Power demand slump narrows to 9.76 per cent in third week of June

Source: The Hindu Business Line, Jun 20, 2020

New Delhi: Intense heat wave during the third week of June has helped further narrowing of power demand slump to 9.76 per cent from 10.5 per cent in the previous week, showing commercial and industrial activities are yet to reach optimum levels.

The slump in power demand in the first week of the June was recorded at 19.7 per cent. However, the decline so far is still higher than 8.8 per cent recorded in May.

In the third week of June, the power demand has improved due to intensifying heat wave, and it hovered around 162 GW from June 15 onwards, and further shot up to 164.64 GW on Friday (June 19), as per the power ministry data.

The peak power demand met stood at 163.30 gigawatts (GW) on June 11 and remained slightly lower at 158.02GW on June 12, 157.79 GW on 13th and 156.88 GW on 14th.

The peak power demand of 164.64 GW this week is 9.76 per cent less than 182.45 (GW) recorded in June last year.

The peak power demand met ranged between 162.35 GW on June 15 and 164.64 GW on June 19.

It swung between 138.28 GW on June 4 and 146.53 GW on June 6. Thus, the peak power demand met for the first week was 146.53 GW, which was 19.7 per cent less than the 182.45 GW recorded in June last year.

The peak power demand met slump narrowed from 19.7 per cent in the first week of June to 10.5 per cent in the second week of this month.

Similarly, the slump in demand further narrowed slightly to 9.76 per cent in the third week of June.

The peak power demand met is the highest energy supply during the day across the country.

In May, it stood at 166.42 GW (on May 26), which was 8.82 per cent less than 182.55 GW in the corresponding month a year ago.

Similarly, the peak power demand met in April stood at 132.77 GW, 25 per cent less than 176.81 GW in the year-ago period.

Therefore, the power demand slump narrowed down to 8.8 per cent in May from 25 per cent in April this year.

An industry expert said power demand can rise closer to normal levels of the previous year with further increase in commercial and industrial activities.

The government started easing the lockdown imposed on March 25 for economic activities from April 20. However, the demand from the commercial and industrial sector is still to achieve its optimum levels as there is still a power demand slump of 9.76 per cent despite intense heat waves in the country, an industry expert said.

India’ LNG import drops 40% to 1.5 MT in May

Source: Financial Express, Jun 05, 2020

India’s import of liquefied natural gas (LNG) recorded a drop of 40% year-on-year (y-o-y) in May. However, the import volumes inched up 4% from the levels in April. For LNG imports, Petronet LNG’s Dahej and Kochi terminals have been losing market share to Shell’s Hazira and the newly commissioned Mundra terminals over last three months, analysts at Credit Suisse noted.

The Mundra terminal is owned by GSPC LNG, a joint venture by the Gujarat government and Adani Enterprises.

The total capacity of operational LNG import terminals is 41 MT per annum (MTPA). Petronet’s Dahej, the largest among them with 16.3 MTPA capacity, was operating at 55-60% utilisation in May. The 5 MTPA Dabhol terminal, owned by a joint venture of GAIL and NTPC, has been closed from May 26 due to the monsoon season, and this is seen to provide some support to Dahej’s LNG volumes, experts pointed. Though the existing capacity of Dabhol is 5 MPTA, the available capacity is only 1.7 MTPA due to the absence of breakwater facility. Petronet LNG is a joint venture by Bharat Petroleum Corporation Ltd, GAIL, Indian Oil Corporation Ltd and Oil and Natural Gas Corporation. Import dependency of natural gas has increased to 53% of consumption in FY20 from 47% in FY19. Imports of LNG have increased at a CAGR of 12% during FY16-20, as the government plans to convert India into a ‘gas-based economy’ by 2030. As noted by Care Ratings, LNG imports have increased by more than 17% during FY20 with gas-based power plants, oil refineries and gas marketing companies taking advantage of low spot LNG prices. Value of imports came down by 7.8% in FY20 to $9.5 billion. India mainly sources supplies of LNG from Qatar, UAE, Niger, Angola and the US.

Despite high consumption, India’s electricity generation fell 14.3% in May

Source: Business Standard, Jun 01, 2020

Chennai: India’s electricity generation in May fell at a slower pace than in April, as higher temperatures lead to greater demand for residential power and the government eased some lockdown restrictions to control the spread of the coronavirus.

Overall electricity generation fell 14.3% in May, a Reuters analysis of provisional government data showed, compared with a decline of 24% in April.

Despite higher consumption by residential consumers, power use was lower as many industries and commercial establishments – which account for over half of India’s annual consumption – were shut or not operating at full capacity.

Electricity generation from coal – India’s primary source of electricity – fell 22%, an analysis of daily load despatch data from POSOCO showed. Coal’s contribution to overall electricity generation in May fell to 64.2%, compared with an average of over 70.7% last year.

India’s electricity demand is likely to fall for the first time in at least four decades this fiscal year, analysts say, adding to the woes of coal-fired utilities, which were already hurting due to a prolonged industrial slowdown.

Thermal coal imports by India – the second-largest consumer, importer and producer of coal and third-largest greenhouse gas emitter – could fall as much as 18% in 2020 due to lower electricity demand, Anurag Sehgal, an analyst at Noble Resources said, a blow to miners in Indonesia and South Africa.

Menwhile, India’s solar power supply grew 12.7% and hydro-powered electricity supply rose 3.6%, while gas-fired power output was 13.8% higher, the data showed. However, wind-powered electricity supply fell 10.8%.

The share of fossil fuels in overall electricity generation in May was 70.71%, compared with 76% the previous year, an analysis of data from POSOCO showed.

India overtakes Japan with fifth-largest hydropower capacity in the world

Source: The Economic Times, Jun 01, 2020

India became the nation with the fifth-largest hydropower production capacity in the world surpassing Japan and has total installed base standing at over 50 Gigawatt (GW), behind Canada, US, Brazil and China, according to International Hydropower Association (IHA).

The Hydropower Status Report for 2020 was published in May 2020 along with COVID-19 Policy Paper. According to data in the report, global hydropower installed capacity reached 1,308 GW in 2019, as 50 countries completed greenfield and upgrade projects, including pumped storage.

Although, a total of 15.6 GW in installed capacity was added in 2019, down from 21.8 GW in 2018. This represents a rise of 1.2 per cent, which is below the estimated 2.0 per cent growth rate required for the world to meet Paris Agreement carbon reduction targets. The countries with the highest increases in were Brazil (4.92 GW), China (4.17 GW) and Laos (1.89 GW).

IHA also added that the hydropower’s flexibility services have seen an increase in demand during the COVID-19 crisis, while plant operations have been less affected due to the degree of automation in modern facilities.

The developments in the hydropower have not been immune to economic impacts as the industry faces a widespread uncertainty and liquidity shortages putting financing and refinancing of some projects at risk.

The IHA added that the COVID-19 pandemic has underlined hydropower’s resilience and critical role in delivering clean, reliable and affordable energy.

Govt extends Bharat Petroleum privatisation bid deadline to July 31

Source: Business Standard, May 28, 2020

New Delhi: The government has for the second time extended the deadline for bidding for privatisation of India’s second-biggest oil refiner Bharat Petroleum Corp Ltd (BPCL) by over a month to July 31.

While the Cabinet had in November last year approved the sale of government’s entire 52.98 per cent stake in BPCL, offers seeking expression of interest (EoI), or bids showing interest in buying its stake, were invited only on March 7.

The EoI submission deadline was May 2, but on March 31 it was extended up to June 13.

On Wednesday, the government said this deadline is further being extended up to July 31.

“In view of the further requests received from the interested bidders and the prevailing situation arising out of COVID-19, last date of submission of written queries on Preliminary Information Memorandum (PIM) is again extended up to June 23, 2020 and last date and time for submission of EoIs is extended up to July 31, 2020,” the Department of Investment and Public Asset Management (DIPAM) said in a notice.

The government of India is proposing strategic disinvestment of its entire shareholding in BPCL comprising of 114.91 crore equity shares, which constitutes 52.98 per cent of BPCL’s equity share capital along with transfer of management control to a strategic buyer (except BPCL’s equity shareholding of 61.65 per cent in Numaligarh Refinery Ltd), the notice inviting offer said.

Numaligarh Refinery Ltd stake will be sold to a state-owned oil and gas firm.

The bidding will be a two-stage affair, with qualified bidders in the first EoI phase being asked to make a financial bid in the second round.

Public sector undertakings (PSUs) “are not eligible to participate” in the privatisation, the offer document said.

Any private company having a net worth of $ 10 billion is eligible for bidding and consortium of not more than four firms will be allowed to bid, it said.

According to the bidding criteria, the lead member of the consortium must hold a 40 per cent stake and others must have a minimum net worth of $ 1 billion.

Changes in the consortium are allowed within 45 days, but the lead member cannot be changed, it added.

BPCL will give buyers ready access to 14 per cent of India’s oil refining capacity and about one-fourth of the fuel market share in the world’s fastest-growing energy market.

BPCL has a market capitalisation of about Rs 68,223 crore and the government stake at current prices is worth about Rs 36,159 crore. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 per cent at the same price.

Privatisation of BPCL is essential for meeting the record Rs 2.1 lakh crore target Finance Minister Nirmala Sitharaman has set from disinvestment proceeds in the Budget for 2020-21.

BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India’s total refining capacity of 249.4 million tonnes.

While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonnes of refining capacity.

BPCL also owns 15,177 petrol pumps and 6,011 LPG (liquefied petroleum gas) distributor agencies in the country. Besides, it has 51 LPG bottling plants.

The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year and has more than a fifth of the 250 aviation fuel stations in the country.

The government has appointed Deloitte Touche Tohmatsu India LLP as its transaction advisor for the strategic disinvestment process.

PFC lends Rs 22,000 cr to Narmada Basin Projects for 225 Mw hydel project

Source: Business Standard, May 26, 2020

New Delhi: Leading power sector lender, Power Finance Corporation (PFC), tied an agreement with th with Narmada Basin Projects Company Limited (NBPCL) to fund projects worth Rs 22,000 crore for upcoming 225-Mw hydro-electric plants and multipurpose projects in Madhya Pradesh.

NBPCL is a wholly-owned company of the state government of Madhya Pradesh and is building a hydro power plant and lift irrigation among 12 other allied projects.

PFC, which is a leading lender in the power sector, has been diversifying into other areas the past few years, owing majorly to a slowdown in thermal power sector. The financer has diversified its loan portfolio to fund irrigation schemes, railway electrification, Smart Cities project, e-vehicle manufacturing & charging infrastructure and micro grids.

“The MoU will help PFC to actively partner with NBPCL and provide finance for hydro-electric plants totaling 225 Mw along with power components of multipurpose projects as part of state government’s endeavor to implement twelve major multipurpose projects,” PFC said in a public statement.

Some of the major multipurpose projects that will be financed under the MoU are Basaniya Multipurpose Project Dindori, Chinki Boras Multipurpose Project Narsinghpur Raisen Hoshangabad, Sakkar Pench Link Narsinghpur Chhindwara, Dudhi Project Chhindwara Hoshangabad, etc. PFC will consider the financial assistance to NBPCL based on due diligence and on mutually acceptable terms, the company said.

Power discoms get ₹90,000 crore liquidity lifeline

Source: LiveMint.com, May 14, 2020

NEW DELHI: The government on Wednesday announced a ₹90,000 crore liquidity injection into fund-starved electricity distribution companies (discoms) as part of a stimulus package to revive the country’s battered economy.

The announcement, made by finance minister Nirmala Sitharaman, is one of the measures in the first tranche of a stimulus package to combat the economic disruption that has worsened the already precarious finances of discoms.

“Discoms today are facing unprecedented cash-flow problems,” Sitharaman said.

Electricity demand load shifted to homes during the lockdown, resulting in lower realizations. With peak electricity demand coming down, commercial and industrial power demand has taken a hit after many factories shut down.

The ₹90,000 crore reform-linked injection will help in clearing outstanding dues of discoms.

“…we are making it clear that these benefits should pass to the end consumers,” she said.

Mint reported about the proposed power sector package on Wednesday.

“The government has also decided to waive off the fixed charges and interstate transmission charges (by Power Grid Corp. of India) against the power not drawn from NTPC, DVC and other CPSE from the period from 24 March 2020 to 17-05-2020,” power minister Raj Kumar Singh said in a post on Twitter.

The waiving of ₹0.22 per unit inter-state electricity transmission charges by state-owned Power Grid Corp. of India Ltd may result in a savings of around ₹1,400 crore for discoms.

State-owned Power Finance Corp. (PFC) and Rural Electrification Corp. (REC) will infuse the liquidity by raising ₹90,000 crore from the markets against the receivables of discoms.

These funds will be then given to discoms against state government guarantees for the sole purpose of discharging their liabilities.

State-owned PFC and REC have $80 billion by assets and are the largest lenders to the sector. The idea is to clear the payment backlog with concessional loans guaranteed by the respective state governments.

This one-time liquidity infusion will be used to pay the public sector generation firms, transmission companies, independent power producers and renewable energy generators.

The dues of discoms to power generation and transmission firms are to the tune of ₹94,000 crore. These loans would be disbursed in two tranches and will be linked to certain reforms such as increasing digital payment interfaces; prepaid metering in government departments and making action plans for loss reduction among others.

This comes amid India’s proposed distribution reforms scheme—tentatively named Atal Distribution System Improvement Yojana (Aditya)—to cut electricity losses below 12%. The scheme aims to ensure continuous supply of power, adopting models such as privatizing state-run discoms and promoting retail competition. Sitharaman also spoke about the JAM trinity solution—Jan Dhan Yojana, Aadhaar and mobile numbers—as a game-changing reform for better targeting of subsidies.

Govt simplifies oil, gas block process with self-certification, deemed approval

Source: LiveMint.com, Apr 27, 2020

NEW DELHI: In perhaps the most far-reaching easing of rules, the government has simplified procedures for oil and gas exploration and production by providing for self certification for a host of compliance, such as a discovery notification and deemed consent for investment in fields in a stipulated time.

With a view to make it easier to do business, the government has provided that notification of a discovery and tests to confirm them will not require approval and documents will be accepted on self-certification basis, according to the notification issued on April 25.

Work programme and field development plan or their revisions will be deemed to be approved on expiry of 30 days of submission of documents under self-certification. Only issues requiring government nod will be grant of petroleum exploration or mining license, transfer of stake and extensions.

The Directorate General of Hydrocarbons (DGH) has issued a detailed notification, simplifying procedures and process under Production Sharing Contract (PSC) for pre-NELP and NELP oil and gas blocks.

Almost all of India’s oil and gas production comes from either areas given to state-owned ONGC and OIL on nomination basis or awarded to companies such as Reliance Industries and Cairn in bid rounds since 1990s.

“Ease of doing businesses is one of the focus areas of the government in exploration and production (E&P) sector, with the objective to increase investment and production,” the DGH said in the April 25 order.

“Simplification of procedures and processes make the system transparent and faster which facilitates investments in the sector.”

The areas or blocks awarded under New Exploration Licensing Policy (NELP) since 1999 such as RIL’s KG-D6 or fields given away in pre-NELP bid rounds like Cairn’s Rajasthan oil block will benefit from the easing of rules.

One of the critical aspects of the PSCs signed under pre-NELP and NELP, which also tends to be one of the most contentious, relates to cost recovery: the extent of cost recoverable by the operator from revenue generated in the oil and gas field.

Another important area of dispute is the investment multiple (IM) that determines profit sharing between the government and the contractor.

India has seen a large number of disputes between the private contractors and the government, most of them around cost recovery claims of contractors and IM.

The DGH said a review of processes for various approvals and submission of documents for the same under PSCs for NELP/pre-NELP was undertaken.

Following this, the processes have been divided into three categories – process where documents shall be accepted on self-certification basis and no approval is required; processes where approval will be deemed on expiry of 30 days of submission of documents under self-certification; and processes where approval shall be required.

The 22 processes where documents will be accepted on self certification basis and no approval is required include information of discovery, potential commercial interest, bank guarantee, notification of discovery confirmation test, inventory report, submission of data, environment impact assessment report, contingency plan, appointment of auditor, notice for entering next phase or relinquishment and commercial discovery.

Work programme and budget, appraisal programme or its revisions and field development plan or its revisions are the three processes where approval will be deemed after 30-days.

A dozen processes – including extension of exploration phase, grant of petroleum exploration licenses (PEL) and petroleum mining lease (PM), unit development plan, liquidated damages on account of cost of unfinished work programme, assignment/transfer of participating interest, extension of PSC, cost and profit petroleum calculations and audited accounts – will require prior approval.

“All self-certified documents shall be as per provisions of PSC and shall be duly supported with all the relevant documents duty attested by the authorised/signatories of the contractor,” DGH said.

All self-certified documents will be submitted to petroleum ministry/DGH at any time for alignment with relevant provisions of PSC, policies/guidelines issued by government/DGH, good international petroleum industry practices (GIPIP) and other statutory requirements, it said.

“In case any material deviation is observed in facts/figures and substance submitted by the contractor during review by Ministry of Petroleum and Natural Gas/DGH, the contractor shall be notified for modification/ rectification of the same as per provisions of PSC in a time bound manner,” it added. DGH also issued standard formats for submission of various documents.

Indian refiners export diesel to China as Beijing recovers from Covid-19

Source: Business Standard, Apr 23, 2020

New Delhi: Indian refiners have started exporting commodities like diesel, a large share of which is going to China, where economy is on a recovery path. This comes as fuel sales have dropped by more than half and product storage facilities are getting exhausted.

According to reports, the demand for diesel for the first half of April dropped 61 per cent compared to the same time last year in India. On the other hand, China is seeing a demand recovery in infrastructure and manufacturing sectors. Apart from China, countries, like South Korea and Japan, have also placed quotes for importing petroleum products from India amid lockdown.

“We are slowly filling up our inventory capacity in storage tanks across the country. While this is happening, in order to give our refineries some leverage to move some throughout up or keep it at least at what it is now, we are importing some quantity of diesel, Very Low Sulphur Fuel Oil (VLSFO) and naphtha, too, from coastal refineries,” said a persons close the development.

Industry experts indicate that such exports are likely to be from coastal refineries at Visakhapatnam, Paradip, Kochi and Mumbai.

The western coast would be preferable.

According to a report by ICICI Securities, companies like Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) have cut throughput at their refineries by 10-40 per cent. Thus, OMCs throughput and sales volumes are set to decline in the first quarter of the current financial year.

Export will be of small quantities of four to five cargoes. “We are getting some reasonable quotes now in small quantities. Most of it is going to east Asia, as China on revival track.

There is an imbalance in China between the demand and what their production is because they stopped the production due to Covid-19. Now they are buying some products to balance the demand,” he added. Based on media reports, China’s top fuel producers are likely to raise throughput by around 10 per cent from the March level, as domestic demand is back on track.

On the other hand, the demand of diesel and petrol in India is only 40 per cent of what it was prior to the lockdown period. During the month of April last year, 7.323 million tonne (MT) was sold. Industry experts indicate the situation of lower demand is likely to continue for at least six more months. “Diesel demand has declined to more than half of the normal level. In the last few days, things are improving. However, it will take at least a couple of months more for it to come out of negative. Moreover, product sales will be under pressure for at least six months,” said K Ravichandran, senior vice-president and group head, Corporate Ratings, ICRA.

India misses a trick due to lack of oil storage capacity

Source: LiveMint.com, Apr 21, 2020

MUMBAI: Indian refiners are ruing their inability to fully reap the benefits of a sharp fall in global oil prices, thanks to a dearth of crude oil storage capacity.

With Brent, the global oil benchmark, plunging to a two-decade low, expectations have risen in India that lower oil prices would cushion the country’s current account deficit and help cool inflation.

A nearly month-long countrywide lockdown to contain the covid-19 pandemic has crimped demand for fuel products in India, the world’s third-largest oil importer.

This has saddled refiners with unsold stocks at their depots as well as fuel retailing outlets.

And with bare minimum off take, refineries are now operating at 40-50% of their capacities.

“Our refineries are not running at full capacity, so we decided to divert crude and instead fill up our crude caverns. But that too is limited and will be completed by May,” said a senior official from an oil marketing company. “Had we created more storage capacity, we could have taken full advantage of these historically low crude oil prices,” the official said on condition of anonymity.

Last week, India began filling its three strategic petroleum reserves (SPRs).

And by the end of next month, the country would have moved about 19 million barrels of oil into these reserves located in southern India—Visakhapatnam (1.33 million tonnes) Mangaluru (1.5mt) and Padur, Karnataka, (2.5mt).

India’s crude imports averaged around 4.5 million barrels per day in 2019. Even after filling up the reserves, India would have secured for itself only nine days of emergency fuel supplies at 5.33mt.

Refiners and industry experts say the lack of storage capacity is an opportunity lost for the country at a time when fuel prices are at historic lows.

“Had we created more space to store crude, we would have secured supplies like our Asian peers,” said an energy consultant. He spoke on the condition of anonymity as he is not allowed to speak to the media.

India’s Asian peers China and Japan are way ahead in creating crude storage capacity.

While India has a storage capacity of 39 million barrels, China’s total capacity is at 550 million barrels and Japan’s at 528 million barrels, ensuring a supply of over 190 days in the event of a supply disruption.

Though India approved construction of two new caverns in 2018, as part of its phase two expansion, in Chandikhol in Odisha (4mt) and Padur II in Karnataka (2.5mt), work is yet to commence on these projects.

While building these caverns has a budgeted cost of around ₹15,000 crore (as of 2018), filling them would cost at least an additional ₹20,000 crore.

Debasish Mishra, partner at Deloitte Touche Tohmatsu India Pvt. Ltd, said however, that by the time these caverns become operational, there may be a big question mark on their relevance.

“The proposed strategic petroleum reserves (SPRs) may take 5 to 7 years to come up, by then the global energy scenario and their relevance might have changed completely,” said Mishra.

He said going forward, it is expected that energy demand would gradually shift towards electric vehicles (EVs), and demand for oil will peak and start coming down in two decades.

“All these factors need to be considered while planning for more SPRs,” he said. Though the Indian Strategic Petroleum Reserves Ltd (ISPRL), which is responsible for building and filling of SPR sites, is exploring a public private partnership model with prospective partners such as financial investors, traders, or sovereign wealth funds, there is no revenue model to justify investment by the private sector, raising questions on the viability of the model, said the energy consultant.