Discoms get Rs 46,321 crore under liquidity package so far out of total sanctioned loans of Rs 1.35 lakh crore

Source: The Economic Times, Mar 23, 2021

Power distribution utilities or discoms in the country have been sanctioned loans of Rs 1.35 lakh crore and disbursed Rs 46,321 crore so far under the liquidity infusion scheme, Parliament was informed on Tuesday. “So far, loans of Rs 1,35,497 crore have been sanctioned and Rs 46,321 crore have been released to states/DISCOMs by REC and PFC

(Power Finance Corporation),” Power Minister R K Singh said in a written reply to the Rajya Sabha on Tuesday.

The central government had announced a liquidity infusion scheme as part of AatmaNirbhar Bharat Abhiyan on May 13, 2020, in the backdrop of the outbreak of global pandemic COVID-19 in the country.

Due to the consequent nationwide lockdown, the revenues of the power distribution companies (DISCOMs) nosedived, as people were unable to pay for electricity consumed, the minister told the House.

Under the scheme, PFC and REC have extended special long-term transition loans at concessional rates to DISCOMs against the receivables of the discoms from the state government in the form of electricity dues and subsidy not disbursed, to enable them to clear their outstanding dues as existed on June 30, 2020 towards Central Public Sector Undertaking (CPSU) Generation (Genco) & Transmission Companies (Transcos), Independent Power Producers (IPPs) and Renewable Energy (RE) generators.

Further, to enable DISCOMs that do not have adequate headroom available under working capital limits of 25 per cent of last years’ revenues, as imposed under Ujwal DISCOM Assurance Yojana (UDAY), or do not have adequate receivables from the State Governments, Government of India has also approved a one-time relaxation to PFC and REC Ltd for extending these loans.

The minister told the House that this intervention enabled Gencos to pay for coal companies and meet their operational expenses. This has enabled continuation of uninterrupted power supply throughout the COVID period across the country. Further mitigation of liquidity issues enabled the power sector to cater to highest ever peak demand on 189.395 GW on January 30, 2021, he added.

“Transactions of power purchases and payment thereof is a continuous process. As per information available with this ministry, overall DISCOMs dues to Independent Power Producers (IPPs) including thermal power producers as on June 30, 2020 was Rs 40,635.57 crore,” the minister added.

In another reply to the House, the minister said, “Government has transformed India from power deficit in 2013 to power surplus. The installed generation capacity is around 379 Giga Watt which is more than adequate to serve the electricity peak demand of 190 GW.”

The government has also made plans to have sufficient generation capacity to meet future demand of electricity. The all India power generation installed capacity by the end of 2026-27 is estimated to be 6,19,066 MW which includes 2,38,150 MW coal, 25,735 MW gas, 63,301 MW hydro, 16,880 MW nuclear and 2,75,000 MW renewable energy sources to fully meet the electricity demand projected as per the 19th Electric Power Survey on All India basis, he added.

As per the recent study carried by Central Electricity Authority on Optimal Generation Capacity mix for 2029-30, the likely All India installed capacity in 2029-30 is estimated to be 8,17,254 MW which includes 2,66,911 MW coal, 25,080 MW gas, 71,128 MW hydro, 18,980 MW nuclear and 4,35,155 MW renewable energy sources, he informed the House.

The focus of government is to increase the share of renewable energy which is available in plenty within the country to meet the requirement of the country and also export to our neighbouring countries, he added.

In another reply, he also told the House that state-run NTPC Group has an installed capacity of 64,880 MW and the generation of more than 300 billion units (BUs) is expected during the year 2020-21.

NTPC plans to add 12,850 MW thermal capacity and 6862 MW renewable energy capacity by the year 2024.

As per the National Infrastructure Pipeline (NIP), investment planned during 2020- 2025 by NTPC is cumulatively about Rs 1,30,377 Crore.

US becomes India’s second biggest oil supplier, Saudi falls to fourth spot

Source: Business Standard, Mar 16, 2021

New Delhi: The United States overtook Saudi Arabia as India’s second biggest oil supplier last month, as refiners boosted cheaper U.S. crude purchases to record levels and to offset supply cuts from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), data from trade sources showed.

India’s imports from the world’s top producer rose 48% to a record 545,300 barrels per day (bpd) in February from the prior month, accounting for 14% of India’s overall imports last month, the data obtained by Reuters showed.

In contrast, February imports from Saudi Arabia fell by 42% from the previous month to a decade-low of 445,200 bpd, the data showed. Saudi Arabia, which has consistently been one of India’s top two suppliers, slipped to No. 4 for the first time since at least January 2006.

Country-wise oil import data for before 2006 is not available with Reuters. Iraq continued to be the top oil seller to India despite a 23% decline in purchases to a five-month low of 867,500 bpd, the data showed.

Power consumption grows 16.5 per cent in first 12 days of March

Source: The Hindu Business Line, Mar 14, 2021

New Delhi: Power consumption in the country grew 16.5 per cent in the first 12 days of this month at 47.67 billion units over the corresponding period a year ago, showing a revival in the economic activities, according to Power Ministry data.

Power consumption during March 1-12 last year was recorded at 40.92 BU.

On the other hand, the peak power demand met, which is the highest supply in a day, during this 12-day period of March 2021 remained well above the highest record of 170.16 GW in the entire March 2020.

Till March 12, 2021, peak power demand met touched the highest level of 186.03 GW on March 11, 2021, and recorded a growth of 9.3 per cent over 170.16 GW a year ago.

The highest daily peak power demand met of 1701.16 was recorded on March 3, 2020.

Experts are of the view that the rise in power demand and consumption indicates that the impact of pandemic-induced lockdown and sluggish economic conditions has tapered off.

They exuded confidence that power consumption and demand could record a double digit growth during March this year in view of rising mercury and perk-up in commercial and industrial requirement of electricity.

They expect power consumption in this entire month to be higher than 98.95 BU recorded in March 2020.

The government had imposed a nationwide lockdown on March 25, 2020, to contain the spread of Covid-19.

After a gap of six months, power consumption recorded a 4.6 per cent year-on-year growth in September and 11.6 per cent in October.

In November 2020, the power consumption growth slowed to 3.12 per cent, mainly due to the early onset of winters.

In December, power consumption grew by 4.5 per cent while it was 4.4 per cent in January 2021. Power consumption in February this year recorded higher at 104.11 BU compared to 103.81 BU last year despite the fact that 2020 was a leap year.

India’s February fuel demand falls to five-month low over surge in prices

Source: Business Standard, Mar 11, 2021

New Delhi: India’s fuel consumption fell for the second month in a row in February to its lowest since September last year as record-high retail prices continued to stonewall a demand recovery for the world’s third-biggest oil importer and consumer.

Consumption of fuel, a proxy for oil demand, fell 4.9% to 17.2 million tonnes year-on-year in February, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Thursday.

On a monthly basis, demand slipped by 4.6%.

“Prices have to come down or coronavirus cases should reduce before we see a real recovery, as some people are still reluctant to travel” said Refinitiv analyst Ehsan Ul Haq.

In January, India had registered its first month-on-month decline in five months.

Gasoline and gasoil prices in India have risen to record highs, mirroring global markets. ]

Earlier this month, India said a decision by major producers to extend oil output cuts could derail any consumption led-recovery in some countries since it keeps global prices elevated.

“India is doing what it can to reduce the impact of the pandemic, but it still needs some help from OPEC to stabilise prices. OPEC should not kill the goose that lays the golden egg”, Ul Haq added.

Diesel consumption, a key parameter linked to economic growth and which accounts for about 40% of overall refined fuel sales in India, fell 3.8% to 6.55 million tonnes from the previous month, and also declined 8.5% year-on-year.

Gasoline, or petrol, sales fell 6.5% to 2.44 million tonnes in February and by about 3% from a year earlier.

Sales of cooking gas, or liquefied petroleum gas, were 7.6% higher than a year earlier at 2.27 million tonnes, while naphtha sales remained unchanged at 1.22 million tonnes. Sales of bitumen, used for making roads, were down about 11.1%, while fuel oil decreased by about 10% last month.

Determined push to power reforms

Source: Financial Express, Mar 08, 2021

With no amount of government largesse or fiscally expensive financial re-engineering producing the desired result of salvaging the electricity discoms from being perennial defaulters caught in debt trap, the government has decided to make the terms for the latest scheme announced in the Budget FY22 stricter and non-bendable. It is also fast-tracking a plan to usher in real competition in the electricity distribution space.

The promised grants to state-run discoms under the Rs 3.1-lakh-crore scheme unveiled in the Budget would get converted into loans, unless they met the parameters aimed at reducing their sticky losses, Union power minister RK Singh told FE. The minister also said he intended to introduce a Bill to amend the Electricity Act in the ongoing session of Parliament, to enable operations of multiple discoms in any area and end the current monopoly regime in the power distribution business.

Also, to prevent new players from cherry-picking lucrative supply circles, the states will have to create a ‘cross-subsidy fund’ so that discoms do not get undue advantages owing to higher composition of industrial and commercial consumers in their respective areas, Singh said. State electricity regulators will have to clearly quantify the cross-subsidy component, while determining electricity tariffs for every category, which will determine exactly how much a discom in a ‘lucrative’ area will have to pay to the new fund, the minister added.

As per the Budget announcement, the new scheme, the latest in a series of four over the last two decades starting with the accelerated power development and reforms programme (APDRP) unveiled in 2001, is contingent on the discoms committing to undertake structural reforms and infrastructure creation such as feeder separation and smart meters, to address the core issues of billing-collection inefficiencies and pilferage that cripple the sector.

“As a disincentive for not complying with the agreed loss reduction targets (under the new scheme), we will bring in a provision that if the discoms fail to carry out the desired action, the grants disbursed will be converted into loans,” Singh said. The new scheme is slated to reduce aggregate technical and commercial (AT&C) losses — an indicator of pilferage — after the earlier Ujwal Discom Assurance Yojana (UDAY) programme failed to achieve its target to bring down these losses to 15% by FY19-end. AT&C losses now stand at 25%.

Of the Rs 3.1-lakh-core financial assistance, envisaged over five years under the scheme, 60% will be grants, 30% loans (to be facilitated by the Centre, possibly from the likes of PFC-REC), and the balance 10% will come from state governments. The new proposal is to add a caveat that the 60% grant component would be converted to loans on the discoms’ books if they fail to meet the targets.

Discoms’ financial losses jumped 83% annually to Rs 61,360 crore in FY19 and seen to have risen further since.

Even though details of the new scheme is still being worked out, Singh said: “If loss-making discom will not access the scheme unless it works out a trajectory for loss reduction and get the respective state government’s approval for the same.” the minister noted. The disbursements will be linked to the adherence to the loss reduction trajectory and there will be annual reviews to assess the discoms’ performance.

Regarding the delicensing of the distribution sector, the Union power ministry has already discussed the proposition with all the states, industries and power regulators. “The regulator will fix a ceiling tariff and discoms will be free to charge anything below that, so there will be competition on the basis of price and service quality,” Singh said. The entity which own the distribution net work will have to be paid wheeling charges by others who use the network. The fixed charge component of the tariff payable to generators under existing power purchase agreements would be shared among the discoms in proportion to the connected load of each entity. The energy charges would have to be paid according to the volume of electricity supplied by each discom, the minister said.

Given that contingent liabilities arising out the large outstanding debt and rising losses of electricity discoms remained an intractable problem and an unmitigated risk to states’ finances despite a series of financial bailout packages, ‘genuine reforms’ in the power sector could not wait any longer, 15th Finance Commission chairman NK Singh said recently.

Unbundling of the state power utilities was still an unfinished task, he noted, and added that the issue of ‘regulatory capture’ – state electricity regulators being hamstrung by the political executive –, needed to be addressed on priority, along with a fast-tracking of privatisation of discoms. Under the Rs 1.25-lakh-crore liquidity infusion scheme announced last year, as much as Rs 46,074 crore has been disbursed to all the discoms by PFC-REC as at the end of January 2020. The sanctions include Rs 30,230 crore to Tamil Ndu, Uttar Pradesh (Rs 27,432 crore), Maharashtra (Rs 14,310 crore), Telangana (Rs 12,652 crore), Karnataka (Rs 7,247 crore) and Andhra Pradesh (Rs 6,835 crore).

India’s Reliance looks to green energy, hydrogen as aims for net zero

Source: The Economic Times, Mar 03, 2021

NEW DELHI: India’s Reliance Industries, operator of the world’s biggest refining complex, said on Wednesday its non-energy businesses and increased use of renewable power would help it meet a goal of net zero carbon by 2035.

The leading petrochemical producer and operator of a refining complex in the western Gujarat state that can daily process 1.4 million barrels of crude is also present in India’s retail and telecom sectors.

Reliance has traditionally used its own fossil fuel-fired generation for its giant refineries and manufacturing plants.

Now the company is “aggressively working” towards using renewable power from the grid, Sanjiv Singh, president of Reliance’s oil to chemical business said at IHS CERAWEEK.

As pressure mounts on the energy industry to reduce its carbon emissions, governments and companies globally are betting on clean hydrogen playing a leading role, but its future uses and costs are uncertain.

Singh said Reliance was among those seeking to use green hydrogen, or hydrogen produced using only renewable energy.

“Utilisation of green hydrogen will become a very big option. Now we are working on different options for producing green hydrogen,” he said.

Singh, who joined Reliance in August after retiring as chairman of the country’s biggest refiner and fuel retailer Indian Oil Corp, said Reliance’s 2035 target was challenging because of the company’s sheer size.

“Nevertheless we are committed to achieve this,” he said, adding the group’s less energy intensive activities and efficient energy use would play the biggest part.

In addition, Singh said Reliance was working on investing in technologies to capture and store carbon for conversion into products and chemicals to decarbonise its business.

“I think no single formula is going to work to achieve this (2035 net zero carbon) target but a combination of everything. I am sure that we are going to achieve this target,” he said.

Morgan Stanley in a report last month said Reliance could invest $13 billion-$15 billion over a decade to build a portfolio of 18 gigawatts of renewables, 15 gigawatts for battery manufacturing and 3 gigawatts of hydrogen fuel sales amongst others.

Indian biggest fuel retailers gearing up for rural-led economic rebound

Source: Business Standard, Mar 01, 2021

If there’s one part of India’s economy that’s been relatively unscathed by the devastating impact of Covid-19 it’s the vast rural hinterlands. And the country’s biggest fuel retailers are sitting up and taking notice.

Stay-at-home orders first imposed from March last year had a disproportionate impact on India’s teeming cities, but in small towns and villages people mostly went about their business with fewer restrictions. A bumper agricultural crop and a splurge in government spending to pull the economy out of a slump is also expected to put more money into the hands of rural farmers and laborers.

The increasing economic importance of India’s hinterlands is influencing business expansion plans and accelerating a trend of more service stations being opened in the countryside. Bharat Petroleum Corp. and Hindustan Petroleum Corp. — two of the three biggest fuel retailers — both said they planned to raise the proportion of outlets they have in rural areas this year.

“While the first-level cities are getting saturated, demand is coming up in rural areas,” Hindustan Petroleum Chairman Mukesh Kumar Surana said. The new outlets Hindustan is looking to open would “have a reasonable component of second-rung cities and rural areas without any doubt,” he said.

India is pinning its hopes on the agricultural sector to help pull the economy out of its worst recession since the 1950s. Rural India was a bright spot in local automaker Mahindra & Mahindra Ltd.’s latest financial results amid strong demand for tractors and farm equipment. The rural sector continues to outperform urban India, Ambuja Cements Ltd. Chief Executive Officer Neeraj Akhoury said on a conference call with analysts last month.

HPC and BPC, together with Indian Oil Corp., account for more than 90% of Indian fuel sales. The share of rural service stations in the world’s third-biggest oil importer rose to 26.8% in January from 24.8% a year earlier, oil ministry data show, and the rate of increase looks set to accelerate this year.

Diesel is the most widely used petroleum product in India, accounting for around 40% of total fuel use. The agricultural sector is the second-biggest consumer of diesel after transportation.

Bharat Petroleum, the second-biggest fuel retailer, opened 2,212 outlets in the past year, with two-thirds of these in rural areas, the oil ministry data show. “We weren’t having a presence in the rural segment the way our competition had and that impacted us in Covid times,” said N. Vijayagopal, finance director at Bharat Petroleum. “So, we are now targeting an expansion drive of retail in places where we are under-represented — the rural side.”

India energy demand set to grow fastest in the world; to overtake EU

Source: Business Standard, Feb 09, 2021

New Delhi: India’s energy demand will increase more than that of any other country over the next two decades, the International Energy Agency (IEA) said on Tuesday forecasting India overtaking the European Union as the world’s third-largest energy consumer by 2030.

An expanding economy, population, urbanisation and industrialisation will result in India’s energy needs growing at three times the global average under today’s policies, according to IEA’s India Energy Outlook 2021.

“India has arrived at the centre of the world energy stage,” said Fatih Birol, the IEA’s executive director.

Energy use has doubled since 2000, with most of that demand met by coal and oil. This is set to grow about 35 per cent until 2030, down from 50 per cent before the coronavirus pandemic.

India will see the addition of 13 new Mumbais in urban population, boosting demand for cement, steel, electricity, he said.

Birol said policymakers needed to ensure the next wave of growth is met with renewable energy sources such as solar.

IEA saw primary energy consumption almost doubling to 1,123 million tonnes of oil equivalent as the Gross Domestic Product (GDP) expands to USD 8.6 trillion by 2040.

India at present is the fourth-largest global energy consumer behind China, the United States and the European Union.

Underpinned by “a rate of GDP growth that adds the equivalent of another Japan to the world economy by 2040”, India will overtake the European Union by 2030 to move up to the third position, it said in the report.

India accounts for nearly one-quarter of global energy demand growth from 2019-40 — the largest for any country. Its share in the growth in renewable energy is the second-largest in the world, after China, IEA said.

“By 2040, India’s power system is bigger than that of the European Union, and is the world’s third-largest in terms of electricity generation; it also has 30 per cent more installed renewables capacity than the United States,” it said.

A five-fold increase in per capita car ownership will result in India leading the oil demand growth in the world. Also, it will become the fastest-growing market for natural gas, with demand more than tripling by 2040.

“India’s continued industrialisation becomes a major driving force for the global energy economy. Over the last three decades, India accounted for about 10 per cent of world growth in industrial value-added (in PPP terms),” the report said.

By 2040, India is set to account for almost 20 per cent of global growth in industrial value-added, and to lead global growth in industrial final energy consumption, especially in steelmaking. The nation accounts for nearly one-third of global industrial energy demand growth to 2040.

India’s oil demand is seen rising by rise by 74 per cent to 8.7 million barrels per day by 2040 under the existing policies scenario. The natural gas requirement is projected to more than triple to 201 billion cubic meters and coal demand is seen rising to 772 million tonnes in 2040 from the current 590.

To meet its energy needs, India will be more reliant on fossil fuel imports as its domestic oil and gas production stagnates.

Its net dependence on oil imports — taking into account both the import of crude oil and the export of oil products — increases to more than 90 per cent by 2040 from the current 75 per cent as domestic consumption rises much more than production, the report said.

Natural gas import dependency increased from 20 per cent in 2010 to almost 50 per cent in 2019 and is set to grow further to more than 60 per cent in 2040.

“The dynamics look quite different for coal, where India’s demand for imported coal barely gets back to pre-crisis levels over the next decade,” IEA said.

India currently accounts for 16 per cent of the global coal trade and many global coal suppliers were counting on growth in India to underpin planned export-oriented mining investments.

“These expectations are now running up against India’s determination to boost domestic production, leaving relative certainty only over India’s requirement to import coking coal for its rising steel production, together with steam coal for those coastal power generation plants that have been designed to receive imported grades,” it said.

IEA has forecast combined import bill for fossil fuels tripling over the next two decades.

“Energy use (in India) has doubled since 2000, with 80 per cent of demand still being met by coal, oil and solid biomass,” it said.

On a per-capita basis, India’s energy use and emissions are less than half the world average, as are other key indicators such as vehicle ownership, steel and cement output.

“As India recovers from a COVID-induced slump in 2020, it is re-entering a very dynamic period in its energy development. Over the coming years, millions of Indian households are set to buy new appliances, air conditioning units and vehicles,” it said.

India will soon become the world’s most populous country, adding the equivalent of a city the size of Los Angeles to its urban population each year.

“To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now,” it said.

Prior to the global pandemic, India’s energy demand was projected to increase by almost 50 per cent between 2019 and 2030, but growth over this period is now closer to 35 per cent. “An expanding economy, population, urbanisation and industrialisation mean that India sees the largest increase in energy demand of any country,” IEA said.

ONGC to undertake India’s first geothermal field development project in Ladakh

Source: The Economic Times, Feb 08, 2021

NEW DELHI: ONGC plans to undertake India’s first geothermal field development project in Ladakh with an aim to generate a new green energy source for the union territory.

The company signed a preliminary agreement with the union territory for this, a first step towards creating a carbon-neutral Ladakh, the company said in a statement.

Geothermal energy refers to the heat stored beneath the earth’s surface that can be directly used or converted into electricity. A viable geothermal project can ensure a continuous supply of renewable, clean energy.

“Geothermal resource development can revolutionize farming in Ladakh, which is now totally dependent for supply of fresh vegetables, fruits from outside the union territory round the year,” ONGC said.

Geothermal fields in eastern Ladakh were discovered in the 1970s but subsequent efforts at the exploitation by various government and private agencies did not materialise.

ONGC has planned a three-phase development of the fields. Phase-I involves exploratory-cum-production drilling of wells up to 500 metres depth and setting up of a pilot plant of up to 1 MW power capacity. The second phase would involve the deeper and lateral exploration of the reservoir. Commercial development of the geothermal plant will be undertaken in phase three.

Govt seeks to set up three power gear making zones

Source: LiveMint.com, Feb 04, 2021

Atmanirbhar Bharat package for setting up three manufacturing zones for critical power and renewable energy equipment.

“This scheme is for setting up of three manufacturing zones for power and renewable equipment to be set up in three different states. The facilities shall be based on cutting edge, clean, and energy efficient technology for minimizing dependency on import of equipment, critical components, basic raw material, and critical spares required for the power sector and renewable (energy),” the budget documents said.

Power is a strategically important sector and the move to set up dedicated manufacturing zones is aimed at reducing imports of Chinese equipment and attracting private investments across power generation, distribution, and transmission in green and conventional energy spaces. On 15 December, Mint reported on the plans to set up these zones, one each in a coastal state, a hill state and a land-locked state, by offering incentives such as land and electricity at attractive prices. The government has drawn up a list of equipment that it wants to be manufactured in these zones. Read the rest of this entry »