High on agriculture, rural demand driving up power consumption

Source: The Economic Times, Sept 04, 2020

NEW DELHI: Rural demand is driving up India’s electricity consumption, backed by a 3.4% farm sector growth amid 23.9% contraction in GDP in the first quarter of the current fiscal. Primarily agrarian states in the northern and eastern regions are posting healthy growth in power consumption, while heavily industrialised states in the western and southern regions continue to falter due to sluggish recovery in industrial activity. 

While farm activity largely remained unaffected by the lockdown, factors such as return of migrants to their native places buoyed rural demand. The humid weather also added its bit to boosting domestic consumption on all-India basis as people still largely remain indoors and work from home, prompting households to run air-conditioners for longer. 

Analysis of supply data from the national grid operator by rating agency ICRA shows power consumption hitting nearly 98% of the pre-Covid level in August, up from 97% in July. Demand in northern and eastern states grew between 6% and 13% in July, while those in large industrial states in the western and southern regions fell in the same range on slow recovery in industrial activity and renewed lockdowns

“A combination of factors is driving rural demand. One is agriculture, which was not much affected by the lockdown and grew 3.4% even while the economy shrank 23.9% in the first quarter. The return of migrants to their native places has added to rural consumption, helped by household electrification and improved supply,” Girishkumar Kadam, ICRA sector head and vice-president, corporate ratings, told TOI. 

On all-India basis, the humid weather is also aiding domestic demand. “Families are still largely staying indoors and working from home,” Kadam said, adding that people were running air-conditioners for longer hours. 
“But rise in rural or domestic demand is not enough for discoms (distribution companies) to make up for tepid demand from high tariff-paying commercial and industrial (C&I) consumers,” he said. 

Other analysts said demand for electricity from industry will rise only after the flow of material and products stabilise once ready stocks at factories and supply depots are gone and there are no local lockdowns. 

The decline in demand has adversely impacted revenue and cash flow of discoms, especially when the bulk of the consumption decline has come from high tariff-paying industrial and commercial consumers. 

The countrywide lockdown imposed to check the spread of coronavirus knocked off all-India power demand by 13% in the first four months of the current financial year. While the monthly demand recovered to 112 billion units in July, it was lower than the comparable year-ago period. 

State-run oil and gas firms set to invest Rs 1.62 trillion this year

Source: Business Standard, Aug 26, 2020

New Delhi: State-run oil and gas firms are set to invest Rs 1.62 trillion in FY21 – including capital expenditure (capex) and operational expenditure (opex) — which is expected to generate employment of 240 million man-days.

At present, the sector is seeing work on 8,363 projects with an anticipated cost of Rs 5.88 trillion.

These expenditure figures, expected to give a fillip to the employment scenario, were lined up by the companies in a review meeting by Petroleum Minister Dharmendra Pradhan recently.

“The amount spent will create a virtuous cycle of investments and play a crucial rule in reviving the economy. It will also provide employment opportunities to people,” said the ministry. The major 25 ongoing projects have an anticipated cost of Rs 1.67 trillion and have incurred Rs 7,861 crore of capex, leading to generation of 7.65 million man-days so far.

Of the total anticipated cost of such projects, close to Rs 1.2 trillion is targeted to be incurred as capex through FY20-22. In FY21, Rs 26,576 crore of capex had already been incurred till August 15. An amount of Rs 3,258 crore was paid on account of labour during this period.

India, Nepal to expand energy cooperation, explore new pipeline

Source: Business Standard, Aug 24, 2020

New Delhi: The atmosphere of mistrust between India and Nepal over border issues has not impacted energy sector cooperation between the two countries as both have decided to explore the possibility of another petroleum pipeline to feed the growing fuel demand in the Himalayan nation.

The existing Motihari-Amlekhgunj petroleum products pipeline has become the lifeline for Nepal for meeting its energy needs. The two sides are now exploring whether state-owned Indian Oil Corporation could look at another product pipeline running into the northern and eastern parts of the country.

The discussion on extending the network of petroleum pipeline and setting up new pipelines was discussed during the meeting of a joint working group early this month. The meeting organised through video conferencing was attended by top government officials from the Indian side including representatives from IndianOil, GAIL, and HPCL.

The Nepalese side was represented by the Ministries of Finance and Foreign Affairs of Nepal and Nepal Oil Corporation (NOC).

“A team of officials would soon visit Nepal to explore the possible routes for a new product pipeline. This would be followed by establishing feasibility studies before investment decisions are worked out. There is potential for expanding the pipeline network that would bring a lot of savings for the Himalayan country,” said an official of a public sector oil company asking not to be named.

The existing pipeline between the two countries was inaugurated in September last year by the Prime Ministers of India and Nepal. The 69-km pipeline, which starts from Motihari in India and ends at Amlekhgunj in Nepal, is the first of its kind in south Asia.

Indian Oil Corporation Ltd, India’s largest refiner, built the pipeline, with an investment of over Rs 324 crore, in collaboration with Nepal Oil Corporation Ltd, fulfilling the commitment made under an MoU signed in August 2014.

Before the opening of the pipeline, petroleum products were being transported from India to Nepal by tankers/trucks at 13 pick-up points (7 for products and 6 for LPG). The Raxaul-Birgunj was the most important trade point between the two countries but the pipeline has reduced the movement of tanker trucks from these points to consumption centres in Nepal. The JWG also discussed a larger role for India in building oil production storage capacities in Nepal. It is envisaged that Indian and Nepalese companies may cooperate towards this end as well.

CCEA relaxes norms for discoms in need of loans

Source: LiveMint.com, Aug 19, 2020

The Cabinet Committee on Economic Affairs on Wednesday approved a one-time relaxation to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for extending loans to state-run electricity distribution companies (discoms), above their working capital limits under the Ujwal DISCOM Assurance Yojana, or UDAY.

The decision comes against the backdrop of some discoms being unable to avail the ₹1.25 trillion reform-linked loan package for clearing dues. With some fund-starved discoms neither having the headroom for borrowing more working capital, nor the requisite state receivables to clear their dues, the power ministry had circulated a cabinet note seeking a one-time exemption on working capital limits placed under UDAY, Mint reported on 28 July.

“CCEA approves one-time relaxation to PFC and REC for extending loans to discoms above limits of working capital cap of 25% of last year’s revenues under UDAY,” the government’s principal spokesperson said in a tweet.

As part of its stimulus package to bring the economy back on track after the coronavirus lockdown, the government announced this liquidity injection for discoms as part of the Atmanirbhar Bharat Abhiyan, backed by state governments’ guarantees. The money is to be raised by state-owned PFC and REC from the market against the receivables of discoms.

The CCEA also approved the Fair and Remunerative Price (FRP) of sugarcane payable by sugar mills for 2020-21 sugar season (October-September). The FRP for sugarcane was fixed at ₹285 per quintal for a basic recovery rate of 10%, information and broadcasting minister Prakash Javadekar told reporters. There would be a premium of ₹2.85 per quintal for every 0.1% increase above 10% in the recovery, he said, adding that there would also be a reduction in FRP by ₹2.85 per quintal for every 0.1 percentage point decrease in recovery.

He said the government had procured 190 crore litres of ethanol at ₹60 per litre from sugarcane producers in the past year. He said more steps have been taken to ensure that MSMEs have enough liquidity. Towards this, the cabinet has allowed more NBFCs on the Trade Receivables Discounting System platform, which facilitates the discounting of invoices as well as bills of exchange.

Italian energy utility Snam plans to enter India gas market

Source: Financial Express, Aug 19, 2020

Italian energy utility Snam plans to set its foot in India’s gas infrastructure space as the country intends to raise the share of gas in its energy basket.

The company’s CEO recently had a discussion with petroleum Dharmendra Pradhan regarding collaborations in the areas of liquefied natural gas (LNG), gas storage and hydrogen fuel.

Responding to FE’s queries, Snam said “the significant push towards cleaner energy shift and in particular towards gas is what makes India an interesting market,” adding that “we look forward to opening soon our office in India to enhance the dialogue and cooperation with Indian partners that we have developed over the past couple of years”. Read the rest of this entry »

India steps on gas as coal use for power generation slows

Source: LiveMint.com, Aug 03, 2020

Indian power plants used the most gas in at least 3-1/2 years in the June quarter, as operators along the west coast snapped up cheap liquefied natural gas (LNG) imports that have become competitive against coal, government data showed.

Power producers say the trend is likely to continue until at least September, and perhaps beyond, providing a bright spot for LNG sellers as demand elsewhere falls due to a global economic slowdown sparked by the coronavirus pandemic.

Gas consumption by power plants rose 11.7% to 104.83 million standard cubic metres per day (mmscmd) in the three months to end-June from the same period last year, data from the Central Electricity Authority (CEA) showed.

Imports accounted for 37.4% of overall gas consumption by power plants, up from 35% a year ago.

Lower spot prices are making natural gas “lucrative” for power plants, according to India’s largest gas importer Petronet LNG Ltd, which recently cancelled a tender to buy long-term LNG.

“I do believe there is some coal switching taking place and imported coal-based power plants may not be competitive vis a vis spot LNG (consuming power plants),” Vivek Mittal, general manager for marketing at Petronet, said on a recent conference call.

India’s imports of spot gas more than doubled in the June quarter from a year ago to the highest in at least 14 quarters, while purchases under long-term contracts slumped by over a third to the lowest in the same period, a Reuters analysis of the available data showed.

Coal sales plunge

The increased use of gas comes as India’s overall electricity demand is expected to fall this year for the first time in decades, with a likely fall in national coal-fired generation.

Sales at state-run Coal India, which sells most of its output to power companies, fell to the lowest level in nearly four years in the second quarter. Weaker sales could continue through end-September due to the annual monsoon, when coal demand and output typically falls and transportation is difficult.

Imports of coal by power plants also fell to the lowest level during the June quarter in at least seven years.

Still, coal remains India’s dominant fuel for power production. More than half of India’s gas-fired plants are also shut because they are not economically viable, which power producers attribute to high taxes and transportation costs.

Gas consumption increased mainly due to higher consumption by companies on India’s west coast, particularly the state of Gujarat, home to some of the country’s biggest LNG import plants.

The state, which is close to producer countries such as Qatar, also has a better gas transportation network, and is relatively far from coal mines, making gas-fired power production relatively cheaper, power producers say.

Gujarat-based private firms such as Torrent Power and utilities run by the state government accounted for nearly all LNG imports by power companies, according to the CEA.

“We expect global LNG prices to be at current levels for the next two years due to low global demand and gas consumption by power plants in Gujarat to increase,” an executive from a large Indian power producer said. “But only plants on the west coast will be able to make use of the price competitiveness with coal.”

Govt to ease borrowing cap in relief for discoms

Source: LiveMint.com, Jul 29, 2020

NEW DELHI: The Union power ministry plans to request the cabinet to consider raising the borrowing limits of debt-laden state electricity distribution companies (discoms) so that they qualify for the ₹1.25 trillion reform-linked loan package, two people aware of the development said.

The circulated draft cabinet note seeks a one-time exemption for the discoms from the conditions laid out for accessing working capital under the Ujwal DISCOM Assurance Yojana (UDAY).

The Union government had announced the liquidity injection into discoms as part of a stimulus package to revive India’s virus-battered economy. The money is to be raised by state-owned Power Finance Corp. and Rural Electrification Corp. from the market against the receivables of discoms.

“The draft cabinet note has been circulated for inter-ministerial consultations,” said a senior government official, one of the two people cited above, requesting anonymity.

The ₹90,000 crore, 10-year loan package, announced to help discoms clear outstanding dues up to 31 March, will now cover losses till June, with the package corpus now expected to reach ₹1.25 trillion. The Union power ministry is also examining the possibility of a reduction in interest rates for these loans.

Queries emailed to a power ministry spokesperson remained unanswered.

“This money will help discoms repay most of the money that they owe power generators and transmission companies. It will help restart the virtuous cycle of cash flow in the power sector,” the government said in a statement earlier.

The scheme involves loans to be disbursed in two tranches and is linked to certain reforms such as increasing digital payment interfaces; prepaid metering in government departments and preparing action plans to reduce losses among others.

Loans in the first tranche will require an unconditional and irrevocable guarantee from states covering the loan amount, plus interest and other charges. Loans in the second tranche will be conditional on loss reduction and performance improvement.

“The discoms that do not have headroom under UDAY working capital limits but have receivables from state governments in the form of electricity dues, and subsidy not disbursed will also be eligible for these loans to the extent of receivables from the state governments,” the Union government had said in the statement.

“In addition, the respective states may request for relaxations of the limit to the government of India for the discoms that do not have receivables from states or headroom available under the working capital limits imposed under UDAY,” the statement added.

The Union power ministry has also highlighted to the 15th Finance Commission the need for a recalibration of borrowing limits for states under the Fiscal Responsibility and Budget Management Act. With at least 10 states losing about a third of the power supplied to their consumers in distribution losses, their dues have not only hit power producers but have also contributed to stress in the banking sector.

India eyes access to American crude-oil storage facility

Source: The Hindu Business Line, Jul 22, 2020

New Delhi: India finally seems to be getting its act together for ensuring energy security by focussing on crude-oil storage capacities not only in the country but also acquiring access to capacities overseas including in the US.

“To make the most of the low crude-oil prices, India has initiated talks with the US to gain access to oil storage facilities in that country,” said a senior official, adding that this was also discussed at the recently held second ministerial meeting of the US-India Strategic Energy Partnership (SEP), which covered the entire gamut of bilateral energy issues.

In fact, after the meeting, Minister for Petroleum and Natural Gas and Steel Dharmendra Pradhan had said that the two sides have signed a Memorandum of Understanding to begin cooperation on operation and maintenance of strategic petroleum reserves, including exchange of information and best-practices.

They also discussed the possibility of India storing oil in the US Strategic Petroleum Reserve to increase their nation’s strategic oil stockpile. A Petroleum Ministry official in the know told BusinessLine that preliminary meetings have happened for accessing the facility in the US but talks are going to be held to work out the nuances, in the coming days.

This is mainly for the American oil which India will buy, the official said, adding that once the access is there, India, depending on the need, can either bring the oil home or sell it there itself. Modalities on capacity available and pricing will be worked out when the talks reach the final stages.

‘Leveraging expertise’

As regards to the MoU between the US Department of Energy and the Indian Ministry of Petroleum and Natural Gas concerning cooperation on strategic petroleum reserves, the official said: “We are at a nascent stage as far as strategic reserves are concerned. The US has been operating them for years, so we wanted to leverage their experience and expertise. Besides, in our country, even if we start work at phase-II of building capacities, it will take at least six years to complete. So, the opportunity of getting cheap crude should not be let go.”

Meanwhile, India Strategic Petroleum Reserves Ltd (ISPRL) has successfully filled the current capacities available in India. The capacities were filled by the national oil companies. The bilateral hydrocarbons trade between India and the US alone touched $9.2 billion during 2019-20, accounting for 10 per cent of the overall bilateral trade. In fact, India is now the fourth-largest export destination for US crude and the fifth-largest for US LNG. The trend is expected to continue with Indian companies entering into more long-term contracts from this year.

National Thermal Power Corporation’s total installed capacity reaches 62910 MW

Source: The Economic Times, Jul 20, 2020

NEW DELHI: NTPC Ltd, India’s largest power generation company, said it’s total installed capacity has increased to 62910 MW.

The unit-2 of 800 MW of Lara Super Thermal Power Project has been added to installed Capacity of NTPC on successful completion of trial operation, an official statement said.

“With this, the total installed capacity of NTPC and NTPC group has become 51155 MW and 62910 MW respectively,” it said.

With a total installed capacity of 62910 MW, NTPC Group has 70 Power stations comprising of 24 Coal, 7 combined cycle Gas/Liquid Fuel, 1 Hydro, 13 Renewables along with 25 Subsidiary & JV Power Stations, it said

Public sector oil companies working on 859 projects worth ₹3.57 lakh crore

Source: The Hindu Business Line, Jul 06, 2020

New Delhi: Public sector undertaking oil companies are working on 859 projects worth approximately ₹3,57,000 crore. An official statement said these projects are involving in refinery, exploration and production, marketing infrastructure, pipelines, City Gas Distribution network and in the entire value chain of oil and gas.

Of the total anticipated cost of these projects, more than ₹60,000 crore will be spent in fiscal 2020-21, the statement said.

These oil and gas projects will further enhance energy accessibility, create new employment opportunities and give stimulus to economic growth, the statement added.

Minister of Petroleum and Natural Gas and Steel Dharmendra Pradhan has reviewed the ongoing oil and gas projects started by public sector undertakings since the resumption of economic activities from April 20. The resumption was after Covid-led lockdowns had halted most construction activities in the country.

The statement also said that employment of more than 48.96 lakh man-days have been generated in the execution of these oil and gas projects. Further, ₹1,395 crore has been disbursed to workers as payout during this period. A total of more than 9.74 crore man-days of employment is expected to be generated towards the completion of these projects out of which more than 3.5 crore man-days of employment is expected to be generated in financial year 2020-21 itself, the statement added.