June 2016

Volume 5 | Issue 2 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

Game Changer:
India strengthens energy
ties with WEST ASIA

Hike in domestic coal Financing woes

prices to increase cost may cast shadow on
of power Indias solar plans

Umesh Agrawal Rajiv Ratna Panda Debasish Mishra DV Giri

Director Head-Technical Partner Secretary General, Indian Wind
Energy, Utilities & Mining, PwC SARI/EI/IRADe Deloitte Touche Tohmatsu India LLP Turbine Manufactures Association

Power sector Need to institutionalize Low PLF We are not for

heading towards cross border electricity of power plants bad for competitive bidding in
consolidation trade in South Asia consumers wind projects
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Key Highlights
Sector Performance Review: FY 2015-16
Key Policy and Regulatory updates
Extensive Database of Sector specific Companies including
Manufacturers, Developers, EPCs, BFSIs and Consultants
Top management with contact details
Direct exposure to top decision makers and influencers

tory 2016 tory 2016 ory 2016

Yearbook & Directory 2016 Renewable

Yearbook & Direc Yearbook & Direc ory 2016 Yearbook & Direct
Yearbook & Directory 2016 Oil & Gas

Yearbook & Direct

Yearbook & Directory 2016 Roads
Yearbook & Directory 2016 Power

Power Oil & Gas Energy

Renewable Roads

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InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
June 2016 | Volume 5 | Issue 02

Editors Letter Editorial

Shashi Garg, Editor
India turned a new leaf in its quest for energy security
with Prime Minister, Narendra Modis recent visit to Iran
followed by Qatar. Historically, Iran has been a major ally News Team
of India as far as meeting its crude oil requirements are Chetan Gupta
concerned. However, the relationship between the two
countries had hit a roadblock following imposition of
sanctions by the US. The relationship was once again Analysts
revived with Modis recent visit, with both countries Akshay Kirti
signing the historic Chabahar port agreement which Mohd. Arif
has the potential of becoming Indias gateway to
Afghanistan, Central Asia and Europe. India would invest
about $500 million building two terminals and five cargo berths at the Iranian seaport Content Consultants
of Chabahar. The Port will also give India a key strategic advantage to India by News Monster
providing a precious sea outlet that bypasses Pakistan. There is potential for over Rs
1 lakh crore of investment in the Chabahar free trade zone in setting up industries
ranging from aluminum smelter to urea plants.
Further, given that Iran is now free to export oil and gas reserves and with Iranian Business Development
government racing to boost its oil production, this augurs well for India, which is Manoj Narang, Director
Irans biggest customer for its energy exports, after China. Similarly, Modis visit to Tel.: 0120-6799106 / 100
Qatar was crucial, given that the Gulf country accounts for close to 65 per cent of Email: manoj.narang@infraline.com
Indias LNG imports.
Back home, the power sector is staring at higher tariffs in the backdrop of Coal
India Limiteds recent notification to revise the prices of pit head run of mine prices
of all grades of non-coking coal. On average, prices of coal sold through the fuel Advertisement
supply agreement route have increased 6.3%. The revision is applicable to all its Anshul Sharma
subsidiaries, as well as to consumers in both the regulated power sector and the Tel.: 0120-6799136
non-regulated sectors -- cement, sponge iron, and fertilizer, which has sent the Mobile: +91 9953848494
consumers into a tizzy. Email: advertising@infraline.com 1
There have also been talks of India being power surplus in 2016-17 in the wake of
increased generation. However, doubts are being expressed over the forecasting
methodology while arriving at demand supply projections. In this regard, we feel
Circulation & Subscription
there is an urgent need to have precision in power demand forecasts to arrive at the
true picture. Sneha Pandey
On the other hand, India continues to make swift progress in renewable energy. Tel.: 0120 6799125
In a major milestone, for the first time, renewable plants, mainly wind and solar, Email: sneha.pandey@infraline.com
surpassed the capacity of large hydroelectricity projects. According to experts, India
is on track to becoming one of the worlds largest producers of green energy and
will surpass many developed countries in this endeavour. However, solar power still
faces certain issues. In this regard, we provide an analysis on the financing issues
which are likely to crop up in future in solar sector.
In May, 2016, Infraline conducted a forum on National Pipeline Integrity Management Form IV
to highlight the growing safety and environmental concerns facing pipeline Periodicity of its Publication: Monthly
Printers / Publishers /
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discuss the current and future perspectives of pipeline integrity management which 14-D, Atmaram House, 1, Tolstoy Road
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 June 2016
www.InfralinePlus.com

InfralinePlus

Contents
Editors Letter
1

Cover Story 32
Energy hungry India ready to tango with
West Asia
India is intensifying engagement with West
Asian countries in order to boost its energy
security, secure cheaper funding to support
infrastructure boom and expand trade and
economic ties. Remittances from the region
are also critical for India in meeting its
Current Account Deficit (CAD), which poses
vulnerability to the macroeconomic stability
due to heavy dependence on energy imports.

32
India is also soliciting investment from cash-
rich sovereign wealth funds to finance its
infrastructure boom.
2

Power Coal
4 22
News Briefs p4 News Briefs p22
Expert Speak: Umesh Agrawal, Director Energy, In Conversation: Debasish Mishra, Partner, Deloitte
Utilities & Mining, PwC p8 Touche Tohmatsu India LLP p25

Expert Speak: Vijay Kumar Kharbanda, Project Director In Depth: Hike in domestic coal prices to increase cost
and Rajiv Ratna Panda, Head-Technical, SARI/EI/IRADe of power p27
 P11 Statistics p30
In Depth: Need to have precision in power demand
forecasts P16
Financial Results: Q4 and Annual results announced
during May 2016 P18
Statistics p20
Topics Covered Topics Covered

Regional cooperation Power tariffs

Power trading Coal production

Power forcast Coal imports

 June 2016
www.InfralinePlus.com

Oil and Gas Renewable

39
News Briefs p39
Expert Speak: Mohd Arif, Oil and Gas Analyst, Infraline
Energy p42
Event Snapshot: Infralines National Pipeline Integrity
Management forum p47
Financial Results: Q4 and Annual results announced
during May 2016 p53
Statistics p54
56
News Briefs p56
In Conversation: DV Giri, Secretary General, Indian
Wind Turbine Manufactures Association p60
In Depth: Financing woes may cast shadow on Indias
solar target p62
Financial Results: Q4 and Annual results announced
during May 2016 p65
Statistics p66

Topics Covered Topics Covered

Pipeline integrity management Wind turbines
3
Gas storage Competitive bidding
Crude import Funding issues

Expert Speak/Interview

Debasish Mishra Mohd Arif

Partner, Deloitte Touche Tohmatsu Oil and Gas Analyst, Infraline
India LLP Energy Off Beat
68
In Depth: Surging crude prices spell trouble for airlines

Reports & Studies

71
People in News
Vijay Kumar Kharbanda
Project Director
DV Giri
Secretary General, Indian Wind
72
SARI/EI/IRADe Turbine Manufactures Association
 June 2016
www.InfralinePlus.com
NewsBriefs | Power National
PowerGrid may lose ownership of the countrys electricity transmission network
PowerGrid Corp may soon lose ownership
of the countrys electricity transmission
network as the power ministry has
approached Cabinet with a proposal
aimed at attracting private investment in
the transmission space. As per the plan,
Panel set up to look into rising NPAs of power PSUs
The government has constituted a committee
to look into the sharp rise in non-performing
assets of state-run power sector financiers,
Power Finance Corporation (PFC) and Rural
4 Electrification Corporation (REC), over the last
financial year. Gross non-performing assets
(NPAs) of PFC were 3.15% of its loan assets
as on March 31 this year against 1.16% a year
ago. Net NPAs rose to 2.55% of the loan as-
sets as on March 31 from 0.93% in the year-
ago period. Gross NPAs of REC stood at about
1.71% of its loan assets, while net bad loans
were at 1.36%. In 2014-15, gross NPAs of the
company were at 0.74% while net NPAs were
at 0.54%. Gross NPAs of state-run banks rose
to 7.30% in December 2015 from 5.43% in
Cabinet clears India, Japan pact on thermal power
The Cabinet recently gave ex-post facto ap-
proval to a pact between India and Japan for
promoting sustainable and low-carbon ther-
mal power development. The Union Cabinet
chaired by Prime Minister Narendra Modi
granted ex-post facto approval to the MoU be-
tween India and Japan for promoting sustain-
able, stable and low-carbon thermal power
development in India, a statement said. The
MoU will help India address issues and barri-
ers in this area. The proposal includes under-
taking of activities such as update on the cur-
rent and future policy trend in Indian power
sector with wide coverage from R&M and Life
Extension (LE) to new power development in
India. It will also identify barriers that could
the state-run company would continue
to develop projects, but would not own
them. The ministry has completed inter-
ministerial consultations and moved
the proposal to hive off ownership of
transmission projects from PowerGrid
Corp. The government had in 2014
separated management of electricity
grids from PowerGrid. It is learnt that
the proposal provides for the creation
of an independent entity that will own,
manage and regulate power transmission
lines. Power Finance Corp and Rural
Electrification Corp will continue to bid out
transmission projects and PowerGrid will
participate to bag projects.
March last year. The three-member commit-
tee will comprise independent directors of the
companies and a senior official of the power
ministry. RECs gross NPAs stood at Rs 7,519
crore of the total loan assets of Rs 238,920
crore as on March 31 this year.
be addressed through mutual collaboration
by the Central Electricity Authority (CEA) and
Japan Coal Energy Centre (JCOAL). Both
nations will identify issues to be addressed
regarding existing and upcoming facilities,
and also operation and maintenance at either
BHEL commissions three 660
MW Supercritical thermal units at
Lalitpur within 85 days
Setting a new benchmark in project
commissioning, Bharat Heavy Electricals
Limited (BHEL) has commissioned all the
3 supercritical units of 660 MW each at
the 1980 MW coal-based Lalitpur Super
Thermal Power Project (STPP) in Uttar
Pradesh within a span of just 85 days.
This has been achieved as a result of
enhanced focus on project execution by
way of innovative erection techniques
and meticulous project management.
Located in Lalitpur in Bundelkhand district
of Uttar Pradesh, the 3x660 MW Lalitpur
STPP has been developed by Lalitpur
Power Generation Company Limited,
promoted by the Bajaj Hindusthan group.
The main plant package contract of this
1980 MW power plant is being executed
by BHEL. Significantly, all the three units
have been synchronized by BHEL 3 to 4
months ahead of the schedule agreed
between LPGCL and BHEL. This was made
possible by compressing the erection and
commissioning cycle, by the joint efforts of
BHEL and LPGCL.
of them. It provides for implementation of
full-fledged diagnosis and/or other available
and effective measures including Residual
Life Assessment (RLA) and Conditional As-
sessment (CA) study with priorities on, but
not limited to the target power stations under
the Pre-Primary Study and the Cooperation.
The number of target power station(s)/unit(s)
will be decided through mutual consulta-
tion by CEA and JCOAL. It also provides for
consideration of justifiability and feasibility of
individual cases of power development based
on thermal power generation technologies in
terms of funding from the existing financial
instruments and/or other available bilateral
financial schemes.

NewsBriefs | Power National
For the first time in history, India will not have power deficit situation in FY17
India has, for the first time in history,
declared that it will not have a power
deficit this year, a situation officials say is
an outcome of the current governments
initiatives to resolve burning issues like fuel
scarcity. The country will have a surplus
of 3.1% during peak hours and 1.1% during
India wont need extra power plants for next three years, says government report
India wont need any new power plants for
the next three years as it is flush with genera-
tion capacity, according to a government
assessment. The country can manage for the
next three years with existing plants that are
currently under-utilised, and those that are
under construction and upcoming renewable
energy projects, assessment made by the
power ministry for reviewing the National
Electricity Policy shows. The policy, originally
issued in 2005 as a roadmap to the Electricity
Act of 2003, is being altered in the backdrop
of changes in the power sector. India is
expected to be power sufficient without any
addition. This clearly signals that any thermal
power plant that is yet to begin construction
Nepal, India plan setting up energy bank
India and Nepal are planning to setting
up an energy bank so that they can help
each other to overcome the problem of
power shortage. The two countries have
conducted informal discussions regard-
ing the energy bank before, but this is the
first time that Nepal has made a formal
proposal. According to the energy bank
concept, Nepal would export electricity to
India during the summer season and im-
port power from India in the winter when
output drops sharply resulting in crippling
power shortages. The Power Trade Agree-
ment signed by Nepal and India in 2014
during Prime Minister Narendra Modis visit
to Kathmandu has opened the way for the
non-peak hours during 2016-17, latest
data from the Central Electricity Authority
shows. This is the first time that the
country has declared a year of no shortage
though many regions have had power
surplus for shorter periods. In 2015-16,
the peak hour deficit stood at -3.2% while
non-peak hour deficit was at -2.1%. The
deficit was as high as 13% about a decade
ago. The data, based on gap between
demand raised and demand met, shows
that June onwards the country will have
more electricity than required. Half of the
states will be surplus, while others may
face shortage in varying degrees. The NDA
government says power surplus scenario
as one of its big achievements.
should back off, a power ministry official
said. India has power plants with capacity
to generate 300 GW. These are operating at
64% capacity because of inability of state
distribution utilities to purchase electricity
and sluggish economic growth.
two countries to establish an energy bank.
The concept of an energy bank is clear:
We export to India when our production
exceeds domestic consumption and we
June 2016
www.InfralinePlus.com
USAID and ministry of power launch
portal to promote net zero energy
buildings
The United States Agency for
International Development (USAID)
and the union ministry of Power have
launched Indias first integrated
web portal designed to promote and
mainstream Net Zero Energy Buildings
(NZEB) in India. A first of its kind, the
portal provides complete information
about Net Zero Energy Buildings -
those that generate as much energy
as they use - as well as how to achieve
near-zero energy status through the
use of efficient lighting and equipment,
integration of renewable energy 5
technologies, and best practice design
strategies. In addition, the portal hosts
the NZEB Alliance, an industry-wide
body setup to drive the Indian markets
toward highly energy-efficient buildings.
The portal, www.nzeb.in, was launched
by Secretary, Ministry of Power Pradeep
Kumar Pujari and Ambassador and
USAID mission director to India
Jonathan Addleton.
import from India during times of crisis,
said Mukesh Raj Kafle, managing director
of the Nepal Electricity Authority. India is
agreeable to the concept, but there is no
open access to India due to legal complica-
tions. The proposal is good, but we have
to clear a number of regulatory provisions.
We will start to work on it, Khanal quoted
Indian officials as saying. According to
Nepali officials, it depends on Indias will-
ingness. Nepal has also requested India to
resume production from the 15 MW Gandak
Powerhouse. The plant was constructed as
per the Gandak Agreement. Similarly, Nepal
has also requested India to build the Birpur
Powerhouse as soon as possible.
 June 2016
www.InfralinePlus.com
NewsBriefs | Power States
Surplus TN allows generators to sell power outside state
With the power situation improving in the
state, the Tamil Nadu government has
allowed private power companies to sell
electricity to other states by lifting Section
11 of the Electricity Act 2003. An order to
this effect was issued by the government
Haryana likely to bridge gap in power demand and supply
Haryana may not be self sufficient in
power generation but has been able to
bridge the gap between power demand
and supply as per latest Central Electricity
Authority (CEA) report. CEA in its report
6 has projected that power supply position
will be comfortable round the year
mainly due to long term power purchase
agreements with private generators. The
annual power requirement of state is likely
to be 49800 million units; whereas the
power availability will be 51069 million
units, thus there will be power surplus to
the tune of 2.5 per cent. Even the expected
peak requirement of 8950 MW will be
met by peak availability of 9263 MW. In
Gujarat govt decides to overhaul power generation technology
With an aim to improve its power genera-
tion efficiency, Gujarat government has
decided to completely overhaul its power
generation technology in state-owned
power stations in the state. And as part
of the plan, Gujarat State Electricity
Corporation Limited (GSECL) is going to
change the turbines of two of its ther-
mal power units in Ukai of South Gujarat
and Wanakbori of Central Gujarat at the
cost of around Rs 208 crore. The current
turbine technology of Ukai and Wanakbori
power stations was more than 25 years
old and it had outlived its lifespan. And
therefore, the Energy and Petrochemi-
cals Department had initiated the move
on May 31. The last time the government
withdrew the section was in 2014 but within
a few months, it re-imposed the section due
to shortage. According to the order, there
is surplus power to the extent of 300 MW.
Along with Kudankulam unit 2, the surplus
may increase in the coming months. In
addition to the above, theres some 430MW
of standby power from independent power
producers as well as 500MW from long
term sources. So even if there is a surge in
demand up to 1,000MW, Tamil Nadu will be
comfortably placed to handle it. Last year
some wind power companies went to the
court seeking an order to the government to
lift the section. It is a great decision.
Focus CEA has projected the above after
taking into consideration the proposed
maintenance schedule of the units during
the year.
to overhaul the turbines in the thermal
power stations. The sources said that the
National
UP to hike transmission capacity of
power lines
The state government has stepped on
the gas to increase the transmission
capacity of UPs power lines. The energy
department is learnt to have asked the
UP Transmission Corporation Limited
(UPTCL) to get the total transmission
capacity (TTC) increased from the exist-
ing 6000Mw to over 7000Mw in the next
couple of months. A key factor in wheel-
ing power into the grid from sources
outside the state, the TTC is limited to
6000Mw in UP. The state cannot bring
more than that into the state from sourc-
es outside, including power exchange and
bilateral trading. This capacity is now
proposed to be increased by 1200Mw
to 7200Mw. UPTCL managing director,
Vishal Chauhan said that the corporation
has completed the construction of the
much-needed high-power substations to
ease the congestion. This will also help
in increasing the TTC so that more power
could be brought into the state grid in
times of crisis, he said.
Ukai Thermal Power Station has total six
power generation units two units of 120
MW, three units of 200 MW and one unit of
500 MW power generation capacity. The
Wanakbori Thermal Power Station, on the
other hand, has total power generation
capacity of 1,470 MW with total six units
of power generation capacity of 210 MW
each. Overhauling of the two power gen-
eration units will start in December this
year and is likely to be completed within
eight to ten months. During this period,
the unit will witness shut down of around
100 days.

NewsBriefs | Power International
ABB wins US$11m tender for supporting Java-Bali electricity project
Swiss electricity supplier ABB has won a
tender worth US$11 million to supply sup-
porting equipment for the enhancement
project of the Java-Bali power plants.
The contract will be financed by state-
owned electricity firm PLN with an Asian
Development Bank loan to upgrade 12
Iran ready to connect its electricity grid to Europe
Iran is ready to synchronize its electric-
ity grid with those of European countries,
the Islamic Republics energy minister,
Hamid Chitchian, said. The Islamic Republic
currently trades electricity with seven
neighboring countries, Chitchian said, adding
Iran and Russia have agreed to connect
their power grids. Chitchian added that
Tehran and Baku has reached agreement
to synchronize their power grids, and via
Azerbaijan the Iranian electricity network
will join to Russias grid. Iran is ready to link
its electricity network with Europe as well,
if the other side agrees, Iranian minister
added. He said that the Islamic Republic
exports over 11 gigawatt hour (GWh) of
Nuclear power key for UAE energy security
Nuclear power is the best way for the
world and the UAE to meet its energy
demands, according to experts. The UAE
is fast entering the nuclear world and
by 2020, the countrys nuclear power
plant in Barakah will supply around a
quarter of the emirates electricity needs.
Despite events such as Chernobyl and
Fukushima, more developing countries
are opting for nuclear power plants. The
UAE started construction on four units
of 1,400 megawatt each to generate
5,600MW on April 1, 2010, with drilling
work on the site in Barakah, about 53km
from Ruwais in the Western Region. In
April this year, Emirates Nuclear Energy
substations, said ABB power grid division
president Claudio Facchin. The upgrade
applies to design, engineering, supply and
installation. Along with the controlling
and maintenance, the jobs duration is two
years. It is not about doing the upgrades
and maintenance, but also supporting our
customers with the software and expertise
that we have, he said. All the products
used in the project, Claudio said, would
be made in Indonesia. However, several
foreign technicians would be involved in
the installation. This is not the first time
ABB has worked with PLN as it previously
supplied miniature circuit breakers (MCB )
for house installations.
electricity to regional countries per year.
Tehrans electricity import also stands at
four GWh annually, Chitchian added. Rusnak
in turn said that the issue can be discussed
with European countries, if Iran submitters
a proposal including its current electricity
capacity, needs and future plans.
of units 1 to 4 is now more than 62 per
a nuclear power plant, moves to a new
Corporation (Enec) confirmed that the
project is progressing steadily, as unit 1
June 2016
www.InfralinePlus.com
Ghana to issue $2 bln bond to help
clear power firms debt
Ghana plans to issue a 10-year
syndicated $2 billion bond before year
end to clear legacy debt among its
power utilities. The lions share of the
proceeds of the bond was meant for
power generation company, Volta River
Authority, with the rest spread between
GRIDCo and the Electricity Company
of Ghana, said the chief director in
the petroleum ministry, Thomas
Akabzaa. What we are trying to do
as a government is to put all the debt
into one portfolio. The three entities
all have big legacy debts (in total)
hovering around $1.5 billion, Akabzaa 7
said. The bond will be issued before
the end of the year, certainly, Akabzaa
said. He said the government was
putting the final touches to the bond,
with issuance protocols for the bond
expected to be finalised at the end of
June. Discussions have been held with
a number of banks, including Standard
Bank unit Stanbic, Ecobank and
Standard Chartered Bank, he added.
is now more than 87 per cent complete,
unit 2 is 68 per cent complete, unit 3 is
47 per cent complete and unit 4 is 29
per cent complete. Overall, construction
cent complete.The country, which has
level in terms of science, technology,
industry and education, said Rosatom
State Atomic Energy Corporation director-
general Sergei Kiriyenko.
 June 2016
www.InfralinePlus.com
ExpertSpeak
Power sector heading towards
consolidation
Umesh Agrawal, Director Energy, Utilities & Mining, PwC,
share his outlook on the power sector and feels that industry
consolidation, universal access and sustainable growth will
be the key growth drivers.
The Electricity Act, 2003 and the
subsequent actions by the government,
regulators, investors and other stake-
holders have helped create a situation
of unprecedented level of generation
capacity addition in last five years.
While, it has led to reducing levels of
deficits, the issues with distribution
8 utilities have led to situation of many
assets being stranded owing to lack
of commensurate demand impact-
ing investor sentiment for the sector.
Meanwhile, Government has increased
the focus on sustainable developments
both in terms of generation of energy
as well as consumption of energy there
by focusing on building a sustainable
energy ecosystem. Further, the focus on
making power available to all is really
a significant step to achieve the objec-
tives set out with the promulgation of
the Electricity Act 2003.
Beginning to see industry
consolidation
The Electricity Act, 2003 recom-
mended a structure for the sector with
well-defined goals of de-licensing the
generation of power and provision for
competition in the licensed businesses
of Transmission and Distribution.
Subsequent regulatory framework along
with the National Electricity Policy,
2005and Tariff Policy, 2006 provided
guidance towards development of the
sector. The prolific growth being wit-
nessed by the nation coupled with the
anticipation of consistent development
fuelled significant rise in demand of
power and an industry-wide investment
sentiment. Accordingly, a huge capacity
addition of cost effective coal based
power generating stations took trac-
tion in order to meet the spiraling
demand. India has a coal based
installed genera-
Umesh Agrawal, Director Energy, Utilities &
tion capacity of
185.2 GW Industry Mining, PwC
as on 31 consolidation there are concerted efforts by
March, a healthy sign many players to reduce the level
2016 helping to build a of debt by undertaking various
whereas strong competitive corporate actions. We have seen
almost 78.9 sector benefiting may deal announcements in the
GW of coal recent past and might see many
all stake-
based genera- more going forward. This industry
tion capacity is
holders consolidation is a healthy sign helping
in various stages of to build a strong competitive sector
completion.While the capacity addition benefiting all stakeholders. Similar
has led to a situation of better avail- actions are also visible in the renewable
ability of power, in the short-run, it has energy space as well.
created a situation of excess capacity,
thereby creating stress in the sector. The Making power for all a reality
stress has led to a situation where many The government has set an ambi-
power plants are ready for dispatch but tious goal of 24x7 power for all by
there are no off-takers. The financial 2019 which indicates three specific
health of the utilities are also playing a aspects of the business, viz. building of
role in lack of demand even when the adequate generation, transmission and
reality is that there are rampant power- distribution capability.
cuts in various part of the country The most ailing area among the
except few cities. three is distribution sector. Being a
While this has been a short-run licensed business, most of the licensees
problem, the nature of the business are state owned utilities with the onus
which is highly leveraged is already of collection of revenue from the con-
creating trouble for promoters and sumers, which pays for the whole value

chain. Over the years, the discoms
have significant accumulated losses
and debts. Inefficiencies of these state
owned utilities result in poor upkeep of
the equipments and therefore, frequent
power cuts and poor power quality.
To tackle this, the government has
proposed Ujwal DISCOM Assurance
Yojana (UDAY), wherein about 75%
of the debt of the utilities will be
taken over by the state, which will
further be funded through non-SLR
bonds (SDL) with maturity period of
10-15 years. This would reduce the
interest burden of the utilities and
permit capacity to make investments
to ensure efficient operations.
In addition to the financial health,
meeting the goal of power for all will
entail complete rural electrification
around the country. The government is
investing significantly in development
of Distribution Network in both urban
and rural areas. Deendayal Upadhyaya
Gram Jyoti Yojana intends to separate
agricultural and non-agricultural
feeders, strengthen and augment sub-
transmission & distribution infra-
structure in rural areas and achieve
rural electrification from a budget of
Rs. 43,033 Crores. Integrated Power
Development Scheme (IPDS) intends
to strengthen sub-transmission and
distribution network in the urban areas,
metering of distribution transformers /
feeders / consumers in the urban areas,
ensure IT enablement of distribution
sector and strengthening of distribution
network for completion of targets laid
down under Restructured Accelerated
Power Development and Reforms Pro-
gramme (R-APDRP). The highlight of
these schemes is the provision for inte-
grated third party Project Monitoring
Agency which updates the ministry of
the execution of the projects under-
taken under these schemes. The gov-
ernment has moved towards achieving
the accelerated target of Rural Electrifi-
cation by December, 2016.
The transmission net-
work capacity has also
served as a bottleneck
for despatch of power.
While the integration
of the NEWS Grid has
been achieved and the
transmission capac-
ity building across the
NEW and Southern
Grid is in progress, it is
critical that other bottle-
necks in transmission
are addressed
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The transmission network capacity
has also served as a bottleneck for des-
patch of power. While the integration
of the NEWS Grid has been achieved
and the transmission capacity building
across the NEW and Southern Grid is
in progress, it is critical that other bot-
tlenecks in transmission are addressed.
The government achieved addition of
28,114 circuit km (ckt km) in trans-
mission network, 27% higher than the
capacity addition in the previous year.
The Power Ministry initiated Project
Green Energy Corridor to connect
the RE projects to the grid and ensure
evacuation of power. Traditionally,
erection of transmission line lagged the
construction of a conventional thermal
power plant. However, in case of a RE
based power plant, the erection and
commissioning takes significantly less
time as compared to the time required
to draw a transmission line to the plant,
which delays evacuation of power from 9
such plants.
Developing efficient
and sustainable energy
ecosystem
The government has made
environmental commitments towards
controlling the emissions as the country
moves towards development. In the
UN Climate Change Conference
held in Paris, India has proposed
to reduce the emission intensity by
33% to 35% by 2030 from the 2005
level and to create an additional
carbon sink of 2.5 to 3 billion
tonnes of CO2 equivalent through
afforestation by 2030 as its Intended
Nationally Determined Contribution
(INDC). In order to achieve this on
the long run, the government has
notified Environment (Protection)
Amendment Rule, 2015 to minimize
pollution by reducing Particulate
Matter (PM), SO2, NOx and Mercury,
thereby improving the Ambient
Air Quality (AAQ) in and around
thermal power plants. It requires that
all new coal based thermal power
 June 2016
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ExpertSpeak
Capacity Addition Rate
25%
20%
% increase in C apacity
15%
10%
5%
0%
FY 2014 -15
Increase in Renewable Capacity
plants configurations are incorporated
with Flue Gas Desulphurization and
Selective Catalytic Reducers to ensure
10 that the emission levels are met. The
New Tariff Policy also mandates an
aggressive Renewable Procurement
Obligation and introduces Renewable
Generation Obligation.
In line with the environment targets
set by India and the forecasted rise
in demand, the government intends
to meet the capacity requirement by
increasing the non-fossil fuel based
generation capacity significantly. This
can be observed by noticing the 22%
increase in the RE capacity addition in
FY 2015 -16
Increase in Total Capacity
FY 2015-16 as against an 8% increase
in the previous year whereas the
conventional capacity grew by 11%
and 10% respectively for FY 2015-16
and FY 2014-15. The trend is expected
to continue since the ministry has set
an ambitious target of 175 GW of
Renewable Energy Capacity by 2022.
A total wind power capacity of
3414.65 MW and a total solar power
capacity of 3018.8 MW was added in
FY 2015-16 taking the total Grid con-
nected RE capacity to 42,752.2 MW.
The total RE capacity addition achieved
(7,052 MW) also exceeds the target
capacity addition of 4,460 MW by a
large margin. This capacity addition is
complemented by the rate discovered
during the solar power procurement,
which favorably competes with the
conventional energy rates. A rate of Rs
4.34 per unit of solar power generated
was discovered during the international
competitive bidding held for NTPCs
Bhadla solar park tender in January
2016 as against Rs. 4.63 per unit
discovered in the previous year. While
some doubts are raised on sustainability
of projects at such competitive rates, the
biddings continue to attract aggressive
bids. Recently, SunEdison filed Chapter
11 bankruptcy in United States is likely
to act as a dampener in future bids as
investors take extra precaution to seek
profitable growth.
However, the government has been
supporting and bullish of the renewable
sector in the time to come. It has
initiated various agencies like Inter-
national Solar Alliance headquartered
in India for promotion of solar energy
globally. It has also notified a national
offshore wind energy policy, 2015 for
incentivizing offshore wind generation.
Further, the government has also focused
on distributed generation in the form of
rooftop solar generations by providing
financing assistance for grid connected
rooftop solar setup for residential, com-
mercial and institutional consumers.
While all the above poised well for
a sustainable growth, as the renewable
capacity increases, the issues with
respect to integrating renewable energy
in the grid is extremely important.
Recently, the government has come
out with number of measures to ensure
that renewable energy sources are made
responsible to schedule as per available
technology, the system operators have
visibility of the renewable sources to
take actions for grid stability and overall
help develop a robust commercial
market for ancillary services.
(With inputs from RohitJadye, Senior Consultant,
Energy, Utilities & Mining, PwC)
The views in the article of the author are personal
For suggestions email at feedback@infraline.com
 June 2016
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ExpertSpeak
Need to institutionalize cross border
electricity trade in South Asia
Vijay Kumar Kharbanda,
Project Director and Rajiv
Ratna Panda, Head-Techni-
cal, SARI/EI/IRADe, feel that
the only long-term solu-
tion for balanced growth of
energy sector in South Asia
is the sustained increase in
regional energy cooperation
among these nations.

All the South Asian countries are

currently facing power and energy 11
Vijay Kumar Kharbanda, Project Director - SARI/ Rajiv Ratna Panda, Head-Technical, SARI/EI/
shortages which are negatively impact- EI/IRADe IRADe
ing the economy. Adequate supply of
energy is pre-requisite for all the devel- rate of 6% as measured by GDP per solution is the sustained increase in
opment pursuits in South Asia ranging capita. Yet despite this impressive mac- regional energy cooperation among
from economic progress to scientific roeconomic growth, the energy sector South Asian nations.
research, education, healthcare, quality in the South Asian region has not been
of life, and prosperity in the region. In able to keep pace, and continues to ex- Present status
recent past, South Asia has been one perience chronic problems of shortage Cross Border Electricity Trade (CBET)
of the fastest growing regions in the of supply and poor quality of service. in South Asia is currently being under-
world, with an average annual growth Given this dilemma the only long-term taken in the form of bilateral trade and
is limited between India-Nepal (250
Figure 1- Electricity Import by India from Neighbouring MW approx.); India-Bangladesh (600
Countries MW); and India-Bhutan (1400 MW ap-
prox.). The CBET historically has been
70.0
mainly through bilateral (Government
60
60.0 to Government) arrangements based
50.0
50 on case to case negotiations, though
40 in the recent past market-based CBET
40.0 35 began between India-Bhutan and India-
30.0 25
Bangladesh. It is expected that going
in future the CBET in south Asia will
20.0 15
be more of market oriented. Region is
10
10.0 8
3.5 4 5
7 endowed with vast potential of clean
1.5 1.5 1.5 3
0.0
energy i.e. hydro power of 350 GW (of
2007 2012 2017 2022 2032 2037 2042 2047 which only 14% has been developed)
Import Least Eort( GW) Import Dertermined Eort ( GW) which can be developed successfully
Import Aggressive Eort ( GW) Import Heroic Eort ( GW) through CBET. CBET has the poten-
Source: The IESS, 2047, Niti Aayog tial to improve energy security of the
 June 2016
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ExpertSpeak

Figure 2- Electricity export by India to Neighbouring

Countries The historic Power
Trade Agreement (PTA)
12.0
10
signed between India-
10.0
Nepal, opens up whole
8.0 7 range of new possibil-
6.0 5 ity for trade electricity
4.0 3.5 between Nepal-India,
2.0
2
1.5
2 2 2 and also gives an ac-
1 1 1
0.2 0.2 0.2 0.2 cess to Nepal Power
0.0
2007 2012 2017 2022 2032 2037 2042 2047
Developers to Indian
Export Least Eort ( GW)
Export Aggressive Eort ( GW)
Export Dertermined Eort ( GW)
Export Heroic Eort ( GW)
Power Market. India-
Source: The IESS, 2047, NitiAayog)
Bangladesh and India-
Bhutan are taking steps
Figure 3- SAARC regional transmission capacity by 2033-34 to enhance quantum of
Cross Border Electric-
ity Trade
region and provide adequate and af-
12 fordable electricity in the region.
CBET is expected to increase sig-
nificantly in coming future (Fig1&2).
For facilitating such CBET, several
new transmission interconnections are
being planned/proposed across South
Asian countries (fig-3) which will
enable greater Integration of Power
Systems of South Asian Countries
(SACs). Such power system integration
shall also enable trading on a multi-
lateral basis wherein two countries
having no common border could trade
electricity through a third country
acting as transit.
The political climate is becoming
increasingly more and more conducive
for CBET both at the bilateral and as
well as at the multilateral level as eight
member states of SAARC countries
signed SAARC Framework Agreement
of Energy (Electricity) Cooperation.
Further, the historic Power Trade
Agreement (PTA) signed between India-
Nepal, opens up whole range of new
possibility for trade electricity between
Nepal-India, and also gives an access
to Nepal Power Developers to Indian
Soure: MoP,GoI, Draft Perspective Transmission Plan for Twenty Years (2014-2034) Power Market. India- Bangladesh and

Figure 4: Brief Summary of Regional Regulatory Guidelines
India-Bhutan are taking steps to enhance
quantum of Cross Border Electricity
Trade (CBET) in manifold. In coming
future Bangladesh is planning to import
6000-7000 MW from regional grid to
meet the power demand.
Policy/Regulatory Provisions and
Institutional frameworks required for
promoting/facilitating CBET exist in
some South Asian Countries (SACs)
but are not exhaustive in nature. Cur-
rently, South Asian countries are at
different stage of power sector reforms
and have different electricity regulatory
environment. To enhance CBET within
two or more countries in South Asia,
June 2016
www.InfralinePlus.com
13
there is a need to have common/coordi-
nated set of regulations which facili-
tates/addresses the mechanism of cross
border interconnection. There is a need
to have common/coordinated set of reg-
ulations, policies, and legal framework
which addresses the mechanism of
interconnection, recognizes the CBET,
 June 2016
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ExpertSpeak
Figure 5: International best practices on Regional Regulatory Institutional Mechanism
14
open access to transmission network,
licensing, imbalance settlement
mechanism, coordinated procedures for
integrated system operation, dispute
resolution, etc. Moreover the existing
electricity regulatory, policy and legal
frameworks of SACs primarily address
domestic power sector issues and are
not necessarily developed to address
issues related to CBET.
Without consistent and coherent
regional regulatory framework in
place, investment opportunities and
consequently large scale CBET
between nations that could benefit both
importing and exporting nations may
not happen. In the South Asian regional
context, the risks associated with
forging an intraregional, CBET project
In the South Asian regional context, the risks
associated with forging an intra regional CBET
project would be greatly minimized if each
participating country adopts complementary
regulatory frameworks to facilitate cross border
interconnection and electricity trade
would be greatly minimized if each through a regional regulatory institu-
participating country adopts comple- tional mechanism such as forum/agen-
mentary regulatory frameworks to cy/association of electricity regulators
facilitate cross border interconnection to take care of CBET regulations is
and electricity trade. critical for smooth and rapid expan-
sion of trade of electricity among the
Suggestions for future south Asian countries and for creating a
A transparent, stable regional regula- conductive environment for investment
tory framework for CBET supported in CBET.
 June 2016
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Development Community looks after

South Asia Forum of Electricity Regulators (SAFER) regulatory coordination and ensure that
a neutral and transparent institution aims to the regulatory & contractual aspects
done through common set of regulatory
coordinate with various stakeholders to promote guidelines. As per the study conducted
Regional Regulatory Guidelines in the form of by SARI/EI, formation of a Forum
common regulations, rules and protocols in technical, of Electricity Regulators i.e. South
Asia Forum of Electricity Regulators
operational and legal matters for promoting CBET in
(SAFER) a neutral and transparent
the South Asian Region. institution will aim to coordinate
with various stakeholders to promote
Integrated Research and Action needs a strong institutional sponsor and Regional Regulatory Guidelines in the
for Development (IRADe), a regional the study has recommended formation form of common regulations, rules and
think tank and the implementing of forum of regulators i.e. South protocols in technical, operational and
partner of USAIDs current phase of Asian Forum of Electricity Regulators legal matters for promoting CBET in
South Asia Regional Initiative for (SAFER).This Forum of Regulators the South Asian Region.
Energy Integration (SARI/EI) has i.e. SAFER is proposed to manage The SAARC framework agreement
recently concluded a study on detailed the process of coordination of regula- for energy cooperation (electricity) also
review of coordination of policies/ tions with various regional bodies i.e. suggests Article 15-Member States
regulations/legal framework prevailing SAARC Energy Secretariat, Regu- shall develop the structure, functions,
in each SACs and published Regional latory Commissions/authorities in each and institutional mechanisms for
Regulatory guidelines (RRGs). The SACs and other relevant institutions in regulatory issues related to electricity
objective of these RRGs (fig-4) is to member countries in the area of facili- exchange and trade.
provide national regulators/empowered tating cross border electricity trade. Recently, in the 2nd SAARC Energy 15
entities of South Asian countries with International experiences (fig-5) Regulator meeting held at Colombo,
a common course of action that can also shows that various regional power Sri-Lanka on 08th 9th February 2016,
be referred to for decision making systems in the globe have taken steps the members considered to form a
on CBET in their respective coun- to form regional regulatory institutional Regional Energy Body/ Forum (Elec-
tries. RRGs ensure consistency in the structures/mechanisms to coordinate tricity). Therefore, formation of an
CBET transactions and removes the regulations for promoting CBET. In institutional mechanism such as Forum/
constraints that are often plagued or Europe, the Agency for the Cooperation Association/Agency of Electricity
delayed because of the unclear and of Energy Regulators (ACER) is an Regulators is critical for the success of
complicated regimes. In summary, independent agency, which fosters CBET in South Asian region.
the guidelines and the framework cooperation among European energy While there is a consensus on need
are sufficiently flexible to work with regulators and ensures that market of a Regional Regulatory Institutional
different national legal, policy, and integration and the coordination of Mechanism for coordination/harmo-
regulatory frameworks. The provisions regulatory frameworks are achieved nization of electricity regulations and
allow accommodating different country within the framework of the EUs for developing a regional regulatory
circumstances, yet have a sufficiently energy policy objectives and issues framework for CBET in the South
broad application to promote consistent non-binding opinions and recommen- Asian region, the time has come
decision making and for any appro- dations to national energy regulators institutionalize the process by formally
priate updating and modification. and transmission system operators establishing Regional Regulatory Insti-
For implementation of RRGs and for facilitating CBET. Similarly the tutions such as Forum of South Asia
for coordination/harmonization of elec- Regional Electricity Regulators Asso- Energy (Electricity) regulators or any
tricity regulations for promoting CBET, ciation (RERA) of Southern African other appropriate institutions, identi-
fying its role, responsibilities, structure
SAARC framework agreement for energy cooperation etc. which is also critical for brining
much needed investment in CBET
(electricity) Calls for Institutional Mechanisms for projects in the south Asian region.
Coordination of Regulations for Promoting CBET in
the South Asia Region. The views in the article of the author are personal
For suggestions email at feedback@infraline.com
 June 2016
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InDepth
Need to have precision in
power demand forecasts
16
Ministry of Power estimates electricity demand in 2017-22 to be 20% less than original estimate
Power plants currently operate at less than full capacity to cater to a power demand of 140-150 GW
By Team InfralinePlus
Demand forecasting is an attempt to
predict future electricity needs, which
informs future plans for transmission and
electricity generation. There is an urgent
need for precision in the demand fore-
casts. Accurately forecasting electricity
demand is crucial to make sure that grid
operators plan for adequate generation
and transmission but do not over-procure
or over-build, which can lead to over-
charging electricity customers. An under
estimation could lead to under capacity,
which would result in poor quality of
service including localized brownouts, or
even blackouts, whereas over-forecast-
ing incurs unnecessary costs.
An Electric Power Survey (EPS)
is conducted by Central Electricity
Authority (CEA) to forecast year-wise
Electrical Energy Requirement and
Peak Electric Load at Power Station
Bus Bars (utilities only) for all States/
UTs in India. The 18th Electric Power
Survey of India was conducted in
2013 which made the forecast for the
2017-22 period based on the demand
projection for the 12th Five Year Plan
period of 2012-17. The estimated
power demand by the end of the 13th
Plan period (2017- 2022) as per this
survey was 289 gigawatt (Gw).
Current efforts to electrify all
villages and provide uninterrupted
electricity for all by 2019, the
expected electrification of more
railway lines and the emphasis
on usage of electric vehicles for
transportation are expected to drive
future electricity demand. Though
present installed power generation
capacity of the country is 289 GW,
power plants operate at less than full
 June 2016
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capacity to cater to a power demand of side management with CFL and LED total renewable capacity to 38,000 MW.
140-150 GW. lamps and signage for promoting Renewable energy runs at an average
Ministry of Power while prepa- efficiency at the supply side have PLF of 20 per cent during off peak hours
ration of state-specific action plans for already been taken up in the country. and 80 per cent during peak hours. With
providing 24x7 power for all by 2019 In November 2015, Union cabinet surplus installed generation capacity and
discovered the variations in demand approved, Ujwal Discom Assurance low demand, the domestic power plants
projections. The demand was estimated Yojana (UDAY), a scheme to improve are expected to operate at low capacity
at 298 GW on the back of high growth the operation and financial efficiency of of 55-60 per cent in that period, which is
in states at the time of preparation of the State owned Discomssets targets for the international average.
EPS coupled with a low base in previous utilities to cut their transmission losses. In addition to the existing
years led to the over estimations for the The government is also promoting generation capacity of 289 GW, the
13th plan. The demand was growing at energy-efficient agriculture pumps, National Democratic Alliance (NDA)
a reasonable rate till the last three years. fans and air-conditioners through government plans to add 175 GW of
Economic slowdown, its corresponding power distributors. renewable power capacity by 2022
impact on power demand lag in trans- As per 12th Five Year Plan, capacity which means the system will have
mission planning, the weak financial addition of 88,537 MW has been more than adequate generation units
state of state owned power distribution planned from conventional sources to take care of 239 GW requirement.
companies and cyclical correction has led (thermal, hydro and nuclear). Renewable The power generation plants have some
to a decline in demand. After interactions power generation has witnessed extra room to serve more demand if
with various states, ministry realized that unprecedented growth. In the last economy grows better than assumed
the power requirement is lower. financial year solar power and wind growth rate of eight per cent.
Based on estimated annual gross power exceeded its generation target by
domestic product (GDP) growth rate 116 per cent and 38 per cent to taking the For suggestions email at feedback@infraline.com
of eight per cent in the 2017-22 period, 17
during which electricity generation
is expected to grow annually at 7.2
percent , Ministry of Power estimates
countrys electricity demand in the
2017-22 period to be 20% less than
what was originally estimated. The
altered demand projection is 239 Gw
by 2022 from the earlier estimated 289
Gw. The revised projections also take
into account improvements in energy
efficiency and corrections for the slight
overestimation made in the 18th EPS.
Energy intensity, or the units of energy
required to produce one unit of GDP, is
presently recorded at 0.91 by the 12th
Five Year Plan document. A figure of
less than one indicates efficiency.
Power industry is at its spiralling
best of optimized use of energy and
efficiency in all its business segments
namely generation, transmission,
distribution and end-user. In recent
past, supply of coal and gas has also
improved which has contributed to
stagnation of power demand. There are
significant steps in energy saving and
optimization with better technology.
Initiatives such as smart grid, demand-
 June 2016
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FinancialResults
NTPC Q4 net dips 7.73% to Rs 2,716.41 crore on low sales
State-run power giant NTPC reported 7.73
per cent drop in its standalone net profit at
Rs 2,716.41 crore in the March quarter due
to low demand from discoms resulting in
sales dip. The companys standalone net
profit in the March quarter last year was Rs
2,944.03 crore. Total standalone income
of the company dipped from Rs 19,879.38
crore in th fourth quarter of 2014-15 to Rs
18,560.70 crore during the period under
review. The companys standalone net
sales of electricity was at Rs 17,990 crore
during the quarter under review as against
BHEL Q4 profit drops 60% to Rs 360 crore
State-run power equipment maker BHELs
standalone net profit declined 59.5 per cent
18 to Rs 359.58 crore in the quarter ended
March 31, 2016, due to lower income from
operations. The company had posted a net
profit of Rs 888.35 crore in the correspond-
ing quarter of 2014-15. Total income
from operations fell by 21.5 per cent to
Rs 10,004.77 crore during the January-
March quarter 2015-16 compared to that
of Rs 12,745.19 crore in the same period
of previous fiscal. However, total expenses
decreased to Rs 9,883.76 crore, over Rs
11,345.53 crore in the year-ago period. On
the consolidated basis, BHEL posted a net
loss of Rs 895.93 crore for the year ended
March 31, 2016. On the consolidated basis, it
had posted a net profit after taxes, minority
PFC Q4 profit slides by 19%, NPAs
increase
Rs 19,229.94 crore in the year ago period.
The company supplied 57.95 billion units of
electricity during the period as compared
to 57.38 billion units in the corresponding
quarter of the previous fiscal. For the entire
2015-16, the company supplied 224.926
BUs as compared to 225.007 BUs in 2014-
15. The companys plant load factor (PLF)
or proportion of generation capacity utilised
was 62.28 per cent in 2015-16 as compared
to 64.25 per cent in the year-ago period. Its
average tariff of electricity was Rs 3.18 per
unit during the recently concluded fiscal.
The company reported a standalone net
profit of Rs 10,242.91 crore in 2015-16 as
compared to Rs 10,290.86 crore in 2014-15. Power Finance Corporation (PFC) posted a
Total income too dipped during the year decline in profit by 19.3% to Rs 1259.6 crore
from Rs 75,337.36 crore in 2014-15 to Rs for the quarter ended March 31, 2016. The
71,696.07 crore in 2015-16. profit in corresponding quarter in FY15 was
Rs 1560.7 crore. The total income during
the same period increased to Rs 6,787
crore in Q4FY16 from Rs 6,422.4 crore in
Q4FY15. On an annual basis, the company
has posted a net profit of Rs 6113.4 crore
for the year ended March 31, 2016 as
compared to Rs. 5959.3 crore for the
year ended March 31, 2015. Total income
increased by 10% during the same period to
Rs 27564.3 crore in FY16.
interest and share of profit of associates of
Rs 1452.38 crore for the year ended March
31, 2015. The board of directors recom-
mended a final dividend of Rs 0.40 per share
(Face value Rs 2 per share). The company
has an outstanding order book position of Rs
1,10,730 crore at the end of 2015-16.

PowerGrid Q4 net profit up 13.20% at Rs 1,599 crore

State-run Power Grid Corp posted a Rs 6,026.72 crore in 2015-16 compared to

13.2 percent jump in standalone net
profit at Rs 1,599.05 crore for the March
quarter on higher revenues from power
transmission business. The company
had reported a net profit of Rs 1,412.48
crore in the January-March of 2014-15.
The companys standalone income from
transmission business increased to Rs
5,485.89 crore in the quarter under review
from Rs 4,426.40 crore in the year-ago
period. Its income from operations rose
recommended final dividend of Rs 1.51 per
to Rs 5,760.07 crore in the fourth quarter
of this fiscal compared Rs 4,703.22 crore
in the preceding financial year. Power Grid
Corp reported a standalone net profit of
Rs 4,979.17 crore in previous fiscal. The
companys total standalone income from
operations too increased to Rs 20,802.22
in 2015-16 fiscal compared to Rs 17,177.23
crore in the previous financial year.
The Board of Directors of the company
share (face value Rs 10 each). The total
dividend (including interim dividend) for
the financial year 2015-16 is Rs 2.31 per
share (face value Rs 10 each).
Law- Assemble
India Summit
Indias First Legal Conference
for the Energy Industry
27-28 July 2016, New Delhi

Some of the Confirmed PartiCiPantS
Ministry of Petroleum & Natural Gas
Theme: EnErgy
Essar Power Pvt. Ltd
Powergrid Corp. Ltd
GAIL
Singapore International Arbitration Centre
ONGC
National Highway Authority of India
Amarchand MangalDas
American Express
Lanco Infratech Ltd
Dr Surat & Associates
Ideal Legal Translation

To know more, please contact:

Aditya Chopra, Email: aditya.chopra@infraline.com, +91-120-6799127 (D), +91-9910910880 (M)
 June 2016
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StatisticsPower
Tentative Generation Capacity Addition Target for the Year 2016-17
Capacity
State Project Developer Unit Fuel
(MW)
Central Sector
Bihar Nabinagar TPP, NTPC 2 Thermal 250
Bihar Kanti TPS St-II NTPC 4 Thermal 195
Maharashtra Mauda STPP-II NTPC 4 Thermal 660
Chhattisgarh Lara STPP NTPC 1 Thermal 800
Karnataka Kudgi TPP NTPC 1 Thermal 800
Tripura Agartala Gas Based Power Project NEEPCO ST-1 Thermal 25.5
West Bengal Teesta Low Dam-IV NHPC 3 Hydro 40
West Bengal Teesta Low Dam-IV NHPC 4 Hydro 40
Ar Pradesh Kameng NEEPCO 1 Hydro 150
Ar Pradesh Kameng NEEPCO 2 Hydro 150
Ar Pradesh Pare NEEPCO 1 Hydro 55
Ar Pradesh Pare NEEPCO 2 Hydro 55
Tamil Nadu Kudankulam NPP NPC 2 Nuclear 1000
Tamil Nadu PFBR Kalpakkam BHAVINI 1 Nuclear 500
State Sector
Assam Namrup CCGT APGCL GT+ST Thermal 100
Bihar Barauni TPP, BSEB 8 Thermal 250
Gujarat Bhavnagar TPP BECL 1 Thermal 250
Gujarat Bhavnagar TPP BECL 2 Thermal 250
Karnataka Yermarus TPP KPCL 2 Thermal 800
Maharashtra Koradi TPP MSPGCL 10 Thermal 660
Telangana Singreni TPP SCCL 2 Thermal 600
Chhattisgarh Marwa TPS CSPGCL 2 Thermal 500
West Bengal Sagardighi TPS-II WBPDCL 4 Thermal 500
AP Nagarujana Sagar TR APGENCO 1 Hydro 25
AP Nagarujana Sagar TR APGENCO 2 Hydro 25
HP Kashang-I HPPCL 1 Hydro 65
20
HP Sainj HPPCL 1 Hydro 50
HP Sainj HPPCL 2 Hydro 50
Telangana Lower Jurala TSGENCO 5 Hydro 40
Telangana Lower Jurala TSGENCO 6 Hydro 40
Telangana Pulichintala TSGENCO 1 Hydro 30
Telangana Pulichintala TSGENCO 2 Hydro 30
Meghalaya New Umtru MePGCL 1 Hydro 20
Meghalaya New Umtru MePGCL 2 Hydro 20
Private Sector
Chhattisgarh Nawapara TPP TRN 1 Thermal 300
Chhattisgarh Nawapara TPP TRN 2 Thermal 300
Uttar Pradesh Bara TPP Jaypee 2 Thermal 660
Odisha Utkal TPP Ind Barath 2 Thermal 350
Chhattisgarh Ucchpinda TPP RKM 3 Thermal 360
Tamilnadu ITPCL TPP ILFS 2 Thermal 600
Odisha Lanco Babandh TPP Lanco Babandh 1 Thermal 660
Uttar Pradesh Lalitpur TPP LPGCL 3 Thermal 660
Maharashtra Nashik TPP, Ph-I Rattan Power 2 Thermal 270
Maharashtra Nashik TPP, Ph-I Rattan Power 3 Thermal 270
Andhra Pradesh NCC TPP NCC 1 Thermal 660
Andhra Pradesh NCC TPP NCC 2 Thermal 660
Chhattisgarh Binjkote TPP SKS 1 Thermal 300
Chhattisgarh Athena Singhitari TPP Athena Chhattisgarh 1 Thermal 600
West Bengal Haldia TPP India Power 1 Thermal 150
Sikkim Teesta- III (*) Teesta Urja Ltd 1 Hydro 200
Sikkim Teesta- III (*) Teesta Urja Ltd 2 Hydro 200
Sikkim Teesta- III (*) Teesta Urja Ltd 3 Hydro 200
HP Chanju-I IA Energy 1 Hydro 12
HP Chanju-I IA Energy 2 Hydro 12
HP Chanju-I IA Energy 3 Hydro 12
Sikkim Dikchu Sneha Kinetic Power Projects Pvt. Ltd. 1 Hydro 32
Sikkim Dikchu Sneha Kinetic Power Projects Pvt. Ltd. 2 Hydro 32
Sikkim Dikchu Sneha Kinetic Power Projects Pvt. Ltd. 3 Hydro 32
Sikkim Tashiding Shiga Energy Pvt. Ltd. 1 Hydro 48.5
Sikkim Tashiding Shiga Energy Pvt. Ltd. 2 Hydro 48.5
All India 16654.5
(*)w.e.f. 6th August, 2015 Teesta Urja Ltd. is a Government of Sikkim enterprise.
 June 2016
www.InfralinePlus.com

Generation Capacity Addition from 2007-08 to 2015-16 (MW)

Capacity Addition in MW
Year Thermal Hydro Nuclear Total
Target Achievement Target Achievement Target Achievement Target Achievement
2007-08 9007 6620 2372 2423 660 220 12039 9263
2008-09 5773.2 2484.7 1097 969 660 0 7530.2 3453.7
2009-10 13002 9106 845 39 660 440 14507 9585
2010-11 17793 11250.5 1346 690 1220 220 20359 12160.5
2011-12 13611 19078.7 1990 1423 2000 0 17601 20501.7
2012-13 15154.3 20121.8 802 501 2000 0 17956.3 20622.8
2013-14 15234 16767 1198 1058 2000 0 18432 17825
2014-15 14988 20830.3 842 736.01 2000 1000 17830 22566.31
2015-16 17346 22460.6 1691 1516 1000 0 20037 23976.6

Transmission (Substation) Capacity Addition from 2007-08 to 2015-16 (in MVA)

Substation (in MVA)
800 KV HVDC 500 KV HVDC
765 KV 500 KV 400 KV 220 KV Total
Year Terminals Terminals
Achieve- Achieve- Achieve- Achieve- Achieve- Achieve- Achieve-
Target Target Target Target Target Target Target
ment ment ment ment ment ment ment 21
2007-08 0 0 0 1000 2169 4500 0 0 12635 10265 11020 9658 25824 25423
2008-09 0 0 0 0 0 0 0 0 9885 7995 14943 11234.5 24828 19229.5
2009-10 0 0 2500 0 0 0 0 0 13860 5225 14260 11735 30620 16960
2010-11 0 0 0 0 0 0 0 0 15960 13970 11776 17687 27736 31657
2011-12 0 0 0 0 4315 20500 0 0 8410 17165 14655 16622 27380 54287
2012-13 0 0 0 3750 9500 24000 0 0 8370 16795 13799 19120 31669 63665
2013-14 0 0 0 0 12000 30000 0 0 13400 9630 9963 13700 35363 53330
2014-15 0 0 0 0 30000 38500 0 0 9340 14970 8531 12084 47871 65554
2015-16 1500 1500 0 0 18000 19500 0 0 19390 17045 11652 24804 50542 62849
 June 2016
www.InfralinePlus.com
NewsBriefs | Coal National
Adani may abandon Australian coal mine project
Bogged by a six-year delay, Adani may pull
out from the proposed $21.5 billion rail and
mine project in Australia amid a series of
legal challenges from environmental groups
against the Indian energy giants plans to
build one of the worlds largest coal mines.
Green panel defers green clearance to Coal India washery in Odisha
A high-level panel has deferred green
clearance to Coal Indias 10 MTPA washery
in Odisha and sought more information
from the company, a move that may hit
governments plan to provide quality fuel.
22 The state-owned company has plans to set
up 15 washeries by next year. The proposal
was for grant of environment clearance
to Jagannath washery of 10 MTPA in
village Hensmul, district Talcher, Odisha
of Mahanadi Coalfields, a Coal India arm.
The proposal was deferred by the Expert
Appraisal Committee (EAC) for want of
inputs/clarification. The environment minis-
try panel noted that the proposed washery
with its technology firmed up, was yet to
get the approval of board of the project
Coal Indias price hike makes imported coal cheaper in coastal regions
India Ratings estimates the recent hike in
prices by Coal India will make imported
coal at coastal regions cheaper by 5.45% on
an average. A 13% to 19% hike in the base
prices of lower grade coal by Coal India this
week will negatively impact ailing thermal
power generators in India and result in a
shift to imported coal from domestic coal,
especially for the coastal power plants, said
India Ratings and Research. The rating firm
believes the price hike will squeeze thermal
power generators operating margins,
since they will need to absorb some of the
increase in costs. It is of the opinion that
some generators may be forced to reduce
Stating that he was disappointed, the
companys founder and chairman Gautam
Adani said that the pit to plug project was
yet to receive the green light after six years
of environmental assessments and court
battles. You cant continue just holding. I
have been really disappointed that things
have got too delayed,Adani said. Adani said
he hoped the court challenges to Australias
largest proposed coalmine would be
finalised in early 2017. However, with one
court case yet to be heard in the Federal
Court, and at least two groups threatening
High Court action, Adani warned he could
not wait indefinitely.
proponent. The project proponent is also
required to give data on emission factor for
various sources of fugitive emissions, which
would be generated from the washery.
their plant load factors in order to cut
losses. Prices of most consumed varieties,
G11 to G13 grade will move up between
Government forms inter-ministerial
group to discuss Coal India share
buyback
A difference of opinion with Coal
India over share buyback has led the
government to form an inter-ministerial
group to discuss the pros and cons of
the proposal as well as the optimum
quantum. The state-run monopoly
miner, the largest coal company in the
world, is sitting on cash reserves of at
least Rs 40,000 crore. CIL management
has been holding on to the reserves for
financing the expansion of the company
which is targeting output of 1 billion
tonnes a year by 2020 from about 550
million tonnes at present. The Centre,
on the other hand, wants CIL to hand
over its reserves to the government and
tap into the debt market to finance its
capex. Officials said the government
wants CIL to buy back 25% of its stake
and add about Rs 6,000 crore to the
governments kitty. The Centre, on the
other hand, wants CIL to hand over its
reserves to the government and tap into
the debt market to finance its capex.
Rs 100 per tonne and Rs 150 per tonne,
translating into an increase of around eight
paise per unit. This comes over and above
the Rs 300 per tonne increase caused by
the clean energy cess since 2015 and the
recent increase in royalty to 18% from 14%.
Higher cost may cause many of these plants
to shift their consumption to imported coal
from domestic coal. Ind-Ra estimates, ener-
gy charge based on domestic coal at Rs 1.66
per unit across a sample of power plants
on the eastern and western coasts of India,
which is around the same as the energy
charge based on imported coal for coastal
plants due to their proximity to ports.

NewsBriefs
| Coal National
Forest ministry seeks bar on 417 coal blocks
Of the 835 coal blocks surveyed, the envi-
ronment ministrys Forest Survey of India
(FSI) has found that mining would have to
be partly restricted in 417 to safeguard the
Coal India to cut down on production as demand falls
Lack of demand and huge inventories have
forced Coal India to cut production growth
plan drastically this summer. According to
figures released recently, both production
and off-take grew by approximately 4 per
cent in May, compared to the same period
last year. For the April-May period, off-take
(sales volume) grew by less than 1 million
tonne (mt) and production remained flat at
82 mt. When compared against the target,
production in the April-May period was 93
per cent of the planned volume and off-take
was 86-per-cent of projected sales. As
against targeted sales of 102 mt, the miner
sold a total of 88 mt. Though having diluted
the pithead stock by 5 mt to 52 mt during
the last two months, the company is still
Coal ministry releases Rs 210 crore to states towards auction fees
The Ministry of Coal has released Rs
210.33 crore as upfront payment to
states towards auction of coal blocks.
The amount is for coal bearing host
states of Odisha, Jharkhand, West Bengal,
Chhattisgarh and Maharashtra. Odisha
has the highest share in the payment
among states at Rs 144.14 crore for
auction of Talabira-I, Talabira-II &
III and the Utkal D&E coal blocks.The
amount has accrued from 14 coal blocks
that have gone under the hammer in
these five states. Auction of coal blocks
is expected to mop up Rs 3.45 lakh crore
to the national exchequer. Coal block
rivers. The coal ministry has objected to
this and asked that the partial ban of mining
should be limited to only 49 coal blocks. In
order to pare down the list of restricted coal
blocks, the coal ministry has asked the en-
vironment ministry to once again dilute the
inviolate forest area policy, which has been
in the works since the National Democratic
Alliance (NDA) government came to power.
This time, the coal ministry wants mining to
be allowed till river boundaries, leaving just
15 metres of protected area. It has asked
that protection of waterways be limited
to first order streams and not the larger
streams and rivers.
maintaining 4 mt of higher inventory when
compared to the corresponding period last
year. Though the power utilities have diluted
6.23 mt coal stock, they are still having
more coal than the prescribed 21 days
requirement.
June 2016
www.InfralinePlus.com
National
Coal India hopes to win orders
from Bangladesh
As the domestic demand for coal has
International
started dwindling with surplus stock at
power plants, Coal India has started
exploring export opportunities, hoping
to enter Bangladesh with the upcoming
Maitree super-critical thermal project
there. A team recently visited Bangla-
desh and is likely to table its report
soon. State-owned power generator
NTPC is developing a 1,320-Mw thermal
power project in Khulna, Bangladesh,
in partnership with Bangladesh Power
Development Board (BPDB). A company,
Bangladesh India Friendship Power 23
Company, with a 50:50 ownership ratio
has already been floated in this endea-
vour. NTPC, together with BPDB, will
select the lowest bidder. This puts Coal
India in direct competition with Chinese
and Indonesian coal suppliers. Signing
of Financial Services Authority will
depend on the price quoted by lowest
bidder and as such there will not be any
preference for any particular company
or country, an NTPC official said.
auctions were initiated after the CAG
had, in a report tabled in Parliament in
2012, pegged the notional loss to the
national exchequer at Rs 1.86 lakh crore
on account of improper allocation of coal
mines done by the UPA government. The
first round of coal auctions is likely to
fetch the Odisha government a revenue
of Rs 45,630 crore. The projected amount
would accrue to the state government by
way of e-auction proceeds, royalty fees
and fixed reserve price. So far, nine coal
blocks from the state have been put to
auctions. All blocks have been earmarked
for the power sector.
 June 2016
www.InfralinePlus.com
NewsBriefs | Coal International
Chinas leading coal-producing region reports sharp output decline
Coal output in Shanxi province, Chinas
largest coal-producing region, was down
21.3 percent year on year in April as local
authorities moved to cut capacity. Local coal
mining companies with annual revenues
of more than 20 million yuan ($3.1 million)
Glencore to close Australian coal mine due to low price
Glencore will close its Tahmoor coal
mine in Australia by early 2019, the latest
example of low coal prices decimating the
sector. Glencore is one of Australias larg-
est coal producers running 18 mines and
24 employing some 7,650 workers. Glencore
said it begun consultation with the 350
employees at the Tahmoor mine, which has
been operating since 1979 and last year
produced 2.1 million tonnes of metallurgi-
cal coal used in steel making. The decision
has been made as a result of continued low
prices in global coal markets, which has
meant the economic return from reserves
still available at Tahmoor are not sufficient
to warrant the investment required to mine
them, Glencore said. Like other miners,
Japans export bank agrees $3.4-billion loan for Indonesian coal station
The Japan Bank for International Coopera-
tion (JBIC) agreed on a $3.4 billion loan for
the controversial Batang coal power project,
after years of delay. .JBIC will contribute
just over $2 billion to the loan to fund the
2,000 megawatt coal-fired power plant
in Central Java. Other Japanese banks
including Sumitomo Mitsui, Mizuho and
Bank of Tokyo-Mitsubishi are also joining
the loan, JBIC. Financial close of the loan
for the coal-powered station was delayed
two months, just one of many hitches for
the project. Indonesias Supreme Court had
earlier thrown out a landholders lawsuit on
technical grounds, paving the way for the
churned out 58.2 million tons of raw coal
last month, the provincial statistics bureau
said Monday. The northern region faces se-
vere overcapacity as the countrys economy
slows. Last year, the coal mining industry in
Shanxi reported a massive loss of 9.4 billion
yuan, or roughly 10 yuan per tonne of coal.
Last month, local coal mines were ordered
to operate below 84 percent of production
capacity. Many mines were ordered to halt
production or stop construction. The Shanxi
provincial government said earlier this
month that it would stop approving new coal
mining projects and slash coal production
capacity by over 100 million tons in the
years leading up to 2020.
Glencore has been hit hard by the collapse
in commodity prices linked to slowing de-
mand from China. It has also slashed pro-
duction of copper and oil as well as cutting
investment and costs. Global metallurgical
coal prices have dropped from more than
$300 a tonne in 2011 to around $94 in step
with weakening steel prices.
government to take over the remaining land
for the project. Construction was meant
to begin in 2012, but has been repeatedly
BHP Billiton sells Indonesian coal
assets to Adaro
BHP Billiton has agreed to sell its coal
assets in Indonesia to its partner, Adaro
Energy, following a slump in prices for
metallurgical coal. BHP did not disclose
the price for its 75 percent stake in Indo-
Met Coal, which it first flagged was up for
sale in April. After a detailed review of
IndoMet Coal, we concluded that although
the project could support a larger scale
development, BHP Billiton has a range of
other growth options in the portfolio that
are more attractive for future investment,
IndoMet Coal asset president James
Palmer said. Analysts said in April BHP
would be lucky to fetch $200 million for
the stake, well below the $335 million
Adaro paid for a 25 percent stake in Indo-
Met in 2010, due to regulatory uncertainty
in Indonesia and the sharp slump in coal
prices. IndoMet holds seven coal contracts
of work in Central and Eastern Kalimantan,
including the 1 million tonnes a year Haju
mine, which started producing last year.
Haju made up less than 2 percent of BHPs
metallurgical coal output in the first nine
months of this year.
delayed as dozens of landowners refused
to give up their paddy fields for the power
plant. Bhimasena Power Indonesia (BPI)
- a joint venture set up by Indonesian coal
miner PT Adaro Energy Tbk and Japans
Itochu Corp and Electric Power Develop-
ment Co (J-Power) - is building and operat-
ing the project. Japan is one of the few
industrialized economies that still promotes
coal heavily, including technology to reduces
carbon emissions from the worlds dirtiest
fossil fuel. Critics say the reductions are too
small to justify the expense, especially as
renewable energy sources become cheaper.
 June 2015
www.InfralinePlus.com

InConversation
Low PLF of power plants
bad for consumers
India is heavily dependent on coal to meet fast-growing electricity
requirement of its economy. But there is a growing urgency to
limit emissions because of global warming concern, which could
in turn constrain Indias flexibility to use its vast coal reserves for
electricity generation. Clean coal technologies are a possible
solution. But the question is how far can India depend on them?
Meanwhile, mindful of rising concern over emission-intensity of
coal, India is ramping up capacity in renewable power and it
has also chalked up ambitious plans for nuclear generation as
an alternative option. Will these remedies work for India? In an
interview to Infraline Plus, Debasish Mishra, Partner, Deloitte
Touche Tohmatsu India LLP, fields questions relating to the future
roadmap of the Indian electricity sector. Excerpts:
Debasish Mishra, Partner, Deloitte Touche
Tohmatsu India LLP
25
With international public opinion as environmental protection
turning against burning of coal, objective is concerned? ity law and the massive capital cost
how can India make use of its Washed coal definitely helps in involved in LWR plants, the whole
vast coal reserves? Do you think reducing pollution as it reduces the program has been a non-starter. For
technology can come to the volume of coal transported over longer the next 20 years, nuclear power is
rescue? distances. It reduces operation & unlikely to replace coal based thermal
India will continue to use coal to maintenance (O&M) cost in thermal capacity in the base load.
meet the requirement of base load plant. It also reduces ash handling-
of electricity in the next couple related costs. How credible is the option of
of decades. As the government is setting up power plants in
determined to have Power for All Can nuclear plants replace coastal areas based on imported
target that would ensure 24X7 power. coal-fired generating stations as coal for meeting countrys fast-
This is not going to be possible without base-load source of electricity growing electricity requirement
availing coal based thermal generation. and if so, to what extent, given given the history of volatility in
As committed in COP21, while India the difference in their cost international coal market?
will make a huge push towards energy economics? In certain geographies such as South
efficiency and renewable energy and India has mastered the PHWR technol- and West, imported coal based coastal
make sure by 2030 at least 40 per cent ogy. But the real strategic objective of thermal plants are competitive vis--vis
power comes from non-fossil fuel India in nuclear power is to reach the those using domestic coal transported
sources, still the predominant source third stage of development by using from coal bearing regions of East and
of power will remain coal. Technology Thorium, which is available in plenty Central India. International commodity
would definitely help in reducing level in India. But for that the country must prices will always be volatile and will
of emission from coal plants. have enough quantity of enriched ura- be drain on our foreign exchange. Given
nium, which is only possible by having the new governments push to increase
How effective will be the large LWR power plants. Given the domestic coal production, it is unlikely
strategy of using washed coal concerns that the major LWR players that there will be many more coastal
in power generation so far have around Indias nuclear liabil- plants coming up in next few years.
 June 2015
www.InfralinePlus.com
InConversation
Can India meet the target of
producing 1.5 billion tonne of
coal by 2019-20 without allowing
private players entry into
commercial coal mining?
Based on Coal Indias stellar perfor-
mance, there has been robust increase
in coal production in last two years.
Government has set Coal India a
target of 1 billion tons and the rest of
the players another 500 MT (public
sector entities 250 MT and private
sector captive miners 250 MT). As
long as the country is producing more
coal than the domestic requirement,
the overall target achievement should
not matter. Today we have a situa-
tion where 55 MT coal is not lifted
from mines. But the government is
ready with coal blocks for bidding by
commercial miners. Given the nega-
tive outlook of the commodity in the
global market, there may not be many
26 takers for these blocks even if they are
put to bid.
What do you think of the
prospect of natural gas/LNG
replacing coal in electricity
generation?
At least 10 per cent power sourced
from Natural gas based power plant
is very much essential for any power
system, given the ramp up and ram
down flexibility that it provides like
hydro power. Unfortunately, low avail-
ability of natural gas in the country and
hitherto prevailing high LNG prices
have been a big hindrance for the sec-
tor in India. Today we have 24 GW of
gas based power projects either com-
pletely stranded or partially utilised
Today we have a situa-
tion where 55 MT coal
is not lifted from mines.
But the government is
ready with coal blocks
for bidding by commer-
cial miners. Given the
negative outlook of the
commodity in the glob-
al market, there may
not be many takers for
these blocks even if
they are put to bid.
due to unavailability of gas at the right
price. Government has launched a
programme to partially utilise the gas
power generation capacity. Until long
term availability of gas at prices around
6 dollar per MMBTU is confirmed, it
is unlikely that investors are going to
invest in gas based power project in In-
dia, which would be rather unfortunate.
What is your take on low plant
load factor (PLF) of coal-based
power plants? Is it good from
consumers perspective?
Low PLF can never be good for the
IPP, for their lenders, DISCOMs
and even the consumers. When any
infrastructure asset is created and paid
by the users, it should be used till the
technical limits for giving consumers
best value for money. Power plants
with PPA running at low PLF is bad
for DISCOMs and consumers, as they
would already be paying full fixed cost.
How far will governments
initiatives like Make in India
and Digital India boost demand
for electricity in coming days?
Given that, is there any need
for reassessment of Indias
electricity requirement in
coming years?
In the last five years, India has seen
massive capacity addition (more than
10 per cent CAGR per year) and a
demand slowdown due to industrial
slowdown. This has resulted in the
country having stranded power projects
and many power plants running at
low PLF. More realistic projection of
demand is definitely required. Modi
government has been determined to
increase share of manufacturing in the
GDP and programmes like Make in In-
dia, Industrial corridors, etc, are geared
towards that. If they succeed, it would
be big positive for the demand growth
in electricity sector.
For suggestions email at feedback@infraline.com

InDepth
Hike in domestic coal prices
to increase cost of power
Thermal plants, especially coastal, to see a shift to imported coal from domestic coal
While the overall price hike is 6.2%, the effect on regulated sector would be around 8%
By Team InfralinePlus
Despite several measures adopted both
at policy and regulatory level post last
budget (2015-16), the power sector is
still plagued by weak health of power
distribution companies, fuel-related
issues and transmission constraints
and will continue to do at least in short
to medium term. Post Union Budget
2015-16 announcements, lot of changes
have taken place in the Indian coal
sector. The central government in
December 2015 raised the royalty from
14% to 18.5% for funding the district
mineral fund (DMF) and the National
Mineral Exploration Trust (NEMT). In
the Union Budget 2016-17 announce-
ments, clean energy cess on coal has
been renamed as Clean Environment
Cess and the cess amount has been
doubled from INR 200 per tonne to
INR 400 per tonne. It was expected that
increased cess proposed in the Budget
June 2016
www.InfralinePlus.com
27
was likely to shoot up Coal Indias
average notified coal price by around
20 per cent. Couple of months later, the
inevitable has happened.
Coal India Limited (CIL) issued a
notification on May 29, 2016 revising
the prices of pit head run of mine
(ROM) prices of all grades of non-
coking coal effective from midnight
of May 30, 2016. On average, prices
of coal sold through the fuel supply
 June 2016
www.InfralinePlus.com

InDepth

agreement (FSA) route have increased

6.3%. The revision is applicable to all
its subsidiaries, as well as to consumers
in both the regulated power sector and
the non-regulated sectors -- cement,
sponge iron, and fertiliser.
The development comes when
stockyards of power plants and pit-
heads of Coal India subsidiaries are
full to the brim with coal, leading to a
reduction in sales. A 13% to 19% hike
in the base prices of lower grade coal
by Coal India this week will negatively
impact ailing thermal power generators
in India and result in a shift to imported
coal from domestic coal, especially for
the coastal power plants.
Presently, CIL offers 17 grades of
non-coking coal with the gross calorific
value (GCV) ranging from over 2200 Presently, CIL offers 17 grades of non-coking
kilo calorie per kg to over 7000 kilo coal with the gross calorific value (GCV)
calorie per kg. The CIL board has
approved the differential price for
ranging from over 2200 kilo calorie per kg to
28 the non-regulated sector at a reduced over 7000 kilo calorie per kg. The CIL board
rate of 20 per cent over the price of has approved the differential price for the
regulated sector for G6 to G17 grades
of coal. In the mechanism of rationali-
non-regulated sector at a reduced rate of 20
sation, the prices of G-1 to G-5 grades per cent over the price of regulated sector for
of coal have been reduced between 2% G6 to G17 grades of coal
and 29% to make it competitive with
international prices. The prices of G-6 to increase the cost of generation for PPAs, the impact on the margins will
to G-17 has been increased between coal based power plants by about 9-10 be dependent on the extent of escal-
13% and 19%. According to a CIL paise/unit. According to it, Power able energy charge component in the
statement, while the overall price hike generating companies (Gencos) / tariff structure.
is 6.2%, the effect on the regulated Independent Power Producers (IPPs)
sector would be around 8%. For the with cost plus based PPAs would Companies with cost-plus
non-regulated sector, it remains almost be able to pass on such increase in PPA may not be impacted
at the present level, with a slight tilt in cost of fuel to their off-takers, which Companies having cost-plus power
favour of the consuming sector. are mainly state-owned distribution purchase agreements (PPAs) like
utilities. For domestic coal based IPPs NTPC will not get impacted, as fuel
Hike depends on grade of which have competitively bid based costs are a pass-through. However,
coal used
According to industry sources, the Coal GCV Range Old New Price Revised % Increase in cost
Grade (Kcal/kg) Price (INR/MT) Price Revision of generation
variable cost of power per unit will (INR/MT) (INR/MT) (Paise/Unit)
go up depending on the grade of coal
G10 4300-4600 860 980 120 14% 9
consumed by the power plant. For a
power producer using G5 grade of G11 4000-4300 700 810 110 16% 9
coal (GCV range between 5800 and G12 3700-4300 660 760 100 15% 9
6100 kcal/kg), the unit cost may go G13 3400-3700 610 720 110 18% 9
up by around 12-14 paise. However,
G14 3100-3400 550 650 100 18% 10
according to rating agency ICRA,
G15 2800-3100 510 600 90 18% 10
increase in coal prices is estimated

some companies which sell more than
20 per cent of coal-fired capacity in the
open market and therefore exposed to
short-term and merchant rates, might
feel the pinch since costs will not be
pass-through.
Indias regional electricity dis-
tributors (state-owned distribution
companies) are curtailing purchases,
forcing generators to leave at least
a third of the countrys power plant
capacity unused. Distributors had
unpaid loans of almost 4 trillion rupees
as of last year and are in the process
of transferring 75 percent of that debt
to states as part of a federal effort
to make the companies profitable
(UDAY scheme). In the last 13 years,
generating capacity to the tune of
1,50,000 MW has been successfully
commissioned, effectively doubling
the countrys installed capacity to factor (PLF) an indicator of capacity
Last fiscal year, CIL sold 534 million tonnes
(MT) of coal, out of which that sold through
the FSA route accounted for 447.72 MT. The
price hike will fetch the company additional
revenue of about INR 3,234 crore this year.
CIL has also reduced the premium it charged
the non-regulated sector to 20% from 35%
June 2016
www.InfralinePlus.com
Coal imports on a decline
Indias coal imports have declined by 15% y-o-y to 15.9 million tons (MT) as
of April 2016 which has resulted in saving an estimated INR 240 bn in for-
eign exchange, almost all of the imports is set to be replaced by Coal India
which can improve deliveries going forward. Also, power producer NTPC,
which initially targeted to stop coal imports by 2020, is now 4 years ahead of
schedule to curb imports as supplies from Coal India has reduced its need
to import the fossil fuel.
CIL managed to increase its volumes by 7.1% y-o-y in FY15 and 9% y-o-y in
FY16 after reporting flat growth of 1.8% CAGR over FY10-14. In line with the
Governments plan of doubling production to 1bn tons by FY20, the com-
pany has been on track in FY16. Relaxation in environmental regulations,
governments focus and completion of long-delayed connectivity projects
would lead to a strong volume push going forward.
2,98,000 MW. However, recent years utilisation of the countrys power
have seen tardy growth in electricity plants. In the last one year the average
demand, especially industrial load, has PLF of thermal capacity has plum-
led to a sustained drop in the plant load meted by about 8 percentage points,
with the PLF of generating stations in
the central and private sector estimated
at just a tad above 60 per cent.
Last fiscal year, CIL sold 534
29
million tonnes (MT) of coal, out of
which that sold through the FSA route
accounted for 447.72 MT. The price
hike will fetch the company addi-
tional revenue of about INR 3,234
crore this year. CIL has also reduced
the premium it charged the non-reg-
ulated sector to 20% from 35%. Coal
accounts for more than 60 percent of
Indias power generation capacity and
more than 75 percent of the nations
electricity production.
For Coal India, the price hike comes
at a time its average realisation per
tonne is going down because of the
lack of demand, especially from power
plants, which are flush with coal with
an all-India average stock of 22 days
as on May 26. However, consumers
of coal will be facing the heat of coal
price hikes for the third consecutive
time in the last six months, since before
the revision of coal prices in by CIL
board, there were increases in royalty
and clean energy cess.
For suggestions email at feedback@infraline.com
 June 2016
www.InfralinePlus.com

StatisticsCoal
Indonesian Coal Prices - HBA - FY 2015 - 2016
HPB MARKER (kcal/kg GAR) (USD/Ton)

HBA 6322
Gunung Prima Pinang Indominco Melawan Enviro- Jorong
Month kcal/kg Ecocoal
Bayan I Coal Coal IM East Coal coal J-1
(USD/ton)

7000 6700 6150 5700 5400 5000 4400 4200

Apr-15 64.48 69.04 70.16 63.37 52.89 52 49.34 39.71 36.43

May-15 61.08 65.36 66.72 60.27 50.14 49.55 47.18 37.96 34.88

Jun-15 59.59 63.75 65.21 58.91 48.94 48.48 46.23 37.19 34.19

Jul-15 59.16 63.28 64.77 58.52 48.59 48.17 45.95 36.97 34

Aug-15 59.14 63.26 64.75 58.5 48.58 48.15 45.94 36.96 33.99

Sep-15 58.21 62.25 63.81 57.65 47.82 47.48 45.35 36.48 33.56

Oct-15 57.39 61.36 62.98 56.91 47.16 46.89 44.83 36.06 33.19

Nov-15 54.43 58.16 59.98 54.21 44.77 44.76 42.95 34.54 31.83
30
Dec-15 53.51 57.16 59.04 53.37 44.02 44.1 42.36 34.07 31.41

Jan-16 53.2 56.82 58.73 53.09 43.77 43.88 42.16 33.91 31.27

Feb-16 50.92 54.36 56.42 51.01 41.93 42.24 40.71 32.73 30.23

Mar-16 51.62 55.11 57.13 51.65 42.5 42.74 41.16 33.09 30.55
 June 2016
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Monthly Coal Production during FY12 to FY16 (Million Tonnes)

31
Month 2015-16 2014-15 2013-14 2012-13 2011-12

April 48.87 45.38 43.52 41.46 39.84

May 49.23 45.58 43.23 44.09 40.76

June 46.49 43.75 40.42 41.36 38.5

July 42.27 42.34 39.94 39.27 38.71

August 43.63 43.46 38.38 35.84 32.37

September 44.95 43.97 41 35.76 29.53

October 53.33 49.73 42.73 44.26 39.66

November 56.59 54.62 47.71 46.17 47.56

December 61.95 58.37 54.23 53.69 52.78

January 62.89 58.08 57.13 56.47 54.29

February 60.12 58.34 52.26 50.75 55.1

March 69.41 69.2 65.3 64.06 63.62

Total (Apr-Mar) 637.87 609.18 565.85 553.18 532.72

 June 2016
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CoverStory
Energy hungry India ready to
tango with West Asia

32

Narendra Modi, Prime Minister, India &

Hassan Rouhani, President of Iran

Chabahar port to open up new possibilities for Indias energy sector

India seeks West Asian investments for its E&P and refining sector

By Team InfralinePlus

India is intensifying engagement with
West Asian countries in order to boost
its energy security, secure cheaper
funding to support infrastructure boom
and expand trade and economic ties.
Remittances from the region are also
critical for India in meeting its Current
Account Deficit (CAD), which poses
vulnerability to the macroeconomic
stability due to heavy dependence on
energy imports. India is also soliciting
investment from cash-rich sovereign
wealth funds to finance its infrastruc-
ture boom.
Meanwhile, the trilateral transport
and transit agreement signed by India,
Afghanistan and Iran recently and the
proposed Chabahar port promises to
open up a new possibility for India
to gain access to mineral and energy
resources in Afghanistan, Iran and
Central Asian countries. Besides, the
new route will also give a big boost
to Indias international trade as the
country will not have to depend on
Pakistan for transit facility. India has
been asked to build Irans Chabahar
port which could rival the Gwadar port
being developed by China in Pakistan.
India has promised to invest over $20
billion in urea, petrochemical, phar-
maceutical, IT and rail projects in the
Chabahar Special Economic Zone
provided gas is made available at $1.5
per mmbtu price. For its part, Iran has
offered gas at $2.5 per mmbtu for fer-
tiliser and petrochemical projects.
Kazakhstan in Central Asia has huge
deposits of uranium. As India ramps
up its nuclear power generation, it will
need to import uranium. Kazakhstan
can meet Indias uranium requirement.

Chabahar port can prove Indias
stepping-stone to the Central Asia
and to the politically volatile West
Asia, said Anil Bhardwaj, secretary
general, trade body FISME. Stating
that Iran has the most diversified
industrial infrastructure in the West
Asia, Bhardwaj said that trade with
Iran will boom once the port becomes
operational.
The agreement also holds immense
geopolitical significance for India as
it will nullify Pakistans geographical
advantage of providing the sole
land access to Afghanistan. Now the
moot question is, can India and Iran
use their soft power to strengthen
political stability in Afghanistan,
something which has been elusive
despite military interventions by two
superpowers, the US and erstwhile
Soviet Union.
West Asia
Indians working abroad sent home
$100 billion in remittances in 2014,
nearly double what the country got in
foreign direct investment. The West
Asia accounted for more than half
of the remittances. Indian workers
in United Arab Emirates alone sent
$13 billion, according to data com-
piled by the World Bank. Sovereign
wealth funds from UAE, Qatar and
Saudi Arabia have shown interest to
invest in Indias infrastructure through
National Investment and Infrastructure
Fund (NIIF).
Merchandise trade between Indian
and Gulf Cooperation Council -- a
six-member group comprising Saudi
Arabia, Bahrain, UAE, Kuwait, Oman
and Qatar -- in 2014-15 was valued
at $133 billion dollar. While India
exported goods worth 49 billion dollar,
its imports from the region were valued
at 84 billion dollar. Apart from that,
trade between India and Iran during the
same period was valued at $13 billion
despite western sanctions on the latter
which led to a drastic reduction in oil
import from there.
Maintaining vibrant ties
with Saudi Arabia is im-
perative to its national
interest. Today, Saudi
Arabia is Indias larg-
est supplier of crude
oil. India meets nearly
80 per cent of its crude
oil requirement from
imports, bulk of which
comes from Saudi
Arabia. Besides, India
is the largest recipient
of foreign remittances
from the kingdom
India exported goods worth $4
billion dollar to Iran while imports
from the country were put at $9 billion.
Obviously, there is a significant scope
for India to ramp up exports to West
Asia and Iran given the huge trade
deficits.
If GCC is Indias gateway to the
Arab world spanning Levant to Arab
Maghreb, Iran provides the most prom-
ising entry point to Central Asia and
Afghanistan where Indian trade will be
routed through Irans Chabahar port,
say analysts.
June 2016
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Saudi Arabia
Experts say there is a consensus in
Indias foreign policy establishment
that maintaining vibrant ties with Saudi
Arabia is imperative to its national 33
interest. Today, Saudi Arabia is Indias
largest supplier of crude oil. India
meets nearly 80 per cent of its crude
oil requirement from imports, bulk
of which comes from Saudi Arabia.
Besides, India is the largest recipient of
foreign remittances from the kingdom.
Of the 11 million Indians working in
West Asia, nearly three million are in
Saudi Arabia. Therefore, stability in the
region, and particularly in Saudi Ara-
bia, is high on Indias core agenda. But
bilateral relations have gone beyond
the economic realm in recent years,
acquiring a strategic sense and pushing
both countries to beef up their security
partnership, experts add.
During Prime Minister Narendra
Modis two-day visit to Saudi Arabia
in the first week of April, the two sides
agreed to expand economic coop-
eration. The bilateral trade India and
Saudi Arabia is estimated at $39 billion
dollar in 2014-15. The two sides agreed
to expand bilateral trade, especially
non-oil trade, during PMs visit to the
kingdom. The Indian side highlighted
its key initiatives to improve the ease of
 June 2016
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CoverStory
doing business in the country and Indias
key efforts to simplify and rationalise
existing rules and relax the foreign direct
investment norms in key areas, including
railways, defence and insurance.
Inviting Saudi Arabia to be a
partner in Indias growth story, the
Indian side encouraged Saudi Aramco,
SABIC and other Saudi companies
to invest in the infrastructure sector
in India and to participate in projects
creating mega industrial manufac-
turing corridors, smart cities as well
as the Digital India and Start up India
programmes. The Saudi side expressed
its interest in investing in infrastructure
development in India, especially in
priority areas such as railways, roads,
ports, and shipping. The Saudi side
welcomed interest of Indian side in
investing in the Kingdom, especially
taking advantage of the competitive
investment opportunities offered by the
Saudi economic and industrial cities.
34
Keeping in view the importance
of energy security as a key pillar of
the strategic partnership, the two
sides expressed satisfaction at their
growing bilateral trade in the energy
sector, acknowledging Saudi Arabia
as the largest supplier of crude oil
to India. The two leaders agreed to
transform the buyer-seller relationship
in the energy-sector to one of deeper
partnership focusing on investment
and joint ventures in petrochemical
complexes, and cooperation in joint
exploration in India, Saudi Arabia and
in third countries.
The two sides also agreed to
focus on areas of training and human
resources development and coop-
eration in research and development
in the energy sector. In this regard,
the two leaders expressed the need for
regular meetings under the umbrella of
The bilateral trade be-
tween India and Qatar is
estimated at $15 billion
dollar in 2014-15. While
India exported goods
worth 1 billion dollar, its
imports were from the
country were valued at
14.6 billion dollar. During
Indian Prime Ministers
recent visit to Qatar,
the two sides agreed
to further expand eco-
nomic cooperation while
expressing satisfaction
at the LNG trade
India-Saudi Arabia Ministerial Energy
Dialogue.
Both leaders emphasised the impor-
tance of continued promotion of scien-
tific and technological collaboration,
including in the areas of renewable
energy, including solar, Information
and Communication technology, space
technology, sustainable development,
arid agriculture, desert ecology, urban
development, healthcare and bio-tech-
nology. The two sides further agreed to
collaborate on areas of food security.
Qatar
The bilateral trade between India and
Qatar is estimated at $15 billion dollar
in 2014-15. While India exported goods
worth 1 billion dollar, its imports were
from the country were valued at 14.6
billion dollar. During Indian Prime
Ministers recent visit to Qatar, the two
sides agreed to further expand economic
cooperation while expressing satisfac-
tion at the LNG trade. Specifically, the
two sides agreed to focus on enhancing
cooperation in energy, covering the areas
of training and human resources devel-
opment and cooperation in research and
development and through promotion of
joint ventures in petrochemical complex-
es and cooperation in joint exploration in
India and other countries.
The Indian side highlighted the
interest of its energy companies to
pursue opportunities of mutual interest
in Qatar, with Qatar Petroleum and
other companies, in order to jointly
explore new fields as well development
of discovered oil and gas assets and
exploit the existing resources of natural
gas and crude oil in Qatar.
The Indian side invited Qatar
to invest in Indias exploration and
production sector by bidding for the
exploration blocks in India under the
new Hydrocarbon Exploration and
Licensing Policy and Discovered
Small Fields Policy. The Indian side
also invited Qatar to participate in the
second phase of the strategic reserves
storage facility being created in India.

UAE
UAE is the only GCC member with
whom India has trade surplus. In
2014-15, India exported merchandise
worth $33 billion while its imports
were valued at $26 billion. During the
recent visit of the crown prince of Abu
Dhabi, Sheikh Mohammed bin Zayed
Al Nahyan, to New Delhi, a number
of pacts were signed by the two sides
to expand economic cooperation. The
Indian side highlighted the major initia-
tives taken by it to improve the ease of
doing business in the country. Indias
key efforts to simplify and rationalise
existing rules and relax foreign direct
investment caps in key areas, including
railways, defense, and insurance were
also noted. Prime Minister Narendra
Modi invited the UAE to be a partner
in Indias growth story, and to partici-
pate in projects creating mega indus-
trial manufacturing corridors, including
the Delhi-Mumbai Industrial Corridor
as well as the Digital India and Start up
India programs.
The two sides discussed their plans
for infrastructure development. The
Indian side highlighted the expe-
rience and expertise its companies
had acquired in infrastructure devel-
opment, including in power generation
and transmission, civil construction,
railways and metros, hospitals, airports,
housing and roads. It conveyed the
interest of Indian companies to be a
partner in the infrastructure projects
being undertaken by the UAE in prepa-
ration for the World EXPO, which will
be held in Dubai in 2020, as well as in
the UAEs development plans.
The UAE noted its interest in
investing in infrastructure development
in India, especially in priority areas
such as railways, roads, ports, and
shipping. The two leaders welcomed
the opening of DP Worlds new smart
port Nhava Sheva in Mumba and the
signing of a framework Memorandum
of Understanding between the UAE
and India which will serve to facilitate
and expand the participation of Emirati
UAE is the only GCC
member with whom In-
dia has trade surplus. In
2014-15, India exported
merchandise worth $33
billion while its imports
were valued at $26 bil-
lion. During the recent
visit of the crown prince
of Abu Dhabi, Sheikh
Mohammed bin Zayed
Al Nahyan, to New Delhi,
a number of pacts were
signed by the two sides
to expand economic co-
operation
investors in infrastructure projects in
India. The two sides described these
developments as important steps
towards reaching the 75 billion dollar
target for UAE investments in Indias
infrastructure development plans.
Recognizing that energy is a central
pillar of the economic relationship,
the two leaders expressed satisfaction
at their growing bilateral trade in the
energy sector, noting that the UAE is
one of the largest suppliers of crude
oil to India. They welcomed the
June 2016
www.InfralinePlus.com
intention of the Abu Dhabi National
Oil Company (ADNOC) and the Indian
Strategic Petroleum Reserves Ltd.
(ISPRL) to sign a Memorandum of 35
Understanding on the Establishment of
a Strategic Petroleum Reserve in India,
and agreed to conclude negotiations in
the near future.
The two sides said they looked
forward to increased cooperation in
the crude oil sector, including through
training, and human resources devel-
opment. The Indian side conveyed
the keen interest of its oil companies
in forming joint ventures with and
offering equity participation to UAE
companies, as well as in seeking
participation in prospective exploration
rounds in the UAE and in opportunities
for joint exploration in third countries.
The two countries agreed to
expand their collaboration in
renewable energy and in international
negotiations on climate change,
under the United Nations Framework
Convention on Climate Change. They
also agreed to continue to extend
strong support to the International
Renewable Energy Agency (IRENA).
They welcomed the signing of a
General Framework Arrangement for
Cooperation in Renewable Energy,
 June 2016
www.InfralinePlus.com

CoverStory

which will lead to deeper exchanges in
these areas.
Iran
India has struggled to maintain its
trade ties with Iran in recent years
due to western sanctions imposed on
that country. India-Iran bilateral trade
was valued at $13 billion in 2014-15.
While India exported goods worth 4
billion dollar, its imports were valued
at $8.9 billion. India has offered to in-
vest more than $20 billion in fertiliser,
pharmaceutical petrochemical, IT and
rail projects in the Chabahar special
economic zone (SEZ) of the Persian
Gulf country provided natural gas is
provided at a competitive price of 1.5
dollar per mmbtu.
India took its first step towards
unlocking the investment potential
for its companies in Iran when the
PM visited that country in May. A
36 trilateral transport and transit cor-
ridor agreement was also signed by
Afghanistan, India and Iran to allow
Indian goods access to the Central
Asian countries market without using
Pakistans territory. Commenting on
the signing of the historic agreement,
Indian PM said, The agreement on the
establishment of a Trilateral Transport
and Transit Corridor can alter the
course of history of this region. It
is a new foundation of convergence
between our three nations.
The corridor would spur unhindered
flow of commerce throughout the
region. Inflow of capital and tech-
nology could lead to new industrial
infrastructure in Chabahar. This would
include gas based fertiliser plants, pet-
rochemicals, pharmaceuticals and IT.
The key arteries of the corridor would
pass through the Chabahar port of Iran.
Its very location, on the mouth of Gulf
of Oman, is of great strategic signifi-
cance. Afghanistan will get an assured,
effective, and a friendly route to trade
with the rest of the world. The arc of
economic benefit from this agreement
would extend beyond our three nations.
Its reach could extend to the depths of the International North-South Trade
the Central Asian countries. Corridor (INSTC) and bring India
The successful implementation of closer to the Eurasian Economic Union
the Chahbahar project may re-energise (EAEU), which includes Armenia,
Belarus, Kazakhstan, Kyrgyzstan and
India has offered to Russia. India has already set up a joint
invest more than $20 study group to explore the possibility
of signing an FTA with the EAEU.
billion in fertiliser, phar- Moreover, India and Pakistan will
maceutical petrochemi- be joining the Shanghai Cooperation
cal, IT and rail projects Organisation (SCO) this year. Iran
in the Chabahar special is also expected to join soon. These
economic zone (SEZ) of political and geo-economic develop-
the Persian Gulf country ments may force Pakistan to have a
provided natural gas is fresh look at its trade and transit policy
provided at a competi- towards India.
Pakistan may be forced to consider
tive price of 1.5 dollar allowing Indian goods to pass through
per mmbtu. its territory to benefit from volumes
India eyes Irans energy resources
Over Rs 1 lakh crore investment can happen in Chabahar free trade zone
Iran, Gadkari said, has cheap natural gas and power that Indian firms are
keen to tap to build a 0.5-million tonne aluminium smelter plant as well as
urea manufacturing units.
Nalco will set up the aluminium smelter while private and co-operative fer-
tiliser firms are keen to build urea plants provided they get gas at less than
USD 2 per mmBtu.
India Ports Global Pvt, a joint venture of the Jawaharlal Nehru Port Trust and
the Kandla Port Trust, will invest USD 85 million in developing two container
berths
India recently submitted a reworked master development plan for Irans
Farsi natural gas block. The block is estimated to have reserves of up to
21.68 trillion cu. ft (tcf), with recoverable reserves of around 12.8 tcf.

Nitin Gadkari, Minister, Road Transport, Highways and Shipping
that would be crucial to making some
of these infrastructure projects viable.
To make the Chahbahar port less
attractive, Islamabad may also allow
extension of the Afghanistan-Pakistan
Transit and Trade Agreement (APTTA)
to India, feel experts. Initial work is
already underway on extending the
agreement formally to Tajikistan. Once
the APTTA is expanded to include
Central Asia and India, this small initial
project could become a serious eco-
nomic force of integration, add experts.
Chahbahar initiative well-
timed
The Chahbahar project has been under
discussion for years. However, it was
the Modi government that put its
political weight behind the project.
However, the success of projects will
critically depend on economic integra-
tion of the region. Analysts say that
the Chahbahar initiative is well-timed.
After removal of sanctions, Iran is
now looking to expand business ties.
Moreover, Indian energy companies
are open to purchasing more Iranian
oil, making swap deals and investing
in Iranian oil fields where they have
already made discoveries. This will
The recent pact be-
tween India and Iran to
build Chabahar port in
Iran has the potential to
alter the dynamics of Af-
ghanistans geopolitics.
The pact will add new
players to the game and
construct a compelling
economic dimension
also help India to expand its options in
Central Asia.
Experts also say that the recent
pact between India and Iran to build
Chabahar port in Iran has the potential
to alter the dynamics of Afghanistans
geopolitics. The pact will add new
players to the game and construct a
compelling economic dimension. It
also has the potential for a new security
paradigm to bring about a geopolitical
shift in the region. The development
of Chabahar port and the connecting
transport-and-trade corridor has
the potential for India to unlock the
untapped energy and mineral riches of
Iran, Afghanistan, and Central Asia,
say experts.
June 2016
www.InfralinePlus.com
India, a fast-growing economy,
needs access to overseas energy and raw
material reserves. The Chabahar pact
ends the countrys economic isolation
from Central Asia, opening access that
was blocked by a hostile Pakistan since
1947. Ultimately, Indias connectivity
could expand to Russia and Europe,
adding economic vibrancy to the India-
Iran-Afghanistan arc, say experts. Iran
has always been worlds leading energy
supplier. Now it is also emerging as the
gateway between Central Asia and India
and promises to create a junction of
cheap energy and Afghan raw materials
for Indian markets.
Afghanistans mineral
resources
Impoverished Afghanistan is a min-
eral rich country. The US Geological
Survey has verified previous Soviet
finds. Afghanistan may hold 60 million
tonne of copper, 2.2 billion tonne of 37
iron ore, and 1.4 million tonne of rare
earth elements such as lanthanum,
cerium and neodymium, in addition to
aluminium, gold, silver, zinc, mercury,
and lithium. Rare earth deposits in
Helmand province alone are valued at
89 billion dollar.
Total Afghan mineral wealth is esti-
mated at $1-3 trillion according to the
U.S. Geological Survey. Such mineral
deposits have remained untapped
due to the lack of connectivity to a
major economy, among other factors.
No more, with new connectivity to
India. Afghanistan might be able
to jump-start the engine of modern
economic growth and move beyond
poppy cultivation. Also, a successful
corridor further enforces Afghanistan
as a transit route for oil and natural
gas exports from Central Asia to the
Arabian Sea.
Skepticism over
involvement in Afghanistan
Afghanistan has been the graveyard
of superpowers. Can India and Iran
succeed where the Britain, the US
 June 2016
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CoverStory
and Russia have miserably failed?
Perhaps yes, say experts. They cite
economics, connectivity, and security
as key factors working to the ad-
vantage of India and Iran. An expert
explained that the British, Soviet, and
American campaigns were military
interventions of occupation, with
hardly any direct economic benefit
for Afghanistan.
The Chabahar corridor is not an
intervention. This corridor unleashes
economic opportunities that did not
exist in the past and it offers Afghan-
istan the most tangible prospect to
build a modern economy. The past gov-
ernments in Kabul lacked credibility
among masses as they were dependent
on foreign aid.
They believe that the tax generated
from mining and mineral exports
could facilitate a resourceful and
strong government in Kabul that can
38 assert authority across the country. Job
creation from economic activity would
increase peoples stakes in peace and
stability. This potentially offers a sus-
tainable model that had been missing in
the past superpower-led expeditions in
Afghanistan.
Thanks to land connectivity, India
and Iran will be able to play a far
bigger role in Afghanistan by sup-
porting democratic forces. Mineral
wealth can reduce the cost of such
support. The model can be similar to
the one the West has successfully used
to keep the oil-rich West Asia stable,
said another expert. The Indian road
to Afghanistan leads through Iran. In
event of internal chaos in Afghanistan,
India and Iran will be required to
collaborate closely in bringing about
peace. This makes the two coun-
tries with civilisational links newest
strategic partners in The Great Game,
with a direct stake in long-term peace
and prosperity, said one geopolitical
analyst.
The undeclared but principal
paradigm-breaking impact of this
deal is on Pakistan. India, Iran, and
Afghanistan constitute over 95 percent
The Chabahar corridor
is not an intervention.
This corridor unleashes
economic opportunities
that did not exist in
the past and it offers
Afghanistan the most
tangible prospect
to build a modern
economy. The past
governments in Kabul
lacked credibility
among masses as they
were dependent on
foreign aid
of Pakistans territorial borders. A pact
of such magnitude among Pakistans
bordering states, aimed at excluding
Pakistan, is an enormous indictment of
Pakistans policies with its neighbours
and a sharp reminder of its isolation in
the region. But Pakistani losses extend
beyond the symbolic to the tangible.
The advantage Pakistan enjoyed due to
its geography has been minimised and
will perhaps be eliminated over time,
say experts.
Second, they add, Pakistan loses
its stranglehold over the land-locked
Afghanistan. After the Soviet with-
drawal, Pakistan managed near
absolute control over Afghanistan
through Taliban. As the Americas
Afghan campaign began, Pakistani lev-
eraged its supply lines passing through
Karachi port to increase its closeness
with the US.
Finally, compared to Chabahar, the
alternative ChinaPakistan Economic
Corridor looks lop-sided. This cor-
ridor links the restive Chinese west,
the autonomous Xinjiang region
and autonomous Tibet region, to the
Pakistani port of Gwadar in the equally
restive Balochistan province. The
economic complementarities are obvi-
ously missing, giving rise to question
as to who will benefit from the infra-
structure, add experts.
For suggestions email at feedback@infraline.com

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India plans to more than double its
liquefied natural gas (LNG) import
terminal capacity in six years to cater to
the rising natgas demand from refineries,
fertilizer and power plants. Plans to set
KG Basin to see huge investments over 5-7 years
Union Petroleum Minister Dharmendra
Pradhan has said that the KG Basin is likely
to see investment of over Rs. 1 lakh crore
over next 5-7 years as ONGC, Reliance
Industries Limited and GSPC execute
their plans and expand their operations.
Along with investments from ONGC, GSPC
and RIL, from this financial year to the
next 5-7 financial years, I am visualising
new investment of Rs 1 lakh crore in
Krishna-Godavari Basin, creating new
employment and setting up downstream
industry, Pradhan said. Indias east coast,
particularly Krishna-Godavari Basin has rich
hydrocarbon deposits. Though there is a
difference when compared to Mumbai High,
Centre creates 4 dealer groups to boost LPG service
The government has created four categories
of liquefied petroleum gas (LPG) distributor-
ship to more effectively cater to the varying
needs of consumers in urban, rural areas
with urban infrastructure - also known as
rurban, rural and geographically inaccessible
areas. Simultaneously, the oil ministry has
also started the process of appointing 10,000
dealerships under a unified guideline to ex-
pand the network to meet increased demand
for the clean fuel expected from Ujjwala - the
scheme to provide free connections to five
crore poor households in the next three years.
We have been able to change the oil minis-
trys orientation from corporates to common
up new terminals and expand existing
facilities will push up LNG terminal
capacity to 47.5 million metric tonne per
annum (mmtpa) by 2022 from the current
21.3 mmtpa. In 2015-16, the natural gas
consumption in the country rose barely
2 per cent to 52 billion cubic meters,
of which 40 per cent was imported as
LNG. But in the last few months, the
consumption has soared, rising 14 per
cent in April, banking on cheaper imports
that rose 45 per cent. As the economy
expands and industries and households
increase their consumption of natural gas,
the dependence on imported LNG will only
increase since the domestic output has
been declining for years.
where oil and gas is available at a depth of
100 to 200 meters whereas in east coast,
the same is available at a depth of 2,000 to
3,000 meters, he pointed out.
man in the last two years. We achieved it
with the support and encouragement of the
June 2016
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ONGC to invest Rs 4,000 crore in four
coal bed methane gas blocks
State-owned Oil and Natural Gas
Corp. Ltd (ONGC) has decided to invest
Rs.4,000 crore to develop its four coal
bed methane (CBM) gas blocks. Two
of the four blocksin North Karanpura
and Bokaro, in Jharkhandwould start
production by the second half of 2017-18.
Methane is a form of natural gas extract-
ed from coal beds. The company has sold
a 25% stake in its North Karanpura CBM
block to Prabha Energy Pvt. Ltd (PEPL),
a unit of Deep Industries Ltd. The block
in Bokaro would be developed by ONGC.
The venture with PEPL is on a joint op-
eratorship model and PEPL would make
investments proportionate to its 25% 39
interest in North Karanpura. We expect
to begin CBM production by the later half
of year 2017-18. The cumulative plateau
production after development of all the
four blocks is estimated to the tune of 1.7
million metric standard cubic metres per
day (mmscmd), said a spokesperson for
ONGC. ONGC was allocated nine CBM
blocks, of which it holds four, located
in Jharia, Bokaro, North Karanpura and
Raniganj in West Bengal.
PM. We want to clear the smoke in the daily
lives of poor women who still have to use
unhealthy fuels for cooking... make clean
cooking fuel available to entire population by
2018, oil minister Dharmendra Pradhan said.
Pradhan said plan to meet additional demand
of LPG has been put in place and work on all
the verticals is going on simultaneously to
avoid any lag. There are 27 crore registered
LPG consumers, of which 16.7 crore are ac-
tive. This covers nearly 60% of the population.
The government expects about 3 crore new
consumers from the APL (above poverty line)
households to join the list in addition to the 5
crore Ujjwala consumers in the non-BPL.
 June 2016
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NewsBriefs | Oil & Gas National
Oil refining companies worried over ban on diesel vehicles
Discouraging the use of diesel as a transport
fuel is fast becoming a cause of concern
not just for automakers but for domestic
oil refiners, too. According to the Indian oil
refining and marketing companies, diesel
cannot simply be wished away. Technically, it
is not possible to completely eliminate diesel,
Reliance Industries arm sells stake in African trading and marketing company to Total
Reliance Industries is in pact to sell its
76% stake in Mauritius-incorporated Gulf
Africa Petroleum Corporation (GAPCO) to
French energy company Total Marketing
40 & Services. RIL, through its arm Reliance
Exploration & Production DMCC held
the stake in GAPCO, which is the holding
company with operating subsidiaries
in Tanzania, Kenya and Uganda. The
target company is primarily engaged in
petroleum product import, and trading,
storage, distribution, marketing, supply and
transportation of oil products in East Africa.
RIL acquired the 76% stake in GAPCO in
2007. The latter is one of leading petroleum
marketing company in East Africa and
ONGC Videsh completes $1.3 billion stake acquisition in Russian field
ONGC Videsh Ltd has announced
completion of acquisition of 15 per cent
stake in Russias second biggest oil field of
Vankor from Rosneft for $1.268 billion, its
fourth biggest acquisition. The overseas
arm of state-owned Oil and Natural
Gas Corp (ONGC) said the acquisition
of 15 per cent stake in JSC Vankorneft
-- a company organised under the law of
Russian Federation, which is the owner
of Vankor Field and North Vankor licence
-- was completed recently. Rosneft, the
national oil company of Russia continues
to hold the remaining 85 per cent shares
of JSC Vankorneft, the developer of the
because 45 per cent of a refinerys output
after refining the crude oil is diesel, said
Sanjiv Singh, Director (Refineries) at Indian
Oil Corporation. Singhs comments come
in the wake of the National Green Tribunal
hearing a case to extend the ban on sales of
diesel cars and sports utility vehicles (SUVs)
with engine capacity beyond 2,000 cc across
cities in eight more States Maharashtra,
Uttar Pradesh, Bihar, Tamil Nadu, Andhra
Pradesh, Punjab, West Bengal and Karnataka.
Maharashtra, Tamil Nadu, Uttar Pradesh and
Karnataka are among the four top-five States
for diesel sales from retail outlets. In 2015-
16, retail outlets in these four States sold
22.56 million tonnes diesel to passenger cars,
SUVs and commercial vehicles.
PMC (project management consultants).
operates 108 retail outlets and owns 260
TKL of storage capacity. The proposed
transaction is subject to regulatory
approvals and other closing conditions that
are customary for similar transactions,
RIL said.
OVL 3.3 million tonnes per annum of oil
Vankor oil and gas condensate field in
Turukhansky district of Krasnoyak Territory
Mega refinery: India says ready to offer
stake to Saudi Arabia
India has offered Saudi Arabia a stake in
the mega oil refinery and petrochemicals
project proposed in coastal Maharashtra
at an estimated cost of Rs 1.5 trillion. Re-
cently, I met Saudi officials with an offer
of a stake in the proposed mega refinery
project in Maharashtra, for which we have
already appointed Engineers India as the
We have also finalised the contours of the
special purpose vehicle that will carry out
this large project, Union Petroleum Min-
ister Dharmendra Pradhan said. The state-
ment assumes significance as the minister
had earlier said that Saudi Aramco is
keen to enter the domestic oil distribution
market. It is also a sign of the growing
bilateral ties between New Delhi and Ri-
yadh. On December 28 last year, Pradhan
had sprung a surprise by asking the three
state-run oil refiners -- IndianOil, BPCL
and HPCL -- to get ready to set up the
largest refining and petrochemicals com-
plex in the public sector before 2017-end
on the west coast of Maharashtra with an
investment of Rs 1.5 trillion.
in Russia. The field, which has recoverable
reserves of 2.5 billion barrels, will give
production. OVL said that the deal to
acquire stake in Vankor was signed by
its Managing Director & CEO Narendra K
Verma and Rosneft head Igor Sechin in
early September last year. Further to that,
Rosneft agreed to sell another 11 per cent
stake in Vankor to OVL. Details of this deal
are yet to be finalised. The acquisition
strengthens OVLs presence in Russia and
is consistent with stated strategic objective
of adding high quality international assets
to its existing E&P portfolio.

NewsBriefs | Oil & Gas International
Russian oil output falls slightly in May to 10.83 million bpd
Russian oil output stood at 10.83 million
barrels per day (bpd) in May, slightly down
for a second straight month but still close
to a record high reached earlier this year.
Russia, the worlds top oil producer, had
been steadily increasing oil output despite
U.S. oil exports rise 7-fold in first 3 months
The 40-year ban on exporting U.S. crude
was lifted last December. Since then, theres
been a sevenfold increase in Americas oil
exports to destinations other than Canada,
which was excluded from the ban. The
frenzy of export activity, while still relatively
small, is noteworthy given the depressed
environment in the oil patch these days. Not
only is the U.S. pumping less oil, but there
remains a lingering glut of oil around that
world that earlier this year caused crude to
crash to 13-year lows. Yet U.S. oil exports
hit an important milestone in March. For the
first time since 2000, the majority of U.S.
crude exports were to destinations other
than Canada, according to JBC Energy. The
U.S. exported 15.7 million barrels of oil in
IEA sees slower global gas demand growth to 2021
Growth in natural gas demand will slow to an
average 1.5 percent a year globally through
2021, as stagnation in Europe and uncer-
tainty about Chinese consumption offsets
robust growth in India, the International
Energy Agency (IEA) said. After growth of
2.5 percent over the last six years, gas is
facing competition from renewable energy
and cheap coal, meaning the global gas
market will remain over supplied. In Europe,
Russian gas export monopoly Gazprom will
be challenged by the prospect of a glut of
liquefied natural gas (LNG) as export capacity
rises 45 percent by 2021, even as demand
drops in key markets in Japan and Korea.
a fall in global oil prices as a weaker
rouble helped to offset oil companies
losses. Arkady Dvorkovich, Russian deputy
prime minister, said that Russia was still
ready to discuss an oil production freeze
if all OPEC nations supported the idea.
Russia is not a member of the cartel. Of
course, if everyone has a united position
then Russia of course will look into this
question, Dvorkovich said. Preliminary
data from the Russian energy ministry
showed that Russia produced 45.79
million tonnes of oil last month - or 10.83
million bpd as an average, down from
10.84 million bpd in April. Russian oil
output hit its highest in nearly 30 years in
March at 10.91 million bpd.
March, with only 7.7 million of those barrels
going to Canada. Japan and Italy were the
biggest buyers, importing more than 1 mil-
lion barrels of American crude apiece. Inter-
estingly, the U.S. also exported an average of
75,000 barrels per day to the tiny Caribbean
island nation of Curacao.
Growth will be led by India, at an average of
6 percent per year, while Chinese demand
is likely to recover, spurred by a switch from
coal to gas-fired power generation, the IEA
said. However, new supplies are also limited
June 2016
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Pakistan GasPort Plans LNG Terminal
Listing, Double Capacity
Pakistan GasPort Ltd., which won a gov-
ernment contract to build the countrys
second liquefied natural gas terminal,
plans to list the project in two years and
double capacity, taking advantage of a
global glut. The terminal which costs
$135 million will initially handle 600
million cubic feet a day at Karachis Port
Qasim. GasPort plans to add another
terminal to double capacity by 2018 and
will be followed by the construction of a
500 megawatt power plant. GasPort was
awarded the contract by the state-owned
Pakistan LNG Terminals Ltd. after offer-
ing the lowest bid. South Asias second 41
largest economy became one of the new
buyers of the super chilled fuel last year
after a global price slump and plans
to use it as a fuel, along with coal, to
add new power plants to end an energy
crisis by 2018. The GasPort terminal will
be supplying gas to 3,600 megawatts
of power plants being established by
the government and will be built in 12
months after the deal is signed, Ahmed
said before the agreement.
as production shrinks in Europe and U.S. gas
production hovers around flat next year as
lower gas prices cut into investment. Longer
term, the U.S. shale industry is expect to help
drive recovery in production to reach 100 bil-
lion cubic metres (bcm) by 2021, or one-third
of the global supply rise over the period. The
IEA puts forward prices of shipping U.S. LNG
to Europe below those of oil-linked Russian
gas or hub prices, creating a stark change
in Gazproms operating environment, it said.
Although its exports to Europe are locked in
via take-or-pay contracts, the IEA estimates
Gazprom needs to win an additional 15 to 20
bcm to hang on to its market share last year.
 June 2016
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ExpertSpeak
India needs storage facilities
for natural gas
Mohd Arif, Oil and Gas Analyst, Infraline Energy, throws
light on the need and urgency to set up gas storage facilities
in India and discuses various options that can be considered
in this regard.

India is the worlds fifth largest MMSCMD as on March 2016, whereas

energy consumer and its appetite R-LNG consumption stood at 67.98
for energy is only going to grow MMSCMD. Any kind of interruptions
further in future. Owing to crude oil in natural gas supply can lead to a
reserve depletion and deteriorating standstill in industrial operations.
environmental conditions, a clean Therefore, in order to have
fuel like natural gas is the most uninterrupted natural
feasible and sustainable option to meet gas supply,
nations complex energy requirements there stands Gas
42 as currently India is moving towards a need to storage Mohd Arif, Oil and Gas Analyst, Infraline Energy,

a gas-based economy. Natural gas is establish facilities are and short term flexibility, management
majorly used by City Gas Distribution natural required to be of ramp gas and better maintenance
(CGD) companies and industries such gas established on a management of production plants and
as, Fertilizer, Power, Petrochemicals/ storage pipelines.
priority basis
LPG, among others. Natural gas is facilities Currently, India does not have any
made available to various industries in India. In natural gas storage facility, which
via domestic gas and imported LNG. addition, natural cannot be undermined in coming
Domestic gas consumption by gas storage facilities future, as the share of natural gas in
five major sectors stood at 63.99 carries huge potential to provide long Indias energy mix will increase in
subsequent years.
Natural Gas Demand vs Consumption (March 2016) in
Natural Gas Demand vs Consumption
mmscmd
(March 2016) in mmscmd
Natural Gas storage facilities:
Sectoral demand Total Consumption (Domestic gas +RLNG) An Overview
(2015-16) There are four major types of natural
gas storage facilities such as, under-
33.29 ground gas storage, LNG storage
tanks, gas holders and line packs.
41.96
Underground gas storage is further
189 37.29
113
classified into depleted fields, aquifers
17.39 1.32
39 25
72 0.72 and salt caverns. There are more than
8
600 underground natural gas storage
facilities in the world with 450 deplet-
ed reservoirs, 80 deep aquifers and 70
salt caverns with a working capacity
of more than 300 BCM. Depleted
field is the most common type of gas
storage facility and is comparatively
Source: Working Group report XIII Annual Plan
 June 2016
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Projected Natural Gas Demand

Projected Natural Gas Demand
350
300
250
200
150
100
50
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Demand Projections (mmscmd) 227 240 254 264 269 280 285 292 300 306 314
Source: ICRA

easy to develop. The cost to develop extracting salts with the help of water.
a depleted reservoir lies between Multiple factors such as withdrawal
$176.6 million to $247.2 million per rate, working volume, injection
BCM of working gas capacity. period, development duration and There are four major
Aquifers are natural water res- location are to be considered for the types of natural gas
ervoirs where natural gas can be establishment of underground gas
stored, with additional dehydration storage facility. In addition volu- storage facilities
43
process on extraction. Salt caverns are metric efficiency of natural gas can be such as, underground
formed from existing salt deposits, increased by 600 times if it is being gas storage, LNG
which can be used to store gas after stored in liquefied form at -162C.
storage tanks, gas
Table 1: Status of Natural Gas storage facilities around the holders and line
world as on 2015 packs. Underground
Country/Region Active gas storage Working Capacity gas storage is further
facilities (BCM) classified into depleted
U.S. (Lower 48 States) 385 131.9
fields, aquifers and
Germany 51 25
France 16 13
salt caverns. There
Rest of EU-28 86 71.27 are more than 600
Russia 26 >72 underground natural
Ukraine 12 32 gas storage facilities in
Turkey 3 2.86 the world
Source: Gazprom, EIA, Eurogas and Naftogaz Europe

Table 2: Comparison of different underground gas storage facilities

Depleted Reservoirs Aquifers Salt Caverns
Working Volume Medium to Large Large Small
Withdrawal Flow Rate Medium (Depending upon porosity Medium (Depending upon porosity and High
and permeability) permeability)
Injection Period 150 to 250 days 150 to 250 days 20 to 40 days
Withdrawal Period 100 to 150 days 100 to 150 days 10 to 20 days
Development Duration 5 to 8 years 10 to 12 years 5 to 10 years
 June 2016
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ExpertSpeak

Table 3: Cost associated with different types of gas storage

facilities
Multiple factors such
Type Cost Associated
Depleted Reservoir Acquisition cost+ Development cost+ Gas gathering as withdrawal rate,
cost+ Cost of cushion gas+ Annual storage cost working volume,
Aquifers Cost associated with depleted reservoir+ Explicit Cost+
Implicit cost injection period,
Salt Caverns Cost associated with depleted reservoir+ Explicit Cost+ development duration
Implicit cost
and location are to
Explicit cost Implicit Cost be considered for
Survey cost Diminishing of agriculture in the area
the establishment
Water handling cost Impact on wildlife
Managing the site Hidden costs etc. of underground gas
Cost of unrecoverable gas etc. storage facility

Figure 1: Underground gas storage facilities

At present, India has no liquefaction
facility available. Excluding geo-
logical and geographical constraints,
pressurized natural gas can be stored
in aboveground gas holders. In
44 addition, natural gas can be stored in
pipelines, depending on the quality of
the material; quantity of natural gas
stored can be increased by manipu-
lating the pressure of natural gas.

Fringe benefits of Natural

Gas storage
Stored natural gas has the potential to
meet base load and peak load require-
ments. Base load facilities are used to
satisfy long term demand whereas peak
load facilities are used to satisfy short
Figure 2: Aboveground gas storage tank term surges in demand. Additionally,
for base load facilities there is a long
injection and withdrawal period whereas
peak load facilities attract a short injec-
tion with shorter withdrawal period. De-
pleted reservoirs are most common type
of base load facilities and Salt caverns
contributes to peak load facility.

Probable locus points

India has 26 sedimentary basins
covering an area of 3.14 million sq.
kms. Depending upon the state of the
reservoir, natural gas can be stored. For
depleted reservoirs there is a potential
 June 2016
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Table 4: Locations along with in North Gujarat and for salt caverns,
possible storage type Storage facilities require Bikaner can emerge as a potential loca-
pipelines for injection, tion. However, for deep aquifers, Kota
Location Possible Storage
Type
withdrawal and distribu- and Bhubaneswar could be potential
tion of natural gas. The sites. In addition, North Western part
of Rajasthan, Aravalli ranges and some
North Gujarat Depleted Reservoir importance of pipeline
part of Eastern Ghats holds a potential
Bikaner Salt Cavern
infrastructure can be for underground gas storage. However,
highlighted by the non where underground facilities are not
Devgarh Deep Aquifer utilization of existing feasible, LNG storage and gas hold-
Kota Deep Aquifer strategic petroleum re- ers can be used as potential storage of
serves (SPR). Mangalore natural gas.
Katni Deep Aquifer and Padur are still under Hurdles on the highway
Bhubaneswar Deep Aquifer construction of pipeline Storage facilities require pipelines for
infrastructure in order to injection, withdrawal and distribution
Bijapur Deep Aquifer transport crude oil of natural gas. The importance of pipe-
line infrastructure can be highlighted
by the non utilization of existing strate-
gic petroleum reserves (SPR). Manga-
lore and Padur are still under construc-
tion of pipeline infrastructure in order
to transport crude oil. To utilize the
storage facility, it is essential to have a 45
well established pipeline infrastructure.
Currently, Indias existing natural gas
pipeline network consists of 17,421
kilometer of gas pipelines majorly
in Gujarat, Maharashtra and U.P. On
the other hand, states such as West
Bengal, Bihar, Jharkhand, Chhattisgarh
and Odisha are deprived of sufficient
gas pipeline infrastructure, creating a
strong regional imbalance.

Scanning the horizon

At present, total numbers of CNG
stations in India are 1026 and total
number of PNG connections stood
at 30 lacs, as on January, 2016. Any
interference in natural gas supply will
dampen the natural gas business in the
entire nation. Hence, it is imperative
to secure the supply of natural gas by
focusing more upon natural gas storage
facilities in near future.
Countries such as, U.S., China,
Ukraine, Russia, among others have
acknowledged the importance of
natural gas and are already ahead
in establishing natural gas storage
Source: DGH
 June 2016
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ExpertSpeak
Natural Gas Pipelines in India
Source: Infraline
46
facilities. In midst of the efforts being
made by other countries, India is still
not under consideration of its pilot
project owing to the lack of awareness
in the country and lack of resources
like funds, technology, robust gas
grid etc. Funds and technology can
be taken care of by including foreign
players in the establishment of gas
storage facilities.
Increasing issues with neighboring
countries such as Pakistan and China
could turn out to be the potential
barrier for the natural gas supply
In midst of the efforts
being made by other
countries, India is still
not under consideration
of its pilot project owing
to the lack of awareness
in the country and lack
of resources like funds,
technology, robust gas
grid etc.
in adverse conditions like war.
Natural gas storage will be helpful in
meeting the domestic demand in such
conditions. Moreover, geopolitical
issues prevailing all across the globe
are potential barriers to natural
gas imports. To securitize nations
natural gas supply, storage facilities
are required to be established on a
priority basis. In addition, India can
focus on exploitation and storage of
the unconventional resources such
as shale gas, CBM and gas hydrates
aswell.
For suggestions email at feedback@infraline.com

Event Focus
Infraline Conducts National Pipeline
Integrity Management Forum
by Team InfralinePlus
If oil and gas represent the lifeblood
of Indias energy, transportation and
manufacturing sectors, then the oil and
gas pipeline system can be considered
the blood vessels. This network has
evolved and expanded over several
decades to meet the growing energy
needs of Indian consumers and its
increasing age is a cause for concern
among pipeline owners and operators.
Added to this is the fact that many
pipeline systems run through high-
consequence areas, such as fragile
ecosystems and well-populated
communities, and the need for routine
pipeline inspection and maintenance
programs becomes more crucial than
ever before.
Growing safety and environmental
concerns regarding pipeline man-
agement have led to new regulations
and stricter requirements for pipeline
operators to demonstrate and document
their facilitys safe operations.
Considering the importance of the
issue, InfralineEnergy, in association
with Engineers India Limited (EIL)
as the Knowledge Partner, orga-
nized the National Pipeline Integrity
Management Forum on 25th May
2016, in New Delhi. This forum was a
ladder to connect multiple stakeholders
June 2016
www.InfralinePlus.com
47
from the industry to discuss the current
and future perspectives of pipeline
integrity management which is the
need of the hour.
The event witnessed a gathering of
leading pipeline operators and oil and
gas companies like GAIL, ONGC,
GSPL, EIL, etc. along with key
policy makers from the ministries and
innovative technology providers who
highlighted and showcased some very
efficient technologies and solutions
for PIM. The speakers focused on the
needs and challenges of the PIM along
with the adoption of new technologies
such as MTM, ILI etc. The importance
 June 2016
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Event Focus
of information technology in PIM has
been highlighted by tools like real time
GIS, SCADA etc. Furthermore, the
need of adequate infrastructure and
PIM for hydrogen and bio fuels trans-
portation has been accentuated.
Mr. Niraj Sethi, Executive Director-
Projects, Engineers India Limited,
delivered the
keynote address in
which he high-
lighted the
importance of
Pipeline Integrity
Management and
some of the best practices and strat-
egies in order to ensure most efficient
integrity management of pipelines. Sethi
raised the following key points
GDP growth of various regions is
directly dependent on the pipeline
infrastructure
Governments plan is to increase
48 the existing capacity of pipelines
under Public-Private-Partnership
(PPP) mode
Pipeline Integrity Management is
required in all the three phases of
a pipeline, namely Design phase,
Construction phase and Operation
phase.
Rupturing, Fire, Pilferage, Sab-
otage, Soil Erosion, H2S, Sulfur, etc.
can impact pipeline integrity along
with site welding that can somewhat
infringe the pipeline operations.
Slug catchers, full cathodic protection,
corrosion inhibitors, intelligent pigging,
hydro-testing, inline protection,
SCADA, thickness assessment etc.
are some of the assessment tools
for pipeline integrity management.
However, rigorous quality control of
pump, valves etc. need to be carried
out at a regular interval.
In India, PNGRB has given guide-
lines for prescriptive type integrity
management. In prescriptive type,
the risk is categorized and the
matrix is prepared for risk and con-
sequences, action plan is prepared
on the priority basis.
Industry Perspectives
Dr. Bharat Bhargava, Director General- ONGC Energy Centre
Bio-fuels and Hydrogen will be the significant sources
for energy in the coming future. It is a high time to think
about the pipeline infrastructure for economic transpor-
tation of these fuels.
Rail and road transport is used for the hydrocarbon
transportation, which is not economical vis-a-vis pipeline
transportation.
As hydrogen is light and high compression is required thus traditionally available
materials for pipelines are not suited for the transportation of hydrogen. Moreover,
welding in the conventional pipelines may become source of leakage.
Bio technology, nano technology and solar technology are important param-
eters in pipeline design and management.
Modern technologies like 3D and seismic techniques can be used for site
selection for hydrogen production and pipelines.
Simulation can be used for estimation of life and safety of a pipeline, U.S. is
doing work on this.
Mr. M.K Sogani, Deputy General Manager, GAIL (India) Limited
As per PNGRB guidelines, integrity assessment tools
include- In line inspection (ILI), Hydro testing, Direct
assessment and evaluation, CP Monitoring, Surveil-
lance, thickness assessment and periodic reviews.
For health assessment of piggable and non piggable
pipelines, Magnetic Tomography Method (MTM) is
used. This technology evaluates the relative change
in mechanical stress without physical contact with the
pipeline through the pipeline magnetic field, this helps in locating both time
dependent and time independent threats. Health assessment of Kurikhera to
Bimetal, a non piggable pipeline of GAIL was carried out using MTM.
MTM is more accurate than ILI, this is evident by MTM inspection of Chainsa
to Faridabad piggable pipeline.
MTM is new in India and it can be used in offshore pipelines. Currently
Petronas is using MTM for offshore pipelines.
Mr. Paresh K Patel, Sr. Manager (Operations & Maintenance), Gujarat
State Petronet
Important softwares for IMP are C-FER, Advantica, GE,
PII, MUHLBAVER. Moreover, operating company may
have its own tailored software as per their requirement
Geographical Information System (GIS) is increasingly
being used to manage huge and complex data base
Pipeline operating company should have good HSE
policy, procedures for O&M and a good quality system
in place, like ISO 9000, ISO 14000, and OHSAS 18000.
PNGRB has issued regulations for IMS of natural gas pipelines. It follows
ASME B31.8S-2010 standard. Different threats as per ASME B31.8S are time
dependent and time independent.
GSPL experienced pipeline integrity issues due to heavy backwater at Narmada
River. HDD crossing, cold cutting, removing of existing section, hooking up with
the new section, and pigging of complete pipeline segment was done.
 June 2016
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Mr. K.K Tandon, Director-Technical, Bhotika Pipeline Services Co. Pvt. Ltd.
Pipeline pigging is required at various stages during the life cycle of a pipeline. Pipeline pigging
requirements have to be duly considered at the design & construction stage of the pipeline.
During construction stage pigging is done to remove debris, conducting hydro testing etc.
During operating stage pigging is done to remove condensate, to apply inhibitors etc. and during
inspection stage, pigging is done to check the physical damage.
Pipeline can be non piggable if there is no provision for launchers/receivers, less 3D bends, low
flow conditions, very high flow rates and reduced bore mainline valves and check valves.
40% of existing pipelines are non piggable.
Inline inspection tools and technologies like External Corrosion Direct Assessment (ECDA), Internal Corrosion Direct
Assessment (ICDA), Stress Corrosion Cracking Direct Assessment (SCCDA), Guided Wave Inspection Technology,
Project Specific Inline Inspection Tools and Magnetic Tomography Method are used for integrity assessment of non
piggable pipelines.
Tele Test system based on Long Range Ultrasonic Testing (LRUT), this system is suitable for short length of pipelines
(200 m) and it is generally used in Rail crossing and road crossing areas. HPCL use this system and TWI (U.K.) is the
original inventor.

Mr. Yatinder Suri, Country Head, Outokumpu India Pvt. Ltd.

Stainless steel saves money in the long run.
Duplex products provide high strength, high corrosion resistance and enhanced resistance to
stress corrosion cracking. Moreover, they do not need to be painted or coated.
The total life cycle cost for a duplex stainless pipe in the ground is less than for a coated carbon
steel pipe as soon as a major repair/maintenance is made on the carbon steel.
Outokumpu provides products for subsea applications to combat corrosion. Forta SDX 2507 49
provides excellent strength and corrosion resistance.
First stainless steel raw water pipe in India was installed in Chennai. This resulted in low maintenance cost and increased
life expectancy.

Mr. Sanjiv Malhotra, Executive Director & Head- Business Development, KSS Petron Pvt. Ltd
Challenges pertaining to large diameter pipeline are: ROW, not enough contractors, site condi-
tions, government support, commercial reasons etc.
India is having pipelines of up to 48 inches in diameter; however, 50-70 inches diameter can come
up in future.
Pipeline infrastructure is not adequate in India.
Pipelines face many social and developmental challenges and thus, there is a need for capacity
building and for this it is imperative to have the support of the local bodies
Radical thinking, incumbency free ROW, security, mass education program, revise commercial conditions, government
support and innovative techniques are some of the way forward.

Mr. Chanchal Dasgupta, Application Marketing Manager, Borouge (India) Pvt. Ltd.
For 3LPE/PP coating of steel pipes, there are few major international standards but every client
develops their own specific standard as per their project specifications. In some cases, these
standards may not be optimal due to lack of understanding of the terminology, test method,
polymer properties or due to inclusion of raw materials.
Everyone is reluctant to change an existing standard.
Criteria for selection of coatings include temperature, transport, storage, Installation and
handling.
Some of the errors in representation can be minimized by mentioning that whether the values are maximum or minimum,
avoiding generating more errors in correcting typo errors etc.
It is better to specify the target properties of the coating and leave the Melt Flow Rate (MFR) selection to the raw material
manufacturer. Most of the international specifications do not specify MFI values.
 June 2016
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Event Focus

3LPP coating is recommended for up to 110 C design temperature in onshore and up to 140 C design temperature for
offshore pipelines.
Methods for impact strength include Charpy, Izod, Brittleness temperature and falling weight.

Mr. Krishna Rao TVB, Technology Architect, ESRI India

GIS is the key to pipeline integrity and Indian pipeline integrity regulations are similar to those in
the U.S.
GIS supports pipeline integrity, asset operations, business management, customers and regu-
lators, HSE and asset development.
ArcGIS provides an integrated web GIS platform for vertically integrated gas companies.
Real time GIS captures the real time data for utilities and pipelines and provides feature like
mapping along with feature layers in the interface.

Mr. Nikhil Deshpande, Director- Oil & Gas, Du Pont

Poor operational discipline has led to major catastrophic events like Piper Alpha, Texas City
Refinery Explosion etc.
Operational discipline offers leadership by example, employee engagement, teamwork, absence
of shortcuts etc. Moreover, it alleviates risk.
There are fourteen operational discipline characteristics that are classified in three groups Lead-
ership/Cultural, Processes and Standards.
OD facilitates a process of continuous and enhanced safety improvement through a structured
process and it changes a paper safety program into an action program.

50 Mr. Asim Prasad, Deputy General Manager, GAIL (India) Ltd.

As the natural gas market evolved in the country, acts, standards, guidelines, operating proce-
dures to enhance safety and integrity are also formulated.
In India, a perspective approach is used rather than a performance based approach.
GAILs maintenance policy guideline includes intelligent pigging in 5 years and cleaning pigging
in 3 years.
Work execution includes the following sequence of PIG; Foam, Gauge, Brush, Magnet, Combo of
brush and magnet-I and Combo of brush and magnet-II
Challenges include location challenges, weather conditions, safety challenge and system challenge.
Casing pipe is provided at critical crossings to avoid damage to career pipe. In addition, any misalignment of the
casing pipe with respect to the career pipe will result in a defect.
The roles and interactions of the three main components of PIM- people, processes and technology needs to be clearly
identified.
Threats need to be classified along with mitigation action. Furthermore, proactive approach rather than reactive
approach is required.

Mr. Atiq Khan, Deputy Manager- Corporate Strategy & Business Development,
Engineers India Limited
Pipeline Integrity Management System (PIMS) life cycle includes making policies and strategies,
forming methodologies, collecting data, using software systems and tools, analyzing and finally
conducting inspection at regular intervals.
In internet of things, pipelines have network connectivity which allows them to send and receive
data so that pipeline integrity can be enhanced.
Installed operational hardware and software in pipelines, results in a reduction of risk and helps in
improving networks overall reliability.
Systems such as SCADA, GIS among others are valuable for pipeline integrity resulting in improved life cycle.
 June 2016
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51
 June 2016
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Event Focus

Summary
Key outcomes
The event concluded at a very posi-
tive note and with a clear vision to
Pipeline companies and utilities are aware of the new requirements, and
strengthen the countrys pipeline
a wide range of levels of integrity management related improvements infrastructure. This requires technol-
have been made or are contemplated to help them ensure regulatory ogy advancement; skill set develop-
compliance, increase safety of operations, and improve system reli- ment and policy support from the
ability. regulators and the local bodies. Proper
pipeline integrity management is vital
Pipeline operators are moving away from prescriptive approaches to to every operators profitability and
pipeline design and operation, to risk management as the safest and regulatory compliance. The systematic
most cost effective means of maintaining and improving safety levels in and streamlined PIM approach can
help operators achieve environmental
pipelines.
compliance and make the best use of
Intelligent Technology is Essential for Modern Integrity Management their integrity management budget,
regardless of their pipeline systems
Pipeline companies have at their disposal a host of monitoring tools,
location, age or size.
techniques and methodologies to record data and analyze pipeline While technology in this area is
systems for integrity threats, such as internal and external corrosion, evolving, it has developed to the
accidental strikes upon the line during excavation by third parties, man- point that it is not practical to wait
for additional major improvements to
ufacturing or construction defects, and acts of nature such as storm
come along. Now is the time to start
damage or earthquakes. building strategy for the automation
52 Some PIM systems focus attention on a single problem at a specific to support the next generation of
location in the pipeline, rather than taking a more global look at the integrity.
As the pipeline industry continues
integrity of the entire system. As a result, some areas of the pipeline
to evolve, so will new regulations,
may not be adequately inspected or treated. This can eventually lead operational processes, and man-
to pipeline ruptures that damage the companys reputation and cost agement practices to keep up with the
much more in repairs, cleanup and fines levied by regulatory agencies. latest technologies. Organizations that
capitalize on progressive ideas and
Automation of the management process is becoming a foundational technological advancements will see
requirement for many utilities that are actively creating systems to themselves move to the forefront of
accommodate the next level of integrity management. the pipeline industry.

GIS anchors automated integrity management. Most utilities now have

GIS and are at least using it for map production.
Software applications, available from a number of providers, are
GIS-based in the sense that they interact with the GIS and utilize the
integrated information as a base for analytics. Risk-management
software typically provides the capability to run custom or stock models
for pipeline assessment risk analysis.
Trending technologies such as 3LPE/PP coatings and cathodic pro-
tection holds a strong position in Pipeline Integrity Management.
Stainless steel pipelines are more economical in the long run, as they
possess less maintenance cycle time.
Program such as Operational Discipline holds the potential to enhance
the safety and performance of the pipelines.
For suggestions email at feedback@infraline.com

FinancialResults
IOC net profit at record Rs 10,399 crore in 2015-16
Indian Oil Corp (IOC) reported a record
net profit of Rs 10,399 crore in 2015-16 to
become nations second most profitable
PSU, even as it posted an 80 per cent drop in
March quarter earnings because of inventory
losses. Net profit of Rs 10,399.03 crore in
fiscal year ended March 31, 2016 was second
only to Oil and Natural Gas Corps Rs 16,004
crore net profit in 2015-16 fiscal. IOC net
HPCL Q4 net profit drops 28% to Rs 1,553 crore
State-run Hindustan Petroleum Corpora-
tion Ltd (HPCL) reported a 28% drop in its
March quarter net profit on provisioning for
rise in rentals and foreign exchange losses.
The company also announced investing Rs
26,000 crore in expanding its Mumbai and
Vizag refineries. Net profit of Rs 1,552.94
crore in January-March 2016 was 28.18%
lower than Rs 2,162.39 crore in the same
period a year ago. The profit was lower as
the company provisioned Rs 215 crore for
rise in lease rental by the Delhi government,
HPCL Chairman and Managing Director M
K Surana said. Also, there was a foreign
exchange loss of Rs 203 crore in the quarter.
Another Rs 81 crore was set aside as provi-
sions towards arbitration on cost of LPG
cylinders. Crude oil processing was higher at
4.7 million tonnes from 4.45 million tonnes
in the previous year. Fuel sales also soared
to 9.05 million tonnes from 8.19 million
BPCL Q4 net drops 10.6% to Rs 2,549-crore on low oil prices
State-owned Bharat Petroleum Corp Ltd
(BPCL) reported a 10.6 percent drop in its
March quarter net profit on back of slump in
oil prices. Net profit in January-March quarter
fell to Rs 2,549.08 crore from Rs 2,852.89
crore in the same period a year ago. Sales
were down to Rs 44,197.09 crore in the fourth
quarter of 2015-16 fiscal from Rs 51,346.12
crore, a year-ago. The company turned 6.22
million tons of crude oil into fuel, up from 6.11
million tons in the fourth quarter of 2014-15.
profit in 2015-16 was almost double of Rs
5,273.03 crore net profit in the previous fiscal,
company Chairman B Ashok said. Refineries
processed a record 56.2 million tons of
crude oil 2015-16, up from 53.6 million tons
in the previous year while fuel sales soared
6 per cent to record 72.7 million tons. IOC
maintained its leadership position with 45.5
per cent market share. Petrochemical sales
were up 2 per cent to 2.538 million tons.
Turnover, however, dipped 11.4 per cent to Rs
450,738 crore on back of drop in oil prices.
The profit was aided by sharp drop in revenue
loss or under-recoveries on sale of LPG and
kerosene because of crash in international
oil prices. Under-recoveries dropped from Rs
39,758 crore in 2014-15 to Rs 7,757 crore in
2015-16.
tonnes in the fourth quarter of 2014-15
financial year. Surana said HPCL will invest
Rs 18,000 crore in raising Vizag refinery
capacity from 8.33 million tonnes to 15 mil-
lion tonnes. It will invest another Rs 8,200
crore in raising Mumbai refinery capacity to
9.5 million tonnes from current 6.5 million
tonnes. Also, HPCL is raising capacity of
its joint venture Bhatinda refinery from 9
million tonnes to 11.25 million tonnes by
February/March 2017, he said.
Fuel sales also rose to 9.78 million tons from
8.69 million tons. Exports were however flat
June 2016
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ONGC posts Rs 4,416 crore Q4 net
profit
State-owned explorer Oil and Natural Gas
Corp. Ltd (ONGC) reported a 12.2% jump
in net profit for the three months ended
March to Rs.4,416 crore, partly due to
an accounting provision resulting from a
rebound in oil prices. The company wrote
back part of the impairment charge it had
made previously made when oil prices
were lower. ONGC reported revenue of
Rs.16,424 crore in the fourth quarter of
FY2016, a 24.3% contraction from a year
ago. ONGC chairman D.K. Sarraf said the
company had in the fiscal third quarter
taken an impairment charge of Rs.3,994
crore because of an oil price slump. The 53
rise in oil prices led to a revision of the
figure and the recognition of Rs.752 crore
in the profit statement. In addition, the
decision to develop the Krishna Godavari
basin assets required recognising Rs.1,585
crore in income, reversing a provision
made earlier when the company had held
the view that developing the field was
un-viable, ONGCs director (finance) A.K.
Srinivasan said. In the full fiscal year, net
profit declined 9.8% to Rs.16,004 crore.
ONGC reported a total dividend of 170%
for the year. It produced 26 million tonnes
of crude oil in 2015-16, same as a year ago
and 22.5 billion cubic metres of gas, 4%
lower than its output last year.
at 0.54 million tons. The company earned
USD 6.59 on turning every barrel of crude oil
into fuel in 2015-16 as opposed to a gross
refining margin of USD 3.62 a barrel in the
previous fiscal. It got fully compensated for
the loss it makes on selling domestic cooking
gas LPG and PDS kerosene at subsidised
rates. It received Rs 1,598.49 crore from the
government as fuel subsidy and another Rs
198.01 crore as dole from upstream firms like
ONGC.
 June 2016
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StatisticsOil & Gas

Import/Export of crude and petro products (000 Metric Tonnes)
IMPORT/EXPORT APRIL TOTAL
IMPORT*
CRUDE OIL 17960 17960
PRODUCTS
LPG 800 800
MS/ Petrol 74 74
Naphtha 265 265
ATF/Aviation Turbine Fuel 18 18
SKO/ Kerosene 0 0
HSD/ Diesel 508 508
LOBS/ Lube oil 157 157
Fuel Oil 50 50
Bitumen 64 64
Others 1103 1103
PRODUCT IMPORT 3039 3039
TOTAL IMPORT 20999 20999
PRODUCT EXPORT
LPG 27 27
MS/ Petrol 1368 1368
Naphtha 493 493
ATF/Aviation Turbine Fuel 674 674
54 HSD/ Diesel 2119 2119
SKO/ Kerosene 2 2
LDO 0 0
LOBS/ Lube Oil 0 0
Fuel Oil 88 88
Bitumen 0 0
Others 158 158
TOTAL PRODUCT EXPORT 4930 4930
NET IMPORT 16069 16069
Source: Oil Companies. All figures are Provisional.
Note: POL imports by private parties taken from raw data of DGCI&S which is with a 2 month lag period.
IOCL: Nepal sales taken in exports of IOCL. For Nepal exports , average US$ exchange rate considered .
BPCL: For Nepal and Bhutan exports , average US$ exchange rate considered
*LNG import not included

LPG consumption (April,2016) (Thousand Metric Tonne)

April*
LPG category 2013-14 2014-15 2015-16*
2015 2016 Growth (%)
1. PSU Sales :
LPG-Packed Domestic 14,411.60 16,040.40 17,182.50 1,305.90 1,392.30 6.6
LPG-Packed Non-Domestic 1,073.60 1,051.00 1,464.00 100.5 130.2 29.6
LPG-Bulk 245.7 315.7 316.4 23.3 30.4 30.6
Auto LPG 194.3 163.8 170.8 13.8 13.2 -4.6
Sub-Total (PSU Sales) 15,925.20 17,570.90 19,133.70 1,443.50 1,566.10 8.5
2. Direct Private Imports 368.5 429.2 417.3 36.2 34.8 -3.8
Total (1+2) 16,293.60 18,000.00 19,551.00 1,479.70 1,600.80 8.2
* Provisional
 June 2016
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Consumption of Petroleum Products (April,2016) (TMT)

Products 1-April
(A) Sensitive Products
LPG 1601
SKO 516
Sub total 2117
(B) Major Decontrolled Products
MS 1996
HSD 6774
Naphtha 1184
ATF 556
LDO 34
Lubricants & Greases 253
FO & LSHS 626
Bitumen 622
Sub total 12043
(C ) Other Minor Decontrolled Products
Petroleum coke 1555
Others 530
55
Sub total 2086
All Product total 16245
NOTE :
i) All figures are provisional
ii) The source of information includes Oil Companies, DGCIS & Major
consumers.
iii) The consumption estimates represent market demand and is aggregate of :
(a) sales by oil Companies in domestic market , and
(b) consumption through direct imports by private parties.
While data for company sales are actual, that of private direct import are
estimated, which may undergo change on receipt of actual data.

Sectoral Demand and Consumption of Natural Gas (April,2016) (Qty. in MMSCMD)

Sectoral Domestic gas R-LNG Total Consumption

Sector Demand 2016- consumption in consumption in (Domestic gas
17* April 2016 April , 2016 +RLNG) in April,2016
Fertilizer 113 23.4 16.45 39.86
Power 207 24.97 6.96 31.93
City Gas 46 11.27 7.73 19
Industrial 27 0.5 0.63 1.13
Petrochemicals/ Refineries/ Internal
consumption/LPG Shrinkage/ 72 10.9 30.62 41.52
manufacture/ Miscellaneous
Sponge Iron/Steel 8 0 0.72 0.72
Total 473 71.04 63.11 134.16
*Source : Report of the Working Group on Petroleum and Natural Gas Sector for the 12th Five Year Plan for Sectoral Demand
It may be seen that against a consolidated demand of 473 MMSCMD for the year 2016-17 the actual consumption in the month of April,2016 was 134.16
MMSCMD.
 June 2016
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NewsBriefs | Renewable National
India-US ink MoU to boost energy security, clean energy cooperation
India and the United States recently
signed an MoU to enhance cooperation on
energy security, clean energy and climate
change, ahead of Prime Minister Narendra
Modis Washington visit. The Memoran-
dum of Understanding was signed by
Indias Power Secretary P.K. Pujari and US
Ambassador Richard Verma. The priority
Govt plans Rs 30K crore corpus to establish integrated solar manufacturing facility
To encourage companies to set up
integrated solar manufacturing units in the
country, the government will come out with
a brand new policy to aid equipment makers
by disbursing Rs 30,000 crore as subsidy.
56 Integrated solar manufacturing units will
produce everything from solar cells, solar
photovoltaic modules, ingots and wafers.
The subsidy support will be given on the
basis of a reverse bidding process so those
interested in setting up such plants can bid
for the least amount of subsidy required
to be competitive in the market. Under the
project, the government plans to distribute
total Rs 30,000 crore worth subsidy to
manufacturers and will also give them
business assurances. The proposed policy
JNPT gears up to procure its power via solar energy
Jawahar Lal Nehru Port Trust (JNPT),
the countrys biggest container cargo
handling port, has embarked upon a major
solar power project. The 25MW project,
estimated to cost around Rs 170 crore, has
the potential to meet nearly 55% of the
ports requirement. JNPT requires about
60 lakh units of power a month. The solar
initiatives under the MoU would be, among
others, US-India Energy smart Cities
Partnership; Greening the Grid; Promot-
ing Energy Access through Clean Energy
(PEACE) expansion; energy efficiency
including space cooling; renewable energy,
energy security, and accelerating in-
novation on clean energy, the statement
added. During the Dialogue, it was also
agreed to explore addition of smart grids
and energy storage for grid application as
the fourth stream under PACE-R. Discus-
sions were also held in the working groups
on financing of clean energy technology
as well as on innovative financing for
renewable energy microfinance and micro
enterprises.
is being prepared following the suggestions
from an inter-ministerial panel that was set
up by the department of industrial policy
and promotion. The government has revised
the target of National Solar Mission (NSM)
from 20,000 mW to 1,00,000 mW by 2022.
project is expected to generate 32 lakh to
35 lakh units. The long-term project, along
with a smaller solar project, that JNPT has
rolled on is likely to be commissioned next
month. Already, Prime Minister Narendra
Modi has chosen JNPT as the hub for his
dream project of Make in India for export-
led growth. The project, also known as solar
farm, is in the tendering stage. It is expected
to be operational by 2017. The mega project
requires 125 hectares of land. Currently,
documentation work is going on. The project
can be equated with the capacity to power
10,000 city homes. While JNPT is still to
approach MSEDCL for the formalities, the
project would be the biggest in the area.
Indian Navy to contribute towards
renewable energy generation
The Indian Navy has pledged 1.5 per cent
of its budget towards renewable energy
generation, Ministry of Defence (MoD)
said. As part of navys Green Initiatives
programme, impetus has been given to
reduce the overall carbon footprint with
the focus on not only addressing the
root cause of the problem, which lies in
the way energy is used. Creation of an
energy and environment cell at Naval
Headquarters in January to monitor pan
navy implementation of green measures is
a concrete step in this direction. This cell
has been tasked to making the navy an
environmentally responsible force which is
not only energy and resource efficient, but
also resilient to energy costs, the Indian
Navy said. Through efficient ship design
and operations along with mass energy
conservation awareness drives that are
conducted regularly at all commands and
repair yards, the navy has saved approxi-
mately Rs.12 crore annually. Furthermore,
the navy has set itself an aggressive
target of 21 mw solar installation, to be
implemented in three phases. The initia-
tive is in line with the national mission of
mega watt to giga watt towards achieving
100 gw of solar installations by 2022, the
statement said. Additionally, the navy has
pledged 1.5 per cent of its works budget
towards renewable energy generation.
Under this scheme, solar projects are
being undertaken at various naval stations
across all commands. Naval Stations, with
scarce available land, have resorted to the
deploying rooftop solar panels, it added.
The navy is also exploring the possibility of
harnessing renewable energy from oceans
and feasibility of exploiting ocean thermal
energy and wave energy as sources of
power, are being discussed.

NewsBriefs | Renewable International
With solar boom, MNRE targets 16,660 MW of fresh capacity
The Union Ministry of New and Renewable
Energy (MNRE) has set the highest ever
capacity addition target for the clean power
sector this fiscal. It has set a new capacity
addition target of 16,660 MW close to
four times the capacity target that the
government set in the previous year. In the
Govt lines up over Rs 16k crore to support rooftop solar projects
The government has lined up almost $2.5
billion (about Rs 16,800 crore) for providing
low cost finance to achieve the target of
installing 40 GW grid-connected solar rooftop
systems. The ministry is in negotiations with
the KfW Development Bank to secure soft
loans of 1 billion euro. They have already
provided $100 million funding, The Ministry
of New and Renewable Energy (MNRE)
Secretary Upendra Tripathy said. The
World Bank has committed a loan of $620
million, with the Asian Development Bank
and the New Development Bank pledging
$500 million and $250 million, respectively,
he added. This will enable participating
commercial banks such as SBI, PNB and
Canara Bank to extend loan at or near base
Govt eyes 10,000 solar, wind, and biomass projects in 5 years
The central government has set a target
to start at least 10,000 solar, wind and
biomass-based power projects in five years,
which will serve small groups of customers,
especially in rural areas. The target is part
current fiscal, solar segment is expected
to achieve its highest-ever annual capacity
as the target has been set at 12,000 MW,
followed by wind (4,000 MW), bio power
(400 MW), small hydro (250 MW) and
waste-to-power (10 MW). The Ministry is
confident of achieving its significant capacity
addition in solar this fiscal as it had tendered
20,000 MW worth projects during the
previous year. During the first month (April)
of this fiscal, renewable energy sector has
added about 237 MW of capacity of which
235 MW came from solar sector. As of
April, 2016, total grid-connected installed
renewable power capacity stood at 43,087
MW. Total installed capacity of wind power
stood at 26,867 MW.
rates, Tripathy said. The secretary further
said in the current fiscal, MNRE is trying to
arrange an investment of Rs 6,000 crore for
rooftop solar projects. The power generated
from solar rooftop plants installed even today
is almost at par with the commercial tariff for
consumers in many states.
of the draft national policy on renewable
energy-based micro and mini grids released
by the Union ministry of new and renew-
able energy (MNRE). A mini grid includes
a renewable energy power generator with
a capacity of 10 KW and above, supply-
ing electricity for residential, commercial,
institutional or other users. Micro grids are
similar, but will have capacity below 10 KW.
The ministry has sought comments from all
stakeholders by 20 June. The objective of
the policy is to promote the deployment of
micro and mini grids powered by renewable
energy sources such as solar, biomass, pico
hydro, wind in un-served and underserved
parts of the country, said the draft policy.
June 2016
www.InfralinePlus.com
National
Government plans to unveil solar zones
policy in June
To encourage solar power generators and
equipment manufacturers, the New and
Renewable Energy Ministry will unveil
a policy on solar zones that would be
spread over one or more districts of a
state. We have been working on a new
policy for solar zones, which would be
spread over one or even more districts of
a state to encourage generators as well 57
as equipment manufacturers, Ministry
of New and Renewable Energy Joint
Secretary Tarun Kapoor said. The work
on the policy is almost complete and it
will be launched next month, he added.
Under the policy, the developer will be
provided with inputs like land availability
and power evacuation locations for plan-
ning his project, the official said. Unlike
solar parks, the developer would have to
acquire land for the project and the min-
istry in collaboration with the states will
provide input about availability of land.
The developer will be free to arrange
land for the projects as he would have
option of either buying or getting land on
lease for the purpose. Government would
develop transmission network in each
solar zone for evacuation of power at dif-
ferent points to facilitate the developers,
Kapoor said. He further said that each
solar zone would have a central office,
which will be set up with the support of
state governments to guide the develop-
ers. Government plans to add 10,500 MW
of solar power generation capacity during
the current fiscal. Besides it wants to
encourage solar equipment manufactur-
ing capacity in the country.
 June 2016
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NewsBriefs | Renewable States
Delhi govt aims to generate 1,000 MW solar power in five years
The Delhi government recently approved
the Delhi Solar Energy Policy, aimed at
generating 1,000 MW solar power in the
next five years. The policy recommends
installation of 1GW (1,000 mega watts)
MPs Rewa Ultra Mega Solar to sell power to Delhi Metro
The Delhi Metro Rail Corporation (DMRC)
has signed a power purchase agreement
(PPA) with Madhya Pradeshs Rewa Ultra
Mega Solar Ltd (RUMSL) to get green
power from the latter to run its trains in
58 the national capital. Managing Director of
DMRC Mangu Singh inked the PPA with MP
New and Renewable Energy Department
Principal Secretary Manu Shrivastava on
behalf of RUMSL in Delhi recently. DMRC
will get 150 to 200 MW green power daily
from RUMSL from next year. RUMSL is
raising the worlds largest solar power
station of 750 MW in Rewa district and its
three units of 250 MW each are expected
to go on stream by June, 2017, he said.
The Solar Energy Corporation of India and
RE capacity addition to reach 72 percent of peak demand in Tamil Nadu
The renewable energy capacity addition is
likely to reach 72 per cent of its peak demand
by 2022 in Tamil Nadu, says a report. Tamil
Nadu has done a tremendous development
when it comes to adding capacity of renew-
able energy (RE), which is projected to reach
even 72 per cent of its peak demand by 2022,
according to a joint Assocham-EY paper. At
present, the state has an installed capacity of
over 8,300 MW of non-conventional energy
which is about 40 per cent of the total capacity
installed, including the conventional sources of
thermal and hydro. However, the problem re-
mains about a huge gap between the installed
RE capacity and its actual generation. Against
solar power capacity in Delhi by the year
2020. It is also proposed to double it to 2GW
during the next five years (by 2025). The
policy outlines a combination of regulations,
mandates, incentives and tax breaks for
the growth of rooftop solar power in the
Capital, Delhi power minister Satyendar
Jain said. The policy has been prepared
in consultation with the Delhi Dialogue
Commission after extensive consultations
with local and international experts. The
Energy Efficiency and Renewable Energy
Management Centre (EE&REM) under the
Delhi power department will act as the state
nodal agency and will be responsible for the
effective implementation of this policy.
Madhya Pradesh Urja Vikas Nigam (MPUVN)
have joined hands to facilitate setting up
of the green power station, christened
RUMSL, on 1,500 hectares area at Bandwar
region in Gudh tehsil of Rewa district, said
Shrivastava, who is also the Managing
Director of MPUVN.
the 40 per cent ratio of the installed capacity,
the RE sources supply just about 14 per cent of
the states peak demand, thanks to inadequate
infrastructure to evacuate the power to the
grid and the natural limitations. All the same,
Maharashtra makes most power, but
taps little from sun
Even as India crosses 5000 MW solar
power generation this year, Maharash-
tra, the largest power-producing state
in the country, lagged behind in extract-
ing electricity from the sun. As per
the statistics released by the central
government for top 10 states generat-
ing solar power, Maharashtra stood at
fifth position with power generation at
a meagre 379 MW. Indias cumulative
installed capacity has reached to 5,130
MW, with installed capacity of 1385
MW set up during the current fiscal.
Rajasthan stands first in the country
with 1264MW, followed by Gujarat
(1024MW), Madhya Pradesh (679MW),
Tamil Nadu (419MW), Maharashtra
(379MW) and Andhra Pradesh (357MW).
Currently, the states share of renew-
able energy in its total generation
is around 9% and it has a target of
enhancing it to 15%.
the Assocham-EY paper pointed out that
against the peak electricity demand of 29,975
MW, the projected installed capacity of the RE
resources would be 21,508 MW. The other
progressive states in the area of RE are Gujarat
and Rajasthan. But the interest is still limited
to a few states.., Assocham Secretary General
D S Rawat said. Gauging the conventional
capacity addition growth between 2014 and
2022, it is clearly seen that Tamil Nadu is add-
ing capacity beyond its demand. This beckons
for a robust market mechanism to accom-
modate RE power within the state and also
explore market mechanism to trade its power
to the RE deficit states, the paper suggested.

NewsBriefs | Renewable International
Jinko claims No 1 global solar module maker position for 2016
Chinese manufacturer JinkoSolar expects
to be the top solar module manufacturer
in the world in 2016 after posting record
shipments in the first quarter of 2016. The
10-year-old company announced total ship-
ments of 1,600MW in the March quarter,
more than double the same quarter a year
ago, allowing it to claim the top position
among tier one solar module manufactur-
Wind and solar drive rise in renewable generation in Australia
A 20 per cent increase in wind and solar
energy generation in 2015 have combined to
deliver another annual increase in the amount
of Australias electricity sourced from renew-
ables, more than compensating for a drop
in hydro production, a new report has found.
The Clean Energy Australia Report 2015,
describes 2015 as a tough year all round for
the renewables industry, with low rainfall
in Tasmania affecting hydro output, and the
effects of extended policy uncertainty still
hampering investment in the sector. Never-
theless, electricity generated by renewables
increased in 2015 to 14.6 per cent, the report
said, which was enough to power the equiva-
lent of 6.7 million average homes. The total
percentage of electricity generated by wind
Dubai to build worlds largest concentrated solar power project
Dubai Electricity and Water Authority
(DEWA) has launched the worlds largest
concentrated solar power (CSP) project
which will generate 1000MW of power when
completed. Located within the Mohammed
Bin Rashid Al Maktoum Solar Park, the new
project will include five facilities. DEWA has
launched a tender for international consul-
tants to submit a proposal for advisory ser-
vices for the first 200MW plant. The tender
for the consultant is expected to be awarded
in three months, confirmed DEWA managing
director and chief executive officer Saeed
Mohammed Al Tayer. The next tender for
the main developer will be floated after the
ers for the first time. It expects annual
production capacity of 6GW to 6.5GW in
2016, and a gross margin of 21.3 per cent,
reflecting the strength of the current solar
market. Despite the steep drop in the price
of crude oil and other economic volatili-
ties, global demand for solar is growing
steadily, CEO Chen Kangping said. Chen
said the company would take a cautious
approach to expansion perhaps conscious
of the problems facing US solar giant
SunEdison and the debt issues facing other
Chinese manufacturers. This expansion
should only allow us to meet the minimum
expectation for the market demand in the
future, he said.
energy for the year was 4.9 per cent, just 1
per cent less than hydro, which made up 5.9
per cent of total electricity generated. House-
hold and commercial solar PV, accounted for
2.4 per cent of electricity generated in 2015,
while large-scale solar accounted for just
0.12 per cent. Bioenergy contributed 1.3 per
cent for the year.
following three months, he added. We will
decide the winner based on the lowest bid,
he said. While current rates for CSP stand at
around 15 cents per kilowatt hour, Al Tayer
June 2016
www.InfralinePlus.com
Zambia plans to have sub-Saharan
Africas cheapest electricity using
solar power
Disappointed by hydroelectric power
reduced by drought, Zambia is turning to
the sun. The landlocked country plans to
build two solar projects that will charge
the lowest tariffs in sub-Saharan Africa,
according to the Zambian Industrial
Development Corporation. Solar power
development comes as Lake Kariba,
the main source of Zambias electric-
ity, is at a just 12% of its capacity. The
worlds largest man-made lake lies on 59
the Zambezi River between the Zambian
and Zimbabwean border and produces
600MW and 750MW for the two coun-
tries, respectively. The two solar projects
will provide electricity priced at 6.02c/
kWh and 7.84c/kWh, respectively. Those
prices will remain fixed for 25 years, the
corporation said. Zambians using over
300kWh in their homes pay about 51c/
kWh on the current energy tariffs with a
standard 31c/kWh for commercial use.
said he was aiming to receive bids of around
8 cents. The facility will be completed either
in late 2020 or early 2021, depending on
the contract. An advantage of CSP is that
thermal heat, which is used to produce elec-
tricity, can be stored easily. This is makes
possible to produce electricity after sunset,
said Al Tayer. The plant will have several
thousand heliostats located around a tower
which will receive the radiation reflected by
the heliostats. The heat-transfer fluid is then
used to power the steam turbine to generate
electricity, he explained. The overall project
will be developed in a build and operate
model for a duration of 25 years.
 June 2016
www.InfralinePlus.com

InConversation
We are not for competitive
bidding in wind projects
Encouraged by the enthusiastic industry response to tariff-based competi-
tive bidding regime in the solar sector, the Union Power Ministry considers
introducing a similar dispensation for wind power projects too. However,
wind power industry does not seem to be prepared for the proposed
policy change. DV Giri, Secretary General, Indian Wind Turbine Manufac-
tures Association, says solar and wind are two different ball games. What
has worked in solar may not be replicated in wind. Giri shares industry
concerns about tariff bidding regime with InfralinePlus. Excerpts

Is your association open to will help the industry further

participating in tariff bidding for
supply of electricity from wind
projects?
Our association and industry are not for
competitive bidding. While we say this,
60 it is not about bidding part. The climate
required for proper bidding should have
all constituents like wind data, land
availability, Right-of-the-Way (ROW),
grid availability and grid stability. In the
absence of such details and without as-
surance of grid availability and without
flexibility to back down, wind power
competitive bidding will not make sense.
The Ministry of New &
Renewable Energy (MNRE)
has implemented Repowering
scheme for wind turbines. How
do you look at it?
MNRE invited suggestions on the Re-
Powering policy and the industry has
responded. In principle, it is a good idea
and done globally because land is a finite
source, small. First-generation turbines
need to be repowered by the state-of-the-
art, Mega Watt-sized ones. The challenge
is existing PPA with the utility and lack
of incentive for the land owner to give up
his land or go for the powering.
Do you think future advancement
in wind generation technology
bring down tariff?
Wind Turbine Technology Research
and Development and upgrade are an
ongoing process. Our thrust today is on
maximising energy generation in low
and medium wind regime by increasing
the hub height and enlarging rotor with
suitable Aero foil design to maximise
energy generation. Any increase in
hardware will increase the price.
Steel prices are ruling at historic
lows? Has the wind industry
been able to take advantage of
the lower material costs?
In wind energy one should not purely
rely on CAPEX and should look at
generation and cost of generation.
Major contributors to tariff is high
interest and other related EPC costs
which are going up. Steel prices are
historically low but Governments
imposition of Safeguard Duty and
Minimum Import Price has pushed
the tower cost by almost Rs 20 lakh
per turbine.
Apart from tariff bidding, what
are the aspects of the solar
policy that can be replicated in
wind generation?
Wind and Solar are very different and
to highlight, wind is site-specific and
DV Giri, Secretary General, Indian Wind Turbine
Manufactures Association
wind resource assessment happens over
long period. Wind Energy is also very
mature in technology, standardisation,
International Accreditation, Manufac-
turing in India, Localisation, contribut-
ing to Make in India, whereas Solar
is a more of a service- based economy
of imports.
What does the Government need
to do ensure that the target of
60,000 MW capacity by 2022 is
achieved?
MNRE is doing all it can do to intro-
duce National Renewable Purchase
Obligation (RPO) which will be bind-
ing in all the states, facilitating Inter-
State transactions, Wind Solar Hybrid
Repowering and Storage.
National RPO and Inter-State
transactions, supported by continuity
in Policy of AD and GBI, will hold the
key. One should not forget that almost
90-95 per cent of the investment is
driven by private sector.
For suggestions email at feedback@infraline.com
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 June 2016
www.InfralinePlus.com
InDepth
Financing woes may cast
shadow on Indias solar target
62
Financing, land acquisition and power evacuation key concerns
Tariff for solar still remain much higher compared to conventional power
By Team InfralinePlus
India is banking on its solar power
programme to bring down the carbon in-
tensity of the economy by 33-35 per cent
by 2030 from 2005 level. In that context,
the target of adding 1 lakh MW solar
capacity assumes critical significance.
But India could well miss the target if it
does not get its act together soon.
While the Centre has approved a
new debt recast scheme for restruc-
turing and repricing of outstanding
loans of power distribution companies
(Discoms) to improve liquidity in the
state power sector, a key bottleneck
to encouraging consumption of solar
power, problems still continue in other
areas including financing, land acqui-
sition and power evacuation. Solar
power target set by the government is
aggressive. To make it achievable and
functional, issues like ease of doing
business, grid suitability, encour-
agement to domestic equipment manu-
facturers and remunerative tariffs are
needed, said Tantra Narayan Thakur,
a former PTC India chairman and man-
aging director who is now operating as
an independent consultant.
A key hurdle to implementing mega
solar projects is the availability of
land at an affordable price. According
to industry estimate, for developing
1,000-1,500 MW solar capacity, 4,000
6,000 acre of land is required. But
today such huge tracts of land are
available at remote locations only.
Cost of acquiring land has gone four
times after coming into force of the
new Land Acquisition Act, which is
going to limit land availability for solar
projects to remote areas. But setting up
solar projects in such areas could throw
up new power evacuation challenges.
The NDA government has approved
a proposal for setting up 25 solar parks,

each with a capacity of 500 MW and
above, and ultra mega solar power
projects in various parts of the country
where large chunks of land can be
spared for this purpose. These parks
will be able to accommodate over
20,000 MW of solar power projects.
However, finding land for such projects
in areas where connectivity is already
in place may not be easy. If these parks
are developed in remote areas, they
are likely to get delayed due to lack
of basic infrastructure facilities like
roads, rails, power availability, telecom
networks, etc, which would make
transportation of equipment, machinery
and other materials to project sites dif-
ficult. That would in turn raise project
cost, making power expensive.
Financing issues
Public sector banks, which together
account for 70 per cent of lending, have
burnt their fingers by financing power
and other infrastructure projects and are
now reeling under bad loans. The plans
unveiled by the government for recapi-
talisation of banks do not offer much
hope of improvement in these banks
health. The government has promised to
infuse Rs 70,000 crore in public sector
banks in five years. However, Fitch Rat-
ing agency has in a recent update said
that these banks need more than 140 bil-
lion dollar if they are to be recapitalised
in a meaningful manner.
Following directive from the
Reserve Bank to clean up balance
sheets, majority of public sector banks
have done huge provisioning against
bad loans in the third quarter and as a
result, taken a hit on their bottom-lines.
The process is not yet over. So, raising
equity from market may not be easy
for these banks as private investors
are unlikely to take exposure to them.
Rating agencies have warned that they
may start downgrading public sector
banks if convincing recapitalisation
plans are not brought forth soon.
According to Crisil, a credit rating
agency, solar and wind sectors need
Rs 3 lakh crore over next five years.
Of this, about 70 per cent, or Rs 2 lakh
crore will have to be funded through
debt. But banks are not in a position to
lend so much money given their low
appetite for renewable power projects.
The ability of banks to fund longer-
tenure debt with attractive interest rates
is also constrained because of asset-
The government has
promised to infuse Rs
70,000 crore in public
sector banks in five
years. However, Fitch
Rating agency has in
a recent update said
that these banks need
more than 140 billion
dollar if they are to
be recapitalised in a
meaningful manner
June 2016
www.InfralinePlus.com
liability mismatch risks, the rating
agency said.
Large investors such as pension
funds, provident funds and insurance
companies have significant corpuses but
regulations allow them to invest only
in high-rated debt. The government
has yet to come up with a proposal
for debt funding beyond the banking
system. The government increased
solar mission target from 20,000 MW
to 1 lakh MW in 2014. As a first step
towards achieving this target, close to 7,
000 of state and National Solar Mission
projects were allocated in 2015. Of this
7,000 MW, 1,200 MW was allocated
under the NSM, while 5,900 MW was
allocated by states such as Telangana
and Tamil Nadu.
The solar market in India almost
doubled to 2,000 MW in 2015 as
compared to 800 MW in 2014. In
2015, the southern states of Tamil
Nadu, Telangana and Andhra Pradesh 63
emerged as the fastest-growing
markets, overtaking Gujarat and Raja-
sthan. Tariff for solar projects is falling
as a trend. Tariff of less than Rs 5 a
unit is the new normal. In the first two
rounds of NSM second phase bids in
November and Dec 2015, lowest offer
was Rs 4.63 a unit.
However, tariff for solar power
projects still remain much higher
compared to conventional generating
stations. For example, the delivered cost
of power generated from the mega solar
projects which will be commissioned in
AP and Rajasthan is in the range of Rs
8.4 a unit based on the power purchase
agreement (PPA) signed in 2015, which
is expensive compared to the power
available from grid.
Although there is hope that this
cost will decline to Rs 7.3 a unit in
coming days due to fall in equipment
cost as supply chains become more
effective and competition picks
up, that would still be much higher
compared to conventional plants. So,
the goal of grid parity for solar power
may remain elusive.
 June 2016
www.InfralinePlus.com
InDepth
Transmission bottlenecks
The milestone of 5,000 MW has
already been reached in solar power
and capacity is expected to cross 9,000
MW by the end of 2015-16. Capacity is
projected to further rise to 20,000 MW
by the end of 2016-17, far ahead of the
2022 deadline envisaged initially under
the NSM. However, existing transmis-
sion infrastructure is ill-equipped to ab-
sorb such bulk solar capacities. Further,
80 per cent of this new capacity will
be added by southern states of Tamil
Nadu, Andhra Pradesh, Telangana and
Karnataka where grid curtailment can
be as high as 15 per cent.
In contrast, Germany, which
meets almost 7.5 per cent of its power
requirement from solar energy, has a
robust grid infrastructure and its gas-
fired plants help it in balancing the grid.
So, it is clear that a lot more needs to be
done on the transmission infrastructure
fund if the target of adding 1 lakh MW
64
solar capacity is to be achieved.
Project delays add to
concern
Another important concern is the rising
number of project delays in the solar
sector. Out of a total 1,485MW of ca-
pacity allotted by states during October
2011-September 2014, nearly 50 per
cent projects with 680 MW capacity
missed their commissioning sched-
ule of December 2015. Out of this
680MW, nearly 10 per cent projects
remain stalled, according to industry
sources. The high percentage of proj-
ects getting delayed does not inspire
confidence that 1 lakh MW capacity
will be added by 2022.
India currently lacks long term
policy clarity which remains a key
challenge for such mega projects.
While central and state governments
have offered incentives to attract
investment into solar power, there
is no clarity if such policies will be
continued beyond the specified period.
That would act as a limiting factor for
the growth of large-scale solar projects.
Out of a total 1,485MW
of capacity allotted by
states during October
2011-September 2014,
nearly 50 per cent proj-
ects with 680 MW ca-
pacity missed their com-
missioning schedule of
December 2015. Out of
this 680MW, nearly 10
per cent projects remain
stalled, according to
industry sources
Skepticism about suitability
of solar power in India
Meanwhile, in a reflection of growing
scepticism about solar power, questions
are also being raised about suitability
of this electricity for meeting Indias
power requirement given that genera-
tion from solar plants falls drastically in
the evening when power demand shoots
up. But proponents of solar do not
find much merit in this argument and
underline the significance of solar plants
in meeting season peak power demand.
They say that hydel plants, which are
currently used to provide relief from
peak hour power shortage, achieve
peak generation during monsoon while
Indias seasonal peak comes during
summer when solar plants generate most
As intermittent sources of power
become cheaper and diversification for
energy security becomes a necessity,
like the rest of the world, India will need
to leave the comfort of almost com-
pletely relying on steady power sources
such as coal and nuclear and develop
a smart energy infrastructure, says
Bridge to India, a consultancy firm
focused on solar sector. Indias peak
power requirement will also slowly
move to the day time as we grow and
develop and cooling will play an ever
more important role. In the meantime,
measures such as dynamic pricing and
time of the day tariffs can help, it adds.
So, despite initial success and over-
whelming investors response, it is not
going to be easy for India to achieve the
target of adding 1 lakh MW, let alone run
these plants at optimum capacity. But the
situation is tricky for India as the success
of its emission reduction plan hinges on
solar capacity addition programme.
Although Indian solar market has
seen aggressive bidding in recent years,
with tariffs coming down to as low as
Rs 4.63 a unit, industry experts feel
that this trend is not sustainable. They
argue that investors need attractive
returns on equity which may become
difficult to generate if tariff keeps falling
at this rate. Anyway, most of the solar
projects are being funded by foreign
financial institutions like Germanys
Kfw and Japans SoftBank. They may
exit the Indian market if solar projects
here become unviable due to aggressive
bidding, experts warn.
For suggestions email at feedback@infraline.com

FinancialResults
Suzlon Q4 loss narrows to Rs 270.55 crore on lower expenses
Wind turbine maker Suzlon Energy Ltd
said that its consolidated loss in the quar-
ter ended 31 March narrowed to Rs.270.55
crore as against a loss of Rs.1212.06 crore
in the year-ago period, helped by lower
expenses and faster execution of projects.
Revenue, however, fell about 34% to
Rs.3,244.93 crore from Rs.4,908.83 crore
a year earlier. Total expenses fell 43.7% to
Rs.2972.50 crore as the company lowered
its fixed costs. The company had in April
merged its subsidiaries SE Blades Ltd, SE
Electricals Ltd and Suzlon Wind Interna-
tional Ltd with itself to optimize working
capital and reduce costs. For the full-year,
Suzlon reported a consolidated net profit
of Rs.482.59 crore compared with a loss
Indosolar posts net loss of Rs 29.77 crore for Q4
Solar cell maker Indosolar Ltd reported
a loss of Rs 29.77 crore for the March
quarter. The company had posted a net
profit of Rs 80.91 lakh in the quarter
ended on March 31, 2015. The solar
industry has witnessed turmoil owing to
significant downturn in global market due
to structural over supply situation, the
company said. However, the company said
the domestic market has been showing
an upturn lately due to the government
initiatives to enhance solar power genera-
tion capacity in the country. The company
expects to operate at the significant level
of capacity at least till July, 2016. The
IREDA half-yearly profit declines 6% to Rs 151 crore
State-run Indian Renewable Energy
Development Agency (IREDA) reported
a 5.56 per cent decline in net profit
at Rs 151.49 crore for the six months
period ended March 31. The company
had reported a net profit of Rs 160.42
crore in the same period a year ago. The
total income of the company declined
to Rs 568.01 crore from Rs 583.35 crore
in the year-ago period. Tt has paid an
interim dividend of Rs 150 crore to the
government on March 31. IREDA is a mini
of Rs.9157.69 crore a year ago. Full-
year income from operations fell 52% to
Rs.9508.45 crore. The previous year num-
bers include performance of Senvion SE,
which the company sold last year. Annual
sales volume at Suzlon Wind rose 149%
to 1,131 MW and market share during the
fiscal rose to 26% from 19% a year earlier.
Globally, the demand for renewables is
growing with a record 64 GW installation
and an investment of $329 billion during
calendar year 2015. The demand for clean,
sustainable and affordable power will
continue especially in emerging markets,
chairman and managing director Tulsi
Tanti said. The companys full-year order
book stood at 1,243 MW and is valued at
Rs.7,989 crore. Consolidated net debt,
excluding foreign currency convertible
bonds (FCCB), had come down to Rs.8,452
crore in 2015-16 from Rs.14,570 crore in
2014-15.
companys total income operations in the
March quarter was Rs 99.5 crore com-
pared to Rs 147.63 crore in same period
last year. Its total income in fiscal 2015-
16 was Rs 257.68 crore compared to Rs
295.97 crore in the previous financial year.
The company reported a loss of Rs 141.27
crore for the fiscal 2015-16.
ratna under the administrative control of
Ministry of New and Renewable Energy
(MNRE). The main objectives of IREDA
are to give financial support to specific
June 2016
www.InfralinePlus.com
Jain Irrigation Q4 net profit drops 22
percent
Leading micro-irrigation company Jain
Irrigation reported 22 per cent fall in its
standalone net profit at Rs 64.4 crore in
the fourth quarter of the 2015-16 fiscal on
poor sales. The company had posted net
profit of Rs 82.6 crore in the same quarter
of the previous fiscal. Domestic business
de-grew by 7.4 per cent. Exports revenue
continued to show negative growth and
de-grew by 10.7 per cent, Jain Irrigation
said. The companys total revenue declined
to Rs 1,480 crore in the January-March
quarter of the 2015-16 fiscal, as against
Rs 1,610 crore in the year-ago period. The
revenue from its micro irrigation, pipes
and food segments remained lower during
the fourth quarter of last fiscal ended 65
March 31. Domestic sales were also down
due to severe drought. However, its solar
business grew more than 48 per cent in
the said period. For the full 2015-16 fiscal,
the company reported a consolidated net
profit of Rs 88.27 crore as against Rs 55.4
crore in the previous year. Total income
increased marginally to Rs 6,455.9 crore
from Rs 6,314.6 crore. The company has
manufacturing plants at 28 locations
across the globe. It manufactures micro-
irrigation systems, PVC pipes, HDPE pipes,
plastic sheets, agro-processed products,
renewable energy solutions, among others.
projects and schemes for generating
electricity and/or energy through new and
renewable sources and conserving energy
through energy efficiency among others.
 June 2016
www.InfralinePlus.com

StatisticsRenewableEnergy
1) Programme/ Scheme wise Physical Progress in 2016-17 3. Commissioning Status of
(& during the month of April, 2016) Grid Connected Solar Power
Programme/ Scheme wise Physical Progress in 2016-17 Projects (as on 30-04-16)
(& during the month of April, 2016)
Total commis-
Cumulative Sr. sioned capac-
Sector FY- 2016-17 Achievements (as State/UT
No. ity till 30-04-16
on 30.04.2016) (MW)
Target Achievement
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW) 1 Andhra Pradesh 792.966
Wind Power 4000.00 .45 26867.11 2 Arunachal Pradesh 0.265
Solar Power 12000.00 235.00 6997.85
3 Bihar 5.1
Small Hydro Power 250.00 1.50 4275.45
BioPower (Biomass & Gasification 4 Chhattisgarh 93.58
400.00 0.00 4831.33
and Bagasse Cogeneration) 5 Gujarat 1119.173
Waste to Power 10.00 0.00 115.08
6 Haryana 15.387
Total 16660.00 236.95.05 43086.82
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ) 7 Jharkhand 16.186
Waste to Energy 15.00 0.00 160.16 8 Karnataka 145.462
Biomass(non-bagasse) 9 Kerala 13.045
60.00 0.00 651.91
Cogeneration
Biomass Gasifiers 2.00 0.00 18.15 10 Madhya Pradesh 776.37
- Rural 11 Maharashtra 385.756
- Industrial 8.00 0.00 164.24
Aero-Genrators/Hybrid systems 0.30 0.00 2.69 12 Odisha 66.92
SPV Systems 100.00 0.00 313.88 13 Punjab 405.063
66
Water mills/micro hydel 1.00 0.00 18.71
14 Rajasthan 1285.932
Total 186.30 0.00 1329.74
III. OTHER RENEWABLE ENERGY SYSTEMS 15 Tamil Nadu 1061.82
Family Biogas Plants (in Lakhs) 1.10 0.00 48.55 16 Telangana 527.843
Source: MNRE 17 Tripura 5
18 Uttar Pradesh 143.495
2) REC Trading Volume and Price for February 2016 19 Uttarakhand 41.145
Through IEX 20 West Bengal 7.772
Buy Cleared Cleared No. Of 21 Andaman & 5.1
Sell Bids Month of
REC Type Bids Volume Price Partici- Nicobar
Auction
(REC) (REC) (REC) (INR/REC) pants
22 Delhi 14.28

Solar 17,113 2,801,352 17,113 3,500 482 23 Lakshadweep 0.75

May 2016
Non-Solar 88,923 7,688,639 88,923 1,500 830 24 Puducherry 0.025
25 Chandigarh 6.806
Source: IEX
26 Daman & Diu 4
27 J&K 1
Through PXIL
28 Himachal Pradesh 0.201
Buy Bid Sell Bid MCP MCV
Month of 29 Mizoram 0.1
REC Type (No. of (No. of (INR / (No. of certificate)
Auction
certificates) certificates) Certificate) Qty. (MWH) 27 Others (PSU/ 58.311
channel partner)
Non Solar 7293 5253591 1500 72935 under Rooftop
May 2016
Solar 2970 707321 3500 2970
TOTAL 6998.853
Source: PXIL Source: MNRE
 June 2016
www.InfralinePlus.com

4. Status of Solar Pumps sanctioned during 2014-15 (As on 30.04.2016)

Sanctioned (S) Achievement (A)
Achieve-
S. No. State/UT Drinking Drinking Category Status
Irrigation Irrigation ment in %
water Water
1 Andhra 6725 1000 5315 500 75 A To be Completed in
Pradesh June 16
2 Gujarat 2500 500 2134 0 71 A under Implementation
3 Tamil Nadu 5150 500 2669 0 47 B under Implementation
4 Madhya 3000 750 1719 0 46 B under Implementation
Pradesh
5 Uttar 7100 1500 3700 0 43 B Closed with 3700
Pradesh Pumps
6 Karnataka 5225 500 2386 0 42 B under Implementation
7 Rajasthan 9902 2000 4000 0 34 B under Implementation
8 Chhattisgarh 2740 2000 864 456 28 B under Implementation
9 Odisha 2560 2000 0 1100 24 B under Implementation
10 Bihar 3516 1500 216 0 4 B under Implementation
11 Haryana 873 0 0 0 0 C Tendered
12 Jharkhand 1400 2000 0 0 0 C Tendered
13 Kerala 1380 0 0 0 0 C Tendered
67
14 Maharashtra 7540 0 0 0 0 C Order Placed
15 Telangana 4225 869 0 0 0 C Tendered
16 Meghalaya 0 100 0 0 0 D Cancelled
17 Arunachal 0 100 0 0 0 D To be Cancelled
Pradesh
18 Mizoram 0 11 0 0 0 D Cancelled
19 Punjab 1600 0 0 0 0 D No progress
Category:
Total 65436 15330 23003 2056
A- Work completed more than 50%
B- Work started but less than 50%
D - No
Grand Total 80766 25059 Progress / C- Tendered
cancelled
D - No Progress /cancelled
Source: MNRE
 June 2016
www.InfralinePlus.com

OffBeat
Surging crude prices spell
trouble for airlines
Indias domestic air traffic market posted the fastest growth in the world for
the 13th consecutive month in April
The Union Budget 2015-16 a mixed blessing for the aviation sector

68

By Team InfralinePlus

Aviation companies have been on a roll
because of the drastic fall in interna-
tional crude oil prices since June 2014.
However, after hitting their lowest
level this January, oil prices are surging
again, threatening to spoil airlines
party. Oil marketing companies have
hiked the price of aviation turbine fuel
(ATF) by a steep 9.2 per cent effective
June 1. Since fuel accounts for up to
40-45 per cent of Indian airlines oper-
ating costs, there is pressure on airlines
to pass on the increase to passengers.
So far, airlines have been able to
pass on the fuel cost increase to pas-
sengers because of the strong growth
in air traffic. But there is a limit to it.
If airlines keep on increasing ticket
prices, they could end up hurting pas-
senger demand, say analysts.
Coping strategy in a high fuel
price scenario
Though oil prices are still far below the
levels of above 100 dollar per barrel
they reached before crashing in June
2014 and passenger demand growth re-
mains robust, India aviation companies
should start bracing for tough times
ahead given the cyclical nature of the
industry, say analysts.
I do not see rising oil prices
impacting profitability of airlines in
the current financial year as domestic
passenger demand is strong. But it
is time for airlines to think of inno-
vative ways to manage the impact of
rising fuel price and not to sit on their
haunches, says Rajiv Chib, director,

aerospace and defence consulting,
PWC. Domestic air traffic grew by an
impressive 21 per cent in April.
Chib warned that if the industry
does not pull up its sock now, it could
face a serious viability problem by next
year and might be forced to seek gov-
ernments help if oil prices rise too fast.
Taking cues from the international
market, oil companies increased jet fuel
price in the fourth straight month in
June from Rs 3,945.47 to Rs 46,729.48
per kilolitre. Flying has also become
costlier due to the introduction of a
0.5 per cent Krishi Kalyan cess by
Finance Minister in this years budget,
which is also effective from June 1.
Significantly, Indias domestic air
traffic market posted the fastest growth
in the world for the thirteenth consec-
utive month in April. It grew by close
to 22 per cent during the month.
Low ATF fuel price has fueled
growth in air traffic
The high growth was because of lower
fuel prices and substantial increase in the
number of flights operated by the domes-
tic carriers. The lower air fuel prices
have acted as a stimulus for air traffic
growth over the past few months, en-
couraging people to take flights for their
summer holiday travel, experts said.
In April, ticket prices were down by
nearly 35 per cent on domestic and 16
per cent on international routes com-
pared to the same period the previous
year, fueling a strong growth in pas-
senger traffic.
Union budget 2015-16
The Union Budget 2015-16 proved
to be a mixed blessing for the avia-
tion sector as the governments push
to improve regional connectivity by
reviving 160 airports was nullified by a
hike in excise duty on aviation turbine
fuel. In a bid to give a boost to regional
connectivity, Finance Minister Arun
Jaitley allocated a sum of Rs 50-100
crore to revive 160 non-functional
airports across the country in partner-
Taking cues from the
international market, oil
companies increased
jet fuel price in the
fourth straight month in
June from Rs 3,945.47
to Rs 46,729.48 per
kilolitre. Flying has also
become costlier due
to the introduction of
a 0.5 per cent Krishi
Kalyan cess by Finance
Minister in this years
budget, which is also
effective from June 1
ship with state governments. Plans to
build no-frills, low cost airports have
also been envisaged in the Draft Civil
Aviation Policy.
As the sector cheered the
announcement, it soon turned out that
the budget was not all roses. The excise
duty on air turbine fuel was hiked from
8 to 14 per cent, which partly eroded
the cushion that airlines were enjoying
due to the steep fall in crude oil price.
At a time when ATF in the domestic
market already cost more than in other
June 2016
www.InfralinePlus.com
countries, the move to raise excise
duty did not go down well with the
industry. If ATF prices surge too fast,
the increased excise duty could start 69
biting airlines, potentially forcing the
government to reduce excise duty and
soften the impact of high fuel prices on
the industry, said analysts.
At the same time, to give a boost
to Make in India programme, Jaitley
accepted a long-pending demand of
the industry to rationalise taxation on
maintenance, repairs and overhaul
(MRO). The Finance Minister
announced sops include zero service
tax on MRO, services, simplification
of import processes for aircraft spares,
exemption on customs duty for mainte-
nance tools and tool kit and removal of
the one year window restriction period
for using duty free parts.
Civil Aviation Minister Ashok Gaja-
pathy had earlier said that the finance
ministry has been sympathetic to the
demand for tax relief to the MRO
industry. The earlier tax regime meant
that Indian MROs were 20-30 per cent
costlier compared to other companies,
leading even airlines here to repair their
aircraft in foreign countries, including
Sri Lanka and Singapore. The size of
the domestic MRO industry is esti-
 June 2016
www.InfralinePlus.com
OffBeat
mated at 750 million dollar.
Meanwhile, the government has
reduced budgetary allocation to the
civil aviation ministry by 17 per cent
to Rs 4,417 crore. Out of this, state run
airlines will be given Rs 2,065 crore
as grant, less than half of Rs 4,300
crore that they had demanded from the
government. Before the crash of June
2014, high oil prices had haemorrhaged
finances of airlines, many of them got
back into the black in 2015-16.
An analyst said that the actual
impact of excise duty hike will be
much higher, since sales tax is cal-
culated over and above excise duty.
State-level sales tax rates could be
anywhere between 4 per cent and 30
per cent. Airlines have been pleading
for rationalisation of sales tax rates. Ad
valorem sales tax rates could have cas-
cading impact on the price of jet fuel.
However, excise duty on ATF for
supply to scheduled commuter airlines
70
from regional connectivity scheme
airports will remain unchanged. Riding
high on strong air traffic growth,
airlines so far have been able to pass on
increase in the fuel cost to passengers.
However, passenger demand could get
impacted if ticket prices rise too much.
Shares of all three listed airlines
Jet Airways (India) Ltd, InterGlobe
Aviation Ltd (IndiGo) and SpiceJet
Ltdfell after the Finance Min-
ister announced excise duty hike on
ATF. According to International Air
Transport Association (IATA), airlines
fuel bill will fall to 127 billion in 2016,
which will represent less than 20 per
cent of their total operating costs, for
the first time since 2004.
IATA has projected average price of
55.4 dollar per barrel this year, and 45
dollar per for the Brent crude oil price.
Meanwhile, credit rating agency ICRA
says the airlines are providing deep dis-
counts by utilising the buffer provided
by lower fuel prices, and maintaining
healthy passenger load factor (PLF).
The current scenario of comparatively
steady yields and lower costs has given
rise to some improvement in revenue
per available seat kilometre (RASK)-
cost per available seat kilometer
(CASK) spread, it adds.
With rising competition, the credit
rating agency further says, a strategy
revisit by the airlines is necessary to
maintain market position, possibly by
offering differentiated services, better
connectivity and competitive pricing.
However, it adds that the prospects of
the Indian aviation industry in the near
to medium term are largely dependent
on the movement in the crude oil prices
and foreign exchange besides reform
measures. However, underpinned by
the improving operating performance,
It is clear that the
aviation industry is not
factoring in a sharp rise
in ATF price in 2016-17,
a scenario that now
looks too optimistic
given the surge in
oil prices in recent
months. The way crude
prices have surged
in recent months,
projections on average
ATF price in 2016 may
prove quite off the mark
the balance sheets of Indian carriers are
expected to improve in FY2017.
A recent FICCI-KPMG report says
that steps taken to revive and opera-
tionalise around 160 airports in India,
if chosen carefully, will improve air
connectivity to regional and remote
areas. Public-Private Partnerships
(PPP) in the sector will get substantial
support from the state in terms of
financing, concessional land allotment,
tax holidays and other incentives.
The report further states that the
National Civil Aviation Policy (NCAP
2016) is likely to provide a significant
fillip to the industry. The various
fiscal and monetary incentives, liberal
policies focused on ease of doing
business and enhanced push for
regional and global connectivity are
extremely positive.
On the other hand, Brent crude has
risen to nearly 50 dollar per barrel from
the lowest level of 27.88 dollar per
barrel on January 20, registering 85 per
cent increase. World Bank data show
that the price of Brent crude averaged
at 47.1 dollar per barrel in May, sharply
up from 42.3 dollar per barrel in April.
Data show that global ATF price on
June 3 was 59.1 dollar per barrel, 12.7
per cent higher compared to a month
ago, though still 23.8 per cent lower
from a year ago.
Indian Oil Corporation has raised
ATF price by 20 per cent since March
10 to align it with the international
market. The applicable ATF price, which
was 38,785.46 per kilolitre on March
10, has been hiked to Rs 46,729.48 per
kilolitre with effect from June 1. It is
clear that the aviation industry is not
factoring in a sharp rise in ATF price in
2016-17, a scenario that now looks too
optimistic given the surge in oil prices
in recent months. The way crude prices
have surged in recent months, projec-
tions on average ATF price in 2016 may
prove quite off the mark.
Therefore, the industry needs to
pull up its socks and start preparing
for a high ATF price scenario. In
other words, they must come out with
ideas as to how they can minimise the
impact of surging fuel price on their
bottomlines. Otherwise, the industry
could find itself in a situation similar
to what prevailed in 2013. ATF price
had reached the high of Rs 75,031
per kilolitre in September 2013 on
the back of rising crude oil prices
and depreciating rupee. If CAD goes
out of control because of a spike in
crude oil price, rupee may come under
pressure, potentially forcing oil com-
panies to go for a sharp hike in jet fuel
price, say analysts.
For suggestions email at feedback@infraline.com

Reports & Studies
India ranks 3rd in Renewable Energy Country Attractiveness Index
Indias renewable energy sector has been
ranked third in the Renewable Energy
Country Attractiveness Index (RECAI)
with China at second and the US on
top. The so-called emerging markets
now represent half the countries in the
40-strong index, including four African
markets featuring in the top 30. Just a
decade ago, only China and India were
attractive enough to compete with more
developed markets for investment, EY said
in the report. While the top three countries
maintained their ranking, Chile, Brazil
and Mexico climbed higher in the index
to be ranked in the top 10 at the fourth,
sixth and seventh, respectively. Germany
at fifth and France at eighth fell in the
Timely pass-through of hike in power costs on account of coal price rise remains critical for discoms: ICRA
Coal price hike announced by Coal India is
likely to result in 6 paise per unit rise in cost
of power procurement by distribution com-
panies. Following increase in cost of power
India global 5th in green energy jobs, China on top
India ranks fifth in the world in renewable
energy (RE) job creation, with 416,000
employed in the sector during 2015. In the
world, 8.1 million persons are employed in
the clean energy space. China tops the list
with 3.5 million, followed by Brazil with
918,000. According to the International
Renewable Energy Agencys (Irena)
Annual Review 2016, there was a five per
cent increase over a year before in the
sector, with new jobs being created even
as employment in the broader energy
sector falls. This increase is being driven
by declining RE technology costs and
enabling policy frameworks. We expect
latest ranking. Indias position is thanks
to the strong focus of the government on
renewable energy as well as timely imple-
mentation of renewable energy projects.
The report also suggests that with the
procurement, the ability of the distribution
companies to pass on such variation to the
consumers through timely tariff adjustment
under fuel and power purchase cost adjust-
ment framework remains important from
their cash flow perspective, feels ICRA.
ICRA estimates that the recent domestic
coal price hike would result in an increase
in cost of thermal generation by 9-10 paise
per unit. Coal based generators have an
automatic pass through of fuel costs and it
accounts for about 60% of the total power
procured by utilities. The rest would be a
partial pass-through by independent power
producers with competitively bid power
purchase agreements which account for
this trend to continue as the business
case for renewables strengthens and as
countries move to achieve their climate
targets agreed in (the) Paris (agreement),
said Adnan Z Amin, director-general of
Irena. In this country, solar and wind
energy markets have seen substantial
June 2016
www.InfralinePlus.com
growing number of jurisdictions contract-
ing utility-scale renewable energy through
competitive auction processes, renewable
energy is increasingly proving its mettle
against conventional energy genera-
tion. The index ranks 40 markets on the
attractiveness of their renewable energy
investment and deployment opportuni-
ties, based on a number of macro, energy
market and technology-specific indicators.
The methodology has been refreshed in
the May edition to reflect greater focus
on energy imperative, policy stability and
routes to market.
the balance 40%. This translates into about
6 paise per unit increase in power procure-
ment cost for utilities on an all India basis,
said Sabyasachi Majumdar, senior vice
president at ICRA Ratings. Assuming an 71
average aggregate technical and commer-
cial loss of around 25%, we estimate the
impact on cost of power supply and retail
tariffs at around 8 paisa per unit or a 1.4%
tariff hike, Majumdar. Coal India issued a
notification on May 29, 2016 revising prices
of pit head run of mine prices of all grades
of non-coking coal effective from midnight
of May 30, 2016. The price of thermal grade
supplied to power sector has been increased
by about 15-18%.
activity, as the governments ambitious
RE targets are translated into concrete
policy frameworks, Irena said. Central
and state auctions for solar photovoltaics
(PV), for instance, have resulted in
installation of 1.9 gigawatt (Gw) in 2015
and an impressive pipeline of 23 Gw.
Solar PV employs an estimated 103,000
people in grid-connected (31,000 jobs)
and off-grid applications (72,000 jobs)
With increasing domestic demand, local
companies are utilising their production
capabilities and several foreign companies
are interested in investments, it said.
 June 2016
www.InfralinePlus.com
People in News
S K Sharma takes charge as NPCIL CMD
Eminent scientist S K Sharma has
taken charge as the Chairman and
Managing Director (CMD) of Nuclear
Power Corporation of India Limited
(NPCIL). NPCIL is responsible for design,
construction, commissioning and operation
Indraprastha Gas Ltd appoints E S Ranganathan as Managing Director
72
E S Ranganathan has been appointed as the
new Managing Director of Indraprastha Gas
B K Panda appointed Coal Mines Provident Fund Commissioner
Senior bureaucrat B K Panda has been
appointed as Commissioner of Coal Mines
Provident Fund Organisation based in
Dhanbad. Panda is a 1988 batch officer
of Indian Ordnance Factory Service. The
Appointments Committee of Cabinet has
approved appointment of Panda to the
post for five years, an order issued by
Department of Personnel and Training said.
The Coal Mines Provident Fund Organisation
provides social and financial security to
thousands of employees working in coal
industry.
of nuclear power reactors. Sharma has
been appointed to the post for a period
of five years. Sharma completed his BE
(Electronics) degree from the Maulana Azad
National Institute of Technology (MANIT),
Bhopal in 1980 and graduated from the 24th
batch of Bhabha Atomic Research Centre
Training School in 1981. He started his
career at Rajasthan Atomic Power Station.
He has held several key positions in Indian
nuclear power stations, including that of
site director at Rawatbhata Rajasthan site,
before assuming the position of Director
(Operations) in 2015. He has also worked
in a key position for improving the safety
and reliability of nuclear power stations
across the world in association with an
international team of nuclear experts in
World Association of Nuclear Operators.
Ltd, the sole retailer of CNG to automobiles
and piped cooking gas to households in the
national capital. Ranganathan replaced
Narendra Kumar, who has returned back to
the companys parent firm, GAIL India Ltd.
Ranganathan, an instrumentation and con-
trol engineer possessing and an MBA with
specialisation in Marketing, has taken over
the new assignment, the company said in a
statement. Before joining the current assign-
ment, he was posted as Executive Director in
GAIL. IGL is a joint venture of GAIL (India)
Ltd and Bharat Petroleum Corp Ltd (BPCL)
with government of Delhi holding a 5 per
cent equity stake.
Cairn India MD and CEO Mayank
Ashar resigns
Cairn India, the petroleum exploration
arm of London-listed Vedanta Resources
announced its managing director (MD) and
chief executive officer (CEO) Mayank Ashar
had resigned for personal reasons with
effect from June 5, 2016. The company
has named chief financial officer (CFO)
Sudhir Mathur as the interim CEO the
fourth change of guard since Vedanta
completed Cairns acquisition in December
2011. Mathur will continue to work closely
with the leadership team managing the
business under the guidance of the board,
the company said. Ashars two-year term
was to expire later this year. His resigna-
tion comes a few days after Cairn India
extended the repayment period for its
$1.25-billion loan to a group company by
two years but at a higher interest rate.
Cairn India had last month reported a
historic loss of Rs 10,948 crore for the
fourth quarter ended March as fall in crude
oil prices pulled down performance. It
also undertook an impairment of Rs 11,674
crore for the financial year ended March.
Ashar took over as MD and CEO in Novem-
ber 2014 from the then acting CEO, Mathur.
Before that, P Elango had served as interim
CEO from August 2012 to May 2014. The
company said Ashar will provide transition
support to Mathur through June 30. The
board expresses its appreciation for Ashars
contribution during his association with the
company. Under Ashars leadership, Cairn
India has delivered a resilient performance
in a challenging business environment,
the company said. Cairn India chairman
Navin Agarwal said Ashar had a positive
stint at Cairn. He leaves Cairn India in the
hands of a strong leadership team. Cairn
India shares the countrys vision for energy
security and I am sure Mathur and the
team will continue to strongly pursue the
organisations goal, he said.
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