Energy News Monitor I Volume VIII, Issue 43

Do India’s Equity Oil Investments Make Sense?

Lydia Powell, Observer Research Foundation

t is difficult to answer the question ‘what is India’s energy security strategy’ but it is possible to say with certainty that investing in ‘equity oil’ is among its predominant energy security strategies. Though India began planning for its energy needs right from the first five year plan, it rarely had a consistent and clearly articulated strategy for energy security. The first Five year plan documents talked about generating power so that area under irrigation can be increased. The Third Five year plan brought up the idea of ‘self-sufficiency’ in the context of energy to promote investment in nuclear power. In 1962, almost a decade before the oil crisis provided the global context for the pursuit of ‘energy security’, the first Prime Minister of India set up a Committee on Power & Energy realizing the importance of energy in nation building. The Committee’s report submitted in 1965 mapped energy resources of India and offered suggestions on how they may be utilized. Subsequently, the Fuel Policy Committee Report in 1975, the Report of the Working Group on Energy Policy set up by the Planning Commission in 1979, the Report of the Advisory Board on Energy set up in 1985 as well as Research Reports by the National Council of Applied Economic Research (NCAER) in 1985 provided data and recommendations broadly on the same lines. A striking feature in all the reports was that they offered elaborate projections for wood fuel demand in the future as the decline in wood fuel use was apparently not anticipated. An Energy Policy Committee was set up by the Planning Commission in 1995 but its report which essentially projected energy demand for the future was not published in final form. The Sixth Five Year Plan (1979-84) which followed the first oil crisis had a dedicated section for ‘energy’ for the first time. ‘Self-sufficiency’ was its driving theme and development of domestic resources and the need for pricing reforms to conserve energy were among measures emphasized. Subsequent plan documents emphasized the same ideas but they also stressed investing in ‘equity oil’ to reduce growing import dependence.

In 2000, the Hydrocarbon Vision 2025 commissioned by the Prime Minister of India to address the issue of energy security in the context of the hydrocarbon sector (Oil & Gas) was released. The report recommended ‘intensification of exploration efforts and securing acreages in countries having ‘high attractiveness for ensuring sustainable long term supplies’ such as Russia, Iran, Iraq and North Africa. The recommendations were repeated with some variations in subsequent documents. The Integrated Energy Policy Report released in 2006 commented that ‘obtaining equity oil, coal and gas abroad do not represent adequate strategies for enhancing energy security beyond diversifying supply sources’ but also recommended ‘investing in equity oil’ to enhance energy security in subsequent sections.

A new division on ‘energy security’ was created within the Ministry of External Affairs (MEA) of the Government of India in 2011 and was designated as ‘the nodal point for ‘energy security’ related matters involving coordination with line Ministries, Planning Commission, Indian Missions and Posts Abroad, International Organizations and Foreign Missions’. The overarching theme in its mandate is that of securing equity investment and bilateral energy deals in energy exporting countries in Africa, Latin America, Central Asia and South East Asia.

Despite questions over whether ‘equity oil’ actually contributes to energy security, ONGC Videsh (OVL) was created with the mission to pursue ‘equity oil’ investments. Barring a few exceptions, the list of countries in which OVL has so far made equity investments reads like the list of states to avoid – Vietnam, Myanmar, Russia, Kazakhstan, Iran, Iraq, Syria, Libya, Nigeria, Sudan, Brazil, Columbia and Venezuela.

In Vietnam OVL has invested USD 114 million in exploratory assets and USD 244 million in a producing asset which gives OVL 2.249 BCM of gas and some condensate. In Myanmar India has invested USD 160 in natural gas assets from which production is anticipated next year. Russia has the largest of OVL’s equity investments at 4 billion yielding 1.4 mmt of oil and 0.415 BCM of gas. In Iran and Iraq, OVL has exploratory assets acquired for a consideration of USD 38 million. In Syria OVL has two assets, one producing and one exploratory accounting for an investment of USD 277 million with 0.662 mmt of ‘equity oil’ in 2010-11. In Libya, OVL has invested USD 50 million in three exploratory assets out of which formal letters on relinquishment are awaited on two while force majeure notice has been served and operations suspended on the third. In Nigeria, OVL has invested USD 257 million in exploratory blocks out of which USD 25 million has already been written off. OVL’s USD 2.5 billion investment in the Greater Nile Project in Sudan gives ownership of about 1-2 mmt of ‘equity oil’ each year. Another producing asset in Sudan assigns OVL about 0.226 mmt of equity oil for an investment of USD 428 million. In Venezuela OVL has a producing asset in which it has invested USD 191 million and gets the right to about 0.757 mmt of crude. In Cuba OVL has invested USD 69.7 million in exploratory assets and in Columbia it has invested USD 9.5 million in exploratory assets and a producing asset in which it has invested 437.5 million with right to 0.468 mmt of crude. In Brazil a USD 548 million investment gives about 0.573 mmt of crude and 0.013 BCM of gas. It also has an investment of USD 81 million in exploratory assets. All the above figures from OVL’s website add up to an investment of USD 1.1 billion in exploratory assets and USD 8.7 billion in producing assets yielding about 5.3 million tonnes or 38.8 million barrels of equity oil. This is about 3 percent of India’s annual consumption. We have invested USD 10 billion (not counting other costs) for 38.8 million barrels per annum of equity oil.

We may presume that owning foreign or equity oil will add to India’s energy security as the ‘owned oil’ may be seen to be contributing to India’s oil supplies. This is often not the case as ‘equity oil’ is sold to the global oil market. In that case we may presume that the profits from sale of oil will insulate India’s economy from high world oil prices. But this too makes no economic sense. The world market prices oil according to its opportunity cost. The price of equity oil is roughly the same as that of traded oil. If equity oil investments are seen as having commercial benefit from the perspective of OVL or as a hedge against foreign exchange exposure, it would be better for India to allow domestic price to rise to international price levels and distribute the wind fall profit from owning oil to the population in India rather than subsidize the price in the domestic oil market (and thus give domestic manufacturers and consumers an incentive to use too much oil).

Does the purchase of equity oil lead to smoother national income? The equity investment will always look beneficial if one looks backward after oil price has risen. But if the price of oil falls, people suffer a loss of income and wealth (relative to having invested the money elsewhere). Assuming the foreign oil assets are priced fairly at the time of purchase, India would benefit only when the purchase helps smooth its income; however, purchases may increase income volatility for a large country like India.

As India accounts for a growing share of oil demand, world oil price is likely to be high when India is growing strongly and citizens have better income, whereas the price is likely to be low when India is doing poorly. Foreign oil assets are a bad hedge in such cases, for they subtract from citizens’ income when it is already low and add to it when it is high. India’s property rights in foreign oil assets are actually diminishing in risky countries even as oil price increases. The upstream assets of the Greater Nile project straddle the new territorial border and the continued operation of the project remains uncertain. OVL is also said to be incurring a loss of over USD 8 million per month in the project over inability to supply 12,000 bpd of crude to Sudan as agreed. 85 percent of the project is said to be in South Sudan and South Sudan is reportedly demanding a royalty of USD 36/bbl against an offer of USD 1/bbl from Sudan. The Deputy Chairman of the Planning Commission of India was probably right when he pointed out at a conference organized by ORF in 2006 that, ‘it was never clear in anybody’s mind what energy security was’!

COAL

Fuel Supply Agreements: CIL should not get away with poor delivery

Ashish Gupta, Observer Research Foundation

he earthquake that stirred Indonesia has shaken the whole world. In is indeed a relief that people of Indonesia and country’s valuable assets are safe. The tremor raises issues over the safety of ports for coal and other imports and nuclear power plants in the east coast. Natural disasters are beyond the control of anyone’s capacity but there was another termer from Indonesia on the coal front over additional taxes on coal exports. The price of imported and domestic coal affects our framework for inviting competitive bids for power generation projects. The framework does not offer protection to our power producers against any unforeseen natural events.

Even out domestic coal supply arrangement is not water tight legally. In 1993, government of India, in order to augment coal resources, allowed private sector participation in coal mining for captive use for power, steel and other uses as notified by the government by allocating coal blocks through assured coal linkages. In power sector coal linkages are provided for long tern for which the Ministry of Coal issues Letter of Assurance. After obtaining LOA’s power developer had to execute a standard fuel supply agreement (FSA) with the government owned coal producer, Coal India Limited which assured annual contracted fuel supply to the power developer. The FSA’s executed by CIL with power developers clearly indicate the exploitation of the power developers by CIL and how much power developers are at the mercy of the world’s largest coal miner.

Firstly, CIL signed FSA’s with power producers for only five years where as the Power Purchase Agreements are for 20 years and so the entire fuel cost risk is with the developer and a very limited share on CIL. Secondly, under standard FSAs, CIL’s commitment to supply coal was of only fifty percent of the Annual Contract Quantity (ACQ). In the wake of huge demand supply gap of coal that 50% could also include the blended imported coal. So if a power developer who does not wish to go for imported coal, the quantity component (ACQ) in the FSAs will be reduced below 50% and thus CIL assurance will reduced to only 25% of the linkage, though National Coal Distribution Policy notified in October 2007 to assure 100% of the coal linkage. The supplier will only be panelized if the quantity falls below 50% ACQ and that too mere only 10% of the base price. Where as under most international Power Purchase Agreements the supplier will be liable to pay the damages for failing to supply the contracted quantity of coal on (supply or pay basis). On the contrary, our power producers under competitive bidding route have to ensure 85% of the plant availability under the normative condition which they can not fulfill under the present situation and will end up paying a huge penalty to the power purchasers as is authorized by standard PPA. The question is why power producers should be panelized on account supplier’s failure?

Consequently, the FSA’s for the power plants commissioned after 31^st March, 2009 have not been signed and the coal supply for these plants being made through MoU’s and other adhoc arrangements. The recent instruction that came from PM’s office stating firmly Coal India to sign FSA’s with power producers with 80% assurance for 20 years failing which they have to pay the penalty. Against this, rather than finding a feasible solution for improving the supply, CIL clearly admitting that they will not be able to fulfill FSA commitment and their cash profits will drown on account of penalty. The move which comes as a shock for CIL is certainly an ecstasy for the power developers. This may help in improving the productivity as well as accountability of the world’s largest coal miner!

RENEWABLE ENERGY

Scoring Browny Points for Renewable Energy Generation

Sonali Mittra, Observer Research Foundation

n elementary principle that suggests that a certain ground speed needs to be gained for aircraft to become airborne might not be ideally applicable to the renewable energy sector in India. Recently in the report released by Pew Charitable Trust, India was listed to be one of the top performing clean energy economies. 54% increase in growth from last year led India to the 6^th Rank the G-20 nations with $10.2 billion investment. Despite the euphoria for making it into the top ten clean energy economies of the world, there is a dire need to optimize the investments received to sustain the position.

Of the total investments in India in clean energy sector, wind energy bagged the lion’s share of $4.6 billion, closely followed by solar energy $4.3 billion in 2011. Even the distribution of investment over the past five years shows a similar breakup with wind energy at 51%, solar at 31% and other renewables drawing 15% of the investments. From these numbers it is evident that wind and solar energy sector remain predominantly more attractive for investors. However, the reason for investments in these two sectors shows comparable variability.

The line between wind and solar energy is drawn by multiple factors. One, the cumulative capacity of wind energy was of the order of 15.7 GW as compared to 0.04 GW of solar energy in 2011. Even the Ministry of New and Renewable Energy has kept relatively more realistic targets for 2012 for wind at 2.2 GW and 0.8 GW for solar energy, still the funding remains more or less comparable in the two sectors. Two, support mechanisms for solar energy can not be compared to wind energy. With the National Solar Mission which expects to add 20 GW by 2020, solar sector has gained considerable attention than any other renewable energy source in India. Besides, the inequitable consideration, tax incentives for wind energy has been further reduced. This comes at a time when wind energy over the years has shown to be more cost effective than solar energy.

What remains interesting to note is that even a simple back of the envelope calculation of the investment trends and installed capacity addition proves that the incremental capital output ratio is much lower for wind energy than solar energy; still there is no providential push from the government for wind energy.

It can be safely assumed that ‘big push’ like in the case of solar might not render into the required development on ground. Optimization of the investments is necessary for sustaining the growth as seen in the wind energy sector and it should be promoted across all renewable energy sectors, if India were to maintain its position in the global ranking.

In conclusion, huge investments might not necessarily mean that they would have huge impact on sustainable energy generation or to say ‘big push’ always works to achieve the required development output. In fact in case of India, the reverse might be true. The differentiated and decentralized nature of governance, lack of infrastructural support, inadequate holistic strategic planning, bureaucracies, mis-management and mis-appropriations in the renewable energy sector in India, can not be trounced by heavy investments or centralized planning. For instance, in the 1990’s, India’s efficient cook stove/biogas program was considered the largest in the world. Today both are almost dead. This should be a lesson for the 2^nd generation renewable energy push. It should be acknowledged that renewable energy sector would require ‘bit’ by ‘bit’ transitions and reforms to reach a certain critical threshold to embark upon the path of sustainable development.

DATA INSIGHT

Indian Nuclear Power Plants: Some Safety Indicators

Akhilesh Sati, Observer Research Foundation

Nuclear Station/Plant (Completed or Under Construction)	Seismic Zone
Tarapur Atomic Power Station-1,2	III
Rawatbhata Atomic Power Station-1,2	II
Madras Atomic Power Station-1,2	II
Narora Atomic Power Station-1,2	IV
Kakrapar Atomic Power Station-1,2	III
Kaiga Generating Station-1,2,3,4	III
Rawatbhata Atomic Power Station-3,4,5,6	II
Tarapur Atomic Power Station-3,4	III
Kudankulam Atomic Power Project-1,2	II

Seismic Zones (as per World seismic hazard map)	Hazard Level	Equivalent seismic zone of India
I	Low Hazard	-
II	Low Hazard	-
III	Low Hazard	-
IV	Moderate Hazard	II
V	Moderate Hazard	III
VI	High Hazard	IV
VII	High Hazard	V
VIII	-	-
IX	-	-

Nuclear Station	Avg. radiation per year at 1.6 kms (in micro Sievert)
Tarapur Atomic Power Station	13.3
Rawatbhata Atomic Power Station	26.37
Madras Atomic Power Station	13.48
Narora Atomic Power Station	1.11
Kakrapar Atomic Power Station	1.67
Kaiga Generating Station	1.17
Atomic Energy Regulatory Board (AERB) Limit	1000
Natural background radiation present everywhere (i.e radiation from soil, rocks and even bricks, concretes in every home)	2400
The exposure rates at the Fukushima Dai-ichi site have been measured locally to be as high as*	400 milli Sievert/hour or 400,000 micro Sievert/hour

Nuclear Power Plants: Country Comparisons

Country	NPP sites/units	Seismic Zones (as per world seismic hazard map)	Hazard Level
Japan	54 units	VI & VII	High
USA	7 units	I	Low
	87 units	III	Low
	4 units	V	Moderate
	10 units	VII	High
China	7 units	I	Low
	5 units	II	Low
	9 units	III	Low
	4 units	IV	Moderate
	1 unit	VI	High

Source: Nuclear Power Corporation of India Limited

*Source: http://npcil.nic.in/pdf/news_21mar2011_02.pdf

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

Cairn India to raise Mangala output by 25k bpd

April 10, 2012. Cairn India has won crucial nods to raise output from its largest oilfield in Rajasthan block by 25,000 barrels per day (bpd) to 150,000 bpd. The Rajasthan block oversight panel, called Operating Committee (OC), approved raising Mangala oilfield production from 125,000 bpd to 150,000 bpd after independent studies confirmed 1.29 billion barrels of oil equivalent reservoir's ability to produce at higher rates on a sustained basis. The upstream regulator Directorate General of Hydrocarbons (DGH) had asked for an OC resolution on output hike before giving a formal nod for production increase. The issue would now be taken up at the Rajasthan block Management Committee which is headed by DGH and also includes representative of the oil ministry besides Cairn and its parter ONGC. Oil and Natural Gas Corp's (ONGC) Reserve Estimation Committee too has approved in-place reserves in Mangala and signed on the OC resolution for raising output. DGH had asked for an independent third party study of the reservoir and a separate report on the adequacy of surface facilities to handle higher output before approving an output increase that has been pending for over six months.

‘ONGC's deep water discoveries to start production in 5 yrs’

April 6, 2012. ONGC CMD Sudhir Vasudeva said the state-run oil and gas behemoth was aiming at converting some of the deep water discoveries to production by 2016-17. ONGC owns 56 deep water blocks, allocated to it under the New Exploration Licensing Policy regimes between 1997 and October 2010. There is a huge potential for discoveries there. ONGC had initial success in the KG Basin block in Andhra Pradesh, he said. Vasudeva said ONGC would get 0.8 MMCD of gas less owing to troubles in Sudan and Syria. It will, however, not affect the overseas operations in other 13 countries and ONGC will continue to get 9.45 MMCD of gas. Our operation in Mynmar will start soon, the CMD said. He said the company's estimate for the 12th Plan (2012-17) stood at ` 1.64 lakh crore as against ` 75,000 crore in the previous plan.

OIL in talks to buy stake in Chesapeake's Oklahoma oil assets

April 4, 2012. State-owned Oil India Ltd (OIL) is in talks to buy a stake in Chesapeake Energy Corp's Mississippi Lime unconventional oil assets in Oklahoma. The Mississippi Lime play in northern Oklahoma is a conventional -- if somewhat complex -- carbonate reservoir that is rich in oil and natural gas liquids (NGL) like butane. Chesapeake Energy is a Fortune 500 company with a market capitalisation of $ 37 billion and is the second largest producer of natural gas and 12^th largest producer of liquid hydrocarbons in the USA. It is looking at stake sale in its unconventional liquid-rich Mississippi Lime play covering 2 million acres. OIL is planning to explore oil and gas opportunities in America in tie up with US companies. The company has been for some years scouting for overseas E&P assets, primarily discovered or producing properties. OIL is also considering a proposal put by Finley Resources Inc (FRI) for jointly pursuing E&P opportunities in the US. FRI operates more than 900 oil & gas wells and has working interest in more than 2,500 non-operated oil & gas wells across 9 states in the US.

Downstream

Major fire at Numaligarh Refinery Limited

April 7, 2012. A major fire broke out in Numaligarh Refinery Limited (NRL). The cause of the refinery is not known immediately. ULFA militant have claimed the responsibility for the fire. In NRL Bharat Petroleum Corporation holds 61.65 % stake while Oil India Limited (OIL) has 26 % and Government of Assam has 12.35% stake in the refinery.

Diesel consumption rises 11.9 pc in February as industry switches from expensive petrol

April 5, 2012. Diesel consumption in the country jumped 11.9% in February as industries increased the use of the cheap fuel, while curbs on overloading of commercial vehicles forced transporters to increase the number of trucks on roads. Growth in diesel sales surpassed the growth in total sales of oil products, which rose 7.3% in the month. The data is skewed by the fact that it compares a 29-day month of the leap year with a 28-day February in 2011. The sale of fuel oil has been declining, which is a lower grade fuel than diesel, but is more costly as its price is not controlled by the government. Diesel, which is sold at ` 40.91 a litre in New Delhi, is ` 15 a litre cheaper than fuel oil (FO), a residual product of petroleum distillation burned in furnaces to generate heat. The government controls retail prices of diesel, which is not revised since June last year.

Transportation / Trade

GNF in talks to buy BG stake in Gujarat Gas

April 9, 2012. Spanish utility Gas Natural Fenosa (GNF) is in talks with BG Group Plc to buy the UK oil and gas company's 65 percent stake in India's Gujarat Gas, in a deal valued at about $900 million. A three-member consortium of state-run Oil and Natural Gas Corp, Bharat Petroleum Corp Ltd and Gujarat State Petroleum Corp (GSPC) is the only other bidder in talks on buying BG's stake. The Indian unit of BG, which announced its intention to sell its stake in Gujarat Gas, hopes to finalise the deal with either of the two bidders by early May.

Essar to stop fuel oil exports as early as May

April 4, 2012. Essar Oil is likely to cease fuel oil exports as early as May after starting a new delayed coker unit (DCU) at its 375,000 barrels per day Vadinar refinery. It was originally expected that fuel oil exports would be halted by the end of 2011, but the new unit had not been stablised by then. Essar's cargoes were on-specificaton 380-centistoke grade and traders were initially worried about the impact that this loss would have on the availability of cargoes that could be sold directly into the marine fuel market.

NYSE listed Enbridge joins race to buy RGTIL

April 4, 2012. NYSE listed energy major, Enbridge is in talks to buy RIL's closely held company Reliance Gas Transportation Infrastructure Ltd (RGTIL). IL&FS and private equity players 3i, Blackstone and KKR have also shown interest in buying part or whole of RGTIL and are in talks with RIL's group company. The promoters are said to have a valuation expectation of ` 10,000 crores for the gas pipeline business. Experts said that the entry of Enbridge which operates in Canada and the US is a game changer, especially for the PSU companies like GAIL and Oil India which have already shown interest in buying RGTIL. RIL has appointed JPMorgan, Citi and SBI Caps for the sale of RGTIL. RIL wants to sell the gas pipeline business as the low gas output is unable to justify large investments in these pipelines. RGTIL operates the ` 15,000 crore East-West gas pipeline (EWPL) that connects Kakinada to industrial hubs of Karnataka, Maharashtra and Gujarat. RGTIL was granted the license to build two pipelines connecting Kakinada-Vizianagaram-Srikakulam and Kakinada-Ennore-Nellore-Chennai in 2007, but the company has not gone ahead with the projects due to unavailability of gas.

Policy / Performance

GSPC increases domestic PNG, CNG prices by ` 4-5

April 10, 2012. The state-owned GSPC Gas Company said that it has been forced to increase its PNG and CNG gas prices by ` 4-5 because of non-allocation of cheaper domestic gas by the Central Government. The Piped Natural Gas (PNG) which was priced at ` 16.91 per standard cubic meter (SCM) would cost ` 20.91 per SCM for the domestic consumer. The price of CNG which was ` 45.25 per kilo has been increased to ` 50.20. The situation has been further compounded, of late, with increase in spot LNG prices internationally and the value of the Indian Rupee depreciating against the US Dollar. The Company which provides gas to 21 cities in the state had revised its CNG prices and gas prices to industries last November. It has 1224 commercial customers while it supplies PNG to 3.28 lakh domestic household across the state.

CNG, piped cooking gas prices slashed

April 10, 2012. Oil regulator PNGRB has ordered Indraprastha Gas Ltd (IGL) to refund excessive tariff billed to consumers on selling piped cooking gas to households and CNG to automobiles in the national capital since April 2008, a decision IGL challenged in Delhi High Court. The Petroleum and Natural Gas Regulatory Board (PNGRB) in an April 9 order fixed pipeline transportation tariff at ` 38.58 per million British thermal unit as against ` 104.05 per mmBtu sought by IGL. Gas compression prices were reduced to ` 2.75 per mmBtu from ` 6.66, both changes being effective from April 1, 2008. IGL, which potentially may be impacted by ` 1,000 crore to ` 1,700 crore in past dues, said it is not implementing the order immediately pending its appeal against the directive in the Delhi High Court.

Oil ministry warms up to RIL's D6 survey plan of deep-sea region

April 10, 2012. The oil ministry has called a crucial meeting of administrators of the KG-D6 block to deliberate upon Reliance Industries' plan to survey the entire deep-sea region, instead of a piecemeal approach, to accelerate joint development of 16 untapped discoveries and reverse the steep fall in gas production. Reliance and its partner BP want to immediately conduct a comprehensive survey for the entire block, but the director general of hydrocarbons has so far stoutly opposed this and asked them to restrict the survey to the four satellite fields for which the government approved the $1.5-billion development plan in January. Oil ministry said the government is now favourably inclined towards the proposal as it saves on development costs and speeds up production of more natural gas, but it wants to make sure that Reliance and BP conduct the survey at their own risk. RIL has addressed government concerns about the survey's cost.

AP lodges protest with Centre over reduction in gas allotment

April 9, 2012. Andhra Pradesh (AP) Government has lodged a "protest" with the Centre over reduction in allotment of natural gas from 75 to less than 50 per cent to the state from the Reliance's D6 wells in the Krishna-Godavari basin. Reliance was supposed to supply gas to meet 75 per cent of the plant load factor (PLF) but the current level of supply was sufficient only for 46 per cent PLF. Andhra Pradesh should get 12.97 mmscmd of gas from Reliance and Government-run ONGC for the seven gas-based power plants but currently the supply was only 7.97 mmscmd.

Goa plans mechanism to deter petrol smugglers

April 9, 2012. Goa will soon start monitoring petrol pumps located on its borders to deter "petrol smugglers" from spiriting away hundreds of litres of cheap petrol, Chief Minister Manohar Parrikar said. A mechanism is being worked out to ensure that the smugglers do not take undue advantage of Goa's cheap petrol, which at ` 55 (approx) is priced as the lowest in the country, Parrikar said. Goa's cheap petrol has become a top draw for tourists coming to Goa from Maharashtra and Karnataka. A day after the prices were lowered April 2, petrol pumps witnessed queues from 7 a.m. to 7 p.m. with eager consumers, including those driving cars with outstation numbers, waiting to tank up. In his budget tabled in March, Parrikar had reduced the value added tax, as per a promise in his election manifesto, which reduced petrol prices by ` 11. The promise was one of the biggest "game changers" in the Bharatiya Janata Party's poll campaign. The reduction of petrol price has provided major relief to a large section of the 14 lakh odd population in Goa, which has one two wheeler for every three resident citizens. As of 2011, the state had 5.33 lakh two wheelers.

India bends rules to secure oil from warring Sudans

April 6, 2012. While admitting that the decision to send a special envoy to South Sudan and Sudan to broker peace between the two nations was a policy departure for India, the government said that this had become unavoidable not just to advance the nation's larger strategic interests in Africa, but also because Juba's decision to halt oil production was resulting in a loss of $400,000 to New Delhi every day.

Fitch affirms highest grade to RIL's long-term national rating

April 5, 2012. Fitch affirmed highest grade to Reliance Industries' long-term national rating on the back of the company's ability to generate robust cash flow from operations and a strong liquidity position. The rating agency has affirmed the company's National Long Term Rating at 'AAA' with a stable outlook. Besides, the Long-Term Foreign Currency Issuer Default Rating was affirmed at 'BBB-' with a stable outlook and the LT Local Currency IDR at 'BBB' with a positive outlook, Fitch said.

RIL, BP submit revised field development plan

April 5, 2012. With KG-D6 output hitting an all- time low, Reliance Industries and its British partner BP plc have submitted to the government a revised field development plan for enhancing gas production from MA field in the block. RIL-BP propose to drill one gas production well on the MA oilfield in the eastern offshore KG-D6 block besides intervention jobs in at least two of the existing six wells on the fields. MA is the only oil find made by RIL in the 7,645 square kilometre KG-D6 block. The field produces about 11,200 barrels a day of along and associated gas of 6.45 million cubic meters per day. MA field makes up for about one-fifth of the 34.09 mmcmd of current gas output from KG-D6 block. Six wells had been drilled on MA field, of which one had to be closed because of water loading and sand ingress. RIL-BP plan to do workover (intervention activity involving invasive techniques to raise output) on the closed well and at least one more well facing similar problems. This together with a seventh well, which would only produce gas unlike the current five wells that produce both oil and gas, would help the field raise output to 8 mmcmd. MA field had begun oil production in September 2008 and gas in April 2009 and in 2010 had averaged 8 mmcmd of gas output. The revised FDP for MA field was submitted to the Directorate General of Hydrocarbons (DGH) in February and RIL-BP have made technical presentation. Also, RIL-BP are working on an integrated and capital efficient plan for block development, involving production from all the 18 gas discoveries in KG-D6. They projected first gas from R-Series, the third largest gas find in KG-D6 block, by 2015 and production from satellite fields by 2016 subject to timely regulatory approvals. RIL began production from Dhirubhai-1 and 3 (D1&D3) fields, the largest among the 18 gas and one oil find, in April 2009 but output has fallen from a peak of 54 million cubic meters per day in March 2010 to 27.64 mmcmd this month. Together with 6.45 mmcmd of gas production from D-26 or MA oil field in the same area, block output is 34.09 mmcmd. The plan would help in cost savings of over USD 1 billion due to integration and optimisation. In addition, un-incurred phase-II cost of D1&D3 field development plan (USD 3.1 billion out of total cost of USD 8.8 billion) would not be required to be spent, they said. RIL-BP plan to connect R-Series and four satellite fields, for which a USD 1.529 billion field development plan was approved by the government in January, to the existing infrastructure used to produce gas from D1&D3 and MA. Also, other satellite fields would be hooked up to these. R-series and four satellite fields alone have potential to add 30 mmscmd of output.

SC rejects Essar Oil's plea in tax case

April 4, 2012. Essar Energy Plc said the country's Supreme Court (SC) dismissed its unit Essar Oil's petition to review an earlier verdict that asked Essar Oil not to defer the payment of $1.24 billion in sales tax. London-listed Essar Energy said the decision would not have any new impact on the company's business. Essar Oil, 87 percent owned by Essar Energy, had deferred $1.24 billion under a tax benefit provided by the western state of Gujarat, where the company's Vadinar refinery is located.

POWER

Generation

NMDC eyes partner to develop captive power project in Chhattisgarh

April 10, 2012. State-run NMDC has appointed PFC Consulting for selecting a partner to develop a captive power project for its upcoming steel plant in Chhattisgarh. The other modalities of the joint venture partnership like equity participation by the partner etc. are yet to be worked out. NMDC has a mining capacity of around 30 million tonnes per annum. It is spending over ` 3,000 crore for its upcoming 3 million tonnes per annum capacity steel plant at Nagarnar in Chhattisgarh. The plant will get iron ore from company's existing mines at nearby Bailadila, while the coking coal is planned to be imported. This plant is likely to be commissioned by 2014.

Nalco plans another nuclear power plant with NPCIL

April 10, 2012. After Kakarapar Atomic Power Station (KAPS) in Gujarat, state-owned aluminium major Nalco is looking to set up another nuclear power plant in collaboration with Nuclear Power Corporation of India Ltd (NPCIL). An NPCIL-Nalco joint venture is already executing unit 3 and 4 of Kakarapar Atomic Power Station (KAPS) in Gujarat of 700 MW capacity each, which requires a total investment of about ` 12,000 crore. NPCIL would be the operator of the project with 51 per cent stake.

OTPC to start generation by June-end

April 9, 2012. The ONGC Tripura Power Project (OTPC) will start power generation by the end of June at Palatana in Gomati district. The first unit of state-owned gas based thermal power project would start generation by June 30 and the other unit by September 30. Tripura Power Minister Manik Dey visited the power project site and reviewed the progress of work. State-run ONGC, major partner of the OTPC power project, would supply natural gas extracted from Tripura. Dey also visited the site of ` 623 crore gas-based thermal power project at Manarchack in West Tripura district, which is likely to start generation by March next year. North East Electric Power Corporation said that order for procuring turbine and generators for the 104 MW Palatana power project were likely to arrive after the monsoon. Four north eastern states - Assam, Mizoram, Meghalaya and Manipur - will buy power from the 726 MW Palatana power plant and the Northeast Power Trading Company has already started erecting transmission line from Palatana to Bongaigaon in Assam.

Hindujas eyeing distressed power projects

April 6, 2012. The lubes-to-financial services Hinduja Group is in talks to acquire distressed power projects that are finding it difficult to secure coal linkages and achieve financial closure. The move is part of the group's ambitious plans of adding 10,000 MW of power capacity, with investments of $14 billion in the next seven years. The Hindujas recently sold a 5% stake in privately held HNPCL to the Indian subsidiary of German energy major STEAG for ` 111 crore, valuing the Hinduja firm at ` 2,220 crore. HNPCL is likely to launch its initial public offering (IPO) to raise funds once it commissions its 1040 MW coal-based merchant power plant in Vizag, Andhra Pradesh next year. The Vizag project has already achieved financial closure with a consortium of 14 public sector banks led by the State Bank of India and has secured coal linkages for the project.

Tata Power launches JV firm Cennergi with Exxaro Resources

April 4, 2012. Tata Power, along with South Africa's Exxaro Resources launched their joint venture (JV) Cennergi (Pty) Ltd, that would focus on developing electricity generation projects in the African continent. Cennergi also marks a major overseas foray for Tata Power, India's largest private power generator. The 50:50 joint venture entity would serve the expanding energy markets in South Africa, Namibia and Botswana, Tata Power said.

Essar Power set to triple production capacity

April 4, 2012. Essar Power said it will almost triple its installed production capacity to 4,510 MW by June as three of its new projects will come into operation. The company is building a project at Salaya in Jamnagar district of Gujarat with an investment of $1.1 billion. It will have the capacity to produce 1,200 MW of power. The first unit of 600 MW of this project called Salaya 1 has commenced commercial operation, Essar Power said.

Transmission / Distribution / Trade

PGCIL to set up 7,240 circuit km high voltage lines in FY13

April 10, 2012. Power Grid Corp of India Ltd (PGCIL) targets addition of 7,240 circuit km of extra high voltage transmission lines and 20,000 MVA transformation capacity in 2012-13. The company has also been given a target of energizing 1,100 villages and providing connections to two lakh Below Poverty Line (BPL) households under the flagship Rajeev Gandhi Grameena Vidhyutikaran Yojana. The company has signed a memorandum of understanding with power ministry for the targets to be achieved during 2012-13.

BGR Energy bags NTPC order worth ` 18.5 bn

April 9, 2012. Power equipment maker BGR Energy said it has received a 'Letter of Award' from National Thermal Power Corporation (NTPC) for supply of two super critical boilers valued at ` 1,855 crore. The execution period of the contract is 48 months. BGR Energy Systems emerged as the lowest bidder in the NTPC bulk tender for supply of 11x660 MW super-critical boilers. The project would be setup across the country.

Alstom bags ` 740 mn order from Jyoti Structures

April 9, 2012. Power generation and transmission firm Alstom India said it has bagged a contract worth ` 74 crore for supplying power transmission equipment to state-run Power Grid Corporation for two projects. Alstom T&D India has been awarded a contract worth approximately ` 74 crore by Jyoti Structures, a leader in turnkey engineering, procurement and construction (EPC) projects in the field of power transmission. The French firm's Indian subsidiary will supply products, including circuit breakers, disconnectors, instrument transformers, current transformers and capacitive voltage transformers for several 765/400 kV substations.

Electricity Appellate body rejects BEST plea against Tata Power

April 8, 2012. The Appellate Tribunal for Electricity has upheld the order of Maharashtra Electricity Regulatory Commission (MERC) allowing Tata Power to lay down its own network in south Mumbai and supply power to consumers in the area. The Brihanmumbai Electric Supply and Transport (BEST), which is run by Mumbai Municipal Corporation, had challenged the MERC decision to allow the private player to supply power in south Mumbai, and to develop its distribution system. Earlier, BEST enjoyed monopoly in the island city. The tribunal rejected BEST's case, saying that it was against the spirit of the concerned law which seeks to promote competition in electricity sector.

Tata Power in talks for buying stake in South Africa coal project

April 7, 2012. Tata Power said it is in talks with energy company Sekoko Resources to acquire stake in a coal project in South Africa, even as another partner in the African venture said that the Indian firm's bid has been rejected. The project, being eyed by Tata Power, is reportedly a partnership between South Africa-based Sekoko Resources and Firestone Energy.

24 states raise power tariffs in 18 months

April 5, 2012. Faced with deteriorating health of power distribution companies, as many as 24 states have revised their electricity tariffs in the past 18 months, according to a report. Low tariff regime has been mainly blamed for the poor financial conditions of power distribution companies (discoms), a scenario that has raised concerns of default in the financial system. Brokerage firm Motilal Oswal said in a recent report said that discoms have set the ball rolling in favour of disciplined efforts to manage cost, file tariff petition and tariff hikes. The improved situation is primarily on account of higher tariffs. The latest state to hike the power tariffs is Tamil Nadu, where the rates have been increased 37 per cent. Other states that have raised power tariffs in recent times include Bihar, Rajasthan, Madhya Pradesh, Punjab and Andhra Pradesh.

PGCIL proposes setting up JV with UP Power Transmission Corp

April 5, 2012. Transmission utility Power Grid Corporation of India (PGCIL) expressed its desire to set up a joint venture with the UP Power Transmission Corporation for strengthening the transmission system in the state. The Chairman and Managing Director of the PGCIL, R N Nayak who met the new Chief Minister of UP, Akhilesh Yadav proposed setting up of a joint venture with the state in order to improve investments for strengthening the transmission system. The Chief Minister has sought a detailed proposal in this regard and assured that after receiving it, the state would take a decision within 15 days. The officials of the PGCIL also proposed developing selected cities of the state as smart gridsmart city for strengthening the transmission system in a phased manner. On this, the Chief Minister proposed taking Firozabad, world famous for its glass bangles industry, in the first phase and developing it as model smart city. Yadav asked for a detailed proposal in this regard within 45 days so that the government could take a decision on it at the earliest. The Chief Minister assured the PGCIL officials that his government would extend all possible co-operation for the timely implementation of all the company's proposals.

NTPC invites bids for 5 MT imported coal

April 4, 2012. Country's largest power producer NTPC invited bids for supply of five million tonnes (MT) of imported coal to be utilised for 13 power plants. The fuel will be procured through international competitive bidding. The bidding documents for all the packages will be on sale from April 4 till April 25, according to the company. NTPC imported about 16 MT of coal in the financial year ended March, 2012. State-run NTPC has sought 2.50-MT overseas coal for two projects in Orissa, one each in West Bengal and Bihar. They are 460-MW Talchar thermal and 3,000-MW Talcher Kaniha (both in Orissa), 2,100-MW Farakka (West Bengal) and 2,340-MW Kahalgaon (Bihar) plants. The company will import 0.9 MT coal for 1,500-MW Simhadri and 2,600-MW Ramagundam projects in Andhra Pradesh.

Policy / Performance

PPAs term of gas-based projects may be slashed

April 10, 2012. The government is considering reducing the tenure of power purchase agreements (PPAs) for future gas-based projects by 10 years and reviewing the deals every five years on basis of fuel availability. The move, if implemented, will benefit 9,000-MW plants of companies like Reliance Power, Lanco Infratech and GMR Energy, when they sign power purchase agreements after gas supply is available. They will be able to review their power supply agreements every five years according to the gas supply and their commitment will be for a less number of years. The power ministry said a proposal to reduce long-term PPAs to 15-18 years from the current 25 years has been mooted after consultations with stakeholders on new model bidding documents for projects. The proposal is in line with recommendations made by the Central Electricity Authority (CEA) that duration of PPA for gas based projects needs to be brought down in view of their economic life. The authority has also suggested that the PPAs should be reviewed every five years since gas is generally allocated for that period. CEA has also proposed other policy changes like mandatory purchase of gas-based power by distribution companies, passing on fuel availability and price risks to consumers and extending fiscal benefits to gas based power projects.

Montek moots PPP for mining Coal India blocks

April 10, 2012. Planning Commission Deputy Chairman Montek Singh Ahluwalia has asked Coal Minister Sriprakash Jaiswal to enlist private mine developers expeditiously to explore Coal India Limited’s (CIL) mines through the Public Private Partnership (PPP) route. Pitching for devising a transparent mechanism for fair selection of the private companies, Ahluwalia has offered the Plan panel’s expertise since it has assisted other infrastructure ministries in drafting model concession agreements.

Jharkhand's energy policy finalised

April 10, 2012. After a lapse of eleven years since the constitution of Jharkhand state bifurcating Bihar, the state government has succeeded in finalising its energy policy. Jharkhand State Electricity Regulatory Commission (JSERC) said that the draft energy policy was now ready and it would soon place before the state cabinet for approval and after getting clearance from the cabinet it would be introduced in state Assembly. JSERC said that a provisional increase in the power tariff of the Jharkhand State Electricity Board (JSEB) had been made in August last year. The average increase of 18.5 per cent in power tariff would result in an annual increase of ` 395 crore in revenue for the state electricity board (JSEB). For rural consumers, a marginal increase of 5 paisa has been made. For high tension industrial consumers, the rates have been hiked from ` 4.35 to ` 4.90 per unit, while fixed charges have been revised from ` 165 to ` 205 per month. JSERC said that Damodar Valley Corporation (DVC), which has been supplying power to industrial consumers in its command area, has applied for revision of power tariff. As the matter is in litigation in various courts, the tariff was not revised as yet. DVC also made representation to JSERC for allowing the power utility to expand distribution of electricity to domestic consumers in its command area. The proposal is under active consideration of the commission. JSERC said that the commission has fixed targets for distribution losses and collection efficiency during the tariff period by various licensees in Jharkhand.

Govt finalises site for second UMPP in Orissa

April 10, 2012. The government has identified site for setting up ` 18,000-crore imported coal-based ultra mega power project in Orissa. The 4,000-MW plant, one of the three such proposed projects in the state, will be located at Bhadrak. A team of Central Electricity Authority will on April 21 visit the state for finalising location of the third ultra mega power project that would be run on imported coal. Orissa's first ultra mega power project at Bedabahal is under bidding.

Tamil Nadu to set up 2 LNG power plants

April 9, 2012. The Tamil Nadu government is planning to set up two 500-MW LNG-based power plants to address the electricity shortage in the state. One of the plants would be set up near the five-million-tonne-per-annum Indian Oil Corporation terminal that was set up after a memorandum of understanding was signed. The second plant plans to take advantage of GAIL’s Kochi-Bangalore LNG pipeline, which passes through Tamil Nadu. Both the projects will attract investments of around ` 3,500 crore, according to experts. It was estimated that the capital cost of a natural gas-based station in combined cycle is around ` 3.5 crore per MW. The state, which is facing power cuts between two and 10 hours because of 4,000-MW electricity shortage, is looking at all possibilities to address the shortage. Chief Minister J Jayalalithaa said the Centre was not providing enough coal for thermal power plants in the state. LNG power plants can be built in a shorter time than coal.

Panel recommends green clearance nod to NTPC's coal project in Orissa

April 9, 2012. Power producer NTPC's 7 million tons per annum (mtpa) coal mining project in Orissa has been recommended for green clearance, but with certain riders, by a committee of Environment Ministry. The decision was taken in the meeting of Expert Appraisal Committee held recently. Dulanga Opencast Coal Mining Project in Ib valley coalfields in Orissa was allocated to NTPC's 1,600-MW power plant. The Ministry of Power had requested the Environment Ministry to take the coal block out from the list of the projects falling in the 'No-Go' mining zone. The coal ministry had also issued a notice to NTPC for inordinate delays in development of block, asking it to explain delays in developing coal blocks alloted to it or face "action".

PFC Consulting scouts for foreign partner for its JV

April 9, 2012. PFC Consulting, an arm of Power Finance Corp, has invited expression of interest from foreign companies to form a joint venture (JV) to expand its operations. PFC Consulting, a wholly-owned subsidiary of Power Finance Corp, may set up a special purpose vehicle (SPV), which in turn would form a joint venture company. The terms of the joint venture, equity structure etc are yet to be worked out. PFC Consulting, which was formed in 2008, provides consultancy services in the power sector and related areas. It is mandated to promote, organise and carry on consultancy services to the power sector and is also undertaking the work related to the development of ultra mega power projects (UMPPs). The company also works as a bid coordinator for selection of developer for the independent transmission projects. PFC Consulting may also hit the market, after the joint venture partner is finalised.

Sikkim enters into JV with ATPIL for SPDC

April 9, 2012. The Sikkim government has entered into a strategic joint-venture with ATPIL to run the Sikkim Power Development Corporation (SPDC). The SPDC is now being operated by ATPIL, the company which has also floated Teesta Urja which is developing the 1,200 MW Teesta Stage-III hydroelectric project at Chungthang, North Sikkim. The state continues to hold majority equity in the corporation as it has offloaded 49 per cent equity to ATPIL which was selected from among the best performing private hydel developers in the State. The SPDC is in charge of developing only mini HEPs in the state, with a few already under development and all under 5 MW capacity.

More hydro power to boost energy security

April 9, 2012. Against the backdrop of coal shortages impacting the power sector, increasing hydro power generation capacity would help in strengthening India's energy security, says a report. Many hydro power projects are grappling with delays and cost overruns, mainly due to geological as well as geopolitical obstacles. Given India's tight domestic coal supply and increasing reliance on imported coal, hydro capacity provides the country with greater energy security..., HSBC Global Research, part of banking giant HSBC, said in a recent report on the Indian hydro power sector.

CAG detects 'deficiencies' in rural electrification programme

April 8, 2012. Despite the call to electrify all households, Meghalaya government will be unable to do it by this year, Comptroller and Auditor General (CAG) of India said. The reason for this was that the planning of the Meghalaya Energy Corporation Limited (MeECL) was "deficient" and the possibility of providing access to electricity for all households by the year 2012 as envisaged under National Electricity Policy (NEP) appeared to be 'remote', the CAG report said. Of the 6026 villages (in 2006) only 3568 villages (59.21 per cent) were electrified, the report said.

Tamil Nadu power unit's early start hinges on port decision

April 8, 2012. The early commissioning of one of the two 600 MW thermal power units at North Chennai Thermal Power Station and the easing of Tamil Nadu's power woes now hinges on the decision of Ennore Port Ltd on allowing the unloading of a turbine component weighing around 300 tonnes at its yard. The state-owned power generator and distributor Tamil Nadu Generation and Distribution Corp Ltd is putting up two new power units of 600 MW each at Ennore here. BHEL is the equipment vendor. One of the critical component of the turbine is the stator motor made at BHEL's unit at Haridwar in Uttarakhand.

‘1^st phase of 6 GW sub-station in Odisha by 2013’

April 7, 2012. Power Minister Sushil Kumar Shinde said that the first phase of a 6,000 MW sub- station in Odisha is expected to be completed in 2013 and it will improve the transmission capacity of the eastern region. The sub-station will have 6,000 MW transmission capacity and the first phase would be completed in 2013, Shinde said while laying the foundation stone for the ambitious project. The foundation stone of 765/400 KV powergrid pooling system at an investment of ` 7,400 crore was laid near Phulpada in Odisha's Angul district. This is the first such sub-station of Power Grid Corporation of India Ltd (PGCIL) in the state and is part of a High Capacity Power Transmission Corridor-1 (HCPTC-1) for about 10,000 MW power from Independent Power Projects (IPP) coming up in the state.

5.3 GW more N-power in 12^th Plan

April 6, 2012. India plans to add 5,300 MW nuclear power capacity during the 12th Plan period, taking the total contribution of atomic power to 9980 MW to the country's energy basket. This planned capacity addition includes power from two 1,000 MW units at Kudankulam being built by the Nuclear Power Corporation with Russian collaboration. The capacity addition is planned through two 1000 MW units at Kudankulkam, one 500 MW Prototype Fast Breeder Reactor (PFBR) at Kalpakkam, two 700 MW indigenously-developed Pressurised Heavy Water Reactors (PHWR) each at Kakrapar and Rawat Bhata respectively. While the two units at Kudankulam are expected to be commissioned by August this year, the ambitious sodium-cooled PFBR is expected to start generating power by 2015-16. The four PHWRs under construction at Kakrapar in Gujarat and Rawat Bhata in Rajasthan are upgraded versions of 540 MW reactors operational at Tarapur in Maharashtra. These four reactors are expected to be completed by 2016-17, thus adding a capacity of 2800 MW. The 500 MW PFBR is first of its kind reactor involving several complex technologies and is the forerunner of the indigenous Fast Breeder Reactors of the second stage of India's three-state nuclear programme.

Power Ministry eyes 9,20,000 MU of electricity

April 6, 2012. The Power Ministry has set a target of generating 9,20,000 million units (MU) of electricity this year, of which over 1,50,000 million units would come from the private sector alone, says a Central Electricity Authority report. Even as the sector grapples with acute fuel shortages, the power sector planning body in its report has set a goal of adding over 7,60,000 million units of coal-based power during 2012-13. The government also plans to harness the hydro power potential of the country by adding over 1,22,000 million units of hydel power during the same period, of which nearly 60,000 million units would come from the northern part of the country, the report said.

BHEL subsidiary BHPV posts 16 rise in turnover in FY12

April 5, 2012. Bharat Heavy Plates and Vessels Ltd (BHPV), a subsidiary of state-run power equipment maker BHEL, has recorded a turnover of ` 158.35 crore during 2011-12, an increase of 15.6 per cent over ` 136.97 crore posted during the last fiscal. The profit after tax (PAT) was ` 9.03 crore as against ` 8.77 crore during 2010-11, BHPV said. The ` 235-crore modernisation scheme at BHPV, funded by BHEL, was firmly on track and this would help in achieving sustained growth and profitability in the years to come.

‘Govt to kickstart coal block auction by June’

April 5, 2012. Following furore over an initial CAG report that estimated huge losses to the exchequer in the allotment of mines, the government has said it is ready with the list of coal blocks to be bid and the auction process will kickstart by June. The government is also ready with the list of the blocks to be alloted to Central PSUs like NTPC and state undertakings by it, Coal Minister Sriprakash Jaiswal said. The initial report of Comptroller and Auditor General (CAG) estimated that the government incurred ` 10.67 lakh crore by allocating 155 coal blocks without auction between 2004-2009 to private and public sector companies. Jaiswal, however, had dismissed the report on allocation of coal blocks without auction as "illogical" and "baseless" arguing that when the blocks were given to the private and public sector companies for their captive usage, there was not much demand for coal. Coal India's subsidiary CMPDI has been assigned the task of hiring a consultant for coming out with a methodology of fixing the reserve price of blocks, finalising bid documents and assisting in the bidding process.

NPCIL delivers robust performance during FY11-12

April 4, 2012. Nuclear Power Corporation of India Limited (NPCIL), which operates 19 nuclear power reactors, has surpassed its previous electricity generation record of 26473 MU by generating 32,455 MU during the year ending March 31, 2012, an increase of about 23 per cent. NPCIL has witnessed a robust growth in the fiscal 2011-12 with its turnover increasing to about ` 7500 crore from ` 6,000 crore in the previous financial year. The overall average availability factor of the nuclear power plants continued to be high at 91 per cent during the year. The average capacity factor (CF) for nine reactors of the 19 in operation, fuelled with imported uranium fuel, recorded all time high at 97 per cent. The overall average capacity factor for NPCIL reactors was 79 per cent against the target of 66 per cent.

Indonesia's 25 pc tax plan on coal exports to hit Indian power firms

April 5, 2012. Indian companies, cheering the Presidential decree forcing Coal India to fuel their power stations, face a fresh bout of uncertainty as Indonesia has proposed a 25% tax on coal exports which would make many plants unviable and encourage India to turn to Africa and Australia for fuel. Indonesia's industry ministry, which proposes to impose this tax to prevent overexploitation of its mines, plans to double the levy to 50% in 2013. Indonesia's vast coal reserves had attracted large investments by companies, such as Tata Power, Adani Power and Reliance Power, who bought assets in the country to fuel their projects in India, while others, such as Lanco Infratech, have long-term pacts with miners and traders in the country. Indian power producers are rapidly losing faith in Indonesia as this is the second time that the country has rattled them. Earlier, it had upset the economics of ultra mega power plants (UMPPs) being set up by Tata Power and Reliance Power as it changed its law to raise the export price of coal. Companies are struggling to honour power purchase agreements, and are seeking tariff revision.

Bombay HC rejects PIL against Tata Power

April 5, 2012. The Bombay High Court has dismissed farmers' plea opposing land acquisition by Tata Power for its 1,600 MW power project in Raigad district of Maharashtra. A division bench of the high court comprising Chief Justice ruled that the company can go ahead with the construction of the project with certain riders. In April 2005, Tata Power singed a memorandum of understanding with the Maharashtra government for setting up the power project.

Govt invites views to firm up electricity sector roadmap

April 4, 2012. The government has invited views from all the stakeholders, including power generation firms for finalising the roadmap of the electricity sector for the next five years. Power sector planning body, Central Electricity Authority (CEA) has prepared the draft for National Electricity Plan (NEP) and has invited suggestions, objections etc. from licensees, generating companies and the public for the same. After receiving the comments, the Plan would be notified after getting Central Government approval. The draft covers a review of the 11th Plan (2007-12), 12th Plan (2012-17) in detail and perspective Plan for the 13th Plan (2017-22). The views of the stakeholders on the NEP have to be sent to CEA within two months i.e by May 31, 2012. After which they would be appropriately considered while finalising the Plan. Meanwhile, Power Ministry has said that it plans to add 76,000 MW of power during the current plan period (2012-17), but is yet to receive Planning Commission's approval for the same. Power Ministry had set a target of adding 78,577 MW during the 11^th plan concluded on March 31, 2012. This target was scaled down to 62,000 MW by the Planning Commission in its mid-term appraisal due to fuel shortage and lack of forest and environmental clearances impacting the power projects. The government was able to add around 54,000 MW capacity by the end of the 11th plan period (2007-12).

INTERNATIONAL

OIL & GAS

Upstream

EIA: Iran's oil production to drop 500k bopd in 2012

April 10, 2012. Iran's crude oil production is expected to fall by approximately 500,000 bopd by year-end 2012 from 3.55 million bopd of production at the end of 2011, according the U.S. Energy Information Administration (EIA). Iran's oil output decline sped up during the last quarter of 2011, which EIA believes is due to lack of investment needed to offset offshore natural production declines. EIA's forecast does not factor in potential effects of the more recent sanctions targeting Iran's central bank and the impending European Union embargo on Iran's crude oil production. It is too early to assess Iran's ability to place its supply elsewhere. EIA said it expects the forecast decline in production and additional 200,000 bopd in 2013 will be offset by increased production in other OPEC member countries. It also projects OPEC surplus production capacity will average 2.9 million bopd in 2012 and rise to 3.6 million bopd in 2013.

BP pursues Namibia crude amid no known discovery of oil

April 5, 2012. BP Plc’s push into Namibian oil makes it the only major producer expanding in the West African nation, where commercial crude deposits have never been found and the only gas field has sat idle since its discovery in 1974. BP became the largest shareholder in a block covering Namibia’s Nimrod offshore prospect, which may yield the third-biggest discovery of 2012. The oil producer said it would buy into Serica Energy Plc’s licenses in the country.

Shell to shut Gulf Mars platform in second quarter for work

April 4, 2012. Royal Dutch Shell Plc will shut the Mars deep-water platform in the U.S. Gulf of Mexico in the second quarter for planned work. Shell, based in the Hague, will perform maintenance on the site, located about 130 miles (209 kilometers) south of New Orleans, and conduct work related to a second platform, the Olympus, that the company is building in the Mars field. Shell says it expects to begin production at Mars B Olympus beginning in 2015. Olympus will be able to process about 100,000 barrels of oil equivalent per day. The existing Mars platform produces about 190,000 barrels of oil equivalent a day. Shell has a 71.5 percent working interest in Mars, with London-based BP Plc holding the rest.

Downstream

Phillips 66 looks to pipes to blunt refining volatility

April 9, 2012. Phillips 66 will debut next month as the world’s largest independent refiner by market value. In the future, it may look more like a pipeline and chemical business. The new Houston-based company, set to begin trading May 1 after its spinoff from ConocoPhillips, plans to boost profit by emphasizing growth in its higher-return businesses and shrink its more volatile fuel processing.

Byco set to commence commissioning by June-end

April 5, 2012. Byco Petroleum Pakistan Limited, the country's largest oil refinery having capacity of 120,000 barrels per day is all set to commence commissioning process by the end of June this year. At present, Byco has a smaller refinery having a capacity of 35,000 bpd. The production of Byco's new refinery, the oil refining complex II (ORC-II) will substitute up to 60 percent of Pakistan's valuable imports. Byco also has plans to take immediate steps for augmenting the refining capacity.

Shell eyes gas-to-diesel plant in Louisiana

April 5, 2012. European oil giant Royal Dutch Shell Plc. is exploring the possibility of building a plant in Louisiana that will convert natural gas into diesel fuel. The plant, which would cost more than $10 billion, would reportedly be similar in size to Shell's Pearl gas-to-liquids or GTL facility in the Qatar. The Pearl facility turns natural gas into enough diesel to fill more than 160,000 cars per day.

ConocoPhillips reports flaring at San Francisco-area refinery

April 4, 2012. ConocoPhillips reported excess emissions that resulted in flaring at its San Francisco-area oil refinery in Rodeo, Calif. The notification to the California Emergency Management Agency didn't specify whether the flaring was planned, or perhaps associated with a restart of a process unit, or units, following turnaround maintenance that got under way. Traders doing business in the region said at that time that maintenance was being performed at the plant's crude and coker units and a reformer. That work was expected to last until the end of March. ConocoPhillips doesn't comment on refining operations. The Rodeo refinery is able to process up to 120,200 barrels of crude oil a day.

Transportation / Trade

Oneok enters crude-oil transportation business with $1.8 bn pipeline

April 9, 2012. Oneok Partners LP said it will spend between $1.5 billion to $1.8 billion to build a 1,300-mile crude-oil pipeline between the Bakken Shale in North Dakota and the Cushing, Okla. crude-oil market hub, marking the company's entry into the crude-oil transportation business. The Bakken Crude Express Pipeline will have the capacity to transport 200,000 barrels per day. The move comes as Oneok Partners--the gas-gathering and transportation unit of Oneok Inc.--has been increasing its spending plans for the Bakken Shale region. Construction is expected to begin in late 2013 or early 2014 and be completed by early 2015. The proposed pipeline route will also be well-positioned to transport crude-oil from the Niobrara Shale, Oneok said. The company has already said it is investing $2.8 billion to $3.5 billion through 2014 in growth projects, including $1.6 billion to $2 billion in projects related to the Bakken Shale. The company said it plans to spend an additional $140 million to $160 million to construct a 270-mile natural-gas-gathering system and infrastructure in North Dakota.

Kepco unit signs $3.4 bn deal with Vitol to buy LNG

April 9, 2012. Korea Midland Power said that it has struck a $3.4 billion deal with Switzerland's Vitol SA to buy liquefied natural gas under a long-term contract. The deal marks the first successful attempt by a Kepco unit at buying LNG directly from suppliers instead of purchasing through the country's LNG supplier, Korea Gas Corp. The power-generating unit of Korea Electric Power Corp., known as Komipo, will buy 400,000 metric tons of LNG a year from Vitol from 2015 to 2024. The deal with Vitol comes with an option for Komipo to purchase more than the initially contracted volume, depending on changes in market prices.

Putin’s port project to divert Russia Urals oil to Baltic

April 6, 2012. A Baltic Sea oil terminal opened in March by President-Elect Vladimir Putin to boost Russia’s direct access to international markets may weaken the country’s crude price in northern Europe compared with the south. Urals crude in Northwest Europe was $1.13 a barrel less than in the Mediterranean after the start of operations at the Ust-Luga terminal, the most since July. That compares with a 20-cent premium at the start of March and an average discount of 6 cents in the past year. Russia wants to elevate the role of Urals, which has high- sulfur qualities similar to Middle Eastern crudes, as an international benchmark. Building the new export terminal on its own territory may help the country allay concern that Urals supply is vulnerable to disruption because of political disputes with transit countries such as Belarus and Ukraine and the tanker chokepoint of the Bosphorus Straits near Istanbul.

Kiev to invest in Trans-Caspian Gas Pipeline

April 6, 2012. Kiev is ready to invest 790 million euros in Trans-Caspian Gas Pipeline, pending on whether the project includes the construction of a branch to the liquefied natural gas (LNG) terminal in Georgia's port Kulevi, from which gas could be carried to Ukraine by sea. Ukrainian Prime Minister Nikolai Azarov said the country was ready to participate in 7.9 billion euro Trans-Caspian Gas Pipeline, designed to pump gas from Caspian regions to E.U., bypassing Russia. Moscow criticizes the project because the Caspian Sea status has not been defined and regulated yet. Construction of a branch from the Trans-Caspian Gas Pipeline to Kulevi would help to boost the terminal's transshipments to 20 billion cubic meters of gas from the current 10 billion cubic meters.

Policy / Performance

Iran doesn’t need oil exports, President says

April 10, 2012. President Mahmoud Ahmadinejad said his country can last for years without exporting oil. An EU ban on oil purchases from Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries, will come into force in July. Iran’s Oil Minister Rostam Qasemi said that the country has stopped exporting oil to Greece. Iran halted oil sales to two Greek companies, Hellenic Petroleum SA and Motor Oil Hellas SA, after they failed to pay. Iran stopped crude supplies to Spain and was considering extending the measure to Germany and Italy, citing unidentified persons. The Oil Ministry cut exports to France and the U.K. in February. EU nations bought 18 percent of Iran’s exports of crude and condensates, or 452,000 barrels a day, in the first half of 2011, according to the U.S. Energy Information Administration.

Cosco sees ‘big chance’ China insurer will cover Iran oil

April 10, 2012. China Ocean Shipping Group Co. (Cosco), the nation’s biggest sea-cargo carrier, said a government-backed insurer will probably cover oil shipments from Iran so deliveries aren’t disrupted by European trade sanctions. A number of government departments are discussing the issue, as China, the biggest buyer of Iranian crude, seeks to ensure that EU sanctions coming into force July 1 don’t interrupt supplies. The EU embargo, prompted by Iranian nuclear plans, affects shipments to China and other countries as 95 percent of oil tankers are insured by the 13 members of the London-based International Group of P&I Clubs. China Shipping Group Co., the nation’s No. 2 vessel operator, similarly said that it expects the government will act to safeguard shipments. China buys about 22 percent of Iranian oil exports, according to U.S. Department of Energy estimates. China Shipowners Mutual Assurance Association, known as the China P&I Club, will also probably continue covering tankers carrying Iranian oil. The group may halt coverage. The company operates more than 50 oil and liquefied petroleum gas tankers, including at least 20 very large crude carriers.

Hedge funds cut commodity bets on Fed’s stimulus signals

April 10, 2012. Hedge funds reduced bullish bets on commodities for a second consecutive week as the Federal Reserve signaled it may refrain from more monetary stimulus, increasing concern that growth will slow and curb demand for raw materials. Money managers lowered net-long positions across 18 U.S. futures and options by 2.8 percent to 1.1 million contracts. Bets on higher corn prices fell to the lowest since February, while those on hogs dropped by the most since May. Speculators cut wagers on costlier crude oil for a third week, and are now the least bullish in two months.

PENGASSAN wants Nigerian govt to adopt NLNG model for refineries

April 9, 2012. Against the backdrop of calls for the outright sale of the country's four refineries as a way of increasing local refining in Nigeria, oil workers under the Petroleum and Natural Gas Senior Staff of Nigeria (PENGASSAN) have called on the federal government to adopt the Nigerian Liquefied Natural Gas (NLNG) model in managing the four refineries in the country.

YPF to lose three oil licenses in Argentina

April 6, 2012. YPF SA, Argentina’s largest oil producer, may lose three more licenses for fields where it extracts 11 percent of its crude as provincial governments step up pressure on the company to boost investments. Santa Cruz province is considering revoking the permits because YPF is unlikely to invest enough to reverse a decline in output, the provincial government said. The province, which removed three concessions from YPF, hasn’t decided whether to revoke the other three or reject their renewal in 2015. Santa Cruz and five other provinces have already withdrawn 12 of YPF’s 104 concessions and threatened to revoke at least five more, echoing demands from the national government for increased output to curb fuel imports. The company has lost about 5 percent of its crude output because of removed permits. Neuquen province in southwest Argentina revoked an oil concession belonging to Brazil’s Petroleo Brasileiro SA. The province also withdrew a license owned by Tecpetrol SA, a unit of Techint Group.

Chevron Brazil suits double to $22 bn with new claim

April 5, 2012. Chevron Corp. and Transocean Ltd. are being sued for $22 billion in environmental damages in Brazil, double initial claims, after a federal prosecutor filed a second lawsuit over oil spills off the nation’s coast. Chevron committed “a series of errors” that led to the March spill at Frade, the second incident at the offshore oil project, the federal prosecutors’ office said. Prosecutor Eduardo Santos de Oliveira is also seeking to halt operations at Frade and block San Ramon, California- based Chevron from transferring profits from Brazil. A leak of 3,000 barrels of crude into the Atlantic Ocean off Rio de Janeiro’s coast in November and a seep in March have led to a slew of probes against Chevron and Transocean, which operated the rig at Frade. Oliveira filed the first 20 billion- real ($11 billion) lawsuit and pressed criminal charges against executives of the two companies last month, seeking penalties of as many as 31 years in prison.

POWER

Generation

Turkey to hold nuclear power plant talks with China

April 10, 2012. Turkey's energy and natural resources minister Taner Yildiz said that Turkey would hold nuclear power plant negotiations with China. Taner Yildiz said Turkey would hold nuclear power plant negotiations with China, as well as Japan and South Korea. Yildiz also said there were no problems in talks with the Russian Federation regarding the nuclear power plant to be constructed in Akkuyu town of the southern province of Mersin. Turkey plans to build two nuclear power plants in the next decade. In May 2010, Turkey and Russia signed a deal for construction of Turkey's first nuclear power plant in Akkuyu, a small town on the Mediterranean coast, which is expected to cost about 20 billion USD. Russian state-owned atomic power company ROSATOM is likely to start building the Akkuyu nuclear power plant in 2013 and the first reactor is planned to generate electricity in 2018.

Mongolia: Rising coal power

April 9, 2012. Coal production continues to rise in Mongolia amid the ongoing development of large mining projects aimed at increasing regional demand, yet the energy sector has also began exploring greener alternatives. In late February, construction started on the country’s first wind farm. Located 64 km southeast of Ulaanbaatar, the USD 100 million Salkhit Project is expected to deliver 168.5m KWh of electricity. Salkhit will be a joint project between Mongolian investment firm Newcom Group and US-based General Electric. While expected to contribute about 5% of national demand, Salkhit will not come close to tapping the country’s full wind energy potential. The 1.56m-sq-km country has the potential to generate 2.6 terawatts of renewable energy per year – about one-quarter of global electricity demand – according to data from the National Renewable Energy Laboratory in the US and the National Renewable Energy Centre of Mongolia. As the country’s potential as a green-energy centre for Asia rises, it is already becoming a regional leader in fossil fuel supply. The Mongolian Coal Association has predicted that coal export volumes will reach 50m tonnes by 2015 and 100 million tonnes by 2025. Energy-hungry China will be a prime customer, with coal imports from Mongolia expected to reach 30 million tonnes by 2015, almost double the 163 million imported in 2010. Local media has reported that while a tonne of coking coal from Australia costs China around USD 185 per tonne, it only costs USD 62 when imported from Mongolia.

Nepal invites Chinese hydropower investment

April 9, 2012. Nepal has invited Chinese hydropower companies to invest in power projects worth up to US$400 billion. The Nepalese government recently approved China Three Gorges' US$1.8 billion contract to build a 750-megawatt hydropower plant on the West Seti River. China Three Gorges Corp. built the Three Gorges Dam project, the world largest hydroelectric power plant at 21 gigawatts.

Transmission / Distribution / Trade

Cambodia works on China-funded power transmission line

April 6, 2012. Cambodia broke ground for the construction of a 22 kilovolt electricity transmission line in the country's eastern part. The construction is made possible under a concessional loan of $53 million from the Chinese government. China is the largest country that helps develop energy sector in Cambodia. The Sinohydro Corporation put into operations of the 193 megawatt Kamchay hydroelectric dam in Southwest Phnom Penh, and other four China-invested hydroelectric dams with a total capacity of 722 megawatts are being built and all expected to be completed by 2015. The power transmission line project will benefit 4 million people in those provinces. China would continue its assistance to Cambodia in the economic and social development. According the power transmission line master-plan, the China National Heavy Machinery Corporation is responsible for the construction and the project is expected to be completed in 2014.

Policy / Performance

Construction of NPP on Kazakh govt’s Agenda

April 10, 2012. The question of constructing a nuclear power plant (NPP) in Kazakhstan is on the government's agenda. Kazakhstan itself produces nuclear fuel and has the world's largest reserves of uranium. Two site options for the construction of a nuclear power plant were previously discussed in Mangistau region and close to Lake Balkhash.

NRC fines NextEra for Florida Turkey Pt nuclear violation

April 10, 2012. The U.S. Nuclear Regulatory Commission (NRC) fined a unit of Florida power company NextEra Energy $140,000 for failing to properly maintain the onsite emergency response facility at the Turkey Point nuclear power plant in Florida. NextEra's Florida Power and Light Co's (FPL) failed to report that the plant's technical support center was not fully functional during a seven-month period in 2010-2011, the NRC said.

Japan closer to restarting first reactors since Fukushima

April 10, 2012. Japan took another step toward restarting its first nuclear reactors since the Fukushima disaster, trying to avert electricity shortages this summer that could set back the country’s economic recovery. Prime Minister Yoshihiko Noda and three of his Cabinet members -- the group of four with the final say on reactor restarts -- held talks last night on switching on two Kansai Electric Power Co. reactors that have passed so-called stress tests introduced after the Fukushima meltdowns. Noda’s group “basically” approved the company’s safety measures for its reactors.

KPK plans to develop 2.1 GW projects in 10 year to ease Pakistan power shortage

April 10, 2012. Khyber Pakhtunkhwa (KPK) Chief Minister Ameer Haider Khan Hoti said that province has planned to develop 24 power projects with a cumulative generation capacity of 2,100 mega watt in next ten years to overcome energy crisis. Under this action plan, the projects that would substantially contribute to enhancing hydel power supply in the country, would kick start. He said that this action plan had been put in order to develop 24 medium-size hydel power projects with total potential of 2,100MW with a total cost of around ` 330 billion during next ten years.

Areva predicts uranium demand freeze until 2014

April 5, 2012. Areva SA, the world’s largest maker of atomic reactors, predicted the market for uranium will suffer from a glut before nuclear fuel demand rebounds from 2014 as the industry reels from last year’s meltdown in Japan. The tsunami that wrecked the Japanese nuclear site in 2011 has weighed on Areva, whose shares have lost 58 percent of their value since the worst nuclear accident in 25 years. Japan has idled all but one of its 54 reactors, and Germany has reversed a decision to extend the lifespan of its atomic facilities. Still, Chief Commercial Officer Ruben Lazo aims to double the order intake from Asia this year from more than 1 billion euros ($1.34 billion) in 2011, saying market “fundamentals” remain broadly intact. The French company is betting that an 80 percent jump in global energy demand by 2030, combined with rising fuel prices and the need to cut greenhouse gas emissions, will lead to a 2.2 percent annual increase in the installed base of nuclear plants in the next two decades.

Chile top court OKs mega HidroAysen energy project

April 4, 2012. Chile's Supreme Court said it rejected seven appeals filed against the $3.5 billion HidroAysen hydro-power project, clearing the way for the mega-dam project to go forward. HidroAysen, a joint venture between leading generator Endesa Chile and partner Colbun, has sparked massive protests over potential environmental consequences in Chile's pristine Patagonia region. A local court had previously dismissed appeals against the project, which comprises five power stations and plans to generate 2,750 megawatts of electricity by damming two major rivers.

RENEWABLE ENERGY / CLIMATE CHANGE TRENDS

National

‘650 MW solar power projects to be inaugurated in Gujarat’

April 9, 2012. Gujarat chief minister Narendra Modi said 15 solar projects with a capacity to produce 650 MW power will be dedicated to the nation at Charanka solar park in north Gujarat on April 19. Modi said all these 15 projects have been completed in a record time of 16 months. Modi said Gujarat is poised to become the world's solar energy capital. He said his government would come out with a solar energy policy soon.

L&T commissions 40 MW solar plant of RPower in Rajasthan

April 9, 2012. Leading engineering major Larsen & Toubro said that it has commissioned the country's largest solar photovoltaic power plant of Reliance Power (RPower) in Rajasthan with a capacity to generate 40 MW of power. The group's construction arm L&T Construction executed the project owned by Reliance Power at Dhursar Village in Jaisalmer district of Rajasthan from concept to commissioning in 129 days, the company said.

HHV Solar Technologies develops portable solar power generator Solarator

April 9, 2012. Leading energy firm HHV Solar Technologies Ltd has developed a portable solar photovoltaic power generator with 600 watt capacity for emergency use in remote locations and disaster management. Touted to be the first-of-its kind solar-based product in the country, the Solarator is a trailer-mounted green source of power, which lasts five-six hours. With 2 kwh output from 600 watt input, the product can also be used by infrastructure firms at project sites where there is no conventional power supply through the grid. The privately-held company has invested about ` 50 crore to set up its manufacturing facility at Dobbespet on the city's outskirts to roll out the product, priced at between ` 3.2 lakh to ` 4 lakh. The generator's two solar modules use mono crystalline silicon cells to generate 300 watt power each by converting sunlight into electricity. During transport, the modules are folded compactly and unfolded at the location use to catch the sun's rays.

How blazing sun can cool your building

April 6, 2012. Overdependence on energy-guzzling-ACs-for cooling has prompted scientists to explore others alternatives. The latest alternative on stream is solar airconditioning at Solar Energy Centre at Gual Pahari village in Gurgaon. Incredible as it may sound, 13 rooms are being cooled at this research station using solar energy. In other buildings, minor alterations in the structures are helping minimize the need for airconditioners.

Suzlon Energy sells part of wind energy farm for ` 2 bn

April 5, 2012. Loss-making Suzlon Energy has sold a part of its wind energy farm for $40 million (` 200 crore) to an undisclosed private utility and plans to divest stake in its components business to raise funds to repay debt. The deal is expected to be completed by May. Proceeds from the deal would be used to pay its foreign currency convertible bondholders $569 million in the next seven months, which includes the first round of payment of $360 million due in June. In India, Suzlon typically sets up wind farms and sells them, after which the company only operates and maintains the assets for the customer. Of the total capacity set up by the company, Suzlon owns only around 60 MW spread across five states, of which it has sold almost the entire capacity.

Global

Kyocera joins IHI, Mizuho to build Japan’s largest solar project

April 10, 2012. Kyocera Corp., a Japanese solar panel maker, IHI Corp. and Mizuho Corporate Bank Ltd. plan to jointly construct a 70-megawatt plant powered by the sun, the largest to be built in the country. The companies reached an initial agreement to build the plant in Kagoshima prefecture in southern Japan at a cost of 25 billion yen ($307 million), they said. Construction will start in July. Japan plans to start a feed-in tariff program in July, prompting companies including Softbank Corp. to announce plans for solar plants to take advantage of the above-market rates for power generated from renewable sources. Kyocera will supply solar panels and undertake part of the construction and maintenance of the plant. IHI, a Japanese maker of heavy machinery, will lease the land and Mizuho will help arrange financing for the project. KDDI Corp., Kyudenko Corp. and Kagoshima Bank Ltd. are among companies that are also expected to invest in the project.

Qatar Air targets cleaner fuel for flights with stake in Byogy

April 10, 2012. Qatar Airways Ltd. plans to invest in California’s Byogy Renewables Inc. to produce cleaner jet fuel from alcohol, curbing carbon output to meet emission goals. Byogy, based in San Jose, makes jet fuel from alcohol in the U.S., where it expects the ASTM International standards body to endorse the manufacturing process by late 2013. Airlines have already won approval to mix fuel from inedible plants and organic waste with traditional kerosene-based jet fuel, and Deutsche Lufthansa AG and Air France-KLM Group are among carriers to have flown planes using the blend. The use of alcohol as feedstock would help curb carbon output as airlines seek to meet International Air Transport Association targets to halt the growth of emissions from 2020 and to cut greenhouse gases in half by 2050 from 2005 levels. IATA wants about 6 percent of jet fuel to be met by biofuels by 2020.

Veolia gets New York City water order to advise on cost savings

April 10, 2012. Veolia Environnement SA said it will advise New York City on how to lower operating costs of water and wastewater services to 9 million people. The New York City Department of Environmental Protection could achieve annual savings of between $100 million and $200 million on operating and maintenance costs. The four-year contract could be worth $36 million in sales for the utility, Veolia said.

Hitachi Zosen to build power plant in Britain

April 10, 2012. Hitachi Zosen Corp. said it received an order to construct a garbage-fuelled power plant in Britain. The value of the order is estimated at 30 billion yen, making it the company's largest waste-disposal power plant project overseas. The fuel plant will include two power generators that can handle 2,026 tons of waste a day to produce 68,000 kilowatts of electricity. The plant's construction is set to start as early as December, and it is scheduled to be completed in January 2015.

Siemens says automation beats forecasts as renewables lag

April 10, 2012. Siemens AG, Europe’s largest engineering company, said its industrial-automation business remains stable at a “high level” while earnings growth continues to be hampered at its renewable-energy units. Counter to the company’s forecasts at the beginning of the fiscal year, Siemens’s industrial-automation division hasn’t suffered from slowing economies in Europe and China. Renewable-energy projects will continue to weigh on finances for some time and will also affect the power- transmission unit. Siemens booked 203 million euros ($266 million) in charges in its most recent quarter at the power-transmission division amid delays connecting offshore wind parks to the power grid.

China sets waste-to-power price double that of coal-fired plants

April 10, 2012. China, the biggest carbon emitter, set a price for electricity generated from waste-to-energy plants that’s double that paid to coal-fired projects to encourage renewable-energy development. Developers of waste-to-energy plants will be paid 0.65 yuan (10 U.S. cents) a kilowatt-hour, the National Development and Reform Commission said. Coal-fired projects get 0.3 to 0.4 yuan a kilowatt-hour. The rate is above the highest price of 0.61 yuan a kilowatt-hour paid to wind-power projects. Developers of solar projects get paid a minimum of 1 yuan a kilowatt-hour. The government is seeking to cut carbon dioxide emissions by as much as 17 percent per unit of gross domestic product in its five-year plan through 2015. China aims to derive 15 percent of its energy from non-fossil fuels by 2020. The rate to be paid to waste-to-energy projects may raise retail prices as the government has allowed grid companies to lift them due to an increase in the cost of purchasing power. The nation doubled the surcharges used to offer financial assistance to renewable-energy projects to 0.008 yuan a kilowatt-hour last year.

AMSC taking Sinovel infringement suit to China’s Supreme Court

April 10, 2012. American Superconductor Corp., a U.S. maker of wind-turbine components, filed an appeal with China’s highest court for an intellectual property lawsuit against Sinovel Wind Group Co. The company filed the appeal with China’s Supreme People’s Court for a case that was dismissed by a provincial high court. AMSC is pursuing four suits in China against Sinovel, seeking more than $1.2 billion in damages. It accused the Chinese turbine maker, formerly its largest customer, of violating sales contracts and stealing its technology in September.

Molycorp raises estimates of rare earth reserves

April 9, 2012. Molycorp Inc, one of the only non-Chinese producers of rare earths, has raised its estimates of the reserves contained in its California mine, signaling a longer life for a facility that could supply U.S. green technologies for years to come. The mine has the potential to fill a big void in the global supply of rare earths, used in products as diverse as Apple's iPhone and Toyota's Prius. China, which currently produces some 90 percent of the world's needs, has clamped down on exports, roiling prices of the oxides, metals and alloys. MolyCorp, based in Greenwood Village, Colorado, now estimates reserves at 2.94 billion pounds of contained rare earth oxide equivalent, compared with a previous estimate of 2.24 billion pounds. The analysis, completed by SRK Consulting, used a cut-off grade of 5 percent.

Greek power generation from renewable sources rises 44 pc

April 9, 2012. Greece increased electricity generation from renewable sources by more than 44 percent last year, to 2,511.6 megawatts, the Energy Ministry said. Wind power accounted for the largest part of this production, rising 26 percent to 1,635.87 megawatts; power from photovoltaic units more than tripled, to 625.57 megawatts. Small hydro-production plants accounted for 205.63 megawatts, a rise of 5 percent, and biomass for 44.5 megawatts, an 8.5 percent increase.

German renewable power cheaper than fossils in 2030

April 5, 2012. Germany will pay less for electricity from renewable sources than from coal and natural gas in 2030 if it reaches energy targets, the environment ministry said. Renewable power will cost 7.6 euro cents per kilowatt-hour in 2030, with hard coal and natural gas rising to more than 9 euro cents per kilowatt-hour.

Japan geothermal power could grow to 2 GW by 2020s

April 5, 2012. Geothermal capacity in Japan could grow almost fourfold to 2 gigawatts (GW) by the 2020s following the government’s decision to allow projects in newly opened areas of national parks. Japan’s geothermal sector may also benefit from a feed-in tariff program starting in July to pay above-market rates for renewable energy as well as 9 billion yen ($109 million) in subsidies for feasibility studies and test drilling for the year ending March 2013. The Ministry of Environment announced an expansion of areas where developers may do surveys and build geothermal power plants in national parks, where more than 80 percent of the nation’s resources are. In addition to the current capacity of 537 megawatts, Japan could develop some 1,000 megawatts, or 10 percent of resources, in the newly opened national park areas. The country could also add about 500 megawatts of capacity outside national parks.

Geothermal projects less vulnerable to subsidy cuts

April 5, 2012. Geothermal energy projects are less vulnerable than wind farms to the pending loss of federal subsidies because they take longer to complete, according to the Geothermal Energy Association (GEA). About 100 megawatts of geothermal capacity will be added this year, and “steady growth” probably will continue because the industry is less volatile than wind.

Greece urged to sell ‘virtual’ solar power to help EU meet goals

April 5, 2012. Greece, planning a 20 billion-euro ($26 billion) solar venture, would do well to sell the power “virtually” to help other European countries offset more- polluting generation, according to an adviser to the project. Greece could strike energy-purchase deals whereby nations buy output from the Helios venture without actually taking delivery of the power. The transaction, essentially an investment in renewable energy abroad, can help buyers meet clean-power goals at home.

U.K. drought in 22^nd month forces water restrictions

April 5, 2012. Kemble Water Holdings Ltd.’s Thames Water unit, the U.K.’s largest water company that serves 8.8 million homes and businesses in London, joined six rivals in imposing water restrictions after a 22-month drought. Anglian Water, South East Water, Southern Water, Sutton and East Surrey Water, Veolia Water Southeast and Veolia Water Central also are suppliers with bans that begin, the Department for Environment, Food and Rural Affairs (Defra) said. New “hose-pipe bans” restrict the use of garden hoses to water yards, wash cars, fill pools, ponds and fountains, and clean windows, walls and patios. Violations can result in a fine of as much as 1,000 pounds ($1,600), Defra said.

Electric-drive vehicle demand recharged by gas prices

April 5, 2012. Just when it looked like electric cars were running out of juice, the return of $4 a gallon gasoline is generating new life for battery-powered vehicles. Electric-drive vehicles, including hybrids, plug-in models and pure battery-powered cars, were the fastest-growing segment in the U.S. auto market in the first quarter. Sales of those models rose 49 percent to 117,182 vehicles in the first quarter, from 78,527 a year earlier before Japan’s earthquake and tsunami pinched output.

Pickens reviving plans for Texas wind power at smaller scale

April 5, 2012. Billionaire T. Boone Pickens is building a 377-megawatt wind farm in Texas, three years after shelving plans for a project about ten times as big that would’ve been the world’s largest. Mesa Power Group LLC, the Dallas-based renewable energy company Pickens created in 2007, is co-developing the Stephens Bor-Lynn wind farm with Wind Tex Energy LP.

Alternate-energy group to avoid clean, green in campaigns

April 4, 2012. Clean-energy companies may benefit from a new political-action committee trying to bridge a policy divide that is playing out in ads featuring Solyndra LLC’s collapse and finger-pointing over high gasoline costs. The Accelerating Energy Leadership, or Accel, PAC will help candidates who support “diversifying American energy sources,” which includes solar and wind power, biomass, nuclear and natural gas. The group stresses bipartisanship. The first recipient was Senator Dean Heller, a Nevada Republican who backs renewable energy. The second was Senator Jon Tester, a Montana Democrat who supports the Keystone XL pipeline, a proposed $7.6 billion project to carry crude oil from Canada to Gulf Coast refineries.

Oil, biofuel companies evolve into uneasy "frenemies"

April 4, 2012. Rapid growth in the U.S. biofuels markets has often pitted oil companies against small start-ups seeking a toehold in the gasoline markets, despite the need for both sides to work together, according to industry experts. U.S. gasoline consumption peaked in 2007 as corn-based production surged and more fuel-efficient cars joined the nation's fleet, and crude oil-based gasoline demand is likely to see its market share eroded further when a new wave of advanced biofuels plants come on line over the next three years.

Vestas, Gamesa warn of possible faults in older turbines

April 4, 2012. Vestas Wind Systems A/S and Gamesa Corp. Tecnologica SA, two of the four biggest wind turbine manufacturers, warned clients of possible flaws in a pair of their older models. Gamesa told customers of a potential fault in a component of the G-47 660-kilowatt turbine. Vestas also told clients about a possible flaw in the “root part” of the blades for the V47 turbine of the same capacity. The companies responded after ING Groep NV analyst Maurice Rosenthal wrote about the letters in a note to investors. The component in the Gamesa turbines was designed by Vestas.

RWE gets approval for first part of $4 bn Nordsee wind farm

April 4, 2012. RWE AG, Germany’s second-largest utility, won permission to begin building the first phase of what may become the country’s biggest wind farm at sea. German authorities approved the 330-megawatt Nordsee 1 wind farm, Essen-based RWE said. It also expects to get permits for the two other sections, Nordsee 2 and Nordsee 3. RWE hasn’t made a final decision on investing in the project because of delays with connecting offshore farms to the grid, it said, adding that work may potentially begin in 2014. Once completed, the 3 billion-euro ($4 billion) project will have 162 turbines with a total 1,000-megawatt capacity. RWE plans to invest about 5 billion euros on renewable energy, mainly offshore wind farms, in four years as Germany shuts nuclear reactors after last year’s Fukushima disaster.

Toyota sets Prius sales record on bigger lineup, gas prices

April 4, 2012. Toyota Motor Corp.’s U.S. sales of Prius hybrids reached a record in March and in the first quarter, propelled by higher gasoline prices and two new models. Toyota, the largest seller of gasoline-electric autos, sold 28,711 units in March of the Prius “family,” now comprising a plug-in Prius and c subcompact, the original hatchback and v wagon, the company said. Prius sales surged 54 percent from a year ago, and topped the previous monthly best of 24,009 set in May 2007.

World's largest solar power plant goes bankrupt

April 4, 2012. Another Department of Energy USA funded solar energy company –the world’s largest solar power plant—filed for bankruptcy. Solar Trust of America LLC, which holds the development rights for the world's largest solar power project, filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany. The Oakland-based company has held rights for the 1,000-megawatt Blythe Solar Power Project in the Southern California desert, which last April won $2.1 billion of conditional loan guarantees from the U.S. Department of Energy. It is unclear how the bankruptcy will affect that project. The company won the loan, but it turned down the loan in late September of 2011 as it was "too risky". The Obama administration was willing to loan more than two billion taxpayer dollars to a company who was unwilling to take that kind of risk. The company's bankruptcy filings indicate they employed only nine people. This $2.1 billion loan guarantee would have been equivalent to more than three Solyndra sized loans. Solar Trust is one of the companies Peter Schweizer mentioned in his book “Throw Them All Out” who were offered or received large Department of Energy loans or grants and also have ties to President Obama. Schweizer notes in his book that Citigroup Global Partners and Deutsche Bank have invested $6 billion in this project. Until recently, the vice chair of Citigroup Global Partners was Louis Susman who sat on the National Finance Committee for Obama’s campaign in 2008. In return, Susman left Citigroup to become President Obama’s ambassador to Britain. Another partner in this project is Chevron, who favored candidate Obamaover his 2008 rival Senator McCain in campaign donations.

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