both financially and on the stock exchange. Kingsher Airlines auditors have raised concern over its ability to remain a going concern, stating it would need to inject more funds to remain in such a position. They say, The financial statements are being prepared on a going concern basis, notwithstanding the fact that the companys net worth is eroded. Jet Airways auditors, Deloitte Haskins & Sells and Chaturvedi & Shah warned at the end of second quarter for current financial year that the carrier needed to raise funds in order to meet its obligations, fund the operations of loss-making JetLite and ensure that it continued as a going concern. The appropriateness of the assumption of going concern is dependent upon the companys ability to raise requisite finance or generate cash flows in future to meet its obligations, including financial support to its subsidiary, they said. SpiceJets auditors, S R Batlibol & Associates, stated in December 2011, the companys accumulated losses of `1,078 crore have substantially eroded the net worth, indicating the existence of a material uncertainty that may cast doubt about the companys ability to continue as going concern.
Change pricing model

Among steps to address the problem,
the expert agency had recommended bringing ATF under declared goods category that attract uniformly lower rate of VAT, switching to specific rate of duty instead of ad valorem taxation, open access to all fuel suppliers to fuel-related infrastructure outside airports, such as pipelines and intermediate storage spaces and regulation of supplies by petroleum and natural gas regulatory board. At present, state-run oil marketing companies maintain ownership of and control access to this infrastructure and Indian carriers buy at least 90 per cent of the jet fuel from them. Airlines are also seeking transparency and international benchmarking in fuel pricing which they feel will reduce costs in the long run. There are two pricing models for jet fuel supply in India--the Mean of Platts Arab Gulf or MOPAG model which is an international benchmark for pricing crude and products, designed by Platts, a price assessment agency and the model followed by state-run oil firms in which prices are changed every fortnight. The MOPAG model factors in the
price of crude, a supplier mark-up and a third-party fee for using common fuel supply infrastructure at airports. In the Indian model the three public sector suppliers Indian Oil, Hindustan Petroleum Corp and Bharat Petroleum Corp fix the price based on international crude prices and prevailing multiple taxes. Airlines want the cost of jet fuel to be based on the MOPAG model. The Federation of Indian Airlines says the group is not leading the demand, but airlines may be separately asking for it. According to Albert Tjoeng, assistant director, corporate communications, Asia Pacific, IATA, Between the two pricing models, the MOPAG model offers greater transparency as it is not always clear what is the basis for the price movements followed by state firms.
Potential may dive

Boeing, the Seattle-based aviation giant, last month raised its forecast for Indias commercial aircraft market by more than 11 per cent, saying the country will require 1,450 new planes
worth a total of $175 billion over the next two decades. Boeing has projected that Indias commercial aviation fleet will grow more than 4.5 times in size over the next 20 years and that India would have the highest passenger traffic growth in the world. Airbus, the European aircraft major, estimates that in terms of passenger traffic in domestic markets, India (9.8 per cent) and China (7.2 per cent) would have the fastest growth rates over the next 20 years. But rosy predictions do not take away from the fact that a 10 per cent rise in airfare reduces demand for domestic travel by about 12 per cent. In the backdrop of higher oil crude prices, there is a severe risk of dampening of passenger market growth by taking air travel out of the reach for a significant portion of the market, which was fuelling its growth. The losses being registered by Indian carriers may result in reduced connectivity thereby affecting growth in this sector, says a London-based aviation analyst.
Redemption
The fundamental drivers of aviation growth in India remain strong. The low cost sector has grown massively and now represents 70 per cent of the market. Total investment in the industry since 2000 is estimated at $27 billion and is expected to reach $120 billion by 2020, of which $80 billion will be on new aircraft. To meet the demands of air transport in 2020, up to $2 billion will need to be spent on air traffic control and more than $1.5 billion on upgrading security. Steps have been taken to sort out some of the tricky issues. For instance, the issue of VAT on ATF has been taken up with state governments and Chhattisgarh, Maharashtra (except Pune and Mumbai) and Rajasthan have
Broken wing
The single largest element contributing to airline costs is ATF, which accounts for 4050 per cent of the operating cost of Indian carriers, as against only 20-30 per cent for international carriers ATF in India is priced, on an average, almost 60 per cent higher than internationally The widening differential in ATF prices and its huge negative impact on airline balance sheets is eroding their competitiveness The losses being registered by Indian carriers may result in reduced connectivity thereby affecting growth in this sector
Growth in passenger trafc

Year 2009: 2010: 2011: Passengers carried in million 43.84 52.02 60.66 Growth (per cent) 6.33 18.66 16.61
27
Source: Infraline Research
Losses Permissible FDI

by foreign airlines in other countries
USA 25 per cent of voting stock Japan 33 per cent Australia and New Zealand single foreign airlines up to 25 per cent Australia 100 per cent China 35 per cent Brazil 20 per cent Singapore 100 per cent UAE 49 per cent South Korea 50 per cent
ATF prices in India and other countries as on March 9, 2012: (per KL)
Kolkata: Chennai: Mumbai: Delhi: Sharjah: Bangkok: Dubai: Singapore:
`10,000 crore estimated operational losses of Indian carriers in 2011-12 `19,000 crore operational losses of all airlines between 2008-2011
`72,866 `68,765 `65,399 `63,469 `45,574 `44,168 `44,384 `43,208
Fuel from abroad
Directorate General of Foreign Trade has allowed import of ATF by airlines. The move is expected to help bring down their cost of operations by as much as 15 per cent.
Airline IndiGo Kingfisher Airlines Go Airlines Air India SpiceJet
Quantity Allowed (in KL) 7,15,000 5,00,000 2,00,000 1,00,000 50,000
Value `3200 crore `2233 crore `1200 crore `503.93 crore `235 crore
reduced it to 4 per cent from 22 per cent earlier. The government has also allowed airlines to directly import jet fuel (see box) which is expected to help bring down their cost of operations by as much as 15 per cent. Foreign direct investment by foreign airlines in Indian carriers has been cleared by the Cabinet on September 14 a move that has boosted markets and brought hope for the fledging carriers Many more decisions still remain to be taken for the aviation sector to truly take off.
StatisticsOil & Gas

Crude Oil Import for July 2012 and Cumulative FY 2012-13
Qty.* TMT 7214 6640 July 2012 Value Million US$ 5317 4979 Qty.* TMT 30829 26477 Total: 2012-13 (Prov.) Value Million US$ 24290 20890 PSU PRIVATE INR Crore 29108 26729 INR Crore 132311 109864
Petroleum Product Imports by PSUs for July 2012 and Cumulative FY 2012-13
Qty.* TMT 442 57 33 0 0 118 19 July 2012 Value Million US$ 294 59 27 1 0 109 13 Qty.* TMT 1813 57 118 0.4 0 419 52 Total: 2012-13 (Prov.) Value Million US$ 1549 59 112 1.1 0 400 38
LPG/PROPANE/ BUTANE PETROL NAPHTHA AVIA. PETROL KEROSENE DIESEL FUEL OIL
INR Crore 1646 326 150 4 0 608 75
INR Crore 8501 326 618 6.0 0 2175 210
Petroleum Product Imports by Private* for July 2012 and Cumulative FY 2012-13
Qty.* TMT 35.0 25 0 107 0 130 72 16 7 329 17 8 0 0 July 2012 Value Million US$ 20.1 16 0 87 0 152 51 11 5 234 20 9 0 0 Qty.* TMT 139.9 97 0 427 2 518 288 64 28 1317 68 32 35 1 Total: 2012-13 (Prov.) Value Million US$ 1049 77 0 401 2 605 214 47 21 977 79 37 32 1
28
PROPANE LPG PETROL (MS) NAPHTHA DIESEL (HSD) LOBS FUEL OIL/LSHS CBFS BITUMEN COKE WAX n-PARAFFIN LSWR (RIL) OTHERS
INR Crore 112.7 96 0 492 2 852 287 64 28 1310 112 32 0 1
INR Crore 576 443 0 2217 9 3331 1177 261 114 5374 437 130 164 4
Petroleum Product Export* for July 2012 and Cumulative FY 2012-13

Qty.* TMT 19 1292 815 1533 0 9 458 0 0 233 379 3 2 296 July 2012 Value Million US$ 18 1363 683 1467 0 10 279 0 0 175 364 3 2 204 Qty.* TMT 67 5160 2626 6107 9 29 1774 0 0 406 1293 10 11 823 Total: 2012-13 (Prov.) Value Million US$ 77 5517 2486 5770 8 36 1110 0 0 311 1268 11 8 615
LPG MS NAPHTHA HSD LDO LUBES/LOBS FUEL OIL COKE/ CBFS TAME VGO ATF SKO BITUMEN OTHERS
INR Crore 103 7345 3771 7854 0 55 1553 0 0 966 1982 15 9 1106
INR Crore 430 29532 12741 30923 40 198 6036 0 0 1704 6839 59 44 3298
Source: Oil Companies. *RIL SEZ data estimated for June & July 2012. #DGCIS and Private imports are taken on average basis for May, June and July 2012. @ HMEL Refinery figures not included.
Natural Gas Produced, Supplied, Internally Used and Flared during the Period of April 2012 to July 2012 ((MMm3))
Area/State Field Block Production Sale/Despatch Quantity of Natural Gas Internal Use Consumption Abnormal Loss Normal Loss OFFSHORE (A) EASTERN OFFSHORE 3845.772 35.584 39.728 1.165 0.000 0.000 181.377 14.274 0.000 6.082 GUJARAT OFFSHORE 49.601 5.627 0.025 WESTERN OFFSHORE 510.012 19.710 677.111 26.831 ONSHORE CBM (B) JHARKHAND 1.124 0.000 MADHYA PRADESH 0.000 0.116 0.000 0.157 WEST BENGAL 1.559 0.234 24.390 3.641 ONSHORE CONVENTIONAL GAS (B) ARUNACHAL PRADESH 1.158 1.830 0.000 1.939 GUJARAT 0.000 0.000 0.000 0.000 0.000 0.000 2.502 0.189 0.000 0.000 0.000 0.000 0.000 0.000 0.906 0.080 0.000 0.000 0.000 0.000 0.113 0.004 0.000 0.000 0.223 0.000 6.496 0.876 0.000 0.000 0.000 3.778 0.557 0.000 48.862 4.976 0.000 0.000 0.000 0.720 0.000 0.000 0.000 0.050 0.000 3.598 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 RAJASTHAN 18.420 0.126 0.000 0.000 103.361 0.000 Flare Utilization Percentage
KG-DWN-98/3 (D6) PY-1 PY-3 Ravva CB-OS/2 M&S Tapti Panna-Mukta
3887.403 41.485 0.000 203.095 55.308 532.138 713.937
6.047 0.592 0.000 1.363 0.055 2.416 9.995
99.8 98.6 0.0 96.3 99.9 99.5 98.6
Jharia Sohagpur East Sohagpur West Raniganj East Raniganj South
1.124 0.239 0.504 2.360 28.696
0.000 0.123 0.347 0.567 0.665
0.0 48.5 31.2 76.0 97.7
29
Kharsang Allora Asjol Bakrol Bhandut Cambay CB-ON/2 CB-ON/3 CB-ON/7 CB-ONN-2000/1 CB-ONN-2000/2 Dholasan Dholka Hazira Indrora Kanawara Lohar North Balol North Kathana Ognaj Sabarmati Sanganpur Unawa Wavel RJ-ON/6 RJ-ON-90/1
9.591 0.000 0.000 3.155 0.000 0.010 0.990 0.000 0.198 0.307 7.376 0.000 4.336 53.838 0.013 0.792 0.050 3.607 0.000 0.000 0.000 0027 0.000 0.000 18.546 122.778
4.664 0.000 0.000 0.464 0.000 0.010 0.004 0.000 0,081 0.084 0.004 0.000 0.002 0.000 0.013 0.072 0.000 0.009 0.000 0.000 0.000 0.026 0.000 0.000 0.000 19.417
31.2 0.0 0.0 85.3 0.0 0.0 99.6 0.0 59.3 72.7 99.9 0.0 100.0 100.0 0.0 0.0 100.0 99.8 0.0 0.0 0.0 4.9 0.0 0.0 100.0 84.2
NewsBriefs | Coal
Coal Blocks Of SKS Ispat, JSW Steel, etc deallocated Following the recommendations of the interministerial group (IMG) going into the coal block allocation scam, coal blocks of companies like SKS Ispat and Power Bhushan Steel, JSW Steel, Himachal EMTA Power. The Minister also gave his nod for forfeiting bank guarantee of Nerad Malegaon block in Wardha Maharashtra. Companies penalised for slow development
Castron Mining Ltd Field Mining and Ispat Ltd Domco Smokeless Fuels Pvt. Ltd Monnet Ispat & Energy Ltd. Shri Virangana Steels Ltd Adhunik Metaliks, Adhunik Corporation, Orissa Sponge Iron, Deepak Steel & Power, SMC Power Generation Ltd, Metaliks Ltd, Visa Steel Ltd. SKS Ispat Tata Sponge Bhushan Steel Himachal EMTA Power Ltd & JSW Steel Ltd Gupta Metaliks & Power Ltd & Gupta Coalelds Ltd Usha martin Ltd Electrosteel Castings Rungta Mines Maharashtra Seamless ArcelorMittal and GVK Power Jayaswal Neco Neelachal Iron & Steel DB Power IST Steel and Power Ltd, Gujarat Ambuja Cement and Lafarge India Electrotherm (India) Ltd and Grasim Industries
Jindal Steel & Power Bags project in Mmamabula CIC Energy Corporation, which has been trying to develop the Mmamabula coal mining and energy project, has been acquired by Naveen Jindal-led Jindal Steel & Power Ltd. The Mmamabula project acquisition makes Jindal Africa the frontrunner for building a 1,200 MW power plant in Botswana for the supply of power to South Africa. International Coal Ventures Due diligence going on for 5 assets International Coal Ventures Ltd is likely to finalise at least one deal by the end of this fiscal. The joint venture is in the process of conducting due diligence for five coal assets in different geographies. The total capital expenditure plan for this fiscal is `4,656 crore. So far, it has not been able to finalise any acquisition deals. NMDC eyes Coking Coal In talks with Russian & Mozambique cos NMDC is in talks with two coking coal firms, from Mozambique and Russia, for acquiring stakes in them. Of this, Sol Mineracao Mozambique the Mozambique firm- has coking and thermal coal assets, having an exploration target of about 500 million tonnes, in Mutarara district of Tete Province in the African nation, NMDC said in its annual report for 2011-12. Coal mining Plan panel pitches for privatisation The Planning Commission pitched for privatisation of coal mining, saying the government should have a consistent policy for the energy sector, as third-party sale is allowed for petroleum and natural gas in the country. CAG had recently estimated that the financial impact of the benefit to the private allottees of coal mines will be about `1.86 lakh crore.
Tata Metaliks identifies partner To set up 1.2 lakh tn/yr coke oven plant Pig iron maker Tata Metaliks Ltd has identified a partner to put up a 120,000-tonne a year coke oven plant and a 12-MW captive power plant at Kharagpur on build-operate-transfer mode. Envisaged as backward integration of the pig iron unit, it will be located at the companys existing unit at Kharagpur. Estimated investment for setting up the coke oven and the power plant would be close to `130 crore. Coal-to-liquid projectTata Group denies Tata Group denies special treatment Denying allegations that it had received any special treatment, the Tata Group said the Centre followed a stringent process when it allocated coal block for a coal-to-liquids project to its joint venture with South Africas Sasol. The inter-ministerial group (IMG) set up to examine bids for the blocks had established clear eligibility criteria, including a minimum net-worth of `4,000 crore in view of the large capital investment. Piling Cash Plan panel pulls up Coal India Pulling up Coal India for sitting on a huge idle cash-pile, the Planning Commission has asked the staterun firm to step up investments in domestic coalfields and acquisition abroad. The pace of investment by CIL has been extremely poor. Planning Commission has suggested spinning off CILs subsidiaries into separate entities so that each one of them can pursue its own goals. CIL - CBM To be produced without biding The government plans to allow Coal India Limited and its subsidiaries to produce coal-bed methane from their blocks without any competitive bidding, officials in the petroleum and coal ministries said. The state-run firm will be granted an exception to the existing norms that requires the government to invite bids from public and private firms for producing gas trapped in coal seams under the CBM policy.
30
CIL to outsource coal mining Government working on template The government is working on a watertight template that would enable Coal India to outsource mining through tenders. The move is aimed at avoiding controversies such as the one over the allocation of coal leases. A committee has been set up by the government to help CIL outsource coal mining to mine developers and operators. Coal demand 1,000 million tonnes by 2016 -17 The Planning Commission said that the countrys coal demand is likely to touch 1,000 million tonnes (MT) by 2016 -17, much higher than estimated supply of 750 million. Plan panel has projected a growth of 7 per cent for commercial energy which includes coal, petroleum, hydro, initially it was planned to have some 8-9 per cent growth.
Floating Storage and Regasification Unit (FSRU)

A Promising Opportunity in the Waiting for India
October 2012
Key Highlights DetailedcomparisonofFSRUandOnlandR-LNGterminal EconomicsofFSRUprojects:Understandingtherevenue streamsandestimatingthepaybacks MappingtheglobalFSRUdevelopments BenchmarkingofthekeyFSRUtechnologyplayers EnvisagedFSRUbasedR-LNGcapacitiesinIndia CorrelationofFSRUpossibilitiesinIndiawiththe trunklinedensity UnderstandingofFSRUtechnologiesandevaluating thetechnicalbreakthroughtsenablingpenetrationof FSRUsystems Evaluatingtheregulatoryapproachrequiredforpromoting FSRUdevelopmentsinIndia StudyingtheemergingtrendofconvertingexistingLNG vesselstoFSRU Highlightingthechallengingoperationalrequirements forFSRU A must buy for Evaluating the Emerging Global FSRU Suppliers and Developers LNG Markets: LNG Infrastructure Operators Gas Marketers and Traders FSRU Senrice Providers Shipping Companies Port Deve|opmentAuthorities Maritime Boards Includes: Regulatory Bodies Financial Institutions rt International Dil and Gas Companies Repo 00 Gas Producers (National and Intemational) ,0 5 7(H opy) ` C d r a Power, CGD, Fertilizer, Steel and Petrochemical companies Consultancy
Assessing the Impact on LNG Sourcing Options for India
September 2012
July 2012
Quarterly updates for one year
Post launch session with the author
Power Project Portfolio of Prime Indian States

State Prole Compendium With Coverage On Entire Power Sector Value Chain September 2012
Key Highlights CurrentScenarioofStateandTrends VintageofprojectsindicatingR&M,O&MandLE opportunities Poweroff-takearrangement Fuellinkagedetails Detailsofprojectdeveloper,equipmentandother serviceprovidersoftheproject ProjectPipelineofStatesalongwithtracker,indicative ofprogressoftheprojects InfrastructuralInvestmentandPotential ParametricComparisonofStates OpportunityMappingatStateLevel PowerSectorInvestmentPotential
Fact Packs
Fact Pack is comprehensive anthology of most crucial datasets on operational, nancial and market aspects of a business. The prime objective of the fact pack series is to provide strategic insights on as-is scenario of a business, highlighting business opportunities, risk assessment and key developments shaping the industry. The overall scope of the fact pack will encompass identifying, ltering, sourcing and presenting key business parameters, in form of a market intelligence report. Fact Pack: Power Distribution Companies Price: `15000 Fact Pack: Power Generation Plants Price: `15000 Fact Pack: Gas for Power Generation in India Price: `15000
FACT PACK SERIES
Gas for Power Generation in India

Exploring the Issues, Challenges & Opportunities for Key Stakeholders
August 2012
InfralineEnergy Fact Pack Series
Portfolio Project Power Indian States e m of Pri
e Coverag m With mpendiu lue Chain ofile Co r Va State Pr Power Secto On Entire
Fact Pack of Major Distribution Companies in India

Exploring Business Opportunities for the Key Stakeholders in the Industry
Fact Pack: Port Sector in India Price: `15000

FACT PACK SERIES
Fact Pack of Major Generation Plants in India

Exploring Business Opportunities for the Key Stakeholders in the Industry July 2012
Aug 2012
Port Sector in India

Exploring the Issues, Challenges, Competition and Business Opportunities for Key Stakeholders
0 20,00
Infralin eEnerg y Powe r Projects
Repo
rt
August 2012
dium Compen
InfralineEnergy Fact Pack Series Report
InfralineEnergy Fact Pack Series Report
InfralineEnergy Fact Pack Series
For any further information, kindly contact us on below mentioned coordinates:
Manoj Narang, Director - Business Development
For exhaustive list of our products and services
Ph. +91 11 4625 0038 (D) 4625 0000 (B), Mobile: 9811991174 Email: manoj.narang@infraline.com, rs@infraline.com
http://store.infraline.com
ExpertSpeak
Green activism holding up clearances for coal projects

Incremental capacity of 181 million tonne per annum in coal production is stuck due to environmental clearances. Delays in environmental and forestry clearances are two of the major impediments to production. Though a few clearances have come, a majority of them are still stuck, says Chairman-cumManaging Director of Coal India Limited, S. Narsing Rao.
from InfralinePlus, Rao says, Delays in environmental and forestry clearances are two of the major impediments to production. Though a few clearances have come, a majority of them are still stuck. At present, a total of 178 forestry proposals are awaiting clearances. Of these, 128 are at Stage I level (involving a total area of 15,453 hectare) and 50 at Stage II (total area 13,134 hectare). Explaining the other bottlenecks he says, there are delays in land acquisition, relocation and rehabilitation issues and law & order problems in some areas. Inadequate infrastructure for coal The country may be reeling under a evacuation in some coalfields is another historic power crisis in all senses of the hurdle in production. If these bottlenecks term, 66 per cent of our power plants are removed, coal production would may be staring at a bleak future due witness a spurt, he says. to coal shortages, power generation On CILs strategy to increase may be languishing at a output during 12th Plan, Rao time when demand There says, We are working on is far outstripping are delays in land acquisition, improving our efficiency supplywith all relocation and levels in operations. this and much rehabilitation issues Reducing the more, one would and law & order downtime of the have thought that problems in some areas. equipment and the government Inadequate increasing their machinery infrastructure for availability is would be working coal evacuation is assiduously being overtime clearing another hurdle. pursued to step up pending proposals production. and removing hurdles from the way of capacity augmentation, but the Chairman-cumManaging Director of the countrys biggest coal mining entity Coal India Limited (CIL), S. Narsing Rao, says 51 environmental clearance proposals with an incremental capacity of 181 million tonne per annum are awaiting clearances at different levels. Answering detailed queries
Enter private players

To fast track production, CIL will also give mines to private mine developercum-operators (MDO). As many as 13 opencast greenfield projects with a total annual capacity of 65 million tonne have been identified which will be given to MDOs, informs Rao. Though we should not excessively depend on outsourcing, it helps in engaging private companies and using their efficiency to expedite and shore up coal production, says Rao. He admits that private operators are efficient in coal transportation and overburden removal. Possibly, they can do a faster job in facilitating initial project implementation activities and can be more flexible in negotiations with landowners, he says. Private sector can ideally be engaged to implement projects for CIL on a turn-key basis.
32
Imports inevitable
As per present estimates, coal demand in the country at the end of 12th Plan (2016-17) would be 980 million tonne.
Domestic production would hover around 795 million tonne, leaving a gap of 185 million tonne which may have to be imported. This would be about 120 million tonne of imported quality. CIL has written to its major consumers, i.e. the power sector, and will start importing coal on receiving their consent, says Rao. Initially, about 20 million tonne would be imported every year.
Pool pricing would be adopted to resolve the issue of pricing of imported coal. According to Rao, this would be a mechanism for pricing the 15 per cent coal that would have to be imported to bridge the gap between demand and supply.
Pool pricing would be adopted to resolve the issue of pricing of imported coal. According to Rao, this would be a mechanism for pricing the 15 per cent coal that would have to be imported to bridge the gap between demand and supply. It would be revenue neutral and would have no impact on the companys bottomline. On being asked about the number of fuel supply agreements (FSA) which CIL had signed with power companies, Rao says 39 agreements have been signed with different power producing units since April 2009. On the issue of disagreements with companies on FSAs, he says, The dialogue is active. We are hopeful that something mutually beneficial and a workable would be worked out soon. He refuses to answer a query on the differences with UK-based investment fund TCI, the single largest shareholder in CIL after the Indian government, saying the matter is sub-judice. Outlining CILs expansion plans Rao
says, Fresh underground exploration at more sites will be undertaken but first priority will be on increasing mechanization in the existing mines. Steps are being taken to increase production from underground mines. These include converting manual mines into semi-mechanized bord and pillar mines with load haul dumpers, side discharge loaders and using fully mechanized mass production technology with continuous miner and power support longwall in phases.
What is pool pricing? It is a pricing mechanism for imported coal based on the average cost of domestic coal and imported coal. Under fuel supply agreements with power companies, CIL is required to meet 15 per cent (roughly 20 million tonne) of their fuel requirement through imports since domestic output is sufficient to meet only 65 per cent of the demand. Since imported coal is of a high quality and is hence costlier than domestic coal, pool pricing is a mechanism to neutralize the cost disadvantage for those power companies which may be forced to accept more imported variety of coal. Bord and pillar mining Also called room and pillar mining, it is a method of deep mining in which pillars and timber are left standing to support the roof of the mine. Modern pillar sections use remote-controlled equipment, including large hydraulic mobile roof-supports to prevent cave-ins. These are similar to large dining-room table but with hydraulic jacks for legs. Longwall mining It is a form of underground mining where a long wall of coal is mined in a single slice. It has been extensively as the final stage in mining room and pillar mines. Improved consumer satisfaction, mitigating environmental hazards arising out of coal transport, and pricing of coal at par with international standards are some of the reasons behind CIL favouring setting up of washeries. More washeries on Build-Own-Operate (BOO) basis would be set up in the second phase.
Quality matters
With limited scope of product differentiation, competitiveness of generic products like coal primarily centers around quality and price. To make the product competitive and to bring in international standards of consistency in quality, CIL has decided to set up coal washeries with participation of organizations with proven competence in coal washing technology. In the first phase, 20 units with a washing capacity of 111 million tonne per annum would be set up in BuildOwn-Maintain (BOM) mode. Of these, six will be of coking coal (19.1 million tonne per annum capacity) and 14 of non-coking coal (92 million tonne per annum capacity). So far, four washeries with a total capacity of 22.5 million tonne per annum have been finalized.
33
Revised target of coal production for the year 2012-13 (Coal India Limited) (Mill Te)
34
Sub Co
Apr 2012 - June 2012 Target Actual Shortfall Sep 2012 Aap Revised 2.047 2.047 2.635 2.669 3.153 3.215 5.605 5.695 3.148 3.267 8.316 8.316 7.35 7.35 0.08 0.092 32.334 32.65 Mar 2012 2012-13 Aap ReAap vised 3.717 3.717 33 2.945 2.979 31 8.132 8.196 55.009 6.79 6.883 70 4.183 4.305 44 11.662 11.662 117 12.849 12.849 112 0.116 0.128 1.1 50.392 50.719 464.1
StatisticsCoal
ECL BCCL CCL NCL WCL SECL MCL NEC CIL
7.579 7.44 8.984 15.886 11.428 26.671 23.238 0.231 102.467
7.742 7.134 9.42 15.065 10.342 27.571 25.056 0.121 102.451
0.163 -0.306 -0.564 -0.821 -1.086 0.9 1.818 -0.11 -0.006
Jul 2012 Aug 2012 Aap ReAap Revised vised 2.245 2.245 2.059 2.059 2.17 2.205 2.325 2.36 3.155 3.219 3.123 3.187 4.856 4.948 5.065 5.158 3.189 3.312 3.1 3.223 8.577 8.577 8.021 8.021 8.054 8.054 7.86 7.86 0.071 0.083 0.08 0.092 32.316 32.643 31.633 31.96
Target Jul 2012 - Mar 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2012 Feb 2012 Aap ReAap ReAap ReAap ReAap Revised vised vised vised vised 2.732 2.732 2.873 2.873 2.869 2.869 3.487 3.487 3.392 3.392 2.635 2.67 2.635 2.669 2.79 2.825 2.79 2.825 2.635 2.686 4.406 4.47 4.758 4.82 5.43 5.494 6.531 8.595 8.328 6.366 6.05 6.143 6.33 8.42 6.635 6.728 6.719 6.812 6.065 6.149 3.769 3.882 3.885 4.003 4.121 4.244 4.199 4.322 3.988 4.099 9.696 9.696 10.547 10.547 11.099 11.099 11.305 11.306 11.106 11.106 10.044 10.044 9.831 9.831 10.266 10.255 11.778 11.778 10.741 10.741 0.095 0.107 0.095 0.107 0.107 0.119 0.115 0.127 0.11 0.121 39.418 39.744 40.954 41.27 43.305 43.632 46.925 47.252 44.368 44.661
Revised target of offtake for the year 2012-13 (Mill Te)
Sub Co
Apr 2012 - June 2012 Target Actual Shortfall
ECL 8.195 8.663 BCCL 7.712 6.364 CCL 13.795 12.53 NCL 15.98 15.929 WCL 11.17 10.287 SECL 28.72 30.437 MCL 27.995 26.508 NEC 0.265 0.157 CIL 113.832 112.875
0.468 0.652 -1.265 -0.051 -0.883 1.717 -1.487 -0.108 -0.957
Target Jul 2012 - Mar 2013 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 Feb 2013 Aap ReAap ReAap ReAap ReAap ReAap ReAap ReAap Revised vised vised vised vised vised vised vised 2.55 2.55 2.55 2.55 2.475 2.475 2.76 2.76 2.705 2.706 2.85 2.85 3.495 3.495 3.175 3.175 2.55 2.55 2.498 2.498 2.412 2.412 2.534 2.534 2.518 2.918 2.68 2.68 3.019 3.019 2.812 2.812 4.355 4.498 4.356 4.498 4.25 4.389 4.64 4.783 4.59 4.729 4.875 5.018 5.385 6.528 4.9 5.029 5.31 5.316 5.305 5.311 5.225 5.231 5.95 5.958 5.89 6.896 8.055 6.081 6.6 6.606 6.32 6.325 3.54 3.64 3.35 3.45 3.22 3.317 3.576 3.675 3.64 3.737 3.94 4.04 4.34 4.44 4.04 4.13 9.555 9.555 9.195 9.195 8.68 8.68 8.585 9.585 9.735 9.735 10.635 10.635 10.88 10.86 10.115 10.115 8.85 9.018 8.845 9.013 8.56 8.723 9.505 9.673 9.46 9.623 10.19 10.358 10.45 10.618 9.436 9.587 0.08 0.092 0.08 0.092 0.075 0.087 0.09 0.102 0.09 0.102 0.09 0.102 0.11 0.122 0.105 0.116 38.79 37.219 38.178 36.607 34.897 35.312 38.639 39.068 38.629 39.044 41.315 41.744 44.259 44.688 40.902 41.29
Mar 2013 2012-13 Aap ReAap vised 3.495 3.495 34.25 3.064 3.064 31.8 5.455 5.598 56.6 6.615 6.621 69.25 4.435 4.535 45.25 10.92 10.92 118 10.46 10.628 113.75 0.115 0.127 1.1 44.559 44.988 470
Abstract of Pending Forestry Proposals at MoEF Level for Stage-II & I Clearance (Status as on July, 2012)
S. No. Company No. of Cases for Stage-II & I Clearance 2 1 12 0 5 1 9 13 0 2 No. of Average No. of Cases Pendency Cases Pending at MoEF Pending at MoEF Level At MoEF Level Stage-II Level, Stage-II (Yrs) Stage-I Jharkhand 1 0.8 1 Jharkhand 0 0 1 Jharkhand 7 3.2 5 Madhya Pradesh 0 0 0 Madhya Pradesh 0 0 5 Maharashtra 0 0 1 Chattisgarh 8 2.4 1 Madhya Pradesh 4 3.2 9 Odisha 0 0 0 Assam 0 0 2 20 8 4 0 8 0 0 20 2.7 2.9 3.2 0 2.4 0 0 2.7 25 7 14 1 1 0 2 25 State Average Pendency at MoEF Level, Stage-I (Yrs) 1.5 1.8 3.9 0 2.7. 5.4 5.3 2.3 0 0.9 2.71 3.2 2.5 5.4 5.3 0 0.9 2.71 AreaPending at MoEF Level, Stage-II (Ha) 124.28 0 833.05 0 0 0 1429.93 999.25 0 0 3386.52 957.33 999.25 0 1429.93 0 0 3388.52 Area Pending At MoEF Level, Stage-I (Ha) 245.78 6.41 367.11 0 431.05 193.19 324.84 460.1 0 307 2335.48 619.3 891.15 193.19 324.84 0 307 2335.48 Total Area Pending (Ha)
1 2 3 4 5 6 7 8 1 2 3 4 5 6
ECL BCCL CCL NCL WCL SECL MCL NEC
370.06 6.41 1200.16 0 431.05 193.19 1754.77 1459.36 0 307 5722 1576.63 1890.4 193.19 1754.77 0 307 5722
Total : 45 Jharkhand Madhya Pradesh Maharashtra Chattisgarh Odisha Assam Total : 45
35
Abstract of Pending Forestry Proposals at State Level for Stage-II & I Clearance (Status as on July, 2012)
S. No. Company No. of Cases for Stage-II & I Clearance 2 3 21 3 19 12 43 11 13 6 No. of Average No. of Cases Pendency Cases Pending at MoEF Pending at MoEF Level At MoEF Level Stage-II Level, Stage-II (Yrs) Stage-I Jharkhand 1 0.8 1 Jharkhand 2 2 1 Jharkhand 2 2 19 Madhya Pradesh 0 0 3 Madhya Pradesh 5 2.5 14 Maharashtra 1 4.3 11 Chattisgarh 15 5.6 28 Madhya Pradesh 3 2.6 8 Odisha 1 0.5 12 Assam 0 0 6 30 5 8 15 1 1 0 30 3.9 1.7 2.5 5.6 4.3 0.5 0 3.9 103 21 25 28 11 12 6 103 State Average Pendency at MoEF Level, Stage-I (Yrs) 2.3 1.8 0 4.4 3.1 4.5 5.4 3.3 3.5 2.5 3.34 0.2 3.4 5.4 4.5 3.5 2.5 3.34 AreaPending at MoEF Level, Stage-II (Ha) 527.04 234.08 30.1 0 732.01 216.25 7479.16 512.41 16.9 0 9747.95 791.22 1244.42 7479.16 216.25 16.9 0 9747.95 Area Total Area Pending At Pending MoEFLevel, (Ha) Stage-I (Ha) 109 29.75 1711.86 923 1760.57 435.66 3342.19 768.05 3705.77 331.48 13117.32 1850.61 3451.61 3342.19 435.66 3705.77 331.48 13117.32 636.04 263.83 1741.96 923 2492.58 651.91 10821.35 1280.46 3722.67 331.48 22865.26 2641.83 4696.03 10821.35 651.91 3722.67 331.48 22865.26
1 2 3 4 5 6 7 8 1 2 3 4 5 6
ECL BCCL CCL NCL WCL SECL MCL NEC
Total : 133 Jharkhand Madhya Pradesh Chattisgarh Maharashtra Odisha Assam Total : 133
The PETROTECH series of International Oil & Gas Conference and Exhibitions is a biennial platform for national and international experts in the oil & gas industry to exchange views and share knowledge, expertise and experiences. The event also aims to explore areas of growth in petroleum technology, exploration, drilling, production and processing, rening, pipeline, transportation, petrochemicals, natural gas, LNG, petroleum trade, economics, legal and human resource development, marketing, research & development, information technology, safety, health and environment management in the oil & gas sector. As the prime showcase of Indias hydrocarbon sector, this mega event attracts scientists, technologists, planners and policy makers, management experts and entrepreneurs to solicit their views in order to catalyse achievement of global energy security.
PETROTECH-2012 is being organised under the aegis of the Ministry of Petroleum & Natural Gas, Government of India, by Indian Oil Corporation Ltd. and PETROTECH. The PETROTECH series of conferences has gathered momentum and emerged as a movement uniting the upstream, midstream and the downstream sectors. Each PETROTECH conference has been unique in its approach while ubiquitous in its aim to provide cleaner, greener and sustainable energy. It has been able to garner an enviable reputation in the international circles as one of the coveted forums for the global hydrocarbon industry. PETROTECH-2010 attracted over 3400 delegates including about 390 foreign delegates including ministerial delegates. There were 356 exhibitors including 205 international rms and country pavilions besides presentation of 368 poster papers and 74 oral papers. When it comes to sustainable energy, India has laid emphasis on exploring innovative ways to drive energy economics. Taking the environmental issues into concern, PETROTECH has given a hand to many green causes. With a plethora of topics and technical sessions, 2012 will not only sow the seeds of a vibrant future but also engage you in a memorable and eventful four days of extravaganza.
Theme Hydrocarbon and Beyond: Changing Landscape

The disconcerting reality of the 21st century is the continued dependence of the world economy on hydrocarbons as a source of energy. Despite the rapid technological development, which is denitive of the new millennium, we have yet to nd a reliable, efcient and mass produced alternative to hydrocarbons. Even as global per capita consumption of petroleum products increases, bolstered by the rising living standards in emerging markets, the need for nding truly viable alternatives is paramount. Every new alternative should stand the ultimate test of being able to balance sustainable energy solutions and assurance in terms of supplies. Investments which are otherwise long term in the capital intensive energy business, also need to be looked at from a broader framework probably with multiple social, economic and environmental benets. The theme of Petrotech 2012 - Hydrocarbon and Beyond: Changing Landscape endeavours to raise the quality of debate and enable answers that actually work in transforming the way our society consumes energy. Looking for answers beyond conventionand solutions that promise to open new chapters. Seeking enlightened choices in the energy landscape through the most powerful force in the Universethe power of human imagination.
Organisers
IndianOil
IndianOil is Indias agship national oil company with business interests straddling the entire hydrocarbon value chain - from rening, pipeline transportation and marketing of petroleum products to exploration and production of crude oil and gas, marketing of natural gas and petrochemicals. It is the leading Indian corporate in the Fortune Global 500 listing, ranked at the 98th position in 2011 With a 34000 strong workforce, IndianOil has been helping to meet Indias energy demands for over a century. With a corporate vision to be Indias energy provider, IndianOil closed the year 2010-11 with a sales turnover of Rs. 3,28,744 crores ($72,125 million) and prots of Rs. 7,445 crores ($1,633 million). At IndianOil, operations are strategically structured along business verticals - Reneries, Pipelines, Marketing, R&D and Business Development - E&P, Petrochemicals and Natural Gas. Having set up subsidiaries in Sri Lanka, Mauritius and the United Arab Emirates, IndianOil is actively scouting for new business opportunities in the energy markets of Asia and Africa. The IndianOil group of companies owns and operates 10 of Indias 20 oil reneries with a combined rening capacity of 65.7 million metric tonnes per annum (MMTPA i.e 1.30 million barrels per day approximately). It has a portfolio of muchloved brands such as Indane LPGas, SERVO Lubricants, XtraPremium Petrol, XtraMile Diesel etc. It has a keen customer focus and a formidable network of customer touch points dotting the landscape around rural and urban India. IndianOil has a sprawling world-class R&D centre that is probably Asias nest. It conducts pioneering work in lubricants formulation, renery processes, pipeline transformation and alternative fuels, and is also the nodal agency of the Indian hydrocarbon sector for ushering in Hydrogen fuel economy in the country.
Petrotech
Petrotech is a non-prot organization that works towards exploring possibilities and opportunities in the eld of hydrocarbons globally. It was founded by distinguished members representing the entire spectrum of the hydrocarbon industry. The Governing Council of the society is well represented by multinational, private sector and major public sector oil companies. It also provides a forum for national and international experts in the oil and gas industry to exchange views and share their knowledge, expertise and experiences. The Society is also geared to meet challenges of energy requirements and maximise hydrocarbon resources for the sector. It also aims to identify ways for adopting modern technologies as well as apply knowledge of relevant contemporary technologies to meet oil and gas industry challenges. The Society has numerous other objectives geared towards creating traction in one of the most competitive sectors globally.
CoverStory | LeadEssay
Back on the Wheel

After months of policy paralysis, the government wakes up to take a series of steps to rationalise oil and LPG subsidies even as states are told to pay for what they consume
LPG price hiked by 17% to `883 per cylinder in view of rm international prices Diesel price up by `5 per litre; states offered power debt recast package
38
Stung by a series of downgrades by international credit rating agencies including S&P, Fitch, Citi, CLSA, Moodys and Morgan Stanley coupled with criticism of policy paralysis, the government finally took some crucial policy decisions on economic front last month. Though there is a theory that the announcements were meant to divert attention away from the coal scam, the governments larger purpose seems to have been to project a reformist image by coming out with investment-friendly
policies such as allowing 51 per cent foreign direct investment (FDI) in multi-brand retail. This is something which industry had been clamouring for, for long. In the energy space, two significant policy announcements were made--the power sector got a debt restructuring package, and petroleum saw a bold move of capping the number of subsidised LPG cylinders. Whether they are actually reforms or a mere tinkering may be a subject
of debate but policy signals here are clear. Market-linked price for liquefied petroleum gas (LPG) is the way forward for those who can afford to pay more and a cost-reflective pricing of power is what the Centre wants from state distribution companies. The Centres decision to cap the number of subsidised domestic LPG cylinders to six came along with the decision to hike diesel prices by about 13 per cent or `5 per litre. Both the decisions, though unpopular, had one
larger message of asking the consumers to be prepared to pay a realistic price for energy. We import almost 80 per cent of our oil, and oil prices in the world market have increased sharply in the past four years. We did not pass on most of this price rise to you, so that we could protect you from hardship to the maximum extent possible. If we had not acted, it would have been over `2,00,000 crore this year, Prime Minister Manmohan Singh said in his address to the nation within eight days of fuel price changes on September 21. Singhs address came even as political pressure mounted on him. Trinamool Congress had withdrawn support to the UPA government on September 18. The resolve to be realistic about energy pricing is clear but if the capping of number of LPG cylinders and the price increase in diesel is seen independently, the former appears to be an experiment in targeting subsidy better and the latter a hike that had been postponed for a while and yet did not cover the full `17 a litre revenue loss for the oil marketing companies. What shape the petroleum pricing policy will take is yet not clear even though signals are showing a move towards correction. What is appreciable in these announcements is the duty changes. Through a `5.30 per litre cut in excise duty, an increase in petrol prices was averted. Oil marketing companies needed an increase of about `6 per litre
in petrol price to align it with market rates. But the `6,000-crore revenue loss in the remaining part of the year was made good by increasing excise duty on diesel by `1.50 per litre. The fiscal tool of tax changes is now being used more frequently to make adjustments in retail prices. This trend has been continuing since 2008 when crude oil had crossed $147 per barrel. Every time the price of controlled petroleum products is increased, the Centre makes duty changes as well. Though the financial restructuring scheme for state government distribution companies, with mandatory conditions like annual price revision, should also be seen in the same light as the recent announcements in petroleum sector, being a purely central government subject, petroleum is always easier to tackle. The scheme that will be open to state governments till December 31, 2012, is relying heavily on fulfillment of certain mandatory conditions which are aimed at cleaning up the books of distribution companies. Its announcement on September 24, therefore, is not purely a central government initiative for tackling accumulated losses of `1.96 lakh crore but a signal from the Centre that it wants the states to prevent a build-up of debt again. The package comes a decade after the Centre extended a similar one-time settlement of state electricity boards dues. The scheme would restructure the
Bracing up for hikes in non-subsidised cooking gas

The government on October 1 increased the price of non-subsidised LPG cylinder (14.2 kg) by 17%, to `883 a cylinder in view of firm international prices. The Centre had earlier decided to cap allocation of LPG cylinders to six per household a year. Any additional LPG cylinder over and above the capped figure will now have to be procured at the prevailing market rate which will be notified by public sector oil marketing companies. The subsidized cylinders are priced at `399 in Delhi, while the non-subsidised cylinders are priced around 120 percent higher. Meanwhile, the import and excise duties on non-subsidised household LPG cylinders have been abolished by the government. However, nonsubsidised commercial LPG cylinders would continue to attract customs duty of 5 per cent and excise duty at 8 per cent.
debt of distribution companies by asking state governments to take over half of their short-term debt. The remaining debt will be rescheduled by lenders. Each state that decides to take part in the scheme will appoint a nodal bank to bring the scheme to a logical conclusion. Among the mandatory conditions that a state has to meet is annual revision of power tariffs, allowing fuel surcharge on power sales, bringing in private participation in distribution and converting loans to equity. Though states are yet to take a call on the scheme, they will need to take over the 50 per cent liability during the next two to five years by issuing special securities to lenders in a phased manner. While doing so they have to be mindful of the targets set by the Fiscal Responsibility and Budgetary Management Act. As an incentive, the scheme offers transition finance to states which is expected to cost the Centre `1,500 crore annually for one per cent loss reduction in aggregated commercial and technical losses nationally. States will be eligible for this only if the gap between the average revenue realised and cost of supply is brought down by at least 25 per cent during a year over 2010-11. The inducement to shift to reform measures spelt out by the scheme, however, will not necessarily come from this transition finance as much as it will come from the distribution companies own need to clean their balance-sheet. Banks are not ready to finance discoms. A case in point has been Rajasthan. The success of this scheme would largely depend on the willingness of states to adhere to the reform path charted by the Centre. As is the case with petroleum policy signals, this scheme too will rely on a strong dose of policy willpower to keep politics out of pricing of energy and, more importantly, a proactive regulator which will see that the price is not unfair to consumers and costs are not inflated.
39
Oiling of the reform chain

Defying political wisdom, government goes for cut in diesel subsidy and cap on supply of cheap LPG cylinders to signal its commitment on reforms. People protest but markets welcome the move with Sensex, Nifty and rupee moving up.
CoverStory | InDepth
40
Reform lubricant set to put economy back in motion

Ratings downgrades by international agencies do the trick Under-recoveries of oil rms set to climb down
It had escaped the rod in June this yearafter price hikes on June 25, 2011 and June 26, 2010, the theory of predictability would have called for a similar action on June 24 2012. But nothing of that sort happened that Sunday. For, the government was in a de-active mode then. It came back into the active mode finally in September, and how! Anyway, the dirty fuel had it coming
for long while petrol prices had been raised 10 times in 24 months since June 23, 2010, when they were deregulated-diesel had succeeded in evading the long arm of the executive by hiding behind the common man. So much so that the gap between the two varieties of hydrocarbon had grown to nearly `30 per litre. It was, after all, common mans fuelpowering his buses, trucks, lorries, trains and ferrying everything that he required to
lead a comfortable life. But on September 14 diesels luck ran out and a belligerent government, fed up of mounting fiscal deficit and piling under-recoveries of oil marketing companies (OMCs), raised its price by `5 per litre. Had it not done so, the under-recoveries on diesel sale alone would have gone up to `1,07,620 crore in 2012-13 (comprising 57 per cent of total under-recoveries of `1,89,605 crore)
against under-recoveries of `81,192 crore in 2011-12 (comprising 59 per cent of the total under-recoveries of `1,38,541 crore). International crude prices have been ruling above $100/ barrel since February 2011, while oil prices are currently around $109/barrel. Sustained rise in the international oil prices and a virtual freeze on domestic front was putting extra pressure on the margins of OMCs.
Promise overdue
It was a promise made almost six months back. The government had announced its intent to cap fuel subsidies at around `43,000 crore in this years budget itself. But since then nothing much had been done to achieve that target. Till the day the price of diesel was raised by `5 per litre and supply of liquefied petroleum gas (LPG) was restricted to six cylinders per household in a year (subsequently raised to nine cylinders in a year), losses of OMCs on sale of diesel, LPG and kerosene were projected to mount to `1.88 lakh crore. That figure, by the way, is equivalent to Indias annual defence budget and is three times the budget for the governments pet National Rural Employment Guarantee Scheme (NREGA).
and Wipro--also faced the same fate. Fitch downgraded the credit rating outlook for India on June 18 to negative, assigning it the lowest investment grade notch. On August 8, Moodys cut Indias GDP growth forecast to 5.5 per cent from 6.2 per cent estimated earlier. Other global financial services firms such as Citi and CLSA also reduced the growth forecast for India to 5.4 per cent and 5.5 per cent, respectively. Morgan Stanley lowered its forecast for India on September 4.
in supply of subsidized LPG cylinders and allowing 51 per cent foreign direct investment (FDI) in multi brand retail. Every household will now get only a limited number (nine, in Congressruled states and six elsewhere) of LPG cylinders at `400 (Delhi price) per cylinder while above this number the cost would be around `750 per cylinder.
Why this kolaveri?
Diesel is the fuel of the economy and any increase in its price is bound to have a cascading impact on prices of all essential commodities, thereby fuelling inflation. But economists are of the view that subsidising diesel artificially leads to large fiscal deficit which in turn again exerts an inflationary pressure on the wholesale price index and fuels inflation.
While the then finance minister Pranab Mukherjee slammed the Fitch downgrade in June terming it as based on old data, Prime Minister Manmohan Singh expressed concern over the Moodys downgrade in August. Jolted out of its reverie by the slew of downgrades, the governments key ministers, including finance minister P Chidambaram, along with Singh, reportedly worked overtime trying to convince UPA chairperson Sonia Gandhi on the need to give a green signal to reforms. Permission secured, the government finally came out with its booster package for the economy on September 14 which included diesel price hike, reduction
Foreign hand
The trigger for reforms, however, came not from all the ruckus in Parliament over scams, agitations against corruption or criticism of inaction from the Opposition but from rating downgrades by international agencies. On April 25, Standard & Poors revised its outlook on Indias longterm sovereign rating from stable to negative. It also revised its outlook to negative for seven government-related entities, including the Export-Import Bank of India, the India Infrastructure Finance Co., the Indian Railway Finance Corp., and the Power Finance Corp. The countrys top three IT companiesInfosys, Tata Consultancy
Explaining the rationale behind the much-awaited reforms and the decision to hike diesel prices by `5 per litre, Singh, in his subsequent address to the nation said the hike was aimed at discouraging the rich from using subsidised fuel which was meant for the poor and the farmers. Much of the diesel is used by big cars and sports utility vehicles (SUVs) owned by the rich and by factories and businesses. Should government run large fiscal deficit to subsidize them, Singh asked, adding that diesel price was raised by only `5 while it should have been raised by `17 to cut the losses. Huge gap in prices of petrol and diesel has also led to a huge growth in sales of diesel vehicles in recent times. Low diesel prices also prompt its usage in factories in place of furnace oil which is a common industrial fuel having same properties as diesel. At the same time it is also true that diesel is the fuel of the economy and any increase in its price is bound to have a cascading impact on prices of all essential commodities, thereby fuelling inflation. But economists are of the view that subsidising diesel artificially leads to large fiscal deficit which in turn again exerts an inflationary pressure on the wholesale price index and fuels inflation. Chief Economist and Senior VicePresident at World Bank Kaushik Basu has long been of the view that a gradual rise in diesel prices would eventually cool down inflation. I personally believe that we should decontrol diesel prices, which will take some pressure off on fiscal front and in the long run bring
41
42
inflation down, Basu had said recently. Noted economist and former finance secretary Vijay Kelkar in a recent report titled Roadmap for Fiscal Consolidation, which was released by the finance ministry on September 29, says subsidies pose the greatest fiscal risk. According to him, diesel prices should be completely deregulated. A Re 1 increase in diesel price would result in a subsidy reduction of about `7,800 crore, says his report. Out of the budget estimate of `43,500 crore for fuel subsidy, the government has already released `38,500 crore to OMCs for 2011-12. In our assessment, if no steps are taken, the additional burden on the government for the first three quarters of the current year would be of `51,500 crore, even if it is assumed that international prices would soften a bit, says the report. Although diesel prices have been deregulated in principle, the report notes that they are still being administered by the government. At this stage, it says, even if diesel prices are not fully deregulated, there is an urgent need for an immediate price increase. The price adjustment should be done in small successive steps and the government should move to complete deregulation of diesel as early as possible, the report says, adding that the government should aim to eliminate at least half of the per unit subsidy on
Thus spake Kelkar on Diesel Subsidy on diesel has been a major contributor to fiscal slippage in recent years. Government should move to complete deregulation of diesel as early as possible. Increase price of diesel by `4 per litre immediately (already implemented) Make successive price adjustment in small steps Losses on diesel have increased to `13.50 per litre Although diesel prices have been deregulated in principle, they are still being administered by the government. Our policy objectives should at a minimum aim to eliminate half of the diesel per unit subsidy during this year itself by March 31, 2013, and the remaining half over the next fiscal
3 times in 3 years Date Increase (`/litre) Price after revision* 26.6.2010 2.00 40.10 25.6.2011 3.00 (excluding 41.19 state VAT) 14.9.2012 5.00 46.95
Thus spake Kelkar on LPG Policy goal should be to eliminate subsidy by 201415. Reduce it by 25 per cent this year with the remaining 75 per cent reduction coming over the next two years. Increase price by `50 per cylinder immediately
Thus spake Kelkar on kerosene The subsidy should be reduced to one-third by 2014-15 Increase price of kerosene by `2 per litre immediately
diesel during this year itself by March 31, 2013, and the remaining half over the next fiscal. Similarly on LPG, the report says that the goal should be to eliminate subsidy by 2014-15 and reducing it by 25 per cent this year, with the remaining 75 per cent reduction taking place over the next two years. For kerosene, the objective should be to reduce the subsidy by one-third by 2014-15. Further, price revisions should be left to the discretion of the OMCs, who should be empowered to make such revisions. This would reduce the projected under-recovery by `20,000 crore for the next half year, says the Kelkar report. While taking a cue from the report, the government did increase diesel prices by `5 per litre but losses per litre on this fuel are still close to `13-14. What needs to be seen now is how the government will move towards de-regulating diesel prices, as proposed by the committee, over the next two years.
In Control: Finance Minister P . Chidambaram
Credit-worthy: Petroleum Minister S Jaipal Reddy
Carrot minus stick

Accumulated debt of state power distribution companies will be converted into bonds but in the absence of a statuary liquidity ratio status, these bonds will be of little value
Discoms get `1.9 lakh crore breather Lenders may go deeper in red as the scheme does not address long-term energy problems
by Alok Sharma
Bailouts dont get bigger than this. The recent `1.9 lakh crore debt restructuring package for state power distribution companies (discoms), which had been reeling under accumulated losses of `2.4 lakh crore, would provide the nearbankrupt state electricity boards (SEBs) a welcome breather. But, in the absence of accompanying clear-cut reform measures, its efficacy in the long term remains uncertain. The quantum of the package equals the sum of the losses of seven out of 28 states alone. Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh and Tamil Nadu together account for at least `1.9 lakh crore of the debt of discoms. Some distribution companies have aggregate technical and commercial (AT&C) losses of more than 50 per cent. According to the scheme approved by the Cabinet Committee on Economic Affairs (CCEA) on 24 September, 50 per cent of the short-term outstanding liabilities of discoms will be taken over by state governments. The balance half of the loans would be restructured by lenders through moratorium on principal and best possible terms for repayment. The plan, formulated on the basis of an expert group report by B K Chaturvedi, Member (Energy), Planning Commission, and deliberations in the Prime Ministers Office (PMO) and Finance Ministry, shall remain open up to December
How effective is the bailout package is yet to be seen...
43
Two committees, one each at Centre and state level, would be formed to monitor the progress of the turnaround plan, Union Power Minister Veerappa Moily
31, 2012, unless extended by the government. To avail the package, state governments will have to agree to bear 50 per cent of the outstanding dues of discoms up to March 31, 2012. To begin with, the rest of the dues would be converted into bonds which would be issued to lenders. But the bonds will not enjoy SLR (statutory
CoverStory
liquidity ratio) status. States will have to undertake milestone-linked reforms, including yearly tariff revisions and changing managements of loss-making distribution companies.
Intent not right

An official from a public lending institute says it would have been easier to lend money had the bonds been provided SLR status as that would have underscored the governments commitment to fulfilling its financial obligations. SLR bonds are essentially issued by the government and an investment in them is treated as liquid under the SLR requirements for banks. Experts too feel that the package fails to address the countrys long-term energy problems and may only drag government lenders deeper into the red. The scheme should have addressed the cause of the debt. SEBs have been driven into losses by years of populist policies such as free power for farmers, unreasonably low tariffs, corruption and mismanagement. The announcement is silent on this, said an industry expert. Keeping in view that the debt restructuring is dependent on regular tariff revisions, Fitch Ratings says that the entities should upgrade their infrastructure, curtail inefficiencies and improve credit profile. However, the long-term benefits will only accrue if the SEBs meet their milestones on tariff increases and reduce the large operational inefficiencies that lie at the core of the problem In light of
Key beneficiaries from the package will be Lanco Infratech (high receivables, benefit from merchant upside), JSW Energy (high merchant exposure) and Power Grid Corporation, as concerns on small receivables build-up will ease now.
the political sensitivity of the issue, strong political will across various state governments will be needed to achieve meaningful reform, the rating agency said in a statement.
Perform or perish
Explaining the intent of the scheme, Union Power Minister Veerappa Moily clarified that the relief proposals will be linked to performance. He said two committees--one each at Centre and state level--would be formed to monitor the progress of the turnaround plan. They will ensure that SEBs comply with the conditions of the relief package. The Centre will provide incentive by way of grant equal to the value of the additional energy saved by way of accelerated AT&C losses and capital reimbursement support of 25 per cent of principal repayment by the state governments on the liability taken over by them under the scheme. Terming the package as a move in the right direction, former power secretary Anil Razdan said It is better to give good quality power at `5-6 per unit instead of making people keep inverters at home or paying `12-18 per unit for diesel generated power and having the mess of pollution all around. The sector needs to develop sensibly so that law abiding citizens are able to enjoy the fruits of whatever tariff they are paying. Those who are cheating the system, whether from within or from outside, should get due punishment and should be exposed, he said.
Welcoming the governments move, Ashok Khurana, Director General, Association of Power Producers, said, It is a step in the positive direction. The loss reduction and tariff increase plans would need to be monitored very strictly so that utilities are able to break even in the next three to four years. In the interim they need to be provided adequate transition finance. L. Madhusudhan Rao, Executive Chairman of Lanco Infratech said, The implications of the re-structuring are far-reaching. It will improve the financial health of boards. This will ensure timely payments to utilities which in turn will be able to re-deploy funds into new projects. The provision to increase tariffs will benefit the sector as banks will again begin lending for power projects. Deutsche Bank Beneficiaries are likely to be power producers with spare capacity but with own/imported fuel sources-JSW Energy and Jaiprakash Power. On financing side, financiers such as PFC, REC, and PSU banks will benefit partly from chronic asset quality issues.
44
The proposed restructuring package may lift sentiment in the power sector especially for stocks such as Lanco which have large outstanding dues from stateelectricity boards A lower cost of equity would benefit Lanco, Adani Power and Indiabulls Power the most.
While the power generation companies are happy about the development, some states have expressed concern that the plan is not going to work. Explaining their logic, former power secretary R V Shahi said states were reluctant because the plan destabilised their own financial status. But these are the states which have allowed their distribution companies to deteriorate. According to Shahi, state governments should learn from Delhi governments initiative to privatise power distribution. He, however, cautions that unless this package is linked to specific time-bound action, it wont serve the purpose.
Executive reprieve
Parting gift: For Manmohan, with love from Kapadia
Former CJI, SH Kapadia Prime Minister, Manmohan Singh
45
Governments right to decide how to allocate resources vindicated Kapadia calls for policies to be fair but not vague
Just a week before leaving the office of Chief Justice of India, Justice S H Kapadia had delivered a crisp warningcum-advise to the government frame your economic policies in an equitable and transparent manner and do not leave much for the Judges to judge when such policies are challenged. Justice Kapadia had also said if the government leaves too many gaps in its economic policies, then the courts step in while judging its legality. Listening to him was Prime Minister Manmohan Singh. The warning-cum-advise had come four days before the Supreme Courts
land mark judgment, delivered by a 5-judge constitution bench headed by Justice Kapadia, on whether auction should be the only method for allocation of natural resources. Before the wider meaning of the 5-judge bench ruling, a small background would put things in context. Justice Kapadias warning summed up the 2G case which entailed a lot of political and economic misery for the government, which had to run through a tunnel for seven months before seeing light. Everyone, including the Prime Minister, had smelt a rat when the 2G
spectrum was being allocated in 2008. The first-come-first-served policy was apparently tweaked to favour the select few who had allegedly paid handsomely to the then people in position. Fairness and transparency, two cardinal principles in distribution of any natural resource by the government, were thrown in the dustbin. When the allocation of 2G spectrum licences was done, 122 of them were challenged. The court faulted the brazen violation of the two principles in the allotment procedure on February 2 and directed their auction. The court was so disturbed by the blatant violations of
CoverStory
46
fairness principle that it even observed that perhaps auction was the best mode for allocation of natural resources. An observation, having persuasive value, came to haunt the government in a big way as it got embroiled in scam after scam. But, it also realized that the countrys economic policies and development, especially the neglected sectors, could suffer if auction was made the only method for allocation of natural resources. It decided the constitutional method to approach the Supreme Court a Presidential Reference to attempt getting back what was constitutionally the domain of the Executive, i.e., is the formulation of economic policies. On September 27, it fully got back what it wanted to. For the court ruled that auction could be only among several methods for distribution of natural resources and that it was for the government to choose the mode that best served the common good. To the glee of the government, the court made an emphatic declaration that policy matters fell in the Executives exclusive domain. Four paragraphs in the 208 page-judgement are crucial for the government and stand out in the researched text of the verdict. On one hand, the court gave the government freedom to choose a method for allocation of natural resources saying judiciary did not have the expertise to recommend which allotment procedure was best but on the other hand it warned that arbitrariness in such allocations would not be tolerated under the constitutional scheme. It needs to be emphasized that the Supreme Court cannot conduct a comparative study of various methods of distribution of natural resources and suggest the most efficacious mode. If there is one universal efficacious mode in place, it respects the mandate and wisdom of Executive for such matters. Methodology pertaining to disposal
of natural resources is clearly an economic policy. It cannot and shall not be the endeavour of this court to evaluate the efficacy of auction vis-vis other methods of disposal of natural resources. The Court cannot mandate one method to be followed in all facts and circumstances. When these (policy decisions on allocation of natural resources) questioned, the courts are entitled to analyze the legal validity of different means of distribution and give constitutional answer as to which methods are unconstitutional and constitutional. Nevertheless, it cannot and will not compare which policy is fairer than the other, but if a policy or law is patently unfair to the extent that it falls foul of fairness requirement of Article 14 of the Constitution, the court will not hesitate in striking it down.
Fairness and transparency, two cardinal principles in distribution of any natural resource by the government, were thrown in the dustbin. When the allocation of 2G spectrum licences was done, 122 of them were challenged.
The governments, be the one at the Centre or in the states, will do well to frame these four paragraphs and place it on the prominent walls of power corridors. For, it will help them in understanding the constitutional requirements needed to be followed in allocation of precious natural resources which, in a democratic set up like ours, are held by the government as a mere trustee and mandated to be used for greater common good. Though the Supreme Courts
unanimous judgment, authored by Justice D K Jain, sparked joyous reactions from important cabinet ministers, Justice J S Khehar while agreeing with the other 4 judges, did dampen it a bit. Justice Khehars separate opinion on Presidential Reference made no bones of the illegalities that had been committed in allocation of coal blocks. He said the allocations were in blatant violation of Section 11A of the Mines and Mineral (Development and Regulation) Act, which mandated that the coal blocks could be allotted only through auction and competitive bidding. When he said no part of the natural resources can be dissipated as a matter of largesse, charity, donation or endowment, it must have sent shivers down the spine of those managing the coal sector which, everybody knows, have been operated as fiefdoms for decades. Justice Khehar said the government must plan carefully to evaluate what it was getting back from allocation of natural resources, even when it was done through a fair method, and find out whether it was getting the country good revenue or serving greater common good. And the allocation could not be be for a price lower than the actual cost of the natural resources, he warned. But, the final word from Justice Khehar was poignant as it reflected the successive governments inability to bridge the rich-poor divide through policy frameworks which leaned more towards the haves than the have-nots. He said: There cannot be dissipation of natural resources free of cost or at a consideration lower than their actual worth. One set of citizens cannot prosper at the cost of another set of citizens, for that would not be fair or reasonable.
CoverStory | InConversation
India was once the place to be, now things are not so rosy
Under his leadership, the Oil and Natural Gas Corporation (ONGC) has grown in leaps and bounds. It is today the only Indian energy major to feature in Fortunes Most Admired List 2012. The companys growth path seems to be uncluttered. For the first time, ONGC has come out with a Perspective Plan-2030 which outlines the production and financial targets to be achieved, both in the short and the long term. The man in the hot seat, Chairman Sudhir Vasudeva, speaks to Neeraj Dhankher on the stiff challenges faced by the company and how he plans to overcome them. Excerpts:
the same. However, because of other compulsions, the government could not implement the recommendations made by these committees. Why, according to you, is the participation of foreign companies in bidding rounds in the New Exploration and Licencing Policy (NELP) on the wane? First, there are competing opportunities elsewhere. East Africa has opened up recently, while there are opportunities galore in Brazil, Canada and Venezuela. So people have to decide if they want to come to India or go to those places.
How will the diesel price hike (by `5 per litre) affect your share of upstream contribution for under-recoveries in 2012-13? What burden-sharing formula do you propose? The subsidy burden which was projected by media and some analysts initially for 2012-13 was `187,000 crore. At that rate, after the diesel price hike, the burden is expected to come down by `20,000 crore, to `167,000 crore. Now rupee has also appreciated against dollar which will have a bearing on our contribution. Taking all this into account, our under-recovery burden this fiscal is projected to be the same as last year, i.e. around `138,000 to 140,000 crore as per investors, in which case we may end up paying almost the same amount which we paid last year. One thing lacking currently in the system is that we come to know about the contribution in under-recoveries only after the quarter is over. The government had constituted the BK Chaturvedi Committee and Kirit
Parekh Committee, which had made very exhaustive recommendations on
47
ONGC produces 70% of the countrys oil output
CoverStory | InConversation
Issues such as size of reservoir, fiscal regime and the ease of doing business are some of the considerations based on which investment decisions are taken. In India, there are many issues, coupled with policy paralysis. Two years back India was the place to be, but suddenly things are not that rosy. But being an optimist, I feel things will change for the better. And if you look at the kind of actions and decisions being taken in the last few weeks, there is every reason to be more optimistic. ONGCs plans to revamp aging elds seem to be not going as per plan. What the reason behind Assam Renewal Project getting delayed? We are getting nearly 73 per cent of our entire production from our 15 fields which are now between 37 to 51 years old. Mumbai High is 37 years old; while Ankleshwar and Ahmedabad fields were put on production in 1960s. The Enhanced Oil Recovery (EOR) and Improved Oil Recovery (IOR) schemes being implemented at a cost of `330,00 crore have helped us in maintaining production levels from such aging fields. More schemes are likely to follow soon. The 22 IOR/EOR schemes will give 160 mmt of oil and oil equivalent, out of which 72 mmt has already been produced and another 90 mmt will be produced between now and 2030. The future schemes will also help in arresting the decline or downfall in production. We may not be able to show increase in production, but we will be able to maintain production. With regard to the Assam Renewal Project, initially there were some glitches, but they have now been sorted out. In Assam, it is logistically difficult and working environment is also not very conducive. There were also some contractual issues which have now been taken care of. The project is on track and should be completed around March 2014. The government is known to be pushing for a takeover of ONGCs Assam assets by Oil India Ltd (OIL). It is felt that OIL is better placed to handle assets in the North-East as it has a rm base in Upper Assam. Is this so? When Mr R.S. Pandey was the petroleum secretary, a lot of comparison was done with regard to working of OIL and ONGC. However, the ground realities are completely different. Comparing ONGC and OIL is not an apple to apple comparison. OIL is producing only 3.5 mmt, and 85per cent of their production comes from new fields, while in our case about 85per cent of production is from old fields. Our fields are much deeper. Talks keep happening but there is no comparison between the two companies, be it production, financial resources or manpower. The audit watchdog, Comptroller and Auditor General (CAG) has slammed ONGC for shoddy exploration and targets, both for production as well as drilling. What are your comments? I do not want to engage in any debate with the issues regarding the observations of CAG. What I want to submit is that out of 10.9 billion tonne of reserves accredited so far in our country, 8.2 billion tonne have been accredited by ONGC. That speaks volumes about our performance and commitment. Six out of the countrys seven producing basins have been discovered by ONGC. We have a presence in all corners of the country, and are today producing 70 per cent of countrys oil and 50per cent of gas. Before KG-D6 gas find, we were producing almost 84 per cent of countrys oil and gas. We have our own credentials. This is just a perception which depends on what kind of yardstick you have. Ground realities are quite different. We are aware of what is not good in ONGC and we are constantly working at improving it. ONGC is reported to have surplus cash worth more than `18,000 crore. But a lot of this is reported to be lying waste in banks and has not been used wisely by ONGC. What are your comments? First of all, this `18,000 crore of spare cash that we have, is not liquid. Out of this, around `9,200 crore is lying in site restoration fund which is meant for abandonment of fields. We are supposed to keep this money in banks and every year we work out what will be the cost of abandoning the fields. But this `9,200 crore is generating interest. So the corpus is increasing. Then, we also have about `3,500 crore of unsecured liabilities which we are going to tie up with annuity. So about `12,000 crore is lying like this and we are then left with only `6,000 crore. We have made a presentation to the finance minister where we have shown that there will be a draw down from the surplus available with us in the five year plan. So we will not generate more cash but will draw down from cash reserves. Is borrowing an option, to fuel ONGCs E&P operations in the future? We will be looking at borrowings if there is a need. Today we are a debt free company. Our net worth is `111,000 crore, while the entire ONGC group has a net worth of `135,000 crore. If we need to raise debt, we will be able to do so from the market. How much of crude and gas production is expected from existing and new elds in the next few years? The production target for this year is 27.54 million metric tonne (mmt) of oil and 25.73 bcm of gas. It is about 1.6 per cent more than what we produced last year. The discoveries which are going to be monetized this year are the marginal fields. All these are at various stages of implementation. Some of these fields
48
have started contributing, like B-22, B-46 and B-193 fields. So by 2013-14, our production will be around 3 to 3.5 MMT more than what it would be in 2012-13. We made another discovery this year in western offshore basin. While carrying out drilling in D1 Field, we discovered a new pool of reserves. Earlier the D1 was known to have IOIP (Initial Oil In-place) to the order of 600 million barrel (82.20 mmt). After the discovery of the new pool, its total IOIP is expected to be in excess of One Billon Barrel (140 mmt), thereby making it the third largest field in Western Offshore after Mumbai high and Heera. By 2013-14, we will are likely to increase production from this field to the level of 60,000 barrels a day. What is the status of work on ONGC Petro-additions Ltds (OPaL) is mega petrochemical complex at Dahej in Gujarat? There has been no cost overrun on the project and the cost remains at `21,396 crore, which has been frozen and approved by the board. The project is nearly 60 per cent complete and should be completed by January 2014. ONGC has made a foray into the LNG business. What kind of opportunities are you looking at? See, more than deep pockets, we have a large heart. We plan to get into everything concerning LNG, right from sourcing, transportation and setting up regasification plant. It depends on the kind of opportunities. We are keenly looking for opportunities in the entire value chain of LNG if it makes commercial sense. ONGC has recently come out with its Perspective Plan-2030. What are the reasons for coming out with a new plan at this juncture and what will be your priorities? The only perspective plan made before Perspective Plan-2030 was when Col. Wahi was the Chairman. That time, ground realities were completely
I do not want to engage in any debate regarding the observations of CAG. We have a presence in all corners of the country, and are today producing 70 per cent of countrys oil and 50per cent of gas. That speaks volumes about us.
49
InConversation
different. ONGC was not a company but a Commission. There was no NELP, no competition and no subsidy burden under APM mechanism. Even OVL had only one property at Vietnam. The requirements were different so perspective plan was also different. The Perspective Plan-2030 is based on the fundamental premise that if we have a dominant Indian presence, to retain that we have to grow at a rate of 4 per cent, so that we can increase our contribution in the countrys oil and gas consumption from 20per cent to 30per cent by 2030. Oil and gas demand is expected to grow at the rate of 3per cent, so we have to grow at 4per cent. In our kitty today, 85per cent of production comes from domestic resources and 15per cent from our overseas E&P arm, OVL. This will have to change. We target to produce 130 MMT by 2030, of which 70 MMT will come from domestic sources and 60 MMT from outside. Today we are producing 52 mmt from ONGC and other joint ventures. The ratio of domestic and overseas is expected to be 55:45. This is a compulsion we are faced with. It is not that we are losing focus on E&P, but our growth vehicle has to be OVL. Do you feel shale gas can turn out to be a game changer in India as it did in the US? ONGC was the first to do pioneering work in shale gas in India. We hired Schlumberger and its expert subsidiary TerraTek. We drilled four wells in Damodar valley which confirmed the presence of shale gas. So we are up on a learning curve. Shale gas requires two things -- horizontal well drilling and hydro fracturing. We routinely do both. But that doesnt make us complacent. We have tied up with ConocoPhillips which is one of the US majors having lot of experience in shale gas and deepwater blocks. Both of us are studying the potential of shale gas in India. Besides India, wherever they have opportunities or operating fields of shale gas, they will provide us an opportunity of joining them. By November 2012 we will have a fair idea on the areas on which we may cooperate in shale gas exploration. Future of shale gas in India will depend on how the shale gas policy pans out. But concerns are many. In shale gas, the number of wells to be drilled is large as productivity of each well is low. The large tract of land available in the US may not be available in any other country. Similarly, hydro fracturing requires enormous quantity. Other concerns like disposal of used water, affect of drilling on seismic activity and pollution of million barrel of liquids more, from 7 to 12 million barrels. It is not only likely to become self sufficient but a net exporter of hydrocarbons. USA today has got 450 TCF of conventional gas and 875 TCF of shale gas. In case of India, the first step is to assess the reserves correctly. Given the decline in participation of foreign players in bidding rounds, do you feel India needs to replace NELP with the Open Acreage Licensing Policy (OLAP)? OLAP is only possible if you have accessibility to all the right data. For that, National Data Repository has to be created. That is now being done. Once the data depository is in place, it will lead to better participation of foreign players. Today, in India, there is no choice while participating in the bidding round. The DGH decides which blocks they want to offer. Many times the same blocks are recirculated. Unless there is more knowledge on the block, or there is a change in fiscal regime which can improve the blocks viability, who would want to bid? In case of OLAP, bidders will have the freedom to bid for all 26 sedimentary basins based on data available. Do you feel there is a need to change the PSC scal regime in India? You have already submitted your comments to the Rangarajan Committee on the same. It isnt that we do not agree with the current profit sharing mechanism in the existing PSC regime. But if it can be made better then why not? Idea is how to make things better to draw more people. So the proposal submitted by us is a win-win for both the government as well as the contractors. Of all the comments received from different entities, the Rangarajan Committee in its wisdom will pick up whatever is the best in all of that and come out with the best of the best.
50
Future of shale gas in India will depend on how the shale gas policy pans out. But concerns are many. In shale gas, the number of wells to be drilled is large as productivity of each well is low. The large tract of land available in the US may not be available in any other country.
water table have also been raised. In countries like France, they have stopped shale gas exploration altogether due to various concerns, while in the US, efforts are being made to demonstrate that it is possible to take care of all these problems. Further, when it comes to development of shale gas, there are two issues- availability of infrastructure for evacuation of gas and infrastructure for drilling. Then there is the all important issue of pricing. In USA, the reason why people are moving from shale gas to shale oil is that in Henry Hub the price is only $2. So it is not becoming viable. Between now and 2020, USA will produce 5
CoverStory | ExpertSpeak
Diesel price rise does not impact WPI as much as is made out
Mukesh Anand, Assistant Professor, National Institute of Public Finance and Policy
Increase in diesel prices last month prompted Trinamool Congress leader Mamata Banerjee to withdraw support to the government. The government survived with the support of other parties but the issue calls for a closer look at the way diesel is priced in the country. First, lets look at the macros-diesel comprises 38 per cent of all petroleum products consumed in India. Its substitution possibilities, at present appear to be severely limited. It is used as an input in activities that together account for almost 40 per cent of gross domestic product (GDP). More than 65 per cent of diesel is used in transportation activities which contribute 6.6 per cent to GDP. Road transportation services constitute more than 70 per cent of contribution to GDP from transport services. Trucks use more than 50 per cent of the total diesel consumed in transportation sector. is the difference between the desired and depot price.
To blame for under-recovery

As all components of RSP are completely predetermined, underrecovery varies largely due to changes in the desired price. The latter changes, sometimes sharply, due to changes in the (i) FOB price and (ii) exchange rate. For nearly two years, under-recovery on diesel has varied roughly between 20 and 30 per cent of RSP. Sale of diesel accounted for close to 59 per cent of total under-recovery of OMCs in 2011-2. Under-recovery on account of sale of all sensitive petroleum products namely, petrol, diesel, domestic LPG and PDS kerosene was estimated at INR 1,38,540 crore in 2011-2--almost 46 times the fiscal subsidy for that year. Fiscal subsidy however, is only the explicit subsidy on domestic LPG and PDS kerosene. And, since 2004-5 this rate has remained unchanged at INR 22.58 per domestic LPG cylinder (of 14.2 kg) and INR 0.82 per litre of PDS kerosene. Union government revenue expenditure on the petroleum sector in 2010-1 totalled INR 38477.95 crore (including fiscal subsidy and payment to OMCs against under-recoveries). Under-recovery signals presumptive loss on account of sales. As on September 1, 2012, under-recovery (INR 17.05 per litre) on diesel was significantly higher than taxes (INR 8.13 per litre) on the then RSP (INR 41.32 per litre)i.e. under-recovery exceeded 40 per cent of the retail price. However, annual average under-
51
Deregulated but not decontrolled

While there is no explicit policy to subsidise diesel, the current refrain is that pricing of diesel is deregulated, but not decontrolled. In particular, the price faced by OMCs appears to be deregulated and linked to the international prices, but the price charged by them is completely controlled. The price faced by OMCs or the desired price of diesel, as
recommended by the Rangarajan Committee (2006) and later endorsed by the Parikh Committee (2010), is determined by trade parity pricing (TPP). This gives 80 per cent weight to import parity price (IPP) and 20 per cent weight to export parity price (EPP) of diesel. The EPP is the freeon-board (FOB) price of Bharat stage (BS) III equivalent diesel at Arab Gulf, converted into INR per litre at the prevalent INR per US dollar exchange rate. The IPP includes three more (than EPP) elements namely, (ocean) freight, insurance, and customs duty. The retail sale price (RSP) of diesel is however, determined differently. Its components are (i) depot price--the price charged by OMCs (from dealers), (ii) excise duty on the depot price, charged by the central government (iii) dealer commission, charged by retailers, and (iv) sales tax on the sum of i, ii, and iii, charged by the state government. Under-recovery
52
recovery hovered around 25 per cent of RSP in 2011-2. Elimination of average underrecovery thus required a minimum of 25 per cent increase in RSP of diesel. Recent move by the UPA government is a significant step in this direction and Prime Minister Manmohan Singh came on television to explain the rationale. The Opposition however, is concerned about its ripple effect, which could raise total costs by 4, 5, 1.5 and 0.125 per cent respectively for (i) passenger transport by road in public sector (ii) freight transport by road (iii) railway transportation and (iv) industry. While actual escalations have not come to light yet, under broad assumptions, in agriculture the cost of cultivation, for example, of wheat and sugarcane could rise by 1.38 and 0.38 per cent, respectively. Given the weight (4.67 per cent) of diesel in wholesale price index (WPI), the direct impact of recent increase in
its price would raise WPI by 0.6 per cent. But, the practitioners of Indian macro-economic management worry about a significantly larger cumulative impact. Appropriate benchmarking of the desired price of diesel is then a prerequisite for reform.
Change diesel pricing benchmark

Reform in pricing diesel is critical to the success of the national policy on tariff and pricing of hydrocarbons. It is practicable to benchmark desired price against international prices. But, the extant practice of benchmarking desired price with TPP has weak theoretical grounding. Next, a higher weight on IPP in estimating TPP is inadmissible when India is emerging as a competitive producer and exporter of certain refined products, particularly diesel. Further, inclusion of customs duty in IPP apart from offering unwarranted
protection is inconsistent with the notion of international prices. The FOB price or EPP appears to be the appropriate benchmark. By realignment of desired price of diesel with FOB price, 17 per cent or more (about INR 14,000 crore out of INR 82,000 crore) of estimated under-recovery on diesel for 2011-12 could be shaved off. Importantly, this would reset incentives faced by public and private sector OMCs. More significantly, this would also limit the expected increase in RSP when pricing of diesel is decontrolled.
Hydrocarbon Vision 2025

An essential policy ingredient in the objectives of India: Hydrocarbon Vision-2025, relates to tariff and pricing of differing products. It is intended to (i) promote new investment with adequate protection to domestic producers (ii) incentivise environment friendly behaviour and encourage cleaner, greener, and quality fuels (iii) balance the need to boost government revenues with the need to align duties with Asia-Pacific countries and aligning prices to international levels, and (iv) remove subsidies and cross-subsidies to promote efficient utilisation and eliminate adulteration. A recent report focussed on diesel notes that the nearing-completion and proposed refining capacity could yield large excess after accounting for rising domestic consumption. The relatively younger Indian refineries would also improve average quality of fuels. The report documents the pre-eminence of taxes on petroleum products, for both central and state governments. But, progress on removal of subsidies and cross subsidies, and elimination of adulteration, appear as a redherring in what could otherwise pass as successful implementation of the policy envisaged in the vision.
Power should be costlier at peak hours

Failure of state electricity boards to raise power tariffs in time, low level of protection of private power distribution companies (discoms), reckless lending by financial institutions, inadequate release of subsidy by state governments and high AT&C losses of operators are some of the reasons given by former power secretary and veteran of the sector, Anil Razdan, for the present sorry state of affairs in the power sector.
In 2001, the main suppliers of electricity to the then electricity boards and power distribution companies were either state generating units such as the Power Grid Corporation or national power generating companies such as NTPC, NHPC and Nipco. The electricity boards were in a financial mess and they often used to default on making payments to these entities. At that time the entire sector was being restructured and state governments were being asked to write-off loans, dues and losses of the electricity boards. It was also the time to ensure payments to central government undertakings which were the main suppliers of power. There was this securitization mechanism by which the state governments undertook to pay off these entities for supply of power. That situation has now changed. We have new distribution companies which have run into problems, but this time we have regulators in place. The problem is that the regulators have not been revising tariffs regularly, which is why there has been a gap between the cost of supply and the average revenue realized. At the same time the regulatory commissions have not been able to scrutinize the power booking of these distribution entities in the sense that they have not procured requisite power in advance. This time around we have a lot of private power generators so while earlier public sector companies stood securitized, private players do not have that level of protection. At the same time, these people have been borrowing recklessly from financial institutions which is why these institutions have run into crisis. Because if they do not get their money back, this `2 lakh crore that we are talking about would cause a huge distress to the financial institutions. And if this situation had not been addressed they could have landed up with NPAs. State governments have been formally The distribution end of asked to take over ownership and the power business assume responsibilities. At the is the end where same time the state entities have State money is realized been asked to clear payments governments from consumers immediately. There should have been and then it is also be a turn-around time, formally asked to paid either to take over ownership may be about three years, and assume the distribution so that they get financially responsibilities. companies or healthy again and there is an the generating incentive also which has been companies. So, if added, under which the central the cash flow runs into a government would also be prepared to problem here it affects the other two go a step further. segments of transmission and generation The cause of the crisis is not only substantially.This debt-fee restructuring the failure of regulatory commissions package is the first to take the distress to raise tariffs adequately and in time, out of the financial institutions, which it has been also non release of subsidy, have doled out large sums of money also inadequate release of subsidy and to these people. At the same time the delayed release of subsidy by state scheme also exhorts states, who are governments in some situations where also the owners of the power entities, to figures suggest that it was about 63 come and share the burden. per cent till about two years ago. The They are bonds all right but that is third factor is very high AT&C losses. yet to be decided by the government. A national average of about 26 per cent
53
54
itself is bad enough but some states have it as high as 50 per cent or more which is, simply put, appalling. There has to be a three-pronged attack and all these three issues have to be addressed. AT & C losses should be brought down to about 15 per cent on an average and in cities where the distribution system is more compact they should be brought down to single digit figures. Distribution systems have to improve and for that to happen the regulators have to provide some more funds to these companies. It is important to keep increasing tariffs slowly and steadily. When you have to increase the tariff in one go you have to also ensure better quality service to consumers. In addition, areas which are prone to theft, we need to introduce technology, for example smarter grids at the distribution level. Substantial investments have been made to improve the higher transmission levels but the lower voltage levels closer towards the consumer end are in dire need of investment. Plus, we need to have better command and control over mechanisms within so that you can audit power flow adequately and monitor interventions and other mal practices. The laws have been strengthened in the past to make these very heavily punishable offences but obviously it has not worked. I strongly advocate very high penalties on criminal offences as this alone can bring down corruption and help check such offences. Technology needs to be brought in to check power thefts and other malpractices. May be with the help of technology we can identify offending consumers and switch off their supply immediately from the distribution transformers if they are not behaving properly. Another important factor is the pricing of power. Power cannot be priced at the same rate throughout the day. There should be peaking tariff and normal tariff. When the grid is under distress you have to have higher tariffs because that power can be the most costly. In the past, states have been overdrawing during peak
hours and misusing the U-I mechanism which I think has not been stringent enough. These have to be stricter so that grid excursions are not practised. The last two grid failures prove that we need good governance.
Technology needs to be brought in to check power thefts and other malpractices. We can then identify offending consumers and switch off their supply immediately from the distribution transformers if they are not behaving properly.
The frequency at which we are operating also has to be narrowed as we are now operating from a national grid. We may require gas-based power as we have not been able to add the required amount of hydro capacity for peaking hours. Our total hydro generation was only 15 per cent of the required capacity in the last financial year. We would have to supplement with gas-based power for peaking hours but this would demand higher tariff. It cannot be the same as thermal power or nuclear power. For this you would need to have different tariffs at different times of the day. So, if we have a smarter system in place, Power pricing Power cannot be priced at the same rate throughout the day. There should be peaking tariff and normal tariff When the grid is under distress you have to have higher tariffs because that power can be the most costly
consumers can be told that if it is not under the designated times of the day they would have to pay higher tariffs for power so they can reduce their consumption accordingly. Or office, commercial establishments, etc. can get a warning signal through their metering mechanism or there can be automatic switch of the first, second and third degree requirements which you can forego if you dont want to pay a higher tariff . We have to improve the whole technical competence and the governance of the system and get realistic that if you need peaking power you would need a higher cost. We would also need to improve corporate governance within entities; their regulatory commissions have to be more vigilant in their enforcements. The power sector needs to be run as a business not a political wish. If states can manage providing 24 hours power supply its fine but if they provide just a 12-hour supply the consumers would be actually depending more on generator sets,so it is really cheating the consumer. In the agricultural sector also we do not have enough service for irrigation so we have to depend on ground water. Though we have started exploiting it, the groundwater level is falling. The debt restructuring package is a wake-up call for everyone, including regulatory commissions, power entities and financial entities which need to be sure about the health of the distribution companies they are lending to. Lastly, where the state entities have failed to bring down AT&C losses, privatisation can be considered seeing the performance of those companies which offer to come in or go for franchisee arrangements where they dont want to completely privatise the entities and yet ensure better functioning of the system. Pre-paid meters are another effective solution where recovery of dues is difficult.
Increase accountability of regulatory commissions

Since the enactment of the Electricity Act, 2003, there have been several critical developments in the power sector in India. However, there are still some gap that exists between the vision of reforms and its actual understanding and appreciation by the policy makers and regulators. Alok Kumar, former director in the Ministry of Power and Sushanta K. Chatterjee, Deputy Chief (Regulatory Affairs) Central Electricity Regulatory Commission (also coauthors of Electricity Sector in India: Policy and Regulation) delve deep into the the various developments based on policy and regulatory changes and landmark judicial pronouncements, crisp and concise analysis leading to the suggested course of action for future.
Power sector reforms in India are identified with the Electricity Act that came into being in June 2003. Although a correct assumption, it is pertinent to note that several states had unbundled their State Electricity Boards (SEBs) many years before this move. They had also set up independent Regulatory Commissions. The Central Electricity Regulatory Commission (CERC) was already five years old by then, and the Government of India had launched the Accelerated Power Development and Reforms Programme (APDRP) in the year 2002. Even the private sector had been given an entry in the generation and transmission segment much before the new law came into existence. Then, what was so significant about the 2003 Act? Well most significantly it aimed at
Alok Kumar Former director in the Ministry of Power
Sushanta K. Chatterjee Deputy Chief (Regulatory Affairs) CERC
55
building a new architecture of all-India competitive electricity markets for providing full choice to the generators and consumers, with a major role to be played by the state-level actors. Unfortunately, state-level actors have been slow in changing their mindset and this is turning out to be the biggest challenge for power sector reforms. We now need a second phase of power sector reforms. The enactment of 2003 has already seen two sets of amendments - in 2004 and 2007 but they were more in the nature of political adjustments than conscious steps to deepen the reform process. While the first set of amendments was a reflection of the national-level anxiety to push for faster competition and can be seen as a continuation of the birth process of the law itself, the second set which came to be known as review of the Electricity Act was born out of a political demand to revisit the law in order to accommodate the viewpoints of some of the states. The Act survived the review during 2004 - 2005 with
a few changes, but the whole process left a major imprint on the pace of reforms. The process of unbundling the SEBs, the most promising feature of the reforms slowed down as also the pace of tariff rationalisation. In a period of about eight years following the new law there has been noticeable progress on some fronts such as the revival of the private sectors interest, which had dipped following the failed attempt of Enron, USA, to set up a power generation plant in Dabhol, Maharashtra; the institutionalisation of open access on interstate grids; an increasing focus on consumer care; growth in trading volumes, transparency in functioning of the regulatory commissions; and rapid expansion in renewable energys share in the electricity mix. However, the core concerns that urged the initiation of reforms, by and large, remain the same. India is still unable to supply electricity to most rural areas beyond more than a few hours, even though the grid has been expanded. The supply to urban
56
centres also remains erratic. Industrial tariffs are still carrying a significant burden of cross subsidies. The financial deterioration of a large number of utilities has again become a major national concern. The lawmakers had placed a big responsibility on the Regulatory Commissions. But the Regulatory Commissions have chosen to ignore many crucial provisions of the statutory policies notified by the government and are, to a significant extent, responsible for the snails pace of tariff reforms and the consequent disastrous decline in the financial viability of the whole sector. Institutional weakness of the regulators is emerging as one of the key constraints in pushing forward the reforms agenda. To remedy the alarming situation, we urgently need to focus on three broad areas: strengthening the statutory framework, increasing accountability of the Regulatory Commissions while empowering them, and engaging with the states. As far as the statutory framework is concerned, we need to settle two key aspects. First, several important issues are awaiting final judicial pronouncements. Interpretation of powers of the state governments in the matter of directing a generating company to supply to a particular person is one such example. Whether we should wait and lose precious time or amend the Act itself to clarify the correct position? The latter course of action appears to be preferable. Second, the Electricity Act envisaged that important guiding details would be provided in statutory policies that would be followed by the regulators. But this is not happening in a large number of matters. There is ambiguity on the binding nature of the policies. Such uncertainty should not be allowed to prevail - either the policy should be made binding or the key stipulations should be incorporated in the Act. Ideally the Act should be amended without delay to incorporate the following: a governance structure for load dispatch centres and public transmission utilities
for effective ring fencing, mandatory competitive procurement of electricity by the distribution licensees, obliging the distribution licensees to procure adequate power five years in advance directly without any single buyer in between, definition and manner of computing the cross-subsidy surcharge, and that the commercial freedom of generators cannot be infringed by the state governments.
The three broad areas that demand attention are: strengthening the statutory framework, increasing accountability of the Regulatory Commissions while empowering them, and engaging with the states.
Regulatory Commissions are the key institutions for implementation of most of the reforms. But the experience of the last eight years shows that these bodies are facing serious constraints in arranging adequate skilled manpower and also are not showing the desired seriousness and urgency in implementing many critical statutory and policy provisions. The present requirement for taking prior approval of the government for designing and staffing their organisational structure is making the regulatory bodies heavily dependent on the governments. Similar dependence is being experienced in the matter of financial resources despite the statutory provision for special regulatory funds. These constraints need to be removed forthwith if regulatory functioning is to be made efficient and more accountable. These bodies should not be run like the normal government departments. At the most, broad guidelines can be given through the National Electricity Policy. In any case their expenditure is audited by the CAG. To make them really accountable, there is an urgent need to mandate that the Regulatory Commissions would
prepare an action plan for the next year in a transparent manner at least a quarter in advance, which should clearly show the items in policies or law that are yet to be implemented and the timelines for action on the same. Actual achievements by the regulatory bodies with respect to their action plans should be published in a national compilation for public scrutiny. Third crucial aspect of power sector reforms relates to the leadership role required to be played by the central government by continuously engaging with the states. State-level business environment for the power industry is in transition and states are still experiencing difficulties in adjusting to the new structure. Just to quote one example of this mind-set, one state government had demanded a few years ago that states should have the powers to issue policy directions to the Appellate Tribunal in the same manner as they have the powers with respect to the Regulatory Commissions. Another example, states are resisting, and sometimes confronting, the attempts of CERC to enforce grid discipline. Electricity is a concurrent subject but it is not a state subject. The central governments role should not just end by enacting a law. Through various efforts at building a consensus for expediting the transition, and through policies and programmes, it can incentivise speedy actions for implementation of reforms at the state level. The states where reforms are making good progress need to be rewarded in the best possible manner. Other states need to be persuaded to emulate. We need to quickly tighten these loose ends of power sector reforms. Otherwise, how will India achieve inclusive growth in the absence of reasonably good power supply to rural areas and our cities? Yes, the state governments can intervene to provide subsidies to the needy ones. But they must pay such subsidies to the utilities. And also pay in time.
NewsBriefs | Power
7 UMPP and 106 MPP exempted from higher duty Seven Ultra Mega Power Projects and 106 mega power projects will not have to pay higher duty for importing equipment. The Finance Ministry has notified a new duty structure that prescribes an effective duty of over 22 per cent, including education cess. However, this new duty will not be imposed on UMPPs, MPPs and expansion of existing mega projects. Reviewing AREB process India planning to approach IAEA India is looking forward at approaching the International Atomic Energy Agency to review the nuclear regulatory process of the Atomic Energy Regulatory Board, which has been severely criticised by the government auditor and activists. Preparation and planning for inviting IAEAs Integrated Regulatory Review Service for peer review of our regulatory system is also in progress. Bhola Power Plant LANCO ties up with BPDB Bangladesh Power Development Board (BPDB) and LANCO, signed the contract for setting up of the Bhola 217.9 MW gas-fired Combined Cycle Power Project. The project being set up at a cost of US$ 182.6 million will be funded by international donors such as ADB, FMO, OFID, DEG as well as have 25% equity participation of LANCO. NTPC Ministry plans stake sale Indias finance ministry has proposed selling a 9.5% stake in NTPC Ltd to raise as much as `131 billion ($2.41 bn) as part of its divestment programme for this fiscal year. proposal will now go for inter-ministerial consultation and then to the cabinet committee on economic affairs. The power ministry had certain reservations on the share sale of power companies due to volatile stock markets. 12th Five-Year Plan Capacity addition targeted at 88,000 MW In order to bridge the gap between peak demand and peak deficit, and provide for faster retirement of the old energy inefficient plants, the target for the 12th Plan has been fixed at 88,425 MW. The Commission had earlier estimated a capacity addition requirement of 75,785 MW in the next five years. The share of the private sector will be 52 per cent compared to the target of 19 per cent in the 11th Plan. Southern grid To be integrated with national grid The government said the southern power transmission grid will be connected with the national grid by the first week of January, 2014. The Southern Grid, which has not been integrated yet, will be integrated by the first week of January, 2014. Once the entire southern grid is also connected, we will have one frequency across India. Sasan UMPP Grid connectivity established The 400 Kv switchyard at the Sasan Ultra Mega Power Plant in Madhya Pradesh has been commissioned and with this, the Sasan UMPP is now connected to the national grid. The project is now ready to draw power from the grid to provide start-up power for the first 660-MW unit which is nearing completion. The same switchyard would enable evacuation of power to seven states from the Sasan UMPP . Teesta-V Hydroelectric Project MoP okays NHPCs investment plan The Ministry of Power has conveyed its approval to the capital investment by NHPC for the execution of Teesta-V HE Project (3x170 MW) in Sikkim to the completion cost (Revised Cost Estimate) of `2656.95 crore including IDC and FC of `169.94 crore. The project has been put under commercial operation in April, 2008.
New 500 MW Power project Joint effort of SAIL, NTPC & NMDC Indias largest power, steel and iron ore mining companies are joining hands to set up a power project in Uttar Pradesh to meet the electricity needs of National Mineral Development Corporation. The joint venture, comprising Steel Authority of India, National Thermal Power Corporation and NMDC, will establish a 500 MW coal-fired power generation facility, Neyveli Lignite Plans power projects worth 6,480 MW Neyveli Lignite Corporation (NLC) is proposed to consider power projects with a generation capacity to the tune of 6,480 mega watt (MW) in two five year plan periods. The projects would attract an investment of around `32,400 crore, with the given market rate at `5 crore to set up a MW, which is coal based.
57
Inflated Bills DERC to review tariff structure Flooded with complaints of inflated bills, the Delhi Electricity Regulatory Commission may examine making certain adjustments in power tariff structure. Effecting a 26 per cent hike in tariff for domestic consumers in June, DERC had abolished the slab of 200-400 units, resulting in a 33 per cent jump in electricity bills of consumers whose consumption exceed 200 units.
Barauni thermal power station Centre clears tapering coal linkage The Centre has formally approved in principle tapering coal linkage for the 250x2MW Barauni thermal power station (BTPS) extension project expected to be commissioned by January/July 2014. The tapering linkage means that the power project would receive coal supplies from Coal India in the interim period before supplies from the coal block allotted to Bihar begins.
InConversation
Political will required to prevent grid failure

As half-of-India plunged into dark after national grid collapse in July everyone in the sector is busy finding practical solution so that there is no repeat of such an event. Gregoire PouxGuillaume, President of Alstom Grid, attempts to offer workable solutions besides advocating for more accountability and transparency in the segment. An MBA from Harvard University bats for extending teeth to the regulators so that they can take much needed action at the right time to prevent the country from getting into an embarrassing situation.
How can India ensure that power outages, as bad as we have seen in recent times, dont happen again? Its a complex issue and one that will take some political will to solve. There are five grids in India. There is an overarching control center and there are regional centers. The problem is that the national control center does not have the authority to control regional consumption. So if a region draws too much power from the grid, the national control center can flag it off but cannot cut off the regional centre from the grid. And as I read the debrief from the investigation, that seems to be one of the issues. There is also the issue of power capacity in India. There is no shortage of it though we all know that some of the power plants are operating at limited capacity because of fuel issues. According to you, what could be the possible solution? The primary issue is how do you manage a country as vast and with as many grids as India. We need to have robust systems and for that India is investing a lot. Power Grid Corporation (PGCIL) has a very aggressive investment plan. But we need to do morehave more data, more real time data, more intelligence. We also need to have regulatory authorities which can and are authorised to take action. Its good to have the data but its better to have the data and to be able to take action. Nonetheless we can reinforce the grid in order to build an additional safety net. We designed and installed the national control centers. We also designed and installed three out of five regional centers. How do you see Alstoms business in India vis--vis China? And where do you see future investment plans in India? We have invested heavily in both the countries but historically, India has been a stronger base for us. We have had a long and distinguished history here, starting in 1911 in Kolkata. We consider ourselves Indian. We have five worldclass factories in this country and we manufacture every single equipment that we use here. So, there is little that we can do better in terms of our
58
presence in India, besides being a better supplier to PGCIL and independent power producers (IPPs) and the various companies involved. China is a different market for us. There too we have a lot of factories but we developed our presence in China through various joint ventures with different players. So, its a less coherent presence than in India. Which country is easier to do business with, India or China? Its hard to choose, but again I would choose India because as a market we understand India well. In China we have had a shorter history and its a market which has evolved quite a lot in the last few years. It is sometimes a bit difficult to read. Do you also face problems such as that of land acquisition and others that many rms are facing in India? For example, do you fear
any problems for the Champa-Kurukshetra project that you have bagged? Do you feel frustrated like some others do? Land acquisition is one part of the value chain where we are not in the front line. We are not responsible for securing the land but we usually sign a contract with our customers which says that we have to make progress and they have to make the land available. Yes we share the frustration because if the land is not available then we cannot install (machines). That usually means that we dont get paid and it impacts our business. You are the market leader in India, what is your strategy to stay ahead and maintain the leadership? We have been historically successful in the HVDC segment. We have three good references in India there. With ChampaKurukshetra project we have entered the 800 kV (kilo volt) segment and can now say that we are present in the whole value chain. It was a big part of our going to the next level in India and that needs lot of investments. Take our transformer factory in Baroda. Through the ChampaKurukshetra project we are building an extension. We are adding a test facility. Basically, we are laying the ground for the next 100 years. What are Alstom T&D Indias capex plans for 2012-13 and the next few years? Next year we are building an extension to our Baroda factory, so thats going to involve lot of money and we havent disclosed the numbers. But I am pushing Rathin (Rathin Basu, Head, Alstom T&D India) to negotiate well with the suppliers. India is probably going to be
If I have to choose between India and China, I would choose India because as a market we understand India well. In China we have had a shorter history and its a market which has evolved quite a lot in the last few years. It is sometimes a bit difficult to read.
the country next year where we will have the highest capex individually. And we have to also keep in mind that our five factories in India were commissioned less than five years ago -- in 2008-09. We invested more than `900 crore. What kind of impact will the huge import duty on power equipment have on your business in India? (Rathin Basu): Our imports are not that significant. Historically, we have been very local. High import duties might
have an impact on power producers, particularly those who are relying on Chinese equipment. (Gregoire PouxGuillaume): Its only impacting us on very specific projects where the rules of the tenders force us to bring something from elsewhere. I will give you an example in Champa-Kurukshetra, in order to qualify for 800 kV you need to have some references. So we can have one factory that can qualify in the UK, which is our case. The factory in Baroda does not qualify for the scope. So we have to import some of the transformers from Europe because we are only qualified for certain numbers of transformers for India. But through this project and next HVDC projects, we are hoping to be qualified for the full scope of operations in India. Has the economic slowdown impacted Alstom? In India its not so much to do with the economic slowdown as with independent power producers (IPP). Some of them are struggling financially and have huge debts. So we are having problems getting paid. There is less cash in the system and people are waiting till the last minute to pay. In countries which were impacted by economic crisis, we see is delays in projects becoming reality. Time is stretching out between one project becoming visible and it actually being awarded to somebody. We see sometimes customers are not in a hurry to take delivery, so we have our products ready in our factories for delivery but we have to have an acceptance test before. And customers are not coming to witness the acceptance test, simply because their projects are slowing down.
59
InDepth
Let there be Light, in Islands

Islanding is essential to protect priority areas in the event of a grid collapse Various changes need to be made in the system before implementation of schemes
60
by Pallavi Chakravorty
It was a dark chapter in the beleaguered power history of India. The only silver lining to this black cloud was that it jolted the entire power machinery in the country out of its stupor. Suddenly, everybody is on an alert mode after the double blackouts of July that hurled half of Indias 1.2 billion population into darkness on those two fateful days. Life came to a standstill as essential services including trains, traffic lights and Metro shuttles stopped functioning. Office-goers were forced to forego office as traffic piled up in serpentine queues on roads, air travellers missed
their flights, airlines made a killing on rebooking of tickets and train passengers were left stranded on stations. West Bengal Chief Minister Mamata Banerjee declared holiday due to the disruption. Soon enough,
A transmission infrastructure for carrying out automatic load shedding needs to be put in place for effective islanding.
the blame game started. The Centre blamed northern states, particularly Uttar Pradesh and Haryana for having overdrawn power beyond their quotas, an allegation that the states have repeatedly denied. Post the disaster, the prime question was how to avoid such a mishap in future? Newly appointed Minister of Power Dr. M. Veerappa Moily called a meeting of heads of all northern state electricity boards (SEBs) -- Delhi, Uttar Pradesh, Punjab, Haryana, Rajasthan, Uttarakhand, Himachal Pradesh and Jammu & Kashmir. It
was decided that states would adopt a defence mechanism called Islanding to avoid such blackouts. The concerned states have to prepare their islanding schemes with Power Grid Corporation (PGCIL), Central Electricity Authority (CEA) and Northern Regional Power Committee (NRPC) within the next three months and implement it in the next six months. A transmission infrastructure (frequency relays and phasor measurement units) for carrying out automatic load shedding needs to be put in place for effective islanding. The logic for such network islanding and automatic frequency-based load shedding needs to be reviewed on a periodic basis to accommodate the change in the generationtransmissiondistribution (G-T-D) cycle. All this requires detailed and continuous planning as well as execution. To what extent are we prepared for this is what remains to be seen.
Is islanding viable?
More than viable, islanding is essential, says Munish Sharma, spokesperson for BSES. However, since this can be worked out from 400 or 220 KV sub-stations only, a detailed study involving generators, state transmission units (STU) and discoms would be required to evolve an adequate protection system. The rate of success of islanding will be high if frequency is maintained by demand-supply balance within the network periphery of the utility, says Sharma. He adds that in metropolitan cities where captive and dedicated generation is in near vicinity, proper islanding schemes can be implemented. However, for a complete state where generation may be far away from the loads with a mesh of transmission network, the logic and criterions will be complex and such solutions may require extensive studies to establish their viability. For example, post the full commissioning of Bawana plant, Delhis dedicated generation will increase from
1,200 mw to 2,500 mw, thus making islanding more strong and fruitful for NCR, says Kumar.
Mumbai a success story

Though examples of islanding as a defence mechanism abound around the world, there is a success story back home as well Mumbai. The city has faced major grid disturbances since 1981 and has survived successfully on 27 of these occasions due to successful islanding. Initially designed by Tata Power, it was later upgraded with active participation of Reliance Infrastructure (R-Infra) and the Brihan Mumbai Electric Supply & Transport (BEST), along with network development and generation additions. A Tata Power official on condition of anonymity told InfralinePlus: Islanding has been provided on all tie points to simultaneously operate and island the Mumbai system. On the feasibility of all northern states embracing this option, he says, Northern states have been into several power crisis situations which is why it would be good if they go for islanding. However, there are a number of processes involved in islanding
61
The rate of success of islanding will be high if frequency is maintained by demand-supply balance within the network periphery of the utility
InDepth
What is Islanding? It is basically a defence mechanism to protect priority areas such as hospitals, airports, railways, Metro stations and high security zones such as the National Capital Region from plunging into darkness in the event of a grid collapse. As the name suggests, islanding isolates the transmission network from the interconnected grid in the event of excess load so that only non-priority areas get affected in case of grid disturbance of critical nature.
Why is it Important? Under certain circumstances, unexpected faults can lead to a major blackout There can be security issues over strategic locations plunging into darkness It will lead to load balance with tripping contained at minimum in every island As many stable islands as possible will be preserved Line flows will not exceed loading limits System bus voltage will remain within limits
Challenges Intelligent coordination required among various protection elements Changes need to be made in the system to control the load of the feeders/sub-stations to be islanded Loads need to be prioritised Frequency relay coordination and discrimination has to be accurate Political will needed to prioritise load shedding Coordination needed among government agencies to ensure sufficient and uninterrupted fuel supply terms is, controlled segregation of a system into a number of viable islands together with generation and/or load shedding. The nature and location of any fault that warrants such islanding can be ascertained in real time through monitoring the active-power (megawatt) flows at both ends of a number of pre-specified lines. Unfortunately, he says, contingency plans are not being made. The problem would be in doing islanding for big power plants with 2,000-3,000 mw capacity. As, in a situation of grid failure, it would be very difficult to deviate huge amount of power generated on a separate feeder, says Singh. Though islanding seems to be a step in the right direction, it has to be planned well and on a smaller scale. The entire nation cannot be islanded; only some pockets and essential services can be segregated. It would basically involve power distributing companies as they are the ones who will have to build a parallel network. How far the plans go in three months, as directed by the ministry, remains to be seen.
62
and they require rigorous planning and continuous upgradation.
Hurdles in implementation
As the grid is an inter-connected system with changing power flows, intelligent coordination among the various protection elements would be a major challenge in implementation. Changes need to be made in the system to control the load of the feeders/substations to be islanded. Loads need to be prioritised in case the generation is lower than the installed capacity, plus there has to be accuracy of frequency relay coordination and discrimination. Apart from technical issues, there has to be a political will to
prioritise load shedding in unusual circumstances. Discoms will have to be allowed cost-reflective tariff, which in turn will support the generation and transmission network. And lastly, co-ordination amongst various government departments to ensure sufficient and continuous fuel supply to have enough generation to cater to the load would be key to implementation of islanding. Emphasising the need to create a mechanism which can differentiate between grid failure and normal line fault, Director, Legal and Licensing, Uttar Pradesh State Electricity Regulatory Commission, Sanjay Singh, says, Islanding, in technical
InConversation
Licensing norms for power trading should have been stricter

Power Trading Corporation of India was set up in 1999 as a public-private partnership (PPP) with the purpose of developing a commercially vibrant energy market in the country. Its Chairman and Managing Director since October 11, 2000, Tantra Narayan Thakur, will relinquish office next month. He spoke to Pallavi Chakravorty about the power trading scenario in the country. Edited excerpts:
Are you satised with the way power trading has evolved in India since 2001? No, I would have preferred faster progress. We have not gone ahead at the pace that we could have. One of the major reasons is that there are too many controls on trading. I am of the view that once you have started something in order to develop the sector, it should be allowed to function independently, you should let it blossom. You can try to control the market to prevent distortions once it has evolved. But why do you anticipate distortions? They are not real. And this is not healthy. Apart from the controls on trading, what have been the other nagging points? There should have been stricter norms in giving licences. People who thought they would be able to do power trading, got licences but they dont yet have the logistics to do it. Power We trading is have not gone ahead at not an the pace that we easy could have. One of task, it the major reasons for requires this is there is too a lot of much of controls technical on trading. and sectoral expertise. Traders started competing with each other on unsound grounds. They should have been more professional in their dealings.
63
InConversation
If licences have been given to those who did not deserve them, then how viable is power trading? Unless you have open access which would result in pooling of power, sustaining power trading would be difficult. Open access should be encouraged. There is no problem at the national level but at the state level there are many issues. What is wrong with the current norms of giving licences? We only look at the net worth of a company while deciding to give licences. But it is also important to consider its technical soundness. One should look at the technical and commercial support of the licensee organization. Also, it should be seen what percentage of the sales turnover is the firms capital, as is the case with banks. For example, if a company with a net worth of `50 crore does trading of `10,000 crore, then its credibility is worth only `50 crore. One can say that giving licence to such a company is justifiable through payment security, but that is only for unforeseen circumstances. It doesnt cover the entire turnover. One should have a supporting balance sheet for doing trading. PTC is not merely a broker making two parties meet, we also look at how the trading market is progressing. What kind of impact would capacity augmentation have on power trading? Almost all power generators have some surplus and some deficit hours. For example, Delhi might mostly have deficit hours, but in the night it may have surplus power which it may sell to agricultural states. So, there will be seasonal disparities, there will be special disparities and there will be daily disparities and because of all these disparities you can do trading. If there is more generation, there will be more power available and therefore it would result in more trading. Market should be allowed to move freely, that will encourage trading and bring in more investment. It would give impetus to the whole system. Plus, competition would come in and with that prices can be controlled. Prices may go up initially but later no one would stretch the prices beyond a point. The best mechanism to control prices is the market. So if you have more power, there would be more players and more trading resulting in stabilization of prices. from Bhutan and selling it to those who require it in India. But probably from next year they would require some power from us during the dry season. Nepal is not surplus as of now. It buys power from us occasionally and has signed an agreement for purchase of 150 mw of thermal power on year-round basis. But it is short-term trading, done only in the dry season. When it starts harnessing hydro power, Nepal would become surplus. With Bangladesh, trading would begin now. The interconnection is being set up. Initially, it would be done through NTPC at an agreeable 250 mw, the rest would be done through trading. Are there any talks going on with Sri Lanka regarding this? Talks have taken place many a times. In fact, Sri Lanka is interested in getting power from India, and so is Pakistan. Talks have been going on for decades but now only Bangladesh seems to be fructifying. If we talk about investments, for example, in the distribution sector private players are not doing well. Does this affect the power-trading market? It doesnt have a direct impact, but yes indirectly it does. If power distribution companies are not in good financial health, they would not buy power and there would be load shedding. Consumers would rely on diesel generators and there would be less opportunity to reach out to them. So, if they are not buying power then they should allow the consumers to buy power from the open access system for which express feeder lines, etc. have to be set up. So, the financial health of distribution companies is also important for the growth of the market. To ensure the health of distribution companies, the basic thing is that they should get adequate tariff. The regulators should allow them
64
Cross-border trading would be beneficial for all the countries in the region. We already are doing power trading with Nepal and Bhutan, and in future we can have interconnections with Sri Lanka and tap their wind potential as well.
How do you see cross-border power trade evolving? Are there bottlenecks on that front as well? Cross-border trading would be beneficial for all the countries in the region. Nepal and Bhutan only have hydro potential, while Bangladesh has some thermal and gas potential as well. We can have inter-connections with Sri Lanka and tap their wind potential and they dont need to set up thermal power plants and spoil the island. Instead they can buy power from us and during the wind season they can sell power to us. The prospects are good but it is not happening due to lack of connectivity. At present, we are doing crossborder trading only with Bhutan and Nepal. We are buying surplus power
do it as formal consultancy. We have also entered into energy efficiency. Plus, we are also getting into renewable sources of power. So, this is not really diversification, we are just trying to be more proactive in encouraging project developers. Going forward, given the situation of coal in India, for the past 4-5 years, we have been buying coal assets abroad. What is the logic behind entering into coal trading and buying coal assets abroad? What are the economics involved? It is. In fact that is the purpose--to make available good quality coal at competitive prices to consumers. However, it is for the companies to decide where they want to source coal from. Whosoever wants to go through us, we help them. What kind of ripple effect is the coal scam having on the power trading market? The sector is affected due to the uncertainty. There are many power developers which were given coal and based on that they have been financed, some PPAs have also been signed with us. But the producers and financers have now become worried which is why the process has slowed down. How can PTC play a role in straightening things? We cannot play a role in domestic coal as it is given only to power generators and we are not into generation. What is that biggest challenge you face in the power sector? The biggest challenge is that Open Access has not been very encouraging though now it is catching up. But despite these problems we have been making profits.
65
reasonable tariff and not fear that consumers would protest. Consumers are anyway spending more on generators, so if they get regulated supply of power at lower rates why wont they buy? Distribution companies also have to bring down their AT & C (aggregate technical and commercial losses) substantially and their cost of buying power. This is not happening yet which is why there is no streamlining in the sector. PTC has diversied into nancing and other areas. Are there any more diversication plans? PTC was essentially established to bring in private investment in the power sector. And that is precisely
what we are doing.In fact we have been able to get a lot of private investment in the sector due to trading. When we were getting into long-term contracts with project developers, they asked us to take some financial stake in the power projects. So, initially we started with small amounts of equity, now we have a finance company which is taking part in equity and debt both. Similarly, we have also started coal trading. We are buying coal from Indonesia and selling it here. These are the two areas where we have become active apart from power trading. Many people often come to us for advice regarding power trading and their participation. Earlier, we used to give them informal advice, now we
StatisticsPower
Sector and Utility-wise generation performance of Hydro-Electric Stations (Station Capacity above 25 MW) during 2012-13 as on August 23, 2012
Station / Utility Installed Capacity as on August 8, 2012 2012-2013 (as on August 23, 2012) Prog. Achieved % of (MW) (MW) Achievement Over Prog. Station / Utility Installed Capacity as on August 8, 2012 2012-2013 (as on August 23, 2012) Prog. Achieved % of (MW) (MW) Achievement Over Prog. 2660.63 2669.62 100.34 164.34 4438.25 5387.83 99.93 4390.77 5101.81 60.81 98.93 94.69
66
Northern Region Central BBMB 1. Bhakra L&R 1325 2066.7 2. Ganguwal 77.65 164.96 3. Kotla 77.65 189.66 4. Dehar 990 1751.02 5. Pong 396 420.33 Total BBMB 2866.3 4592.67 NHPC 1. Baira Siul 198 479.34 2. Salal-I 345 1771.68 3. Salal-II 345 4. Tanakpur 94.2 201.38 5. Chamera-I 540 999.31 6. Chamera-II 300 900.03 7. Chamera-III 231 593.98 8. Uri 480 1559.71 9. Uri-II 378.36 10. Dhauliganga 280 616.98 11. Dulhasti 390 1062.34 12. Sewa-II 120 315.02 13. Chutak 29.98 14. Nimboo Bazdo 0 15.Parbati-III 0 0 Total NHPC 3323.2 8908.11 SJVNL 1. Nathpa Jhakri 1500 3942.96 THDC 1. Tehri 1000 1052.63 2. Koteshwar 400 486 Total THDC 1400 1539 Total Central 9089.5 18982 HPSEB 1. Giri Bata 60 80.67 2. Bassi 60 189.96 3. Sanjay 120 333.62 4. Larji 126 345.33 5. Uhl-III 0 0 Total HPSEB 366 949.58 Private Malana Power Company Ltd. 1. Malana 86 227.36 Jaiprakash Hydro Power Ltd. 1. Baspa-II 300 697.32 Everest Power Company Ltd. 1. Malana-II 100 244.29 Allain Duhangan Power Ltd. 1. Allain Duhangan 192 444.31 Jaypee Karcham Hydro Corporation Ltd.
2111.87 238.46 249.16 1789.3 571.53 4960.32 440.8 1920.65 217.87 1495.38 856.99 339.67 1604.12 0 659.26 1186.14 228.71 0 0 0 8949.59 4034.81 977.16 417.91 1395.07 19339.79 57.84 139.36 354.79 159.05 0 711.04
102.19 144.56 131.37 102.19 135.97 108.01 91.96 108.41 108.19 149.64 95.22 57.19 102.85 0 106.85 111.65 72.6 0 0 0 100.47 102.33 92.83 85.99 90.67 101.88 71.7 73.36 106.35 46.06 0 74.88
1. Karcham Wangtoo 1000 LANCO Green Power Ltd. 1. Budhil 70 Total Private 1748 Total H.P . 2114 Jammu & Kashmir J&KSPDC 1. Lower Jhelum 105 2. Upper Sindh II 105 3. Baglihar 450 Total J&K SPDC 660 Rajasthan RRVUNL 1. R.P . Sagar 2. Jawahar Sagar 3. Mahi Bajaj I & II Total RRVUNL Punjab PSPCL 1. Shanan 2. Mukerian I - IV 3. A.P . Sahib I & II 4. Ranjit Sagar Total PSPCL Uttar Pradesh UPJVNL 1. Rihand 2. Obra 3. Matatilla 4. Khara Total UPJVNL Uttarakhand UJVNL 1. Khatima 2. Ram Ganga 3. Dhakrani (y.St.1) 4. Dhalipur(y.St.I) 5. Kulhal (y.S IV) 6. Chibro (y.St.II) 7. Chilla 8. Khodri (y.St.11) 9. Maneri Bhali-I 10. Maneri Bhali-II Total UJVNL Private 172 99 140 411
279.64 197.34 1521.64 1998.62
283.79 195.29 1546.82 2025.9
101.48 98.96 101.65 101.36
0 2.69 20 22.69
2.57 17.1 22.35 42.02
635.69 111.75 185.19
110 207 134 600 1051
345.04 428.32 353.02 821.64 1948.02
267.12 480.45 349.01 737.95 1834.53
77.42 112.17 98.86 89.81 94.17
300 99 30.6 72 501.6
90.64 26.04 28.36 139.67 284.71
290.43 121.02 17.79 149.51 578.75
320.42 464.75 62.73 107.05 203.28
203.81 759.91 195.65 461.85
89.64 108.98 80.09 103.95
41.4 198 33.75 51 30 240 144 120 90 304 1252.15
70.65 75 67.03 99.01 62.65 380.96 352.33 174.34 208.67 659.32 2149.96
74.17 123.7 62.79 98.13 63.25 387.14 369 176.43 218.62 618.66 2191.89
104.98 164.93 93.67 99.11 100.96 101.62 104.73 101.2 104.77 93.83 101.95
Jaiprakash power Venture ltd. 1. Vishnu Prayag 400 1024.99 1119.44 109.21 Total Uttrakhand 1652.15 3175 3311.33 104.3 Total N. Region 15479.25 31799.19 32234.13 101.37
Year State/System Chandigarh Delhi Haryana Himachal Pradesh Jammu & Kashmir Punjab Rajasthan Uttar Pradesh Uttarakhand Chhattisgarh Gujarat Madhya Pradesh Maharashtra Daman &Diu Dadra and Nagar Haveli Goa Andhra Pradesh Karnataka Kerala Tamil Nadu Puducherry Bihar Jharkhand Odisha West Bengal Sikkim Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Tripura
April - July, 2012 Energy schedule form Central Generating Stations (Million Unit) 366 6318 3702 2115 3065 4303 4189 10080 1353 2190 7175 6950 12054 680 1412 1039 6963 3920 3383 6786 927 3747 1027 2622 2410 314 188 1407 190 272 116 125 129
67
Rating status of distribution agencies

CRISIL
SI. No Company Name 1 2 3 4 Rating downgraded from Downgrade to Northern Power Distribution Company CRISIL BBB+/Negative/CRISIL A2 CRISIL BB+/Stable/CRISIL D (for ST of Andhra Pradesh Ltd loans) CRISIL A4 (for LC facility) Southern Power Distribution Company CRISIL BBB+/Negative/CRISIL A2 CRISIL BB+/Stable/CRISIL D of Andhra Pradesh Ltd Eastern Power Distribution Company CRISIL A-/Negative/CRISIL A2+ CRISIL BB+/Stable/CRISIL A4 of Andhra Pradesh Ltd Hubli Electricity Supply Company Ltd CRISIL BBB-/Negative/CRISIL A3 CRISIL BB+/Negative/CRISIL A4+ Date of rating action 5-Jul-12 5-Jul-12 5-Jul-12 30-Apr-12
2. CARE
SI. No 1 2 3 4 Category Name Bank Facilities Issuer Rating Bank Facilities Issuer Rating Company Name Ajmer Vidyut Vitran Nigam Limited Dakshin Haryana Bijli Vitran Nigam Jodhpur Vidhyut Vitran Nigam Limited Uttar Haryana Bijli Vitran Nigam Rating downgraded from CARE BBBCARE BB+(is) CARE BBBCARE BB+(is) Downgrade to CARE BB+ CARE BB- (Is) CARE BB+ CARE BB- (Is) Rating date 21-Nov-11 5-Mar-12 21-Nov-11 5-Mar-12
3. ICRA
SI. No Company Name Rating downgraded from Downgrade to Rating date 1 Tamil Nadu Electricity Board [ICRA]BB+/[ICRA]A(SO) [ICRA]D/[ICRA]A-(SO) Fy 12 or Q1 Fy 13 2 Tamil Nadu Generation and [ICRA]A (SO) [ICRA]A-(SO) Fy 12 or Q1 Fy 13 Distribution Corporation Limited 3 West Bengal State Electricity [ICRA]A-/lrA[ICRA]BBB+/lrBBB+ Fy 12 or Q1 Fy 13 Distribution Company Ltd 4 Hubli Electricity Supply Company Ltd CRISIL BBB-/Negative/CRISIL A3 CRISIL BB+/Negative/CRISIL A4+ 30-Apr-12
NewsBriefs | Renewable
51 MW biomass power projects Haryana signs pact with 4 IPPs Haryana Government has signed Memorandum of Understating with four Independent Power Producers for setting up of five biomass power projects of 51 MW capacities with an investment of `230 crore. Out of these, two projects are likely to be commissioned soon. Energy Conservation Fund had been created for execution of energy conservation programmes in the state. Solar city scheme Bhagalpur, Gaya selected Two ancient cities of Patna - Bhagalpur and Gaya - will flaunt solar power. They have been selected under the solar city scheme of the union ministry of New and Renewable Energy (MNRE). Under the scheme, 60 cities across the country are proposed to be developed in such a manner, that a major part of their daily energy needs are met by solar power combined with other forms of renewable energy. Green Energy Report 85 GW electricity generation targeted Ministry of New and Renewable Energy (MNRE) has released a report which covers both renewable energy policy initiatives in the nation and technical requirements for integrating more renewables into Indias generation mix. Green Energy Corridors poses these goals within the governments efforts to reach 85 GW of electricity generation during the 12th five-year plan, which lasts until 2017. NSL Renewable Power Loan secured for 75 MW wind farm NSL Renewable Power Private Ltd, a subsidiary of NSL Group, is setting up a 75 MW wind farm in Maharashtra in two phases. It has secured a $19 million loan from International Finance Corporation for its wind power farm. International Finance Corporation, World Bank Group, which had also earlier invested in NSL firm, recently approved the investment to part fund the wind project estimated to cost about `500 crore. Clean energy EU companies eye India EU companies are looking forward to having tie-ups with Indian companies in the clean energy segment. Energy security, energy efficiency, reduction of carbon emissions are the areas of cooperation between India and European Union. Companies from Denmark, Germany, France, Britain, Poland, Austria have shown interest in the renewable energy sector. Wind Turbines Bags contract from Poland Suzlon group subsidiary REpower Systems has signed a contract for delivery and construction of 22 wind turbines in Poland for the countrys biggest wind farm project. It has signed the contract with WSB Neue Energien GmbH for supply of MM92 turbines, each with a rated power of 2.05 MW, intended for the Taczalin project near Legnica in the Polish province of Lower Silesia, Suzlon said in a statement. Gamesa - Indo Rama Renewables Contrat for wind energy generators Gamesa Wind Turbines Pvt Ltd will supply 30 MW of wind energy generators to Indo Rama Renewables, a subsidiary of Indo Rama Synthetics (I) Ltd. The order from Indo Rama Renewables involves supply of 15 wind mills, G97-2.0MW units, which Gamesa will erect and commission in Jath, Maharashtra, by December-end. Solar Power Punjab govt targets 400 MW The Punjab Govt has set a target to generate 400 MW power through solar power. The projects which were earlier considered uneconomical are now considered viable in view of the steep increase of cost of several other forms of energy and the rapid depletion of other sources. The state govt has recently set up a one MW solar power plant at Phullokhari in Bathinda district at a cost of `13.10 crore. REpower Bags contract from Austria Suzlon Group subsidiary REpower Systems SE has signed a contract with Austrian operator Windkraft Simonsfeld AG for the delivery of eight 3.2M114 wind turbines. The wind turbines will be delivered in the second quarter of 2013 and the Poysdorf-Wilfersdorf III wind farm in the north-east of Austria, for which they are intended, is scheduled to go live in the fourth quarter. Finnish cleantech companies Eying opportunities in Indian RE sector In a bid to tap Indias potential in the renewable energy sector, Finnish cleantech companies are looking for stronger partnerships in the country, in the clean energy segment. The companies, part of Cleantech Finland -- a network of top cleantech experts, claim their technological innovations have made them global leaders in energy efficiency, water management and bio-energy. Solar projects won under JNNSM 27 cos achieve financial closure All but one of the 28 companies that won solar photo voltaic projects in the second round of bidding under the National Solar Mission have achieved financial closure, the nodal agency for the programme, NTPC Vidyut Vyapar Nigam Ltd (NVVN) disclosed. The projects that will be put up by these companies will add up to 340 MW, which is a respectable capacity in the solar power sector.
68
First Solar Photovoltaic System Donates 3.2 KW system Photovoltaic (PV) solar systems provider, First Solar has completed installation of a 3.2kW solar PV system at the Solar Energy Center (SEC) of Ministry of New and Renewable Energy in Gwal Pahari, India. The company has donated the solar system, which would help the center achieve its goal of 100% renewable energy consumption as well as demonstrate First Solars advanced, thin-film technology.
InDepth
BSES takes a giant leap to reap the Sun

Pollution free technology empowers farmers to irrigate at will On an average a pump has a lifespan of 7 to 10 years
telecom and IT sector, this system enables power to reach nooks and corners of the country without wires and cables. REAP has come as a boon for farmers who until now had to wait for the monsoons to irrigate their fields. Now with this technology, they can irrigate lands whenever they need without worrying about electricity bills. In this system, a solar panel above water tank absorbs sunlight. This solar energy is then converted into mechanical energy used for pumping water and
69
by Priyanka Singh
Ramesh Narayanan, CEO- BSES Yamuna Power Ltd
Normally, it is perceived that necessary resources like water and power can only reach households through a network of cables and pipes. But this myth has been shed off by the new indigenous technology called REAP systems (Renewable Energy Assisted Pumps). These are solar energy operated water pumps to draw water for storage, harvesting, drinking and other miscellaneous purposes. This is an offgrid power generating system and can be installed at the point of consumption itself, thereby reducing the distribution
and transmission losses. This cutting edge technology is being jointly developed and promoted by BSES Yamuna Power Ltd (BYPL), the power distribution arm of Reliance Infrastructure Ltd and IIT, Delhi. Like
InDepth
filling the tank. Also, they need not worry about the mounting electricity bills, as these machines are not connected to the main grid system of the country. Experts believe that this innovative idea can bring about a green revolution in the country, as it can make us self-reliant in terms of food crops. The cost of REAP system
varies from `4-7 lakhs depending on the model, capacity, accessories involved, scope of work and inclusive or exclusive of boring charges. The company is providing one year warranty and two years after sales service to REAP customers. REAP system is not only beneficial to farmers, in fact it can also be used
70
for pumping water to higher floors of multistoried buildings in big cities. These can very well work in schools, parks, hospitals, malls, hotels, housing societies and markets. India happens to be one of those countries which receive a good amount of sunlight for almost 300 days a year. If we are able to carefully deploy this abundant solar energy to our use, we can not only fulfill our increasing power demand but also get rid of the pollution caused by coal based plants. REAP system comprises four partssolar panel, a specially designed motor for these pumps, submersible renewable energy assisted pump and an overhead water tank. This panel when connected to the pump helps in drawing the underground water to fill the overhead tank. This stored water can then be used for irrigation purpose through pipes. The best part about this advanced system is that it doesnt require strong rays of the sun. It can work even in normal sunlight. This gives relief in summers when there is water shortage, especially in dry parts of India. Ramesh Narayanan, CEO- BSES Yamuna Power Ltd says, This is an off-grid, completely solar based power plant which is not only useful for agricultural consumers but also for pumping water to multistoried housing societies in urban areas for storage purpose. We are exploring all marketing options for REAP - franchisee, dealers and direct marketing. Apart from directly marketing to business and commercial establishments we will also participate in various State Government tenders for drinking water and sanitation schemes. This specially designed solar pump can operate between 200 to 1200 Watt-peak and is capable of delivering around 25,000 litres of water on an average at 30 meters of head (Dynamic), with exposure to just 7 hours of sunlight. The first REAP system has been successfully operating at the All India Panchayat Parishad premises in Mayur
BSES approached IITDelhi to look at ways of finding a viable off grid solution and hence REAP was born... It is a one time investment. Post installment of the system, one does not have to worry for years
Vihar area of Eastern Delhi since November, 2011. Meanwhile, BYPL is using all channels to create awareness through advertisements on their bills, meetings with Resident Welfare Associations (RWAs) and reports in the media. They have also uploaded an informative film on Youtube. A special film on the REAP system in Hindi and English has been produced to promote it. Since many panchayat heads have seen the ease of operating the REAP system we have received enthusiastic response from the farming community. We are also in talks with various agencies to take this forward in rural areas as well, says the company. BYPL and IIT-Delhi have been in an industry-institute technical collaboration since 2010. In the search for finding a viable Demand Side Management tool to reduce peak loads that are primarily because of water pumping needs BSES approached IIT-Delhi to look at ways of finding a viable off grid solution and hence REAP was born. Initially, BYPL is targeting the demand for these environment friendly pumps in Delhi and NCR region and then plans to move to the next level to meet pan India and even overseas demand. It is an accredited channel partner of Ministry of New & Renewable Energy (MNRE) for Off- Grid applications. The ministry has approved a subsidy of around `68,400 for REAP systems. Professor Sunil Jha, IIT Delhi says, This is a onetime investment. Once you have installed it, you dont have to worry for years.
Being a simple, viable and reliable clean green alternative we see huge potential for REAP in future. Except for the pump, other components in the REAP system are static and have no movable parts. On an average a pump has a lifespan of 7 to 10 years. The company has developed servicing teams for on-site servicing of the systems. After the initial warranty period of 2 years, comprehensive AMC proposals would also be offered to REAP customers through the dealer network. From the distribution companys perspective, it is a very important innovation. Until now, the distribution companies had to suffer huge transmission and distribution losses while supplying power to the remote villages. While reaching out to these far flung rural areas, companies were undergoing about 20-30 percent loss every year. Reliable and scientific innovations like REAP will definitely help in curtailing these losses, Narayanan said. BYPL has a decade of successfully operating a power distribution company in Delhi with over 12 lakh customers. It has been able to bring down its Aggregate Technical and Commercial losses down to 43.2 percent within 9 years of existence. In 2002, it was 63.1 percent which has been brought down to 19.85 percent in 2011. This has been possible due to efficient distribution system, upgrading to new technologies and applying innovative ideas to tap renewable sources of energy from time to time. With the increasing number of environment conscious consumers who are choosing to reduce their carbon footprint, we are confident that the market for REAP will continue to grow. Our in-house expertise and manpower is capable of providing complete endto-end solutions to REAP customers not just in NCR region but pan-India, adds a confident Narayanan.
Key Highlights Daily Newsletter and Database Updates on: Power Coal Oil & Gas India Upstream Renewable
For more details email at: general.support@infraline.com
InConversation
Cerebra to set up world class e-waste facility in India

With a mission to become a leading IT solutions provider, Cerebra Integrated Technologies is on its way to set up one of Indias largest e-waste facility with a capacity of about 90,000 MT. The company has over 50,000 installations of PCs and servers across the country. Its Director- Technical Support, Gururaja K Upadhya shares his vision and plans behind setting up this world-class facility in India with Priyanka Singh. He views India as a growing market for e-waste management, as the countrys annual e-waste generation stands at over 4.4 lakh tonnes, growing at 20% every year.
72
Various other reports say that by the end of year 2012, India will generate 2500000 MT Per Annum. E-waste recycling has the potential to generate decent employment, cut greenhouse gas emissions and recover a wide range of valuable metals including silver, gold, palladium, copper and indium. By acting now and planning forward many countries can turn an e-challenge into an e-opportunity What are the projects that you are currently working on? We are also planning to set up the White Goods Recycling, Automobile Catalyst Converter plant and at a later stage, probably in 3-4 years from now, a plastic to fuel plant in India. Cerebra is setting up one of Indias largest e-waste facility (90,000 MT capacity) and wants to be one of the leading players in this business which has huge potential not only in terms of generating huge revenues and profits for the company and its shareholders but also wants to contribute in a big way to the Green environment issues that have taken off worldwide. Cerebra recognize that it would be a big social responsibility to truly setup a world class e-waste facility. The industry for these solutions is still very nascent in India. Tell us about the market size, current trends, players in the market and the untapped opportunities here? E-waste generation is not showing any signs of slowing down. India, at present, churns out about 400,000 tons of e-waste annually of which only 19,000 tonnes is getting recycled, according
What kind of opportunity you see in India in e-waste management system? Tell us about your clientele as well? Over the last decade, the use of electronics has grown substantially, providing the business world with increased capabilities, global networks, and faster results. This shift to e-business has also introduced one of the rising problems in waste management: ensuring the proper disposal and sustainable treatment of outdated electronics. The
environmentalists believe that handling e-waste, i.e. recycling/reusing will become a major concern for the developed and developing countries including India. As per IRG report 2008, India generates about 1, 46,180 tons of e-waste every year. This is contributed by both house-holds and corporate houses. The majority of e-waste generation happens in the cities listed below. Mumbai at present tops the list.
Mumbai: Delhi : Bangalore : Chennai : Kolkata : Ahmadabad : Hyderabad : Pune : Surat : 11, 017 tonnes 9,730 tonnes 4,648 tonnes 4,132 tonnes 4,025 tonnes 3,287 tonnes 2,833 tonnes 2,584 tonnes 1,836 tonnes
to MAIT. According to a report by the Center for Science and Environment (CSE), India generates 3,50,000 tons of electronic waste every year and additionally imports another 50,000 tons. New surveys say that by the end of year 2012, India will generate 2.5 Million MT per annum of e-waste with the growth and development of new technology. E-waste is also growing every year which signifies that this e-waste market will not come down; it will increase every year. This is a huge market filled with opportunity. What are the processes involved in the e-waste management? Can you explain the process and simplify the technology for our readers? Cerebra will have the highest capacity and most technologically advanced e-waste Recycling & Recovery System in India, thus providing our customers with a maximum economic benefit and maximum commodity return. All material sent to Cerebra will be 100 percent recycled into 3 main commodities: metals, plastic and glass. No electronics are placed in landfills. Mechanical Dry Process Plant Dry Techniques Separates Plastics & Metals Fully Automatic with PLC control Capacity 12 MT per hour Total Capacity 90,000 MT/Year Precious Metal Refining Special Refining Equipment Less Energy consumption Distillation Technique to save about 50percent of refinery chemicals Gold can be refined to 99.999 purity Precious Metals Refining Most of us are really unaware about electronic wastes? What are the forms of this waste? E-waste is a popular, informal name for electronic products nearing the end of their useful life. Computers,
televisions, VCRs, stereos, copiers, and fax machines are common electronic products. Many of these products can be reused, refurbished, or recycled. Unfortunately, electronic discards is one of the fastest growing segments of our nations waste stream. The discarded and end-of-life electronics products ranging from computers, equipment used in Information and Communication Technology (ICT), home appliances, audio and video products and all of their peripherals are popularly known as Electronic waste (E-Waste). In most cases, e-waste comprises of the relatively expensive and essentially durable products used for data processing, telecommunications or entertainment in private households and businesses. E-waste is not hazardous if it is stocked in safe storage or recycled by scientific methods or transported from one place to the other in parts or in totality in the formal sector. The e-waste can, however, be considered hazardous if
Computer equipment accounts for almost 68 percent of e-waste material. This is followed by telecommunication (12 percent), electrical (8 percent) and medical equipment (7 percent)
recycled by primitive methods. E-waste contains several substances such as heavy metals, plastics, glass etc., which can be potentially toxic and hazardous to the environment and human health, if not handled in an environmentally sound manner. E-waste recycling in the nonformal sector by primitive methods can damage the environment. The ill effects of e-waste could be on soil through leaching of hazardous contents from landfills; in water due to contamination of rivers, wells and other
water sources; in air due to emission of gases and burning of e-waste the recycling process, if not carried out properly, can cause damage to human being through inhalation of gases during recycling, contact of the skin of the workers with hazardous substances and contact during acid treatment used in recovery process The hazardous and toxic substances found in e-waste include lead (Pb) and cadmium (Cd) in printed circuit boards (PCBs). Lead is primarily found in all electronic products/ assembly, cathode ray tubes (CRT) etc. Cadmium is found in monitor/ CRTs while there may be mercury in switches and flat screen monitors. Mercury is also found in CFL, relays and some other specific products. Besides the cadmium in computer batteries, cadmium is also used for plating metal enclosures/ metal parts in sub assemblies. Polychlorinated biphenyls are found in capacitors and transformers and as brominated flame retardant on printed circuit boards, plastic casings, cable and polyvinyl chloride (PVC) cable sheathing for insulation and PBD/PBDE in plastic parts of Electronics. How are you being funded, is it the government funding or some aid from foreign companies? We are expecting some subsidies from the government for this project. Otherwise the funding has come in from PEs and Institutional Investors. Unlike western countries, India has a secondary market too for IT products. In western world, people might easily discard products after use but in India, there are a lot of buyers for second hand products. How do you t in such an environment and create value for your service? Our PC manufacturing and support background has made it easy for us to set up our Repair and Refurbishment
73
InConversation
processes. Part of the Computer e-waste collected goes through repair and refurbishment process. These are then sold through NGOs, IT dealers etc., in Delhi, Tamil Nadu, U.P., Karnataka, What are the side-effects of the technology you use on the environment? How do you make sure that your technology does not have any harmful effect on the environment during the process? The effluent from the process plant is sent to effluent treatment plant. The Effluent plant mainly consists of three stages, 1. Neutralization 2. Clarification 3. Purification and Recycling Water Pollution Control: The effluent generated from the unit will be treated in an effluent treatment plant consisting above mentioned units & confirmed to stipulate standards of the Board and also it will be used for gardening, toilet flushing etc., after treatment to the stipulated standard. The domestic effluent will be discharged to Septic tank & Soak pit. The liquid from scrubber will be treated in the ETP before final disposal. Air Pollution Control: The discharge of emission from the premises of the unit will be passed through the stack/chimneys stipulated by the Board. The rate of emissions discharged and the tolerance limits of the constituent forming the emissions in each of the stack/chimney will not exceed the limits laid by the Board. Industry will provide standby Air Pollution Control Equipments on line so that incase of failure of the existing equipments. The samples of the emissions collected and analyzed in the laboratory every day and the results are submitted to the Board. Solid Waste Disposal: The industry will dispose of the solid
Country
Total Ewaste Categories of Appliances counted in e -waste Generated tonnes/year Switzerland 66,042 Office & Telecommunications Equipment, Consumer Entertainment Electronics, Large and Small Domestic Appliances, Refrigerators, Fractions Germany 1,100,000 Office & Telecommunications Equipment, Consumer Entertainment Electronics, Large and Small Domestic Appliances, Refrigerators, Fractions UK 915,000 Office & Telecommunications Equipment, Consumer Entertainment Electronics, Large and Small Domestic Appliances, Refrigerators, Fractions USA 2,158,490 Video Products, Audio Products, Computers and Telecommunications Equipment Taiwan 14,036 Computers, Home electrical appliances (TVs, Washing Machines, Airconditioners, Refrigerators) Thailand 60,000 Refrigerator, Air Conditioners, Televisions, Washing Machines, Computers Denmark 118,000 Electronic and Electrical Appliances including Refrigerators Canada 67,000 Computer Equipment (computers, printers etc) & Consumer Electronics (TVs)
Source: http://www.ewaste.ch/facts_and_figures/statistical/quantities
Year 2003 2005 1998 2000 2003 2003 1997 2005
74
waste generated from the process and from the effluent treatment plant in a scientific manner without causing underground and surface water pollution directly or indirectly. The factory premises will be kept clean. What is the annual e-waste of India as compared to other countries? Which are the countries that produce largest and least amount of e-waste? Asia is largest emerging market with fast growing economy in the world. Due to increase in per capita incomes and relatively young population structure, consumption of EEE products is increasing exponentially. Recycling of e-waste in Asia is still not well organized and established except countries like Japan, Taiwan, South Korea, Singapore. Some of the major concerns are: Regulations may exist but enforcement is the key for success. Most of the e-waste problem in Asia is compounded by illegal dumping from developed countries Illegal e-waste Imports help for new business opportunities and create demand for second-hand EEE product usage (Reuse) but impact the environment.
Where does India stand in comparison to other countries in terms of e-waste generation? Population of India stands at: 1,140 million (FY 2008). Growing at an annual growth rate of about 20 percent, India generates over 4.4 lakh tonnes of e-waste annually. It is going to increase up to 800000 MT by the end of 2012 and almost half of all the unused and end-of-life electronic products lie waste in landfills, junk yards and warehouses, the report notes. Computer equipment accounts for almost 68 percent of e-waste material. This is followed by telecommunication (12 percent), electrical (8 percent) and medical equipment (7 percent) with household e-scrap accounting for the rest 5 percent. In India, Mumbai ranks first in generating e-waste followed by Delhi, Bangalore, Chennai, Kolkata, Ahmadabad, Hyderabad, Pune, Surat and Nagpur. The 10 states generate 70 percent of the total e-waste. State wise generation of e-waste is as follows: Delhi - 21.2 percent, Mumbai 24 percent, Kolkata 8.8 percent, Chennai 9 percent, Bangalore 10.1 percent and Hyderabad- 6.2 percent.
THE COMPLETE ENERGY SECTOR MAGAZINE FOR POLICY AND DECISION MAKERS
Subscribe Now!
TERM (YEARS) 1 year 2 years 3 years ONE SUBSCRIPTION COVER PRICE `1,200 `2,400 `3,600 YOU PAY `1,000 `2,000 `3,000
Please tick scheme of your choice

FIVE SUBSCRIPTIONS COVER PRICE `6,000 `12,000 `18,000 YOU PAY `4,500 `9,000 `12,000 TEN SUBSCRIPTIONS COVER PRICE `12,000 `24,000 `36,000 YOU PAY `8,500 `17,000 `22,000
YOUR DETAILS (ALL DETAIL IN CAPITAL LETTERS) Name: mr/ms................................................................................................................. occupation.......................................................Date of Birth......................................... address.......................................................................................................................... ......................................................................................................................................... city............................................state......................................Pin code......................... email...................................................................................mobile.................................. Phone (off)........................................................Phone (resi)........................................ Please charge my credit card card No. ......................................................................................................................... card expiry date............................................................................................................. Name (as appears on card).............................................................................................. Date....................................................................signature.............................................. or kindly Draw the cheque/DD/Po in favor of iNfraliNe techNoloGies (iNDia) PriVate limiteD. (Please add
`20/- extra for outstation cheque)
Please find enclosed cheque/DD no........................................ Dated....................................................... Bank......................................................... Branch......................................................

Terms and Conditions: Please allow 4-5 weeks for processing of your subscription. Copies will be sent by ordinary post only. Infraline will not be responsible for postal delay, transit loses or mutilation of copies. no cancellation of subscriptions will be entertained after commencement of subscription. Please mention your name and address on the reverse of your DD/Cheque. All disputes are subject to the exclusive jurisdiction of courts in New Delhi only.
To Subscribe: Please complete the order form and mail it to us at the below mentioned address. You can also Fax the order for credit card purchases to +91 11 46250099
infraline technologies (india) Private limited 14th floor, atmaram house,1, tolstoy road, connaught Place, New Delhi - 110001, india tel: +91 11 46250000/13, fax: +91 11 46250099, email: general.support@infraline.com
StatisticsRenewableEnergy
List of Defaulters REC Generators in India (MW)
Seller Name 1 2 3 4 5 6 7 8 9 10 11 yash Agro Energy Limited Bhanudas Raibage Gayatri Projects Ltd Pudumjee Pulp & Paper Mills Ltd. Bajaj Finserv Limited Pudumjee Pulp & Paper Mills Ltd. Punit Construction Company Simran Wind Project Private Limited ReNew Wind Energy (Rajkot) Pvt. Ltd. Magpie Hydel Construction Operation Industries Pvt. Ltd. Shri Bajrang Power & Ispat Ltd. Project Number yASHE001 BGRWG001 GPLTN001 PPPSD001 BFSLT005 PPPML001 PCCOM002 SIMRN009 RWRPL001 MHCOI001 BPAIL001 State Maharashtra Maharashtra Tamil Nadu Maharashtra Maharashtra Maharashtra Maharashtra Tamil Nadu Gujarat Jammu and Kashmir (JKSPDCL) Chhattisgarh Number of Defaults 1 1 1 1 1 1 1 1 1 1 1 Trading Date 28-09-2011 30-11-2011 30-11-2011 25-01-2012 29-02-2012 29-02-2012 30-05-2012 27-06-2012 27-06-2012 27-06-2012 25-07-2012
Source: REC Registry
Plant wise small hydro power energy generation (MWh) in Gujarat during Ongoing 2012-13
Month Yr April 2012 Sr. No. 1 2 1 2 1 2 1 2 Name of Power Station Madhuban Dam (Hydro) Kishan Kanaiya Mini Hydro Madhuban Dam (Hydro) Kishan Kanaiya Mini Hydro Madhuban Dam (Hydro) Kishan Kanaiya Mini Hydro Madhuban Dam (Hydro) Kishan Kanaiya Mini Hydro Name of Inter face meter location 66 KV Kakadkopar - Madhuban Dam - 1 66 KV Karjandam - Rajpipla -1, 2 Total 66 KV Kakadkopar - Madhuban Dam - 1 66 KV Karjandam - Rajpipla -1, 2 Total 66 KV Kakadkopar - Madhuban Dam - 1 66 KV Karjandam - Rajpipla -1, 2 Total 66 KV Kakadkopar - Madhuban Dam - 1 66 KV Karjandam - Rajpipla - 1,2 Total Energy recorded in MWH (Export) 2247.7104 145.8 2393.5104 166.0536 1267.8 1433.8536 121.9644 1079.2 1201.1644 936.2736 0 936.2736
May 2012
76
June 2012
July 2012
Source: Infraline Research/SLDC
State-wise Installed Solar Capacity (As on August 2012)

State/UT Andhra Pradesh Chhattisgarh Gujarat Haryana Jharkhand Karnataka Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh Uttarakhand West Bengal Andaman & Nicobar Delhi Lakshadweep TOTAL Installed Capacity (MW) 21.8 4.0 690.0 7.8 16.0 14.0 7.4 20.0 13.0 9.3 198.7 15.1 12.4 5.1 2.1 0.1 2.5 0.8 1040.7
Source: MNRE/Infraline Research
Certied Wind Turbine Manufacturers

Manufacturer M/s. Chiranjjeevi Wind Energy Limited M/s. Enercon (India) Ltd. Enercon Tower M/s. Essar Wind Power Pvt. Ltd. M/s. Gamesa Wind Turbines Private Limited M/s. GE India Industrial Private Limited M/s. Global Wind Power Limited M/s. Kenersys India Private Limited http://www. gamesacorp. com/en Website http://www. cwel.in/ http://www. enerconindia.net Collaboration/ Joint Venture None Enercon GmbH, Germany Licence Agreement with Repower Systems AG, Germany Gamesa Innovation and Technology, S.L. Spain Address 26-A, Kamaraj Road, Mahalingapuram Pollachi 642002, Coimbatore District A-9, Veera Industrial Estate, Veera Desai Road, Andheri (West) Mumbai 400 053 Essar House, 11 K.K Marg, Mahalaksmi, Mumbai 400 034 No.489, G.N.T Road, Thandal Kazhani village, Vadagarai (Post), Red Hills, Chennai 600 052 A-1, 2nd Floor, Golden Enclave, Corporate Towers, Old Airport Road, Bangalore 560 017 301, Satellite Silver, 3 rd Floor, Andheri Kurla Road, Marol, Andheri (East), Mumbai 400 059 Industry House, Survey No.49, Mundhwa, Pune 411 036 No.5, T.V.Street, Off. Spurtank Road, Chetpet, Chennai 600 031 30/1A, Harrington Chambers, 2nd Floor, B Block, Abdul Razaq 1st Street, Saidapet, Chennai 600 015 No.28/11, College Road, Chennai 600 006 State Tamil Nadu Maharashtra Maharashtra Contact P: 04259 224438 F: 04259 224437 P: 022-66924848 F: 022- 67040473 P: 022-66601557 F: 022-23544787 P: 044-30989898 F: Nil P: 080-40183802 F: 080-25203860 P: 022-39918500 F: 022-39918521 P: 020-30462851 F: 020-30462888 P: 044-27926000 F: 044-27924944 Turbine Type CWEL C30/250 kW E-48, E-53 REpower MD77 G58-850 kW MSC yes (10.02.2011) yes (08.02.2013) yes (28.03.2013) yes (31.12.2012) yes (31.03.2011)
Tamil Nadu
Technology Transfer Agreement with M/s. GE http://www. geindustrial.com Infrastructure Technology International, LLC, USA http://www.gwpl. co.in http://www. kenersys.com/ Licence Agreement with NORWIN A/S, Denmark KENERSyS GmbH, Germany LEITWIND BV, Netherlands
Karnataka
GE 1.5sle
Maharashtra
NORWIN 750 yes kW (14.11.2010) K82 Leitner LTW77-1.35 MW, Leitwind LTW77 1.5 MW Pioneer P250/29 yes (09.11.2011) yes (04.01.2012)
Maharashtra
M/s. Leitner http://www. Shriram leitwind.in Manufacturing Ltd M/s. Pioneer Wincon Private Ltd.
Tamil Nadu
http://www. pioneerasia.com
None
Tamil Nadu
P: 044-24314790 F: 044-24314789 P: 044-30280200 F: 044-30280199
yes (15.11.2010) yes (20.06.2011)
77
Sub-license agreement http://www. M/s. Regen regenpowertech. with Vensys Energy, AG, Powertech Pvt Ltd Germany. com M/s. RRB Energy Limited http://www. rrbenergy.com
Tamil Nadu
VENSyS 77
Technological No.17 , Vembuliamman Koil cooperation with Vestas Street, K.K. Nagar (West), Wind Systems A/s, Chennai 600 078 Denmark. License agreement with TTG Industries Ltd. License agreement with Wind Technik Nord, Germany. None Suzlon Energy Gmbh, Germany. (Subsidiary of Suzlon Energy Limited) Wholly owned Subsidiary of Vestas Group, Denmark Under License agreement with Winwind Oy, Finland GW Wind Energy, USA
Tamil Nadu
P: 044-23641111 F: 044-23642222
V39-500 kW with 47m rotor yes diameter, (17.12.2011) Pawan Shakthi600 kW yes (29.05.2010) yes (30.09.2011) yes (05.01.2013) yes (14.04.2012) yes (10.09.2010) yes (31.12.2011) -
M/s. Shriram EPC http://www. shriramepc.com Limited M/s. Siva Windturbine India Private Limited M/s. Southern Wind Farms Limited M/s. Suzlon Energy Ltd. M/s. Vestas Wind Technology India Private Limited M/s. Winwind Power Energy Private Limited GE Wind Energy Ghodawat Industries (I) Pvt. Ltd. RK Wind Pvt. Ltd http://sivawind. com/ http://www.swl. co.in http://www. suzlon.com http://www. vestas.com http://www. winwind.in http://www. gepower.com http://www. genergy.in http://www. rkwind.com
AMSC Austria Wind Technik Nord, Germany
No.9, Vanagaram Road, P: 044-26533313 SEPC 250T Ayanambakkam, Tamil Nadu F: 044-26532780 Chennai 600095 12A, Kandampalayam, P: 04294-220017 SIVA 250/50 Perundurai, Erode - (DIS) Tamil Nadu F: 04294-220137 Pin : 638052 No.15, Soundarapandian P: 044-39182600 GWL 225 Salai, Ashok nagar, Tamil Nadu F: 044-39182636 Chennai 600 083 Suzlon S82V3Tree Lounge, Level 0 One 1500 kW, P: 020-40122000 Earth, Opp. Magarpatta Maharashtra Suzlon S88 F: 020-40122200 City, Hadapasar, V3A- 2100 kW Pune 411028 298, Old Mahabalipuram P: 044-24505100 V82-1.65 MW Road, Sholinganallur, Tamil Nadu F: 044-24505101 Chennai 600 119 STERLING TOWER 327, P: 044-24313001 WinWinD 1 Anna Salai Teynampet, Tamil Nadu F: 044-24313066 MW Chennai 600 006 A-1, Golden Enclave, Corporate Towers, 3rd Karnataka 1.5 s Floor, Airport Road, Bangalore 560 017 Gat No. 355, Post Majale P: 0230416109, Tal. Hatkanangale, Maharashtra 2483714/15 G-1650 Dist. Kolhapur, Maharashtra F: 0230-2483774 Hall No 4, 2nd Floor NBCC P: 011-4313-2132 PTCRSI 1646 / Tower, 15, Bhikaji Cama Delhi F: 011-4313-2125 PTCRSI 1648 Place, New Delhi 110066 (India)
Source: Centre for Wind Energy Technology (C-WET)
PhotoEssay
Every Indian vehicle has the soul of ONGC

Oil and Natural Gas Corporation Ltd. (ONGC) is national oil company of India focused on Exploration & Production of oil & gas. It has interests in refining, LNG, power, petrochemicals and new sources of energy. Recognized as worlds number 2 E&P company (Platts 2011), ONGC is credited with discovery of all the 6 producing petroliferous Indian Basins since its formation in 1956. With a recoverable reserve of 1.6 billion tonnes of oil equivalent, ONGC has a current daily production of over 1.2 million barrels per day. It contributes 65 per cent of Indias domestic oil equivalent production. Against a decline in production from matured fields globally, ONGC has maintained production from its brownfields like Mumbai High with aggressive investments in technologies. To sustain the other end of its E&P cycle, ONGC has the unique distinction of having a 1+ Reserve-Replenishment ratio run consecutively for the last seven years. It is the largest exploration acreage and mining lease holder in India, having 51 per cent of the petroleum exploration license areas and 67 per cent of the mining lease areas. Its wholly-owned subsidiary ONGC Videsh Limited (OVL) is Indias biggest E&P multinational, managing 30 overseas hydrocarbon properties in 15 countries, worth a cumulative investment of around $15 billion. The most valuable public enterprise is also the most profitable and highest highest-dividend paying corporation in India. The earning-per-share of the zero-debt company is growing at a compounded annual growth of over 10 per cent. ONGCs sustainability focus in energy business has made it build up a robust presence in most of the emerging green corridors including renewables and unconventional gas like shale gas and coal bed methane. It has got a number of its clean development mechanism (CDM) projects registered with the United Nations Framework Convention on Climate Change. ONGCs 726 MW natural gas based power generation in Tripura is one of the globally-biggest CDM project. This gas-based power project entails a 43 per cent lower green-house-gas emission than its hybrid-energy based power generation counterpart. Maharatna ONGC is the only Indian energy giant in Fortunes Most Admired List 2012 under Mining, Crude Oil Production category. It is ranked 171st in Forbes Global 2000 list 2012 of worlds biggest companies.
78
2
79
3 4
PhotoEssay
6
80
7
1. 2. 3. 4. 5. 6. 7. 8. A view of an ONGC Installation in the Arabian Sea ONGC strives 24x7 to search and produce oil for the growing Indian economy A view of ONGCs gas processing plant at Hazira A control room of ONGC for real-time communication across its entire operational chain ONGC is building offshore capacity aggressively to increase production from its matured assets Onshore Rig: An onland drilling rig of ONGC ONGC is active in developing local communities near its operational areas; a Goat-rearing project in Assam Vibroseis A state-of-art equipment of ONGC for seismic survey
SHAPING SHAPING THE THE SMART SMART GRID GRID Transforming Transforming the the power power grids grids SHAPING THE SMART GRID
Transforming the power grids
PILOTING PILOTING THE THE PILOTING THE ENERGY ENERGY IN IN TOMORROWS TOMORROWS ENERGY IN TOMORROWS
SMART CITIES SMART CITIES
Alstoms Smart Grid offerings provide utilities with mission-critical energy management technologies to support and Alstoms Grid provide utilities with mission-critical management technologies to support optimise Smart existing or offerings new energy infrastructures. Smart Grid is energy built on synergies between Alstom Grids and key optimise existing or new energy infrastructures. Smart Grid is built on synergies between Alstom Grids key technologies, power electronics, digital substation solutions and control room IT platforms. In this way, Alstom enables technologies, power electronics, digital substation solutions and control room IT platforms. In this way, Alstom enables grid operators, governments and other in the energy chain to start building the Smart Grid Alstoms Smart regulators, Grid offerings provide utilities withstakeholders mission-critical energy management technologies to support and grid operators, regulators, governments and other stakeholders in the energy chain to start building the Smart at Grid today. The result isor dramatically upgraded grid design Smart and operation, with greatly enhanced embedded intelligence all optimise existing new energy infrastructures. Grid is built on synergies between Alstom Grids today. The result is dramatically upgraded grid design and operation, with greatly enhanced embedded intelligence atkey all levels. technologies, power electronics, digital substation solutions and control room IT platforms. In this way, Alstom enables levels. grid operators, regulators, governments and other stakeholders in the energy chain to start building the Smart Grid today. The result is dramatically upgraded grid design and operation, with greatly enhanced embedded intelligence at all levels.
www.alstom.com/grid www.alstom.com/grid Delhi and NCR: +91 120 479000 | Mumbai: +91 22 30210500 Delhi and NCR: +91 120 479000 | Mumbai: +91 22 30210500 Kolkata: +91 33 40097050 | Chennai: +91 44 22649000 Kolkata: +91 33 40097050 | Chennai: +91 44 22649000 www.alstom.com/grid Delhi and NCR: +91 120 479000 | Mumbai: +91 22 30210500 Kolkata: +91 33 40097050 | Chennai: +91 44 22649000
RNI No: DELENG/2012/45441

InfralinePlus Oct12

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

InfralinePlus Oct12

Загружено:

Авторское право:

Доступные форматы

October 2012 Volume 1 | Issue 6 | `100 www.InfralinePlus.

Its economics over politics, at last

PM and his team is back on the wheel as Reform-II gains momentum

INDIA'S 2ND LARGEST SINGLE LOCATION REFINERY

October 2012 | Volume 1 | Issue 6

Form IV 14-D, Atmaram House, 1, Tolstoy Road New Delhi - 110001

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

Plus - Photo Essay

October 2012 www.InfralinePlus.com

NewsBriefs | Oil & Gas

October 2012 www.InfralinePlus.com

Swapping of domestic gas with imported LNG to become official

October 2012 www.InfralinePlus.com

Situation thus far

Issues and challenges

Needed -- gas pooling

For suggestions email at feedback@infraline.com

October 2012 www.InfralinePlus.com

National gas grid will soon become a reality

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

Draft shale gas policy has many loopholes, deficiencies

Petrofed differs on royalty and cost recovery

October 2012 www.InfralinePlus.com

CII stresses on scal stability

October 2012 www.InfralinePlus.com

Shale gas drilling

BG against simultaneous exploration

October 2012 www.InfralinePlus.com

Resource nationalism restricts acquisitions

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

Infraline Energy Coal Research 2012

September 2012 Price: `50,000

Mapping Global Coal Assets:

October 2012 Price: `50,000

InfralineEnergy Business Report Series

Post launch session with the author

InfralineEnergys Opportunity Assessment Business Research Report

Coal Washeries in India

October 2012 Price: `35,000

InfralineEnergy Outlook Series Report

InfralineEnergy Business Report Series

Includes:  Half Yearly updates for one year

For any further information, kindly contact us on below mentioned coordinates:

Manoj Narang, Director - Business Development

For exhaustive list of our products and services

October 2012 www.InfralinePlus.com

Hydrocarbon infrastructure needs constant upgradation

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

Mozambique gas find will prove to be a game changer for India

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

International norms on oil and gas remain a non-starter

October 2012 www.InfralinePlus.com

October 2012 www.InfralinePlus.com

Aviation sector on a wing and a prayer

October 2012 www.InfralinePlus.com

Can they keep going?

Includes: Half Yearly updates for one year