September 2016

Volume 5 | Issue 5 | `100

www.InfralinePlus.com

The Complete Energy Sector Magazine for Policy and Decision Makers

Make in India:
Limited impact
on energy sector

Government pushes 100% As solar rooftop goes slow,

rural electrification to government doubles target
achieve 24/7 power supply for solar parks

Amit Jain VK Arora Ravi Singhania Shravan Sampath

Managing Director Chief Mentor Managing Partner CEO
CMI Ltd Karam Chand Thapar & Bros Singhania & Partners Oakridge Energy
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&2016 Yearbook
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Key Highlights
Sector Performance Review: FY 2015-16
Key Policy and Regulatory updates
Extensive Database of Sector specific Companies including
Manufacturers, Developers, EPCs, BFSIs and Consultants
Top management with contact details
Direct exposure to top decision makers and influencers

tory 2016 tory 2016 ory 2016

Yearbook & Directory 2016 Renewable

Yearbook & Direc Yearbook & Direc ory 2016 Yearbook & Direct
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Yearbook & Directory 2016 Roads
Yearbook & Directory 2016 Power

Power Oil & Gas E nergy

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InfralinePlus
The Complete Energy Sector Magazine for Policy and Decision Makers
September 2016 | Volume 5 | Issue 05

Editors Letter Editorial

Shashi Garg, Editor
The energy sector has been into an overdrive since
the last few years thanks to the quick decision
making, policy reforms and proactive measures News Team
Chetan Gupta
taken by the government. However, one central
idea behind these measures has been the policy
to promote domestic manufacturing in all sectors Analyst
under the Make in India umbrella. It has been Mohd. Arif
two years since this programme was announced,
September 25, 2014, to be precise; however, the
Content Consultant
results are yet to be seen on ground, especially in the energy sector.
News Monster
A lot more needs to be done to boost domestic production of natural
resources and manufacturing of equipment.
Nonetheless, there have been some positive developments in the
power sector of note. While the jury is still out on the claims being
made with regard to India being power surplus, there is no doubt
Business Development
that the Government is aggressively pursuing its goal of 100 percent
electrification to provide 24/7 power supply. Close monitoring is being Manoj Narang, Director
done through Gram Vidyut Abhiyanta (GVA) and various actions are also Tel.: 0120-6799106 / 100
being taken on a regular basis to expedite the progress. Email: manoj.narang@infraline.com

The Government is also trying to revive stranded gas-based power

capacity in the country. Under the governments revival plan for stranded
gas-based power plants, LNG is be imported and cash-strapped state
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power distribution companies are financially supported to buy electricity
from them. The fourth reverse e-auction to provide subsidy to buy gas Ashwini Solomon
for running stranded power projects and those operating at sub-optimal Tel.: 0120-6799157/100
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level is likely to be conducted after October.
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The recent revision in the rail freights has caught everyone off guard. The
move is being fiercely debated, especially by the power companies, as it
is likely to push up tariffs of power produced from coal-based plants by
8 to 10 paise per kWh. Clearly, the sector is unhappy given that it is yet to Circulation & Subscription
come to terms with the Clean Cess levied earlier this year. Sneha Pandey
A debate has also been ignited in the renewable energy sector. While Tel.: 0120 6799125
the blossoming of the solar growth story is for everyone to see, we Email: sneha.pandey@infraline.com
bring to you an interesting piece which argues that the current rapid
transformation seen in the solar sector may not be sustainable in the
long run due to various financial and technological challenges that are
Form IV
expected to arise. It is claimed that while talks of how policy making in Periodicity of its Publication: Monthly
the solar power sector is currently driving growth but it could result in Printers / Publishers /
Mrs Shashi Garg
substantial stressed assets due to various financial challenges facing Editors / Owners
the solar industry in India. It will be interesting to see how this growth Nationality Indian
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 September 2016
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InfralinePlus

Contents
Editors Letter
1

Cover Story 33
Make in India: Limited impact on
energy sector so far
The Make in India programme is yet to make
an impact on the ground despite a series
of measures taken by the Modi government
to improve the ease of doing business. Two
years after the campaign was launched by
Prime Minister Narendra Modi in September
2014, private investment is still trickling in. The
government is banking on public spending to
drive the growth. However, this strategy has

33
its own limitations and cannot substitute for
private investment.
2

Power
4 19
News Briefs p4
In Conversation: Amit Jain, Managing Director, CMI
Ltd p8
Expert Speak: India Power Corporation Ltd P11
In Depth: Government aggressively pursuing 100% rural
electrification to achieve 24/7 power supply dream P13
Statistics p17
Coal
News Briefs p19
Expert Speak: VK Arora, Chief Mentor, Karam Chand
Thapar & Bros p22
In Depth: Under utilisation of thermal power plants
cause of worry for power producers p24
In Depth: Coal freight rate hike a mixed bag P28
Statistics p31

Topics Covered Topics Covered

Power equipment Coal import
Cables and transformers Coal transportation
Rural electrification Coal production
 September 2016
www.InfralinePlus.com

Oil and Gas Renewable

39
News Briefs p39
In Conversation: Ravi Singhania, Managing Partner,
Singhania & Partners p42
In Depth: Gas-based power plants: Gas-ping for fuel! In Conversation: Pradeep Misra, CMD, Rudrabhishek
 p44
Statistics p47
49
News Briefs p49
Expert Speak: Shravan Sampath, CEO, Oakridge
Energy p54
Enterprises Pvt Ltd p56
In Depth: As solar rooftop goes slow, govt doubles
target for solar parks p58
In Depth: Government looks at providing impetus to
small hydro programme p61
Statistics p64

Topics Covered Topics Covered

Legal issues Solar tariffs
3
Gas supply Solar parks
Crude oil import Small hydro production

Expert Speak/Interview

Amit Jain VK Arora

Managing Director Chief Mentor
CMI Ltd Karam Chand Thapar & Bros Off Beat
66
Event Focus: Law- Assemble India Summit by Infraline
Energy

Reports & Studies

69
People in News
Ravi Singhania
Managing Partner
Pradeep Misra
CMD
71
Singhania & Partners Rudrabhishek Enterprises Pvt Ltd
 September 2016
www.InfralinePlus.com
NewsBriefs | Power National
India powers past 6,000 MW mark in nuclear energy
With synchronization of the second unit of
the Kudankulam power plant, Indias civil
nuclear programme has reached a couple of
landmarks: the Kudankulam project turned a
page on protests and a legal challenge over its
safety parameters in the Supreme Court, and
India crossed the 6,000 MW mark in nuclear
Prices of gas for power projects may fall further
Power Minister Piyush Goyal expects prices to
fall further in the next round of subsidy-based
auction of gas for power projects, given the
softening of global rates and muted electricity
4 demand in the country. Generators are unable
to sell power as distribution companies are
buying cheap electricity on a short-term basis
from the market, which makes for a strong
case for the bids to be even more favour-
able for the government. In an attempt to
kick-start stranded gas-based projects, Prime
Minister Narendra Modis government had
introduced subsidy-based auctions to import
gas and supply it to these power units. Lower
prices for gas would translate into a lower sub-
sidy burden for the government. The fourth
India urges power producers to seek opportunities overseas
India is urging its power producers to look
overseas for new markets as fewer new
plants are needed at home amid surplus
generation capacity. The Indian government
is encouraging state-run power producers to
build plants overseas, Coal and Power Min-
ister Piyush Goyal said recently. The country
is projected to report surplus power supply
for the first time in at least eight years dur-
ing the year ending March, even as several
parts remain without access to electricity.
State-run generators NTPC Ltd. and NLC
India Ltd. as well as private producers can
explore opportunities in Indias neighboring
countries and beyond, Goyal said. Some
have already signed international agree-
power. Once the output of Unit II is scaled
up to a full 1,000MW in two months, Indias
22 nuclear power reactors will be able to
generate 6,780MW of power and the Nuclear
Power Corporation of India Limited (NPCIL)
expects four more reactors to be commis-
sioned in a year. Unit II is functioning smoothly
as scientists seem to have incorporated the
right lessons from hitches that marred Unit Is
functioning after attaining criticality in 2013.
The two 1,000MW nuclear units built with
Russian assistance have made Tamil Nadu the
highest consumer of nuclear power on a daily
basis. Kudankulam I and II are also the last
nuclear units in India built with foreign collabo-
ration that will not attract the liability clause
legislated after the India-US nuclear deal.
round of bids will start soon and we are look-
ing at the possibility of even lower prices given
that the international gas prices are much
lower than what they were one-and-a-half
years back when we formulated the scheme.
ments. NTPC, Indias biggest generator,
is building a 1,320 megawatt coal-based
power project in Bangladesh and is consider-
ing setting up another plant in Sri Lanka.
Power thieves in rural India steal
over 20percent of electricity
India is looking to its countryside to
understand how more than 20% of power
distributed by state retailers goes missing.
Rural Electrification Corp. plans to install
equipment that will transmit usage data
from metres at each of the countrys
100,000 rural feeder stations, one of the
final electricity distribution points between
power plants and customers. Data from
the meters, which will be installed by state
retail companies, will be streamed live
to the public. Tracking rural usage is part
of Prime Minister Narendra Modis vision
of reforming the countrys power sector
and lighting every home in the country by
2019. Regional distributors lose almost
23% of the electricity they buy through
theft, unmetered usage and dissipation
through old wires, hurting their finances
and preventing them from repaying debt.
A federal-government plan to make them
profitable has set a target of bringing that
down to 15% by 2019. The data gathered
from the feeders will be posted on a new
smartphone application.
Tata Power Co. Ltd., among Indias biggest
private producers, has signed agreements to
build two wind power projects in South Af-
rica and has commissioned a 120 megawatt
hydro project in Zambia. Indias coal-based
power plants used 60.9 percent of their
capacity in June, according to the power
ministrys Central Electricity Authority.
Plants operated by private companies and
provincial governments reported an even
lower utilization rate. That has led to stock-
piling of coal, which helps produce more
than three-fourths of Indias electricity. Coal
India Ltd., which accounts for more than
80 percent of Indias output, is also seeking
markets to export the commodity.

NewsBriefs | Power National
Power prices to rise, with coal freight hike, green cess
New rate and cess increases would erode
the benefit to power plants from surplus
coal availability. The recent freight rate
increase by Indian Railways for coal and
the clean energy cess doubling to Rs 400
a tonne for coal has offset by 15p a unit
of power of the earlier total benefit of 35p
Kudankulams second unit connected to grid
Kudankulam Nuclear Power Projects
(KNPP) second unit, which has a capacity
of 1000 MW, went online recently, and
is currently operating at 170 MW output.
With this, the atomic power generation
of Nuclear Power Corporation of India
Ltd (NPCIL) has crossed 5,000 MW. The
second unit will be disconnected from the
grid after four days for testing and will be
reconnected a week later. After clearances
from the Atomic Energy Regulatory Board,
the power generation will be increased in
stages. By November, the unit is expected
to touch its full capacity of 1000 MW.
Currently, the unit has permission to
operate up to 50% capacity. The second
35 percent of Indias total thermal power capacity lying unused
More than a third of Indias 303 gigawatt
thermal power capacity is lying unused
while the rest is running at a shade over
55% utilisation owing to inadequate
demand. Utilisation is expected to fall
further if more capacity is added as
planned by the government, portending
losses for power firms. About 35% of the
total capacity, or 104 gigawatt, is lying idle
at present. The government added about
24,000 mw of fresh conventional capacity
last year and plans to add 86 gigawatt by
2022. In addition, 100 gigawatt of solar
capacity is to be added by 2022. The list of
shut units includes a chunk of 31gigawatt
capacity that was set up after 2009.
a unit from its surplus availability and
reduction in price in both the domestic and
international markets. According to NTPC,
after accounting for all costs, the price of
power would increase by close to 25 per
cent on an average for all its units. For
pithead plants, the fuel price escalation is
12-25p a unit and for non-pithead, 28-40p
a unit of power produced. Pithead plants
are in the vicinity of a coal mine. This might
disturb the merit order of states procuring
power from NTPC. The companys energy
cost came down to Rs 1.69 a unit in Febru-
ary, from Rs 2.03 a unit a year before. The
decrease in price was due to rationalisation
of linkages and reduction in imported coal
consumption.
unit went critical on July 10, 2016. The
First Unit (1000 MW) of KNNPP was
dedicated to the country early this month
by the Prime Minister.
to non-availability of coal. Another 5,650
These include 6,360 mw capacity that
does have power supply contracts with
distributioncompanies but is lying shut due
September 2016
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Discoms to turn around by next
year thanks to UDAY, says power
secretary
Power distribution continues to be an
area of concern. However, with the imple-
mentation of Ujwal DISCOM Assurance
Yojana (UDAY), aimed at making ailing
power distribution companies (discoms)
to operationally efficient, some are ex-
pected to witness a turnaround in a year,
said Union Power Secretary Pradeep
Kumar Pujari. Pujari said since the launch
of UDAY in November the debt service
liability of discoms has reduced because
of the reduction in losses and a dip in
generation cost. The Centre has already
extended the deadline for implementing 5
UDAY by a year to March 31, 2017. About
15 states have joined. Discoms capacity
to buy, purchase and supply power 24x7
is still a question. Lot of focus is being
given to distribution so that discoms
turnaround both financially and in opera-
tional efficiency. They have to improve
operational efficiency, reduce aggregate
transmission and commercial (AT&C)
losses, which are quite high, Pujari said.
mw have neither coal nor power supply
contracts with any distribution company.
The next set of 9,316 mw have coal supply
contracts but does not have power supply
agreements. Yet another set of 2,940
mw have letter of coal supply assurance
from Coal India and has managed to sign
power purchase agreements but has not
been receiving coal from the state-run
miner. The last set includes 3,300 mw of
plants that do not have power purchase
agreements and despite Coal Indias
assurance of supplies, have not been
receiving coal.
 September 2016
www.InfralinePlus.com
NewsBriefs | Power States
Punjab goes all out to sell excess power, but finds no buyers
In a desperate effort to sell excess power,
the state government has made an offer
to all power utilities across the country. In
the offer, it says that is willing to dedicate
power from two private thermal plants
recently established in Punjab with an aim
to sell its surplus power for which it is
paying fixed charges to these plants without
Maharashtra to soon introduce Energy Conservation policy
The Maharashtra government will soon
come up with an Energy Conservation policy
which will aim at enhancing the technology
required to improve electricity generation.
The draft of the policy, prepared in line with
6 the Centres Energy Conservation Policy
of 2001 has been uploaded on the govern-
ments website and recommendations have
been invited from experts to strengthen
it. Increase in development and growing
population of the state has caused a rise in
the demand for electricity. Most of the elec-
tricity being generated today is through non-
renewable sources like coal, fuels, etc which
causes an imbalance in nature, increases
pollution and is a factor causing global
West Bengal is no more power surplus: CEA
West Bengal is no longer a power
surplus state with deficit projected to
be 7,257 million units in 2016-17. The
Central Electricity Authoritys (CEAs)
Load Generation Balance Report (LGBR)
prepared with the inputs of Regional
Power Committees (RPCs) says that
West Bengals projected off peak demand
for 2016-17 has been pegged at 52,867
million units; while availability is 45,610
MUs. Peak requirement for the same
period has been estimated at 8,439 MUs
against a peak availability of 8,138 MUs.
This puts the state to a 13.7% and 3.6%
off peak and peak deficits respectively,
bringing the state out of the much touted
consuming their power. But not even a single
utility in the country has come forward to
buy that power. Hence, the state is unable
to sell the 2,520 megawatts available with
it. Highly placed officials within the Punjab
State Power Corporation Limited (PSPCL)
said that Secretary (Power), Punjab, recently
wrote to many states to sell and sign a
long-term contract for selling power from
two of its private thermal plants. The letter
mentions that the state power utility was
willing to enter into a long-term agreement
to sell roughly 2,500 MW 540 MW (2x270
MW) from GVK Thermal power project near
Goindwal Sahib and 1,980 MW (3x660 MW)
from Talwandi Sabo Power Limited (TSPL),
they said.
warming. Also since these resources are
fast depleting, there may not have enough of
them in future. Thus these resources need
to be used wisely. The Energy department
said the new policy will ensure the govern-
ment provides sufficient infrastructure for
the Centres 2001 policy to be implemented.
figures points out to the need of importing
power surplus status. Although West
Bengal chief minister Mamata Banerjee
Chhattisgarh curtails power tariff for
industry
Chhattisgarh governments decision
to reduce power tariff for industry
had allegedly come as a shock for the
secondary steel makers in neighbouring
state of Maharashtra. Following the fall
in demand and high running cost, over
100 mini steel plants in Chhattisgarh
had cut short the production over last
many months that finally culminated in
complete shut down on August 1. The
mini steel plants across Chhattisgarh
remained close for over a fortnight
before the state government announced
to curtail power tariff for the industry.
The annual production output from
secondary steel makers in the state
had been about 4 million tonnes (MT).
Of which, about 25 per cent steel is
consumed in the states domestic
market. Since, the steel makers were
not fulfilling the domestic demand, steel
from Maharashtra started coming to the
local market. The average per unit power
tariff for the industry was reduced by Rs
1.40 per unit and would remain effective
till March 2017.
claimed to have started exporting power
to power starved states considering
Bengals power surplus status, the CEA
power both during the peak and off peak
periods. A host of states including Delhi,
Haryana, Himachal Pradesh, Gujarat,
Madhya Pradesh, Maharashtra, Daman
& Diu, Dadra Nagar Haveli, Tamil Nadu,
Karnataka, Kerala, Puducherry, Orissa,
Sikkim, Mizoram and Tripura are now
power surplus putting the countrys
average power situation to an off peak
surplus of 1.1% and peak surplus of 2.6%,
according to the CEA.

NewsBriefs | Power International
Chinese giant to buy Pakistani power company for $1.6 bn
Chinese multinational Shanghai Electric is
set to buy the utility serving Pakistans big-
gest city of Karachi, in a $1.6 billion deal that
will be the biggest private-sector acquisition
in the countrys history. China is stepping
up investment in its South Asian neighbour
as part of a $46 billion project unveiled
Brazil to seek foreign investment in its power sector
Brazils government will organize a roadshow
abroad to attract investors to its power
sector, and might consider offering power
delivery contracts denominated in dollars to
facilitate attraction of foreign capital, Luiz
Barroso, head of state-run power research
company EPE, said. The fact is that there is a
lot of money available on European invest-
ment funds ... That money flows to countries
who offer dollar-denominated receivables,
Barroso said. Since the long-term currency
risk is difficult to manage, it is an idea to
be discussed, he added. Barroso cited this
months large Chilean power auction, where
bidders, mostly from Europe, were awarded
dollar-denominated power delivery contracts.
China faces massive closures of small thermal power plants
Chinas power generation companies will
have to contend with massive closures of
their smaller coal-fired power plants as
government plans to shut excessive coal
and steel capacity deprives the plants of
customers. China Guodian Corp, one of
the countrys top five state-owned power
companies, might stumble as less-efficient
zombie power plants are no longer
economically viable, said Zhang Shumin,
Guodians chief economist. Thermal power
plants will face difficulties in operating in
the next three to five year, even edging to
bankruptcy, especially for the small plants
and those that fail to meet environmental
last year that will link its western Xinjiang
province to Pakistans Gwadar port with a
series of infrastructure, power and transport
upgrades. We have received the public an-
nouncement of intention for acquisition of up
to 66.4 percent of the shares of K-Electric
Limited by Shanghai Electric Limited, a
Pakistan Stock Exchange notification said.
The Karachi Electric Corporation, set up in
1913 as a public-sector company, was sold
to Saudi Arabias Aljomaih Group in 2005,
who in turn sold it to the UAEs Abraaj
Capital. Chinese interest is tremendous in
Pakistan and the new deal would be quite
attractive to strengthen cooperation under
CPEC, said Taha Javed, director of research
at Alfalah Securities.
Financing has been a critical factor for power
companies in Brazil, as the worst recession
in generations squeezes available credit. Al-
though recognizing Chiles economy is much
more linked to the dollar compared with
Brazil, Barroso said a discussion regarding this
possibility should take place.
result of sagging power demand and rising
of Chinese power plants, but plants were
standards, said Zhang. To relocate employ-
ees from the small thermal power plants,
Guodian plans to increase wind power in its
portfolio to transfer those workers to new
September 2016
www.InfralinePlus.com
ADB approves $810m for Pakistans
energy sector overhaul
The Asian Development Bank (ADB) has
approved an $810 million multi-tranche
financing facility to develop Pakistans
power transmission system, to improve the
reliability and quality of energy supply, and
to meet increasing demand for electricity.
A reliable and sustainable power sector
is critical to the economic growth and
wellbeing of Pakistan, said Megan Wolf,
Energy Specialist with ADBs Central and
West Asia Department. Fast implementa-
tion of this facility and related reforms to
alleviate power shortages will improve
the prospects for the economy. The loan
facility will help fund the staged rehabilita- 7
tion and expansion of the transmission net-
work, increasing transmission capacity and
energy efficiency and security. It will also
support government efforts to develop a
more transparent and efficient power sec-
tor by promoting reforms in the National
Transmission and Despatch Company
Limited, and the sectors newly established
commercial operator, the Central Power
Purchasing Agency (Guarantee) Limited.
positions. Guodian has 130 gigawatts (GW)
of installed capacity as of 2015, with renew-
ables accounting for 49 percent of the total.
As the world biggest wind power supplier,
it has 24 GW of wind power installed, or 18
percent of the nations total, said Zhang.
Profits have shrunk at Chinas big power
companies in the first half of the year as
coal prices. Coal fires nearly three-quarters
operating at historically low utilization rates
last year. Thermal power plants under 600
megawatts would be phased out as they are
not efficient.
 September 2016
www.InfralinePlus.com

InConversation
High voltage transmission conductors
and cables to see exponential growth
The market for high voltage transmission conductors and cables
is all set to explode with various reforms being unleashed by
the government in the power transmission sector. Amit Jain,
Managing Director, CMI Ltd, talks to InfralinePlus on his outlook
for the cabling sector in India and how initiatives like Make in
India are provind a huge impetus to the industry. Excerpts:

How has Make in India impacted
the power and industrial sector
in India?
Make in India has provided huge im-
petus to the industry. With the focus on
new manufacturing facilities in India,
the wire and cable industry market
8 will definitely witness growth. With
the focus shifting to manufacturing in
India, the industry wins in another way.
The Chinese sub-standard imports, that
cause trouble and give a bad name to
the industry, will possibly be replaced
by more robust Indian counterparts.
Indian companies in the industry
will start focusing on R&D, inno-
vation and product quality, now that
the industry is gearing up to take the
challenge head-on and is creating
awareness about the need for certifica-
tions and educating the influencers in
the category.
What are the key growth drivers
for your power cabling business?
The key triggers for our business
growth have been constant innovation
and focus on R&D. We have managed
to stay ahead of the technology curve
and this has been because of us pump-
ing money into the R&D and we have
innovated new products, keeping in
mind changing customer requirements.
We have been also focused on
quality and that is why we are the
preferred supplier for most of the cat-
egories that we operate in.
This has been visible in our growth
trajectory, with us going from the
revenues of Rs. 5.6 Crore in 2004-05 to
Rs.240.22 Crore in 2015-16.
How has been the growth in your
cabling business in the power
sector? Has growth in renewable
energy capacity impacted your
business?
Currently, around 17% of our revenue
comes from the power sector. We have
already geared up and have increased
our capacities substantially to meet
with the increased demands. We expect
that the power industrys share of our
revenues will rise up to around 20%
and the real numbers will possibly
double with the increased demand.
In power sector, cables and wires
are a must and we believe that there
will be many openings and avenues
available in the sector in the future. We
have the wherewithal and the product
range to service this sector as well.
Please share your outlook on the
power sector going forward in
terms of demand and supply as
well as growth.
The Government is spending a huge
amount in the power sector which is
pegged at around US$ 1 trillion
Amit Jain, Managing Director, CMI Ltd
(Rs. 65 Lakh Crore) investment kitty by
2030. The figure includes around 40%
of power gear which will be by domestic
manufacturing in India. This in itself is a
stupendous figure and possibly points to
the explosive growth in the sector.
We have already put in place
the most modern technology in our
recently acquired facilities, which are
possibly the best in the country. We
are amongst very few companies in the
country to manufacture the maximum
range of cables being used and will,
we hope be able to reap rich dividends
from the investments made.
Which are your key segments/
target market for high voltage
and low voltage power cables?
Our key segments / target market for
high voltage and low voltage power
cables include Power Generation &
Transmission Utilities, Power distri-
bution Utilities, Refineries & Petro-
chemicals, Cement & Steel Industry,
Railways & Metro Rails and Infrastruc-
ture Development Utilities.

What are the key issues facing
cabling business in India? What
suggestions would you have to
remove those challenges?
The issues are three-fold. First are input
costs, which can change majorly with
the variation of cost of raw materials.
Second is issue of Certification, which
is not standard and the third is the issue
of Quality and R&D in the segment.
The fluctuating price of raw material
(copper, etc.) is a concern area for
key players in the organized sector.
It becomes an even bigger issue for
players like us who are focused on the
B2B segment and our bottom lines are
impacted by any steep price rise in the
raw materials. Global certifications and
requirements are very different from that
in India and it is therefore important that
any Indian organization that is looking
at sales abroad keeps itself updated
on the global requirements. Constant
quality checks, R&D, Innovations, and
Certifications will be the way to excel in
exports. Short turnaround times on cus-
tomization requirements will also help
the cable companies in the global arena.
Research & development is most
important in any field of manufacturing
activity. One has to be updated with
any development in the industry in the
country or abroad. The requirements
of customers are changing. Special
insulating / jacketing compound with
special parameters like fire retarding
parameters, low smoke zero halogen
parameters, TPU jacketing, lead free
compounds etc are now in demand.
Similarly there are different changes in
construction of cables to meet specific
requirement of customers and we take
all necessary action to meet these spe-
cific requirements.
We at CMI continuously keep
ourselves updated with the development
in the industry in country or abroad &
with new requirements of the customer
and keep producing cables as per
customer requirements. We are putting
in a good portion of our revenues in
R&D is most important
in any field of manu-
facturing activity. One
has to be updated with
any development in the
industry in the country
or abroad. The require-
ments of customers
are changing. Special
insulating / jacketing
compound with special
parameters like fire re-
tarding parameters, low
smoke zero halogen
parameters etc are now
in demand
R& D activities including putting in the
most modern plant & machinery and
trying new raw materials.
The government is opening up
the power transmission segment
for private players. What are
your views on this issue?
The possibilities are immense and we
believe that the opening up of transmis-
sion sector will exponentially explode
the market in the segments that CMI
September 2016
www.InfralinePlus.com
operates in. With the private players
entry into transmission, there is a huge
scope for extra high voltage transmis-
sion conductors and cables, because
we believe that the focus will be on
changing the legacy cables and putting
9
in wires and cables that can minimize
distribution losses due to leakages,
which currently accounts for as much
as 20-25% of the total power being
transmitted.
We believe that our market share will
grow exponentially with these and we
will become an even more significant
player in our categories of operation.
We already manufacture a wide variety
of conductors and cables targeted at the
EHV transmission segment and will be
able to capitalize on the opportunities.
Please elaborate on your
presence in the power and
industrial segment in terms of
your offerings.
In the power and industrial segment,
CMI is manufacturing cables, wires &
conductors for wide range of application.
There is a wide variety of cables that we
have developed and have the capability
to manufacture. We are in B2B segment
and have clients in every sector.
For suggestions email at feedback@infraline.com
 Renewable eneRgy
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 September 2016
www.InfralinePlus.com

ExpertSpeak
UDAY needs to deliver for
actual power surplus
Amidst claims that India is likely to have a power surplus for the
first time this year, India Power Corporation Ltd analyses the
situation on ground and picks out financial restructuring of power
discoms through UDAY scheme as one of the most crucial steps
in achieving the same.

For the first time in history, India will Karnataka. As many as 17

have a surplus of electricity. This un-
precedented situation will be reflected
in both peak (3.1% surplus) and non-
peak (1.1% surplus) hours in 2016-17,
according to data from the Central
Electricity Authority. While parts of
India have earlier shown a surplus for
short periods of time, this is the first
time in the entirety of its existence that
the entire nation will, on average, show
no deficit in power supply and demand.
This stands in sharp contrast to the situ-
ation a few years ago, where the deficit
was as high as 13%. Even as recently
as the last fiscal, the power deficit
stood at 3.2% and 2.1% during peak
and non-peak hours respectively.
Uneven distribution of power
supply Indias massive population, the low per
The difference between power supply
and power demand has been positive
since June 2016, but it is not evenly
distributed across the country. As many
as half of the states still have some de-
gree of power deficit, while others have
a surplus. Southern India is expected to
have nearly 3.3% surplus power, and
new plants generating a total of 2,000
MW are likely to be commissioned in
the region in the near future.
Tamil Nadu, once a severe power
shortage state, now has the largest
power surplus, ahead of the other
surplus states such as Maharashtra,
Madhya Pradesh, Delhi, Gujarat, and
states in all will have
a power surplus
in 2016-17. One
of the
Tamil Nadu key factors
is pre- responsible for the
dicted to slow growth of power
retain its generation is the dire
surplus at financial status
least until of state power
2021, which discoms
is further set
to boost industrial
growth in the state.
It should also be noted that while
the date indicates that the demand of
state power utilities is being met, it
does not account for power failures and
outages caused by rolling blackouts
and technical failures.
Reasons for power surplus
The current government, which looks
on the power surplus as a major accom-
plishment, has undertaken several steps
to reach this outcome. One of these
has been an increase in coal produc-
tion, revitalising several stalled power
plants. This has also led to India, the
worlds largest importer of coal, to look
for export markets for domestically
produced coal.
According to union power minister,
Piyush Goyal, 46,453 MW of conven-
tional power capacity has been added
to the grid under his oversight, along
with the revival of 11,000 MW of gas
plants. The government has promised
to electrify all villages in the country
by 2018, as well as provide electricity
around the clock. To accomplish the 11
latter, it has entered into agreements
and action plans with 21 states. By
2022, the government plans to add 175
GW of renewable energy to the grid.
The state of power in the country
is best captured by looking at the per
capita power consumption. On average,
the per capita consumption in India
in 2015-16 was 1,070 kWh, less than
half the world average of 3,026 kWh.
This low number can be attributed to
capita income of its citizens, and large
swathes of people not having access
to electricity. The states of Odisha,
Kerala, Madhya Pradesh, Mizoram,
Tripura and Sikkim will be power
surplus states this year, but their per
capita power availability is lower than
the national average.
The demand for power in India has
grown in fits and bursts, registering at
6.6% in 2014-15 and 4.2% in 2015-16.
Bihar, the state with the lowest per
capita power availability in the nation,
saw a massive jump of nearly 25% for
both these years a strong indicator of
increased availability to the people.
 September 2016
www.InfralinePlus.com
ExpertSpeak
Slow growth in power
generation portfolio
Even with improvements in the domes-
tic coal supply and the falling prices
of international coal, India has shown
only gradual growth in its power gener-
ation portfolio. Thermal power rose by
only 5.5% between 2014-15 and 2015-
16 to 943 billion units; in contrast,
the countrys thermal power capacity
has grown much faster, growing to
2,10,675 MW from 1,51,490 MW in
three years. This represents a growth
rate of 11% per annum. This means
that the capacity utilisation at power
plants has fallen, and plant load factors
are declining all over the country.
One of the key factors responsible for
the slow growth of power generation is
the dire financial status of state power
distribution companies (DISCOMs). The
accumulation of decades of inefficiency,
coupled with subsidised tariffs, has led
to these companies amassing a collective
12
loss of ` 3.8 lakh crore (March 2015).
Unable to purchase the power needed
to continue operations, DISCOMs are
forced to shed excessive load instead.
Due to legacy issues, DISCOMs
are trapped in a vicious cycle.
Operational losses are being funded
by debt. The outstanding debt of these
DISCOMs has increased from about
` 240,000 crore in 2011-12 to about
` 430,000 crore in 2014-15 -- with
interest rates of 14-15 per cent, Piyush
Goyal recently said.
UDAY the likely saviour
To help rectify this situation, the
government has instituted the Ujwal
DISCOM Assurance Yojana, a finan-
cial turnaround and revival package
for the countrys beleaguered DIS-
Even with improve-
ments in the domestic
coal supply and the
falling prices of inter-
national coal, India has
shown only gradual
growth in its power
generation portfolio.
Thermal power rose
by only 5.5% between
2014-15 and 2015- 16
to 943 billion units; in
contrast, the countrys
thermal power capacity
has grown much faster,
growing to 2,10,675 MW
from 1,51,490 MW in
three years
COMs. This scheme aims to improve
operational efficiency, reduce power
costs, reduce interest costs and enforce
financial discipline on state-owned
DISCOMs.
Under UDAY, states will be
allowed to take over 75% of the
DISCOMs debt, which they can then
offset through the sale of government
bonds. 50% of the debt will be taken
over in 2015-16 and 25% in 2016-17.
The remaining 25% will continue as
loans with limited rates of interest
imposed on them. These measures will
provide immediate pecuniary relief to
DISCOMs, improving their financial
health and cash flow.
To qualify for UDAY, DISCOMs
have to meet efficiency parameters
through the adoption of new tech-
nologies (such as smart meters and
grids), upgrades to their transmission
infrastructure and periodic hikes in
tariffs. States are further incentivised
to join UDAY through provisions
for additional funding from the
Centre and increased coal supplies.
These incentives seem to have had
the desired effect, as 18 states have
joined the scheme in some measure
or other.
The government hopes that the
improved financial situation of
DISCOMs will enable them to increase
their power purchases, boosting
demand as well as the capacity utili-
sation levels of power plants.
According to Goyal, the role of the
central government will be that of a
catalyst, enabling states and DISCOMs
to alleviate their financial woes while
taking a hands-off approach to the
process. Through UDAY, he hopes to
reduce the systemic cost of the power
ecosystem by ` 1.8 trillion every year
by 2019, against the prior scenario. He
also says that the scheme creates strong
incentives against DISCOMs relapsing
into losses in addition to solving
current issues.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com

InDepth
Government aggressively pursuing
100% rural electrification to achieve
24/7 power supply dream
Center plans to electrify 18,452 un-electrified villages within 1,000 days by May 1, 2018
Mini-grids being seen as a likely solution to meet the electricity demand of vast rural population
By Team InfralinePlus
Indias rapidly growing economy
has fuelled an intensifying demand
for electricity for which supply has
struggled to keep pace. India is now the
fourth-largest generator of electricity
after Japan, United States and China
though still comparatively low energy
access rate of 81% (World Bank, 2014)
leaving about 237 million people
without reliable access to electricity.
The growth in demand for power has
outpaced the supply of power, led by
rapid urbanization and industrialization
in the country.
As soon as Modi Government
came to power in 2014, it launched
one of its ambitious projects of Rural
Electrification. The center plans to
electrify 18,452 un-electrified vil-
lages within 1,000 days by May 1,
2018. Rural electrification is often
considered to be the backbone of
the rural economy. Rural energy
needs include energy for a) Cooking
September 2016
www.InfralinePlus.com
13
b) Basic lighting c) Irrigation d)
Communication e) Water heating f)
Cottage industry and so on. Rural
electrification can meet most of
these and the impact can be seen
on improved farm productivity,
improved health and education,
improved communication and eco-
nomic development through creation
of employment in rural areas which
traditionally depend on agriculture
related income generation activities.
 September 2016
www.InfralinePlus.com

InDepth

Current Progress and dividing village electrification yanta (GVA) and various actions are
Last month, the government declared process into 12-stage milestones with also being taken on regular basis like
that 10,079 villages have been elec- defined timeliness for monitoring. reviewing the progress on monthly
trified (till August 22) under Deen- In order to expedite the progress basis during the RPM meeting, sharing
Dayal Upadhyaya Gram Jyoti Yojana further, a close monitoring is being of list of villages which are at the stage
(DDUGJY) scheme. With the electrifi- done through Gram Vidyut Abhi- of under energisation with the state
cation of these villages, the number of Discom, identifying the villages where
electrified villages in the country has The scale of the chal- milestone progress are delayed.
reached to 10,079.Out of these 28 newly lenge the government
electrified villages, four are in Assam, has set itself to achieve 24/7 power supply: Village
five in Chhattisgarh, three in Jharkhand, electrification holds the key
10 in Meghalaya and 6 in Rajasthan.
in three to four years The scale of the challenge the govern-
Out of remaining 8,373 villages, is nothing short of as- ment has set itself to achieve in three to
525 villages are uninhabited. 5,069 vil- tonishing. It will have four years is nothing short of astonish-
lages are to be electrified through grid, to provide an electricity ing. It will have to provide an electric-
2,590 villages to be electrified through connection to roughly ity connection to roughly 80 million
off-grid where grid solutions are out 80 million households households that are still not connected
of reach due to geographical barriers that are still not con- to the grid (2011 Census). Then it will
and 189 villages are to be electrified by have to ensure the connections actually
the state government, according to the
nected to the grid buzz with uninterrupted power that
statement released by the Ministry of (2011 Census). Then it reaches 237 million households.The
Power (MoP) last month. will have to ensure the government can take some solace from
The rural electrification scheme/ connections actually the fact that substantial connections
14 project has been undertaken on buzz with uninterrupted provided between 2011-14 will lower
mission mode and the strategy for power that reaches 237 the targets to be met in four years. To
electrification comprises squeezing the million households put this in perspective, between 2001
implementation schedule to 12 months and 2011, an additional 61.6 million
households got access to electricity.
Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) aims at separating the The government will have to more
electric feeders for agricultural and non-agricultural purposes. The core objective than double the rate of electrification to
of separation of feeders is to provide regulated supply to agricultural consumers cover the remaining by 2019.
and continuous power supply to non-agricultural consumers in rural areas.
The role that electricity has played in
This arrangement allows the distribution company to regulate power supply to
agricultural consumers as and when needed. The separation of feeders helps reducing poverty is especially significant
in flattening of the load curve by shifting the agricultural load to off-peak hours because rural electrification is patchy
and thus facilitates peak load management. The scheme is also concentrating and the supply unreliable. Though it is
on strengthening the electrification infrastructure as laid out in the 12th 5-year interesting to note that how an individual
plan of RGGVY. village is classified as electrified
DDUGJY is an achievement at the policy formulation level. To achieve separation when - 1) Basic infrastructure such as a
of feeders and complete electrification- the scheme allows discoms (distribution distribution transformer should be made
companies) and power departments to submit a report that is first distilled by a available within the inhabited locality
nodal agency as recommended by the State Level Standing Committee setup
of the villages revenue boundary. This
under the RGGVY. This report is then passed on to a monitoring committee,
which then approves the final project after taking into account factors like cost- standard was inserted after it became
effectiveness, human resource development and of course the final impact of apparent that many states played fast and
the project. loose with the status of electrification by
The scheme also very clearly outlines the things it will engage in like installing of simply connecting multiple villages with
capacitors, high voltage distribution systems, erection of HT lines etc. and the single line or setting up a solitary utility
things it will keep itself out of like underground cabling and service lines to APL pole without a transformer; 2) Any
consumers among others. The DDUGJY scheme envisages connecting all the public place such a school, panchayat
33 KV or 66 KV grid sub stations/ billing offices / Regional / Circle / Zonal offices office, health centre, dispensary,
of utilities by extending optic fibre network being established under National
community centre etc, should be able
Optic Fibre Network (NOFN). Provision of 100% grant has been made under the
scheme for connecting the missing links of NOFN including terminal equipment. to avail of power supply on demand.
The logic here first and foremost was

that critical institutions such as health
centres deserve a constant supply of
power. Secondly, it assumes that people
who live in villages prefer to congregate
in public places; thus the prioritizing
of electricity to communal places
such as community centres; 3) The
number of households electrified should
be minimum 10% for villages which
are unelectrified, before the village is
declared electrified. This essentially
states that the minimum criteria that
needs to be fulfilled before a whole
village is declared electrified, is that 10%
of its households need to be electrified.
The most troubling criteria is the
10% figure: there is a wealth of data
and reports that shows while Indias
villages continue to reach almost 100%
electrification, its rural households lag
behind. Nearly 96% villages in India are
electrified but only 69% of homes have
electricity connections. For instance, in
Uttar Pradesh, Indias most populous
state, 99% of villages are electrified, but
only 60% of households have access to
electricity, with three out of four rural
electrified households in UP receiving
electricity for less than 12 hours a day.
This implies that regular and reliable
electricity could have a salutary effect in
reducing poverty, regardless of how the
poverty line is calculated.
Rural electrification through
renewable energy
Renewable energy based mini-grids
is being seen as a possible solution to
meet the electricity demand of vast ru-
ral population of India which addresses
the climate change issues. Various re-
newable based mini-grid models have
emerged in India. They have been able
to set examples of how mini-grids can
bring an end to energy poverty in India.
But mini-grids developed so far in the
country are facing several challenges
due to high capital and operating costs,
high tariff and inconsistent revenue
collection, low demand in the villages,
and bureaucratic delays etc.
In some states with its unique
September 2016
www.InfralinePlus.com
Figure 1: Comparison of villages electrified vs individual
households electrified under rural electrification (in 2015-16)
Villages Electrified vs Households Electrified
(2015-16)
97% 97% 99% 100%
93% 93% 93%
86%
67% 70%
60%
56%
Jharkhand Bihar Madhya Odisha Uttar Pradesh West Bengal
Pradesh
Villages Electrified Households Electrified
Source: Access to Clean Cooking Energy and Electricity report by CEEW
villages where connectivity to the
Renewable energy grid is not feasible or cost effective.
based mini-grids is be- DDG enables electricity generation at
ing seen as a possible the local level using locally available
solution to meet the resources ensuring reduced dependence 15
electricity demand of on external resources. Local distribution
vast rural population of networks or mini-grids are set up over
a cluster of villages and powered by
India which addresses a local generating plant which may
the climate change is- be based on conventional fuels such
sues. Various renewable as diesel, natural gas, fuel oil or on
based mini-grid models renewable energy such as wind energy,
have emerged in India. solar energy, hydro power, and biomass.
They have been able to RE mini-grids have distinct advan-
set examples of how tages over central grid extension and
mini-grids can bring an other decentralized energy options
in providing access to reliable and
end to energy poverty affordable electricity.
in India. But mini-grids 1. Compared to central grid extension,
developed so far in the RE mini-grids can be less expensive
country are facing sev- due to lower capital cost of infra-
eral challenges structure (depending on distance) and
lower cost of operation by avoiding
geography and the current state of transmission and distribution losses.
economy and village habitations, grid 2. In countries with power shortages,
connectivity is neither feasible nor cost electricity supply through the central
effective. Therefore, off-grid solutions grid, especially in rural areas, may
like Decentralized Distributed Gener- not be reliable. In such regions, RE
ation (DDG) facilities stand as an ideal mini-grids that can be designed and
mode for supply of electricity. operated effectively, can be more
DDG can be based on either reliable than the central grid in
conventional or renewable sources providing electricity access and can
and is usually implemented in remote ensure local energy security.
 September 2016
www.InfralinePlus.com

InDepth

Mini-grid policies to boost rural electrification needs to be fostered and strengthened.

Case Study: Uttar Pradesh In addition to technology and project
finance, affordable end-user financing
Uttar Pradesh government released its mini-grid policy in March this year to
through local banking and credit
provide thrust to the rural electrification. Under the scheme, the state government
institutions, entrepreneur development
will facilitate the private players to set up solar plants to power rural households
and recover tariff from the users. and capacity building programmes,
The policy has limited the size of mini-grid to 500 kW. It also states conditions and a supportive policy and planning
to qualify for state governments subsidy. framework are critical.
Developers need to procure their own land for the projects.
It mandates minimum eight hours of electricity supply - three hours in the Conclusion
morning and five hours in the evening to all households willing to pay in the Access to energy is a cornerstone for
chosen area. development and essential for a bet-
Supply for production and commercial needs for six hours. ter quality of life. When this access
There is also an alternative of not opting for government subsidy. In that case, does not exist or is very poor, it has
the developers have no obligation of a minimum supply and can charge a negative impacts on everything from
mutually-agreed tariff. education, to health, employment and
One of the most important concerns of the mini-grid developers has been the irrigation - touching all aspects of life
uncertainty of the plant when conventional grid arrives. The state has, hence, and livelihood.In India today, there
laid out two exit policies for the developers: exist approximately 237 (World Bank,
The energy generated from the plant will be received in the grid by Power 2014) million people still without basic
Distribution Companies (DISCOM) at the tariff decided by Uttar Pradesh Elec-
access to electricity and no matter how
tricity Regulatory Commission/ tariff decided on mutual consent. Project de-
the GDP figures continue to grow, there
veloper will be given priority for authorisation as a franchisee by DISCOM, or
will be no link established between
Based on the cost benefit analysis of the installed project, the project will
16 be transferred to the DISCOM at the cost determined on mutual consent such an increase and an increase of the
between DISCOM and developer by the estimation of cost / profit or loss of most basic standard of living of such
the project installed by the developer. people. This highlights the need to look
beyond metrics such as possessing an
3. Mini-grid developers have the electricity connection to meaningfully
potential to access capital beyond In India today, there describe the energy access situation.
the traditional power sector, and may exist approximately Households face severe challenges of
be able to provide quicker access to 237 (World Bank, 2014) quality, reliability and duration of sup-
electricity than central grid extension million people still ply which then drive their classification
that may be prone to bureaucratic without basic access to in the low energy access regions.
hurdles and slow implementation. electricity and no matter The challenge gets even more
4. Unlike other decentralized energy how the GDP figures complicated when confronting the fact
options like solar home lighting that energy access to people, if based
systems and off-grid lighting products,
continue to grow, on existing models will only be adding
mini-grids (depending on their size) there will be no link value to one aspect of their lives while
can provide electricity to not only res- established between taking away from many others. It is
idential loads like lighting and phone such an increase and imperative to design energy access
charging, but also to commercial loads an increase of the most to those without it in such a way
like mills and oil presses. basic standard of living that it leaves a very low carbon and
5. RE mini-grid developers have strong of such people. This ecological footprint. Thus, it is most
incentives to pursue demand-side highlights the need to crucial to design inclusive growth
management, to keep capital cost of models where a low carbon and
generation equipment low.
look beyond metrics ecological footprint remain important
6. Development and operation of mini- such as possessing an with the collateral advantage of a
grids can create local jobs. electricity connection to stimulated economy, good standard
For decentralized renewable energy meaningfully describe of living plus access to a clean and
(DRE) solutions to play a role in the the energy access healthy life.
larger development and electrification situation
conversation, a supportive ecosystem For suggestions email at feedback@infraline.com
 September 2016
www.InfralinePlus.com

StatisticsPower
Details of state-wise and Utility-wise AT&C losses for 2012-13 to 2014-15
Details of state-wise and Utility-wise AT&C losses for 2012-13 to 2014-15
Region State Utility 2012-13 2013-14 2014-15
Bihar BSEB 59.4 - -
NBPDCL 50.85 41.93 41.76
SBPDCL 45.77 48.7 45.28
Bihar Total 54.64 46.33 43.99
Jharkhand JSEB 47.49 26.3 -
JBVNL - - 47.01
Jharkhand Total 47.49 26.3 47.01
Sikkim Sikkim PD 53.51 71.23 42.37
Eastern
Sikkim Total 53.51 71.23 42.37
West Bengal WBSEDCL 34.43 32.05 35.35
West Bengal Total 34.43 32.05 35.35
Odisha NESCO 39.61 36.47 38.36
SESCO 49.36 41.18 42.57
WESCO 41.87 41.24 41.03
CESU 43.43 38.48 37.08
Odisha Total 42.88 39.19 39.28
Eastern Total 42.04 36.24 39.64
Arunachal Pradesh Arunachal PD 60.26 68.2 67.83
Arunachal Pradesh Total 60.26 68.2 67.83
Assam APDCL 31.85 30.25 26
Assam Total 31.85 30.25 26 17
Manipur Manipur PD 85.49 43.55 -
MSPDCL - - 49.62
Manipur Total 85.49 43.55 49.62
North Eastern Meghalaya MePDCL 41.71 39.77 34.69
Meghalaya Total 41.71 39.77 34.69
Mizoram Mizoram PD 27.55 32.53 33.51
Mizoram Total 27.55 32.53 33.51
Nagaland Nagaland PD 75.3 38.37 78.48
Nagaland Total 75.3 38.37 78.48
Tripura TSECL 34.45 41.81 38.02
Tripura Total 34.45 41.81 38.02
North Eastern Total 39.97 35.92 35.29
Delhi BSES Rajdhani 15.16 16.19 10.76
BSES Yamuna 17.94 15.51 19.68
TPDDL 13.12 9.75 10.31
Delhi Total 15.22 14.09 12.9
Haryana DHBVNL 28.31 30.89 30.71
UHBVNL 36.97 38.61 34.83
Northern Haryana Total 32.55 34.33 32.52
Himachal Pradesh HPSEB Ltd. 11.9 14.82 15.21
Himachal Pradesh Total 11.9 14.82 15.21
Jammu & Kashmir J&K
60.87 49.14 59.04
PDD
Jammu & Kashmir Total 60.87 49.14 59.04
Punjab PSPCL 17.52 17.87 17.56
Punjab Total 17.52 17.87 17.56
Rajasthan AVVNL 19.9 22.06 28.13
JDVVNL 18.97 25.71 26.99
 September 2016
www.InfralinePlus.com

StatisticsPower

JVVNL 20.91 31.08 32

Rajasthan Total 20 26.77 29.28
Uttar Pradesh DVVN 45.69 36.47 40.18
KESCO 37.61 34.29 32.02
MVVN 45.83 14.43 35.18
Pash VVN 33.39 23.49 22.19
Poorv VVN 52.37 20.09 42.91
Uttar Pradesh Total 42.85 24.67 33.82
Uttarakhand Ut PCL 23.18 19.01 18.82
Uttarakhand Total 23.18 19.01 18.82
Northern Total 28.89 24.86 28.06
Andhra Pradesh APCPDCL 15.64 17.54 -
APEPDCL 10.15 6.57 7.67
APNPDCL 13.09 20.8 -
APSPDCL 12.74 11.77 12.01
Andhra Pradesh Total 13.7 14.77 10.55
Karnataka BESCOM 20.45 18.93 17.59
CHESCOM 30.42 33.92 21.64
GESCOM 18.28 30.45 21.25
HESCOM 20.44 20.42 19.49
MESCOM 14.57 14.83 15.72
Southern Karnataka Total 20.78 22.02 18.71
Kerala KSEB 12.32 11.45 -
KSEBL - 22.99 17.64
18
Kerala Total 12.32 16.48 17.64
Puducherry Puducherry PD 9.13 16.18 16.64
Puducherry Total 9.13 16.18 16.64
Tamil Nadu TANGEDCO 20.71 22.35 24.74
Tamil Nadu Total 20.71 22.35 24.74
Telangana TSNPDCL - - 16.49
TSSPDCL - - 11.91
Telangana Total - - 13.23
Southern Total 17.4 19.08 18.22
Chhattisgarh CSPDCL 25.12 23.17 27.84
Chhattisgarh Total 25.12 23.17 27.84
Goa Goa PD 14.14 10.72 13.31
Goa Total 14.14 10.72 13.31
Gujarat DGVCL 10.4 10.83 10.81
MGVCL 14.94 14.77 11.47
PGVCL 30.41 24.12 25.18
UGVCL 14.37 9.1 10.21
Western Gujarat Total 19.87 15.93 16.06
MP Madhya Kshetra
Madhya Pradesh 29.97 29.6 32.47
VVCL
MP Paschim Kshetra
28.16 21.15 30.79
VVCL
MP Purv Kshetra VVCL 36.4 34.83 27.09
Madhya Pradesh Total 31.15 28.03 30.26
Maharashtra MSEDCL 21.95 14.39 19.75
Maharashtra Total 21.95 14.39 19.75
Western Total 23.36 18.37 21.59
Grand Total 25.48 22.58 24.62

NewsBriefs | Coal National
Odisha to get two coal blocks
The state government is in the process of
getting two more coal blocks from the Centre
after state energy minister Pranab Prakash
Das recently had a discussion with Union
coal minister Piyush Goyal in New Delhi. It is
learnt that the Centre has agreed to allocate
NTPC awaits coal linkage to start work on Pudimadaka project
Work on 4x1000 megawatt NTPC Pudima-
daka Super Thermal Power Project is likely to
gain pace once the Ministry of Coal finalises
the Policy for Long-term Coal Linkage. Work
on the ultra-modern project envisaged with
an investment of about Rs.26,500 crore the
largest single investment post bifurcation in
Andhra Pradesh will be launched after get-
ting green nod from the Ministry of Environ-
ment and Forests. MoEF is awaiting details
on coal linkage. The tendering process, which
is kept on hold, will be revived once long-term
coal linkage is finalised. The project, located
about 60 km from here, was originally con-
ceived to generate power by importing coal.
However, due to Government of Indias deci-
sion to encourage power generation to curtail
Coal India to give up Mozambique mining licences completely
Coal India Ltd (CIL) has submitted its
application to National Institute of Mines
of Mozambique for complete surrender of
prospecting licences which were awarded
to its wholly-own subsidiary Coal India
Africana Limitada (CIAL) as mining would
be technically not feasible in the licence
areas, its latest Annual Report said. A
mineability study has been undertaken
based on the findings of the geological
report. The findings of the mineability study
revealed that it is technically not feasible to
do mining in the licence areas of CIAL. Ac-
cordingly, CIL board accorded its approval
for surrender of prospecting licences ... to
a coal block to the Odisha Thermal Power
Corporation Limited (OTPCL) for its proposed
coal-based power plant at Kamakhyanagar
in Dhenkanal district. The Union coal ministry
is also believed to have agreed to the states
demand for allocation of another block to
the state-owned Odisha Mining Corporation
(OMC), said a reliable source. The OTPCL, a
joint venture between the OMC and Odisha
Hydro Power Corporation (OHPC), is planning
to set up a 3,200 MW (4x800 MW) power
plant with an estimated investment of over
Rs 24,000 crore. Land acquisition for the proj-
ect is in advanced stage and the government
has asked the departments to expedite the
process to get all statutory clearances.
foreign exchange expenditure with domestic
coal, the project is being redesigned. The coal
requirement will be around 15 to 16 million
tonnes per annum. NTPC is making prepara-
tion to ensure 100 per cent ash utilisation for
construction work and exports.
the Government of Mozambique. Pursuant
to this decision, applications for complete
surrender of prospecting licences have been
submitted to the National Institute of Mines
September 2016
www.InfralinePlus.com
Land acquisition issues hit Uppur
thermal plant
Six months after Chief Minister Jayala-
lithaa laid the foundation stone for the
1,600 MW Uppur supercritical thermal
power plant and handed over the Rs.
5,580-crore contract order to it, Bharat
Heavy Electricals Ltd. (BHEL) has been
unable to make much headway, appar-
ently because of official apathy. After
receiving the order, BHEL began establish-
ing boiler, turbine and generators, but the
work has come to a standstill as there is
delay on the part of the government in
issuing notification under Section 3 (1) of
the Tamil Nadu Acquisition of Land for 19
Industrial Purposes Act for taking over
767.83 acres of patta lands. The District
Collector, after issuing a notification under
Section 3 (2) of the Act in November 2015
and hearing objections from landowners,
passed an order overruling their objections
in January and paving the way for take-
over of the land. However, the government
was yet to issue the notification under
Section 3 (1) of the Act and publish it in
the gazette for taking over the land.
(Instituto Nacional de Minas), Ministry of
Mineral Resources and Energy, Govern-
ment of Mozambique, companys latest
report said. CIL said in its report that the
response of the Government of Mozam-
bique is awaited. For extraction of coal, two
prospective licences covering a total area of
224 sq.km. were awarded to CILs African
subsidiary with validity from August 2009 to
August 2014. Out of 224 sq.km. of the total
licence areas, 170 sq.km. area having no oc-
currence of coaly horizons till a depth of 500
metre, as revealed in the geological report,
was already surrendered to the Mozambique
government.
 September 2016
www.InfralinePlus.com
NewsBriefs | Coal National
Kamarajar Port records dip in handling of coal cargo
Going by the phrase that one persons gain
could be anothers loss, the well-planned
coal supply management executed by the
Tamil Nadu Generation and Distribution Cor-
poration (TANGEDCO) has resulted in a dip
in coal handling at Kamarajar Port in Ennore
and other ports. Kamarajar Port in Ennore
CIL board okays pact with S African firm for mines acquisition
Coal Indias board has approved signing
of a pact with African Exploration Mining
& Finance Corporation SOC Ltd (AEMFC),
owned by the South African government,
for acquisition of coal mines in that
20 country. The CIL board has accorded
approval to the proposal for execution
of MoU between CIL (Coal India) and
African Exploration Mining & Finance
Corporation, SOC Ltd (AEMFC), an entity
owned by the government of South Africa
for identification, acquisition, exploration,
development and operation of coal assets
in South Africa, a recent report of the
PSU said. The decision of the CIL board,
it said, has been communicated to AEMFC
requesting them to finalise the date and
Coal imports in July dip 11 percent to 18 MT
Coal imports during July declined by 11.1 per
cent to 18.03 million tonnes (MT) on the back
of higher domestic availability of the fossil
fuel. The figure stood at 20.29 MT during the
same month last year, according to mjunction
services, an online procurement and sales
platform jointly floated by SAIL and Tata
Steel. The decline in July imports this year
against (the same month) last year can be at-
tributed to number of factors, including mon-
soon, when imports generally come down,
Viresh Oberoi, CEO and MD of mjunction, said
In addition, firmness in international coal
prices since beginning of June and higher
availability of domestic coal also impacted
has reported a 15 per cent drop in cargo
volume till August 20 compared to the
same period a year ago as power producers
have slashed their coal imports. However,
this was only a temporary phenomenon
with the port recording a minimal slump
in cargo volume for July 2016. The official
said coal imports by TANGEDCO had come
down this year through better inventory
management and by giving priority to power
generated by wind mills. Chettinad Coal
Terminal, which handles coal for private
players, has assured that the import would
increase in a month as four vessels are
expected to call soon.
venue of signing of the agreement. Coal
and Power Minister Piyush Goyal had
informed Parliament that CIL is looking at
entering into a pact with a South African
government miner to jointly acquire coal
mines in that country.
imports, added Oberoi. PwCs Kameswara
Rao said that thermal coal imports, after a dip
last year, will be at similar levels. So, on the
whole, the broader trend remains flat. The
Odisha demands grants for Pump
Storage Projects from NCEF
Noting that coal bearing states face the
adverse effect of mining, reduction in for-
est area, risks of environmental pollution
and strain on water resources, Odisha
Chief Minister Naveen Patnaik has asked
the Centre to provide financial assistance
for Pump Storage Projects (PSP) from
the National Clean Energy Fund. It is re-
quested that financial assistance (grant)
to the tune of 75 per cent, the estimated
coast of each PSP, may be provided
from the NCEF to bring down the cost
of power from these projects in order to
make the tariff affordable, Patnaik said
in his letter to Prime Minister Narendra
Modi. Patnaik further said Once the in-
stitutional mechanism is established and
in-principle clearance is accorded by the
government of India, specific proposals
will be submitted by the state govern-
ment for execution of renewable energy
projects including hydro-electric projects,
more particularly, the PSPs.
real change is that with surplus generation
capacity and adequate supplies of domestic
coal, imported coal-based power plants are
largely filling in the marginal gaps in demand
requirement, taking opportunistic advantage
of price movements, he said. Further, with
many imported coal-based load power plants
operating at lower utilisation, the overall
volume of imports is likely to remain flat. Of
the 18.03 MT of coal imported, non-coking
coal was highest at 12.39 MT, followed by
coking coal at 3.76 MT, pet coke at 1.05 MT,
among others. However, coal imports in June
had gone up by 20.19 MT against 19.63 MT in
the same month of 2015.

NewsBriefs | Coal International
Thermal coal market analysts pinpoint Southeast Asia region for standout growth
Southeast Asian countries including Malaysia,
Thailand and Vietnam are seen as growth
markets for the consumption of imported
thermal coal in the years out to 2020, as
Chinas Inner Mongolia cuts coal output by 10 pct in Jan-July
Inner Mongolia, Chinas biggest coal produc-
ing region, cut its output of the commodity
by just over 10 percent in the first seven
months of the year as part of its efforts to
close 3.3 million tonnes of capacity this year.
By the end of August, the region had shut
seven coal mines, Wang Binjun, the director
of Inner Mongolias Economic and Informa-
tion Commission, was cited as saying. The
region plans to close a total of 65 mines by
2020 to curb crippling overcapacity in the
sector. Authorities have allotted output cuts
to ten companies, who will be responsible for
implementing the cuts by the end of October
to help the region meet its capacity reduc-
tion target for the year, an official document
released by the Coal Industrial Bureau (CIB)
Thailands July coal imports plummet 41% on year to 1.23 million mt
Thailand imported 1.23 million mt of coal
in July, down 41.2% from a year earlier. It
imported 527,313 mt of bituminous coal,
down 43.8% from 937,401 mt a year earlier.
The top suppliers in July were Indonesia
with 378,028 mt, down 22% year on year,
and Australia with 148,082 mt, down 67.2%.
Thailand imported 4,270 mt of anthracite
coal in July, down 22.8% year on year, all
from China. Imports of other coals were
701,081 mt, down 39.3% from July 2015.
They came mainly from Indonesia (644,220
mt, down 41.5% year on year) and Russia
(56,810 mt against none last year). In the
first seven months, Thailand imported 12.36
coal-fired electricity is used to fuel their fast-
growing economies according to analysts. In a
10-year outlook for the Asia seaborne thermal
coal market, Mark Gresswell, chief analyst
at Australian mining consultancy group HDR
Salva said three-and-a-half billion people are
living on electricity consumption below the
level in Japan. Eight of the most populous
countries are in Asia, and 54% of the worlds
population live in Asia, he said. To move
these people to Japanese levels of power
consumption will require an extra 4,300 TW
of electricity generation. This step change in
levels of power generation in Asia will require
an 80% increase in global coal production.
of Inner Mongolia said last week. Coal com-
panies in the region have posted a combined
loss of 4 billion yuan ($600.41 million) in the
first half, up 17 percent year-on-year, due to
the supply glut caused by Chinas economic
slowdown, according to the CIB.
million mt of coal, down 3.8% from 12.86
million mt during January-July 2015. Of
this, 6.13 million mt were bituminous coal,
down 0.9% year on year. The major supplier
was Indonesia with 3.79 million mt, down
1.9% year on year, followed by Australia
with 2.26 million mt, down 2.3% from the
September 2016
www.InfralinePlus.com
Vietnams July coal imports surge
141% on year to 1.31 million mt
Vietnams coal imports surged 141% year
on year to 1.31 million mt in July. Tradi-
tionally a coal exporter, Vietnam turned
into an importer amid rising domestic de-
mand, particularly from the power sector.
Australia was the largest supplier in July
at 463,131 mt, compared with 112,092
mt a year earlier; followed by Russia with
410,449 mt, up 168%; and Indonesia with
172,099 mt, up 37.1% year on year. In the
first seven months, Vietnam imported
8.38 million mt of coal, compared with
just 2.72 million mt a year ago. Australia
was the top supplier over January-July 21
too with 2.67 million mt, up almost five
times from 586,761 mt; followed by Rus-
sia with 2.59 million mt, up from 551,849
mt a year earlier; and Indonesia with 1.5
million mt, up 57.2% from 955,878 mt a
year ago. Vietnam National Coal Mineral
Industries Holding Corp., or Vinacomin,
had to reduce its sales target to 36.5
million mt from 39 million mt this year
due to competition from cheaper imports,
Chairman Le Minh Chuan said in July.
same period last year, according to the data.
Thailands anthracite coal imports in the
first seven months declined 34.9% from
a year ago to 51,629 mt and came from
Russia (19,718 mt, from none a year earlier)
and China (16,333 mt, up 42.6% year on
year). It imported 6.18 million mt of other
coals during January-July, down 6.2% from
6.59 million mt a year ago, mainly from
Indonesia with 5.8 million mt, down 9.6%
year on year. Thailand produced 8.25 million
mt of lignite in the first half of the year, up
7.7% from 7.66 million mt in the same period
last year, according to data released August
12 by the Energy Policy and Planning Office.
 September 2016
www.InfralinePlus.com

ExpertSpeak
Ultra Mega Power Plants should
be located at pitheads
VK Arora, Chief Mentor, Karam Chand Thapar & Bros. (Coal
Sales) Ltd., discusses two important issues facing the countrys
coal sector steps required to achieve affordable and low cost
power in every corner of the country and the issue of compulsory
washing of coal for transport beyond 500 kms. At the same time,
he feels that despite huge investment in renewables, India will
continue to depend on fossil fuel (mainly coal) for generation of
power for the next two decades.

Mr K S R Chari, an eminent mining be transmitted upto longer distances for

engineer and former Coal Secretary, had
submitted a report to the Central govern-
ment in April 1996 which, among other
things, included two important recom-
mendations: Power stations should
22 be located at pitheads instead of near
the cities. This would save transporta-
tion costs for coal. Secondly, instead
of selling power to SEBs, the stations
should sell them directly to power grids.
Extending this to the present times, what
is being recommended is to establish
Ultra Mega Power Plants (> 5000 MW)
near the pitheads. The possible locations
would be in Singrauli (NCL), Talcher,
IbValley (MCL) and Korba (SECL).
These places have large reserves of low
grade coal, which can be exploited to set
up large mines to produce upto 20 MMT
/year each. These Ultra Mega Power
Plants will be set up in vicinity where
coal could be fed by belt conveyors.
We have seen from a recent Ultra
Mega Power Plant set up at Sasan by
Reliance alongwith a captive coal block,
where power is being produced and sold
at rates less than Rs. 1.5 per unit. If this
power is transported over long dis-
tances, this would be better any day than
transporting coal by rail over such long
distance which puts a constraint on the
rail capacity and is also more expensive.
Instead, what is ideal is to invest in the
transmission lines, where power could
a maximum cost of Rs. 1/- to Rs. 1.5
per unit leading to a landed cost of
maximum Rs. 3/- per unit with
minimum effect on
environment and
infrastructure. Despite
This huge
would investment in
also avoid renewables, India
setting
will continue to
up wash-
eries to
depend on coal for
reduce ash next 2 decades
percentage to
less than 34% for
complying with MOEF guidelines. In
any case, the washing has a cost of about
Rs. 150/- per MT which eventually adds
to the cost of the coal as the recovery is
only 80%. Pithead Ultra Mega Power
Plants can be designed to use high ash
coal with latest technologies to achieve
much better efficiency of combustion,
with minimum impact on environment.
This system of having Ultra Mega
Power Plant would ensure availability of
power in the Northern India as well as
Southern India at a maximum rate of Rs.
3/- per unit which incase a power plant
is set up in Northern India or Southern
India would be much higher due to
higher cost of fuel, because of the high
cost of transportation by rail.
Ofcourse, this may not be preferred
VK Arora, Chief Mentor, Karam Chand Thapar &
Bros. (Coal Sales) Ltd.
by SEBs as generally, a power plant
situated even away from the coal-
fields is a symbolic industrial unit in
the State generating employment for
the local population and also catering
to the popular sentiment of the people.
Compulsory washing of coal
for transport beyond 500 kms
As per the directive from the Supreme
Court from June 2016 onwards, coal
of over 34% ash will not be allowed
to be transported by rail beyond
a distance of 500 kms. The recent
notification also puts the responsibility
of ensuring this not only on purchasers
but also on the sellers.
It is not understood how is this
going to be implemented as the
washing capacity is still inadequate.
CIL is still a long way off from estab-
lishing its 17 washeries for which they
have been talking for a long time. The
early directive of transporting less than
34% ash for distances below 1000 kms
was not being complied with because
of inadequate washing capacity by

CIL. A number of washeries were set
up in the private sector. Except for a
few, rest of the washeries have been for
long inoperative as the rates quoted for
washing were inadequate resulting in
genuine washing not being done. This
brought about the notoriety and a bad
name for the washeries and some of
them are still fighting their cases with
the power companies.
An honest washing plant has to be
paid remunerative washing charges,
failing which there would be an attempt
to enforce a shortcut in the system
benefitting no one. It is expected that
commissioning of CIL washeries would
bring some sanity into the system.
Unfortunately, this commissioning is
still 2/3 years away. It is yet to be seen
whether such mega washeries can be set
up to conform to the parameters set by
the CIL tenders at prices quoted by them.
Increasing investment in re-
newables Will it come at the
cost of coal?
Indias total installed power capacity is
298 GW (as on March 31, 2016), out of
which renewables capacity forms 28%
(including hydro) and non renewable as
72%. The present per capita consump-
tion of electricity is ranging around
1000 kwh which is expected to rise
upto 2000 kwh in a few years. Demand
for power is expected to surpass 300
GW over the next 10 years. This would
involve 5-10 fold ramp up in capacity
addition along with matching invest-
ments in distribution and transmission.
In line with the pressure on
government to discourage the use of
fossil fuel, India has taken up very
ambitious targets for renewables. The
target for green energy is 175 GW by
2022. This includes solar at 100 GW,
comprising 60 GW as large and medium
grid connected power and 40 GW as
rooftop solar. Target for wind is 60 GW,
Despite huge investment
in renewables, India will
continue to depend on
fossil fuel (mainly coal)
for generation of power
for the next 2 decades.
Coal production in the
country has been in the
range of 500-550 MMT
per annum. There have
been signs of increase
in the last year by
500 MMT by the captive coal blocks
about 9-10%, which has
brought some relief for
the beleaguered power
plants who were earlier
depending on imported
coal or whatever little
coal that was made
available by CIL
September 2016
www.InfralinePlus.com
for bio fuel at 10 GW and hydel forming
the balance 5GW. If we achieve these
targets, we shall become one of the
largest green energy producers in
the world. Present renewable energy
installed capacity is 27,000 MW for
wind and 6,700 MW for solar. With
abundance of sunlight in major parts of
the country, investments in solar will far
exceed investments in any other sector.
Despite huge investment in renew-
ables, India will continue to depend on
fossil fuel (mainly coal) for generation
of power for the next 2 decades. Coal
production in the country has been in
the range of 500-550 MMT per annum.
There have been signs of increase
in the last year by about 9-10%,
which has brought some relief for the
beleaguered power plants who were
earlier depending on imported coal
or whatever little coal that was made
available by CIL. CIL has done well in
the last one and a half years. 23
CIL may be able to achieve its target
of 1000 MMT by 2020 but the target of
looks rather doubtful. With increase of
availability of coal, shortage of power
would be virtually over by next year. The
country has enough capacity based on
coal and renewables meeting the power
demand of the country. The problem
of shortage is only on account of the
poor financial health of the discoms.
The government has tried to address
this issue by promoting UDAY (Ujjwal
Discoms Assurance Yojana) whereby the
States will take over 75% of the discom
debt and also expecting them to reduce
the TDS losses from 25% to 15%.
If all these well intended schemes
are implemented, India should no
longer be a country with shortage of
power. All credit goes to the gov-
ernment, Ministry of Coal, Coal India
Ltd. NTPC, Power Grid Corporation
and renewable energy producers who
have achieved what looked like impos-
sibility sometimes ago.
The views in the article of the author are personal
For suggestions email at feedback@infraline.com
 September 2016
www.InfralinePlus.com

InDepth
Under utilisation of thermal power plants
cause of worry for power producers

24

Currently about one-third of Indias 211 GW of installed thermal power capacity lying idle
Stranded power capacities of 22-28 GW may have to wait for 2-3 years for securing PPA

By Team InfralinePlus

With the advent of the ambitious renew-
able energy programme in the country,
it seems thermal power producers have
a cause to worry. While the Central
Government has repeatedly promoted
the goal of tripling domestic coal
production by 2020 to fuel a dramatic
increase in coal power generation, the
goal looks increasingly fanciful.Signifi-
cantly, in a more drastic step to reduce
coal imports, the Indian government has
scrapped plans for the construction of
at least four large thermal power plants
categorised as ultra-mega thermal
power plants (UMPPs) with aggregate
generating capacity of 16 GW. The four
proposed plants to be located in the
provinces of Chhattisgarh, Karnataka,
Maharashtra and Odisha would together
have required 46-million tons a year of
coal, half of which would have been
sourced through imports.
Currently about one-third of Indias
211 GW of installed thermal power
capacity predominantly coal plants
but including some gas units as well
is lying idle. The reasons for Indias
vast amount of idle capacity are varied.
Some plants have long been shut
because of a lack of cooling water. 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. A Greenpeace India analysis
of a report released in March this year
 September 2016
www.InfralinePlus.com

estimates that the total freshwater con- power distribution companies, will have capacity unused. Distributors had
sumption of coal power plants in India definite impact on the buying capacity of unpaid loans of almost 4 trillion rupees
is 4.6 billion cubic meters per year. This the distribution utilities. But thats going as of last year and are in the process
is enough to meet the basic water needs to be more long term and sustainability of transferring 75 percent of that debt
of 251 million (25.1 crore) people. would depend on the overall turnaround to states as part of a federal effort to
Others plants have been shut of the distribution segment. make the companies profitable (UDAY
because of technical problems Indias regional electricity dis- scheme). In the last 13 years, gener-
requiring maintenance or idled because tributors (state-owned distribution ating capacity to the tune of 1,50,000
they are uneconomic. In other cases, companies) are curtailing purchases, MW has been successfully commis-
some plants have coal supply agree- forcing generators to leave at least sioned, effectively doubling the coun-
ments but not power purchase agree- a third of the countrys power plant trys installed capacity to 3,03,000 MW
ments while other plants have the (by July 2016). However, recent years
opposite problem. Other plants which Electricity DISCOMS are have seen tardy growth in electricity
have been built have neither fuel demand, especially industrial load, has
facing financial stress
supply agreements nor power purchase led to a sustained drop in the plant load
agreements. Compounding the thermal
due to accumulated factor (PLF) an indicator of capacity
power generators problems has been losses to the tune of utilisation of the countrys power
sluggish power demand and debt-laden INR 3.8 Lakh Crores plants. In the last one year the average
distribution utilities (discoms) pre- (as on March, 2015) PLF of thermal capacity has plum-
ferring to buy limited power because of and increasing @ 12% meted by about 8 percentage points,
their dire financial circumstances. p.a. as reported by the with the PLF of generating stations in
Electricity distribution companies the central and private sector estimated
(DISCOMs) are facing financial stress
ministry. Such financial at just a tad above 60 per cent.
due to accumulated losses to the tune stress does not allow Leading state electricity boards 25
of INR 3.8 Lakh Crores (as on March, DISCOMs to make (SEBs) of Maharashtra, Gujarat and
2015) and increasing @ 12% p.a. as fresh purchases and even Tamil Nadu have become power
reported by the ministry. Such financial prevents them from surplus and may not require additional
stress does not allow DISCOMs to floating tenders for Long contracts for the next couple of years.
make fresh purchases and prevents them Term Power Purchase Other utilities who need power are
from floating tenders for Long Term taking full advantage of the prevailing
Power Purchase Agreements (LTPPA).
Agreements (LTPPA). low spot power prices in exchanges
Over the past four years, PPAs of only Over the past four years, (less than INR 2.5/unit), rather than
12 GW have been signed under the PPAs of only 12 GW entering into long-term contracts.
competitive bidding route (Case 1 bids). have been signed under The plant load factor (PLF) of the
The Ujwal Discom Assurance Yojana the competitive bidding existing coal-based capacity for private
(UDAY), launched by the government route (Case 1 bids) independent power producers with
for financial turnaround and revival of a contract was less than 60% in FY
2015-16. While Coal India Ltds stellar
More concern for thermal power producers:
Railways hikes cost of freight for coal consumers performance over the past two years
has taken away fuel-related worries to
Indian Railways recently hiked the cost of freight for several consumers of coal, some extent, legacy issues such as new
the commodity that accounts for 45% of its receipts from transportation of coal block auctions at aggressive prices
goods: it raised the freight rates by 7-14% for distances between 200-700 km
still haunt some generators.
and imposed a INR 55/tonne extra charge on both loading and unloading. At the
same time, it reduced the freight for long-lead traffic by 4-13%.
The tariff increase will increase the fuel costs of power stations and cement Curious Case of Stranded
units closer to pitheads, while units far away from coal mines could see their Capacity
fuel/input costs decline. Electricity from plants less than 700 km from pitheads There is a huge amount of generation
could become costlier by 8-10 paise/unit, according to industry estimates. Coal capacity lying undispatched due to un-
freight rate increase comes after the recent increase in clean energy cess and availability of coal which is due to the
coal price which may further increase end user power cost. Inability to pass on policy that only plants with long term
such tariff may further deteriorate financial condition of distribution companies contracts will get coal linkage, thereby
and power generators.
rendering installed transmission
 September 2016
www.InfralinePlus.com

InDepth

capacity under-utilised. On the other Table 1: Stranded Capacity (without PPAs)

hand, state distribution companies (comprising coal and gas-based capacity as well as
are not pursuing long term contracts hydro power capacity
resulting in a Catch-22 situation for the
generation and transmission capacity Stranded Capacity (without PPAs)
addition and a utilization mismatch. Already Commis- Under Construction Total
sioned (in MW) (in MW) (in MW)
Recently coal availability for medium
Coal bearing states 10873 3270 14143
term has been suggested which will go
some way but the transmission capacity Chhattisgarh 4636 990 5626
already laid for projects which do not Madhya Pradesh 1824 1200 3024
have a long term / medium term PPA Odisha 1315 1315
are stuck because they are unable to Maharashtra 3098 1080 4178
run economically since imported and Hydro 1270 855 2125
e-auction coal prices make them non- Himachal Pradesh 1174 244 1418
competitive thereby, causing a national Sikkim 96 535 631
waste of state transmission infrastruc- Uttarakhand 76 76
ture. This is resulting in a dead end Demand centers 4137 2368 6505
situation for them. Interestingly the Andhra Pradesh 1150 2020 3170
coal stocks at the pit head have swelled Gujarat 945 945
with few off takers. Maybe it is time Tamil Nadu 942 150 1092
to allow coal linkages for all power Karnataka 980 980
plants and not hold the sector through Rajasthan 120 120
an unnecessary and counter-productive Uttar Pradesh 198 198
26 situation creating a huge and growing Gas 5000 5000
liability for the banks. Total 21280 6493 27773
Demand would come back within
Source: Motilal Oswal Securities Limited (MOSL) update on power sector (July 2016)
the next few quarters with successful
monsoon and overall recovery in the high variable costs because of high
economy. Untied capacity would get India will continue to transportation costs, low operating
tied up in the next two years and the depend on coal-based efficiencies, coal pilferage and cor-
power plants will be running at better thermal generation ruption. Variable cost ranges as high
utilisation. India will continue to as INR 3-4/unit. These plants do not
for the next few
depend on coal-based thermal gen- get scheduled in merit order dis-
eration for the next few decades, but
decades, but it will patches. On the other hand, new effi-
it will become increasingly difficult become increasingly cient merchant power plants are able
to attract fresh investments from the difficult to attract fresh to supply power at total cost as low as
private sector in the next few years. investments from the INR 2.2/unit. There is nearly 14GW of
Investments could be further hampered private sector in the next stranded capacity without PPAs near
by the Central Electricity Authority few years. Investments coal mines in the states of Madhya
(CEA) projecting that India could could be further Pradesh, Chhattisgarh, Odisha and
become power surplus for the first time Maharashtra. These capacities have
hampered by the Central
in the financial year 2017. lowvariable cost and they sell to
Stranded power capacities of 22-28
Electricity Authority states like Delhi and Rajasthan (where
GW may have to wait for 2-3 years for (CEA) projecting that variable cost is high due to transpor-
securing Power Purchase Agreement India could become tation of coal) or to states in the south
(PPAs). The Ministry of Power (MoP) power surplus for the that have to either pay high transpor-
has come up with a good idea to capi- first time in the financial tation cost or import coal. Similarly,
talize on this it has started promoting year 2017 2.2 GW of hydro capacity can supply
the short-term power market. Coal to states in north India.
is being made available in a separate to come to the electronic platform for The growth of coal-based installed
e-auction window for the power sector. meeting their short-term requirements. capacity is on a decline. Touching a
At the same time, states have been asked Many generating companies have three year-low, last year the installed
 September 2016
www.InfralinePlus.com

So, ensuring fuel supplies for such

No generation from 6 plants in 2015-16!
projects will help the Independent
Power Producers (IPPs) to avail CDM
Overall, 26 power plants have shut down since June 2015 across the country
(clean development mechanism) ben-
totalling 5,574 MW in several states with Maharashtra topping the list of states
efits / credits and will go a long way
with maximum power plants that have not generated electricity over the last one
in meeting Indias obligations under
year.The details of these closed plants were revealed by Minister of State for
Power, Coal, New & Renewable Energy and Mines Piyush Goyal in reply to a the climate change commitments and
question in the Lok Sabha last month. reduce green-house emissions substan-
Of these 26, Maharashtra accounted for a lions share of six power plants, which tially. Also, dedicated plants operating
together had an installed capacity of 3,026 MW. Andhra Pradesh comes second in open cycle in proximity to load
with two plants with a capacity of 614 MW not producing any power for the last centers can meet peak demand.
one year. A couple of power producers had to close because of lack of fuel supply
both coal and gas. The biggest among them all, Parli TPP (MAHAGENCO) with Conclusion
a capacity of 1,380 MW had to shut down because of a lack of water.. At the 21st Conference of the Parties
to the UN Framework Convention on
capacity grew by 10.77 per cent against nitrogen oxides for thermal plants, adding Climate Change (UNFCCC), COP 21
12.48 per cent in 2012. The more wor- to the cost of setting up thermal capacity. in Paris, a resolution on limiting the
rying aspect is that the 2016 pipeline A clean energy cess on coal, amounting use of coal across countries was one
for thermal power looks bleak. The to INR 400/tonne, was announced in the of the proposals put up for consid-
thermal power cycle takes four years. last Union budget, further adding to the eration. In the Indian context, this is
Even if 10,000 MW comes up by cost of coal-based power of particular relevance as coal-fired
2018-19, there will still be a mismatch power stations form the backbone of
with demand when the economy grows Gas-based power plants the Indian power generation sector
as is being envisaged. not faring any better and will continue to remain so in the 27
Against a target of installing an The uncertain future of Indian domestic foreseeable future, the Centres con-
additional capacity of 88,537 MW gas production has cascading effects on certed efforts to ramp up renewables
from conventional sources during the the overall role of gas in the countrys such as solar notwithstanding.
XII Plan (2012-17), the country has energy sector. The impacts have already Coal-powered thermal power plant-
achieved 86,565.72 MW which is been felt in the power sector where the saccount for 70% of total electricity
97.77 per cent, up to July 2016. Private PLF of gas-fired plants during the year generated in the country and represents
sector alone has added 50,817.50 MW. averaged only 18.64% in May last year 61% of the installed power capacity.Till
The share of hydro in the total installed and more recently at 23.73% (May the thermal generating capacity utili-
capacity has been on a downward 2016) due to unavailability of gas.With sation improves to 80-85%, PLF levels
trajectory for long and government natural gas accounting for just about 9% (to the existing 60% PLF level) and the
may be looking to compensate this of its overall energy mix, India is trying existing untied capacities are contracted,
loss in the XII plan targets by adding hard to increase domestic production. its unlikely that there will be any
more coal based capacity (currently Indias Liquefied Natural Gas (LNG) private sector interest in the coal-based
envisaged at 72,340 MW). sector is undergoing a major transforma- thermal generation sector. Coal has
At a time when several Independent tion as it is set to occupy a crucial part always been the mainstay of the Indian
Power Producers (IPPs) are locked into in the countrys energy portfolio after power sector and it is a view shared by
power purchase agreements (PPAs) that the central government approved the use most policymakers that it must remain
have become unviable because they do of imported gas for power generation the primary source of electricity gen-
not allow the high costs of imported and fertilizer production.LNG demand eration for at least the next three to four
fuel to be passed through. Indian power is forecast to witness robust growth over decades. This view is based on the belief
generators capacity utilisation will likely the next 5-10 years in India and project that a centralised electricity system
be limited by the financial weakness developers will have an abundant supply based on an ever-expanding coal power
of off takers, in turn constraining off- to run their plants not just at 25-30% generation base will ensure energy
take electricity demand.Due to Indias Plant Load Factor (PLF) but at the security, provide affordable energy for
commitment to reduce carbon dioxide required optimal levels of 80-85%. all and, importantly, address the issue of
emission intensity by 33-35% by 2030, Gas-based power projects are energy scarcity in India.
the government has also come out with second only to renewables and hydro
stringent norms on sulphur oxides and power in generating clean energy. For suggestions email at feedback@infraline.com
 September 2016
www.InfralinePlus.com

InDepth
Coal freight rate hike a
mixed bag

28

To lead to better utilization of empty stabled rakes

Likely to reduce import of coal for power stations near ports

By Team InfralinePlus

The coal sector has been subjected to
a plethora of new levies which has left
the power companies a worried lot.
The most recent instance has been the
revision in freight rates for coal by the
railway ministry, which has increased
transportation cost for plants located
200-700 km away from the mines, at
the same time reducing it for those situ-
ated further away. According to Rail-
way Board member (traffic) Moham-
mad Jamshed, the freight rates were
raised by 8-14% for transporting coal
between 200 km and 700 km and were
lowered by 4-13% for distances above
700 km. Freight rates for distances up
to 200 km were kept unchanged.
Impact on railways
Jamshed said the rate revision is
expected to be revenue-neutral for
railways because the hike for some
distances is being complemented by the
tariff reduction on long routes. We are
trying to encourage long-distance coal
freight through this move, and it will
benefit several industries and thermal
power plants, said Jamshed adding a
coal terminal surcharge at the rate of
Rs.55 per tonne at both the loading and
unloading terminals for traffic of coal
for the distance beyond 100 km will
also be levied.
 September 2016
www.InfralinePlus.com

New railways lines being constructed for additional Impact on power sector
capacities in coalfields Tariff rationalization would result in
reducing import of coal for power
In order to evacuate/transport coal from pithead three critical railway lines have stations near ports by making coal
been identified in the three potential coalfields transportation from mines cheaper
Tori-Shivpur-Kathautia Railway Line (90.7 kms) in North Karanpura in over long distances. Tariff rationaliza-
Jharkhand
tion in the freight rates for coal would
Jharsuguda-Barpalli-Sardega Railway Line (53 kms) in Ib Valley, Odisha
facilitate more generation schedules for
Bhupdevpur-KorichaparDharamjaigarh (180 kms) in MandRaigarh Coalfield,
long lead power plants by making long
Chhattisgarh
distance power plants competitive in
This would lead to better utilization liberalized Station to Station Rates, the Merit Order.
of empty stabled rakes as this would Long Term Tariff Agreements at pre- The decision has evoked mixed
result in encouraging long lead traffic determined price escalation principles response from the industry with many
and thus reduce terminal handling and further liberalized Empty flow expecting an increase in power tariff.
frequently. The aim is to increase direction policies would be introduced According to Lalit Jain, Group Chief
the coal loading volume so we have in near future. Commercial Officer & CEO (Solar
reduced the rate for the long distance Coal is the single-largest commodity International & Wind), Hindustan
transportation, Jamshed said, adding, in Indian Railways freight basket and Power Projects (HPP), Railways has
Coal rakes are lying idle so there is a any tinkering with freight tariffs creates increased the rail freight by 25-35%
need for rate rationalisation. ripple effect on electricity prices and including Additional Coal Terminal
More rationalization of freight rates the cost of other industrial goods Charge of Rs. 55/ MT has been
by bringing innovative schemes like including steel and cement. levied on both loading and unloading
terminal. With so much increase in
Tariff rationalization would result in reducing the railway freight, energy tariff from 29
coal-based power plants shall increase
import of coal for power stations near ports by by 8-10 paise/ kWh. This is yet another
making coal transportation from mines cheaper increase for coal based power plants
over long distances. Tariff rationalization in after recent increase in Clean Energy
the freight rates for coal would facilitate more Cess and Coal Price which shall further
increase end user power cost. Inability
generation schedules for long lead power
to pass such tariff shall further deteri-
plants by making long distance power plants orate financial condition of distribution
competitive in the Merit Order companies and power generators.
According to Sushil Maroo,
executive vice-chairman at Essar
Power Ltd, About 60% of the power
plants in India need to transport coal
for 200-700km, where there is an
increase in the freight rate. For them,
there is a likely cost increase of 6-7
paise per unit of power. For the others,
the impact is negligible, said.
However, according to union power
and coal minister, Piyush Goyal,
rationalisation of the coal freight tariff
will have minimal impact on power
tariff and the move would gradually
lead to domestic fuel replacing
imported coal. Supporting the move,
the minister said railways have reduced
the freight for long distances so that
the domestic coal becomes more viable
 September 2016
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InDepth

Coal sector reels under increasing levies translate into increase in input cost for
the manufacturers, he added. Besides,
In February 2016, the Government proposed to raise the cess on coal, the coal freight hike will impact the
lignite and peat from Rs 200 a tonne to Rs 400 per tonne. cost of power as its generation is coal
The purpose of clean energy/environment cess was for financing and dependent, he said.
promoting clean energy initiatives, funding research in the area of clean With power being another major
energy, or for any other purpose relating thereto. cost centre for cement production,
According to official data, the estimated amount of clean environment cess the effect on the sector would be
to be collected by Coal India and deposited with the government of India cascading. It is expected that cement
for the year 20116-17 based on the budgeted estimated production of CIL industry will suffer a combined impact
is Rs 23,944.4 crore of over Rs 2,000 crore. In the current
The government had increased the Clean Energy Cess from Rs 100 to 200 situation, cement players would find
per tonne of coal to finance clean environment initiatives for 2015-16. it difficult to absorb this increase and
therefore, I will not be surprised if the
in front of imported coal. This year a period of time the shift does take cement prices go up, Chouksey said.
we are hoping that we reduce the coal place, the firm said. With increase in freight rates for
imports by Rs 40,000 crore. That is our Cement Manufacturers Association railways, the cost of road transportation
mission which is why railway freight President, Shailendra Chouksey said may reduce. Railway, no doubt, needs
rationalisation is a very positive step, the move will have an inflationary more investment but the government
the minister said. impact on the sector. Coal, which must ensure that burden of the same
is the main raw material for cement should be shared by everyone and not
Impact on other sectors will on an average suffer a 20 per just the power sector.
According to experts, hike in coal cent increase in freight that would For suggestions email at feedback@infraline.com

30 freight charges by Railways will

adversely impact the domestic cement
industry with a hit of over Rs 2,000
crore and is likely to force companies
to pass on the burden to consumers.
According to Edelweiss Securities,
in near term, increase in freight rates is
negative for cement and power utilities
(merchant players). Commenting
on the rate hike, it said railway data
suggests that average lead distance of
coal shipments is declining and stands
at around 486 km versus 545 km in
2014-15 fiscal. Hence, one can infer
that such moves may bolster revenue
for Indian Railways in the short term,
however, we are unsure if this tariff
structure will arrest the long-term
declining market share trend of rail in
shipments, it added.
On doubts over the move helping
railways to check the declining market
share in the long term, it said that
overall leads in freight movements
both in bulk/ container have been
structurally declining. Probably, in
the short run none of the bulk cargo
shipments may move from rail to road.
But, as seen in the cement sector, over
 September 2016
www.InfralinePlus.com

StatisticsCoal
Trends in Industry wise Consumption of Raw Coal in India(FY06 - FY15) (Million tonnes)
Fertilizers
Elec- Steel & Sponge
Year Cement Paper Textile &chemi- Brick Others * Total
tricity Washery Iron
cals
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 to2014-
15(%)
31
(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.

Trends in Industry wise Consumption of Lignite in India(FY06 - FY15) (Million tonnes)

Steel &
Year Electricity Cement Paper Textile Others * Total
Washery
1 2 3 4 5 6 7 8 = 2 to 7
2005-06 23.36 - 0.79 0.23 1.11 4.86 30.34
2006-07 23.92 - 0.77 0.22 0.84 5.06 30.8
2007-08 26.76 - 0.96 0.35 0.77 5.83 34.66
2008-09 25.71 - 0.34 0.36 - 6.01 32.42
2009-10 28.14 - 0.38 0.82 - 4.09 33.43
2010-11 29.9 - 0.36 0.84 1.18 6.25 38.53
2011-12 32.06 0.03 1.01 0.63 3.67 4.48 41.88
2012-13 37.2 0.05 1.1 0.69 0.3 3.81 43.15
2013-14 36.34 0.03 1.49 1.29 0.73 4.02 43.9
2014-15(p) 39.47 0.02 1.27 0.69 2.89 2.6 46.94
Distribution (%) 84.09 0.05 2.7 1.47 6.15 5.54 100
Growth rate of 8.63 -23.33 -14.78 -46.51 293.86 -35.33 6.93
2014-15 over
2013-14(%)

(P): Provisional
* Includes Sponge Iron, colliery consumption., jute, bricks, coal for soft coke, chemicals, fertilisers & other industries consumption.
From 2008-09 onwards cotton is also included in others.
Note: Industry wise breakup of consumption for the period 1970-71 to 1999-2000 are not readily available, hence estimated by production data as it is observed, approximately for lignite,
production= despatch= consumption.
 September 2016
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StatisticsCoal

Trends in Production of Coal andLignite in India during 2005-15 (Million tonnes)

Coal
Year Lignite Grand Total
Coking Non-coking Total

1 2 3 4=(2)+(3) 5 6=(4)+(5)

2005-06 31.51 375.53 407.04 30.23 437.27

2006-07 32.1 398.74 430.83 31.29 462.12

2007-08 34.46 422.63 457.08 33.98 491.06

2008-09 33.81 457.95 491.76 32.42 524.18

2009-10 44.41 487.63 532.04 34.07 566.11

2010-11 49.55 483.15 532.69 37.73 570.43

2011-12 51.65 488.29 539.94 42.33 582.27

2012-13 51.83 505.87 557.71 46.6 604.31

2013-14 56.82 508.95 565.77 44.27 610

2014-15(p) 57.45 554.98 612.44 48.25 660.69

Growth rate of 2014- 1.11 9.04 8.25 8.99 8.31

15 owner 2013-14(%)

32 CAGR 2005-06 to 6.19 3.98 4.17 4.79 4.21

2014-15(%)
(P): Provisional

CoverStory
Make in India: Limited impact
on energy sector so far
High on ease of doing business, but private investments still trickling in
Power, coal and renewable have high potential for domestic manufacturing
By Infraline Bureau
The Make in India programme is
yet to make an impact on the ground
despite a series of measures taken by
the Modi government to improve the
ease of doing business. Two years after
the campaign was launched by Prime
Minister Narendra Modi in Septem-
ber 2014, private investment is still
trickling in. The government is banking
on public spending to drive the growth.
However, this strategy has its own limi-
tations and cannot substitute for private
investment. In the absence of strong
investment flows, GDP growth is being
led by consumption.
The government has envisaged
raising share of the manufacturing
in the GDP to 25 per cent by 2022
from the current level of 16 per cent.
The sector continues to remain in the
doldrums after posting anaemic growth
of 2.4 per cent in 2015-16. Measures
taken by the government have failed
to rekindle the animal spirit in the
economy. The Business Confidence
Index of National Council of Applied
September 2016
www.InfralinePlus.com
33
Economic Research (NCAER), which
had reached 148.4 in January 2015,
slipped back to 121.6 in April 2016.
The key factor holding the acceler-
ation of industrial growth is investment
recovery, India Ratings and Research
said in a recent update on the economy.
It stated that corporates, particularly
those engaged in infrastructure, power,
iron and steel and textile sectors, are
either repairing their balance sheets
or saddled with stagnation or even
decline in capacity utilisation. It
 September 2016
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CoverStory

Make in India Week National capital goods

policy unveiled
The Make in India week held in Mumbai during February elicited investment The government has for the first time
proposals worth Rs 15.20 lakh crore. unveiled the National Capital Goods
Jharkhand government and Adani group signed pact to set a up 1,600 MW
Policy to boost manufacturing. The
thermal plant for supplying electricity to Bangladesh. The two sides also
policy aims to increase production of
entered into an agreement to a coal-based methane fertiliser plant.
capital goods from Rs 2.30 lakh crore
Yes Bank and IREDA joined hands to finance green power projects.
Tar Kovacs and Karnataka government signed agreements to set up ocean in 2014-15 to Rs 7.50 lakh crore in
based renewable energy project. 2025 and create direct and indirect
Gujarat state and Denmarks Vestas came together to set up windmill blade employment of nearly 2.2 crore. The
manufacturing in Ahmedabad. policy envisages increasing exports
from the current 27 to 40 per cent of
expects investments to grow 5 per cent production while increasing share
in FY17, mainly driven by the gov- The process of applying of domestic production in Indias
ernment capital expenditure, the rating for industrial license and demand from 60 to 80 per cent,
agency added. industrial entrepreneur thus making India a net exporter of
The good monsoon is expected to memorandum has been capital goods. The policy also aims to
boost rural demand which has been made online. Initial validity facilitate improvement in technology
sluggish due to two consecutive years depth across sub-sectors, increase
period of industrial license
of drought. The urban demand is likely skill availability, ensure mandatory
to get a lift from the implementation of
has been increased to standards and promote growth and
the Seventh Central Pay Commission three years from two capacity building of micro, small and
which will benefit nearly 1 crore years, also, two exten- medium enterprises.
34 employees and pensioners. However, sions of two years each in
all this might not be enough to drive the initial validity of three Ease of doing business:
up GDP growth rate, say analysts. But years of the industrial li- moves on taxation,
things might start changing soon with cense will now be allowed regulations and clearances
the prospect of early implementation up to seven years, which The government will bring down cor-
of landmark indirect tax reform getting would give enough time to porate tax rate for companies registered
brighter after the passage of the GST licensees to procure land in India from 30 to 25 per cent of net
Bill. Besides, the government has and obtain the necessary profits in a phased manner over the next
unveiled capital goods policy which four years starting from FY 16-17. An
clearances and approvals
should bring momentum to the Make in expert committee has also been set up
India campaign.
from authorities to examine the possibility and prepare a
draft legislation where the need for mul-
tiple prior permission can be replaced by
a pre-existing regulatory mechanism.
The process of applying for indus-
trial license and industrial entrepreneur
memorandum has been made online.
Initial validity period of industrial
license has been increased to three
years from two years, also, two exten-
sions of two years each in the initial
validity of three years of the industrial
license will now be allowed up to
seven years, which would give enough
time to licensees to procure land and
obtain the necessary clearances and
approvals from authorities.
Through eBiz portal, a business user
can fill the eForms online and offline,

upload the attachments, make payment
online and submit the forms for pro-
cessing of the department. A dedicated
Shram Suvidha portal set up, which
would allot Labour Identification
Number (LIN) to nearly 6 lakhs units
and allow them to file online com-
pliance for 16 out of 44 labour laws.
Goods and Services Tax
(GST)
The government is gearing up to
implement the GST from next fiscal
after securing parliamentary for the
draft legislation. According to analysts,
implementation of the new indirect
tax regime will go a long way towards
boosting domestic manufacturing
which is hobbled by flawed tax system.
The current tax structure fragments
Indian markets along state lines and
undermines domestic manufacturing.
The GST would rectify flaws not by
increasing protection but by eliminat-
ing the negative protection favouring
imports and disfavouring domestic
manufacturing, say experts.
The 2 per cent central sales tax
on inter-state sales of goods leads to
inefficiencies in supply chain of goods.
Goods produced locally within the
jurisdiction of consumption attract
lower tax than those produced outside,
which encourages geographic frag-
mentation of production. It is insuf-
ficiently appreciated that Indias border
tax arrangements undermine Indian
manufacturing and the Make in India
initiative. Eliminating exemptions in
the countervailing duties (CVD) and
special additional duties (SAD) levied
on imports will address this problem.
It is a well-accepted proposition in
tax theory that achieving neutrality of
incentives between domestic pro-
duction and imports requires that all
domestic indirect taxes also be levied
on imports. So, if a country levies a
sales tax, VAT, or excise or GST on
domestic sales or production, it should
also be levied on imports. In India,
this is achieved through the CVD/SAD
The government is gear-
ing up to implement the
GST from next fiscal
after securing parlia-
mentary for the draft
legislation. According to
analysts, implementa-
tion of the new indirect
tax regime will go a long
way towards boosting
domestic manufactur-
ing which is hobbled by
flawed tax system. The
current tax structure
face the excise duty, but since it has
fragments Indian mar-
kets along state lines
and undermines domes-
tic manufacturing
which is levied on imports to offset
the impact of the excise duty levied on
domestically manufactured goods.
However, CVD/SAD exemp-
tions act perversely to favour foreign
production over domestically produced
goods; that is, they provide negative
protection for Indian manufacturing.
When there are no CVD/SAD and
excise exemptions (Scenario 1), neu-
trality of incentives between domestic
September 2016
www.InfralinePlus.com
goods and imports is achieved which
is desirable. In scenario 2, there is no
excise exemption but there is a CVD/
SAD exemption which results in a
large penalty on domestic producers.
But the important and subtle point
relates to scenario 3 when the excise
35
and CVD/SAD are both exempted.
This may seem apparently neutral
between domestic production and
imports but it is not. The imported
good enters the market without the
CVD/SAD imposed on it; and, because
it is zero-rated in the source country, is
not burdened by any embedded input
taxes on it, analysts point out. The
corresponding domestic good does not
been exempted, the input tax credit
cannot be claimed. The domestic good
is thus less competitive compared to
the foreign goods because it bears input
taxes which the foreign good does
not. In the example, the penalty on
domestic producers is over 6 per cent.
In effect, a policy designed to promote
domestic manufacturing through excise
exemption creates a perverse incentive
for the exempt industry and its eventual
decline, say taxation experts.
The CVD/SAD, which is levied
to offset the excise duty imposed on
domestic producers, is not applied on a
whole range of imports. These exemp-
 September 2016
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CoverStory
tions can be quantified. The effective
rate of excise on domestically-produced
non-oil goods is about 9 per cent.
The effective collection rate of CVDs
should theoretically be the same but
is in actual fact only about 6 per cent.
The difference not only represents
the fiscal cost to the government of
Rs 40,000 crore, it also represents the
negative protection in favour of foreign
produced goods over domestically
produced goods. In a sense, India finds
itself in a de facto state of negative
protection on the one hand, and calls for
higher tariffs on the other. It is win-win
to resist these calls that would burnish
Indias openness credentials and instead
eliminate the unnecessary and costly
penalty on domestic producers.
Energy sector
The government has tweaked policies
to promote domestic manufacturing
36 for meeting equipment requirements of
the energy sector. However, industry
experts say that local manufacturing
has failed to keep pace with demand,
impacting capacity addition in nuclear,
renewable energy and transmission and
distribution industries.
Kameswara Rao, leader, power and
mining, PwC, says that the govern-
ments attention has been on success-
fully addressing some of the policy
issues in these sectors, but concurrent
actions in localising manufacturing
have not kept pace. This has been a
particular drawback in certain sectors
like renewable energy and nuclear,
which are capital intensive, and over-
reliance on imported equipment places
significant additional costs in terms
financing cost, exchange rate variation
and risk premiums, Rao said.
Power sector is expected
to benefit most from
the Make in India as it
would entail a significant
increase in electricity
consumption. Demand
for electricity will in-
crease manifold due to
programmes like Make in
India and Rural Electrifi-
cation, says Union power
minister, Piyush Goyal.
Thanks to intervention
by the NDA government,
coal production has seen
a significant increase in
recent years, which has
helped in reducing depen-
dence on imported coal
India, as a large energy user,
with ongoing investments to change
energy mix and provide inversely
access, should have a broad based local
manufacturing capability to support it,
which is currently lacking in both, gen-
eration and in higher end T&D power
equipment, he added.
Power and coal have high
potential
Power sector is expected to benefit
most from the Make in India as it
would entail a significant increase in
electricity consumption. Demand for
electricity will increase manifold due
to programmes like Make in India and
Rural Electrification, says Union power
minister, Piyush Goyal. Thanks to
intervention by the NDA government,
coal production has seen a significant
increase in recent years, which has
helped in reducing dependence on
imported coal. India is also looking
at deepening energy partnership with
Japan in clean coal technology with
eye on Make in India campaign.
Back home, the government has
targeted to ensure 24X7 power supply
from 2018-19 and unveiled mega
investment plans to boost transmission
and distribution. The government has
also targeted to increase coal production
to 1.5 billion tonnes by 2019-20.
However, the power sector con-
tinues to reel under sluggish demand
and as a consequence, generating
stations are operating at sub-optimal
plant load factor (PLF). For example,
the overall PLF of thermal plants
in the country during June stood at
the low level of 60.67 per cent. A
big chunk of coal-based generating
capacity is facing viability issue due
to absence of long-term electricity
buyers, inadequate fuel supply and
under-recovery on account of tariff
due to aggressive bidding. While
record capacity has been added during
the 12th Plan period, the government
is in no hurry to line up more projects
for implementation. An official

moratorium on capacity addition looks
likely. That means ultra mega power
projects too will also have to wait for
take-off.
Oil and gas sector
The petroleum ministry has envisaged
enhancing Indias crude oil refining ca-
pacity through 2040 by setting up a high-
level panel, which will work towards
aligning Indias energy portfolio with
changing trends and transition towards
cleaner sources of energy generation.
The Hydrocarbon Sector Skill Council
(HSSC), set up by the government
under Skill India initiative, plans to train
over 1.9 million people in the oil and gas
sector over the next 10 years, to cater to
the rising skill needs of the industry.
The Union Cabinet has allowed
state-owned oil firms to evolve their own
crude oil import policies which involve
freedom to choose source companies as
well as pricing for their crude oil imports,
thus allowing them to compete in the
market effectively. In a major drive to
enhance the petroleum and hydrocarbon
sector, the government has intro-
duced initiatives like the Hydrocarbon
Exploration Licensing Policy (HELP),
marketing and pricing freedom for new
gas production, grant of extension to
the Production Sharing Contracts and
assigning the Ratna offshore field award
to ONGC for development.
The petroleum ministry has released
the Hydrocarbon Vision 2030 for
North East India, with the objective
of leveraging the north-eastern
regions hydrocarbon potential to
enhance access to clean fuels, improve
availability of petroleum products,
facilitate economic development and
to involve local population in the
economic activities in this sector.
The government has also unveiled
a new policy to incentivise gas
production from deep-water, ultra
deep-water and high pressure-high
temperature areas which are presently
not exploited on account of higher
cost and risk, and also to augment the
September 2016
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The petroleum ministry investment in nuclear power generation
has envisaged enhancing in the next 15 to 20 years.
Indias crude oil refining The petroleum ministry has
announced a new Marginal Fields
capacity through 2040 by
Policy which aims to bring into
setting up a highlevel pan- production 69 marginal oil and gas
el, which will work towards fields with 89 million tonnes or Rs 37
aligning Indias energy 75,000 crore worth of reserves by
portfolio with changing offering various incentives to oil and
trends and transition gas explorers such as exemption from
towards cleaner sources payment of oil cess and customs duty
of energy generation. The on machinery and equipment. The
government has entered into bilateral
Hydrocarbon Sector Skill
discussion with Norway to extend
Council (HSSC), set up co-operation between the two countries
by the government under in the field of oil and natural gas and
Skill India initiative, plans hydrocarbon exploration.
to train over 1.9 million To strengthen the country`s energy
people in the oil and gas security, oil diplomacy initiatives have
sector over the next 10 been intensified through meaningful
years, to cater to the rising engagements with hydrocarbon-
rich countries. The government has
skill needs of the industry
approved a mechanism for procurement
Domestic manufacturing of LNG ships makes little progress
As part of the Make in India initiative, the Government had planned to
construct three liquefied natural gas (LNG) carriers at Indian shipyards to
allow GAIL to ferry gas from the US to India for 20 years, starting 2017.
However, the plans fell flat as there were no takers for the tender issued by
GAIL, since local yards inexperienced in building such ships failed to get
expert LNG shipbuilders to share technology for the same.
Eventually, GAIL has to postpone the bidding deadline several times.
Only Cochin Shipyard, which has acquired full certification from GTT to built
LNG carriers, is now the only company looking to compete for the tender in
partnership with Samsung Heavy Industries.
 September 2016
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CoverStory
of ethanol by public sector oil mar-
keting companies to implement ethanol
blending programme.
Renewable energy
The RE-INVEST 2015 hosted by the
Ministry and New and Renewable
Energy attracted commitments
from investors to set up green
energy projects worth 2.66 lakh
MW. Encouraged by the positive
responsive, the MNRE is hosting
similar RE-INVEST 2017 in
Ahmedabad. During RE-INVEST
2015, 14 banks and financial
institutions, 8 PSUs and private
manufacturers, 15 private sector
companies gave their Green Energy
Commitments. 2800 delegates from
42 countries participated in the three
day RE-INVEST 2015 . 202 speakers
addressed various sessions, out of
which the 40 international speakers
38 were from 29 countries.
MNRE Secretary Upendra Tripathy
Secretary said 14 companies from
seven countries have their Green
Energy Commitments for 58 GW.
Similarly, 22 PSUs for 18 GW, 257
private companies for 190 GW and
the Railways for 5,000MW have
submitted their commitments for
renewable energy. In addition, 27
banks have also submitted their
High potential in Renewable Energy
India is the fourth largest importer of oil and the 15th largest importer of
petroleum products and LNG globally. The increased use of indigenous
renewable resources is expected to reduce Indias dependence on
expensive imported fossil fuels.
The government is playing an active role in promoting the adoption of
renewable energy resources by offering various incentives, such as
generation-based incentives (GBIs), capital and interest subsidies, viability
gap funding, concessional finance, fiscal incentives etc.
The National Solar Mission aims to promote the development and use of
solar energy for power generation and other uses, with the ultimate objective
of making solar energy compete with fossil-based energy options.
The objective of the National Solar Mission is to reduce the cost of solar
power generation in the country through long-term policy, large scale
deployment goals, aggressive R&D and the domestic production of critical
raw materials, components and products.
Renewable energy is becoming increasingly cost-competitive compared to
fossil fuel-based generation.
commitments for financing 72 GW depreciation. The government has
renewable energy projects. also amended the Electricity Act and
India is already an exporter of Tariff Policy for strong enforcement
wind power equipment. The focus on of Renewable Purchase Obligation
Make in India has led to increase in (RPO) and for providing Renewable
domestic manufacturing capacity for Generation Obligation (RGO).
solar equipment. However, domestic It has also envisaged setting up of
manufacturers are unable to compete exclusive solar parks; development of
with imports. power transmission network through
The government has taken Green Energy Corridor project;
several initiatives to increase usage identification of large government
of renewable energy, including complexes/ buildings for rooftop
enactment of an offshore wind energy projects; provision of roof top solar
policy and support of generation- and 10 percent renewable energy as
based incentives and accelerated mandatory under Mission Statement
and Guidelines for development of
smart cities. The government has
also amended building bye-laws
for mandatory provision of roof top
solar for new construction; provided
infrastructure status to solar projects;
granted permission for raising tax-
free solar bonds and extended long
tenor loans.
Initiatives like Make in India are
definitely a progressive move to boost
domestic economy and all related
sectors. However, it is still early days
for the programme and its actual
results may only be visible after few
more years.
For suggestions email at feedback@infraline.com

NewsBriefs | Oil & Gas National
OMCs bullish on renewable energy segment
In a bid to reduce carbon footprint and
look at avenues beyond the conventional
sources of energy, oil marketing companies
(OMCs)Indian Oil Corp. Ltd (IOCL), Bharat
Petroleum Corp. Ltd (BPCL) and Hindustan
Petroleum Corp. Ltd (HPCL)are looking
LPG market gets ready for private oil firms
With the central government restricting lique-
fied petroleum gas (LPG) subsidy to consum-
ers earning less than Rs 10 lakh per annum,
a ready-made market is now available for
private oil companies. This, coupled with the
lure of higher margins, is pushing them to
aim for a larger pie of the cooking gas market
in India. Indias total LPG consumption rose
from 18 million tonnes (mt) in 2014-2015 to
19.6 mt in 2015-2016, according to Petro-
leum Planning and Analysis Cell (PPAC) data.
The three state-run oil marketing companies
(OMCs) have 274,000 connections in the
waiting list across the country, PPAC data
show. This shows that there is a huge market
to tap. Essar Oil and Reliance Industries are
Oil ministry seeks uniform taxes on LPG for domestic, commercial use
The oil ministry is seeking to rationalise
taxes on cooking gas sold to all types of
consumers in order to block diversion
of cylinders meant for domestic use. It
has written to the finance ministry to
impose uniform taxes on cooking gas, or
liquefied petroleum gas (LPG), used for
domestic and commercial consumption.
The finance ministry will take a final call
on the demand that was also made in the
past. Gas cylinders meant for domestic
use attract no taxes at present while
commercial users have to pay a basic
customs duty of 5 per cent, additional
customs duty of 8 per cent and a central
at expanding their renewable energy plans.
IOCL, the countrys largest oil marketing
company, plans to generate 260 megawatt
(MW) of renewable power in the next five
years. HPCL, on the other hand, has plans to
generate 1,000 MW in the same time period.
IndianOil has ambitious plans to broaden
its energy basket with alternative energy
options. The corporation envisages setting
up 260 MW of renewable energy (wind and
solar) over the next five years, IOCL said
in its annual report for 2015-16. IOCL has
installed wind power systems totaling 69.3
MW in Gujarat and Andhra Pradesh. A 5 MW
grid-connected solar power plant at Rawra,
Rajasthan, is also in operation since 2012.
two private refiners vying for the LPG market
in India. Mahesh Advani, head of direct sales
at Essar Oil, says they have a potential mar-
ket in the non- subsidised LPG customers and
commercial users.
excise duty of 8 per cent. In addition to
central taxes, commercial users have to
pay local levies imposed by states. All
these duties together make commercial
September 2016
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HPCL in $8 billion drive to boost oil
refining margins
Indias fastest-growing fuel seller will
spend $8 billion over the next five years to
help its 60-year-old refineries earn profit
margins closer to modern processors such
as billionaire Mukesh Ambanis Reliance
Industries Ltd. You can definitely expect
$2 to $3 addition to the refining margin,
Mukesh Kumar Surana, chairman and
managing director at Hindustan Petroleum
Corp., said. These projects will improve
distillate yields and improve our margins.
This will bring our margin much closer
to other complex refiners. Government-
owned HPCL, sold 34.2 million tons of oil 39
products in the year ended in March, an
increase of 7%, the fastest pace among the
countrys top three fuel retailers. Indian
Oil Corp. and Bharat Petroleum Corp.s vol-
umes increased 5.3% and 6%, respectively.
HPCL reported a gross refining margin
of $6.68 a barrel last financial year. In
comparison, Reliance, which operates the
worlds largest refining complex at Jam-
nagar in western India, reported a refining
margin of $10.80 in the same period.
LPG about a third more expensive than
domestic. In Delhi, non-subsidised cooking
gas costs about Rs 34 per kilogram while
the commercial LPG costs about Rs 45
per kg. About 90 per cent of the total
LPG consumed in the country is used
by households, although it is suspected
that some subsidised cylinders meant for
household use are diverted for commercial
purpose. Besides not having to pay taxes,
households also get subsidy on 12 cylinders
of gas they consume in a year. The subsidy
has sharply shrunk to Rs 64 per cylinder
due to a nearly two-thirds fall in crude oil
price in the past two years.
 September 2016
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NewsBriefs | Oil & Gas National
State-run oil firms to form JV for jet fuel
State-run oil marketing companies Indian
Oil Corporation (IOC), Bharat Petroleum
Corporation (BPCL) and Hindustan
Petroleum Corporation (HPCL) are set to
form a joint venture to manage fuelling
facilities at all airports controlled by the
Airports Authority of India (AAI) by the
ONGC hires consultant to assess reserves in GSPC KG gas block
State-owned ONGC has hired US-based
consultant Ryder Scott to assess natural
gas reserves in Gujarat State Petroleum
Corps (GSPC) Deendayal block before
40 deciding to buy a stake in it. Since the
BJP-led government came to power at the
Centre, the Gujarat government firm GSPC
has been seeking to sell a majority stake
in its KG-OSN-2001/3 (Deendayal) block in
Bay of Bengal to ONGC to avoid defaulting
on loans. ONGC initially was not keen to
buy stake in the block as it felt the block
had reserves far less than what GSPC was
claiming and the asking price for the stake
was not commensurate with the returns.
Ryder Scott Petroleum Consultants has
RIL focuses on domestic market for refined products
Mukesh Ambani-led Reliance Industries
(RIL) is looking to increase focus on the
domestic market for its refined products. On
July 15, in its results, RIL said its exports
of refined products from India were at Rs
28,610 crore during the April-June 2016
quarter, compared to Rs 32,352 crore in
the same period a year ago. In terms of
volume, exports of refined products were
at 9.8 million metric tonnes (MMT) during
the April-June 2016 quarter, compared
to 8.5 MMT in the corresponding period a
year ago. RIL expects growth in Indias
diesel and gasoline consumption for the
next 10-15 years, as the countrys economy
end of this year. AAI is also likely to be an
equity partner in the JV. The public sector
OMCs have, however, spurned private fuel
retailers. This comes at a time when Mukesh
Ambani-led Reliance Industries (RIL)
approached the petroleum ministry and the
AAI to be part of the JV. The venture will
cover majority of the fuelling facilities in
India, except Delhi, Mumbai, Hyderabad and
Bengaluru, where private parties are also
involved. IOC, which owns more than 60
per cent of the aviation turbine fuel market,
is likely to hold 37.5 per cent stake in the
venture, while AAI will get 25 per cent and
the remaining two oil companies will have
18.75 per cent each.
been asked to evaluate gas properties in
the GSPC block and independently certify
the reserves quantities.
and disposable income increase. For the
financial year 2015-2016, Indias industry
sales for petrol rose 15 per cent, to 21.84
million tonnes (MT), and sales for diesel
Indias crude production down 3 per
cent in first quarter current fiscal
The countrys total crude output de-
creased 2.9 per cent in the first quarter
current financial year (2016-17). Also,
natural gas output was down 3.8 per
cent. Crude production has dropped to
12078.34 thousand metric tons(tmt)
this year compared to 12445.18 tmt for
the first quarter last year. Natural gas
production is also down by 3.8 per cent to
10449.30 Million Metric Standard Cubic
Meters (mmscm) compared to 10862.42
mmscm for the same time period last
year said the report. The government
is attempting to increase domestic oil
production to reduce its dependence on
imports, and also boost infrastructure
development in the country. The ministry
stated closure of oil wells due to repair,
replacement, strikes, and blockades are
stated as the reasons for lower crude
production. Sick older wells, power
shutdown & less gas injection pressure
have also contributed to the decline of
crude. The ministry said 24 oil wells
were closed in the Kadali-Tatipaka &
Endamuru-Oduru GAIL pipelines.
rose eight per cent to 74.63 MT, according
to data available with the Petroleum
Planning and Analysis Cell. Ratings agency
India Ratings & Research (Ind-Ra), in its
outlook for FY17, said, Growth was driven
by strong pick-up in automobile sales,
particularly passenger vehicles. Ind-Ra
expects petrol consumption to further
increase by eight to 10 per cent in FY17,
driven by strong passenger vehicle sales.
Diesel consumption, the rating agency said,
is likely to grow by five to six per cent on
improved sales of commercial vehicles,
however, offset to some extent by lower
consumption of diesel in power backup.

NewsBriefs | Oil & Gas International
Indonesia offers 10 blocks for exploration to Petronas
Petronas has been offered to explore 10 new
blocks of oil and gas (O&G) fields in Indone-
sia, said Deputy Prime Minister Ahmad Zahid
Hamidi. He said the invitation involving seven
exploration blocks in the Exclusive Economic
Zone and three in Natuna Island was made by
Indonesias Coordinating Minister for Maritime
Shell assessing possibility of supplying LNG to Pakistan
Shell Exploration Company BV is assessing
the possibility of supplying Liquefied Natural
Gas (LNG) to Pakistan, as it keeps a vigilant
eye on developments regarding construction
of the second LNG import terminal in the
country. At the moment, the possibility and
options of providing LNG to Pakistan are being
assessed, Shell Pakistan said. Recently, Shell
Exploration Company BV, Engro Corporations
Elengy Terminal Limited and Pakarab
Fertilizers Limited (a Fatima Group company)
signed a joint cooperation agreement to
assess the development of a liquefied natural
gas receiving and re-gasification terminal
at Port Qasim, Karachi. The three parties
will continue work to assess the technical
Chevron LNG supply deal with Chinas ENN may boost spot market growth
Chevron Corps LNG supply deal with
Chinas ENN LNG Trading Co may boost
the formation of a spot market for the
fuel in Asia. Chevron signed a 10-year
term supply deal with ENN to supply up
to 650,000 metric tons per annum of LNG
with first delivery expected in 2018 or in
the first half of 2019, Chevron said. ENN is
a subsidiary of ENN Energy Holding, which
is one of Chinas largest gas distribution
companies and operates in 150 Chinese
cities. The firm is also constructing a
LNG import terminal in the northeastern
city of Zhoushan that is planned to start
by 2018. Chevron expects to supply
Affairs Luhut Binsar Panjaitan in a meeting.
Zahid said with the invitation, Petronas had the
opportunity to participate in the open tender
by Pertamina, Indonesias state-owned oil
company, for the exploration of new blocks
in other locations. This is a good offer as
Petronas is basically focusing on exploration in
Asean countries. Zahid said the meeting also
opened a new chapter for Tenaga Nasional Bhd
(TNB) as the utility company had now been
allowed to negotiate directly with coal suppli-
ers in Indonesia to ensure a continuous supply
of high-quality coal. He said the two countries
also agreed that the cooperation between TNB
and Perusahaan Listrik Negara (PLN) Indone-
sia be done on a business to business deal.
and commercial feasibility of the fast-track
project before moving it to the final investment
decision (FID) to provide the cleanest fossil
fuel to help meet the countrys growing energy
demands, it added. Royal Dutch Shell remains
an active trader of the gas internationally.
ENN through its existing LNG assets,
including the companys Australian
LNG interests at Gorgon, Wheatstone
September 2016
www.InfralinePlus.com
Australian state to permanently ban
onshore gas fracking
The state of Victoria plans to ban shale
and coal seam gas fracking in what
would be Australias first permanent ban
on unconventional gas drilling, citing the
concerns of farmers and potential health
and environment risks. However the gov-
ernment left the door open to allowing
onshore conventional gas drilling after
2020. The decision was made despite the
fact that most of eastern Australias gas
supply is produced from coal seam gas
and comes as a blow to manufacturers
who have been clamouring for more gas
supply to help keep prices down. Our 41
farmers produce some of the worlds
cleanest and freshest food. We wont put
that at risk with fracking, state Labor
Premier Daniel Andrews said. Farmers
are worried that groundwater reserves
could be depleted or contaminated by on-
shore gas drilling. Victorians have made
it clear that they dont support fracking
and that the health and environmental
risks involved outweigh any potential
benefits, Andrews said.
and the North West Shelf, the company
said. Companies such as Chevron with
the flexibility to match their supply with
customers around the world are growing
in dominance. By depending on a number
of supply terminals rather than simply
one site to supply ENN, the deal may help
the formation of so-called spot market
for LNG. This would help to replace the
dominant sales model of multi-year
contracts from one supply site to a buyer,
said Sophie Corbeau, a research fellow at
the King Abdullah Petroleum Studies and
Research Center.
 September 2016
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InConversation
Slow dispute resolution eroding
confidence of foreign investors in India
Timely and efficient dispute resolution arising out of
commercial contracts is key in todays era where our country
is looking to increase investments. Arbitration disputes in
India have been rampant in the major sectors including
construction, infrastructure, and oil and gas sectors.
This is primarily due to the nature of these businesses
and exigencies attached in running the business. Ravi
Singhania, Managing Partner, Singhania & Partners, LLP and
governing member of the Indian Council of Arbitration having
a vast experience of more than two decades in handling
Arbitration related matters, talks to InfralinePlus on various
issues involved in arbitration in these sectors. Ravi Singhania, Managing Partner, Singhania
& Partners, LLP and governing member of the
Indian Council of Arbitration

42 Please share your outlook A step forward in this direction has

towards Arbitration as a mode
of dispute resolution in the
Infrastructure Sector.
Most Infrastructure and Construction
projects include Arbitration as
a dispute resolution process in
their contracts owing to various
factors such as speedy disposal,
availability of expert panels etc.
The Infrastructure sector has gained
importance owing to its key role in
Economic Growth.
However, today the government
is facing the challenge of lack of
confidence in Foreign Investors to
infuse funds in the Infrastructure
Sector. Since 2006, 50% of the total
inbound private-equity has been made
to the infrastructure sector but these
projects have seen a lot of delays
due to various factors including slow
dispute resolution processes. In such a
scenario the importance of Arbitration
increases manifold and it is important
to select the right mode and method of
Dispute Resolution while drafting and
negotiating these Agreements.
been shown by the legislature by recently
introducing appropriate Amendment to
the Arbitration and Conciliation Act,
1996 in January 2016. It includes various
important changes including an endeavor
to complete the arbitration within a year
of the commencement. Such modifica-
tions are sure to make Arbitration in India
as a favorable mode of dispute resolution
in this sector.
What would you suggest as a
preferred mode of Arbitration?
There are normally two modes for the
conduct of Arbitration, Institutional
and Ad-hoc. In Institutional arbitra-
tion, the entire arbitration process is
administered by a specialized institu-
tion like Delhi International Arbitration
Centre, Indian Council of Arbitration,
Construction Industry Arbitration
Council, Singapore International Arbi-
tration Centre, International Chamber
of Commerce, etc. Amongst the several
advantages of Institutional Arbitration,
the most important ones are, having a
predetermined procedure in place and
also the choice of the parties to select
an arbitrator possessing the necessary
skills, experience and expertise to pro-
vide a quick and effective resolution of
disputes. Such expertise is useful to the
parties in sectors such as Infrastructure,
Construction and Energy owing to the
technicalities and nuances involved.
The major disadvantage of Institutional
Arbitration is the heavy costs involved.
An Ad-hoc arbitration in com-
parison is usually less expensive, but
the parties are left to determine all
aspects of the arbitration themselves,
from the number of arbitrators, to the
procedure for conduct of arbitration
etc. Therefore, where claims are
smaller, ad-hoc arbitrations are the pre-
ferred form of dispute resolution. The
choice of the mode thus would really
vary depending on the intention of the
parties and the desired results.
How important is it to choose the
right seat of Arbitration?
Identification of the seat of arbitration
(which is different from the location
 September 2016
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where the hearings take place ie the does not have a reciprocal arrangement International Centre for Settlement of
venue), is one of the most important with India. These factors always need Investor Disputes (ICSID) ICSID or
features of an arbitration clause. This is to be kept in mind while drafting the initiating arbitration under the United
because the selection of the seat deter- Agreement between the parties. Nations Commission on International
mines the law governing the arbitration Trade Law (UNCITRAL) rules. A
procedure and often, more importantly, Please share your views on growing number of countries are
the process and rights relating to seek- Investment Treaty Arbitration? getting engaged in this mode of dispute
ing of interim relief and enforcement of Today Foreign Investors enjoy interna- resolution and treaty based arbitration
arbitration award. In view of the same, tional legal protection through various is likely to gain more importance in the
it is best to specifically mention the investment treaties. The trend of having time to come.
seat in the arbitration clause itself and various Bilateral Investment Treaties
avoid ambiguity. (BITs) had begun in India since the What do you think about the
In India, the law of arbitration 1990s and has gained greater momen- dispute resolution under PPP
provides for a simple procedure of tum now. The most important advantage models? Do you think any
enforcement if the seat is located in that a foreign Investor enjoys under In- changes need to be made in the
a country which has signed the New vestment Treaties is the option to initiate existing regime?
York Convention and with which arbitration against the State, with which As a firm we are dealing with innu-
India has a reciprocal arrangement. it has entered into an agreement without merable disputes arising out of PPP
However, foreign awards are difficult approaching their own government. projects. The most common form of
to enforce in India if the country where As far as Indias BITs are con- dispute resolution clauses in Highway
the award has been passed has not cerned, most of them have an option projects that we have come across are,
signed the New York Convention and of approaching the World Banks that initially the disputes are endeav-
ored to be amicably resolved between
In India, the law of arbitration provides for a simple the parties, failing which, the Engineer/ 43
Independent Consultant has to give its
procedure of enforcement if the seat is located finding on the disputes. The next step
in a country which has signed the New York is that the disputes are referred to a
Convention and with which India has a reciprocal Dispute Review Board which places
arrangement. However, foreign awards are its recommendation within a specified
difficult to enforce in India if the country where the period. If the recommendations are not
award has been passed has not signed the New acceptable to either party, the dispute is
referred to arbitration.
York Convention and does not have a reciprocal PPPs in infrastructure are a valuable
arrangement instrument to speed up infrastructure
development in India. For the PPP
model to be most effective, the
dispute resolution process under these
contracts needs to be improved. One
method of doing this could be to
make the dispute resolution process
institutionalized, which could lead to
enhanced efficiency. Inspiration can
be taken from the National Highways
Authority of India which has for-
mulated the Society for Affordable
Redressal of Disputes (SAROD) with
its own rules for all cases of domestic
arbitrations which has lead to evidently
faster disposal rates.

For suggestions email at feedback@infraline.com

 September 2016
www.InfralinePlus.com

InDepth
Gas-based power plants:
Gas-ping for fuel!

44

Close to 25 gigawatts of gas-based capacity running at less than a quarter of their potential
Fourth reverse e-auction to provide subsidy to buy gas likely after October

By Team InfralinePlus

With natural gas accounting for just
about 9% of Indias overall energy
mix, the government is trying hard to
increase its domestic production. Indias
Liquefied Natural Gas (LNG) sector is
undergoing a major transformation as
it is set to occupy a crucial part in the
countrys energy portfolio. Under the
governments revival plan for stranded
gas-based power plants, LNG will be
imported and cash-strapped state power
distribution companies will be financially
supported to buy electricity from them.
Though generation from such plants has
significantly picked up in the last couple
of months, its the offtake of power by
DISCOMs that is a big challenge. Power
plants seldom use high-priced imported
LNG as power produced from this fuel
would cost much more than the power
produced from a domestic gas-fired or
coal-fuelled plant and there would be no
takers for such expensive power.
The fourth reverse e-auction to
provide subsidy to buy gas for running
stranded power projects and those
operating at sub-optimal level is likely
to be conducted after October once the
current phase (June to September) ends
on September 30. As basic fuel costs
increase, especially in thermal coal,
more expensive fuels such as LNG will
emerge as more viable alternatives.
Auctions for the 1st phase (June
1 to September 30, 2015) of PSDF
Support to gas-based power plants was
 September 2016
www.InfralinePlus.com

held in the months of May, 2015. A stranded projects and 24 domestic According to the Central Electricity
combined total of 10,270 MW plants gas-based plants. Authority, the average PLF has come
were able to secure gas allocation. The However, falling price of LNG in the down to 60% in June 2016 from a high
entire process was completed in less global markets has enabled the gov- of more than 70% a couple of years back.
than a month and gas supply by GAIL ernment to launch a subsidy scheme to The position is really worrisome for state
started on June 1, 2015. Auctions for revive gas-based power plants. Recent units and private entities for whose plants
2nd Phase (October 1, 2015 to March spot LNG contracts were struck at prices the factor was about 54-57%. Given the
31, 2016) were held in the month of as low as $10.5 per MMBtu, nearly 45% limited financial capacity of states, this
September 2015 and helped in revival down from year ago period and 25% cannot be a viable power generation unit
of gas-based generation plants with down from those struck in August 2014. performance on a sustained basis. There
installed capacity of 11,717.72 MW. These contracts are for delivery after are still a very large number of gas-based
The countrys gas-fired plants, two months and hence deliveries will be plants which continue to be particularly
with nearly 25 gigawatts of gen- effective from January 2015. There are poor performing in view of lack of fuel,
eration capacity, are running at less indications the trend will continue well which is natural gas, at affordable prices.
than a quarter of their potential. in future. However, LNG imports will Fortunately, the international prices of
Transportation costs and taxes have subject these companies to the vagaries liquefied natural gas are coming down
countered the 27% decline in spot of foreign exchange markets, besides and this should help them improve their
LNG prices in the past year. Com- natural gas ones. performance.
panies such as NTPC, Essar, GMR, The cost of power generation may
Lanco, GVK, Tata Power, Torrent go up in the coming years due to low Pricing Policy
Power, GSEC, RGPPL (Dabhol) and plant load factor (PLF) of thermal plants. Another major constraint is the distorted
CLP India are expected participate The capacity utilization of plants has retail pricing structure in the power sec-
in the future auction for as many 31 been going down in the last few years. tor that currently limits the competitive-
ness of gas-fired generation. As per the 45
Falling price of LNG in the global markets has en- Central Governments Gas Utilisation
abled the government to launch a subsidy scheme Policy, NELP producers cannot sell gas
on purely commercial basis. The gas is
to revive gas-based power plants. Recent spot allocated by the government, limit-
LNG contracts were struck at prices as low as ing upstream investments as the high
$10.5 per MMBtu, nearly 45% down from year ago cost of off-shore exploration cannot
period and 25% down from those struck in August be recovered from the priority sectors
2014. These contracts are for delivery after two that are highly price sensitive. Power
months and hence deliveries will be effective from producing companies cannot raise tariffs
January 2015. There are indications the trend will without the consent of the state electric-
continue well in future. ity boards. If the latter do not agree to
an increase, the power company has
to either reduce the quantity of power
generation or bear the losses.
In addition, under subsidy mecha-
nisms, power tariffs are kept artificially
low, which fails to send proper pricing
signals to those who can adjust con-
sumption to price changes. Similarly, it
undermines the cost-recovery prospect
of the investors. Hence there has been a
demand from the industry for ratio-
nalisation of the pricing mechanism to
attract investors into this sector.
The uncertain future of Indian
domestic gas production has cascading
effects on the overall role of gas in the
countrys energy sector. The impacts
 September 2016
www.InfralinePlus.com

InDepth

have already been felt in the power
sector where the PLF of gas-fired
plants during the year averaged only
18.64% (May 2015) and more recently
at 23.73% (May 2016) due to unavail-
ability of gas. As the economy expands
and industries and households increase
their consumption of natural gas, the
dependence on imported LNG will
only increase since the domestic output
has been declining for years.
Infrastructural challenges
Increasing focus on expansion of gas
pipeline infrastructure in the country,
rising demand for natural gas from
power and industrial sectors and favour-
able government policies makes LNG
a commercially viable and suitable fuel
for various end users in India. As a re-
sult, LNG demand is forecast to witness
robust growth over the next 510 years
in India and project developers will
have an abundant supply to run their
plants not just at 2530% PLF but at the
required optimal levels of 8085%.
As the economy grows, it is inevi-
table that our requirements for natural
gas will also grow at a much faster rate
than our domestic production. However,
our capability to enhance imports is
seriously crippled by the capacities of
LNG terminals (India currently imports
40 mmscmd of gas annually, while the
existing capacity to handle imports is
only 60 mmscmd). Hence, it is pertinent
for the government to support expansion
plans and new greenfield investments on
new LNG terminals.
According to industry estimates, the
gas demand will rise to ~275 mmscmd
by 2019-20 and ~330 mmscmd by
NTPC not keen on buying
expensive RLNG power
State-run NTPC Ltd., Indias biggest
power producer, is said to be seeking
to terminate a long-term supply con-
tract for imported natural gas as it says
the fuel is too expensive to be used in
power generation. NTPC signed a 20-
year contract with GAIL in 2009 to buy
2 million metric standard cubic meters
a day of gas.
NTPCs combined 4 GW of gas-fired
generation account for about 9% of its
total capacity. Its seven gas plants ran
at 25% of their capacity in the year end-
ed 31 March, compared with 33% in the
prior year. Petronet LNG, Indias biggest
gas importer, renegotiated a contract
with Qatars RasGas Co. for 8.5 million
tons of LNG annually through 2025.
Petronet sells the fuel to companies
including GAIL and Indian Oil Corp.,
which have their own deals to sell it on
to end consumers, such as NTPC.

As the economy grows, it is inevitable that our 2024-25, from the current demand
potential of more than 225 mmscmd.
46 requirements for natural gas will also grow at a Natural gas power has the potential to
much faster rate than our domestic production. play an important role in meeting Indias
However, our capability to enhance imports energy demand, but some reforms
is seriously crippled by the capacities of LNG have to be in place if the country has to
terminals. Hence, it is pertinent for the government realise this potential. Several suggestions
to support expansion plans and new greenfield have been put forward like having an
investments on new LNG terminals attractive gas pricing to attract invest-
ments, development of fully-integrated
national gas grid that assures effective
Figure 1: State-wise distribution of gas-based power plants
in India third party access etc.
Gas supply contracts are characterised
State-wise distribution of gas based power plants by high level of take or pay obligations
on fuel buyer. It also needs to be ensured
that gas-based plants do not face dispatch
risks during their intended hours of
operation (peak/intermediate load).Gas-
Delhi, 2208 MW based peaking power if integrated into
(9%)
Others, 3574 MW the total electricity generation system can
(15%)
lead to carbon reduction efficiencies even
higher than renewables like wind or solar
power. Hence it is suggested to extend
the fiscal benefits to gas based peaking
Andhra Pradesh, Maharashtra,
3207 MW
power projects at par with the renewable
7579 MW
(31%) Gujarat,
(13%) energy projects or Ultra Mega Projects-
7579 MW specifically, zero customs duties and
(31%)
taxes and interest rate subsidy.

For suggestions email at feedback@infraline.com

 September 2016
www.InfralinePlus.com

StatisticsOil & Gas

Month Wise Crude Oil Processed by Refineries (2016-17) (As on July, 2016) (000 MT)
OIL COMPANIES APR MAY JUN JULY TOTAL
Indian Oil Corporation Ltd.(IOCL)
IOCL-KOYALI, GUJARAT 1215 1240 1233 1273 4962
IOCL-MATHURA, UTTAR PRADESH 797 814 797 755 3163
IOCL-PANIPAT, HARYANA 1316 1386 1357 1400 5459
IOCL-HALDIA, WEST BENGAL 692 713 682 659 2747
IOCL-BARAUNI,BIHAR 559 577 547 576 2259
IOCL-GUWAHATI,ASSAM 75 73 68 86 302
IOCL-DIGBOI,ASSAM 52 46 43 24 164
IOCL-BONGAIGAON,ASSAM 212 215 200 215 841
IOCL-PARADIP,ODISHA 394 538 257 697 1887
IOCL TOTAL 5313 5602 5183 5686 21784

Hindustan Petroleum Corporation Ltd.(HPCL)

HPCL-MUMBAI,MAHARASHTRA 714 725 623 689 2751
HPCL-VISAKH,ANDHRA PRADESH 804 815 798 731 3148
HMEL-GGSR, BATHINDA, PUNJAB 920 945 878 909 3652
HPCL-TOTAL 2438 2485 2299 2329 9552

Bharat Petroleum Corporation Ltd (BPCL)

BPCL-MUMBAI, MAHARASHTRA 1146 1169 1163 1210 4688
BPCL-KOCHI, KERALA 895 933 897 923 3647
NRL-NUMALIGARH, ASSAM 217 238 233 237 925
BORL-BINA 534 617 532 502 2184
BPCL-TOTAL 2791 2957 2825 2872 11444

Chennai Petroleum Corporation Ltd (CPCL)

CPCL-MANALI, TAMILNADU 821 807 878 951 3457
CPCL-NARIMANAM,TAMILNADU 56 50 33 48 187
CPCL-TOTAL 877 856 911 1000 3644

Oil & Natural Gas Corporation Ltd.(ONGC) 47

ONGC-TATIPAKA,ANDHRA PRADESH 7 6 8 7 28
MRPL-MANGALORE,KARNATAKA 1166 1232 1274 1332 5004
ONGC TOTAL 1173 1239 1282 1339 5032

Reliance Industries Ltd. (RIL)

RIL,JAMNAGAR,GUJARAT 2732 2856 2727 2814 11129
RIL-(SEZ), JAMNAGAR,GUJARAT 3115 2183 3215 3425 11937
RIL TOTAL 5846 5039 5942 6239 23066

ESSAR OIL LTD.,VADINAR,GUJARAT 1719 1779 1720 1760 6978

GRAND TOTAL 20157 19955 20162 21224 81499

Production of Petroleum Products by Refineries and Fractionators (Apr-July,2016) (000 MT)

PRODUCTS APR MAY JUN JULY TOTAL
LPG 841 870 906 954 3572
NAPHTHA 1361 1364 1529 1738 5992
MS-III 815 887 867 799 3369
MS-IV 762 804 734 831 3131
MS Others 1392 1525 1436 1438 5792
ATF 1159 1057 1170 1114 4500
SKO 507 583 586 616 2292
HSD-III 2805 3004 2932 2893 11634
HSD-IV 2448 2501 2421 2719 10089
HSD Others 2784 2602 3303 3426 12116
LDO 35 37 25 30 127
LUBES 79 87 94 93 353
FO 1037 1131 925 1038 4131
LSHS 18 29 28 22 97
BITUMEN 590 578 475 268 1911
RPC/Petcoke 979 962 1065 1104 4110
Others 1937 2068 1705 1624 7333
TOTAL 19548 20090 20201 20707 80547

REFINERIES 19295 19796 19924 20406 79421

FRACTIONATORS 253 294 277 301 1126

19548 20090 20201 20707 80547
 September 2016
www.InfralinePlus.com

StatisticsCoal

Production and consumption of petroleum products (Million Metric Tonnes)

April-March 2016 (P) 15-Jul July 2016 (P) April-July 2015 April-July 2016 (P)
Products Con- Prodn Prodn Prodn Con-
Prodn Prodn
sumpn Consumpn Consumpn Consumpn sumpn
LPG 10.6 19.6 0.8 1.6 1 1.7 3.2 6 3.6 6.5
MS 35.3 21.8 3 1.7 3.1 1.9 10.9 7.1 12.3 7.8
NAPHTHA 17.7 13.4 1.4 1.2 1.7 1.1 5.7 4.4 6 4.4
ATF 11.8 6.2 0.9 0.5 1.1 0.6 3.3 2 4.5 2.2
SKO 7.5 6.8 0.7 0.6 0.6 0.5 2.4 2.3 2.3 2.1
HSD 98.6 74.6 7.9 5.7 9 5.8 32.1 24.9 33.8 25.9
LDO 0.4 0.4 0.04 0.03 0.03 0.04 0.1 0.1 0.1 0.1
LUBES 1 3.2 0.08 0.3 0.09 0.3 0.3 1.1 0.4 1.1
FO/LSHS 10.7 6.7 1.1 0.5 1.1 0.6 3.7 2.1 4.2 2.4
BITUMEN 5.2 5.8 0.3 0.3 0.3 0.3 1.7 1.9 1.9 2.1
OTHERS 32.5 24.9 3 2 2.7 2.2 10.7 7.6 11.4 8.8
ALL INDIA 231.3 183.5 19.2 14.4 20.7 14.9 74.2 59.3 80.5 63.7
Growth (%) 4.80% 10.90% 8.50% 8.00% 8.00% 3.90% 3.90% 6.90% 8.50% 7.30%
Note: Prod - Production; Consump - Consumption

Refineries: Installed capacity and crude oil processing (MMTPA/ MMT)

Crude oil processing
Installed
Com- 2015- July April-July
Refinery capaci- 2014-15
pany 16(p) 2015 2016 2016(P) 2015 2016 2016(P)
ty(1.4.2016)
(Actual) (Target) (Actual) (Target)
IOCL Barauni (1964) 6 5.9 6.5 0.5 0.4 0.6 2.1 2.1 2.3
48
Koyali (1965) 13.7 13.3 13.8 1.3 1.3 1.3 4.2 4.8 5
Haldia (1975) 7.5 7.7 7.8 0.7 0.7 0.7 2.6 2.7 2.7
Mathura (1982) 8 8.5 8.9 0.8 0.7 0.8 2.9 2.9 3.2
Panipat(1998) 15 14.2 15.3 1.2 1.3 1.4 5.1 5.2 5.5
Guwahati (1962) 1 1 0.9 0.1 0.08 0.09 0.37 0.32 0.3
Digboi (1901) 0.7 0.6 0.6 0.05 0.01 0.02 0.18 0.18 0.16
Bongaigaon(1979) 2.4 2.4 2.4 0.2 0.2 0.2 0.9 0.8 0.8
Paradip (2016) 15 - 1.8 0 0.9 0.7 0 3 1.9
IOCL TOTAL 69.2 53.6 58 4.7 5.5 5.7 18.3 22 21.8
HPCL Mumbai (1954) 6.5 7.4 8 0.7 0.7 0.7 2.3 2.6 2.8
Visakh (1957) 8.3 8.8 9.2 0.5 0.5 0.7 2.6 2.7 3.1
HMEL Bathinda (2012) 9 7.3 10.7 0.9 0.8 0.9 3.6 3.1 3.7
HPCL-TOTAL 23.8 23.5 27.9 2.1 1.9 2.3 8.6 8.4 9.6
BPCL Mumbai (1955) 12 12.8 13.4 1.1 1.1 1.2 4.5 4.6 4.7
Kochi (1966) 9.5 10.4 10.7 0.9 0.9 0.9 3.7 3.6 3.6
BORL Bina (2011) 6 6.2 6.4 0.6 0.5 0.5 1.8 2.1 2.2
BPCL-TOTAL 27.5 29.4 30.5 2.7 2.6 2.6 9.9 10.3 10.5
CPCL Manali (1969) 10.5 10.2 9.1 0.7 0.9 1 3.4 3.5 3.5
CBR(1993) 1 0.5 0.5 0.05 0.05 0.05 0.18 0.2 0.19
CPCL-TOTAL 11.5 10.8 9.6 0.8 1 1 3.6 3.7 3.6
NRL Numaligarh (1999) 3 2.8 2.5 0.3 0.2 0.2 0.7 0.9 0.9
ONGC Tatipaka (2001) 0.1 0.1 0.1 0.005 0.004 0.007 0.019 0.013 0.03
MRPL Mangalore (1996) 15 14.6 15.5 1.1 1.1 1.3 5 5 5
ONGC TOTAL 15.1 14.7 15.6 1.1 1.1 1.3 5 5 5
RIL* Jamnagar(DTA)(1999) 33 30.9 32.4 2.8 2.8 2.8 10.3 10.3 11.1
Jamnagar(SEZ)(2008) 27 37.2 37.1 2.5 2.5 3.4 11.6 11.6 11.9
EOL Vadinar (2006) 20 20.5 19.1 1.8 1.7 1.8 6.9 6.8 7
All India 230.1 223.3 232.9 18.7 19.3 21.2 74.9 79 81.5
* RIL target for 2016-17 is previous year crude processing. Note: Some sub-totals/totals may not add up due to rounding off at
individual levels.

NewsBriefs | Renewable International
Govt mulling subsidised solar water pumps for farmers in all states
In a move to promote farm activities using so-
lar power in the country, mostly in rural areas,
the Central Government is mulling subsidised
solar water pumps of different capacities
(horsepower or HP) for farmers in almost all
states soon. The subsidy of such pumps is
expected to raise upto 95 per cent for farmers
and it will vary from state to state, depend-
Adanis solar equipment mfg facility may commence by year-end
Gautam Adani-led Adani Enterprises is
expecting to commission the first phase
of its solar power equipment facility being
set up in Gujarat by year-end. In the first
phase, the company, which has set up a
special purpose vehicle (SPV) Mundra Solar
PV for the project, is setting up 1,200 MW
of manufacturing capacity and will invest
Rs 2,000 crore. In the second phase, the
company will not only enhance the capacity
to 2,000 MW but also manufacture other
components like silicon wafers, PV back
sheets among others. The second phase of
the project is likely to go operational in the
second quarter (April-June) of 2017. This
facility will vertically integrate all aspects
US assures to provide finances to India for renewable energy
US has assured India of doing more
by providing it finances for innovative
renewable energy projects while asserting
that it is the only way of meeting
the challenge of climate change. US
Secretary of State John Kerry said that
the civil nuclear cooperation between
both the countries will bring affordable
and clean energy to tens of millions
of Indian households. To build on our
shared leadership in combating climate
change, the US is going to do more to help
India upgrade its power grid and work
with our private sector in order to help
provide financing for innovative renewable
ing upon their agricultural production and
demand. The cost of the rest amount will be
borne by both Central and State Governments.
The Government is in process to provide
solar water pumps in subsidised rates to the
farmers of almost all states in the country.
Haryana has already started this initiative, and
I think other states will follow soon. The aim
of Government is to ease the farm activities
in productive way and ease the farm activities
across the country, mostly in rural areas, said
officials in the Ministry of New and Renewable
Energy. It is expected that the subsidy may
vary from 75 to 95 per cent to meet the de-
mand of the farmers, while the cost of pumps
from 5 to 25 per cent will be borne jointly by
both Central and State Governments.
of solar panel production on site, including
polysilicon refining, ingots, wafers, cells, PV
back sheets and panels production, with
a broader ecosystem involving extended
supply chain for raw materials and
consumables.
the challenge of climate change, Kerry
during Second India-US Strategic and
energy projects and clean energy
entrepreneurs.That is the only way we will
have a chance of adequately meeting the
promise of Paris and adequately meeting
September 2016
www.InfralinePlus.com
National
Gujarat becomes the first state to
distribute 2 crore LED Bulbs under
UJALA
Gujarat has become the first state to
distribute 2 crore LED bulbs Under
the Governments Unnat Jyoti by
Affordable LEDs for all (UJALA) scheme.
Gujarat has reached this milestone in
96 days and over 42 lakh households
have benefited from the scheme.
Indian Prime Minister Narendra Modi
while congratulating Gujarat on the
achievement said, There is competition
between states to outdo each other in
terms of LED distribution. Gujarat, in
less than 100 days is now leading in
terms of LED distribution across the
nation. I congratulate the entire team for 49
implementing the LED Bulb programme.
I am confident that every household
in Gujarat will adopt LEDs and save on
electricity bills. The state will save a lot
of energy and will also lead the way in
helping protect the environment. The
distribution of 2 crore LED bulbs has led
to an annual energy savings of 259 crore
kWh which is equivalent to lighting up 5
lakh Indian homes for an entire year.
said during the joint press interaction with
External Affairs Minister Sushma Swaraj
Commercial Dialogue. He said that US will
soon make the promise made by more than
190 nations at the Paris Climate change
summit last year a reality by officially
joining the global climate agreement.
Our civil nuclear cooperation will bring
affordable clean energy to tens of millions
of Indian households as we move closer in
the use of safe, modern, latest generation
nuclear power.
 September 2016
www.InfralinePlus.com
NewsBriefs | Renewable National
Government plans two funds to charge up power sector
The power ministry plans to set up two
funds of $1billion each to enable alternative
financing options for stressed power assets
and renewable energy projects. The two
funds have been proposed under the ambit of
the National Investment and Infrastructure
Govt to set up Rs 1.5k crore payment security fund for solar projects
Government is in the process of setting up
a Rs 1,500-crore fund to avoid delays in re-
leasing viability gap funding (VGF) to solar
power developers under the Jawaharlal
Nehru National Solar Mission (JNNSM).
50 State-run Solar Energy Corporation of
India (SECI) will set up a Rs 1,500 crore
payment security mechanism (PSM) to
ensure timely payment of VGF to the devel-
opers of solar power capacities under the
JNNSM, a senior official said. The official
further said, This fund will have a corpus
to cover three months payment for the
various VGF schemes approved by Ministry
of New & Renewable Energy (MNRE) from
time to time. The fund is significant as the
government has set the target of adding
ReNew Power targets 3.500 Mw extra capacity every year
The Goldman Sachs-supported ReNew Pow-
er plans to add 3,500 Mw every year to main-
tain its share of 10 per cent green capacity
by 2020. The company, which has 1,130
Mw of commissioned capacity, will require
$10-12 billion funding, of which equity will be
around $3 billion. India plans to add 175 Gw
capacity by 2020, for which 35,000 Mw will
need to be added every year. Of this 35,000
Mw, we plan to take a 10 per cent share,
Sumant Sinha, founder and chief executive
officer, ReNew Power said. ReNew Power
would require $8-10 billion in debt funding
over the next five years. The company is
looking at funding options, including private
Fund (NIIF). NIIF is the fund of funds
within which we will set up a sub-fund which
will focus on renewable energy projects and
give investment support for faster ramp up
of renewable energy. It is under our active
consideration and we may launch it in the
near future, power minister Piyush Goyal
said. We are also in dialogue with certain
bankers to see if we could look at a stressed
power asset fund. It may take us some
more months to put its framework in place.
Asked about the size of the funds, Goyal said,
Each of these funds could easily be of the
size of $1billion. The government set up the
Rs 40,000 crore NIIF in as an investment
vehicle to fund commercially viable
greenfield, brownfield and stalled projects.
100GW of solar power by 2022. The fund
will also cover delays/defaults in payments
to SECI by entities (discoms/state utilities/
bulk consumers), so that timely payment to
developers could be ensured.
placement of equity and an initial public offer.
ReNew Power had last year planned an IPO
but put it on hold. Besides Goldman Sachs,
which has invested $385 million in equity,
the company has funding from the Asian De-
velopment Bank, the Abu Dhabi Investment
Authority and the Global Environment Fund.
MNRE seeks comments to standardise
norms for solar equipment
In a bid to standardise norms for solar
equipment, the Ministry of New and
Renewable Energy has sought comments
from various stakeholders on technical
regulation for the sector. Toughening its
stand on dumping of poor quality solar
equipment, the government had earlier
decided to regulate imports of such prod-
ucts under the Bureau of India Standards
(BIS) Act. In view of enhanced target
of 100 GW Solar Power by 2022, the
ministry has decided to bring out techni-
cal regulation for Solar Photovoltaic
Systems/Devices/Components Goods, a
senior ministry official said. This exercise
is part of the process of bringing out a Lab
Policy for Renewable Energy Sector for
Testing, Standardisation and Certification,
he said adding that the comments can
be provided by September 6, 2016. Once
the standards are inserted in the rules
of BIS Act, the importers would have to
seek certified test reports of the products
under the order.
It has raised $650 million equity and has an
asset base of $2 billion. Sinha said the Centre
was promoting renewable energy but there
were state-level issues like grid curtailment.
He said the next stage of capacity addition
in renewable energy would have to be driven
by grid management through forecasting
and scheduling. Savings through this have
to be understood better and transferred to
bidders as an incentive, currently this goes to
the states, he said. He said with the roll-out
of the debt restructuring scheme for power
distribution companies, their finances were
likely to improve, giving them more space to
buy power.

NewsBriefs | Renewable International
Odisha targets 70 Mw rooftop solar projects by 2022
In an effort to harness the non-conventional
sources of energy, Odisha targets to gener-
ate 70 Mw exclusively from rooftop solar
projects by 2022. The target to generate
70 Mw from rooftops is likely to see an
investment of around Rs 500 crore. The
Madhya Pradesh to provide state guarantee for 750 Mw Rewa ultra mega solar project
To ensure viability of its ultra mega solar
park at Rewa, the Madhya Pradesh govern-
ment is slated to extend state guarantee to
the flagship project. This would ensure that
there wont be any default in payment to
the Rewa Ultra Mega Solar Ltd (RUMS), a
joint-venture of the states Urja Vikas Nigam
and the Union government-controlled Solar
Energy Corporation of India. The park is
expected to have a capacity of 750 Mw.
Nearly 75 per cent power generated would
be procured by the Madhya Pradesh Power
Management Company (MPPMC) and the
balance 25 per cent by Delhi Metro Rail
Corporation (DMRC). Besides, the imple-
mentation support agreement and coordina-
tion agreement would also be signed since
UP becomes lab for green energy firms looking to tap rural market
Uttar Pradesh, home to about 16% of
Indias 1.2 billion population, many of
whom have poor or no access to power, is
emerging as the preferred testing ground
for non-profits and companies trying out
new business models as they seek to tap
rising demand for electricity in rural India.
Across the state, these organizations are
testing the viability of supplying electricity
from mini-grids and solar-powered lighting
systems specially designed for villages
and small enterprises. The first customers
are telcos whose telecom towers in
remote parts of the country have, until
now, been powered by diesel generators;
projects are likely to be taken by the govern-
ment, private companies and individuals,
said a government official. In 2016-17 and
2017-18, the Green Energy Development
Company Ltd (Gedcol), the nodal agency
for implementation of renewable energy
projects, will implement 10 Mw roof top
projects at a cost of around Rs 80 crore.
Recently, the Odisha government has signed
implementation agreement with Azure
Power Mercury Pvt Ltd for developing the
countrys first grid connected Mw scale roof
top project on net metering basis. It will be
a four Mw project to be set up on about 190
government buildings in the twin cities of
Cuttack and Bhubaneswar.
separate power purchase agreements
(PPAs) would be signed for drawing power
by each of the procurers. This apart, the
land use purchase agreement will be signed
for the 1,530 hectare of land required for
the project.
strategy at the Rockefeller Foundation,
and shops, even individual households,
in villages that were hitherto illuminated
by kerosene lanterns. According to Zia
September 2016
www.InfralinePlus.com
States
43 per cent solar street lights non-
functional in Gujarat, says CAG
Despite incurring huge expenditure, the
purpose of installing solar photovoltaic
street lighting system for the rural popu-
lace in Gujarat has been defeated, says the
Comptroller and Auditor General of India
(CAG) that not only found 43 percent of
these systems non-functional, but also
found several of them installed within
the residential premises of elected gram
panchayat members or private parties. The
state government had executed the work of
installation of solar street lighting systems
under the Samras Yojana and MPLAD
schemes. During field visits, CAG found 51
that in three gram panchayats Naglod,
Ranela and Shanbar four of the solar
street lighting system were installed in the
premises of private parties while in Dehari
and (Umargaon) Ranela gram panchayat
(Santrampur), it found 15 such systems
installed in the residential premises of
elected members of gram panchayat which
was in contravention to the provisions of
the scheme guidelines, stated a CAG report
on local bodies.
Khan, vice-president, initiatives and
which has committed $75 million of debt
financing and early investment capital to
energy services companies in India, the
market for mini-grids in Uttar Pradesh is
promising. More consumers are signing
up, no one has dropped out of the mini-
grid ecosystem and more energy service
companies are coming up, said Khan. The
foundation provides finance for setting up
micro-grids, helps these utilities in finding
anchor customers (mostly telcos), and in
marketing power to households and small
commercial establishments.
 September 2016
www.InfralinePlus.com
NewsBriefs | Renewable International
Sri Lanka eyes 70% renewable energy share in power generation by 2030
Sri Lankan government intends to
significantly increase the share of renewable
energy in electricity generation by the end
of the next decade. Sri Lankan Cabinet of
Ministers has approved a Battle for Solar
energy program which aims to boost the
Chile breaks Dubais record of solar power output at low cost
Chile has broken Dubais record of promis-
ing to produce solar at the worlds cheapest
rates. During June, Dubai announced that
it would produce solar power at Rs 2.01
per unit in June, in August Chile broke the
52 record with a new low of Rs 1.95 per unit.
According to reports, SunEdison set a new
record-low solar bid at 2.91ents per unit.
This beats the 2.99 cent per unit Masdar
Consortiums bid for an 800 MW solar power
project in Dubai. As part of an auction held
in Chile this month, power producers were
asked to bid on the price at which they could
supply power irrespective of the generation
source. Solar won the war that too at a new
record low. These new lows are increas-
ingly turning out to be threat for thermal
Pakistan to add 1 GW of wind energy capacity by 2018
Pakistan is expected to see a huge jump in
installed wind energy capacity over the next
two years as 21 projects are lined up for com-
missioning. Government officials in Pakistan
have revealed that almost two dozen wind
energy projects are currently at various stag-
es of development, and 1,012 MW capacity is
expected to be added to the grid by 2018. All
of these projects are being developed in the
eastern province of Sindh, which shares an
international border with the Indian states
of Rajasthan and Gujarat. These states have
some of the largest installed wind energy
capacities among all Indian states. A number
of foreign companies are planning these proj-
sustainable power generation in the country.
The Battle for Solar energy program
aims to encourage the small consumers
to install solar panels at their roof-tops
and consumers will be paid for any excess
energy exported to the grid. With this new
program, government expects that at least
20% of the consumers produce electricity
on their own. Deputy Minister of Power and
Renewable Energy Ajith P. Perera said that,
for excess energy exported to the national
grid, electricity board is ready to pay feed-in
tariff for power generated by the consumers.
The scheme will be implemented in stages
and first stage will cover Northern, Southern
and Eastern Provinces.
power generation. However, the intermittent
nature of these renewable sources would
either require large power storage systems
or thermal power to be the base load, said
an analyst. Solar power plants does not
generate power during cloudy days and at
night. Wind power can suddenly stop.
ects, including China Three Gorges Corpora-
tion, China Sunec Energy, and Tricon Boston
Consulting Corporation. Nine projects with a
cumulative capacity of 479 MW have already
achieved financial closure and are currently
Indonesia will add 5 GW of solar over
next 3 years through feed-in-tariffs
Solar electricity in Indonesia could
grow markedly in the next few years,
through the use of Fits. The Ministry of
Energy & Mineral Resources (ESDM) has
issued a Government Decree to provide
support mechanisms for utility-scale
solar photovoltaic systems, exhibition
and management services. The driving
support mechanism will be the solar
FiT priced at up to USD 0.25 per kWh.
The fundamental points of this decree
involve Feed-in-Tariffs (FiTs) for solar
power from USD 0.145 cents to USD
0.25 per kWh of solar power. The goal of
this decree targets adding 5.000 MWp
of solar PV capacity in 2-3 years. The
ESDM is optimistic that projects will be
implemented smoothly. This program
will offer quotas to Independent Power
Producers (IPPs). Through the regula-
tion, Indonesia could get an additional
investment of up to Rp 156 trillion (USD
12 billion). The government of Indonesia
has set aside USD 100 million for subsi-
dizing renewable energy in 2017.
under construction. Six projects with 308 MW
of capacity are already operational. The Sindh
government has taken several measures to
promote the renewable energy sector. Last
year, it approved the allocation of 15,089
acres of land to set up 21 solar and wind en-
ergy projects, amounting to a total installed
capacity of 1,880 MW. The government will
also allocate an additional 6,622 acres land
for 12 more renewable energy projects later.
Several European and Chinese companies
have already invested in Pakistans renewable
energy market. Foreign investors poured over
$3 billion into the renewable energy sector in
Pakistan over the last year.
 Magazine SubScription forM
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 September 2016
www.InfralinePlus.com
ExpertSpeak
The first signs of stress in
solar power
Shravan Sampath, CEO, Oakridge Energy - a specialized stressed
asset re-construction company in the power sector talks of how
policy making in the solar power sector is currently driving growth but
could result in substantial stressed assets due to various financial
challenges facing the solar industry in India.
The year that went by saw some path-
breaking achievements in solar capac-
ity additions over 3,019 MW of new
capacity added, and tendering of over
21,000 MW. Large developers like Sun
Edison, SoftBank and Fortum drove
bidding to record lows, and tariffs have
now settled at Rs. 4.3 / kWh, among
the lowest in the world. Is it time to
rejoice about the grand success of our
54
solar mission? Is it time to make even
grander targets for the coming year?
Or does all this appear to be a prelude
to another meltdown as was seen in the
thermal power sector after years of ag-
gressive growth up until 2012?
Structural flaws in bidding
The present bidding framework for
solar power suffers from several struc-
tural flaws. For starters, it is unclear
why states are indulging in so much
tendering, while it appears they re-
ally have no demand for such large
volumes of power. Several bids have
defied reason. For instance, on the one
hand, the state of Jharkhand already
has backed out of PPAs from several
thermal power plants citing lack of
demand. On the other hand, they have
called and successfully concluded 1200
MW of solar bids. Telangana, a state
with a total installed capacity of 5850
MW, has called and concluded bids for
2000 MW of solar power (over 35% of
its total installed capacity). It is unclear
why states need so much contracted
long-term power, particularly when
spot power markets are trading at his-
toric lows and power is available at Rs.
2 / kWh for the taking. In fact, several
states like Haryana, Uttar Pradesh,
Punjab and Rajasthan are backing
down installed capacities due to
lack of demand in
the backdrop of Solar Shravan Sampath, CEO, Oakridge Energy
an inter- sector
national Local villagers and leaders take ad-
needs to evolve
demand vantage of this pressure by making
drop and
specialist lenders land acquisition and transmission
decline in that are accurately line difficult. It would make far
commod- able to identify more sense for the government to
ity markets. risk and finance stipulate upfront that the develop-
In addition, projects ment timeline is twenty-four months.
over 20,000 Developers would be free to take
MW of thermal advantage of any future likely drop in
power capacity is lying idle and shut panel prices. In any case, distribution
down due to lack of buyers and a long- utilities are facing no great pressure
term PPA. of power shortage for them to require
construction of solar projects in such a
Stringent timelines tearing hurry.
Another area of concern is the stringent
timelines for completion of solar power Need to impose adequate
plants. Most bids stipulate financial bank guarantees
closure within seven months of PPA Perhaps this solar hysteria is being
signing, and commissioning within fuelled by the fact that most states are
fifteen months. The stated rationale not imposing adequate bank guarantees
appears to be that the government (bid bond guarantees) for bidders
does not want the developers to take to participate. States like Telangana
advantage of falling solar panel prices. had bank guarantees of only Rs. 10
However, this stringent timeline makes lakh / MW while calling for tenders
proper appraisal by banks virtually im- for over 2000 MW. This brings in all
possible, and lending is becoming more kinds of non-serious bidders who are
and more ad-hoc. The fifteen-month only interested in picking up projects
stipulation for project execution also to sell in the secondary market. It is
puts undue pressure on the developer. precisely for this reason that the market

is today flooded with over 3000 MW
of solar power projects for sale where
the bidders had won at attractive tariffs
but have no intention to build. Since
the PPA stipulates that these projects
are not to be sold before achieving
commissioning, complicated but frail
option structures are suggested by
bright lawyers to circumvent these
provisions. Several of these structures
are waiting to fail in case the original
seller decides to play foul after the
project is fully built.
The biggest challenge in devel-
opment of solar capacities is the
payment risks of such high priced
PPAs. Most states continue to be in
a precarious financial situation, and
its very likely that they may default
on such high priced PPAs. This could
have a trigger effect across the solar
sector and result in a string of non-
performing assets.
Systemic risks to power
sector
As the size of our solar power sector
increases in size, it poses several
systemic risks to the power sector.
For instance, for all the path-breaking
capacity additions, we do not have
a long term proven track record
as we do for wind power or hydro
power. Such large capacity additions
are being funded by banks without
While developers are
equally in the dark,
lenders and other stake
holders are only to be
content with manu-
facturer performance
commitments that are
supposedly valid for 25
years. However, in the
volatile world of solar
bankruptcies, it remains
to be seen whether
these manufacturers
would be able to sustain
themselves for 25 years
in order to fulfill these
commitments
September 2016
www.InfralinePlus.com
adequate track record of stable
performance. While developers are
equally in the dark, lenders and other
stake holders are only to be content
with manufacturer performance
commitments that are supposedly
valid for 25 years. However, in the
volatile world of solar bankruptcies,
it remains to be seen whether these
manufacturers would be able to
sustain themselves for 25 years in
order to fulfill these commitments.
In the last five years, we have seen
several new issues coming up in solar
project performance, such as the
potential induced degradation (PID)
issue that could result in almost 50%
degradation in 5 years.
With loans of over Rs. 71,000 crore
sanctioned to the green energy sector,
with most of this to the solar sector, it
appears that our solar power sector needs
to evolve specialist lenders that are accu-
rately able to identify the risk and finance 55
projects in the solar power sector.
The views in the article of the author are personal.
For suggestions email at feedback@infraline.com
 September 2016
www.InfralinePlus.com

InConversation
Smart Cities are as much about
infra as about citizens
Cities are projected to be the primary growth drivers of the
economy in coming years. But most of the Indian cities are
overcrowded and their infrastructure overstretched to cope with the
needs of growing population. The Modi government has launched
ambitious projects to rejuvenate existing cities even as new urban
centres are proposed on the North-East and North-West corridors.
Pradeep Misra, CMD, REPL (Rudrabhishek Enterprises Pvt Ltd),
a leading urban planner and infrastructure consultant, shares his
views on Smart City mission and urban development. Excerpts:

What are Smart Cities all about?
A lot of new investment was
expected to pour into such proj-
56 ects. But now it turns out states
are passing off existing projects
as Smart City projects. What is
your take on that?
See, it has always been so. States tend
to restructure their existing projects
to secure central government funding.
So it would not be surprising if states
are doing so under Smart City Mis-
sion. Smart City Mission is a positive
thing. Infrastructure will improve in
100 cities that are to be taken up for
rejuvenation under the Smart City Mis-
sion. When that happens, it would act
as a catalyst for other cities. So overall,
Smart City projects will have a positive
effect on urban infrastructure.
In what ways, Smart Cities will
be different from traditional
urban infrastructure?
Smart City is not an alien concept.
The purpose of the Smart Cities is
to optimise infrastructure to match
with the requirements of the popula-
tion. If citizens can lead their lives
in a hassle-free manner, then a city is
called a Smart City.
Do you think not only existing
cities should be rejuvenated
but new ones too be developed
under the Mission?
Some new cities have come up on
their own and some have been de-
veloped by governments. Ghaziabad
was not there before 30 years but it
has now become a city. Noida was
just a just village of Ghaziabad tehsil
then. But now Noida has overtaken
Ghaziabad in importance. Urban
development happens only under
two situations first, when there is a
big city that acts as a magnet and the
other, when development is induced
through development of some mega
project. Delhi is a magnet that attracts
investment and it is an example of the
first model.
The other scenario in which devel-
opment happens is when some big
power plant or refinery is set up at a
place that spurs development of urban
infrastructure in the area. For example,
along the North-east and north-west
corridors being built with Japanese
help, several large urban centres are
proposed.
If we look back at the 1947-2000
period of our country, we find that
Pradeep Misra, CMD, REPL (Rudrabhishek
Enterprises Pvt Ltd)
the government focus was mostly
on villages due to the political
necessity of keeping in good humour
rural population which was large in
size. Because of this village-centric
approach, urban centres got ignored.
Existing infrastructure built by the
Britishers in cities were meant for a
certain population and had a certain
life. Not surprising if these cities have
become overcrowded.
India has planned massive
investment in urban infrastruc-
ture. What do you think are chal-
lenges in undertaking develop-
ment?
The biggest challenge is our legal
set-up. Due to socialist mindset of our
country, there are lots of challenges in
infrastructure development. For any
large scale infrastructure development,
we need support from both the central
and state government. Certain issues
are central government issues, certain
issues are state government issues. In
 September 2016
www.InfralinePlus.com

a number of cases, their policies are have been overturned, relooked or even into those projects which are oth-
not in alignment. challenged. Most of the policies erwise not FDI-compliant. Hopefully
The second concern is inconsis- were either scrapped or amended. So results should be good. Policy change
tency in policy. Our governments take there is a big question mark over the is a kind of revolution, which was not
policy decision and people move on sanctity of the policy. expected. In India, our cities are over-
that. But when half of the work is burdened by population. If services
completed, policy is relooked at by the Government has eased condi- are delivered to users in a hassle-free
government or by court or by media tions for foreign direct invest- manner, then it is a smart city.
trial. Policy is again reworked. Cred- ment inflows into real estate. Security concerns are electronically
ibility of policy is a big question mark What do you think will be its managed. Infrastructure is optimised
on arrival of big investment. There is a impact on the sector? to cater to the requirement of popu-
sudden change in policy. FDI norms for the real estate sector lation. Smart cities are as much about
Policy decisions taken by the were never so liberal. Permission has infrastructure as about citizens.
government over the last 50 years been allowed for foreign fund inflows There is no fund shortage for smart
city projects. World situation too is
There is no fund shortage for smart city favourable as no other major economy
is doing as well as India. If investors do
projects. World situation too is favourable as not get return, they will never invest. If
no other major economy is doing as well as investors are unable to get their money
India. If investors do not get return, they will out, then also they will not bring
money. Municipalities in India are not
never invest. If investors are unable to get their groomed to handle large-sized infra-
money out, then also they will not bring money. structure projects. Municipalities will
Municipalities in India are not groomed to never take unpopular decisions. 57
handle largesized infrastructure projects
For suggestions email at feedback@infraline.com
 September 2016
www.InfralinePlus.com
InDepth
As solar rooftop goes slow, govt
doubles target for solar parks
58
Presently 21 solar parks have been approved with a cumulative capacity of 19,900 MW
Govt banks on aggressive mode shown by the developers in recent solar auctions
By Team InfralinePlus
The Ministry of New and Renewable
Energy (MNRE) is planning a second
phase of setting up solar parks across
the country with comprehensive plans
to increase the capacity to about 40
GW. The ministry is also said to
have sanctioned plans to implement
10 Solar Zones each consisting of
at least 10,000 hectares of land to
encourage solar PV project developers,
manufacturers and investors to help
achieve the countrys massive 100 GW
by 2022 solar targets. This scheme,
which will run up to 2020/21 using
government or privately-owned
wasteland, uncultivable land or
fallow land, will receive significant
portion of the funding from the central
government. Moreover, the U.S.
Agency for International Development
(USAID) and the Asian Development
Bank (ADB) have already signed
a memorandum of understanding
(MoU) with the central government to
provide $848 million of funding for
the development of solar parks across
the country. The zones will be able
to cover more than one patch of land
at a time. To count as a solar zone, it
must be possible to install transmission
systems in an economically feasible
manner on site.
The difference between Solar Zones
and Solar Parks is that the Government
will only facilitate the purchase of land
for the zones, but will not actually
acquire it. Furthermore, instead of
having transmission provided, solar
zones will have several intercon-
nection points set up in a manner
that prevents any developer from
having to build a line for more than 25
kilometres. JNNSM, Guidelines for
Development of Solar Parks, which
was released by the MNRE in Feb-
 September 2016
www.InfralinePlus.com

ruary this year, states, The solar park
is a concentrated zone of development
of solar power generation projects
and provides developers an area that
is well characterised with proper
infrastructure and access to amenities
and where the risk of the projects can
be minimised. Solar Park will also
facilitate developers by reducing the
number of required approvals.
Present status
At present, the Ministry has approved
solar parks in 21 states with a cumula-
tive capacity of 19,900 MW. Phase
II of the program will add another 20
GW of capacity. India plans to have
100 GW of operational solar capacity
by March 2022. This includes 20 GW
from solar parks and 40 GW from roof-
top solar power projects. However, the
Another encouraging measure has been the
move to develop a separate project for evacua-
market response to rooftop solar has
been rather weak compared to the solar
park program. Industry watchers have
expressed doubts about the huge roof-
top solar target. This, perhaps, could
be a reason for increasing the capacity
addition target under the solar park pro-
gram. Last year, Reliance Group had
signed an MoU to develop Solar Park
and Solar Projects of 6,000 MW capac-
ity, spread over nearly 30,000 acres,
over next six years, with a potential to
attract investment of about INR 60,000
crore in Rajasthan.
In the first phase, the MNRE
provided financial support through
viability gap funding (VGF) of INR
20 lakh per MW, or 30% of the cost
of developing the park, whichever
was lower. This may be increased
in the second phase if storage is
included. Bids for the first ever solar
projects to include storage at scale
have been invited in the latest round
of tenders in India. The preliminary
program, first announced in March,
involves the states of Andhra Pradesh
and Karnataka, as well as the Solar
Energy Corporation of India (SECI),
who will implement 300 MW of solar
and storage large-scale projects and
will seek two initial, 50 MW bids in
Andhra Pradesh. These solar projects
will also be developed with a 5
MW/2.5 MWh battery storage system
included, and the same specifications
are also being outlined for four 50
MW solar parks in Karnataka.
Each park under Phase-I has a
solar power park developer (SPPD)
usually, a venture between the SECI
and the nodal agency for renewable
energy in the state where the project is
coming up.
The scheme has been conceived
on the lines of Charanka Solar Park
59

tion of power from solar parks. The state-owned in Gujarat which is a first-of-its-kind
Power Grid Corporation of India (PowerGrid) large scale solar park in the country
aims at evacuating power from 20 solar parks with contiguous developed land and
transmission connectivity. This scheme
planned by 12 states. Accordingly, inter-state envisages supporting the states in
lines will be laid by the corporation and the intra- setting up solar parks at various loca-
state ones will be installed by state transmission tions in the country with a view to
utilities or by calling tenders. create required infrastructure for setting
up of solar power projects. The solar
parks will provide suitable developed
land with all clearances, transmission
system, water access, road connec-
tivity, communication network, etc.

Govt banks on aggressive

bidding
The government is banking on the ag-
gressive mode shown by the developers
in recent auctions for the success of
solar park scheme. The latest Indian
solar auction has seen wining tariffs
return to extreme lows at INR 4.35/
kWh for 130 MW of PV in the Indian
state of Rajasthan. The auction, held by
NTPC, was for capacity outside solar
parks and the three successful players
were all Indian firms.
 September 2016
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InDepth

Details of 130 MW PV solar project auction in Rajasthan However, a total of 16 developers

were all willing to put in bids below
Developer Bid (INR/kWh) Capacity (MW)
five rupees per unit. Tariffs below
Shapoorji Pallonji 4.35 50 five rupees have divided industry
Mahindra Susten 4.35 60 commentators over the last six months
Adani 4.36 20 as they speculated over just how
Source: PV Tech, Bridge to India
bankable and viable such projects are.
The guidelines for solar power parks
Oil refineries plan to diversify into solar now! also states that large projects have the
potential to bring down the cost of
Indian downstream oil companies are the latest to express interest in de- solar power. It adds, Therefore, ultra
veloping large-scale solar power projects to meet electricity demand. Two mega solar power projects having a
of the leading oil refining companies in India Indian Oil Corporation capacity of 500 MW or above have
and Oil India are planning to set up 1 GW of solar capacity in state of been planned in India. Large chunks
Madhya Pradesh to power their operations. of land are available in some states for
Over the last few months, several entities across the country have express solar park development. Smaller parks
intentions to source electricity from solar projects. With the steep fall in tar- in Himalayan and other hilly states
iff bids, they hope to sign long-term power purchase agreements (PPAs) where contiguous land may be difficult
with solar projects and bypass rising coal-based power costs. Solar PPAs to acquire in view of the difficult
will also help them fulfil their renewable purchase obligations (RPOs). terrain are also being considered.
Indian miner and power producer Neyveli Lignite Corporation Ltd (NLC), is Smaller parks are also being considered
interested in building a 300 MW solar power facility in Odisha state. NLC in states where there is acute shortage
had earlier announced its intention to construct solar parks totalling 50 of non-agricultural lands.
MW in Andaman under an action plan prepared by MNRE. Under the scheme for the
60
development of solar parks, another
Under the scheme for the development of solar encouraging measure has been the
parks, another encouraging measure has been move to develop a separate project
for evacuation of power from solar
the move to develop a separate project for evacu- parks. The state-owned Power Grid
ation of power from solar parks. The state-owned Corporation of India (PowerGrid)
Power Grid Corporation of India (PowerGrid) aims aims at evacuating power from 20
at evacuating power from 20 solar parks planned solar parks planned by 12 states.
by 12 states. Accordingly, inter-state lines will be Accordingly, inter-state lines will
laid by the corporation and the intra-state ones be laid by the corporation and the
will be installed by state transmission utilities intra-state ones will be installed by
state transmission utilities or by
calling tenders. Out of 20 capacity of
ultra-mega solar power parks envisaged
in 12 states, about 17 GW would be
evacuated inter-state and the rest by
state transmission utilities.
As roof-top installations progress
is slower than anticipated and U.S.
company SunEdisons projects
are threatened by its bankruptcy,
the ministry is banking on solar
power parks to set the benchmark
in achieving 100 GW solar target
by2022.

For suggestions email at feedback@infraline.com


InDepth
Government looks at providing
impetus to small hydro programme
Small hydro has a target of just 5 GW compared to 100 GW of Solar and 60 GW of Wind
MNRE estimates the potential of SHP in India to be about 20 GW
By Team InfralinePlus
Clean power is the new buzzword
in the Indian power sector. Keeping
in mind Indias global commitment
towards climate change obligations and
increase of renewables in the total ener-
gy mix of the countrys installed capac-
ity, several projects in solar and wind
sectors have been planned over the
course of next 5-6 years. Contrary to
this, the share of hydropower in coun-
trys energy mix is falling precipitously
due to the rather slow pace of capacity
addition. As the Government of India
(GoI) moves towards fulfilling its
commitments under the COP21 of the
United Nations Framework Convention
on Climate Change (UNFCCC), the
development of renewable energy with
a view to provide reliable, sustainable
and affordable energy to all consum-
ers is becoming a top priority.
The government has set ambitious
targets for 2022 for renewable energy
involving a huge expansion in the solar
September 2016
www.InfralinePlus.com
61
and wind sector. However, this vision
for the future does not accord the same
priority to other sources of renewable
energy, especially small hydro which
has a target of 5 GW, compared to 100
GW of Solar and 60 GW of Wind.
Current Progress
After unveiling its big plans for har-
nessing solar energy and wind energy,
the government seems to have turned
its focus on small hydro sector with
 September 2016
www.InfralinePlus.com

InDepth

a draft mission document (National Plan budget for small hydro pro- Mini - 101 to 2000 kW and Small -
Mission on Small Hydro) already been gramme. No direct subsidy to private 2001 to 25000 kW.
prepared, with the aim of setting up sector projects is envisaged in Phase II
5000 MW of small hydro projects in of the Mission.This gap in priority has An alternative to big dams?
the next five years. to be looked at more closely because if According to a new study, small hydro-
National Mission on Small Hydro is small hydro projects (SHP) are imple- power projects (SHPs) (projects up to
essentially to address difficulties being mented and planned with expertise, 25 MW) are considered safer than big
faced by the private developers. These they can lead to a non-consumptive dams in Indias quake-prone western
require some policy changes and some and non-polluting use of the coun- Himalayas, but projects to build them get
fiscal facilitations more than direct trys vast water resources to provide bogged down by administrative delays
financial benefits. However, some reliable power. Further, this power can and other factors. While Indias total
activities of the Phase I of the Mission be used to counter the infirm nature of installed capacity for small hydro power
would require financial investments. It other sources of renewable energy such (SHP) units reported a significant in-
is assessed that the financial require- as solar and wind. crease from 1,909 MW as in March 2006
ments of Phase I of the Mission, which The MNRE estimates that the to 4,274 MW (as of May 2016) thereby
is more of a preparatory to the Phase II, potential of SHP in India is about 20 taking up SHPs share of the countrys
can be met within the XII Plan alloca- GW and present installed capacity total installed renewable energy (RE)
tions for the small hydro programme. is 4.27 GW. Generally, all hydro capacity to almost 12%, considerable
The funds required for Phase II will projects under 25 MW are classified potential still remains untapped across
be worked out in the second year of as small hydro, these are further sub- states with favourable SHP potential.
phase I and would be part of the XIII divided into Micro Up to 100 kW, The low utilization of the countrys
SHP potential is attributable to several
National Mission on Small Hydro is essentially to factors, including: challenges in setting
up plants in difficult and remote terrain;
62 address difficulties being faced by the private de- delays in acquiring land and obtaining
velopers. These require some policy changes and statutory clearances; inadequate grid
some fiscal facilitations more than direct financial connectivity; and high wheeling and
benefits. However, some activities of the Phase I of open access charges in some states. The
the Mission would require financial investments. further development of small hydro
It is assessed that the financial requirements of projects has been hampered mainly by
rising costs, with the construction costs
Phase I of the Mission, which is more of a prepara- of these projects increasing to INR
tory to the Phase II, can be met within the XII Plan 8.5 Crore to 9.5 Crore per MW from
allocations for the small hydro programme between INR 5 Crore and 6 Crore per
MW a few years ago.
Small hydro projects usually do
not require building a reservoir and
therefore, mitigate the problems of
resettlement and deforestation. They
have the potential to meet the require-
ments of remote areas and have zero
emissions while generating electricity.
Further, they can either be connected to
the grid or can be in the form of decen-
tralised generation (micro hydel and
watermills). According to research and
ratings agency ICRA, small hydro plants
have certain inherent advantages. They
generate clean energy at a competitive
cost; have features that make them
suitable for peaking operations; are less
affected by rehabilitation and reset-

tlement (R&R) problems as against large
hydro power plants. They can also meet
the power requirements of remote and
isolated areas apart from using mature
and largely indigenous technology.
These are typically run of the
river hydro that just need a turbine to
generate and can be easily maintained
without causing a lot of hassles. Plus,
something like a pumped storage can
be used to shave power demand peaks,
which would be very helpful as the
peak load spikes further.
Smaller hydro power projects
require higher level of investments,
which means higher tariffs to
become economically viable. This
is further compounded by the
regulatory challenges to determine
tariffs as costs can vary widely for
similar projects under different
geographical conditions. In terms of
its positioning, its remoteness is often
counterproductive as it leads to higher
transmission costs and often there is an
absence of high voltage transmission
lines in such locations leading to heavy
line losses. Operation and maintenance
costs also rise as a result of the
aforementioned issues. Along with
these, procedural delays have impaired
the development of this segment to a
large extent. These procedural delays
are closely tied to the issue of acquiring
land and environmental clearance that
Smaller hydro power
projects require higher
level of investments,
which means higher
tariffs to become eco-
nomically viable. This is
further compounded by
the regulatory challeng-
es to determine tariffs
as costs can vary widely
for similar projects
under different geo-
graphical conditions. In
terms of its positioning,
its remoteness is often
counterproductive as it
leads to higher trans-
mission costs
September 2016
www.InfralinePlus.com
often leads to delay in installation and
implementation of the project.
Conclusion
To develop the sector sustainably, there
is a need for specific policy and regula-
tory support for the promotion of small
hydro. Also new technologies that
maximises efficiency and minimize
environmental damage (for example,
damage to fish) have to be promoted
along with ensuring that there is a
single window system of clearances.
A multi-stakeholder approach may be
adopted before clearance of project
which involves the local community,
which will not only mitigate the social
implications of such projects but also
shield the developers from future
bottlenecks relating to ecological and
socio-political concerns.
With greater policy and regulatory
support for developers and a greater
emphasis on minimizing socio- 63
ecological damage, small hydro can
go a long way in helping the country
achieve its aim of 24x7 clean power.
For suggestions email at feedback@infraline.com
 September 2016
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StatisticsRenewableEnergy
1) Programme/ Scheme wise Physical Progress in 2016-17 (& during the month of July, 2016)

FY- 2016-17
Cumulative Achievements
Sector Achievement (April
Target (as on 31.07.2016)
- July, 2016)
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW)
Wind Power 4000.00 663.70 27441.15
Solar Power 12000.00 1299.14 8062.00
Small Hydro Power 250.00 30.30 4304.27
BioPower (Biomass & Gasification 400.00 29.50 4860.83
and Bagasse Cogeneration)
Waste to Power 10.00 7.50 115.08
Total 16660.00 2030.14 44783.33
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MWEQ)
Waste to Energy 15.00 1.23 161.39
Biomass(non-bagasse) 60.00 0.00 651.91
Cogeneration
Biomass Gasifiers 2.00 0.00 18.15
- Rural 8.00 0.00 164.24
- Industrial
64
Aero-Genrators/Hybrid systems 1.00 0.10 2.79
SPV Systems 100.00 3.40 325.40
Water mills/micro hydel 1 MW + 500 Water Mills 0.10 MW + 100 Water Mills 18.81
Total 187.00 4.83 1342.69
III. OTHER RENEWABLE ENERGY SYSTEMS
Family Biogas Plants (in Lakhs) 1.00 0.05 48.60

Source: MNRE

2) REC Trading Volume and Price for August 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 21,937 2,192,565 21,937 3,500 516

August 2016
Non-Solar 136,352 7,336,837 136,352 1,500 853

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 122539 5407315 1500 122539
August 2016
Solar 18041 1290791 3500 18041
Source: PXIL
 September 2016
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3. Commissioning Status of Grid Connected Solar 4. State-wise installed capacity of grid connected
Power Projects (as on 31-07-16) solar rooftop systems
Sr. Total cumulative capac- Sl. Capacity Commissioned
State/UT State
No. ity till 31-07-16 (in MW) No. (as on 30.06.2016) (MWp)
1 Andhra Pradesh 935.800 1 Andhra Pradesh 5.1
2 Arunachal Pradesh 0.265 2 Assam 0.1
3 Bihar 80.100
3 Bihar 0.6
4 Chhattisgarh 123.780
4 Tamil Nadu 50
5 Gujarat 1123.363
5 Chandigarh 8
6 Haryana 15.387
7 Jharkhand 16.186 6 Gujarat 37
8 Karnataka 238.322 7 Punjab 33.4
9 Kerala 13.045 8 Jharkhand 0.4
10 Madhya Pradesh 790.370 9 J&K 1
11 Maharashtra 385.756 10 Haryana 18.3
12 Odisha 66.920 11 Himachal Pradesh 0.2
13 Punjab 520.700 12 Kerala 1.2
14 Rajasthan 1294.600
13 Karnataka 18
15 Tamil Nadu 1267.414
14 Madhya Pradesh 4.1
16 Telangana 845.843
17 Tripura 5.000 15 Maharashtra 11.7
18 Uttar Pradesh 143.495 16 Mizoram 0.1
19 Uttarakhand 41.145 17 Odisha 0.9
20 West Bengal 11.772 18 Delhi 29.5
21 Andaman & Nicobar 5.100 19 Rajasthan 6.2
22 Delhi 23.870 20 Chhattisgarh 18.8 65
23 Lakshadweep 0.750 21 Telangana 15.9
24 Puducherry 0.025
22 Uttarakhand 6.1
25 Chandigarh 6.806
23 Uttar Pradesh 17.8
26 Daman & Diu 4.000
27 J&K 1.000 24 West Bengal 2.6
28 Himachal Pradesh 0.201 A Sub total 287.2
29 Mizoram 0.100 B Others (Railways, Delhi 28.6
30 Others (PSU/channel partner) 100.924 Metro, Airport Authority of
under Rooftop India, Other PSUs etc.)
TOTAL 8062.039 Total (A+ B) 315.8
Source: MNRE Source: MNRE

5. Installed Capacity of Biogas Plants as on 31/07/2016

Total nos. of biogas plants set up Total nos. of biogas plants set up
State
during the period (2012-13 to 2015-16) during 2016-17 (upto 31.07.2016)
Assam 28497 1500
Sikkim 718 NR
Odisha 15851 176
Rajasthan 2667 95
Gujarat 10821 300
Maharashtra 61303 870
Telangana 18999 806
Kerala 12689 178
Chhattisgarh 12715 269
Punjab 33112 835
Total 197372 5029
Source: MNRE
 September 2016
www.InfralinePlus.com

OffBeat
Infraline conducts Indias first legal
conference for energy sector
Conference was attended by prominent legal experts from the energy
sector in the country
Focused on developing more sustainable and efficient legal and regulatory
framework for energy sector

66

By Team InfralinePlus

Infraline Energy recently conducted Law- Assemble India Summit - Indias first legal
conference for the energy sector. The two-day conference was attended by legal experts
from the energy sector. The event focused on developing more sustainable and efficient legal
and regulatory framework for the energy sector in India. Various legal issues were discussed
such as litigation, compliance and risk, M&A, IP, Trademarks, patents, regulations driving the
energy sector, taxation, fraud, management, e-discovery in energy sector etc.
 September 2016
www.InfralinePlus.com

Sohail Barkatali, Jatinder (Jay)

Partner, Hogan
Lovells on the
changing face of the
energy sector and
what does it mean
for lawyers?
A rapidly changing
power sector with fewer
ultra mega projects, higher demand for renewable
energy projects, changing role of global utility com-
panies and emergence of secondary market
A very different global oil and gas environment with con-
tinued slide in crude oil prices, reduced spending on
new upstream developments and limited M&A activity.
Commodities have also been heavily impacted
whereby mining and resources sector is also being
directly impacted by continued downward pressure
on prices.
How it has impacted legal profession:
Lesser deals means there is less to go around
Smaller projects means lower legal budgets
Opportunities in new areas such as rooftop solar,
renewable energy projects, captive power plants,
secondary markets and dispute resolution
Softer fiscal forms of government support to help
projects, with a much greater emphasis on local
legal development and training of nationals, aca-
demia, etc.
More broadly, the legal profession is also currently
undergoing considerable reform on a global scale
Clients are increasingly looking to build real part-
nerships with advisors, requiring their advisors to
work on a value added rather than strict time
based basis, are aware of the social impact of
their projects, seeking diversity from their advisors
and also interested in the CSR, pro bono and
other activities of their advisors
Cheema, Partner,
Cyril Amarchand
Mangaldas on LNG
Sale and Purchase
Agreements
Risk dynamics include
global price volatility +
Current over-supply situ-
ation, makings of a buyers market, deciding whether
its a buyers market or sellers market, risk allo-
cation in a dynamic world, game-changer - LNG
regasification infrastructure and difference between
Business risk and Commodity risk
Delivery issues include who has the responsibility for
arranging shipping and insurance, who must deal with
import and export formalities, at what point does the
commodity risk pass from the seller to buyer and has
seller off loaded his business risk onto the buyer?
Product specifications include agreed specification,
extent of any flexibility and off-specification LNG
deliveries.
Defining the requirements and obligations regards
loading and unloading facilities, including buyers and
sellers respective obligations at loading and unloading
ports, requirements for notices (e.g. pre-arrival notices),
vessel preparation for loading and unloading, responsi- 67
bility for charges for delay and associated costs during
loading and unloading and assumption of the buyers
or the sellers ship-or-pay obligations.
Force majeure includes standard of care, termination
rights and relief for the buyers, downstream events of
force majeure, such as events affecting either parties
vessel or its regasification facilities, non-natural force
majeure events and total loss and constructive loss.
Commercial issues like diversion rights separate
considerations for buyers and sellers, price and price
reviews, base price and indexation, crucial difference
between data and information in a non-trans-
parent market and taxation

Mr. Alok Pandey, Deputy General Manager, Powergrid Corp. Ltd., on

Arbitration
The Arbitration & Conciliation Act enacted in 1996 regulates all the Arbitration in our
county.
The Arbitration and Conciliation (Amendment) Act, 2015 (Amendment Act) was
passed by both houses of parliament in the winter session, pursuant to which it
has received Presidential assent on 31 December 2015. The Act was notified in the
Gazette of India on 1 January 2016 and has now come in to force.
The intent of the legislature both times seems to be clear and yet we seem to be
already falling short in appreciating the same.
First and foremost the issue as to who should be an arbitrator needs some insight.
Secondly, the procedural aspects should be given some thought because as per Section 19 of the Act, if the
parties are free to determine their procedure and are not bound by CPC, in which case is it not possible to dis-
pense with hearings in every case except Cross-examination and Evidence?
Thirdly, the issue of fee was and is still a major bone of contention between the parties as sometimes it appears
that a fee higher than
 September 2016
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OffBeat

S. Ravi Shankar, Arbitration lawyer & Senior Partner, Law Senate

on The Impact Arbitration & Conciliation (Amendment) Act, 2015 in
Energy Disputes
Some of the attractions to foreign entities with respect to India seated international
arbitrations include:
Power to Chief Justice to designate an Institution to appoint arbitrators
Arbitrator from a Neutral Country mandatory S.11(9)
Fees fixed for the ad-hoc arbitrators on the basis of the value of the dispute (4th
Schedule) (No sitting, reading & writing fee)
Arbitral Institutions are allowed to have a higher Fee scale
An arbitration has to be completed within 12 months
Both parties can jointly extend the completion period by 6 months
Fast Track Arbitration S.29B to be completed with in 6 months
If Arbitrator can not complete the arbitration within the time limit he looses the mandate to continue the arbitration
Interim orders can be granted by Indian Courts in support of Foreign seated International Arbitrations
No automatic stay on filing of an appeal challenging an Arbitral award S.36, while granting stay courts can
impose terms

Richa Pandey, Partner, Yogesh Singh,

Krishna & Saurastri Partner, Trilegal
Associates on Patent on Mergers &
prosecution challenges in Acquisitions in
68
India energy sector
She discussed issues relating Investment
to patent filing trends in India, routes FDI,
Section 8, working requirement, Portfolio
divisional application and claim amendments. investment, FVCI and ECB/loans
Working requirement: Section 146 (2), every patentee shall M&A structures- share purchase and asset
furnish statements as to the extent to which the patented purchase
invention has been worked on a commercial case in India, Key transactional issues pertain to financial
84. Compulsory licences, (1) at any time after the expiration strength of counterparties, financing, land,
of three years from the date of the grant of a patent, any regulatory, environment, HR, antitrust,
person interested may make an application to the Controller deferred payment and anti-corruption
for grant of compulsory licence, on patent on any of the fol- Fund raising in M&A through internal accruals,
lowing grounds, namely (c) that the patented invention is issue of bonds, overseas leverage, NBFC
not worked in the territory of India.that a fee higher than deals and overseas funds

Mr. Prasad Shetty, Dr. Surat Singh, K. R. Nair, Director, Anupam Sharan, Mr. Pranav Mago,
Executive Director Managing Partner, President, Indian Wind Director, Sr. Leader Head (South Asia)
Ernst & Young (LLP) Dr. Surat & Associates Power Association Legal, Contract, Singapore International
(Northern Regional Compliance, American Arbitration Centre
Council) Express

For suggestions email at feedback@infraline.com


Reports & Studies
Indias current solar module capacity inadequate to meet annual demand: RBSA
The governments ambitious target of 60
Gw of solar power projects in the country
is not void of challenges, especially in
terms of funding and equipment. As per a
latest report by consulting and advisory
firm RBSA on solar power in India, the
requirement of 5,00,000 MVA by 2022 will
need an investment of Rs 43,000 crore.
However, at 5.6 Gw per annum, Indias solar
module manufacturing capacity would be
inadequate to meet the annual demand for
15 Gw as of now. At the same time, India
has mandated use of locally manufactured
solar cells for 3,000 Mw installations
(where developers have sought subsidies).
The US has challenged these norms at the
India will be oils next big growth centre: S&P Global Platts
Commodities price reporting agency S&P
Global Platts has projected that India would
become the next big growth centre for oil
based on the fact that demand for most
oil products hit record highs last year and
Fitch sees no change in OIL rating post royalty math revision
Fitch Ratings said it does not expect state-
owned Oil Indias rating to change follow-
ing revision in how royalties on crude oil
produced from onshore fields are calculated.
However, the resulting additional payments
will lower the headroom under OILs BBB-
standalone credit assessment, Fitch said.
The government recently announced that
state-owned upstream oil producers must
pay state royalties on the gross value of
crude oil produced domestically instead of
the previous method of using the net price
after discounts to state-run refiners. The
new formula applies retrospectively from
February 2014, resulting in a back-payment
to cover the period up to 2015-16. As per
World Trade Organization. Laying out other
key challenges in meeting the target, the
report states that low bidding levels through
reverse auctions have been a major concern
at a time when the Indian banking sector
is going through its own challenges, which
could make borrowing much more difficult
the recent rising momentum of demand for
cleaner cooking gas or LPG. For most of
last year, demand has seen average of 10
per cent growth. Demand for most oil prod-
ucts hit record highs, the American agency
said in a report. Market participants expect
gasoline and gasoil to rebound to levels
closer to double digits in the second half
of the year, said S&P Platts Oil News and
Analysis Editor Sambit Mohanty. In addi-
tion, the policy move last month lifting sala-
ries of government employees could boost
car demand, which in turn could lift gasoline
consumption, he said. Meanwhile, LPG has
added a silver lining to the Indian growth
story, the report said. A raft of government
M&A even though the higher royalty pay-
Fitch estimate, OIL will need to pay a one-
time royalty fee of around Rs 1,150 crore,
amounting to about a quarter of its projected
Ebitda for 2016-17 end. This, along with
payments for acquisition of a share in Taas
Yuriakh and Vankor from Russias national
September 2016
www.InfralinePlus.com
in the short-term. According to the Reserve
Bank of India (RBI) data, bank loans worth
Rs 7 lakh crore (about $103 billion) were
under stress as of the end 2015. Currently,
19 developers have bid for 2.9 Gw of solar
projects below Rs 5 (about $0.0735).
About 1.2 Gw of these projects have signed
power purchase agreements (PPAs), the
report stated. As per the RBSA report, the
ambitious target for solar power could also
face funding blues. At a capital cost of Rs
5.30 crore per Mw, the cost of setting up
1,00,000 Mw of solar plants works out to
Rs 5.30 lakh crore. Even at a debt-to-equity
ratio of 1:3, this will require debt to the tune
of Rs 3.5-4 lakh crore.
initiatives to promote clean fuels lifted LPG
demand to record highs in March. And the
momentum continues. We saw demand
growing by 9 per cent in June and around
10 per cent in the first half, Mohanty added.
The report noted that the government has 69
plans to provide more subsidies for 50 mil-
lion new LPG connections for lower income
families. This is leading analysts to believe
that LPG demand growth will be closer to
double-digits for the whole of 2016, it said.
In addition to LPG, a booming petrochemi-
cals sector has also come as a blessing for
naphtha, which saw demand growth of 16
per cent in June, it added.
oil company, Rosneft, is expected to weaken
OILs leverage beyond what is comfort-
able for its standalone credit assessment.
However, Fitch believes OILs leverage will
improve in 2017-18 in the absence of large
ments will reduce the companys netback,
Fitch said. Netback is the revenue after all
the costs for bringing one unit of oil to the
market. Fitch estimates OILs royalty charg-
es under the revised formula - and based on
the existing subsidy-sharing mechanism be-
tween the state and state-owned upstream
and downstream companies - to increase by
around USD 0.2 per barrel (bbl) at a crude
price of around USD 50 per bbl.
 September 2016
www.InfralinePlus.com
Reports & Studies
24x7 power for all, a humongous but achievable feat: PwC
Unrealistic power demand forecasting,
lack of information on existing power
assets, inadequate planning without
systematic system studies, delays in ap-
provals and competencies of electricity
utility staff are some of the roadblocks
that would heavily come in the way of
Shah panel says RIL must pay penalty to govt
70
The A P Shah committee has asked the
government to claim restitution from Reli-
ance Industries (RIL) for the unjust benefit
it received from the migration of gas from
state-run Oil and Natural Gas Corporations
(ONGC) block in the Krishna-Godavari basin
to the adjacent fields owned by the Mukesh
Ambani-led company. However, it states that
ONGC has no right on the restitution and no
Power costs may reduce by 50 paise per unit for plants
Coastal movement of coal could cut power
costs by 50 paise per unit for power plants
besides saving Rs 17,000 crore annually,
a report under governments ambitious
Sagarmala project has said. Sagarmala is an
ambitious port-led infrastructure develop-
ment programme of the government to
harness Indias 7,500 km coastline and its
perspective plan was launched by Prime
Minister Narendra Modi in April. Using the
right infrastructure and institutional sup-
port, India can coastally move 190 to 200
million tonne per annum (MTPA) of coal,
and save around Rs 17,000 crore per annum,
by 2025, said the governments final draft
governments aim to provide power 24x7,
a joint study by PwC and CII pointed out.
The study says achieving the objective of
Round- the-clock power supply pro-
gramme will not be an easy task. But im-
proved fuel availability scenario, achieving
target capacity additions well within time
or even earlier, increasing investments,
and aggressive bids for renewable energy
projects are some of the encouraging
trends that indicate that India can achieve
this humongous feat in the near future.
Nevertheless, concerns related to fund
availability due to poor financial condition
of utilities, lack of standard specifications
and utility centric tender conditions have
been haunting the sector.
locus standi to bring a tortious claim against
RIL for trespass/conversion since it does
not have any ownership rights or possessory
interest in the natural gas. The committee
did not quantify the restitution, leaving it to
the government to decide. It said whatever
benefit RIL received in terms of the migrated
gas is liable to be returned to the government.
The panel said it faced limitations in providing
a figure to the final value of the migrated gas
produced by RIL during the term of its lease,
because of the lack of data and the commit-
tees inherent technical limitations. While the
D&M (DeGolyer and MacNaughton) Report
has to form the basis for the migration of gas
up till 2015, subsequent migration of gas post-
2015 has to be inquired into by the Govern-
ment of India, it said.
report on cargo projections under Sagar-
mala. In 2013-14, nearly 740 MTPA of coal
moved through the country predominantly
through rail and of this barely 23 MTPA
moved through coastal shipping even though
Power prices at five years low
The short term prices of power bought
through exchanges have dipped five years
low, according to a report by Edelweiss.
This has led an increase of 30 per cent in
power bough through exchanges in the
last 6-9 months. A recent trend in the
short-term power market is that exchange
traded volumes (IEX and PXIL) have
surged sharply average 30 per cent year
on year jump over the past 6-9 months,
said the report. The average power prices
have touched lows of Rs 2.16 a unit (down
to Rs 2.35 in South). State discoms have
been using this opportunity to buy cheaper
power and back down the expensive
medium/ long term power, said Edelweiss.
It said private independent power producer
(IPPs) with some open capacity (Jindal
Power, Derang, DB Power, JP Nigrie, among
others) and located closer to coal mines
have been supplying in the exchange
market possibly earning some spread over
their marginal cost Rs 1.8- 1.9 a unit.
Meanwhile, the report said that the onset of
monsoon has resulted in decline in power
off take over the past 45 days. This year,
rainfall has largely been normal, leading to
subdued power demand from agricultural
and cooling demand, it said.
this mode costs one-sixth that of rail cost
at about 20 paisa per tonne against about
Rs 1.2 per tonne. More than 90 per cent of
the rail routes relevant to coal are running
at over 100 per cent utilization. With the
expected ramp-up in coal production by Coal
India Limited, India may need to move 1,000
to 1,200 MTPA coal across the country by
2025, creating tremendous pressure on the
already congested railways, the report said.
It carried out a logistics cost comparison for
all modal mix combinations for Indias 400
thermal power plants. The report said that
by using right infrastructure power costs to
power plants could be cut by 50 paise.

People in News
Urjit Patel named as the new RBI Governor
The Indian government has named insider
Urjit Patel as the new governor of the Re-
serve Bank of India, to replace popular
central banker Raghuram Rajan when his
term ends in September. The promotion of
deputy governor Patel ends weeks of fever-
ish speculation by the Indian media since
Rajan caught investors off guard in June
by announcing he was leaving to return to
academia. Patel is deft not just at monetary
policy formulation and the larger economic
policy reforms, the 52 year-old inflation
fighter is an expert at handling energy
sectors issues too. Patels experience in
the economic sphere boasts of an impres-
sive connection with the countrys energy
sector. From power distribution reforms to
the economics of climate change and the
contentious energy pricing issues to the in-
tricacies of upstream oil and gas production
- Raghuram Rajans lieutenant has dabbled
in all. A product of the London School of Eco-
nomics (LSE), Patel was part of several high
Ashok Chawla is new Chancellor at Teri University
The Energy and Resources Institute (Teri)
has officially appointed former Finance Sec-
Sekhar Basu gets 1-year extension as Atomic Energy Commission chief
Noted scientist Sekhar Basu today got one-
year extension, till September next year,
as Atomic Energy Secretary and Atomic
Energy Commission Chairman. He was
appointed to the posts in October last year
and his tenure was to end next month. The
Appointments Committee of Cabinet has
approved extension of tenure of Basu for a
period of one year beyond September 19,
2016, an order issued by Department of
Personnel and Training (DoPT) said. Basu is
an engineer of exceptional ability who has
level committees between 2000 and 2004
in the previous National Democratic Alliance
(NDA) regime including the Prime Ministers
Task Force on Infrastructure and the Expert
Group on State Electricity Boards (SEBs).
Prior to his appointment as the deputy
governor at the RBI in January 2013, Patel
was advisor (energy & infrastructure) at The
Boston Consulting Group. His other assign-
ments include president (business develop-
retary Ashok Chawla as the new Chancellor
of Teri University. The decision on the ap-
pointment was taken in its last meeting on
August 19 by the governing council of Teri.
With this, Teri ended its last association with
former Chancellor and Head R.K. Pachauri.
Pachauri stepped down as chairperson of
the UN Intergovernmental Panel on Climate
Change in February 2015 and proceeded on
leave from Teri, where he was the director
general. New Chancellor Chawla is also the
Chairman of Teri since February 2016. A
former head of the Competition Commis-
September 2016
www.InfralinePlus.com
ment) at Reliance Industries (RIL); member
of the Integrated Energy Policy Committee
of the Government of India; and member of
the Board, Gujarat State Petroleum Corpora-
tion Ltd. As part of the core team of experts
selected to frame the countrys energy policy
(IEP) in 2005 -- along with the likes of the
then planning commission member Kirit
Parikh, Administrative Staff College of In-
dias T L Sankar, and Department of Atomic
Energy Secretary Anil Kakodkar - Patel
played a key role in working out the blueprint
of the policy that has guided Indias energy
sector reforms over more than a decade.
The policy formulation turned around the
performance of the energy sector through
multiple ambitious reform initiatives includ-
ing market-linked resource allocation and
pricing of fossil fuel-led energy generation,
introduction of competitive energy markets
for the first time, transparent and targeted
subsidies, strengthening the role of indepen-
dent regulators for tariff setting.
71
sion of India and Finance Secretary, Chawla
is also the Chairman of the National Stock
Exchange. His work experience of over 40
years spans various sectors in the Govern-
ment of India and in international agencies.
The Council also inducted three new mem-
bers into the Governing Council, including
Co-Chairman of Forbes Marshall Naushad
Forbes, Prof. Basabi Bhaumik from Depart-
ment of Electrical Engineering, IIT Delhi
and Founder of Institute for Sustainable
Development and International Relations
(Paris) Prof. Laurence Tubiana.
played a lead role in multiple areas of nu-
clear science and engineering and is a major
contributor in establishing India as a leader
in nuclear field. He had been Director of
Bhabha Atomic Research Centre (BARC)
and chief executive of the Nuclear Recycle
Board (NRB). Basu, who was instrumental in
setting up reprocessing and waste manage-
ment facilities at Indira Gandhi Centre for
Atomic Research in Kalpakkam, is a recipi-
ent of Padma Shri award.
 September 2016
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People in News
L&Ts Naik says Subrahmanyan to take over from him Oct 1, 2017
Larsen & Toubros head AM Naik said
that SN Subrahmanyan, who is currently
deputy managing director and CEO, will
take over as his successor from October
1, 2017. Speculations regarding Naiks
successor have been doing the rounds
since 2012, when Naik was scheduled to
step down. Naik was given an extension
and while earlier this year he hinted that
Subrahmanyan could take the top job. He
will succeed me from October 1, 2017.
Theres no doubt, Naik said. It is learnt
that Subrahmanyan will be elevated as
Managing Director and will retain the post
Rathi Steel & Power Managing Director resigns
72
Rathi Steel and Power recently informed
that its Managing Director Pradeep Kumar
Rathi has resigned from the post with
effect from July 28, 2016. The company,
after due considerations, on August 24,
2016 has accepted Pradeep Kumar Rathis
request to vacate his office as Director and
GK Satish takes over as Director (BD), IOC
G K Satish has taken over as Director
(Planning and Business Development) of
Indian Oil Corp (IOC). Prior to this, he
was executive director in-charge (Gas
Business) at IOC. He replaces Debasis Sen
who superannuated on August 31, 2016. A
Graduate in Mechanical Engineering from
the National Institute of Technology, Surat
and a Post-Graduate in Management from
Management Development Institute, Gur-
gaon, Satish has over 30 years experience
in IOC in the areas of marketing opera-
tions, logistics, business development,
international trade, natural gas business
and human resources. He is also Chair-
man of IndianOil-Adani Gas Pvt Ltd, which
Managing Director of the company with ef-
fect from July 28, 2016, it said. Rathi, who
has been on companys Board of Directors
since August 27, 1994, was monitoring the
day to day affairs of the company. Rathi
Steel & Power (erstwhile Rathi Udyog
Ltd) is a part of the Delhi-based P C Rathi
of CEO. They added that decision on who
holds chairmanship is yet to be taken.
For years L&Ts succession plans have
been in limelight amid speculations on
whether Naik will finally hang his boots
and announce a successor. In 2012, when
he was to retire and new leadership was
to be announced, the company surprised
everyone by splitting the post of chairman
and managing director.
Group. In June, the firm had informed
that its CEO Udit Rathi has also resigned
from his post with effect from May 17,
2016. Besides, its Board in meeting held
in June had considered and approved the
demerger/or hiving of the Ghaziabad and
Orissa units of the company on slump sale
basis to unlock the value and to arrive at
long term viability solutions. Its Ghazi-
abad unit consists of steel rolling mills
having an installed capacity of 1.25 lakh
tonnes per annum (LTPA), a wire rod mill
and steel melting shop with 40,000 TPA
installed capacity comprising for manufac-
turing high end value added stainless steel
and alloy steel products.
is developing city gas distribution (CGD)
networks in various cities across the
country, and Chairman of IndianOil LNG
Pvt Ltd, which is setting up an LNG import
terminal at Ennore near Chennai. He is
also a Director on the Boards of Green Gas
Ltd, which is operating CGD networks in
Agra and Lucknow, and GSPL IndiaGasnet
Ltd and GSPL IndiaTransco Ltd, which are
implementing cross-country natural gas
pipelines. IOC also named Satish as its
nominee director on Petronet LngLtd to
replace Sen. IOC holds 12.5 per cent stake
in Petronet and has right to nominate one
director on board of Indias largest lique-
fied natural gas importer (LNG).
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