August 2016

Volume 5 | Issue 4 | `100

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The Complete Energy Sector Magazine for Policy and Decision Makers

G rowth for power & coal

S tressed solar

T ransforming India
Govt announces
draft Solar-Wind
Hybrid policy

Transmission push
on the cards with private
participation

Satyajit Ganguly Salil Garg Ramakrishnan M Saurabh Kumar

Managing Director Director-Corporate Ratings Vice President Managing Director
ONGC Tripura Power Co. Ltd. India Ratings The Smart Cube EESL
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Key Highlights
Sector Performance Review: FY 2015-16
Key Policy and Regulatory updates
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Top management with contact details
Direct exposure to top decision makers and influencers

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InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
August 2016 | Volume 5 | Issue 04

Editors Letter Editorial

Shashi Garg, Editor
August 2016, perhaps, will go down as one of the most
important months in the history of economic reforms in
India. After a lot of debate and deliberation, the Rajya News Team
Sabha finally passed the GST Bill on August 3. The Chetan Gupta
new tax regime will pave the way for a single unified
and uniform tax regime in India, something which has
been a long time demand of the industry. While clarity Analyst
is yet to emerge on the tax rate and various other issues Mohd. Arif
need to be ironed out, the economy is gung-ho about
the passing of the GST Bill. From the perspective of
investors, both domestic and global, the idea of one- Content Consultant
nation-one-tax would not only reduce the level of taxes but will also improve ease News Monster
of doing business.
Coming to the energy sector, the new GST regime is expected to be a mixed bag.
Renewable sector, currently a beneficiary of several indirect tax exemptions, may
be a big loser as a result of GST since the bill proposes to revoke most of the
exemptions. For the oil and gas sector, products like kerosene, naphtha and LPG Business Development
will be under the ambit of GST, while five items in the basket crude oil, natural
gas, aviation fuel, diesel and petrol have been excluded during the initial years. Manoj Narang, Director
Dual tax regime for the oil and gas industry is expected to make compliance Tel.: 0120-6799106 / 100
difficult and hence, may impact the industry negatively. Email: manoj.narang@infraline.com

On the other hand, power sector stands to benefit if is brought under the ambit
of GST. It is estimated that a GST rate of 18 per cent for the power sector could
result in 15-20 per cent reduction in retail tariff. Further, a cut in power cost will also
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 August 2016
www.InfralinePlus.com

InfralinePlus

Contents
Editors Letter
1

Cover Story 35
GST: A mixed bag for energy, infra
sectors
History was made on 3rd August, 2016, with
India taking a giant leap towards a single
unified market after the Rajya Sabha approved
the Goods and Services Tax (GST) a reform
considered almost three decades back.
Taxation experts say that the GST will transform
the Indian economy by giving rise to a common
market and reduce the cascading effect of tax
on the cost of goods and services.

2
35
Power Coal
4 20
News Briefs p4 News Briefs p20
Expert Speak: Satyajit Ganguly, Managing Director, In Conversation: Salil Garg, Director-Corporate Ratings,
ONGC Tripura Power Company Ltd p8 India Ratings p23

In Depth: Govt seeks transmission push with private Expert Speak: Ramakrishnan M, Vice President and
participationP10 Mayank Taneja, Senior Analyst, The Smart Cube p25

In Depth: Water management for thermal plants need of In Depth: Coal linkage auction for non-regulated sector
the hour P14 gathers steam p27

Statistics p18 In Depth: Flexibility in utilisation of domestic coal to

bring down cost of power generation P30
Statistics p33

Topics Covered Topics Covered

Power transmission Coal linkage
Thermal power generation Coal imports
Power reforms Domestic production
 August 2016
www.InfralinePlus.com

Oil and Gas Renewable

41
News Briefs p41
In Depth: A long road ahead for CBM to be a potential
star p44
In Depth: LNG imports critical to rescue gas-based
capacity p48
53
News Briefs p53
In Conversation: Saurabh Kumar, Managing Director,
EESL p58
In Depth: Coming together of solar and wind: Govt
announces draft Hybrid policy p62

Statistics p51 Statistics p65

Topics Covered Topics Covered

Coal Bed Methane Energy efficiency
3
LNG imports LED Lighting
Natural gas demand Solar and wind

Expert Speak/Interview

Satyajit Ganguly Mayank Taneja

Managing Director, ONGC Tripura Senior Analyst
Power Company Ltd The Smart Cube Off Beat
67
In Depth: Prime Minister Narendra Modis Cabinet gets
some new faces

Reports & Studies

71
People in News
Salil Garg
Director-Corporate Ratings
Saurabh Kumar,
Managing Director
72
India Ratings EESL
 August 2016
www.InfralinePlus.com
NewsBriefs | Power National
Indias total power generation capacity crosses 300 GW mark
Indias total installed power generation
capacity has crossed the 300-Gw mark,
which includes 42 Gw of renewable energy
sources, including solar and wind. Indias
total power generation capacity was
3,03,118.21 Mw as on June 30, 2016, which
includes 42,848.43 Mw, stated Power Min-
States pull the plug on mega power equipment tender
The Centres plan to procure electrical
equipment on a mass scale under its two
flagship schemes for power supply reforms
in states might not take off, even though
4 tenders for the same had been bid out.
This is because state governments are not
willing to follow a uniform norm. The central
governments plan to bring down the cost of
power equipment, and eventually the power
tariffs, faced stiff resistance from four states
Uttar Pradesh (UP), Maharashtra, Madhya
Pradesh (MP), and Chhattisgarh of which
three are Bharatiya Janata Party (BJP)-
ruled. Power is a subject in the concurrent
list and state governments have so far been
procuring equipment themselves. The Union
PowerGrid approves investment proposals of Rs 2,731 crore
Power Grid Corporation has approved
investment of Rs 2,731 crore in various
projects, including setting up of a
transmission system for solar park at
Bhadla in Rajasthan for Rs 1,429.38 crore.
The board of the company approved
as many as 11 proposals in its meeting
held on July 20. The transmission
system for solar park at Bhadla in
Rajasthan at an estimated cost of Rs
1,429.38 crore with commissioning
schedule of 30 months from the date
of investment approval is among the
approved proposals. The investment
approval also include transmission
system strengthening for independent
ister Piyush Goyal in a written reply to the
Rajya Sabha on Monday. Private sectors
cumulative installed power generation
capacity was 1,24,995.51 Mw as on June
30, 2016 while central plants account
for 76,296.76 Mw and state capacities
101,825,94 Mw. The minister also stated
that the country has generated 12.01
billion units of electricity from renewable
energy sources till June-end this financial
year while the output was 65.78 billion
units in 2015-16 and 61.78 billion units in
2014-15. The target from clean sources in
2015-16 was 70 billion units. The minister
also told the House that 1,107.82 billion
units of electricity were generated last
financial year.
Budget for 2016-17 had allocated Rs 5,500
crore for Integrated Power Development
Scheme for urban power supply and Rs 3,000
crore for the Deendayal Upadhyay Gram
Jyoti Yojana for rural power supply.
Jaypee Group in talks to sell stake
in power transmission unit
Debt-laden Jaypee Group, which has so
far sold power assets worth Rs.11,900
crore, may get luckier and get more
funds as it enters into discussions
with JSW Group for selling its stake
in Jaypee PowerGrid Ltd. The group
is also likely to get more funds from
its asset sale of Bina thermal power
plant than the stated Rs.2,700 crore.
On 18 July, group company Jaiprakash
Power Ventures Ltd agreed to sell its
500 megawatt (MW) Bina thermal
power plant to JSW Energy Ltd for
an enterprise value of Rs.2,700 crore.
Separately, Jaiprakash Power Ventures
has also started discussions to sell its
74% in power transmission subsidiary
Jaypee PowerGrid Ltd. These deals are
critical for Jaypee Group as it struggles
to reduce its debt to stay afloat. As on
31 March, Jaiprakash Power had a debt
of Rs.22,414.94 crore.
power projects in Chhattisgarh and other
generation projects in Western region at
an estimated cost of Rs 333.17 crore with
commissioning schedule progressively by
March, 2019. The company will also invest
in transmission system strengthening
associated with Mundra Ultra Mega Power
Project (Part-B) at an estimated cost of
Rs 300.94 crore, with commissioning
schedule of 29 months. The projects also
include Western Region Strengthening
Scheme XVI at an estimated
investment cost of Rs 150.99 crore, with
commissioning schedule of 24 months
from the date of investment approval.

Nationwide powermen strike on Sept 2 against Electricity (Amendment) Bill
Public sector power employees have an-
nounced a nationwide strike on September
2 over the Electricity (Amendment) Bill. In a
meeting held recently, National Co-ordination
Committee of Electricity Employees and
Engineers (NCCOEEE) flayed the Centre for
allegedly failing to address the burning issues
Centre asks States to offer power to industries at fixed rates
The Centre has asked all States to offer
power to industries at a fixed rate for
a fixed period to attract investments.
Power Minister Piyush Goyal said in Lok
Sabha that the country was producing
sufficient power and hence efforts should
be made by state governments to attract
industries by offering uninterrupted power.
Industries need uninterrupted power. If
we can guarantee power, investment will
come for industries. Therefore, I would
like to request all members to persuade
their respective state governments to
offer regular power to industries for a
fixed rate like Rs. 4, Rs. 4.5 or Rs. 5 per
unit for 10 or 15 years, he said. Goyal said
No final decision on scrapping SPVs for four UMPPs
No final decision has been taken to
scrap special purpose vehicles set up
for four ultra mega power projects in
Maharashtra, Odisha, Karnataka and
Chhattisgarh. No final decision has
been taken to wind up the four special
purpose vehicles (SPVs), Power Minister
Piyush Goyal said in a reply to the Lok
Sabha. Activities in the ultra mega power
projects (UMPPs) -- Maharashtra, Odisha
(second additional UMPP), Karnataka and
Surguja in Chhattisgarh -- are stuck due
to various reasons, including agitation
by local people and non-identification of
a suitable site. Goyal added that around
Rs 96.82 crore has been spent by SPVs
of the energy sector even as they labeled the
Bill as anti-people. The powermen had earlier
sought discussion on the modified Electricity
(Amendment) Bill with all the stakeholders
for an amicable settlement of the issues.
The meeting at New Delhi was attended by
the representatives of Electricity Employees
Federation of India, Indian National Electric-
ity Workers Federation, All India Federation
of Electricity Employees, All India Power
Engineers Federation (AIPEF), TNEB Work-
ers Union, All India Power Mens Federation
(AIPF) and All India Federation of Diploma
Engineers. AIPEF Chairman Shailendra
Dubey said NCCOEEE resolution mentioned
that the central government was playing hide
and seek on the Electricity (Amendment) Bill.
as per information reported by the States
to Central Electricity Authority, energy
shortage at all-India level was reduced to
2.1 per cent during 2015-16 which is the
lowest in last two decades.
developers, he said. Out of the four
Sasan are in operation, the minister said.
set up for these UMPPs. According to the
minister, the Chhattisgarh government
has said it in not keen on setting up
of 4,000-mw UMPP in the state. Four
August 2016
www.InfralinePlus.com
National
Piyush Goyal inducts Urban Vidyut
Abhiyantas to monitor Integrated
Power Scheme
Union Power Minister Piyush Goyal
recently inducted Urban Vidyut
Abhiyantas (UVAs) to monitor the
implementation of the Integrated
Power Development Scheme (IPDS).
The Minister said the UVAs will take
the work on a mission mode, similar
to the Grameen Vidyut Abhiyantas
deputed for the Deen Dayal Upadhyay
Gram Jyoti Yojana. Goyal further said
they will upload their reports on the
implementation of the scheme on
the URJA mobile application of the
Ministry of Power in an effort to increase 5
transparency. Some of the UVAs will be
inducted in the State power distribution
companies. These UVAs have an
experience of 3-15 years in project
management/distribution franchisee/
infrastructure sector. The IPDS is part
of the Ministry of Powers efforts to
ensure 24x7 electricity availability to
all by 2022 and has a total outlay of Rs
65,424 crore.
UMPPs, namely Sasan in Madhya Pradesh,
Mundra in Gujarat, Krishnapatnam in
Andhra Pradesh and Tilaiya in Jharkhand,
have already been transferred to the
awarded UMPPs, two namely Mundra and
The minister said 6x660 mw Sasan UMPP
in Madhya Pradesh, which was awarded
and transferred to Reliance Power in
2007, is fully commissioned. The 5x800
mw Mundra UMPP in Gujarat, which was
awarded and transferred to Tata Power in
2007, also stands fully commissioned,
he added.
 August 2016
www.InfralinePlus.com
NewsBriefs | Power States
No hike in power tariff for urban domestic consumers in UP
Urban domestic power consumers in poll
bound Uttar Pradesh got a major sop when
the UP Electricity Regulatory Commission
(UPERC) announced no hike in power tariff
for financial year 2016-17. The sop extended
to rural consumers, including those in
Plan ready to meet Maharashtra power needs till 2040
The state energy ministry has prepared a
plan to meet the power requirements of
the state till 2040. According to energy
minister Chandrashekhar Bawankule,
distribution sector will need 22,000 crore
6 in the coming 25 years, while transmission
sector will require 15,000 crore. On the
generation front, the MSEDCL will sign
power purchase agreements (PPAs) for
4,000MW in the coming years. Rest of the
requirement will be met through renewable
sources. At present MSEDCL is grappling
with oversupply and will have 6,000MW
surplus power even in 2019-20. Bawankule
clarified that the 4,000MW PPAs will be
utilized after 2025. Earlier, in the state
No hike in Punjab power tariff
With the Punjab Assembly poll round the
corner, the PSERC has brought relief for
the 85 lakh power consumers in the state.
For a second consecutive year, the power
tariff for the year 2016-17 has been left
unchanged. The state electricity regulatory
commission has also announced a number
of sops for two important categories of
consumers a portion of agriculture pump
set consumers get free replacement of
their pumpsets, while all categories of
industrial consumers will get a relief of Rs
0.36- Rs 0.11 per unit in power tariff. The
new rates will be applicable from August
1. The power tariff for the domestic, non-
residential consumers and bulk supply
Bundelkhand region where tariff for tube
well users have been brought down to Rs
160/BHP/month to Rs 100/BHP/month.
Commercial establishments like shops and
commercial complex and malls will see a
hike of 7.24% with the average tariff being
increased from 7.47 per unit to 8.01 per
unit. The new tariff will come into effect
expectedly from August 10 soon after UP
Power Corporation Limited (UPPCL) issues
a notification in a day or two. Announcing
the decision, UPERC chairman, Desh Deepak
Verma said that the tariff has been designed
so as to compensate the rising cost of
distribution companies without putting
excessive load on the consumers.
assembly, Bawankule admitted that
MSEDCLs financial position was not good.
Its arrears due from consumers have
reached 20,000 crore, of which 13,000
crore are owed by farmers. Lift irrigation
schemes (LISs) and public water works are
also major defaulters.
the consumers. Bains in fact projected
consumers has remained unchanged,
although the power subsidy bill of the
Punjab State Power Corporation Limited
will swell from Rs 5,600 crore last fiscal
National
Gujarat offers to sell Railways power
at low rates
Gujarat government has offered to sell
Indian Railways its surplus electricity
for running trains and other related work
across the country. Gujarats state-owned
units currently generate around 1500 MW
to 2000 MW electricity which is expected
to increase to 4,000 MW in the coming
years. The surplus electricity can be
supplied to the Railways at economical
rates through the national grid. In 2013-
14, the railways paid Rs 10,000 crore for
using around 4000 MW electricity across
the country. If Gujarat sells its surplus
power to the railways, it can be of mutual
interest to both. The state-owned power
generating units currently have unused
capacity of around 1500 MW to 2000 MW.
In 2013-14, Indian Railways used over
17.5 billion units of electricity during 2013-
14, equivalent to about 4000 MW and paid
about Rs10,000 crore towards electricity
charges, says an analysis of Vidyut Energy
(a unit of the Indian Railways). This 4000
MW used by the railways in 2013-14
constitutes about 1.8% of the countrys
total power generation.
to Rs 6,364 crore this year. Announcing
the detailed power tariff order, Punjab
State Electricity Regulatory Commission
(PSERC) chairman DS Bains said the
decision to not increase the tariff was
not based on political considerations, but
because the state was power surplus
and thus, there was no need to burden
the state power utility to have a revenue
surplus of Rs 165.94 crore. He said the
PSPCL would save a total of Rs 270 crore
this year Rs 120 crore through interest
payment and Rs 150 crore towards bringing
down transmission and distribution losses
to 14.5 per cent by the end of this fiscal.

France and Ireland eye 1 billion euro power link by 2025
France and Ireland plan to build a 1
billion euro ($1.10 billion) cable which
would allow electricity to flow between
the two countries by 2025, Irelands
grid operator said as French President
Franois Hollande visited the country.
Ireland currently imports electricity
World Bank stops funding worlds biggest power plant plan
The World Bank has suspended funding
to help develop a $14 billion hydropower
project in the Democratic Republic of Congo,
a stage in what could become the worlds
biggest power plant, after a disagreement
with the nation over implementation
plans. The announcement to halt financing
the Inga 3 project followed the Congos
decision to take the project in a different
strategic direction to that agreed between
the World Bank and the government in
2014, the Washington-based lender said
in a statement. The World Bank agreed to
$73 million in technical assistance for the
first phase of the $100 billion Grand Inga
Russia and Bangladesh sign $11.38 billion loan deal for nuclear plant
Russia and Bangladesh have signed an
$11.38 billion loan agreement, paving the
way for the main construction work of
Rooppur Nuclear Power Project. The inter-
governmental loan agreement was signed
in Moscow, according to a statement from
the ASE Group of Companies, the general
contractor of the project. The Russian
loan covers 90 percent of the project cost
and carries an interest rate of LIBOR plus
1.75 percent. The interest rate will not
exceed 4 percent. The repayment period
is 30 years, including a grace period
of 10 years. Disbursement will begin
in 2017. Sergei Anatolyevich Storchak,
deputy minister for finance of the Russian
from Britain via Northern Ireland but is
looking for ways to increase its electricity
supplies. The planned 600-km link will run
between Brittany and the south coast of
Ireland. The (interconnector) will improve
security of supply on the island of Ireland
and increase competition, driving down
prices for customers, Fintan Slye, EirGrid
Chief Executive said. French average spot
prices on power exchanges were around
30 percent cheaper than those in Britain
last year, according to data from French
power grid operator RTE. If built, the
700 megawatt (MW) sub-sea cable could
transport enough electricity to power
around 450,000 homes, Eirgrid said.
hydropower project which would produce
44,000 megawatts. Inga 3 alone would
produce at least 4,800 megawatts, almost
double Congos current installed capacity.
August 2016
www.InfralinePlus.com
International
China stakes a strong claim in the
Greek electricity landscape
The strong presence of Chinese firms
came as a surprise in the tender
for the concession of 24 percent of
power grid operator ADMIE, given
that the interest of both Italys Terna
and Frances RTE had been taken for
granted. China entered the race for a
stake in the Greek grid through two
giants, the State Grid Corporation of
China (SGCC) which was also present
in the first tender for 66 percent of
ADMIE and China Southern Power
Grid, which was not expected to weigh in
as it does not fulfill the basic condition
of the tender for participating in the 7
European interconnection system of
ENTZO_E. It is learnt that the latter
Chinese company has expressed an
interest in entering a consortium with
one of the other companies that fulfill
the conditions. Government sources
describe the Chinese interest as very
significant and associate it with Beijings
strategy to acquire stakes in energy
infrastructure projects in Europe.
Federation, and Mohammad Mejbahuddin,
senior secretary of the Economic
Relations Department of Bangladesh,
signed the agreement. Speaking at the
event, Vladimir Sabushkin, senior vice-
president of ASE Group of Companies,
said: Now we have both the legal and
financial base for implementing the
Rooppur nuclear power project. For us,
as the general contractor of the project,
Russias state credit to Bangladesh is very
important to begin the main construction
works. Bangladesh is borrowing the funds
from Russia to build the 2,400-megawatt
nuclear power plant.
 August 2016
www.InfralinePlus.com
ExpertSpeak
Need to fast track GNA mechanism for devel-
opment of Inter-State Transmission Systems
Satyajit Ganguly, Managing Director, ONGC Tripura Power Com-
pany Ltd, outlines the challenges being faced by the power trans-
mission industry and why it makes sense to expedite implementa-
tion of the GNA mechanism in India.
As India embarks on developing a ro-
bust country-wide mesh of power grid,
it is imperative to have a mechanism
to allow planning with fair degree of
certainty without prior knowledge of
pairs of injection and drawal. System
strengthening for additional drawal
and additional injection could be done
without knowing the contracted source
of purchase or sale because power in a
meshed network would be transferred
by displacement. In other words, the
8
generator and the States/Consumer
could be given General Network Ac-
cess (GNA) to Inter State Transmis-
sion System (ISTS) for the agreed
quantum of power (MW). A GNA
agreement could become the driver for
investment. The new approach should
therefore involve introduction of GNA
mechanism in ISTS for transmission
system development and hassle free
access to the transmission system by
the Generators.
GNA is the ability in MW to draw
or supply from a given point/zone of
connection (POC) to any ISTS point
as assessed by the Central Trans-
mission Utility (CTU) through system
studies. The concept of PoC charges
has de-linked the transmission charges
and losses from the notional path of
transaction. GNA is also not path
specific or point-to-point specific.
Accordingly, GNA charges would be
the PoC charges.
Salient features of GNA
Entities availing GNA shall have to
commit to pay such POC charges (in-
jection or drawal) for 25 years as may
be prescribed by CERC. GNA holder
shall have the option to be scheduled
as preferred customer provided the
counter party is also having GNA un-
der Long-Term Open Access (LTOA)
category, Medium Term Open Access
(MTOA) and Short- Term Open
Access (STOA) and
Access through GNA
power exchanges a market
(PX). friendly
Further, transmission
GNA holders
product to improve congestion. Further, a new and
system reliability
having PPAs and remove
of more than congestion
three years shall
be entitled under LTA
category. They may seek reservation
under MTOA/STOA category. For
access sought by the drawing entity
(DISCOM, OA consumers) above its
GNA, request shall be entertained only
for STOA/PX service at a premium
(say 100%) after accommodating GNA
holders. Generators may be mandated
to take GNA corresponding to their
ex-bus capacity (other than captive).
Drawee entity may also be mandated
to take GNA corresponding to import
/ export requirement. Transfer of
physical GNA right at least within the
Discoms of a state is a possibility. A
GNA registry would be set up to keep
track of GNA transfers.
Benefits of GNA mechanism
GNA is expected to extend benefits to
the sector in general. These include a
market friendly transmission service
Satyajit Ganguly, Managing Director, ONGC
Tripura Power Company Ltd
product and more accountability of
planners to anticipate and remove
dynamic approach to planning
required for GNA would help in
improving system reliability. With
both GNA and PoC pricing being point
based, the users will be able to get the
full benefit of PoC transmission pricing
which is free from pan caking.
Specifically, power generators also
stand to benefit from GNA. Benefits
include all India access with flexibility
to change point of drawal, no liability
to pay for notional point of drawal
charges, no requirement to declare
target beneficiaries and connectivity
to be linked to GNA so that it does not
result in congestion.
On the other hand, even the distri-
bution companies (discoms) stand to
benefit from GNA. Benefits include
potential for buying of power from
anywhere in the market and reliable
access for short term and medium
term market. This will be a great
comfort to OA consumers as well as
Discoms. Further, states would be
empowered to determine their GNA

requirement and get the ISTS built
for it. Drawing entities will also be
allowed to import power beyond
GNA subject to the margins. The
transmission premium will be shared
amongst the GNA holders. In addition,
discoms will be able buy cheap
power with certainty through the
PX where the competition is intense
thereby benefitting the consumers.
Concerns
While the concept is designed to
derive all the benefits associated with
POC tariff, there are certain issues
which need to be safeguarded so that
it remains win-win for all the stake-
holders. The success of the GNA
would be contingent upon the success
rate of actual scheduling of contracts
undertaken by sellers with buyers
spread across the country with minimal
congestion. The guidelines delineated
in NEP 2005 should be adhered to:
Network expansion should be planned
and implemented keeping in view an-
ticipated transmission needs that would
be incident on the system in the open
access regime. Prior agreement with
beneficiaries would not be a precon-
dition. CTU/STU should undertake
network expansion in consultation with
stakeholders and take up execution
after regulatory approval.
It may be inferred from the above
that despite such blanket approval,
the transmission network has not been
built in an optimum manner until today.
Congestion is commonplace and not an
exception specifically in inter-regional
corridors between NEW and SR, WR
and NR, S1 and S2 and ER and NR. The
intra-regional corridors are equally con-
gested in W3 region and N3 region etc.
Therefore generators would like to
get a guarantee from CTU that once
they pay GNA along with counter-
parties, their contract will be scheduled
without any congestion in ISTS,
failing which a penal amount equal to
three-fourth of the contract value may
be recovered from CTU. Similarly, gen-
erators connected to STU system may
like to get a guarantee from STU with
similar penal provision.
Secondly, some DISCOMs have
filed petitions highlighting various
operational/implementation issues of
POC and are not paying transmission
charges in line with POC. If those
issues are not resolved immediately
it would be difficult to ensure that
DISCOMs pay their share of GNA
charges, which may put the entire
concept in jeopardy.
Third, presently, generators apply
for connectivity to start with much
before the synchronization and are
permitted to arrange for tie-up with
beneficiaries with ease (as long-term
August 2016
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power purchases by DISCOMs are
few and far) and then apply for LTOA/
MTOA/STOA. It gives them some time
and advantage in managing cash-flow
better before the commercial operation
of the unit. With the implementation of
GNA, the generators will be forced to
apply for GNA immediately which will
start the fund outflow much before the
commercial operation thereby ham-
pering the cash-flow balance.
Lastly, GNA (Import/export
requirement) should be assessed by
the States at least 4-5 years in advance
and STUs of respective state should
be the nodal agency for assessment in
line with Section 39 of the Electricity
Act. But whether such arrangement
under federal structure is maintainable
and whether CERC/SERC/CTU would
take responsibility is something that
only time can tell. This is a very crucial
point as more and more States are
implementing coercive measure to 9
force IPPs to remain connected with
STU only as embedded customers. In
such a scenario, development of STU
corridor is paramount for developing
competitive power-market.
Summary
GNA is a market friendly transmission
service product which is intended to im-
prove system reliability and to remove
congestion. It will extend full benefit of
PoC transmission pricing, free from pan
caking of charges. It would also help
generators as it does not require identi-
fication of target region or beneficiaries
at the time of seeking access. However,
its success would be contingent upon
the beneficiary DISCOMs seeking
GNA as per their load demands. The
details regarding the term of payment
and the time of payment would have
be addressed separately and adequately
to ensure that neither generator nor
beneficiaries are burdened right from
the beginning.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com
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InDepth
Govt seeks transmission push
with private participation

10

Policy reforms and increased confidence of lenders have made power transmission attractive
NITI Aayog has set a target of adding 51,400 ckm transmission line in 2016-17

By Team InfralinePlus

India is one of the few countries where
the power transmission sector has been
opened up for private participation
and has garnered significant interest
from private players. The recent policy
reforms in distribution segment (UDAY
scheme for discoms) and the push
for renewable energy can be seen as
the drivers for fast implementation of
transmission lines during the Twelfth
Plan (2012-2017) at 21,912 circuit
km (ckm) as on May 31, 2016. Since
the seventh five-year Plan, this is the
highest net addition of CKM under any
five-year plan.
Policy reforms and increased
confidence of lenders have made the
power transmission sector in India
attractive for the private sector. The
improved pace of project implemen-
tation and stable realisation from
investment have transformed this
sector from what was earlier described
as a stressed sector to a new promising
investment destination. There have
been suggestions that foreign investors
may get to own power transmission
lines in India as the government
is looking at monetising the assets
by offering equity to international
pension funds aimed at mopping up
INR 10,000-12,000 crore investments.
The proposal will aim at unlocking
value of the existing power trans-
mission lines to generate revenues that
can be re-invested in strengthening

transmission system and other infra-
structure projects.
Even as the market opportunity for
private sector in transmission business
has improved, strict qualifying require-
ments in recent tenders have ensured
that the most competent bidders are in
the fray. This has improved credibility
and attractiveness for private sector
with core competency in transmission
and will ensure that bids are not
aggressive and projects are completed
in time. A total of 13 projects went
under tariff-based competitive bidding
during 2015-16 at a cumulative esti-
mated cost of INR 18,300 crore. Three
projects each were won by Sterlite
Grid, Essel Infra, Adani Power and
state-owned Power Grid Corporation
of India (PowerGrid). One was won by
Kalpataru Power.
Apart from buying operational
assets, more companies are looking
to bid for projects in 2016-17, both
for PowerGrid EPC (engineering,
procurement, construction) projects
as well as for the PPP-BOT (public-
private partnership on built, operate,
transfer) projects. Power transmission
companies with assets that are up
and running are seeing interest from
buyers, who expect gains from the
governments attempts to plug power
leakage and attract investments.
Adani Transmission Ltd, Indias
largest private power transmission
company is said to be in talks to buy
a 74% stake in Maru Transmission
Service Co. Ltd and a 49% stake in
Even as the market
opportunity for private
sector in transmis-
sion business has
improved, strict quali-
fying requirements in
recent tenders have
ensured that the most
competent bidders are
in the fray. This has
improved credibility
and attractiveness for
private sector with core
competency in trans-
mission and will ensure
that bids are not ag-
gressive and projects
are completed in time
August 2016
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Aravali Transmission Service Co.
Ltd. Both are subsidiaries of GMR
Infrastructure.
Historical trend
Transmission infrastructure is the back-
bone for the operation of a competitive
electricity market. Development of the
transmission system must match with
the generating capacity on one side
and growing demand on the other with
flexibility for generators to switch from
one drawing entity (Discom or Con-
sumer) to another and vice versa for the
drawing entity to switch from one gen-
erator to another. While transmission
as a segment accounts for only about
8% of the total costs of the power value
chain, it makes the real Umbilical cord
of power, without which all invest-
ments in power sector become fruitless.
With Open Access now being more im-
portant than ever before, transmission
is not only an enabler for power but
11
also is the multiplier of a competitive
power market as well as basic param-
eter of power price sensitivity.
In recent years, investment in trans-
mission networks have lagged the curve
vis-a-vis investments in generation. The
accepted thumb rule is that for devel-
opment of a robust power system, every
unit currency invested in generation,
shall be followed by an investment of
0.5 unit in transmission. This ration of
1:0.5 has not been respected in Indian
power investment scenario.
In the 11th plan, which saw the real
burst of generation investments, the
ratio stood at 1:0.3. While generation
grew by 55%, transmission growth
was stunted at 27% only, leaving
large deficit to be filled in 12th plan.
This deficit moves the ratio to 1:0.6
or even more. The expected fund
requirement for meeting 12th plan
generation targets of about 88 GW
is about INR 4.8 lakh Crores, which
means the transmission sector would
need investments of about INR 3 lakh
Crores. Against this, government has
kept transmission investment target
 August 2016
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InDepth

Fig.1: Net addition of transmission lines (in ckm) over at INR 2.09 lakh Crores only, thus
successive five-year plans compounding the existing investment
gap in transmission.
Transmission Lines Addition While there has been a marked
Over Successive Five Year Plans increase in the growth of the central
21912
sector transmission system and trans-
21351
19969 formation capacity during the previous
17636
17393 (XI) and the current (XII) five-year
13626 plans, transmission congestion in some
parts of the grid as evident in the last
few years, underlines the need for
emphasis on the development of ade-
quate transmission system, especially
at the intra-state level and its coordi-
VII Five Year Plan VIII Five Year Plan IX Five Year Plan X Five Year Plan XI Five Year Plan XII Five Year Plan nated planning and development with
(1985 -1990) (1992 -1997) (1997 -2002) (2002 -2007) (2007 -2012) (2012 -2017)
As of May 2016 the inter-state transmission system.
Net Addition in Circuit Kilometers India faces irregular power avail-
Source: Ministry of Power ability across states. Some states in
the northern and western parts of the
country have surplus power, while
While there has been a marked increase in the some states in the south face shortages.
growth of the central sector transmission sys- The central government, which has
tem and transformation capacity during the pre- made boosting power generation a key
policy priority, is looking to supply
12 vious (XI) and the current (XII) five-year plans, adequate power at affordable prices,
transmission congestion in some parts of the with the aim of doubling electricity
grid as evident in the last few years, underlines generation to two trillion units by 2019.
the need for emphasis on the development of The centre has set a target of bringing
adequate transmission system 24x7 power for all by fiscal 2019.

Future trends
Private sector investment in green energy corridor projects To meet the governments target of
providing 24x7 power to all, govern-
The green corridor, a INR 40,000 crore transmission network for renewable
ments think tank NITI Aayog has
energy, was envisaged by state-owned Power Grid Corporation in 2011. The
set a target of adding 51,400 ckm
project was divided into two parts to speed it up. PowerGrid is setting up the
transmission line in 2016-17, 82 per
first corridor connecting states rich in renewable energy. Work is also on for a
cent more than what was achieved in
second corridor connecting solar parks in Andhra Pradesh, Madhya Pradesh,
2015-16. In order to provide fillip to
Karnataka, Rajasthan and Gujarat.
the transmission segment, the gov-
Rajasthan, Karnataka, Gujarat and Andhra Pradesh will issue their tenders
ernment may soon invite bids from
later this year. These projects are expected to be awarded through transparent
private and public companies for
bidding to speed up transmission for upcoming solar parks. The move is in
interstate power transmission projects
line with the governments plan to open up power transmission to private
through reverse electronic auction on
investment. Adani Power, Sterlite Power, Essel Infra and Tata Power are likely to
build-operate-own (BOO) basis for 35
bid for these projects.
years. The proposal for separation of
The decision to adopt the tariff-based competitive bidding (TBCB) route for
planning function from PowerGrid has
new solar parks means the private sector would be allowed to compete for
also been mooted amid rising con-
21 prospective solar parks. It seems essential to ensure power evacuation
cerns on conflict of interest and level
infrastructure to the investors in solar projects. It takes 3-6 years for the
playing field for private companies as
developers to commission transmission lines while the solar project can be
the state-run company is involved in
ready in six months. Private participation will ease the burden on the government
planning the transmission system and
(PGCIL) to commission transmission projects in a limited time.
participates in the bidding as well.
 August 2016
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Industry concerns
India is one of the few countries where the transmission segment of the power sector has been opened up for private
participation and has garnered significant interest from private players. The private developers however, face a number of
challenges in implementing transmission projects awarded under the competitive bidding route, which include:
- Delays in securing clearances under Section 164 and Section 68 of Electricity Act 2003;
- Delays in securing transmission license from the Appropriate Commission;
- Delays and cost escalation in securing Right of Way (ROW) clearance;
- Delays in acquiring forest land due to differing dispensations for Central Transmission Utility (CTU) vis-a-vis private
developers;
- Fixed quoted tariff for 35 years creates challenges due to long gestation period of the transmission projects leading to
cost and time overruns.
In contrast, the Central Transmission Utility (CTU) under cost plus regime does not face most of these challenges as:
- It has automatic clearance under Section 164 and Section 68 of the Electricity Act 2003 being deemed as a central
project;
- It is a deemed licensee;
- It has the power to pay double compensation for the forest land and acquire it without any procedural issues, being
deemed a central project;
- The tariff determination for projects executed by the CTU is under cost plus regime which allows any cost escalation
to be passed through the tariffs although there is a sunset clause which mandates competitive bidding for all future
projects.

India being on brink of explosive

Exponential growth in power generation has growth path cannot achieve it without
already proved that a healthy private sector robust power sector growth, which
participation is must to achieve significant cannot happen without having sufficient 13
emphasis on inter-state and intra-state
improvements in capacities. For private sector power transmission networks. Expo-
to draw confidence for participation in the nential growth in power generation has
process of competitive transmission, these already proved that a healthy private
key policy shifts are required to be made to sector participation is must to achieve
make the whole process more investor friendly, significant improvements in capacities.
empathetic and credible For private sector to draw confidence
for participation in the process of
competitive transmission, these key
policy shifts are required to be made to
make the whole process more investor
friendly, empathetic and credible.
Going forward, demand could
further increase with increasing
industrialization. If Indias trans-
mission capacity is not augmented in
a timely manner, the grid congestion
problem is expected to further
aggravate in certain areas. In order
to address the changing market mind
set, there is a need to design and
develop a grid which addresses the
changing needs of the consumers and
generators as well as acts as a market
enabler for growth of power demand
and generation.

For suggestions email at feedback@infraline.com

 August 2016
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InDepth
Water management for thermal
plants need of the hour

14

Total freshwater consumption of coal plants in India estimated at 4.6 bcm meters per year
Dedicated targets for reduction in freshwater consumption need to be set for thermal plants

By Team InfralinePlus

Despite the central governments
determination to increase domestic coal
production up to 1bn tonne by 2019,
the power sector faced a new foe, water
scarcity. A lack of cooling water for
coal-based power plants in Karnataka,
Maharashtra and West Bengal led to
repeated shut downs and curtailment in
electricity generation.The water crisis
has once again highlighted the urgency
of shifting to a diversified energy
model that reduces Indias reliance
on coal-based thermal power, to save
water and prevent power outages.
Thermal power sector: A
water guzzler?
Coal power plants are one of most
water-intensive industrial users of fresh
water across the world and in India.
The water consumption of coal power
plants has not received sufficient at-
tention, even during a drought affected
year. Coal power plants require large
volumes of water for their operations.
Water is mostly consumed for cool-
ing, with additional water going into
scrubbing the air pollutants from power
plant emissions and handling coal ash.
A Greenpeace India analysis of
a report released in March this year
estimates that the total freshwater
consumption of coal power plants in
India is 4.6 billion cubic meters per
year. This is enough to meet the basic
water needs of 251 million (25.1 crore)
 August 2016
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people. This figure will more than The water available in Indias most Such abnormally low levels of
double if all proposed plants are built. important reservoirs now stands at water have already affected electricity
According to the report, the water merely 29% of total storage capacity potential and generation, particularly
consumption for solar and wind of 45.8 billion cubic metres, the latest at hydropower projects. The electricity
energy is negligible in comparison to numbers released by the Central generation from Tehri hydro power
coal and the governments ambitious Water Commission (CWC) reveals. project stood at 205 million units
175 GW target for wind and solar The commission monitors live water (MUs) on March 10 compared with
energy holds the key to securing storage status of 91 big reservoirs that 1,921 MU at full reservoir level,
both water and electricity supplies have a holding capacity of 150 BCM, according to data available with
in water stressed regions. The total which is 62% of the total storage Central Electricity Authority (CEA).
capacity of power plants operating in capacity in India. Out of these, 37 res- On March 10 last year, the energy
Maharashtra which use fresh water in ervoirs have the capacity of generating content was 386 MUs in the dam on
cooling towers and cooling ponds is more than 60 MW of hydropower. the Bhagirathi River in Uttarakhand
14,660 MW while these coal power in the Himalayas.The situation is even
plants altogether consume about 350 worse in some other dams. The energy
million cubic metres of water each The total capacity of content at the SardarSarovar dam
year. On the other hand, the total power plants operating on the Narmada River, the countrys
capacity of power plants in Madhya in Maharashtra which largest in central India, stood at 95
Pradesh which use fresh water in use fresh water in cool- MU on March 10 against 1,818 at full
cooling towers is 9344 MW and these ing towers and cooling reservoir level. It was 288 MU on
coal-based power plants altogether the same date last year, according to
consume about 222 million cubic
ponds is 14,660 MW CEAs data.
metres of water each year. while these coal power
It is estimated that power plants of plants altogether con- Treatment of sewage water 15
National Thermal Power Corporation sume about 350 million for TTPs: An alternative?
(NTPC) at Farraka (West Bengal), cubic metres of water Given the increasing competition for
Adani Power at Tiroda (Maharashtra), each year. On the other water for different uses like agriculture
GMR at Warora (Maharashtra), and domestic supply, it is clear that
MAHAGENCO at Parli(Maharashtra)
hand, the total capacity such problems are likely to increase in
and the Karnataka Power Corporation of power plants in Mad- the future. The government of India has
(KPCL) at Raichur(Karnataka) were hya Pradesh which use also recognised the seriousness of the
the worst affected, losing about INR fresh water in cooling issue and has started taking steps to ad-
2,400 crore in revenues due to the towers is 9344 MW dress it. The one measure that it seems
shutdowns. to be relying upon in a big way is to
require thermal power plants to use
Figure-1: Generation and Revenue Losses from Coal-based treated sewage rather than fresh water.
power plants (due to water scarcity) (for the period between In the amendments to the National
January 1, 2016 and May 21, 2016) Tariff Policy (2006) notified by the
Ministry of Power (MoP) on Janu-
KPCL (Raichur) Generation and Revenue Losses from Coal-based ary 28, 2016, there is a provision that
Generation and Revenue Losses
power plants (due tofrom
waterCoal-based
scarcity) power
plants (due
MAHAGENCO (Parli)to water scarcity)
now requires that the thermal power
plant(s) including the existing plants
GMR (Warora) located within 50 km radius of sewage
Total generation loss: 6,828 MUs
Total revenue loss: INR 239,004 lacs (INR 2390 crore) treatment plant of any municipality/lo-
Adani Power (Tiroda)
cal bodies/similar organisation shall
NTPC (Farakka) mandatorily use treated sewage water
produced by these bodies
NTPC Adani Power MAHAGENCO
(Farakka) (Tiroda)
GMR (Warora)
(Parli)
KPCL (Raichur) Governments directive to use
Generation Loss (MUs)
recycled sewage water by power
1,119 570 480 4,529 130
Revenue Loss (in INR Lakhs) 39183 19958 17136 158,516 4,211
plants will call for an investment of
up to INR 32,000 crore to meet the
Source: Greenpeace Report (June 2016) requirement of 80 GW capacities of
 August 2016
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InDepth

Water-Power Nexus: Several TPPs face shutdown undermining financial viability

Case Study: Maharashtra

This summer has already seen temporary shut downs of KPCLs Raichur power plant and NTPCs Farakka plant due
to lack of water. MAHAGENCOs Parli power plant has been shut since July 2015 due to lack of water. Five years earlier
Maharashtras state-owned utility, MAHAGENCO, had shut down several units of the 2340 MW Chandrapur Thermal Power
Station due to the impact of drought. The construction of NTPCs Solapur power plant in Maharashtra has been delayed
due to huge question marks about where the plant will get water to run on. Water scarcity could severely undermine the
plants financial viability.
Water crisis in Maharashtra had been precipitated as Dhapewada dam, the water source for 3,300 MW Tiroda power
plant of Adani Power, had almost gone dry. The only way to increase water level in this dam is to get water released from
Bawanthadi dam in Madhya Pradesh (MP) having capacity of 217 million cubic metres (mm3). The states share is 50%.
Tiroda plant supplies 2,400 MW on an average to Maharashtra State Electricity Distribution Company Limited (MSEDCL).
At present, the discom has 1,700 MW surplus power during night hours and 1,000 MW extra power during day hours.
Closure of Tiroda plant could lead to shortage of 700 MW during night and 1,400 MW during day. MSEDCL would have
had to buy additional power from open market. If power was not available at affordable rates, then MSEDCL would have
gone in for load shedding. Closure ofTiroda plant would burden MSEDCL with INR 233 crore as the company would have
to pay capacity charges to Adani as per the power purchase agreement (PPA).
Given the precarious water situation in large parts of India, the fact that generating electricity from coal requires significant
quantities of water is a clear financial risk multiplier. Financial risks from water scarcity could range from physical constraints,
where plants will experience water shortages leading to shutdowns, to regulatory risks with increased constraints on water
use, the restriction or cancellation of permits and tighter technological requirements to curtail water use. Civil unrest
because of the conflict between power generators and local farming communities over access to water will further reduce
companies social license to operate, and bring reputational damage to financiers of new coal projects. This could result
16 in abrupt policy changes, as policy makers realise that water consumption based on existing policies is unsustainable.

state and central utilities depending

Governments directive will not be legally binding upon the distance between sewage
and it depends on state regulators to implement treatment plant and the power plant,
according to Industry estimates.
it. But even if central and state generators with Governments directive will not be
aggregate capacity of 80 GW follow this directive, legally binding and it depends on state
they would be requiring supply of 8,000 million regulators to implement it. But even
litres treated water per day if central and state generators with
aggregate capacity of 80 GW follow
this directive, they would be requiring
supply of 8,000 million litres treated
water per day.
Recently, NTPC has decided to
use sewage water treated by Nagpur
Municipal Corporations (NMC) sewage
treatment plant (STP) at Bhandewadi for
its Mouda plant. The plant is operating
two 500 MW units using Gosikhurd
water. NMC is building a 200 million
litre per day (MLD) capacity STP at
Bhandewadi.While recycling and reuse
of sewage is a welcome step, it needs
to be undertaken with great caution and
only after assessing implications in each
individual case.
Finding the coal to run power
plants in India is no longer the big
 August 2016
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hurdle it was a couple of years ago. available in which water is replaced not possible for power plant operators
Coal India (CIL) has cranked up with condenser cooling systems based to expect water availability at current
production, and inventories held on air. levels in the future. Deploying a water
by power producers are at a record The projected water scarcity in management strategy today would
high. The bigger resource crunch future will potentially cripple power help companies mitigate the impact of
today is water. The water needed in plant operations resulting in revenue upcoming water scarcity and ensure
ash-handling systems and cooling losses running into several crores on sustainability of their operations, in
plants could easily create acute a daily basis. The future situation is the long term.
local shortages, which would in turn alarming, considering that 2/3rd of Water management needs to become
lead to power plants being turned the current and planned capacities an integral factor in planning of future
off and electricity prices spiking. fall in water stressed regions. Hence, strategic initiatives. For existing
Power Ministry is preparing a the risks to operations due to water plants, dedicated targets for reduction
national roadmap for setting up water scarcity would impair the viability in freshwater consumption need to be
reprocessing facilities, which could of power plant operations. Power set, with clear timelines for short-term
marginally increasepower tariff. plants, who have historically treated and long-term measures. Water-shed
The power plants require water for a water availability as a given, need to management plan could be combined
critical plant operation condenser hence radically overhaul their current with CSR activities to implement water
cooling. But, today, technologies are approach to water management. It is conservation measures for other users
in the watershed. The power plant
Coal India has cranked up production, and must prepare a scenario analysis to
develop a contingency plan to deal with
inventories held by power producers are at a exigencies like regulatory disruptions or
record high. The bigger resource crunch today physical shortages. For future capacity
is water. The water needed in ash-handling additions, location planning must 17
incorporate potential water risks in
systems and cooling plants could easily create the decision making process. Potential
acute local shortages, which would in turn lead measures that can be incorporated for
to power plants being turned off and electricity some of the under construction plants
also need to be assessed.
prices spiking
For suggestions email at feedback@infraline.com
 August 2016
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StatisticsPower
Trends in Production of Primary Sources ofEnergy in India(2014-15)
Natural Gas Electricity*
Coal (Million Lignite (Million Crude Petroleum
Year (Billion Cubic Hydro &
Tonnes) Tonnes) (Million Tonnes)
Metres) Nuclear (GWh)
2005-06 407.04 30.23 32.19 32.2 1,18,818
2006-07 430.83 31.29 33.99 31.75 1,32,304
2007-08 457.08 33.98 34.12 32.42 1,37,344
2008-09 492.76 32.42 33.51 32.85 142576
2009-10 532.04 34.07 33.69 47.5 1,25,316
2010-11 532.69 37.73 37.68 52.22 1,40,524
2011-12 539.95 42.33 38.09 47.56 1,63,000
2012-13 556.4 46.45 37.86 39.83 1,46,497
2013-14 565.77 44.27 37.79 35.41 1,69,076
2014-15(P) 612.44 48.26 37.46 33.66 1,65,346
Growth rate of 2014-15 over
8.25 9 -0.87 -4.94 -2.21
2013-14(%)
CAGR 2005-06 to 2014-15(%) 4.17 4.79 1.53 0.44 3.36
(p): provisional
* Thermal electricity is not a primary source of energy
18
Trends in Installed Generating Capacity of Electricity in Utilities and Non-utilities in
India from2005-06 to 2014-15 (in Mega Watt )
Utilities Non-utilities
As on Grand Total
Thermal * Hydro Nuclear Total Total

31.03.2006 88,601 32,326 3,360 1,24,287 21,468 1,45,755

31.03.2007 93,775 34,654 3,900 1,32,329 22,335 1,54,664

31.03.2008 1,03,032 35,909 4,120 1,43,061 24,986 1,68,047

31.03.2009 1,06,968 36,878 4,120 1,47,966 26,980 1,74,946

31.03.2010 1,17,975 36,863 4,560 1,59,398 28,474 1,87,872

31.03.2011 1,31,279 37,567 4,780 1,73,626 32,900 2,06,526

31.03.2012 1,56,107 38,990 4,780 1,99,877 39,375 2,39,252

31.03.2013 1,79,072 39,491 4,780 2,23,344 43,300 2,66,644

31.03.2014 1,99,947 40,531 4,780 2,45,259 42,257 2,87,516

31.03.2015(F) 2,24,674 41,268 5,780 2,71,722 44,657 3,16,379

Growth rate of 2014-15 over 12.37 1.82 20.92 10.79 5.68 10.04

2013-14(%) CAGR 2005-06 to

9.75 2.47 5.57 8.14 7.6 8.06
2014-15(%)
Thermal includes Renewable Energy Resources.
** Capacity in respect of Self Generating Industries includes units of capacity 1 MW and above. CAGR: Compound Annual Growth Rate =((Current Value/Base
Value)A(l/nos. of years )-l)* 100 Source : Central Electricity Authority (P) Provisional
 August 2016
www.InfralinePlus.com

Actual power supply position of various States during the year 2015-16
Region / State Requirement Availability (MU) Surplus(+) / Deficit(-)
/ System (MU) (MU) (MU) (%)
Chandigarh 1,607 1,607 0 0
Delhi 29,626 29,583 -43 -0.1
Haryana 47,506 47,437 -69 -0.1
Himachal Pradesh 8,821 8,758 -63 -0.7
Jammu & Kashmir 16,572 14,037 -2,536 -15.3
Punjab 49,687 49,675 -12 0
Rajasthan 67,417 67,205 -212 -0.3
Uttar Pradesh 106,350 93,033 -13,317 -12.5
Uttarakhand 12,889 12,675 -214 -1.7
Northern Region 340,475 324,009 -16,466 -4.8
Chhattisgarh 25,650 25,310 -340 -1.3
Gujarat 103,544 103,540 -4 0
Madhya Pradesh 62,375 62,375 0 0
Maharashtra 141,817 141,361 -456 -0.3
Daman & Diu 2,337 2,337 0 0
Dadra & Nagar Haveli 5,925 5,925 0 0
Goa 5,120 5,119 -1 0
Western Region 346,767 345,967 -800 -0.2
Andhra Pradesh 50,437 50,366 -71 -0.1 19
Karnataka 64,302 60,971 -3,331 -5.2
Kerala 23,318 23,194 -124 -0.5
Tamil Nadu 97,277 96,586 -690 -0.7
Telangana 50,254 49,948 -307 -0.6
Puducherry 2,437 2,429 -8 -0.3
Lakshadweep 48 48 0 0
Southern Region 288,025 283,494 -4,532 -1.6
Bihar 23,960 23,658 -302 -1.3
Damodar Valley 18,437 18,234 -203 -1.1
Corporation
Jharkhand 7,735 7,560 -174 -2.3
Odisha 26,763 26,600 -163 -0.6
West Bengal 47,359 47,194 -165 -0.3
Sikkim 399 399 0 -0.1
Andaman & Nicobar 240 180 -60 -25
Eastern Region 124,653 123,646 -1,007 -0.8
Arunachal Pradesh 625 591 -35 -5.5
Assam 8,762 8,271 -491 -5.6
Manipur 840 810 -30 -3.6
Meghalaya 1,832 1,724 -108 -5.9
Mizoram 471 455 -16 -3.3
Nagaland 755 738 -16 -2.2
Tripura 1,202 1,146 -57 -4.7
North-Eastern Region 14,488 13,735 -752 -5.2
All India 1,114,408 1,090,851 -23,557 -2.1
 August 2016
www.InfralinePlus.com
NewsBriefs | Coal National
Rs 2,237-crore revenue generated from 74 coal mines
According to the government, revenue of
around Rs 2,237 crore has already been gener-
ated till May-end from the allocation of 74
coal mines. The revenue already generated
till May 31, 2016 from the allocation of 74 coal
Power generation utilities owe Rs 12,028 crore to Coal India
Power generation utilities owe Rs 12,028
crore to state-owned CIL as on March
31. Various steps are being taken by Coal
India for timely recovery of dues from all
its consumers. The party-wise outstanding
20 dues are being reviewed by the subsidiary
companies on a monthly basis. In case of
major defaulters, CIL authorities have taken
up the matter with various ministries. In a bid
to rescue almost bankrupt state electricity
retailers, the central government had last
year approved a scheme to rejig Rs 4.3 lakh-
crore debt of the utilities. The Cabinet had
approved the scheme to ease the financial
crunch of power distribution companies or
discoms that has impaired their ability to
buy electricity. The rescue plan, called Ujwal
CAG suspects 1st e-auction of coal blocks was rigged with multiple biddings
Multiple bids by corporate groups made
through joint ventures or group arms
may have limited the competition for
11 coal mines auctioned in the first two
rounds in March 2015, according to
the federal auditors report on the first
e-auction of natural resources conducted
by the Modi government. The auction
was conducted after the Supreme Court
cancelled allotment of 204 blocks in 2014.
The Comptroller and Auditor Generals
(CAG) report supports the suspicion that
the government itself had developed
after the first two rounds of bidding,
prompting the coal ministry to put up
mines under the provisions of the Coal Mines
(Special Provisions) Act, 2015 is Rs 2,237 crore
(excluding royalty, cess and taxes) which shall
be devolving entirely to the coal bearing state
concerned, Coal and Power Minister Piyush
Goyal said in a reply to Rajya Sabha. The rev-
enue which would accrue to the coal bearing
states from the allocation of mines comprises
of upfront payment as prescribed in allotment
document, auction/allotment process and
royalty on per tonne of coal production, the
minister added. Under the provisions of Coal
Mines (Special Provisions) Act, 2015 and its
rules, he said, the government has so far al-
located 75 coal mines for specified end uses.
Discom Assurance Yojna or UDAY, aims at
reviving ailing state electricity boards and
bolstering operational efficiency of power
distribution companies. It envisages reducing
interest burden, cost of power and aggregate
technical and commercial losses.
cartelisation, which the coal ministry then
ministry to put under the scanner bids
Coal Indias e-auction premium
shrinks to a half
Kollkata-based Coal India Ltd (CIL) may
have benefited from higher realizations on
spot sales of the fuel through e-auction for
years. But not anymore. The miner sold
coal through e-auction at a price mere
20 per cent more than the notified price
in the first quarter ended June - a sharp
drop from 40 per cent premium it fetched
in the same period last fiscal. The sharp
drop in the premium available on e-auction
sales - coupled with a drop in volumes
-- is attributed to the slump in spot power
prices on the back of lacklustre demand
for electricity. E-auction was launched by
the government in 2005 to ease coal sup-
ply for customers in the non-core sectors
of cement, fertilizer and sponge iron. The
new trend signals how the electronic trad-
ing platform, a traditional profit centre for
CIL, is now failing to attract customers.
According to fresh data, during the quarter
ended June, CIL offered 26.3 MT coal to
spot consumers but could allocate only
12.3 MT - or 47 per cent - of the quantity,
thanks to the depressed demand.
firewalls against the probability of price-
rigging or cartelisation from then on. The
government has been looking at barring
multiple bids by any corporate group to
curtail the probability of price rigging or
believed had led to wide variation in the
winning bids described as outliers in
the first round of mine auctions for power
plants. These outliers had prompted the
for several blocks and finally reject the
winning bid of Naveen Jindal group firm
for Gare Palma IV/2&3 blocks.

NewsBriefs
| Coal National
Coal linkages: Captive power segment comes to CILs rescue
Lack of demand for Coal Indias linkages
from sponge iron and cement sectors
is being made up in a small way by the
captive power segment. Excepting the small
offerings of a Western coalfields mine, the
rest of the coal offered in the first three days
found buyers. In a majority of the cases,
Kerala makes fresh bid for coal block allocation
Four years after it lost a claim on the
Baitarani West coal block in Orissa, the
state is making a fresh bid for coal block
allocation. The State Government has
requested the Centre to allocate it a
new coal block for power generation. A
tentative plan is to use the coal to fuel
a power plant that would be established
jointly by Kerala and Odisha in Odisha.
The Union Power Minister said the states
request would be considered when it
submits concrete plans for a (power)
project. According to top officials, the
state is gunning for a coal block with
reserves of 200 million tonnes. In
July 2007, the Kerala State Electricity
Board, along with Odisha Hydro Power
Mahanadi Coalfields to commission coal corridor by March 2017
Mahanadi Coalfields Ltd (MCL) would
complete work on a separate, dedicated coal
transportation coal corridor in the coal-rich
Talcher region by March 2017. The align-
ment of the coal corridor would be such that
it passes through the coal mining blocks
but avoids the populated areas of the coal
bearing region. MCL has already commenced
work on the corridor. In the existing coal
transportation road of 35 km length from
Hingula to Pawitra Mohan Chowk in Talcher
area, MCl would deploy road sweepers
and water sprinkling system on the routes
passing through the populated areas. Both
Talcher and Ib valley coalfields are under
coal was sold at a (small) premium ranging
up to 100 a tonne, it has been learnt. CIL
is scheduled to auction linkages worth 18
million tonne in the current round. Nearly 5
million tonne linkages were sold in the first
two days. After improved demand in May,
when offtake was up by almost three per
cent; demand for the fuel slowed down in
July. According to the latest information,
offtake grew by merely one per cent during
the month. The modest growth came in
the backdrop of a one per cent reduction
in coal-based power generation during the
month as hydro-electricity was available at
a cheaper rate.
Corporation and the Gujarat Power
Corporation Ltd, was allocated the 602
million tonne Baitarani West coal block
in Talcher, Odisha. The next year, they
floated an SPV - Baitarani West Coal
Company Ltd - to mine the block.
MCLs jurisdiction and have been classified as
critically polluted areas of Odisha. Since MCL
operates numerous coal mines in this belt,
such large scale mining has the potential to
August 2016
www.InfralinePlus.com
National
Green panel gives nod to MCLs
coal washery project in Odisha
International
The Centres green panel has recom-
mended environment clearance to state-
owned Mahanadi Coalfields Ltd (MCL)
to establish a 10 million tonnes per
annum capacity coal washery in Talcher
district in Odisha. Coal India arm MCL
has proposed setting up of Jagannath
Coal Washery with 10 million tonnes per
annum (MTPA) capacity in an area of 30
hectare at Hensmul village in Talcher
district. MCLs coal washery proposal
was taken up for discussion in the recent
meeting of the Expert Appraisal Com- 21
mittee (EAC) set up under the Union
Environment Ministry. As per the rule, the
ministry gives final green clearances to
the projects based on the EAC recom-
mendations. Among conditions specified,
MCL has been asked to set up the wash-
ery as per the project report submitted to
the committee. It has been told to trans-
port raw coal through pipe-belt conveyor,
and clean coal and rejected ones by rail
with wagon loading through silo.
degrade the environment unless adequate
measures are taken to curb pollution. Be-
sides taking action for regulatory compliance
of the stipulations of consent order, MCL
being one of the major stakeholders of these
two areas needs to take some additional
steps for improvement of overall environ-
mental scenario of the areas. On ground-
water and its recharge potential, it was
decided that MCL should take expeditious
action to start survey work by CSIR-National
Geophysical Research Institute (NGRI),
Hyderabad during post monsoon period and
ensure that the report preparation by NGRI
is completed by July-2017.
 August 2016
www.InfralinePlus.com
NewsBriefs | Coal International
Greenpeace slams China for creating more coal-fired power plants
A report created by Greenpeace East
Asia was released recently slamming
China for creating more coal-fired power
plants. This came after China signed a new
BHP Billitons thermal coal production falls 16% on year in fiscal 2015-16
Mining giant BHP Billiton expects further
declines in its thermal coal production in fiscal
2016-2017 after periods of drought and heavy
rain took a toll on output in the current fiscal
year that ended June 30. Production plunged
22 16% year on year to 34.25 million mt and well
below the years guidance of 40 million mt,
the company said in its annual operational
review. Further declines are expected in fis-
cal 2016-2017 and it sees output only at 32
million mt. BHP Billitons New South Wales
coal production fell 13% year on year to 17.1
million mt in fiscal 2015-2016 on bad weather
as well as rescheduling of mine plans based
on individual pit economics. Productivity im-
provements at New South Wales Energy Coal
are expected to partially offset the divestment
Bangladesh awards USD2.5b coal-fired power project to Malaysia
Bangladesh has awarded a USD 5 billion
project to build a 1,320-megawatt coal-
fired power plant to Malaysia. The decision
was conveyed by visiting Bangladesh
State Minister for Power, Energy and
Mineral Resources, Nasrul Hamid, to Prime
Minister Najib Razak. Special Envoy for
Infrastructure to India and South Asia S.
Samy Vellu, said Najib has expressed the
governments gratitude to the Bangladeshi
government for awarding the project on a
government-to-government understanding.
Its final. The Bangladesh Cabinet made
the decision to award the project to the
Malaysian Government. Now, a Malaysian
climate change policy in 2014. This policy
resulted in China pledging to bring their
renewable energy usage up to 20 percent
by 2030. These changes began after it
was clear China was the biggest emitter of
greenhouse gasses in the world. Greenpeace
went on to explain, China was on track to
add one additional coal-fired power plant
a week until the year 2020. It is believed
this is due to the countrys issues related
to overcapacity. Greenpeace is concerned
because China has still not reduced their
emissions, two years after their climate
change policy was put in place, and are still
unable to meet the air quality standards.
of our New Mexico assets, BHP Billiton said.
The sale of the San Juan Mine to Westmore-
land Coal was completed in January this year
and the transfer of the Navajo coal mine to
the Navajo Transitional Energy Company was
on track for December 31, BHP said.
consortium will implement the project but
it will do a feasibility study first, he said. In
2014, Malaysia and Bangladesh signed a
government-to-government memorandum
of understanding (MoU) to implement the
Philippines coal demand to grow
over 1 MT/yr until 2020
The Philippines coal consumption could
grow by more than 1 million tonnes annu-
ally until 2020 as it expects to switch on
more coal-fired power plants to support its
economy. The Southeast Asian countrys
consumption of the fossil fuel reached
22 million tonnes last year, and about 80
percent of that, or a record high 17.4 million
tonnes, had to be imported almost entirely
from Indonesia, the worlds top seller of
thermal coal used in electricity generation.
Higher Philippine coal demand could be
good news for Indonesia though it might be
insufficient to move prices in an over-sup-
plied market. The Philippines relies heavily
on coal imports as domestic supply, mainly
from mine operated by Semirara Mining
Corp , is not enough and the heat content is
too low to be used in most of the countrys
power plants. Imports in 2014 totalled
15.2 million tonnes, based on government
data. Were looking at an increment of 1
million tonnes per year until 2020, Arnulfo
Robles, executive director of the Philippine
Chamber of Coal Mines, said.
project. The MoU paves the way for the
Malaysian consortium to finance and build
the power plant in Maheshkhali, Coxs
Bazar, Bangladesh with the Bangladesh
Power Development Board (BPDB). The
Malaysian consortium and BPDB would
have equal equity shareholding in the
power plant with a concession period of 21
to 25 years. Samy Vellu said if the parties
decided to go ahead with the project after
the completion of the feasibility study, they
will form a joint venture (JV) company and
conduct international tender to appoint the
engineering procurement and commission
(EPC) contractor for the project.
 August 2016
www.InfralinePlus.com

InConversation
Discoms unable to cater to
latent demand
After the Modi government came into power in May 2014, India
has seen dramatic improvement in generation, pushing electricity
shortfall to all-time lows. This turnaround was made possible by
increased production of coal. Coal availability has improved to
the extent that now the government is looking at exporting coal to
deal with rising stocks at mines. However, the moot question is,
how sustainable is this situation? As economic growth picks up
momentum and flows of investment into governments flagship
programmes like Make in India become stronger, electricity
demand too would go up. In such a scenario, will electricity
supply be able to keep pace with demand? In an interview to
Infraline Plus, Salil Garg, Director-Corporate Ratings, India
Ratings, fields questions about the medium-term electricity
supply challenges. Excerpts:
Salil Garg, Director-Corporate Ratings, India
Ratings
23

The central electricity authority
(CEA) says India will become
power surplus by end of this
fiscal. How sustainable will
be this projected situation
of excess power given the
governments strong focus on
manufacturing sector?
India has seen rapid growth in power
generation capacity in the past 5 years
because of investments in the sector
from 2006-2007 onwards. As a result,
almost 100,000 GW of new capacity
has been added in the past five years.
This capacity has helped reduce the
power deficits which is visible in CEA
data. Many states are reporting very
low or nil deficits. Therefore, CEA
could be technically right in saying that
India will become power surplus by the
end of this fiscal. However, this will
not capture the latent demand in the
system and scheduled load shedding by
the discoms. The surplus power situ-
ation will continue as long as the coal
supplies remain robust and as long as
the discoms are unable to cater to the
latent demand. Over the medium term,
the demand is expected to catch up
with supplies.
The government says it could
export surplus coal. Do you think
India will find buyers for its high
ash content coal? Anyway, will
this strategy make sense for
India which has been undertaking
huge imports to meet domestic
coal deficit? Would India not
benefit more if it exports
electricity instead of coal?
The government is hopeful of finding
buyers for Indian coal. It may sound
far-fetched but small quantities of
Indian coal could get exported in the
near term while India would still be
importing coal at some other locations
as boiler designs and other economic
considerations will prevent complete
import substitution. Export of electric-
ity is an option but such exports are
possible to limited geographies. India is
already exporting electricity to Bangla-
desh where potential exists for further
increase in volumes. There was a talk of
electricity export to Pakistan as well but
that has other geopolitical implications.
Do you think electricity demand is
growing at a healthy pace? How
is your medium-term outlook on
power demand growth?
Electricity demand is indeed growing
at a healthy pace though the bulk of the
increased demand is coming from the
domestic segment. The slowdown in
industrial growth has, however, subdued
demand growth from the industry. As
we know, electricity demand in this
country is also a function of effective
intermediation by the discoms. The
discoms have not been able to service
demand fully due to their poor financial
status, thus there is a huge latent
demand in the sector. In the medium
term, electricity demand will still remain
robust and could outstrip the GDP
growth. In case the discoms are able
 August 2016
www.InfralinePlus.com
InConversation
to improve their financial capabilities
under Mission UDAY, there is a
possibility of consistent double-digit
demand growth over the next 3 years.
Do you think time has come
for the government to open up
commercial coal mining for
private sector? Is the goal of
producing 1.5 billion tonne of
coal by 2019-20 achievable?
Globally coal mining is largely in the
domain of coal mining companies
instead of the captive users. Commer-
cial mining companies are expected to
have the technical capabilities to mine
coal economically and also manage
the market risks. India has not seen
very effective results from allocating
mines to the end users. Opening of the
coal to commercial mining involves
a deeper dialogue with the stakehold-
ers especially from the regulatory and
24 environmental perspective. Given the
present state of affairs, a rapid action is
not expected on this front.
As far as growth in coal output is
concerned, the last two years have
been very successful but it is difficult
to maintain high rates of output growth
over a long term. The target of 1.5
billion tonne by 2019-20 appears to be
very difficult, even achieving 1 billion
tonne will have serious challenges. One
also has to look at the demand.
Do you think India should use
nuclear power instead of coal-
fired generation given the
growing global concern over
emissions? Or do you think clean
coal technologies will show the
way in coming days?
Theoretically, nuclear fuel has an edge
over coal from emissions perspective
India has not seen very
effective results from
allocating mines to the
end users. Opening of
the coal to commercial
mining involves a deep-
er dialogue with the
stakeholders especially
from the regulatory and
environmental perspec-
tive. Given the present
state of affairs, a rapid
action is not expected
on this front
but nuclear power will face difficulties
in gaining critical mass India, mainly
due to long gestation period, high cost
and concerns over fuel availability.
Thus, coal will remain the dominant
fuel in India for power generation
even if further investments in coal
remain muted.
Should India provide additional
incentives to promote usage of
LNG in electricity generation?
Use of LNG for electricity generation is
not economical and is possible only with
the help of subsidies. It is not possible
to have a large capacity based on an im-
ported fuel which is highly price sensi-
tive and needs constant government sup-
port. This is not a viable business model
from the point of view of investors and
users. At a time when LNG prices are
benign, there is no interest to invest in
gas-based power generation. Making the
existing gas-based investments viable is
a challenge at the moment.
How far solar and wind
electricity can help India in
meeting its energy demand
given the intermittent nature of
renewable?
India has declared very ambitious tar-
gets for solar, wind power generation
but even after achieving these targets,
renewable will remain less than 10%
of the total electricity produced in the
country. Yes, solar and wind pose grid
stability issues which will hopefully get
resolved with the help of advancements
in technology. Also, the renewables
will meet part of the incremental elec-
tricity demand and garner a large chunk
of investments in the sector. However,
we have seen that there are other
challenges in the renewable electricity
space including availability of capital
and poor financial health of counterpar-
ties. As a result, investors are cautious
at this moment.
For suggestions email at feedback@infraline.com
 August 2016
www.InfralinePlus.com

ExpertSpeak
Coal: Darker days ahead
for India?
In this article, Ramakrishnan
M, Vice President and Mayank
Taneja, Senior Analyst, the
Smart Cube, assesses the
current supply demand scenario
of coal in India and examines
the path chosen by the Indian
government while answering
questions on the governments
long-term strategyis India
aiming to become a net exporter
of coal by 2020, is privatisation
on the cards and the forecast
price trend. Ramakrishnan M, Vice President, the Smart Cube Mayank Taneja, Senior Analyst, the Smart Cube
25

Coal India Declining coal (consumed by power plants Hence, Indias coal production target
Limited (CIL), global coal primarily in West Bengal, Bihar has been set at 1.5 billion MT
the largest prices and reduced and Jharkhand) by 130%net (1 billion MT to be achieved by the
coal miner shipping rates have increase stood at ~6.3%. The CIL) by 2020.
globally, made imported coal announcement came amid With the above targets in mind,
contributes declining prices globally due the government passed the Coal
~82% to In-
cheaper than to increased output and low Mines Special Provisions Bill and
dias total coal domestic coal demand. Moreover, in June 2016, the Mines & Minerals Development
production. Dur- ~12 power stations across UP, and Regulation (MMDR) bill in
ing FY20152016, Maharashtra and West Bengal asked March 2016. It can now allow private
the state-led company produced ~536 the CIL to stop further supply due to companies to mine and sell coal in the
MT of coalan 8.5% Y-o-Y increase. extensive stockpile. This has raised open market. In addition, the state-run
However, the commoditys demand did eyebrows at the strategy pursued by CIL is ramping up operations and
not report a similar trend, with demand the state-owned miner, or indirectly, increasing production. To achieve the
from the power sector (the largest the Indian government. 1-billion MT mark, the company aims
consumer of coal) witnessing a decline. to invest INR 57,000 crore during
During FY20142015, the countrys The Government way 20152020.
power plants operated at 65% capac- Privatisation, reduced
ity, posting the lowest plant load factor dependence on import Uncertainty Prevails Price
since 1990. To achieve its goal of 100% rural Outlook and Challenges
While the gap between supply and electrification, the Indian government Ahead
demand should have led to a decline plans to introduce reforms in the coal With the production ramp-up, the
in coal prices, in May 2016, CIL industrythe countrys largest source government has been successful
raised the prices of low-grade coal of electricity. The aim is to make India in reducing imports so far. During
(consumed by a majority of the power self-sufficient in terms of coal produc- FY20152016, imports declined
plants in the country) by 1319% and tion, i.e., reduce dependence on im- ~15% Y-o-Y, and thus helped gener-
reduced those of higher grades of ports to zero by the end of this decade. ate savings of ~INR 28,000 crore in
 August 2016
www.InfralinePlus.com

ExpertSpeak

foreign exchange. Further, in April states prefer importing coal, instead commodity to increase consumption.
and May 2016, coal imports posted of purchasing it domestically. Low A majority of the companys labour
Y-o-Y declines of ~15% and ~19%, demand from the power sector, (60%) goes into the production of the
respectively. The government expects clubbed with the above factors, has latter, the cost of which is difficult to
to save ~INR 30,000 crore during resulted in extensive stockpile at recover on account of very few takers
FY20162017. CIL mines, despite the government in India. In addition, the companys
However, declining global coal encouraging states to buy the plans to invest in hi-tech machinery
prices and reduced shipping rates commodity domestically, and forced and technology to improve efficiency,
have made imported coal cheaper the government to postpone its while ramping up production, are not
than domestic coal, especially in current plans of auctioning mines to being received well by labour unions
coastal statessuch as West Bengal. private and foreign companies. (which fear huge job losses).
Further, due to the increase in While the CIL has hiked the Amid the challenging and dynamic
prices by the CIL, along with rising prices of low-grade coal, it has scenarios prevailing in the domestic
surcharges, taxes and transport costs, dropped those of high grades of the as well as the global coal market,
the Indian government is taking
Due to the increase in prices by the CIL, along numerous measures such as priva-
with rising surcharges, taxes and transport tisation, accelerated infrastructure
development and faster approvals
costs, states prefer importing coal, instead of to create a favourable position for
purchasing it domestically. Low demand from India in the global coal landscape.
the power sector has resulted in extensive However, it remains to be seen as to
stockpile at CIL mines, despite the government what all measures will work for the
encouraging states to buy the commodity Indian market.
26 domestically, and forced the government to
postpone its current plans of auctioning mines The views in the article of the author are personal
For suggestions email at feedback@infraline.com

InDepth
Coal linkage auction for Non-Regulated
sector gathers steam
CIL to auction coal linkages for an annual contracted quantity of 23.25 MTPA
Coal linkages for sponge iron sector conducted, cement sector in action
By Team InfralinePlus
Battling all odds, the Government has
fast tracked the auction of coal linkages
for the non-regulated sector. The Gov-
ernment had earlier conducted auction
of coal linkages for the sponge iron sec-
tor and has now kicked off the bidding
process for the cement sector. Notably,
this is the first time coal linkages are be-
ing e-auctioned. Earlier, the fuel supply
agreements were governed by the New
Coal Distribution Policy of October
2007. The linkage would be for five
years, while there is an exit clause in
the agreement where the consumers can
exit after two years without giving any
penalty. The Agreement (FSA) shall be
executed between the Successful Bidder
and the relevant Subsidiary in respect of
the Allocated Quantity within 30 days of
receipt of the Performance Security; and
submission of the documents specified
in Scheme Document.
August 2016
www.InfralinePlus.com
27
Bidders will have to execute
separate FSAs for each Lot where they
emerge as Successful Bidders. Lot
shall mean a specified quantity of coal
belonging to a particular grade which
is to be offered for sale and which may
be dispatched by road or by rail. Each
Lot will contain only one Grade and
will also have a pre-identified Sec-
ondary Source. Each Lot will have a
specified mode of dispatch i.e. road or
 August 2016
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InDepth

rail. Bidders will have to off-take coal Sub Sector Offered Quantity (Mt) Allocated Quantity (Mt)
from Lots via the specified mode of
dispatch only. Players with large NCRs Sponge Iron 3.78 2.098
and located at Pit head will control the Cement 2.15 1.29
ascent in price, and overall the outcome CPP 17.52 To be allocated
of auctions. 0.30 (Left out from
Steel Coking Coal To be allocated
Tranche I)
Auction for sponge iron 0.30 (Left out from
sector Others To be allocated
Tranche I)
Coal India has secured a booking of Sub Sector Offered Quantity (Mt) Allocated Quantity (Mt)
about 2.05 million tonnes (mt) against
the offer of 3.78 mt in the first tranche use plant. In February, 2016, the Cabi- of non-regulated sector maturing in
of linkage auction for the non-regulated net Committee on Economic Affairs FY2016 onwards and 25% of incre-
sponge iron sector. The auction was (CCEA) approved that all allocations mental CIL/SCCL production during
conducted in 18 slots spanning six of coal linkages/Letter of Assurance FY2016 over FY2015. FSA tenure may
days. There were no bidders in some (LoAs) for non-regulated sector shall be as decided by MoC, subject to a
of the slots while only in three slots, henceforth be auction-based. As per maximum tenure of 15 years.
the booking exceeded the offer amount CCEA decision, proportion of coal al- Separate quantities are to be ear-
and hence attracted a premium over the location between power and non-power marked for sub-sectors. It has been
notified price in such cases. sector was pegged at 75% and 25%, decided to conduct the current auction
respectively. Bidders with tapering of coal linkages under non-regulated
Key provisions linkages are allowed to participate in sector (Tranche I) under the following
Linkages are assured supply commit- the linkage auction. sub-sectors: Cement (excluding its
28 ments from Coal India Limited (CIL) Total quantity earmarked for CPPs), Sponge Iron (excluding its
and Singareni Collieries Company Ltd Tranche-I is 23.25 mtpa. Quantity for CPPs), all Captive Power Plants
(SCCL) to a company that has an end- Tranche-I shall be aggregate of FSAs (CPPs), Steel (Coking Coal), all EUPs
that do not fall as mentioned above
In February, 2016, the Cabinet Committee on are included in Others sub-sector
[excluding Fertilizer (urea) sector].
Economic Affairs (CCEA) approved that all A bidder must be a consumer of
allocations of coal linkages/Letter of Assurance coal engaged in the Specified End
(LoAs) for non-regulated sector shall henceforth be Use and should be the owner of the
auction-based. As per CCEA decision, proportion Specified End Use Plant for which it
of coal allocation between power and non-power is submitting the Bid. Bidders shall
sector was pegged at 75% and 25%, respectively not have been convicted for wrongful
utilization of coal by the Central
Bureau of Investigation or any other
governmental authority or statutory
or judicial body. The Specified End
Use Plant for which the Bidder is
submitting the Bid should have com-
menced commercial operations as on
the date of issuance of this Scheme
Document and should have a Nor-
mative Coal Requirement of not less
than 4200 TPA.
Auction methodology shall be
Non Discriminatory Ascending Clock
Auction. In this system auctioneer
increments the premium on electronic
platform till demand supply equi-
librium is established. Bidder will have

to register each EUP on the MSTC
system. In the event that the bidder
combines one or more DRI/Cement
units under one EUP, it will not be able
to split them subsequently and submit
different Bids in respect thereof. As a
part of Conditions to Auction, bidders
shall provide details such as technical
data of EUP (capacity of EUP only
DRI/Cement plant is to be provided),
details of any existing coal linkages
(expiring after June 30, 2016) for the
above EUP and details of any coal
mine allocated under CMSP and/or
MMDR Acts.
Premium shall remain constant
over contract period; Notified price to
be paid shall be suitably indexed on
semi annual basis. The auction will
commence at the Reserve Price (Floor
Price) and the bidders shall bid for
premium above the Reserve Price and
for a particular Quantity. Reserve Price
shall be the notified price published for
a particular grade of coal.
Premium for the first round will be
Rs. Zero/ tonne. Other than the first
round, round premiums will depend
on the Demand/Supply Ratio of the
immediately preceding round and will
be determined by the auction platform
as follows:
The system will then calculate the
Normative Coal Requirement of the
EUP. Bidders can bid up to normative
annual coal requirement of the end
use plant (EUP). The Bidder shall
deposit the necessary Bid Security
and the Process Fee. The Bidders
also need to submit a process fee in
the form of an earnest money deposit
within the timelines stipulated. Post
submission of the requisite infor-
mation/payments, e-auction process
will commence wherein the bidders
are required to bid for quantity
against a certain price.
CIL will allocate coal from area or
mine within a subsidiary, as deemed fit.
Linkage Auctions for Sponge Iron and
Cement already concluded during June
10-16 and June 28-July 2 respectively.
Demand/Supply Ratio in a particular round
Greater than 100% and less than or equal to 125%
Greater than 125% and less than or equal to 200%
Greater than 200% and less than or equal to 300%
Greater than 300%
The Sponge Iron Manu-
facturers Association
had argued against
clubbing of sponge iron
sector with cement and
captive power produc-
ers sectors. Further, the
association wanted coal
mines of high grades to
be exclusively reserved
for iron and steel sector
as coal is a feed stock
used to reduce iron ore
unlike other sectors
where it is used as heat-
ing fuel
Linkage Auctions for Captive Power
announced on June 22, and auctions
scheduled to start on 19 July 2016.
Muted response has been received
from sponge-iron and cement sectors
with 40-45% quantity remaining
un-allocated. Low response has been
witnessed for higher grades. After the
cement sector, coal linkages will be
offered to captive power plants.
Voices of discontent
The decision to auction coal link-
ages for non-regulated sector had its
share of opposition from the sec-
tor. According to CII, the proposed
methodology of auction may lead
to unsustainable price discovery as
demand for coal is much more than
the availability and also because
Coal India is the only supplier in the
market. Further, Cement Manufac-
August 2016
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Incremental
Round Premium
(Rs. per tonne)
10
25
50
100
turers Association had argued the
present fuel supply agreement system
be continued and the implementation
of proposed market based allocation
mechanism be only done after de-
velopment of infrastructure like port
and railway to facilitate movement
of coal from mines/ports in an cost
effective manner. The association
wanted the government to shift to e-
auction methodology after the indig-
enous production would be adequate
to meet the ever rising demand.
The Sponge Iron Manufacturers
Association had argued against 29
clubbing of sponge iron sector with
cement and captive power producers
(CPP) sectors. Further, the association
wanted coal mines of high grades to
be exclusively reserved for iron and
steel sector as coal is a feed stock
used to reduce iron ore unlike other
sectors where it is used as heating
fuel. Besides, Railways need to accord
same priority to the sponge iron plants
in allocation of rakes as is given to
steel plants.
Similar fears were voiced by the
Indian Captive Power Producers
Association indicating that the
auction and market based allocation
will help and serve purpose of coal
consumers within the close vicinity
of auction pit heads and far away
consumers will be deprived and
never be able to get coal through this
process. According to the association,
all CPPs should have been kept in
one basket and pegged at par with
power generation category with the
creation of quota for them.
For suggestions email at feedback@infraline.com
 August 2016
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InDepth
Flexibility in utilisation of domestic coal
to bring down cost of power generation

30

To reduce cost of power generation by 40-50 paise per unit; savings of Rs 25,000 crore PA
To help in better utilization and consumption of domestic coal by the industry

By Team InfralinePlus

Coal is the primary source of power
generation in our country. Broadly
coal-based thermal power plants can
be categorized as Pit Head based
plants, which are situated near coal
Mines, and Load centre based plants
situated near load centres. Depending
upon the technology, thermal power
plant has different efficiency levels for
conversion of coal to electricity. The
cost of generation of power is depen-
dent on timely availability of coal and
transportation distance of coal from
mine to generating station. Presently,
on one hand, there are efficient power
plants faced with a shortage of coal
and on the other hand other plants are
running way below capacity.
The Union Cabinet on May 4,
2016 has approved a proposal to relax
norms for utilisation of domestic coal
with an objective of allowing optimal
utilization of domestic coal by the
generation utilities for reducing power
purchase cost of state-owned distri-
bution utilities. This initiative paves
way for optimal use of domestic coal
in efficient power plants as well as
lowers the cost of electricity. It is also
in line with the UDAY scheme which
envisages liberally allowing of coal
swaps from inefficient plants to effi-
cient plants and from plants situated
 August 2016
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away from coal mines to pit head to

minimize cost of coal transportation
which consequently help in reduction
in cost ofpower.
Before this reform, coal linkages
were provided to individual com-
panies for a particular plant only. The
linkage was not allowed to transfer the
coal even between two plants of the
same company. Though to ensure cost
optimization through savings in the
transportation cost, the government
has recently allowed swapping of
coal linkage between some plants of
NTPC. However this arrangement was
approved on case-to-case basis.
These norms offer freedom to use
coal in any power generation unit,
instead of prefixing its source and con-
sumption point. This provides flexibility These norms offer freedom to use coal in any
in use of coal amongst the generating
stations of state owned utilities, plants
power generation unit, instead of prefixing its
of other state power utilities, company source and consumption point. This provides
owning the Central Generating stations flexibility in use of coal amongst the generating 31
and IPPs, amongst each other. stations of state owned utilities, plants of other
The proposal envisages that all the
long term coal supply contracts of state
state power utilities, company owning the Central
generating stations will be clubbed and Generating stations and IPPs, amongst each other
assigned to respective states or state nom-
inated agency. Similarly, coal linkages of The Central Electricity Authority Generating stations, other State Gen-
individual central generating stations will (CEA) is the authorized body which erating Stations, Central Generating
be clubbed and assigned to the company in consultation with all the Stake- Stations (CGS) and IPPs. Similarly
owning them, so as to enable efficient holders issues the methodology methodologies used by a company
coal utilization or allocation amongst end for implementation of use of coal owning CGS for use of coal in their
use generating stations. assigned to the State(s) in their own own plants or any other efficient

Average cost of supply for a discom at varying levels of mix of coal based generation
in procurement and average distance for coal transportation
Average cost of supply
Average distance for coal transportation (KM)
per unit sold (Rs/unit)

% mix of 100 200 300 400 500 600

coal based 55% 5.90 5.96 6.03 6.09 6.15 6.22
generation
in overall 60% 5.78 5.85 5.92 5.99 6.06 6.13
procurement 65% 5.66 5.74 5.81 5.81 5.96 6.04
for the
discom 70% 5.54 5.63 5.71 5.71 5.87 5.95
75% 5.43 5.51 5.60 5.60 5.77 5.86
Source: ICRA
 August 2016
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InDepth
plants shall also be issued by Central
Electricity Authority.
For usage of coal in State or Central
power generating stations, the deciding
criteria will be plant efficiency, coal
transportation cost, transmission
charges and overall cost of power. The
actual realization of savings depends
on the decrease in the coal transpor-
tation distance.
Benefits envisaged
It is a positive development for the
utilities as it would result in an optimal
utilization of the linkage coal from
mines and assist to minimize the trans-
portation cost of domestic coal used.
Coal is transported from mines to end
user plants within range of varied dif-
ference range most likely between 100
km to 1000 km.
On an average, coal is transported
for 700 kilometer as sources of
32 coal for every generating station is
prefixed. Providing flexibility for con-
sumption points will lead to optimal
utilization and help lower transpor-
tation costs. This in turn will lead to
reduction in power purchase cost for
distribution utilities.
According to ICRA, the average
cost of supply for distribution utility
Impact of new norms
It is expected this initiative will help to reduce cost of power generation
by 40-50 paise per unit which will subsequently lead to savings of Rs
25,000 crore per annum in 4-5 years.
It is also anticipated that it will help in improving the consumption of
domestic coal by the industry, mainly the power sector, against cheaper
imports in the country.
It is a positive
development for the
utilities as it would
result in an optimal
utilization of the
linkage coal from
mines and assist
to minimize the
transportation cost of
domestic coal used.
Coal is transported
from mines to end user
plants within range of
varied difference range
most likely between
100 km to 1000 km
is estimated to decrease by 7 paise
per unit for every 100 km reduction
in distance travelled for transpor-
tation of coal, considering that the
distribution utility procures 60% of
its overall power requirement from
coal-based generation stations. If this
assumption is altered i.e. distribution
utility procures 75% of its overall
power requirement from coal based
generation stations than for every 100
km reduction in coal haulage, cost of
generation would reduce by 9 paise
per unit.
Average cost of supply for a discom
at varying levels of mix of coal based
generation in procurement and average
distance for coal transportation
It will not only help in reduction
of transportation cost but also result
in removal of congestion of Railway
network. This will also be a more
environment friendly arrangement as
less coal will be used to produce more
power and also the distance for trans-
portation of coal would be optimized.
Considering the coal prices remains
low and domestic coal production
maintains its growth rate during the
year, the government is expecting
to reduce the coal importbill by Rs
40,000 crore duringFY17.
This will also help in getting rid
of micro management by government
for utilization of coal in specified
facilities and to grant more flexibility
to central public sector undertakings,
states and private power producers at a
group level to determine which of their
facilities gets the fuel.
For suggestions email at feedback@infraline.com
 August 2016
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StatisticsCoal
Trends in Consumption of Energy Sources inIndia(FY06 - FY15)
Coal# Lignite Crude Oil** Natural Gas(Billion Electricity*
Year
(Million Tonnes) (MMT) CubicMetres) $ (GWh)

2005-06 433.27 30.24 130.11 36.39 118,818.00

2006-07 462.35 30.81 146.55 37.6 132,304.00
2007-08 502.82 34.65 156.1 39.8 137,344.00
2008-09 549.57 31.85 160.77 39.81 142,576.00
2009-10 585.3 34.41 192.77 55.67 125,316.00
2010-11 589.87 37.69 196.99 61.18 140,524.00
2011-12 642.64 42.77 204.12 59.69 163,000.00
2012-13 688.75 46.83 219.21 52.92 146,497.00
2013-14 724.18 44.64 222.5 47.67 169,076.00
2014-15(p) 827.57 49.57 223.24 48.25 165,346.00
Growth rate of 14.28 11.05 0.33 1.22 -2.21
2014-15 over 2013-
14 (% )
CAGR 2005- 06 to 6.69 5.07 5.55 2.86 3.36
2014-15(% )
(p): Provisional
GWh = Giga Watt hour = 106 xKilo Watt hour 33
*Includes hydro & nuclear electricity from utilities.
**Crude oil in terms of refinery crude throughput.
$ Due to non-availability of the Consumption data it has been assumed that Consumption is equal to the Production
# Does not include Lignite

Trends in Industry wise Consumption of Raw Coal in India(FY06 - FY15) (Million tonnes)
Fertil-
Elec- Steel & Sponge
Year Cement Paper Textile izers & Brick Others * Total
tricity Washery Iron
chemicals
1 2 3 4 5 6 7 8 9 10=2 to 9
2005-06 306.04 19.66 14.97 2.77 0.29 - - - 51.85 395.59
2006-07 321.91 17.3 14.71 2.5 0.3 - - - 63.08 419.8
2007-08 350.58 16.99 15.27 2.64 0.37 - - - 67.72 453.57
2008-09 377.27 16.58 13.12 2.16 2.53 - - - 77.52 489.17
2009-10 390.58 16.45 14.66 2.34 0.27 - - - 89.5 513.79
2010-11 395.84 17.26 15.08 2.43 0.28 - - - 92.58 523.47
2011-12 437.67 47.86 26.36 2.03 0.26 21.69 2.82 0.13 69.36 608.17
2012-13 485.47 51.7 31.79 2.12 0.3 20.9 2.86 2.01 116.24 713.39
2013-14 493.25 53.05 32.46 1.91 0.36 18.49 2.64 4.01 133.19 739.34
2014-15(p) 527.1 66.37 37.95 1.54 0.42 14.68 2.69 0.11 169.46 820.31
Distribution (%) 64.26 8.09 4.63 0.19 0.05 1.79 0.33 0.01 20.66 100
Growth rate of 6.86 25.11 16.91 -19.15 16.39 -20.64 2.05 -97.18 27.23 10.95
2014-15 over
2013-14(%) CAGR 5.59 12.94 9.75 -5.71 3.82 -9.3 -1.17 -3.26 12.57 7.57
2005-06 to 2014-
15(%)
(P): Provisional
* Includes Sponge Iron, colliery consumption, jute, bricks, coal for soft coke, fertilisers & other industries consumption.
@ From 1996-97 and onwards Cotton includes Rayon also.
 August 2016
www.InfralinePlus.com

StatisticsCoal
Monthly Coal Production during FY12 to FY17 (Million Tonnes)
Month 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12
April 40.35 48.87 45.38 43.52 41.46 39.84
May 42.58 49.23 45.58 43.23 44.09 40.76
June 42.27 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) 125.65 637.87 609.18 565.85 553.18 532.72

FOB Thermal Coal Prices - Australia & South Africa - FY 2017

Australia (FOB Newcastle South Africa (FOB Richards
Month
6700 kcal/kg) (USD/Ton) Bay 6000 kcal/kg) (USD/Ton)

April 16 50.8 52.7

May 16 51.2 53.7

34
Jun 16 53.4 57.3

Indonesian Coal Prices - HBA - FY 2016-17

HBA HPB MARKER (kcal/kg GAR) (USD/Ton)
6322
Month kcal/kg Gunung Prima Pinang Indominco Melawan Jorong
Envirocoal Ecocoal
(USD/ Bayan I Coal Coal IM East Coal
5000
J-1
4400
ton) 7000 6700 6150 5700 5400 4400

April 16 52.32 55.87 57.84 52.29 43.06 43.25 41.6 33.45 30.87
May 16 51.2 54.66 56.7 51.26 42.16 42.44 40.89 32.88 30.35
Jun 16 51.81 55.32 57.32 51.82 42.65 42.88 41.28 33.19 30.63

CoverStory
GST: A mixed bag for energy,
infra sectors
GST could add 1 to 1.5 per cent to GDP, say economists
Renewable energy to feel the brunt due to higher solar and wind tariffs
By Infraline Bureau
History was made on 3rd August, 2016,
with India taking a giant leap towards
a single unified market after the Rajya
Sabha approved the Goods and Ser-
vices Tax (GST) a reform considered
almost three decades back. Taxation
experts say that the GST will transform
the Indian economy by giving rise to a
common market and reduce the cascad-
ing effect of tax on the cost of goods
and services.
Specifically, the proposed reform
will impact the Tax Structure, Tax Inci-
dence, Tax Computation, Tax Payment,
Compliance, Credit Utilization and
Reporting leading to a complete
overhaul of the current indirect tax
system, says consulting firm EY. It adds
GST will have a far-reaching impact on
almost all the aspects of the business
operations in the country, for instance,
pricing of products and services; supply
chain optimization; IT, accounting and
tax compliance systems.
Economists say that implementation
of GST could add 1 to 1.5 per cent to
GDP, supporting the ongoing economic
recovery that remains fragile. While
August 2016
www.InfralinePlus.com
35
the overall economy will definitely get
a boost from the implementation of the
GST, impact on different sub-sectors in
the energy sector will not be uniform.
Renewable sector will feel the pinch
when the country shifts to the GST even
as there is no consensus over bringing
oil, gas and electricity within the ambit
of the proposed indirect tax reform.
Conventional power producers,
however, expect significant gains
from the implementation of the GST.
Currently, the power sector is subject
to multiple taxes on capital goods and
 August 2016
www.InfralinePlus.com
CoverStory
other inputs. The incidence of these
taxes passes to end consumers in the
form of higher tariffs. It is estimated
that the GST rate of 18 per cent for
power sector could result in nearly
15 per cent reduction to consumers,
says Ashok Khurana, director general,
Association of Power Producers. On
the other hand, the GST could create
complications for infrastructure and
real estate sectors which are currently
enjoying various tax sops.
Renewable energy to feel
the brunt of GST
GST is a key taxation reform as it seeks
to simplify a complex maze of state
and central taxes by subsuming these
into a single tax levied at the point of
consumption. Renewable sector, cur-
rently a beneficiary of several indirect
tax exemptions, may be a big loser as a
result of GST since the bill proposes to
36 revoke most of the exemptions.
Despite the threat looming over
the renewable energy sector, Union
power minister Piyush Goyal seems
disinclined to pitch for keeping the
industry out of the GST purview.
Instead, he wants a level-playing field
for domestic manufactures. Ideally
we should put GST on imports so that
it becomes a level-playing field and
domestic manufacturing is not at dis-
advantage. Today there is an inverted
duty structure. Domestic manufac-
turers are paying more taxes than
imports, Goyal said recently.
Bridge to India, a solar sector con-
sulting firm, says that due to implemen-
tation of the GST, input cost or tariff
increase will go up by 12-20 per cent,
which could wipe out the pricing gains
of the past two years in the solar sector.
The cost increase of this magnitude
would also put viability of several
projects in jeopardy.
The cost increase would arise
because of two reasons: currently, no
import duty or indirect tax is applicable
on solar modules but under the new
regime, GST of between 17-20 per cent
Under the current
regime, there is no tax
or duty applicable on
import of solar cells or
modules as against an
import duty of 26-29 per
cent applicable to most
goods. As solar modules
are normally procured
directly by the project
developers, there is
also no additional local
tax. Under the GST
regime, this zero rate
would be replaced by
a combination of basic
custom duty and the
applicable GST rate
would be payable. The consulting firm
points out that VAT and other levies
such as excise, entry tax and octroi on
solar modules and the complete system,
together at around 5 per cent in most
states because of many exemptions,
would again be replaced by a combined
GST of 17-20 per cent.
The industry had been expecting
solar cells and modules to find a place
in the exemption list of around 100
essential items where GST would be
waived off. But given Goyals com-
ments, that looks unlikely. Solar
equipment would fall either under the
standard list or merit list. In either sce-
nario, the overall project cost is likely
to increase and pare most of the price
reduction gains made over the last 1-2
years, Bridge-to-India concludes.
Under the current regime, there is
no tax or duty applicable on import
of solar cells or modules as against
an import duty of 26-29 per cent
applicable to most goods. As solar
modules are normally procured directly
by the project developers, there is also
no additional local tax. Under the GST
regime, this zero rate would be replaced
by a combination of basic custom duty
and the applicable GST rate.
It is expected that the basic custom
duty will continue to be waived off
for solar cells and modules but the
standard GST rate will need to be
paid. The standard import duty for
inverters in India is 28.44 per cent but
this is reduced to just 5.15 per cent for
solar projects. Consequently, the cost
of imported solar inverters will also
increase under the GST regime.
However, many prominent
international inverter suppliers
assemble their inverters in India and
tax inefficiencies weeded out by GST

should benefit local manufacturing by
providing them with a level playing
field against imports.
Currently, VAT and/or a CST is appli-
cable on sale of equipment within India.
Several states including Uttar Pradesh
(UP) and Rajasthan have completely
waived off VAT, normally around 14
per cent for solar equipment, and most
other states have set it around the 5 per
cent. Excise duty on manufacturers is
also waived off for items such as solar
module mounting structures. As all these
exemptions go away and VAT, CST and
excise duty get replaced with GST, the
project cost will certainly increase.
However, a part of this increase
will be offset as a pass through will be
allowed on the GST paid at the time
of import and savings on multiple
taxes and duties along the value chain,
Bridge-to-India says.
The magnitude of actual cost
increase will depend on the applicable
GST rate and the procurement pattern.
The ministry of new and renewable
energy (MNRE) estimates the cost
increase to be in the range of 12-16
per cent for a GST rate of 20 per cent.
Now the question is how do devel-
opers manage the risk of GST being
implemented when they are bidding for
projects and signing PPAs?
Most power purchase agreements
(PPAs) in India include a change in
law clause, wherein, any impact due
to change in law is passed through to
power procurers. However, there is no
precedence or a process in place for
calculating the pass through impact
of such a change for bidding based
solar project. This uncertainty will be
a cause of concern for the investors,
say analysts. Post implementation of
GST, power distribution companies
Currently, VAT and/or
a CST is applicable on
sale of equipment within
India. Several states
including Uttar Pradesh
(UP) and Rajasthan
have completely waived
off VAT, normally around
14 per cent for solar
equipment, and most
other states have set
it around the 5 per
cent. Excise duty on
manufacturers is also
waived off for items
such as solar module
mounting structures
August 2016
www.InfralinePlus.com
willingness to buy more solar power at
higher tariffs will also be affected and
could pose another short-term chal-
lenge for the sector.
Similarly, cost of wind power will
go up by 11-14 per cent, depending
on whether equipment are procured
within or outside home state. Cur-
rently, wind power equipment are
exempted from additional excise duty
and special additional duty. However,
when GST comes into effect, IGST of
20 per cent along with additional tax of
1 per cent will be applicable on inter-
state procurement of wind equipment.
However, for intra-state procurement,
only 20 per cent IGST will be appli-
cable on wind power equipment.
Service tax which is currently
applicable at 14.5 per cent would be
replaced by GST of 20 per cent. Lev-
elised tariff could go up to nearly Rs
7.5 a unit from the current level of Rs
6.58 a unit. 37
Power and coal sector to
reap benefits
Power companies have made a strong
case for the inclusion of power, coal
and natural gas in the GST regime to
subsume multiple taxes and thereby
reduce the cost of power projects and
the per-unit tariff. They say the power
transmission & distribution (T&D) sec-
tor should be granted the infrastructure
industry status and that all related tax
benefits available to other infrastruc-
ture sectors be extended to this sector.
Industry players say even though
generation is exempt from CENVAT,
excise and value-added tax, taxes on
power generation equipment and other
inputs are included in the cost of power.
The overall impact of present taxation
regime at both Central and state levels
leads to higher price of power.
A power sector analyst explained
that taxes on domestic coal are at 27-28
per cent while on domestic natural gas
it is at 19 per cent. Besides, service
tax is levied at 14.5 per cent on input
service availed such as engineering,
 August 2016
www.InfralinePlus.com
CoverStory
procurement and construction; oper-
ation and maintenance services; and
electricity duty is levied at one per cent
of cost of generation and 17-20 per cent
across states on consumption of power.
It is estimated that a GST rate of 18 per
cent for the power sector could result in
15-20 per cent reduction in retail tariff.
Further, a cut in power cost will also
improve payment by end-consumers
and reduce incentive for theft and
losses. This will also help distribution
utilities to reduce their problem of
revenue deficit, the analyst said.
There will be no difference between
inter and intra states with the launch
of GST and the benefit of availing
CST will be done away with, which is
expected to result in lesser movement
of goods, thereby reducing logistics
costs. The government should not put
electricity in the exempted category of
goods under GST regime so that the
38 cascading impact and burden of tax
does not fall on electricity consumers.
The inclusion of power and coal
sectors in GST regime will result
in lowering of bulk power, retail
tariff and support the Make in India
initiative, said another tax expert.
Industry players want the government
to announce extension of e-bid LNG
scheme by another five years to take
advantage of low crude oil prices
and extend Ujwal Discom Assurance
Yojana (UDAY) scheme to private
owned discoms.
Oil and Gas: Consensus
yet to emerge
There is still no consensus over bring-
ing oil and gas within the GST ambit.
However, there is provision for includ-
ing the sector in GST at a later stage
when political consensus is achieved.
Analysts have pointed out various
inconsistencies in GSTs provisions.
For example, they have pointed out
that while input (goods and services)
consumed in exploration and produc-
tion of crude oil and natural gas will be
under the GST regime, crude oil and
as naphtha, light diesel oil, kerosene,
There will be no furnace oil, etc, will be under the GST
difference between inter regime. This arrangement will lead
and intra states with to avoidable multiple tax regimes for
the launch of GST and petroleum sector, extra burden on the
the benefit of availing consumer and add to the tax burden on
consumers, warn tax experts. It will
CST will be done away
also increase compliance work for state
with, which is expected governments and the industry, they add.
to result in lesser They suggest that a State Con-
movement of goods, trolled Specific levy can be levied
thereby reducing by state governments over and above
logistics costs. The standard SGST on petro, diesel, ATF
and natural gas which will address
government should revenue concerns of the states. The
not put electricity in levy will be a single point levy
the exempted category perhaps at the point of sale from an oil
of goods under GST company to a dealer or consumer on
regime so that the which no input credit will be available
at subsequent stages.
cascading impact and
Tax experts suggest that the
burden of tax does proposed amendment to the
not fall on electricity Constitution be confined to empowering
consumers Centre and the states for levy of GST
on all goods and services. Exclusion
natural gas will be outside the proposed of petroleum products through the
tax net. Crude oil, which is input for proposed Constitution Amendment Bill
refinery, will be outside the purview of is not desirable since it will require
GST whereas other inputs for refineries another Constitutional amendment
will be under GST. to levy GST on these products, even
Crude oil, natural gas, petrol, diesel, if the Centre and the States were to
and jet fuel will be outside GST and reach a consensus on full or partial or
will remain under existing taxation stage-wise implementation of GST for
system. Other petroleum products, such the sector, in future, they pointout.
 August 2016
www.InfralinePlus.com

States concerns on revenue The specified petroleum products Infrastructure benefits

buoyancy and autonomy on taxation would be subject to the current regime may go
of petroleum products can be met by a on the output side and to the GST Under the current policy, infrastructure
state-controlled specific additional levy regime on the procurement side, with projects enjoy concessional duty ben-
on petrol, diesel, ATF and natural gas, GST also applying to non-specified efits under various indirect tax laws,
experts suggest. If crude petroleum, petroleum products. Availability of thus bringing down the cost for infra-
natural gas, petrol, diesel, aviation credit of input GST against output structure projects. However, there is no
turbine fuel and electricity are kept out excise and VAT on specified petroleum clarity on concessions/ exemptions for
of GST, it would result in cascading. products and vice versa seems unlikely, infrastructure projects under the GST
Since petroleum products play an say experts. regime. A project owner engaged in
important role in Indias energy use, setting up of a power plant or engaged
and are used directly or indirectly as If crude petroleum, in power transmission or distribution
inputs in most sectors, the proposed can currently procure goods under
natural gas, petrol,
design would result in cascading in inter-state sales at a concessional CST
various sectors of the economy. diesel, aviation turbine rate of 2 per cent against Form C and
However, bringing these goods fuel and electricity structure some of the procurements as
into the GST regime, without any are kept out of GST, in-transit sale to reduce tax incidence
other changes in the economy, would it would result in on the project. However, there is no
imply that GST has to be levied at such concession provided under the
higher rates for revenues to be pro-
cascading. Since Model GST law. In the absence of such
tected. Since contribution of taxes on petroleum products exemptions, there is a possibility of
petroleum products generate substantial play an important role significant increase in project cost.
revenues for state governments, the in Indias energy use, There is a concept of deemed
latter have expressed apprehension that and are used directly export defined under the Model GST 39
switchover to GST will lead to loss of law. It is yet not clear which types
flexibility that they currently enjoy to
or indirectly as inputs of projects will be eligible for the
increase revenue. in most sectors, the deemed export benefit. To ensure that
They also point out that col- proposed design would there is limited tax burden on infra-
lection is currently easy because of a result in cascading in structure projects, it is important that
limited numbers of assesses (only oil various sectors of the all key types of infrastructure projects
companies). The 10 per cent SGST (including roads, highways, ports,
envisaged on petrol, diesel, jet fuel
economy airport, railways and power) should
and natural gas is lower than the VAT
rates across many states. Promise of
compensation from the Centre is at best
for a limited period and cannot solve a
structural problem, say states.
As per the Amendment Bill, certain
petroleum products (petroleum crude,
high speed diesel, petrol, natural
gas, and aviation turbine fuel) would
remain outside the ambit of GST until
a date to be determined by the GST
Council. Until that date is confirmed,
existing indirect taxes would continue
to apply on petroleum products. This
means that production/manufacture of
petroleum products would continue
to attract excise duty, as currently
applied, and sale of these products
would be subject to VAT/ CST, as cur-
rently applied.
 August 2016
www.InfralinePlus.com
CoverStory
be made eligible for deemed export
benefits, say experts.
Free of cost (FOC) supplies by
project owners to contractors appears
to be liable to GST. Thereafter, the
contractor may need to include value
of such free supplies in the value of
his services, thereby increasing the tax
incidence, especially in scenarios where
the project owner is not eligible to take
credit, or where the contractor avails
any exemption. Else, the FOC supplies
would create a cash flow issue, warn
experts. Project cost may be impacted
due to GST credit restrictions in many
sectors, depending upon the end use.
Place of provision for services in
relation to immovable property would
be location of the immovable property.
There may be possible issues
where a single contract is entered into
for provision of services related to
immovable properties across two or
40 more states. For example, in case of
highway construction services, railway
track laying project, typically a single
contract may be entered into with
the vendor, for which consolidated
invoices may be raised at one location.
Such a contract may involve execution
across multiple states.
Under the current regime, contractors
are required to segregate contract values
(for sale of goods) for the purpose of
determining VAT/ CST liability in dif-
ferent states. However, considering that
there would be no distinction between
goods and services under the GST
regime, the same would need to be done
for services as well, and hence, there
may be a requirement for the vendor
to raise separate invoices, for which
separate contracts may also be required,
warn tax consultants.
In case of infrastructure projects,
Indian entities do procure significant
amount of services, especially per-
taining to technical know-how, designs
from their parent companies. Under the
GST Model Law, the concept of valu-
ation for services in related party trans-
actions has been introduced. Therefore,
for any services provided between
group companies, such as royalty for
access to global brand, group company
cost allocations, etc, it needs to be
demonstrated that the transaction is at
arms-length. If this cannot be demon-
strated, the value will be determined
based on the GST valuation rules, that
is, based on services of like kind and
quality, or the cost of providing the
services, including profit.
Implementing these provisions
may be challenging to implement in
respect of cross-border transactions, as
it may not be feasible for the resident
entity to obtain the value of similar
In case of infrastructure
projects, Indian entities
do procure significant
amount of services,
especially pertaining
to technical know-how,
designs from their
parent companies.
Under the GST Model
Law, the concept of
valuation for services
in related party
transactions has been
introduced
services, or to provide the details of
their cost of supply of services, to
substantiate that the price is at arms
length. Additionally, the Model GST
Law provides that if there is a reason
to doubt the accuracy of the transaction
value declared by the supplier, then the
authorities can determine the trans-
action value as per the GST valuation
rules. Such an unfettered power to
question the transaction value can lead
to litigation, warns PwC.
Real estate to see
additional tax burden
The Model GST Law specifies that
works contract would be taxed as a
service. This is a welcome move and
should provide certainty on taxability
of the construction sector, says Anita
Rastogi, Partner-Indirect Tax, PwC.
The concern is however from the as-
pect of valuation as currently no deduc-
tion is provided under GST for value
of land, or no abatement/ composition
is provided. This may lead to signifi-
cant increase in tax burden, especially
if such services are taxed at Standard
GST rate (which is expected to be 18
per cent), she adds.
Even if such services are subjected
to lower tax rate (expected to be
around 12 per cent) considering that
there is additional tax incidence in the
form of Stamp duty on value of land/
immovable property, it would need to
be evaluated whether the tax incidence
would be higher than the current
regime (in absence of any deduction).
Additionally not all expenses incurred
are allowed as credits and this restric-
tions under credit rules could have sig-
nificant adverse impact on Real Estate
industry. The industry was expecting a
much more liberal credit regime where
it could get the credit of the con-
struction services acquired in relation
to commercial property which would
be subsequently leased, Rastogi says.
However, the draft law could be
interpreted to mean that there may
not be any credit available either to a
contractor or the developer involved
in construction of immovable property
(whether sold as underconstruction
property or leased). This does not
seem to be the intent of the lawmaker
and hence would need significant
revision, experts point out. Consid-
ering the absence of valuation rules and
the restrictions under credit rules, the
proposed law as it stands today could
have a negative impact on the industry,
says PwC. It now remains to be see
when the GST bill will be passed and
in what form.
For suggestions email at feedback@infraline.com

NewsBriefs | Oil & Gas National
Government set to start talks on merging 13 state oil companies to create behemoth
The government is set to start consultations
for an ambitious plan to merge 13 state oil
firms to create a giant corporation whose
revenue dwarfs global energy major Chevron
In a first, natural gas hydrates discovered in the Indian Ocean
A large natural gas discovery has been
made in the Indian Ocean following a joint
expedition by India and the U.S., opening
up a new resource to meet energy needs.
Indias Oil Ministry and the US Geological
Survey made the discovery of large, highly
enriched accumulations of natural gas
hydrate an icy form of the fuel in the
Bay of Bengal. This is the first discovery
of its kind in the Indian Ocean that has the
potential to be producible, the US agency
said. India had in September 2014 agreed to
collaborate to explore gas hydrates potential
in the country and identify sites for pilot
production testing. Natural gas hydrates are
a naturally occurring, ice-like combination
India, US to forge closer ties in oil, gas sector
India and the US have decided to
forge closer institutional and technical
co-operation in the energy sector for
re-assessment of conventional and
unconventional hydrocarbon reserves
in India, including its offshore areas. Oil
minister Dharmendra Pradhan discussed
the contours of a way forward during his
meeting with US energy secretary Ernest
Moniz in Washington. The two ministers
reviewed bilateral energy cooperation,
especially in oil and gas sector, between
the two countries. The two sides also
decided to share new technologies in
development of biofuel and development
which competes with US conglomerate
General Electric in the Fortune-500 ranking.
It is learnt that the Cabinet Secretariat has
referred the idea of the integrated giant, which
would also absorb various institutions related
to safety, development and analysis, to the oil
ministry. Following this, the oil ministry has
begun the process of evaluating the prospects
of creating the conglomerate, which will have
a bigger market value than Russian state oil
giant Rosneft and Indias Reliance Industries
Ltd. It plans to consult all stakeholders in-
cluding the state firms that may be combined
to create the mega corporation that will be
the countrys No. 1 in turnover, net profit, capi-
tal expenditure and market capitalisation.
imports. The audit has also found
of natural gas and water found in oceans
and polar regions. The amount of gas within
the worlds gas hydrate accumulations is
estimated to greatly exceed the volume of
all known conventional gas resources.
of petroleum storage. The bilateral energy
cooperation between the two countries
had started in the form of an energy
dialogue in 2005, which also includes oil
August 2016
www.InfralinePlus.com
CAG audit nails Centres claim on
LPG subsidy saving
The Centre claims it would end up
saving almost Rs. 22,000 crore in the
financial years of 2014-15 and 2015-
16 since launching its two-pronged
approach on cooking gas subsidy
introducing direct bank transfers
of the subsidy and asking better off
consumers to voluntarily give up theirs.
However, a CAG report could seriously
puncture the claim. The audit has found
that the saving from people voluntarily
giving up LPG subsidy and direct bank
transfers adds up to less than Rs.
2,000 crore. The remaining saving is 41
actually thanks to the dramatic fall in
the prices of LPG that India annually
substantial systemic problems with
the Direct Benefit Transfer in LPG
scheme which is called Pahal by the
government. Among them are diversion
of domestic subsidy for commercial
use and commercial consumption LPG
being diverted to domestic use.
and gas. Over the last decade, several
areas of cooperation, such as technology
for production from marginal fields,
shale structures, developing gas pipeline
network, improving refinery efficiency etc.
had been identified. GAIL has contracted
5.8 million tonne per year of liquid gas
from shale gas projects in the US, from
where delivery is expected to start from
2017-end. Other Indian companies have
also invested in shale oil and gas projects
in the US. GAIL has 20% equity in Eagle
Ford basin; Indian Oil and Oil India have
10% equity in Niobrara basin project.
 August 2016
www.InfralinePlus.com
NewsBriefs | Oil & Gas National
Iraq becomes Indias top oil supplier
Iraq overtook Saudi Arabia for the first time
to become Indias top oil supplier in the
June quarter, helped by sales of discounted
heavy crude that refiners have also been
using to make bitumen to build roads in the
worlds No.3 oil consumer. State oil firm
Saudi Aramco has traditionally been the
ONGC should merge with a refining firm to stay competitive
Oil and Natural Gas Corporation (ONGC)
should merge with a refining corporation
such as Indian Oil, Bharat Petroleum or
Hindustan Petroleum to weather price
42 volatility, stabilise its income and stay
competitive, a director at the state-run
company said. As an integrated company,
during price fluctuations ONGC can make up
in its refining and petrochemicals business
whatever it loses as a crude oil producer.
This will help stabilise the companys
revenue and profit, Tapas Kumar Sengupta,
director (offshore) said. Major oil firms
across the world are better able to deal
with the cyclical nature of the oil markets
because they are integrated, he said.
RIL, BP spend Rs 4,500 crore to maintain gas output at KG-D6
Reliance Industries and its partner BP plc of
UK have invested over Rs 4,500 crore in the
flagging eastern offshore KG-D6 block to
maintain gas output at current level despite
the steep natural decline that has set in the
seven-year old fields. RIL-BP are currently
producing from Dhirubhai-1 and 3 gas field
and MA oil and gas field, three of the over
one-and-half dozen discoveries made in the
Bay of Bengal Block KG-DWN-98/3 or KG-
D6. The fields, which began gas production
in April 2009, hit a peak output of 69.43
million standard cubic meters per day in
March 2010 before water and sand ingress
shut down well after well. The fields are
IOC in talks to buy GSPCs stake in
main supplier to India and Riyadh could
face pressure to deepen crude price cuts to
regain market share, particularly ahead of
the planned listing of Saudi Aramco. Iraqi
oil accounted for about a fifth of Indian
imports in the second quarter, up from 16
per cent a year ago. The Saudi market share
in India over the period fell to about 18 per
cent from a fifth last year, marking the first
time Iraq has overtaken Saudi Arabia in an
entire quarter. Facing inroads into its market
shares, Saudi Aramco this month slashed
the August official selling price (OSP) of its
benchmark light crude grade to Asia by the
most in nine months but analysts warned it
may need to make deeper cuts.
ONGC already has presence in refining and
petrochemicals through its units Mangalore
Refinery and Petrochemicals Ltd and ONGC
Petro additions Ltd but Sengupta said the
scale has to be much bigger.
on steep natural decline and RIL-BP have
spent over Rs 4,500 crore arrest the decline
and continue to increase the ultimate
recovery of gas. The block is currently
Mundra LNG terminal
Indian Oil Corporation (IOC) is in talks to
buy debt-laden Gujarat State Petroleum
Corps (GPSC) stake in the under-
construction Rs 4,500 crore Mundra
LNG import terminal in Gujarat. GSPC
is looking to exit the 5 million tonnes a
year LNG import terminal project, which
is likely to be completed by mid-2017. It
has offered its 50 per cent stake in the
terminal to IOC. With a view to expand its
gas business, IOC is keen to buy a stake in
Mundra terminal but does not want GSPC
to exit the project completely. IOC, the
countrys largest oil company, wants the
state government entity to remain as a
part of the project for smooth operations.
The terminal is not connected with any
pipeline for shipping gas to consumers. To
lay a pipeline to the nearest grid, it would
require state government support and
with GSPC on board, it could be done eas-
ily, according to IOC. IOC is keen to take
half of GSPC stake and wants the Gujarat
government entity to keep the remaining
25 per cent. GSPC LNG - a unit of GSPC -
holds 50 per cent interest in the project.
producing 8.7 mmscmd. Currently, RIL-BP
are in the process of sidetracking (drilling)
two of their existing wells and drilling away
from the water to increase recovery of gas.
Side-track campaign has also been initiated
in MA field. Sources said the existing and
enhanced production from these fields only
get the price as per the formula that was
approved in November 2014. Price according
to this formula currently is USD 3.06 per
million British thermal unit and is expected
to be revised lower in October 2016. At
these prices, leave alone new investment,
even the base business will struggle to yield
any profits, they said.

NewsBriefs | Oil & Gas International
Total lands LNG deal with Japan
French energy company Total said it has
landed a 17-year agreement to supply
liquefied natural gas to the Japanese
market starting in 2019. Total signed a
binding agreement with Japanese utility
China plans 70 million cubic meters for strategic oil storage
China plans to construct a total of 70 million
cubic meters of storage for its strategic
petroleum reserve (SPR) in three construc-
tion phases. Equivalent to 441 million barrels,
that would equal about 60 days of Chinas
current crude imports of about 7.4 million
barrels per day. Though it is not known when
the 70 million cubic meters of storage would
be completed, the China Securities Journal
reported that the government plans to build
44.6 million cubic meters, or 281 million
barrels, of SPR storage sites by 2020, citing a
draft government plan for 2016-2020 for the
energy sector. The storage sites being built
over the next four years would equal roughly
38 days of Chinas current oil imports. It
Bangladesh in first LNG import terminal
Excelerate Energy, Petrobangla, and the
Government of Bangladesh executed
an agreement for the construction and
operation of Bangladeshs first liquefied
natural gas LNG import terminal
Moheshkhali Floating LNG (FLNG). Located
offshore near Moheshkhali Island in the
Bay of Bengal, the FLNG will provide
the crucial infrastructure required for
the country to access natural gas from
global markets. It is expected to be in
operation in 2018. The new terminal
will enable Petrobangla to procure LNG
from international gas markets, which
will further complement and enhance
Chugoku Electric for the direct supply of
LNG sourced from the French companys
global portfolio. Strengthening our
presence in Japan, the worlds largest
LNG importer, through long-term
cooperation with leading LNG buyers such
as Chugoku Electric is a key component
of Totals strategy, Laurent Vivier, the
president of Totals gas portfolio, said.
Japan started taking on more natural gas
to make up for the loss of nuclear power
in the wake of the Fukushima Daicchi
reactor meltdown in 2011. With the restart
of some reactors, however, demand for
gas could start moving lower on sector
diversity and economic grounds.
would add to the countrys existing strategic
reserves held in seven above-ground facilities
at Zhoushan, Zhenhai, Dalian, Huangdao,
Dushanzi, Lanzhou and Tianjin, as well as one
underground facility also at Huangdao, with a
total capacity of 28.6 million cubic meters.
Bangladeshs ability to reliably use the
countrys domestic natural gas reserves.
Expanding access to diverse and abundant
sources of natural gas supply will promote
August 2016
www.InfralinePlus.com
BP profits plummet 44% as oil prices
continue to fall
Profits at BP plunged 44% to $720m
(550m) in the second quarter of
2016, as the collapse of crude prices
continues to affect the energy sector.
Oil companies have rushed to cut
costs and curtail investment after oil
prices fell to a 12-year low in January,
resulting in tens of thousands of job
losses in the UK alone. BP boss Bob
Dudley said: Compared with a year
earlier, the underlying second-quarter
result was impacted by lower oil and
gas prices. Dudley said concern about
over supply because of the rising 43
number of rigs being drilled in the US
was overdone. BP is working on the
assumption that oil prices will be in the
range of $50-$55 a barrel next year.
Oil prices fell to a three-month low
amid concerns of a global oversupply
of crude and natural gas. Dudley said it
was a huge relief that the group was
finally able to draw a line under the
Deepwater Horizon oil spill in the Gulf
of Mexico in 2010.
power reliability, industrial development,
and job creation in the region. Moheshkhali
FLNG will be the worlds first fully
integrated turnkey floating LNG terminal
whereby a single provider Excelerate, will
provide all services under a single contract.
Excelerate will fully develop, design,
construct, install, finance, and operate the
terminal. This structure will allow for a
single point of interface and responsibility
to Petrobangla and provide seamless
operations for the Bangladeshi market.
Excelerate will operate the terminal for
15 years, after which the company will
transfer ownership to Petrobangla.
 August 2016
www.InfralinePlus.com

InDepth
A long road ahead for CBM
to be a potential star

44

India estimated to have a CBM resource potential of 28 BCM

CBM needs higher price realization to be successful

By Team InfralinePlus

Indias Coal Bed Methane resources
are said to have the potential to provide
as much as 28 BCM, or about 76 mil
sm3/day, of natural gas by 2040. That is
almost as much as the 2015-16 domestic
production of natural gas of 32 BCM, or
88 mil sm3/day. This future projection
for CBM is given in the India Energy
Outlook document brought out by the
International Energy Agency in Dec
2015, with inputs from various interna-
tional and Indian government agencies.
It is also way above the 2015-16
CBM production level of a mere
0.4 BCM, or just above 1 mil sm3/
day (Table 1). Reaching even this
low level has taken 8 years to reach,
after production of CBM started in
2007-08.
The IE Outlook document
bases its optimism for CBM on its
estimate that, at end of 2014, Indias
Remaining Recoverable Reserves
(RRR) of CBM were 1,230 BCM,
which is similar to the levels for Con-
ventional Onshore, Shallow Offshore,
and Deep Offshore. Only Shale Gas is
significantly higher (Table 2).
Clearly, CBM has a long journey
ahead to reach its full potential. A lot
of exploration still needs to be done.
According to the Directorate General
of Hydrocarbons, the prognosticated
CBM resources in the country are
about 2,600 BCM, spread across 12
states of India, over 26,000 sq.km of
 August 2016
www.InfralinePlus.com

Table 1 Annual CBM Production by Block, in mil sm3

Block 2011-12 2012-13 2013-14 2014-15 2015-16 Operator
Jharia, Jharkhand 3.56 2.95 3.38 2.48 2.04 ONGC
Raniganj East, W.Bengal 9.07 12.83 35.36 91.33 236.50 Essar Oil
Raniganj South,
70.04 88.02 121.13 132.35 152.93 Great Eastern Energy
W.Bengal
Sohagpur East, MP 0.38 2.24 4.50 0.57 0.02 RIL
Sohagpur West, MP 1.14 1.20 1.15 1.51 1.38 RIL
Total mil sm3 84.19 107.24 165.52 228.24 392.87
Total in mil sm3/day 0.23 0.29 0.45 0.63 1.08
Source: MoPNG

Table 2 Natural Gas Resources in India, end 2014 in BCM

Ultimately Remaining
Cumulative Remaining Proven
recoverable recoverable
production % of URR reserves
resources resources
Conventional onshore 1 570 280 1 280 82% 290
Shallow offshore 1 810 500 1 300 72% 340
Deep offshore 1 480 70 1 400 95% 770
Coal Bed Methane 1 230 0 1 230 100% 20
Shale gas 2 720 0 2 720 100% 0 45

Total India 8 810 850 7 930 90% 1 420

in Raniganj South in West Bengal,

For the IE Outlook projections to be attained, the some four years before Government
CBM would have to come from the 8,000 odd sq formulated a CBM policy. GEECL
kms still under exploration, plus the 10,000 sq kms was formally allocated the 210 sq km
that has not yet been awarded for exploration. In block through the FIPB route in 2001.
It has invested over Rs. 1500 crore on
order to gauge the prospects, it is useful to exam-
the block, which produced about 0.4
ine the experience of some of the parties operating mil sm3/d in 2015-16, from about 150
blocks producing CBM wells. This is halfway to the target of
total 300 wells.
total available coal bearing areas. Of Thus, for the IE Outlook projec- GEECL estimates the quantum of
this area, about 16,613 sq.km has been tions to be attained, the CBM would Original Gas-In-Place (OGIP) to be 74
awarded across 33 blocks for explo- have to come from the 8,000 odd sq BCM, which is almost double of that
ration under four rounds of bidding for kms still under exploration, plus the estimated in 2005. Proved Reserves
CBM held (including two nomination 10,000 sq kms that has not yet been were reported at 49 BCM as on March
blocks, and one through Foreign awarded for exploration. In order to 2015 - just a little less than the 54
Investment Promotion Board route). gauge the prospects, it is useful to BCM of Proved Reserves reported by
However, half of the 33 blocks examine the experience of some of Reliance for its Reserves Outside India
have been relinquished (or in that the parties operating blocks pro- (viz North America), or the 66 BCM
process), covering 8,407 sq kms. Only ducing CBM. reported for India, which are princi-
16 are under exploration, as of 31 pally from its conventional fields, such
March 2015. Thus, one-third of the Preset experience as KG D6 field and PMT.
total prospective area of 26,000 sq Great Eastern Energy Corporation Ltd GEECL has another block (667
kms has been relinquished, with no (GEECL) started exploration for CBM sq kms) in Mannargudi, Tamil Nadu
CBM output. in 1993 with Coal India Limited (CIL) in India, with 28 BCM Gas-in-Place.
 August 2016
www.InfralinePlus.com

InDepth

allocation in 2001. The blocks (area

46 There is so much confidence in the CBM potential 995 sq km) are targeted to produce
of the block that Matix Industries Ltd has invested about 3.5 mil sm3/d, from about 1,000
over Rs 4,000 crores in a 1.25 mil mtpa Urea plant wells. Test Production recently started
nearby, in expectation of drawing about 2.5 mil from Sohagpur West block. Reliance
sm3/day from this CBM source. SAIL already has enough confidence in the blocks
to invest in a 302 km gas pipeline to
draws about 0.4 mil sm3/ day. Essar is also
transmit the gas from Shahdol to reach
continuing work on the remaining four blocks the national grid at Phulpur. Reliance
(area 2,233 sq kms) has relinquished 3 blocks from bidding
Round 2.
However, progress is stymied due the life of the block, which is expected The fourth party active in CBM is
toobjections from farmers. to produce CBM for about 25 years. ONGC, which holds three blocks in
Another major player is Essar Oil, There is so much confidence in the Jharkhand, plus one in West Bengal,
which has 5 blocks across Jharkhand, CBM potential of the block that Matix which were estimated to have 62 BCM
Madhya Pradesh, Odisha and West Industries Ltd has invested over Rs Gas Initially In Place at the time of
Bengal, on which it has invested Rs 4,000 crores in a 1.25 mil mtpa Urea allocation in 2001, from total area of
2,270 crores, till March 2015. It has plant nearby, in expectation of drawing 870 sq kms. Only the Jharkhand field is
made the most progress on the 500 about 2.5 mil sm3/day from this CBM in production, but at a very low level.
sq km Raniganj East block in West source. SAIL already draws about 0.4 The company may give up the West
Bengal, which was estimated to have mil sm3/ day. Essar is also continuing Bengal field, as an airport has been
Gas Initially In Place of 61 BCM at the work on the remaining four blocks constructed that prevents exploration. It
time of allocation in 2001. The block (area 2,233 sq kms). has relinquished 5 blocks from bidding
currently produces about one mil sm3/ The third player making progress Round 2.
day, making Essar Oil the largest CBM is Reliance industries Ltd, at its two A few other companies are also
producer in the country. Essar plans to blocks in Sohagpur West and Sohagpur active in CBM exploration, though not
reach 2 mil sm3/day by March 2017, East, in Madhya Pradesh, which in production yet. Coal India Limited is
and later go upto 3.5 mil sm3/day. were estimated to have 103 BCM also naturally interested in CBM. It has
About 500 wells are to be drilled over Gas Initially In Place at the time of been granted permission by MoPNG
 August 2016
www.InfralinePlus.com

to extract CBM from its coal mines, under exploration, or from the yet to objections, and enable CBM explo-
subject to complying with various pro- be awarded blocks, or from the coal ration to commence.
cedures applicable to CBM activities. blocks that CIL may explore for CBM. Another crucial aspect is sale
CIL may extract CBM prior to coal They could also be from some of the price. Present policy allows CBM
mining operations, or do both activities blocks that have been relinquished. producers the price under the
simultaneously. Some blocks are given up because Domestic Pricing Guidelines of
of poor prospectivity for CBM. October 2014, which is USD 3.06/
Way forward Changes in technology or data analysis mmbtu (GCV) for April to Sep-
From the foregoing, it is seen that four may bring these blocks back into the tember 2016. The exception is
blocks together are able to produce reckoning - as often happens in the GEECL, whose PSC allows it to
about 8 mil sm3/d on long term basis. Exploration business. Other blocks charge higher prices: its average
So, the output of 76 mil sm3/d pro- may have been given up for non-CBM price for FY 2016 was $ 10.26/
jected in the IE Outlook would require reasons, such as lack of permission mmbtu, compared to $11 plus for
about 32 more similar blocks. These from various authorities. A change the previous two years. It may be
could be from the blocks presently in perspective may be able to resolve noted that the DGHs Hydrocarbon
E&P Activities Report for 2014-15
Another crucial aspect is sale price. Present policy indicates that CBM requires higher
breakeven price than conventional
allows CBM producers the price under the Do-
gas. The Indian Energy Outlook also
mestic Pricing Guidelines of October 2014, which assumes higher price realisation for
is USD 3.06/ mmbtu (GCV) for April to September CBM. In sum, unlocking the potential
2016. The exception is GEECL, whose PSC allows of CBM requires a lot more work
it to charge higher prices: its average price for FY on the ground, as well as a review
2016 was $ 10.26/ mmbtu, compared to $11 plus onpricing. 47
for the previous two years
For suggestions email at feedback@infraline.com
 August 2016
www.InfralinePlus.com

InDepth
LNG imports critical to rescue
gas-based capacity

48

Power and fertilizer sector are the leading end users of natural gas in India
Indo-Australian sub group to help in supplying cheap LNG for power plants

By Team InfralinePlus

With natural gas accounting for just
about 9% of its overall energy mix, In-
dia is trying hard to increase domestic
production. Indias Liquefied Natural
Gas (LNG) sector is undergoing a ma-
jor transformation as it is set to occupy
a crucial part in the countrys energy
portfolio after the central government
approved the use of imported gas for
power generation and fertilizer produc-
tion. Now, Indias plans to set 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, according to the Ministry of
Petroleum and Natural Gas (MoPNG).
The power sector is the leading
end user of natural gas in India along
with the fertilizer sector and consumes
nearly one third of the total natural gas
produced in the country. Moreover,
central government is increasing its
focus on gas based power projects due
to their high efficiency, low gestation
period, environmental factors, and
requirement of less water and land
compared to other fuel based power
plants. Various other policies such
as recent updates in Gas Allocation
Policy have also been implemented
to encourage use of gas in different
end user segments. Other policies that
are expected to have a positive impact
on the countrys LNG market include
E-bid RLNG for smoothing the supply
 August 2016
www.InfralinePlus.com

of imported spot RLNG to power Figure 1: Grid Connected Gas-based Power Plants:
plants and fertiliser industries. Ownership, Consumption and Plant Load Factor (PLF)

LNG imports on the up as G rid C onnected G as -based Power Plants:

domestic production falls Ownership, C ons umption and PLF (As of May 2016)
50
Falling production of natural gas in
45
India has forced companies in the oil 45
41
and gas, fertiliser and gas-based power 40
generation sectors to rely heavily on 36
35
imported LNG in recent years. In the 30
31
29
last decade, domestic natural gas pro- 30

duction has grown by just 10%, while

Percent

25 24

imports of LNG have risen by 335%.

20 18
The volume of gas import is expected 15
to grow further in future. Currently, 15

the countrys gas demand stands at 10

120 million standard cubic meters per 5
day (mscmd), while the volume of
0
domestic supply is 80 mscmd. Cur-
C entral S ec tor S tate S ec tor Private S ec tor
rently, there are four LNG terminals at
Ins talled C apacity G as C ons umption Plant Load F actor
Dahej and Hazira in Gujarat, Dabhol in
Maharashtra and Kochi in Kerala. The Source: Central Electricity Authority (CEA)
recently-built Kochi terminal is barely This may spell good news for
functional due to the delay in the con- In the last decade, developers of gas-based power 49
struction of pipeline planned to connect domestic natural gas plants and already Essar Power Ltd.
the terminal with the consumers. is seeking liquefied natural gas to
production has grown
Recently, India and Australia supply two power plants (Hazira and
decided to form a sub-group, to prepare
by just 10%, while im- Bhander) after a global glut cut prices
a roadmap on streamlining issues that ports of LNG have risen for the fuel by two-thirds since Sep-
would help in providing cheap LNG by 335%. The volume tember 2014. The price for spot LNG
for power plants in the country. The of gas import is ex- to Asia was at $4.808 per mmbtu as
move will lead to committed LNG pected to grow further of June end, down 66 percent since
supply to gas-based power plants, in future. Currently, the September 2014. The company is
which are running below their capacity countrys gas demand said to be in discussions with sup-
due to lack of availability of gas. pliers including Royal Dutch Shell
stands at 120 million
The grid connected gas-based power Plc and state-run GAIL India Ltd. to
generation capacity in the country is
standard cubic meters supply the two plants in the state of
around 24,508 MW. Of this, a capacity per day (mscmd), while Gujarat. The Bhander Power-Hazira
of 14,305 MW had no supply of the volume of domestic plant was commissioned in 2006 and
domestic gas. supply is 80 mscmd commenced full commercial opera-
tions in October 2008, but due to
Will this rescue Ratnagiri (Dabhol) power plant? high price of the primary fuel, the
company had kept the operations sus-
Ratnagiri Gas & Power Private Limited (RGPPL) is being restructured with the pended since the past three years. The
5 million tonne LNG regasification unit being spun off into a special purpose Essar Power-Hazira is a multi-fuel
vehicle (SPV) which will take on 50% of the total debt of INR 6,981 Crore. (naphtha, high-speed diesel, natural
State-owned insurer Life Insurance Corporation (LIC), which had loaned the gasoline liquid and/or natural gas)
project INR 1,400 crore by subscribing to government -guaranteed bonds, is combined-cycle power plant. The
willing to continue to fund the project provided the government extends the company has signed Power Purchase
Agreements (PPAs) with Essar Steel
guarantee. The project is being refinanced via the 5/25 route which allows the
(captive purposes) and Gujarat Urja
borrower to pay back the loan over a longer time period.
Vikas Nigam Limited (GUVNL) to
 August 2016
www.InfralinePlus.com

InDepth

Plans to shelve gas-based power plants along DMIC? and trade nearly 50 million tonnes,
accounting for about a sixth of global
The central government is said to have asked the state governments of
trading volume. Global output capacity
Madhya Pradesh, Maharashtra and Gujarat, along the Delhi-Mumbai Industrial
is expected to rise by half by 2020,
Corridor (DMIC) to consider using land allotted for five gas-based power
potentially adding some 150 million
plants to set up industrial areas or renewable energy projects following the
tonnes of LNG to the market.
non-availability of gas.
Increasing focus on expansion
The gas-fired projects, each with capacity of 1,000-1,200 MW, were to come of gas pipeline infrastructure in the
up in Madhya Pradesh, Maharashtra and Gujarat as part of the corridor. country, rising demand for natural
The gas-based power projects in the DMIC were to come up at Indapur in gas from power and industrial sectors
Pune (Maharashtra), Ville Bhagad in Raigad (Maharashtra), Vaghel in Patan and favourable government policies
(Gujarat), Rajpur-Shahpur in Mehsana (Gujarat) and Chainpura Industrial makes LNG a commercially viable
Area in Guna District (Madhya Pradesh). and suitable fuel for various end users
in India. As a result, LNG demand is
sell power from the plant commis- forecast to witness robust growth over
sioned in October 1997. Increasing focus on the next 5-10 years in India and project
expansion of gas developers will have an abundant
Spot purchase replacing pipeline infrastructure supply to run their plants not just at
term contracts in the country, rising 25-30% Plant Load Factor (PLF) but at
Mideast Gulf states are among the the required optimal levels of 80-85%.
demand for natural
worlds largest LNG producers and The uncertain future of Indian
Middle Eastern and Indian buyers
gas from power and domestic gas production has cascading
are turning away from term contracts industrial sectors and effects on the overall role of gas in the
50 to the spot market to procure gas for favourable government countrys energy sector. The impacts
power generation and fertilizer and policies makes LNG a have already been felt in the power
chemical production. The ability of commercially viable and sector where the PLF of gas-fired
buyers in the Middle East and India suitable fuel for various plants during the year averaged only
to import gas from around the world 18.64% in May last year and more
has encouraged growth in the regions
end users in India. As recently at 23.73% (May 2016) due to
spot LNG trade. Cargoes from a range a result, LNG demand unavailability of gas. As the economy
of traditional suppliers have moved is forecast to witness expands and industries and households
to the region, as has gas from some of robust growth over the increase their consumption of natural
the newest LNG producers, including next 5-10 years in India gas, the dependence on imported LNG
coal-bed methane operations in Austra- will only increase since the domestic
lia and one of the first exports from the worlds top LNG trader after buying output has been declining for years.
new US liquefaction plant at Sabine BG Group, expects to produce around
Pass on the Gulf coast. Shell, the 30 million tonnes of LNG this year For suggestions email at feedback@infraline.com
 August 2016
www.InfralinePlus.com

StatisticsOil & Gas

LNG Cargo Imported (2016)
Date Quantity(CBM) Quantity (MMT) Cargo Type LNG Price ($/MMBTU) Foreign Country Indian Port
16-Jun
3-Jun-16 156796 0.073 Spot/Short-Term 6.21 EQUATORIAL GUINEA MAGDALLA
6-Jun-16 135918 0.065 Long-Term 5.57 QATAR DAHEJ
8-Jun-16 152331 0.073 Long-Term 6.18 QATAR DAHEJ
8-Jun-16 211851 0.098 Long-Term 5.6 QATAR DAHEJ
9-Jun-16 135858 0.065 Long-Term 6.18 QATAR DAHEJ
13-Jun-16 134336 0.062 Spot/Short-Term 7.11 QATAR MAGDALLA
14-Jun-16 155266 0.073 Spot/Short-Term 4.19 NIGERIA DAHEJ
14-Jun-16 135965 0.065 Long-Term 6.16 QATAR DAHEJ
16-Jun-16 72808 0.033 Spot/Short-Term 6.26 AUSTRALIA DAHEJ
16-Jun-16 584 0.0007 Spot/Short-Term 5.69 AUSTRALIA DAHEJ
16-Jun-16 87892 0.04 Spot/Short-Term 5.69 AUSTRALIA DAHEJ
17-Jun-16 140320 0.066 Spot/Short-Term 5.22 NIGERIA MAGDALLA
17-Jun-16 152361 0.071 Long-Term 6.19 QATAR DAHEJ
20-Jun-16 136040 0.065 Long-Term 6.18 QATAR DAHEJ
20-Jun-16 140508 0.065 Long-Term 4.85 QATAR DAHEJ
20-Jun-16 146022 0.068 Spot/Short-Term 4.12 QATAR MAGDALLA
21-Jun-16 137049 0.066 Spot/Short-Term 4.68 UNITED ARAB EMIRATES DAHEJ
23-Jun-16 84213 0.04 Long-Term 6.18 QATAR DAHEJ
23-Jun-16 51712 0.025 Long-Term 6.18 QATAR DAHEJ
25-Jun-16 135380 0.061 Spot/Short-Term 5.07 AUSTRALIA COCHIN
28-Jun-16 152410 0.071 Long-Term 6.19 QATAR DAHEJ
28-Jun-16 142853 0.067 Spot/Short-Term 6.29 NIGERIA MAGDALLA
29-Jun-16 136824 0.066 Spot/Short-Term 4.23 UNITED ARAB EMIRATES DAHEJ
29-Jun-16 135934 0.065 Long-Term 6.18 QATAR DAHEJ
30-Jun-16 135129 0.064 Spot/Short-Term 5.5 NIGERIA DAHEJ
30-Jun-16 144400 0.069 Spot/Short-Term 5.58 OMAN MAGDALLA
51
Month Wise Import/Export of Crude Oil and Petro-Products (2016-17) (As on June, 2016) (TMT)
IMPORT/EXPORT April May June
IMPORT*
CRUDE OIL 17960 17527 17667
PRODUCTS
LPG 795 827 772
MS/ Petrol 74 157 38
Naphtha 238 304 221
ATF/Aviation Turbine Fuel 23 21 21
SKO/ Kerosene 0 0 0
HSD/ Diesel 503 225 4
LOBS/ Lube oil 179 160 160
Fuel Oil 81 87 72
Bitumen 122 78 69
Others 1060 997 965
PRODUCT IMPORT 3075 2855 2321
TOTAL IMPORT 21035 20382 19988
PRODUCT EXPORT
LPG 27 29 30
MS/ Petrol 1368 1561 1491
Naphtha 494 593 602
ATF/Aviation Turbine Fuel 674 598 643
HSD/ Diesel 2119 1437 2248
SKO/ Kerosene 2 1 1
LDO 0 0 0
LOBS/ Lube Oil 1 3 0
Fuel Oil 88 118 182
Bitumen 9 0 0
Others 158 256 166
TOTAL PRODUCT EXPORT 4940 4595 5363
NET IMPORT 16096 15786 14625
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
 August 2016
www.InfralinePlus.com

StatisticsOil & Gas

State-wise sales of selected petroleum products (As on June 2016) (TMT)
LPG MS SKO HSD Total (All products)*
State/UT Per capita Per capita Per capita Per capita Total Per capita
Sales Sales Sales Sales
sales (Kg) sales (Kg) sales (Kg) sales (Kg) Sales sales (Kg)
Chandigarh 45.7 43.4 100.7 95.5 0.7 0.7 114.7 108.7 440.3 417.4
Delhi 776.7 46.4 901.6 53.8 0.7 0 1508.3 90 4995.8 298.2
Haryana 629.5 24.8 782.7 30.9 57.7 2.3 5013.8 197.8 10772.3 424.9
Himachal Pradesh 130.6 19 162.9 23.8 22.7 3.3 575.7 84 1549.2 225.9
Jammu and Kashmir 169 13.5 199.6 15.9 141.7 11.3 635.4 50.6 1341.5 106.9
Punjab 779.7 28.1 745.2 26.9 66.5 2.4 3302 119.2 5961.5 215.2
Rajasthan 995.2 14.5 1183.5 17.2 377 5.5 5315.9 77.5 11217.7 163.5
Uttar Pradesh 2351.4 11.8 2164.4 10.8 1215.9 6.1 7098.5 35.6 15011.6 75.2
Uttarakhand 232 22.9 252.9 25 30.9 3.1 746.7 73.8 1519.4 150.2
SUB TOTAL NORTH 6109.8 16.6 6493.5 17.6 1913.9 5.2 24311 66 52809.2 143.3
Andaman & Nicobar Islands 8.7 22.8 14 36.8 4.6 12 124.3 327.2 179.7 473
Bihar 769 7.4 545.4 5.3 618.6 6 2254.8 21.7 4632.8 44.6
Jharkhand 215.9 6.5 349.4 10.6 202.8 6.2 1602.2 48.6 2768 84
Odisha 391.9 9.3 553.8 13.2 299.8 7.1 2231.7 53.2 4464.4 106.4
West Bengal 1226.3 13.4 654.6 7.2 736 8.1 2955.2 32.4 7191.8 78.7
SUB TOTAL EAST 2611.7 9.7 2117.1 7.8 1861.7 6.9 9168.1 33.9 19236.7 71.1
Arunachal Pradesh 16.5 11.9 31.4 22.7 14.2 10.3 118.5 85.7 199.8 144.5
Assam 294.7 9.5 267.5 8.6 251.6 8.1 851.7 27.3 2115.4 67.9
Manipur 23.6 8.7 43.5 16 18.6 6.8 87.8 32.3 179.5 66
Meghalaya 17.1 5.8 65.3 22 19.9 6.7 294.5 99.4 418.5 141.2
Mizoram 21.6 19.8 23.7 21.7 5.2 4.7 57.1 52.4 113.1 103.7
Nagaland 18.7 9.4 26.3 13.3 13.2 6.7 59.4 30 127.3 64.2
Sikkim 12 19.8 16.1 26.4 11.8 19.4 57.5 94.6 100.2 164.9
Tripura 35.4 9.6 37.9 10.3 29.9 8.1 93 25.3 212.1 57.8
SUB TOTAL NORTH EAST 439.6 9.6 511.6 11.2 364.2 8 1619.6 35.5 3465.8 76
Chhattisgarh 197.7 7.7 418.2 16.4 124.1 4.9 1461.4 57.2 2872.6 112.5
52 Dadra & Nagar Haveli 16 46.8 16.8 49 1.4 4.2 150.8 410.9
Daman & Diu 9.5 39 18.6 76.6 0.8 3.2 81.4 334.9 181.1 745.5
Goa 57.9 39.7 151.3 3.9 2.7 308.8 211.8 729.9 500.7
Gujarat 868.2 14.4 1526 25.3 515.3 8.5 5076.8 84.1 18954.3 313.9
Madhya Pradesh 751 10.3 1037.7 14.3 452.8 6.2 3282.8 45.2 7008.1 96.5
Maharashtra 2425.2 21.6 2836.5 25.2 486.4 4.3 7814 69.5 18223.1 162.2
SUB TOTAL WEST 4325.4 15.8 6005 22 1584.8 5.8 18175.9 66.6 48379.9 177.3
Andhra Pradesh 923 18.7 844.9 17.1 183.2 3.7 3298.3 66.8 6179.2 125.1
Karnataka 1330.4 21.8 1664 27.2 379.2 6.2 5747.2 94 11051 180.8
Kerala 774.1 23.2 1129.7 33.8 97.1 2.9 2536.7 76 5551.3 166.3
Lakshadweep 0.3 4 0 0 0.8 12.1 13.8 214.2 15 232.7
Puducherry 38.8 31.2 113.1 90.9 3.3 2.6 330.4 265.5 520.8 418.5
Tamil Nadu 1818.6 25.2 2052.1 28.4 304.7 4.2 6311.8 87.5 12698.9 176
Telangana 762.5 21.6 915.4 25.9 133.5 3.8 3077.5 87.2 5705.2 161.7
SUB TOTAL SOUTH 5647.6 22.4 6719.2 26.6 1101.7 4.4 21315.6 84.4 41721.2 165.1
All India 19134.2 15.8 21846.4 18.1 6826.3 5.6 74590.2 61.6 165612.8 136.8
Note:1. Per capita sales figures are based on provisional sales figures for the April 2015- March 2016
2. Population figures have been taken from Census of India, 2011
* Total (all product) sales include other petroleum products such as Naphtha, FO, ATF, Lubricants, Bitumen etc.

Sectoral Demand and Consumption of Natural Gas (June, 2016) (MMSCMD)

Domestic gas Total Consump-
Sectoral Demand R-LNG consumption
Sector consumption tion (Domestic gas
2016-17* May , 2016
May 2016 +RLNG) May,2016
Fertilizer 113 21.89 21.61 43.5
Power 207 23.79 6.25 30.04
City Gas 46 11.19 6.57 17.76
Industrial 27 0.54 1.4 1.94
Petrochemicals/ Refineries/ Internal
consumption/LPG Shrinkage/ 72 9.92 30.68 40.61
manufacture/ Miscellaneous
Sponge Iron/Steel 8 0 1.34 1.34
Total 473 67.33 67.85 135.19

NewsBriefs | Renewable International
PFC, REC will drop interest rates to double lending in three years
State-run power financiers Power Finance
Corp (PFC) and Rural Electrification Corp
(REC) will slash rates to single digits when
lending to renewable energy projects
following the governments order setting
tough targets for the two companies to
double their exposure in the next three
years. In order to achieve the targets, PFC
India reveals plan for implementation of 10 Solar Zones
The Ministry of New and Renewable Energy
(MNRE) has moved forward with its plan to
develop 10 special Solar Zones designed to
accelerate the development of large-scale
solar PV capacity in the country. Eyeing 2022s
100 GW of solar PV target, the ministry has
sanctioned the implementation of these
zones, which will each cover approximately
10,000 hectares of government-owned or
privately owned wasteland, uncultivable
land or fallow land in one or more than one
patches. Development of the first of these
10 zones will begin this year, with the project
expected to span five years. Funding for each
zone will be provided by the government to
the tune of INR 440 million ($6.5 million). The
Grid-connected solar generation capacity touches 7.8 GW
Total installed solar power generation
capacity in the country touched 7,805
MW mark by June-end this year
with Rajasthan topping the charts
with 1,294.60 MW. Tamil Nadu and
Chhattisgarh followed Rajasthan with
grid connected solar power generation
capacity of 1,267.41 MW and 1,123.36
MW respectively as on June 30, 2016,
New and Renewable Energy Minister
Piyush Goyal said in a written reply to
Lok Sabha. In another reply, the Minister
said the government has taken several
initiatives to achieve this target. He
further said the World Bank has approved
will have to sanction Rs 1.5 lakh crore
loans and REC Rs 1 lakh crore by 2019.
Both the companies are likely to make
formal announcements very soon. In a
recent review meeting with Piyush Goyal,
minister for power, coal, renewable energy
and mines, the two companies were asked
to grow their businesses by 100 per cent
by 2019, with specific focus on renewable
energy projects. The minister prodded the
companies to take up smaller renewable
projects and asked the two firms to reduce
cycle time for loan evaluation to disbursal to
60-90 days for renewable energy projects
that take about a year to get commissioned.
The companies take about 170 days for the
same which has been constantly reducing.
purpose of each Solar Zone is to act as a flag-
ship demonstration facility highlighting the
efficacy and affordability of solar power, with
the aim being to encourage project developers
and investors to pour more funds and effort
into Indias growing solar industry.
August 2016
www.InfralinePlus.com
National
Govt seeks bids for 300 megawatt of
solar projects with storage
India has invited its first-ever bids
for solar energy projects that include
storage as a requirement as part of
a trial program aimed at making the
renewable resource a more reliable
source of power. Solar Energy Corp. of
India (SECI), the implementing agency
for clean-energy projects, sought bids for
300 megawatts of solar power to be built
in Andhra Pradesh and Karnataka. SECI
is seeking bids for two projects of 50
megawatt each in Andhra Pradesh with
a battery energy storage system of 5
megawatt/2.5 megawatt-hour attached.
In Karnataka, it has invited bids for four 53
solar projects of 50 megawatt each with
the same storage specifications. The cost
of the project will go up only marginally
since the size of the storage component
being sought is small, Tarun Kapoor, joint
secretary at the ministry of new and
renewable energy, said. A Rs.500 crore
solar project will become costlier only by
about Rs.10 crore and the government is
also extending support, he said.
concessional loan of USD 500 million,
Clean Technology loan of USD 120 million
and Clean Technology Fund grant of USD
five million to State Bank of India for the
grid connected rooftop solar projects. As
on June 30, 2016, estimates show that
states will invest Rs 6,254 crore on solar
power projects in the current fiscal, Goyal
said. The estimated investments by states
on solar projects was Rs 18,113 crore in
2015-16 and Rs 6,672 crore in 2014-15.
Government has planned to add over
10,000 MW of solar power generation
capacity during the current fiscal.
 August 2016
www.InfralinePlus.com
NewsBriefs | Renewable National
National lab policy for renewable energy soon
The ministry of new and renewable
energy is in the process of finalising
a national lab policy to set norms for
testing, standardisation and certification
of renewable energy related products,
India-US solar dispute: WTO appellate bodys ruling expected by mid-Sept
In April, India had appealed against WTOs
panel ruling that the countrys power
purchase agreements with solar firms are
inconsistent with international norms. WTOs
appellate body is expected to give its ruling
54 by mid-September in the solar mission
dispute between India and the US. In April,
India had appealed against WTOs panel rul-
ing that the countrys power purchase agree-
ments with solar firms are inconsistent with
international norms. The appellate body is a
standing body of seven persons. It listens to
the appeals from reports issued by panels in
disputes involving WTO members. The body
can uphold, modify or reverse legal findings
and conclusions of a panel and its reports,
Centre nod to floating solar panels to meet 22 target
The ministry of new and renewable
energy has agreed on a proposal by solar
power expert SP Gon Chaudhuri to have
land-neutral solar power installations
on water bodies. There is a major dearth
of adequate land in states like Bengal,
Bihar, Odisha and Assam to generate solar
energy to meet Indias target of 60,000
MW of land-based solar energy under
the National Solar Mission by 2022. The
National Institute of Solar Energy along
with the city-based NB Institute of Rural
Technology headed by Gon Chaudhuri will
conduct a study to identify water bodies
and huge structures like rail stations and
and define the infrastructure required for
testing centres. The policy document is
in the final stage of being prepared and is
expected to be complete in a months time.
A committee headed by ministry of new
and renewable energy (MNRE) director
BS Negi and National Institute of Solar
Energy (NISE) director OS Sastry has
already prepared a draft policy document.
Noting that there are no existing standards
for products such as solar pumps, solar
batteries, solar lanterns and solar thermal
systems, the draft said these need to be
quickly put in place. It also spelled out the
highly technical standards that each of
these products should adhere to.
once adopted by the Dispute Settlement
Body, must be accepted by the parties to the
dispute. If the body would give ruling against
India, the government would have to imple-
ment the order in the next 6-7 months.
stadiums to install floating solar panels in
Bengal. We expect the study to start off
after the monsoons, Gon Chaudhuri said.
The problem is the non-availability of
Solar power capacity addition outstrips
wind in Q1
Solar power has overtaken wind power
in new capacity addition for the first
time in the country. During the first
quarter of current fiscal, solar power
sector added 1,031 MW of new capacity
when compared with 374 MW of new
capacity added by the wind segment,
according to Union Ministry of New and
Renewable Energy (MNRE). However,
total capacity addition by the renewable
sector in the first quarter was modest
at 1,465 MW given the huge target set
for the current fiscal. MNRE has fixed a
total capacity addition target of 16,600
MW for 2016-17 and solar is expected
to be the major contributor with about
12,000 MW of new capacity, followed
by wind (4000 MW), biopower (400
MW), small hydro (250 MW) and waste
to power (10 MW). As on June 30, total
grid connected installed renewable
power capacity in India stood at 44,237
(MW). Total capacity of wind power
stood at 27,151 MW.
adequate land in many states. In Bengal,
around 300 acre of land is required for the
necessary solar installations to gener-
ate the power but scarcity of land is the
main hindrance, he said. The solar power
expert said that to make up the unavail-
ability of land, floating solar panel instal-
lations on water bodies is the only option.
It is found that around 3 lakh MW of
solar power could be generated by tapping
around 10-15% of waterbodies. States like
Bengal, Bihar, Kerala, Odisha and Assam
are the most potential ones for develop-
ing land-neutral solar power technology,
he said.

NewsBriefs | Renewable International
Delhi discoms can meet green power quota
The discoms will now be able to meet their
annual renewable purchase obligations
(RPO) with the Delhi Electricity Regula-
tory Commission (DERC) finally approving
power purchase obligations (PPAs) from
hydro projects. Tata Power Delhi, which
Gujarat HC notice to govt on PIL on Santhalpur solar park
The Gujarat High Court has issued notice
to the state government in response to a
PIL alleging corruption in contracts for
the development work at the countrys
largest solar power project in Santhalpur
tehsil of Patan district. A division bench
of Chief Justice R Subhash Reddy and
Justice V M Pancholi issued notices to the
government, Gujarat Power Corporation
Limited (GPCL), Anti-Corruption Bureau
and thirteen contractors. The government
recently filed an affidavit as per an
earlier direction. GPCL had awarded the
contracts and, therefore it should file reply
in the matter, it said. But not satisfied
with this stand, the HC issued notices to
all the respondents seeking their reply.
Solar power plants installed atop warehouses to generate 162 MW in Karnataka
With Karnatakas ambitious project of
harnessing 400MW of power through
grid-connected rooftop solar plants rocked
by scams, the government has come up
with an uncommon solution to fast-track
the project: Install solar power plants on
rooftops of warehouses. Were lagging
behind in meeting the 2018 deadline;
we have hardly managed to harness
5MW of solar rooftop power so far. The
warehouses (godowns used for storing
agricultural commodities), operated by the
Karnataka State Warehousing Corporation
(KSWC) and spread across the state, will
now have solar power plants. We hope
had filed the petition, argued that power
from small hydro power projects was in
the consumers interest as their cost of
power was the lowest. There are eight
hydro projects from where the discoms
want to procure power but couldnt due to
lack of guidelines by the regulatory author-
ity. According to discom officials, bids were
invited from small hydro projects as their
tariff was the lowest among all non-solar
sources of energy. The current tender
has been floated to meet the renewable
purchase obligations and it would be wise
if the same is met with the minimum cost
possible. The low cost will ultimately ben-
efit the consumers, said an official.
The petition, filed by former Congress
MLA Farsu Goklani, alleged that the
government did not follow due procedure
while awarding contracts worth Rs 550
crore for development work at the solar
park at Charanka in Santhalpur tehsil.
projects, the remaining 80 lakh sqft is
to generate 162MW of solar power from
these warehouses on the public private
partnership (PPP) model, officials said.
A proposal to this effect is expected to
August 2016
www.InfralinePlus.com
States
Countrys 1st grid rooftop solar
project in Odisha
The Green Energy Development
Corporation of Odisha Limited (GEDCOL)
and the Central Electricity Supply
Utility (CESU) recently signed a 25-year
project implementation agreement
with Azure Power Mercury Private
Limited to develop the countrys first
grid connected rooftop solar project.
The project, with a minimum installed
capacity of four MW, will be set up
across more than 100 Government
buildings in Bhubaneswar and Cuttack. 55
As many as 114 Government buildings
in Bhubaneswar and 85 buildings in
Cuttack are found suitable for generation
of rooftop solar energy. The project will
mobilise around Rs 35 crore of private
investment and to be implemented by
availing Central financial assistance
from Ministry of New and Renewable
Energy (MNRE), GEDCOL Managing
Director Hemant Sharma said.
be placed before the cabinet for approval
shortly. A total of 1.8 crore sqft warehouse
space will be available for installing
photo-voltaic solar panels. Spread across
193 places across the state, while 1 crore
sqft is readily available to start rooftop
under construction and will be readied
shortly. The cost of the warehouse solar
projects is around Rs 1,200 crore. The
idea of using warehouses for solar power
generation was mooted by senior KAS
officer Rajesh Gowda, who moved out
as the managing director of KSWC, to
promote clean energy.
 August 2016
www.InfralinePlus.com
NewsBriefs | Renewable International
ADB approves $115m loan to enhance Sri Lanka power reliability
The Asian Development Bank (ADB)
has granted $115m loan to Sri Lanka
to help the country achieve its goal of
100% electrification and improving power
reliability. The country also secured
grants including $2m from the Japan
Europeans keen to invest in Irans renewable energy sector
Giles Dickson, the CEO of the European
Wind Energy Association (EWEA), said that
renowned European companies are keen
to invest in Irans renewable energy sector,
especially in wind energy sphere. Dickson said
56 that Iran has the potential to generate more
than 30 gigawatts (GW) of electricity from
wind energy. EU members are interested and
ready to seize this opportunity to transfer
their knowledge and technology to Iran and
of course to invest in the countrys energy
sector, he stressed, recommending that Iran
could facilitate the presence of European
companies by providing them with straight-
forward contracts in which land registry,
conditional lease and Power Purchase Agree-
ments (PPAs) are clearly stated. Mentioning
China launches new alert system to tame wind power investments
China has launched a risk alerting system to
prevent further investments in wind power
generation in certain locations, after large
amounts of power were wasted due to inad-
equate power transmission infrastructure.
The National Energy Administration (NEA)
has given a red alert, or the highest warning,
to five provinces where new construction
approvals and access to grid connections
will be put on hold. Among the restricted
regions are Jilin and Heilongjiang in northeast
China, along with Gansu, Ningxia and Xinjiang
province in western China, all with high
concentration of wind farms but only limited
grid connectivity. The worlds top wind power
Fund for Poverty Reduction and $1.8m
from the Clean Energy Fund under the
ADB-managed Clean Energy Financing
Partnership Facility. The funding will be
used for a five-year project, which includes
development of hybrid renewable energy
systems and installation of a renewable
energy micro-grid in the countrys Western
Province. Featuring a combination of wind,
solar and efficient diesel generation, along
with energy-storing long life lithium-ion
batteries, the hybrid renewable energy
systems will provide a reliable electricity
supply for communities on three isolated
islands in the Jaffna area of the Northern
Province.
the challenges facing foreign investors in
Iran, Dickson said that since there are still
some obstacles in banking transactions with
Iran, the most important challenge facing
foreign investors is to overcome such hurdles
and to find resources and export credit agen-
cies to finance their projects.
user has seen a surge in new installations
in the last decade, with 136 gigawatts of
installed capacity as of May. Wind genera-
tion capacity increased by 32 percent during
January to May against the same period last
Biggest sale of clean energy finds no
buyer for all of SunEdison
Three months after filing for Chapter
11 bankruptcy protection with $16.1
billion in liabilities, SunEdison Inc. has
yet to field any bids to take over the
entire business. Instead, its received
more than 100 indications of interest
for specific assets, Rothschild Inc.,
which is managing the sales process,
said. That includes bids for individual
projects, for bundles of wind and solar
farms, and for its entire commercial
and industrial unit. The developer also
received at least one inquiry about its
controlling stake in TerraForm Power
Inc., one of its most valuable holdings.
Potential buyers are looking to cherry-
pick the companys best assets, or
may be pursuing low-ball bids for the
most speculative ones. SunEdison is
marketing most of its assets and will
entertain offers for all of them. At least
50 projects on five continents, from the
U.S. and the U.K. to India, South Africa
and Chile, are available with more than
5 gigawatts of capacity.
year, official data shows. However, a national
average of 26 percent of wind power gener-
ated in the first quarter of 2016 was wasted.
Jilin, Gansu and Xinjiang provinces were the
worst offenders with about half of their wind
power generation wasted while Ningxia and
Heilongjiang lost a little more than one-third
of their wind power, according to the NEA.
We estimate that over the course of the first
six months, 4.2 billion kilowatt hours of wind
and solar power has been wasted, which is
equivalent to New Zealands electricity use in
the whole year of 2015, said Peng Peng, an
analyst with the Chinese Renewable Energy
Industries Association.
 Magazine SubScription forM
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 August 2016
www.InfralinePlus.com

InConversation
LED market size in India to
reach Rs 21,600 crore by 2020
India is all set to become the biggest market for LED lighting in
the world, thanks to the regulatory and policy initiatives taken by
the NDA government as well as the path breaking work done by
Energy Efficiency Services Limited (EESL) - a Joint Venture of NTPC
Limited, PFC, REC and POWERGRID. Saurabh Kumar, Managing
Director, EESL, shares his vision on the energy efficiency industry in
India and what lies in store in the future. Excerpts:

Please share your outlook on the
LED lighting industry in India, in
terms of market size, demand
and growth potential.
A phenomenal growth has been regis-
tered in the Indian LED market since
58 the launch of the UJALA programme
as it has created demand for afford-
able LED bulbs in the country. As
per estimations, the market size of
the Indian LED industry will reach as
high as Rs. 21,600 crore by the year
2020. In the year 2013, out of the
Rs. 13,000 crore turnover of Indias
lighting industry, LED industry stood
at Rs. 1,925 crore. The UJALA pro-
gramme has played a significant role
in creating awareness about LEDs in
every nook and corner of the country
and made the LED lighting technol-
ogy more popular in India.
Please outline the challenges
in promoting LED as an energy
efficient source of lighting in
India. How can we overcome
these?
The biggest roadblocks in LED light-
ing adoption in India have already
been taken care of by EESL. Prob-
lems and bottlenecks are now not as
dominating as they used to be about
one year ago. EESL effectively cre-
ated awareness of energy saving LED
technology in India and fostered its
subsequent demand in the country.
When we started out, LED bulbs were
quite expensive compared to CFLs
or incandescent bulbs, each bulb
was somewhere around Rs. 300-350.
Moreover selling a comparatively
costlier lighting option i.e. LED in a
price sensitive market such as India
was a challenge. EESL overcame
this challenge with bulk procure-
ments from LED manufacturers in the
country and benefitted from volume
discount. Interestingly, within one
year of running this scheme, due to
bulk procurements from indigenous
manufacturers the prices of LED
plummeted to about Rs. 55 per bulb.
This way we were able to effectively
implement Government of Indias
idea of efficient lighting throughout
the country.
Please update on the UJALA
scheme and progress achieved
so far.
Under UJALA scheme, we have
distributed to over 13 crore LED bulbs
in India, which are leading to energy
savings of about 4,60,43,066 KWh
every day. The total estimated cost sav-
ings per day through the distribution is
about INR 18,41,76,523. The scheme
has further successfully avoided a peak
Saurabh Kumar, Managing Director, EESL
demand of 3,365 MW and is helping
reduce over 37,296 tonnes of CO2
emissions per day. With a vision of
including 100 cities under the UJALA
scheme, EESL has now successfully
spread to more than 125 cities and will
cover the whole country by 2019.
What are the savings envisaged
due to the LED bulb program of
the Government in terms of peak
demand and reduction in carbon
footprint?
As already stated, with the distribu-
tion of over 13 crore LED bulbs, the
country is saving 4,60,43,066KWh
of energy every day. Avoiding peak
demand of 3,365 MW, it is further
reducing over 37,296 tonnes of CO2
emissions per day.
What other initiatives are being
implemented by EESL towards
energy efficiency?
Following are some other initiatives:
National Energy Efficient Fan Pro-
gramme (NEEFP): National Energy

Efficient Fan Program (NEEFP) was
implemented by EESL for consum-
ers under demand side management,
with the aim of benefitting the people
from all socio-economic bands. Under
NEEFP, EESL aims to replace 35
crore inefficient regular ceiling fans
across households with BEE 5 Star
rated efficient ceiling fans by 2018.
With the intent to give a significant
thrust to the expansion of market for
efficient fan technologies in India,
EESL through its procurement of fans,
has brought the price of a fan down by
33 per cent to Rs. 955, when com-
pared to the market price.
Streetlight National Programme
(SLNP): Street lights in India were
recognised as the second most po-
tential group resulting in significant
energy savings. The conventional
lighting is not only a burden on
current energy production but the
insufficient lighting levels and bad
colour rendering indices is a public
problem. It has been theoretically
stated that if illuminated street light
structures are visible from the sky, it
is nothing more than light pollution
in the night sky. Here, the concept of
dark sky initiative was imbibed and
research was carried out to come up
with street lights which consume less
energy, illuminate only the path-
ways, reduce light trespass and have
improved colour rendering index. A
way forward was planned and EESL
began replacing the conventional
street lights with new energy efficient
Under NEEFP, EESL
aims to replace 35
crore inefficient regular
ceiling fans across
households with BEE
5 Star rated efficient
ceiling fans by 2018.
With the intent to give
a significant thrust
to the expansion of
market for efficient fan
technologies in India,
EESL through its pro-
curement of fans, has
brought the price of
a fan down by 33 per
cent to Rs. 955, when
compared to the mar-
ficient street lighting benefits munici-
ket price
August 2016
www.InfralinePlus.com
ones at its own cost ,i.e., without any
investment from Urban Local Bodies
(ULBs). The new lights being put
in place consume less energy, have
drastic colour rendering index and
illuminate only the focused area.
The street light contracts that EESL
enters into with ULBs or municipali-
ties is typically of a 7-year duration,
wherein EESL not only guarantees a
minimum energy saving (usually of
50%) but also provides free replace-
ments and maintenance of lights at
no additional costs to the municipal-
ity. In this scheme, EESLs invest-
ment is recovered through the long
terms energy savings resulted by the
new street lights. More than 878,319
inefficient street lights have already
been replaced with LED lights across
the nation and work is in progress
wherein EESL has signed MoUs, en-
tered into agreements for SLNP with
state governments. The overall energy 59
savings estimated from the completed
cities is about 318829.79 kWh per
day. The combined reduction of CO2
emissions taken from completed
ULBs of different states is about 264
tonnes. EESLs business model for ef-
palities by reductions in energy and
maintenance costs.
Agriculture Demand Side
Management (AgDSM): Indias
agricultural sector takes about 18%
of the total national electricity
consumption. As per the Central
Electricity Authority (CEA), there
are about 20.27 million pump sets
installed in agricultural sector. As
electricity supply is inconstant in the
rural regions, the farmers frequently
have to spend money on pump
repairs. This results in adoption of
rugged, locally manufactured pumps,
which are highly inefficient. The
average efficiency of existing in-
efficient pump sets is in the range of
20% - 30% whereas efficiency range
of new star rated Energy Efficient
 August 2016
www.InfralinePlus.com
InConversation
Pump sets (EEPS) is 40% - 50%.
Therefore, there is a need to tap
the huge energy savings potential
promised in agriculture pumping
sector. Under AgDSM proposition,
replacement of inefficient agricultural
pump sets is done with BEE star
rated energy efficient pump sets to
reduce the energy consumption. It
has been experienced that the simple
payback period in these projects is
2-3 years and total project duration
is 4-5 years. Here, EESL enters
into an understanding with the
farmers and DISCOMs to provide
with free BEE star labled pump set
and later recovers its investment
through received energy savings.
Under AgDSM, about 4,423 pump
sets have already been replaced
in Andhra Pradesh and Karnataka
combined. The AgDSM initiative
has resulted in estimated savings of
about 229.7 lakh kWh of electricity
60
per annum. In the above regions of
Andhra Pradesh and Karnataka, it
was noted that well designed and
targeted DSM programmes have
proven to set examples and can be
replicated at a large scale. The EESL
model for Agricultural Demand Side
Management (AgDSM) is beneficial
for customers because there is
no upfront cost to farmers and
utilities and there is free repair and
maintenance during project period.
EESL recovers costs from DISCOM
through the annual energy savings
achieved and there is reduction in
power purchase costs, peak load
and load-shedding to DISCOMS.
This opportunity not only reduces
the costs of Government and the
EESL began installing
energy efficient lighting
in government build-
ings which not only
resulted in improving
the overall energy con-
sumption but also gave
a better lighting output.
This project is driven
by the inculcation of
Buildings Manage-
ment Systems or the
BMS, which provides
a comprehensive view
into buildings energy
consumptions through
data driven live reports
farmers, but also holds the potential
of transforming into a big business
opportunity, where investments
can be recovered through monetary
energy savings.
EESLs Buildings Efficiency
Programme: The way to sustainable
future lies in having smart infra-
structure, that consumes less energy
yet works better than the existing
setup. It has been estimated that on
an average, a building wastes about
30% of energy and if nothing was
ever done to improve its efficiency,
there is lot of room to bring about
a big change. What if we devise
methods to secure the 30% energy
loss in buildings and not let it go
waste? The obtained savings can be
used to add to the energy production
and help to realise the dream of 24
X 7 uninterrupted power supply. In
a fresh move to initiate this change,
Government of India appointed EESL
to not only help make the existing
buildings energy efficient but also
improve their overall energy perfor-
mance. To start with, EESL began
installing energy efficient lighting
in government buildings which not
only resulted in improving the overall
energy consumption but also gave a
better lighting output. This project is
driven by the inculcation of Buildings
Management Systems or the BMS,
which provides a comprehensive
view into buildings energy con-
sumptions through data driven live
reports. The BMS is supported by a
user-friendly software system that
exhibits energy trend analysis and
helps to optimize energy management
strategies to further reduce the
operational costs. EESLs buildings
programme has successfully been
completed at Niti Ayog, Shram
Shakti Bhawan, India Habitat Center,
UPSC building, IP Bhawan along
with others. Currently, work is being
carried out in more than 18 buildings
to make them more energy efficient.
 August 2016
www.InfralinePlus.com

It was observed that on an average, Efficient Fan Program (NEEFP), was However, do you feel the same
EESL has successfully received implemented for consumers under has happened in the open
energy savings of about 19% on bills demand side management, with the market? Has the benefit of
with its completed buildings projects. aim of benefitting the people from all price reduction reached the end
socio-economic bands. Under NEEFP, consumer?
Please elaborate on your plans EESL aims to replace 35 crore inef- Before the initiation of LED bulbs
on energy-efficient fans. What ficient regular ceiling fans across under UJALA scheme the penetration
progress has been achieved households with BEE 5 Star rated of LEDs, the most efficient lighting in
under this initiative? efficient ceiling fans by 2018. With the market was less than 1%. How-
EESLs fan distribution scheme is the intent to give a significant thrust ever after the tremendous success of
also going on in Andhra Pradesh and to the expansion of market for effi- the scheme the penetration now raised
UP and we have huge distribution tar- cient fan technologies in India, EESL to 15-18%. The LED programme un-
gets in both the regions. With over 32 through its procurement of fans, has der UJALA is the largest in the world
million fans sold every year at a 20% brought the price of a fan down by 33 and the success of the programme is
annual growth rate, ceiling fans are per cent to Rs. 955, when compared visible through the daily uptake of our
one of the most economical options to the market price. LED bulbs which is now 350,000 to
(as and when compared to the Air 400,000. Government of India created
Conditioning Units). Reports suggest The price of LED bulbs has a conducive regulatory institutional
that almost every electrified house- come down drastically due to framework for fostering Energy Ef-
hold in India has at least one unit the Governments strong push ficiency initiatives. Under regulatory
for their summers. National Energy towards energy efficiency. perspective EESL was set up as the
market aggregator. LED has become
popular to the extent that small scale
Before the initiation of LED bulbs under UJALA LED industries have come up in India. 61
scheme the penetration of LEDs was less than Their prices are today as low as Rs.
1%. However after the tremendous success of the 65-75 per LED bulb. This model
scheme the penetration now raised to 15-18%. which is fundamental to National LED
programmes holds promise for other
The LED programme under UJALA is the largest appliances as well. Having said that
in the world and the success of the programme is need of the hour is to replicate the
visible through the daily uptake of our LED bulbs LED model to other appliances which
which is now 350,000 to 400,000 will help us achieve a higher scale and
I am glad to say that EESL is already
moving towards that.

Do you feel India has the

potential to be the biggest
market for LED in the world?
With the pace we are treading for-
ward, we are hopeful that we can
achieve this and it is not a far spot in
future. We are running the worlds
largest LED bulb distribution pro-
gramme and the governmental push
has led to the growth of indigenous
manufacturers in LED bulb industry,
which is only flourishing. I definitely
foresee India exporting LED bulbs to
other countries in abundance.

For suggestions email at feedback@infraline.com

 August 2016
www.InfralinePlus.com
InDepth
Coming together of solar and wind:
Govt announces draft Hybrid policy
62
Policy aims at generating 10 GW of hybrid capacities by FY 2022
Timely finalisation and clarity on regulatory front remains key to achieve the objectives
By Team InfralinePlus
Indias Intended Nationally Determined
Contributions (INDC) document to
United Nations Framework Convention
on Climate Change at Paris (COP21)
last year signified a 2030 target to
achieve about 40% cumulative electric
installed capacity from non-fossil fuel
based energy resources, with the help
of technology transfer and low cost in-
ternational finance. Accompanying this
is a domestic goal to achieve 175 GW
of installed generation capacity through
renewable energy (RE) sources by 2022.
The slew of measures the central
government is planning to undertake to
meet those targets includes a National
Wind-Solar Hybrid Policy, which
aims to encourage new technologies
involving combined operation of
wind and solar plants. In June, 2016,
the Ministry of New and Renewable
Energy (MNRE), Government of
India, had issued a draft national wind
solar hybrid policy with a target of
implementing 10 GW of such hybrid
capacities by FY 2022.
MNRE is also implementing a
programme to promote the instal-
lation of small wind energy and hybrid
systems (SWES). The first-such pilot-
cum- demonstration project of 25 KW
capacity will be installed at the wind
turbine test station of National Institute
of Wind Energy (NIWE) at Kayathar,
Tootikudi District, Tamil Nadu. Under
the programme, MNRE provides
Central Financial Assistance (CFA)
to community users for installation
of such systems. The total installed
capacity as on March 31, 2016 is 2.69
MW. There are 6 small wind turbine
manufacturers and 9 models empan-
elled under this programme. These pro-
grammes have been highly successful
in the US and EU countries.

Both Solar and wind sector
are complimentary
The draft policy comes in the wake of
how recent studies have revealed that
wind and solar projects can comple-
ment each other by minimizing the
variability of the power output and
easing pressure on the grid. The policy
aims to encourage new technologies
and methodologies for such hybrid
systems. Superimposition of wind and
solar resource maps shows that there
are large areas where both wind and so-
lar have high to moderate potential. Ex-
isting wind farms have scope of adding
solar PV capacity and similarly, there
may be wind potential in the vicinity
of existing solar PV plant... Suitable
policy interventions are required not
only for new wind-solar hybrid plants
but also for encouraging hybridization
of existing wind and solar plants, the
draft policy added.
The main aim of the policy is to lay
a framework for promoting large grid
connected wind-solar PV system. This
will be helpful for creating optimal and
efficient transmission infrastructure
and land, reducing the variability in
renewable power generation to achieve
better grid stability. The hybrid power
injected in to the grid will not be more
than the transmission capacity/grid
connectivity allowed/sanctioned for
existing wind/solar project, according
to the draft policy, placing the onus of
size restrictions on the utility owner
rather than on the government, which is
responsible for transmission capacity.
This will ensure that no augmentation
of transmission capacity is required,
according to the policy statement.
Policy & regulatory support is also
proposed towards the hybrid projects
The draft policy comes
in the wake of how
recent studies have
revealed that wind and
solar projects can com-
plement each other by
minimizing the variabil-
ity of the power output
and easing pressure
on the grid. The policy
aims to encourage
new technologies and
methodologies for such
hybrid systems
August 2016
www.InfralinePlus.com
in the draft policy, given the eligibility
of hybrid RE to meet the renewable
purchase obligation norms (RPO, both
solar and non-solar) by the obligated
entities as well as continuation of
all other policy & financial benefits
which are currently made available
to existing wind & solar projects. For
new hybrid wind-solar projects, the
draft policy proposes to provide the
developer with the option of using the
hybrid power for captive use, third
party sale or sale to state electricity
distribution utilities at prices deter-
mined by the state electricity regu-
latory commissions for the project.
The policy states, In case of
new wind-solar hybrid projects, the
developer have option to use the
hybrid power for captive use or third
party sale or may sell the hybrid
power to Distribution Company (ies)
at a price determined by the respective
SERC for that hybrid power project. 63
The hybrid power so purchased by
Distribution Company may be used
to offset both solar and non-solar
RPO. The hybrid power may be pro-
cured through a transparent bidding
process under different mechanisms.
Parameters that may be considered
for bidding could be total capacity
delivered at grid interface point, CUF
and unit price of electricity.
A step in the right direction
The variability in generation profile
is likely to be reduced to some extent
by the hybridization of wind and solar
projects at same site, given that genera-
tion from both the sources is at dif-
ferent intervals and in complimentary
seasons. This in turn would partially
address the concerns of distribution
utilities over the grid stability arising
due to the intermittent nature of wind
or solar. The existing wind farms have
scope for adding solar capacity and
similarly there could be wind potential
in the vicinity of existing solar plant.
Hence, it is believed that new policy
will be a great boost to the state of
 August 2016
www.InfralinePlus.com

InDepth

MNRE announced a scheme to set up 1 GW of wind power

connected to transmission network of CTU Government through
the draft policy has pro-
MNRE recently announced a scheme to set up 1 GW of wind power con-
nected to transmission network of Central Transmission Utility (CTU) with
posed that the Central
an objective to facilitate supply of wind power to the non-windy states at Electricity Regulatory
a price discovered through transparent bidding process. According to Commission (CERC)
the ministry, the scheme will encourage competitiveness through scaling should lay down the
up of project sizes and introduction of efficient and transparent e-bidding
guidelines for determi-
and e-auctioning processes. It will also facilitate fulfilment of Non-Solar
Renewable Purchase Obligation (RPO) requirement of non-windy states. nation of generic tariff
The Scheme will be implemented for setting up 1000 MW capacity of for wind-solar hybrid
CTU connected Wind Power Projects by Wind Project Developers on system. Further, the
build, own and operate (BOO) basis. However, the capacity may go Commission is required
higher than 1000 MW, if there is higher demand from distribution com- to frame regulations for
panies (Discoms) of non-windy states. The introduction of tariff based
bidding for awarding wind projects under this scheme is expected to
forecasting and sched-
encourage competition and lead to efficient tariff discovery which would uling for the hybrid
be favourable for the discoms. systems
Tamil Nadu considering its leadership incentives available to wind and solar may be either feed-in tariff based
position in wind installed capacity. The power projects may also be made or competitively bid based, as is
64 country has already crossed 26,700 available to hybrid projects. Low cost proposed in the policy. In our view,
MW of wind and 7,600 MW of solar financing for hybrid projects may be overall regulatory clarity in terms of
power installed capacity till May 2016. made available through IREDA and tariff norms for hybrid projects re-
Tamil Nadu leads in wind installation other financial institutions including mains a key. The Central Electricity
capacity with 7,613 MW and comes multilateral banks, it added. Regulatory Commission is required
close second to Rajasthan with an to lay down generic tariff principles
installed solar capacity of 1267 MW. Issues to be addressed as well as scheduling & forecasting
Government through the draft policy According to ICRA, timely finalisa- framework norms for such projects
has proposed that the Central Elec- tion and clarity on regulatory front which would in turn provide guid-
tricity Regulatory Commission (CERC) remains key to achieve the objectives ance for State Electricity Regulatory
should lay down the guidelines for underlined in the draft policy. In a Commission (SERCs) to follow.
determination of generic tariff for recent report, ICRA said, While While hybrid systems are viewed
wind-solar hybrid system. Further, the there are inherent advantages in as a good step forward for the
Commission is required to frame regu- hybrid projects in optimal utilization renewable energy sector as they stand
lations for forecasting and scheduling of resources, the project economics to facilitate the efficient use of both
for the hybrid systems. The policy for such projects would be critically land and transmission infrastructure,
also states that all fiscal and financial dependent upon tariff levels which the draft policy is not detailed enough
when it comes to tariff structures and
financial incentives. The success of
draft hybrid wind and solar energy
policy would depend on the tariff
(rate) level, which might be feed-in
rate-based or competitively bid-
based. Besides, overall regulatory
clarity in terms of rate norms for
hybrid projects remains key for the
success of the draft policy.

For suggestions email at feedback@infraline.com

 August 2016
www.InfralinePlus.com

StatisticsRenewableEnergy
Programme/ Scheme wise Physical Progress in 2016-17 Commissioning Status of Grid
(During the month of June, 2016) Connected Solar Power Projects
(as on 30-06-16)
FY- 2016-17 Cumulative
Total com-
Achievements
Sector Achieve- Sr. missioned
Target (as on State/UT
No. capacity till
ment 30.06.2016) 30-06-16 (MW)
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW) 1 Andhra Pradesh 878.97
2 Arunachal Pradesh 0.27
Wind Power 4000.00 373.95 27151.40 3 Bihar 45.10
4 Chhattisgarh 93.78
Solar Power 12000.00 1031.48 7805.34 5 Gujarat 1,123.36
Small Hydro Power 250.00 30.32 4304.27 6 Haryana 15.39
7 Jharkhand 16.19
BioPower (Biomass & Gasification 400.00 29.50 4860.83 8 Karnataka 153.32
and Bagasse Cogeneration) 9 Kerala 13.05
10 Madhya Pradesh 790.37
Waste to Power 10.00 0.00 115.08
11 Maharashtra 385.76
Total 16660.00 1465.25 44236.92 12 Odisha 66.92
13 Punjab 520.70
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ) 14 Rajasthan 1,294.60
15 Tamil Nadu 1,267.41
Waste to Energy 15.00 0.00 160.16
16 Telangana 795.84
Biomass(non-bagasse) 60.00 0.00 651.91 17 Tripura 5.00
Cogeneration 18 Uttar Pradesh 143.50
19 Uttarakhand 41.15
Biomass Gasifiers 2.00 0.00 18.15 20 West Bengal 11.77
- Rural 21 Andaman & 5.10 65
8.00 0.00 164.24
- Industrial Nicobar
22 Delhi 23.87
Aero-Genrators/Hybrid systems 0.30 0.00 2.69 23 Lakshadweep 0.75
24 Puducherry 0.03
SPV Systems 100.00 3.40 325.40
25 Chandigarh 6.81
Water mills/micro hydel 1.00 0.00 18.71 26 Daman & Diu 4.00
27 J&K 1.00
Total 186.30 3.40 1341.26 28 Himachal Pradesh 0.20
III. OTHER RENEWABLE ENERGY SYSTEMS 29 Mizoram 0.10
30 Others(PSU/chan- 100.92
Family Biogas Plants (in Lakhs) 1.10 0.00 48.55 nel partner )under
Rooftop
Source: MNRE
TOTAL 7805.21
Source: MNRE
REC Trading Volume and Price for July 2016
Through IEX
Buy Bids Sell Bids Cleared Volume Cleared Price No. Of Month of
REC Type
(REC) (REC) (REC) (INR/REC) Participants Auction
Solar 23,944 2,036,891 23,944 3,500 565
July 2016
Non-Solar 139,250 7,287,207 139,250 1,500 953
Source: IEX

Through PXIL
MCV
Buy Bid Sell Bid MCP
REC Type (No. of certificate) Month of Auction
(No. of certificates) (No. of certificates) (INR / Certificate)
Qty. (MWH)
Non Solar 95757 5637674 1500 95757
July 2016
Solar 14029 1447749 3500 14029
Source: PXIL
 August 2016
www.InfralinePlus.com

StatisticsRenewableEnergy
State-wise and Agency-wise Physical Targets under National Biogas and Manure Management Programme
(NBMMP) for the year 2016-17 for Family Type Biogas Plants (in Nos)

SL Name of the SNAs/SNDs/ Total Target

Target Allocated
No. KVIC/ BDTCs and States Allocated
Gen. S.C. S.T.
1 Andhra Pradesh (NEDCAP. Hyderabad) 7000 1800 1400 10200
2 Arunachal Pradesh (APEDA) 100 0 0 100
3 Assam (FDA) 6200 300 2500 9000
4 Chhattisgarh (CREDA) 1600 50 1400 3050
5 Goa (Dir. of Agri.) 100 0 0 100
6 Gujarat (GAIC) 2000 200 300 2500
7 Haryana (Dir. of Agri.) 1000 0 0 1000
8 Himachal Pradesh (Dir. of Agri.) 150 0 0 150
9 Jammu & Kashmir (JKEDA) 100 0 0 100*
10 Jharkhand (JREDA) 100 0 100 200
11 Karnataka (RD&PRD) 9000 1000 0 10000
12 Kerala (Dir. of Agri.) 1700 50 0 1750
13 Kerala (ANERT. Thiruvananthapuram) 1000 100 0 1100
14 Madhya Pradesh (MPSAIDC) 6600 400 1000 8000
15 Maharashtra (RD&WCD) 13500 1000 0 14500
16 Meghalaya (MNREDA) 200 0 0 200
17 Mizoram (Dir. of AH) 500 0 0 500
18 Nagaland (Dir. of NRE) 300 0 0 300
66
19 Odisha (OREDA) 2500 1000 500 4000
20 Punjab (PEDA) 4800 200 0 5000
21 Sikkim (SREDA) 250 0 0 250
22 Tamilnadu (RD&RD) 300 0 0 300
23 Telangana (TNREDCL) 9800 1100 1400 12300
24 Tripura (TREDA) 400 0 0 400
25 Uttar Pradesh (RDD) - - - -**
26 Uttar Pradesh (UPNREDA) 1000 100 0 1100
27 Uttarakhand (UREDA, Dehradun) 800 100 - 900
28 Uttarakhand (RDD, Pauri) 400 100 - 500
29 KVIC, Mumbai 6500# 1500 - 8000#
Sub total 77900 9000 8600 95500
30 BDTC. I IT Guwahati. (Assam. 500 0 0 500
Meghalaya. Tripura, West Bengal)
31 BDTC. MPUAT. Udaipur (Rajasthan) 800 100 100 1000
32 BDTC, 1 IT Delhi (UK. UP. Delhi. 500 0 0 500
Haryana)
33 BDTC. UAS. Bangalore (Karnataka) 1000 0 0 1000
34 BDTC. PAU. Ludhiana (Punjab. HP & 1500 0 0 1500
J&K)
Sub total 4300 100 100 4500
Grand Total 82200 9100 8700 100000

[* Subject to refund of outstanding amount of previous years lying with the State Govt. ]
[** Target not considered due to accounts from the year 2007-08 to 2014-15 are pending for settlement] [Targets to BDTCs considered as decided in the
Progress Review Meeting held under the Chairmanship of Secretary, MNRE on 29.03.2016 at MNRE, New Delhi]
[Note: Not exceeding the targets over 10% of the total as given in the last column]
[# For KVIC. Mumbai national target 8000 (6500 (5700 Gen.+800 NEZ) and 1500 SCP target}]

Source: MNRE

OffBeat
Prime Minister Narendra Modis
Cabinet gets some new faces
19 new faces inducted in the Union Council of Ministers of which 17 are
from BJP
Five ministers tendered their resignation to Prime Minister Narendra Modi
Prime Minister, Narendra Modi
By Team InfralinePlus
In a significant move, Prime Minister,
Narendra Modi, in July 2016, brought
about a major reshuffle in the portfolio
of Cabinet Ministers.
Nineteen new faces have been
inducted in the Union Council
of Ministers by Prime Minister
Narendra Modi, of which 17
are from BJP, and two are
representatives of allies -Anupriya
Patel from Apna Dal in Uttar
Pradesh and Ramdas Athawale
from Republican Party of India
(Athawale)
The list of newly appointed
ministers of state includes three
from Uttar Pradesh, four from
Rajasthan, three from Gujarat,
two from Maharashtra (excluding
Javadekar), two from Madhya
Pradesh and one each from
Uttarakhand and Assam.
August 2016
www.InfralinePlus.com
67
There is also fresh, young talent in
Apna Dals Anupriya Patel, 35, and
the Mansukh Mandaviya, who has
worked in the agriculture sector in
Gujarat.
Five ministers tendered their
resignation to Prime Minister
Narendra Modi. They include
Nihalchand, Ram Shankar Katheria,
Sanwar Lal Jat, Manuskhbhai D
Vasva and M K Kundariya.
 August 2016
www.InfralinePlus.com

OffBeat

New portfolios of Cabinet Additional portfolios of

Ministers Cabinet Ministers

Chaudhary Birender Singh: Steel

Piyush Goyal: Power, Coal, New and

Prakash Javadekar Renewable Energy, Mines
The first minister to take oath in the
new Cabinet. He is the only leader
who was elevated to the Cabinet rank.
He is now the new Union Minister for
Human Resource. Earlier he was the
Minister for Environment & Forests.

Ananth Kumar: Chemicals and Fertil-

68 izers, Parliamentary Affairs
M. Venkaiah Naidu: Urban Develop-
ment, Housing and Urban Poverty Al- Ministers of State (MoS)
leviation, Information and Broadcasting

Smriti Zubin Irani

She is the new Textile Minister. Earlier
she was Minister, Human Resources
Development

Jayant Sinha, MoS, Civil Aviation

Ravi Shankar Prasad: Law and (earlier Finance)
Justice, Electronics and I&T

D.V. Sadananda Gowda

He is the new Minister of Stastitics
and Programme Implementation. He
previously served as Minister of Law
Narendra Singh Tomar: Rural De- Manoj Sinha, MoS, Communications
and Justice
velopment, Panchayati Raj, Drinking (earlier Railways)
Water and Sanitation
 August 2016
www.InfralinePlus.com

Vijay Goel, BJP Anil Madhav Dave, Ajay Tamta, Lok

MP has been Rajya Sabha MP Sabha MP from
sworn in as MoS. represents Madhya Almora, Uttarakhand.
He was elected to Pradesh. He was first Portfolio: MoS,
Rajya Sabha from elected to the House Textiles
Rajasthan.Portfolio: in 2009. Portfolio:
MoS (Independent MoS (Independent
Charge), Youth Affairs and Sports Charge), Environment, Forest &
Krishna Raj , BJP
Climate Change
MP, represents
Faggan Singh Shahjahanpur
Parsottambhai
Kulaste represents constituency of Uttar
Rupala, a Rajya
the Mandla Pradesh.Portfolio:
Sabha MP from
constituency of MoS, Women & Child
Gujarat.Portfolio:
Madhya Pradesh. Development
MoS, Agriculture
Portfolio: MoS, and Farmers Mansukh
Health and Family Welfare, Panchayati Mandaviya, MP
Welfare Raj BJP who represents
Gujarat in Rajya
SS Ahluwalia is a MJ Akbar, former Sabha.Portfolio: MoS,
vice president of the journalist and Rajya Road Transport and
Sabha MP. He Highways, Shipping,
BJP and represents
represents Madhya Chemicals and Fertilizers.
Darjeeling.
Pradesh in the
Portfolio: MoS, Anupriya Patel,
House.Portfolio:
Agriculture and MoS, External Apna Dal MP
69
Farmers Welfare, Affairs representing
Parliamentary Affairs Mirzapur, Uttar
Arjun Ram Pradesh.Portfolio:
Ramesh Jigajinagi, Meghwal, the MoS, Health &
MP from Bijapur, BJPs chief whip Family Welfare
served on the in Lok Sabha. He CR Chaudhary,
consultation represents Bikaner, Lok Sabha MP from
committee at the Rajasthan and has Nagaur, Rajasthan.
Ministry of External been a member of Portfolio: MoS,
Affairs. Portfolio: the House for two terms.Portfolio: Consumer Affairs,
MoS, Drinking Water and Sanitation MoS, Finance, Corporate Affairs Food and Public
Distribution
Jasvantsinh
Ramdas Athawale, Sumanbhai PP Chaudhary,
Rajya Sabha MP Bhabhor, an MP Lok Sabha MP
from Maharashtra. representing Dahod, representing Pali,
Portfolio: MoS, Gujarat.Portfolio: Rajasthan. Portfolio:
Social Justice and MoS, Tribal Affairs MoS, Law and
Empowerment Justice, Electronics
and Information Technology

Mahendra Nath Dr Subhash Bhamre,

Rajen Gohains an
Pandey represents BJP MP representing
MP from Assam.
Chandauli in the Dhule, Maharashtra.
Portfolio: MoS,
16th Lok Sabha. Portfolio: MoS,
Railways Defence
Portfolio: MoS,
Human Resource
Development
For suggestions email at feedback@infraline.com
 August 2016
www.InfralinePlus.com
Reports & Studies
Indias Ease of Electricity rank jumped 29 points in one year, says World Bank report
India ranks 70 among 189 economies on
ease of getting electricity due to positive
reforms that have aided ease of doing
business in the country, according to a latest
report by The World Bank. India has jumped
by a whopping 29 points from 99 last
year, the report said. Getting an electricity
connection in India takes an average 90.1
days with nearly five procedural steps, the
banks Ease of Doing Business Report 2016
said. Faster and enhanced convenience in
Getting Electricity has been the biggest
contributor in making India improve its
position by 12 ranks climbing to 130 as
Supreme Courts order on revision of tariff under PPA positive for Gencos: ICRA
70
ICRA believes that the recent Supreme
Court orders upholding statutory powers of
state power regulators to review tariffs of
power purchase agreements is a positive de-
velopment for generation entities. This would
cover generation companies that are in dis-
pute with buyers over tariff review for events
Indian start-ups receive 50 per cent of global investments on wind energy
A wind energy start-up landscape study by
Traxcn has revealed that top investors bet on
start-ups that are focused on power genera-
tion, and then manufacturing. The study has
also revealed that start-ups based in India
comprised 50 percent of start-ups across the
world that received top investments in July
2016. Power generation start-ups attracted
the highest investment - worth $7.08 billion,
while manufacturing received a total invest-
ment of $1.68 billion over the last few years.
This trend in the start-up ecosystem coincides
with the governments target of generat-
ing 175 MW of energy by 2022 out of which
60 MW (or 34.3 percent) would be derived
from wind energy. In the power generation
compared to 142 a year ago in terms of
the overall Ease of Doing Business. It
said power utilities in Delhi and Mumbai
have reduced time for getting electricity
connections by improving internal work
that are uncontrollable. While these orders
are a positive development for the indepen-
dent power producers, it is assumed that tar-
iff re-determination or compensation-related
issues are unlikely to be resolved quickly.
Further, orders issued by power regulators -
whichever way they may favour - are likely to
be contested and Supreme Court has noted in
one of the cases that the final orders issued
by the regulators shall be subject to scrutiny,
Sabyasachi Majumdar, Senior Vice President,
ICRA said. On July 5, 2016, Supreme Court
upheld an order issued by Appellate Tribunal
for Electricity for re-determination of tariff
by Gujarat Electricity Regulatory Commis-
sion in case of power purchase agreements
signed by IPPs - Tarini Infrastructure (TIL)
and Junagadh Power Projects (JPPPL) with
category, Hyderabads Greenko Group ($737
million) and ReNew Power Ventures ($655
million) ranked first and second, respectively,
among the most funded companies. Suzlon
($552 million) topped the manufacturing
companies that raised funding last year. Merg-
processes. Another focus is to make
the process for getting a new electricity
connection simpler and faster. Toward
that end the utility in Delhi eliminated an
internal wiring inspection by the Electrical
Inspectorateand now instead of two
inspections for the same purpose, there
is only one. The utility also combined the
external connection works and the final
switching on of electricity in one procedure,
the report said. It further said that utilities
in Mumbai reduced the procedures and time
for connecting to electricity by improving
internal work processes and coordination.
the Gujarat Urja Vikas Nigam (GUVNL). TIL
operates two small hydro power projects of 3
MW and 2.6 MW, while JPPPL operates a 10
MW biomass-based power project in Gujarat.
Supreme Court has also recently refused
to stay proceedings by Central Electricity
Regulatory Commission (CERC) in case of
tariff compensation matter for Coastal Gu-
jarat Power (CGPL) and Adani Power (APL).
This is a positive for these power producers,
given that CERC is currently evaluating tariff
compensations, post APTELs order dated
April 7, 2016. The tribunal had directed CERC
to assess the extent of the impact of force
majeure events on the projects of APL and
CGPL and provide them such relief as may
be available under the respective power
purchase agreements.
ers and acquisitions in power sector had also
increased 1.5 times in India during the first
half of 2016, according to EY. There were 17
deals worth $1.6 billion during the January-
May period compared to 15 deals worth
$601million in the year-ago period. Greenko
Energy Holdings ($230 million), ReNew Power
Ventures ($265 million), Tata-owned Welspun
Renewables ($617 million) were cited among
the firms that received top investment since
2015. Traxcn, the research firm that curates
and monitors start-up investments, also noted
that the average ticket size of investments
per year was highest in 2016 at $115 million,
though 2015 saw the highest total funding in
the sector at $2.7 billion worldwide.

Reports & Studies
UDAY unlikely to destabilise aggregate state finances but select states will feel the pinch
Aggregate impact of UDAY on the fiscal
deficits of 13 states that have joined the
scheme will be 0.47% of gross domestic
product (GDP) in FY17 estimates India
Ratings. However, state finances of
Andhra Pradesh, Haryana, Jharkhand,
Punjab, Rajasthan and Uttar Pradesh will
come under pressure. UDAY is unlikely
to have a destabilising effect on fiscal
India can gain hugely from regional power trade, says World Bank study
Regional trade in electricity can spare India
from investing in 35,000 MW coal-fired capaci-
ties (at estimated $26 billion) over the next 25
years, according to a World Bank study cover-
Rs 10 lakh crore investments needed for 1.5 bn tonne coal output
Investments to the tune of more than
Rs 10 lakh crore would be required in
coal mining and allied sectors like power,
steel and cement to achieve the target
of 1.5 billion tonnes of coal production by
2019-20, according to the latest PwC-ICC
report. India has set an ambitious target
of 1.5 billion tonnes (BT) of domestic
coal production by FY 2020 and will need
huge investments adding up to more than
Rs 10 lakh crore in coal mining and its
allied sectors like power, steel, cement,
infrastructure for logistics, and coal
washeries for achieving this goal, the
consolidation at an aggregate level. We
estimate aggregate fiscal deficit of states
at 3.2% of GDP in FY17. It is expected
to be marginally better than the 3.4%
recorded in FY16, said Devendra Pant,
chief economist, India Ratings & Research.
Five states incurring high distribution
losses that have yet not joined the UDAY
scheme are Telangana, Madhya Pradesh
Maharashtra, Tamil Nadu and West Bengal.
Ind-Ras analysis shows that once they
do, state finances of even Telangana,
Madhya Pradesh and Tamil Nadu will come
under stress. Ind-Ra notes that despite
marginally better fiscal performance,
states at the aggregate level are likely to
miss the fiscal deficit target of 2.8% of GDP
in FY17 by a wide margin.
ing all SAARC nations except the Maldives.
Larger benefits will accrue through reduc-
tion in fuel cost and 6.5 per cent cut in green-
house gas emission. The savings should come
through replacement of thermal power with
hydro-electricity to be sourced mostly from
Nepal, followed by Bhutan and Afghanistan.
The study by World Bank economists Michael
Torman and Govinda Timilsina expects Nepal
to add 52.1 GW (giga-watt) in 2040, over and
above the existing 1 GW. Bhutan will add 9.1
GW and Afghanistan 3.6 GW. Without trade op-
portunities, Nepal and Bhutan cannot maximise
hydro-electric generation potential because of
the smaller size of domestic economies.
support system for developing a cohesive
August 2016
www.InfralinePlus.com
Govt should not delay halting coal plant
expansion: Greenpeace
Noting that the International Energy
Agency (IEA) reaffirmed its position
that thermal power plants contribute to
air pollution, Greenpeace India said the
government should not delay halting its
expansion plans for coal plants. It is
clear that India needs an aggressive shift
to clean energy now. There should be no
delay in implementing the thermal power
plant emission standards and halting the
expansion of coal-based power. This is
the only way to keep our air quality within
breathable limits and reduce premature
deaths, said Sunil Dahiya, Campaigner,
Climate and Energy, Greenpeace India.
He said the government should move 71
urgently to meet the three recommen-
dations by the IEA - set an ambitious
long-term goal for reducing air pollution,
create a comprehensive clean air policy
package for the energy sector includ-
ing both emission controls and clean
energy, and ensure effective monitoring
and enforcement of emission standards.
The IEA report suggests 85 per cent of
particulate matter and almost all of the
sulphur oxides and nitrogen oxides result
from fuel combustion.
report said. The government would need
to take steps to promote smooth land
acquisition, easy availability of water,
augment infrastructure for logistics,
develop coal washeries, capacity building
and skill development to provide the
environment for achieving the target, it
said. Additionally, focused efforts are
required from all stakeholders, especially
governments, industry players, investors,
funding agencies and infrastructure
developers, it added.
 August 2016
www.InfralinePlus.com
People in News
Utpal Bora made OIL chief amid Assam field auction protests
The government has appointed Utpal
Bora as the full-time chairman of Oil
India Ltd after a gap of more than a
year, during which the countrys second-
largest oil producer has seen a steady
decline in output. The appointment of Oil
D Rajkumar appointed CMD of BPC
72
Technocrat D Rajkumar has been appoint-
ed as Chairman and Managing Director
Aruna Sharma appointed Steel Secretary in major bureaucratic reshuffle
In a major reshuffle at the secretarial
level of the Central government, senior
IAS officer Aruna Sharma will take
charge as Secretary of Ministry of Steel,
while Aruna Sundarajan will take over
as Secretary, Ministry of Electronics
and Information & Technology. In other
changes, Bhanu Pratap Sharma, Secretary,
Department of Health and Family Welfare
has been moved to the Department of
Personnel and Training as Secretary. AK
Dubey, Special Secretary, Ministry of Coal
will join the Department of Youth Affairs
as Officer on Special Duty and will take
India chairman comes amid mounting
protest from the BJPs allies against the
auction of 12 small discovered oil and gas
fields in Assam as part of the Centres
plan to attract private investments for
developing 67 such discoveries across the
country. These discoveries were made by
state-run ONGC and OIL, who returned
the fields because restrictive condition
made them commercially unviable. These
conditions have been relaxed for the
auctions. Bora is at present an executive
director with ONGC and runs the flagship
explorers Mehsana field in Gujarat. It is
companys largest onland asset with 1,552
operational oil and gas wells that produce
6,000 tonnes of oil per day and 5.3 lakh
cubic metre gas a day.
(CMD) of Bharat Petroleum Corporation.
Rajkumar is, at present, working as Man-
aging Director of Bharat Petro Resources
Ltd, a unit of BPCL focused on exploration
and production. He has been appointed to
the posts for five-year term, an order is-
sued by the Department of Personnel and
Training (DoPT) said. Rajkumar will take
over the charge on or after October 1, 2016
after retirement of BPCLs current chief S
Varadarajan in September. BPCL is a state
refiner and retailer.
charge as Secretary after the incumbent
Rajiv Gupta retires. Further, M Sathiavathy,
Director General, Directorate General
Rani Singh Nair appointed CBDT
chairperson
Senior Indian Revenue Service (IRS)
officer Rani Singh Nair has taken over as
the new chairperson of Central Board of
Direct Taxes (CBDT), the policy-making
body of the Income Tax department under
the Union Finance Ministry. Her predeces-
sor Atulesh Jindal, who was appointed
CBDT chief in February this year, retired
recently. Nair, a 1979-batch IRS officer of
the Income Tax cadre, worked as member
(Legislation and Computerisation) at
CBDT. An order of her appointment was
issued by the Appointments Committee
of Cabinet, headed by Prime Minister
Narendra Modi. For Nair, who will be in
office till 31 October, an important task
would be to oversee effective execution
of the ambitious one-time domestic black
money disclosure programme, also called
the Income Declaration Scheme (IDS).
IDS is set to close on 30 September. Nair
has been instrumental in framing the pro-
cedures and protocols that led to the roll-
out of IDS on 1 June 2016. The scheme
aims at bringing undisclosed income and
assets into the tax net.
of Civil Aviation, has been moved to the
Ministry of Labour and Employment as
Officer on Special Duty. She will take
charge as Secretary after the incumbent
Shankar Agarwal retires. Sathiavathys
replacement in the Directorate General
of Civil Aviation has not been announced.
Dinesh Singh, Special Secretary,
Ministry of Statistics and Programme
Implementation, has been moved to
Department of Land Resources as Officer
on Special Duty. Singh will take over as
Secretary once the incumbent VS Madan
retires.
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