Iraq overtook Saudi Arabia as the top crude exporter to India in September for the third time in 2015, according to tanker data obtained by Reuters, as the two biggest OPEC producers battle for market share in leading Asian buyers. Saudi Arabia also lost its top spot in China last month, with Russia overtaking the world's biggest crude exporter as the main supplier for the second time this year. Traders attributed the shift to a hike in Saudi's official selling price (OSP) of crude. India imported 640,300 barrels per day (bpd) of oil from Saudi Arabia last month, about 30 percent lower than in August and the weakest in a year, the data obtained by Reuters and compiled by Thomson Reuters Oil Analytics showed. The figure was still up 12.8 percent from a year ago. While Saudi's market share in India is shrinking, Iraq is expanding its hold over one of the world's fastest-growing markets by offering attractive pricing. "Saudi sells oil at OSP under term deals, while Iraqi oil is also sold in the spot market. And in an oversupplied market you often find Iraqi barrels trading at discounts to the OSP," said Ehasan Ul-Haq, senior analyst at London-based consultancy KBC Energy Economics. India shipped in about a fifth of its imports from Iraq in September, while Saudi Arabia's share dropped to 17 percent from about 22 percent in August. Faced with more competition in Asia, Saudi Arabia is trying to make inroads into new markets like Poland and along with other big exporters prepare for more competition from Iranian crude. "When Iran comes to market it will be a tough fight between Iran, Iraq and Saudi," said Haq. In the first half of India's fiscal year running from April to September, Saudi Arabia supplied nearly 19 percent more oil to India at about 776,000 bpd, while volumes from Iraq surged 36 percent to about 676,000 bpd. India is also stepping up purchases from Africa, where more crude is available after China raised shipments from Russia and the United States began processing its own shale oil. India imported nearly 27 percent more African crude in April-September, mainly from Angola and Nigeria. India, which is Iran's second-biggest customer behind China, bought about 17 percent more oil from Tehran in the April-September period, the data showed. Overall oil imports by India slipped 7.4 percent last month from August as Essar Oil, which rarely buys Saudi oil, shut its 400,000 bpd refinery for a month from mid-September for maintenance. (Reuters)
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Meghalaya Chief Minister Mukul Sangma has been lobbying New Delhi to lift a ban on dangerous, small-scale coal mining operations in his state, without disclosing that his wife owns several mines there, according to documents seen by Reuters.So-called "rat-hole" mining practised in Meghalaya state killed thousands of workers, including children, before the ban was imposed in April last year. At its peak the state produced coal worth $4 billion a year, or about a tenth of India's total production, nearly all from this form of small-scale mining.In half a dozen letters to the central government, Sangma's administration has asked for help to revoke the ban imposed on rat-hole mining in the state by the National Green Tribunal (NGT), India's environment court.Sangma argues that the industry forms a large part of the impoverished state's income and the prohibition violates tribal law. He also plans to propose an alternative plan to regulate mining and address the court’s environmental concerns.In the letters, he does not say that his lawmaker wife, Dikkanchi D. Shira, owns six mines in the state. However, Sangma has said his family's interest in the mines was publicly known.A senior central government official with direct knowledge of the matter confirmed that Sangma had not talked about his family's ownership of the mines during discussions with New Delhi.In an interview, Sangma denied any conflict of interest.He said he had declared his family's interest in the mines to the election commission during state elections in 2013, as required under the country's polling laws. He had told the president of his political party about the mines as well."I was fortunate to get married to a rich wife, who inherited the mines," Sangma said.He said his wife's mines were in "running condition", but they stopped extracting coal after he first became chief minister of the state in 2010. Sangma has held several ministerial positions since 1998.There is no law on conflict of interest in India for ministers.An expert said Sangma's actions violate the government’s code of conduct that calls for ministers and their immediate families to sever ties with any business that depends "on licenses, permits, quotas, leases, etc., received or to be received from the government concerned."The code is not legally binding and carries no penalties for violations. "If your wife owns a certain mine, and you as the chief minister are writing letters, then it's a case of the office of the chief minister being used in support of a private business," said Ashutosh Kumar Mishra, executive director of Transparency International in India.Sangma said his push did not violate the code. "We know our responsibilities," he said, but declined to elaborate.Worker DeathsPrivate coal mining in Meghalaya, estimated to have 576 million tonnes or 0.2 percent of the country's total reserves, started in 1894. The practice became illegal in the 1970s, when India nationalised coal mines and gave state-run Coal India <COAL.NS>, the world's top coal miner, a monopoly.Still, private miners continued to operate there and the federal government did not interfere, given the state's remote location and the low quality of its coal.Nearly all mines in Meghalaya use the rat-hole mining method. Workers, often children, go down hundreds of feet on bamboo ladders and dig out coal from narrow, horizontal seams. There are frequent accidents. It also pollutes water bodies and kills fish.Impulse Social Enterprises, a non-profit that filed a petition in the National Green Tribunal that led to the ban, said 10,000 to 15,000 people were believed to have died in rat holes between 2007 and 2014 in Meghalaya.P.B.O. Warjri, Meghalaya's top bureaucrat, acknowledged workers had died in mining accidents. He did not say what steps the government had taken.Despite the NGT’s ban, some mines continue to operate.A visit in September to Sutnga village in the state’s main mining area showed cranes lifting coal out from a rat hole, while men filled two trucks for transport.Sangma told Reuters he will act against anybody found violating the court order.(Reuters)
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Indian Oil Corp, India's top refiner, is expected to start commercial operation at its new 300,000 barrels per day (bpd) Paradip refinery around March 2016, a top executive said on Wednesday.When the refinery reaches full capacity, it could temporarily cut the refiner's dependence on gasoline imports, said Mathew C. George, Chief Manager of Petrochemicals-Exports."We have already taken the crude in. Commercial operation will most probably be in March 2016," he said at the sidelines of Downstream Asia, an annual event held in Singapore."We are running into a gasoline shortage and it is compounded by the fact that India will move into Euro V and Euro VI (gasoline specifications)."India, which has some of the world's most polluted cities, trails mature markets in the emission rules it follows.While the big cities follow what are known as Bharat Stage IV norms that are the equivalent of Euro IV controls, smaller cities follow Bharat Stage III. Europe currently follows stricter Euro VI norms.When the Paradip refinery hits full capacity, IOC would cut its gasoline imports but that would last a year or a year-and-a-half, after which it would have to rely on imports again as demand would outgrew its supplies, said George.India has surplus refining capacity, mainly because of Reliance Industries and Essar Oil, but IOC on its own is lacking in gasoline supplies for now and importing the fuel is more economical.IOC was not a regular gasoline importer until February this year. It has sought over 900,000 tonnes of gasoline for March to December delivery to various ports including Kochi and ParadipGasoline demand in the country has risen after a cut in diesel subsidies increased the attractiveness of petrol cars.IOC also operates a naphtha cracker in Panipat which has a capacity of more than 800,000 tonnes of ethylene a year.It is currently running at full capacity, said George.The unit consumes over 2 million tonnes of naphtha produced at IOC's Gujarat, Mathura and Panipat plants."Ultimately, we've got to do something with all that naphtha. Being a crude-oriented economy, you will produce naphtha whether you like it or not."(Reuters)
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Oil and Natural Gas Corporation (ONGC) is expected to increase its upstream capital expenditure by 10 per cent next year and intensify its exploration activities, taking advantage of the current depressed global energy market. "We want to intensify our exploration activities," said Sahshi Shanker, director of technology and field services at ONGC. "We are securing more and more rigs," Shanker said at the annual Platts Top 250 Global Energy Company Rankings. Rig rates are down by 30-40 per cent on the year and other exploration services rates are down by 40-50 per cent, he said. Industry sources at the gala event said more and more rigs were being laid off while services companies seeking new contracts at discounted rates. According to Shanker ONGC is increasing its 2016 capital expenditure to about Rs 36,000 crores, up by about 10 per cent from the current Rs 33,000 crore. He pointed out that value of any exploration and production company increases through exploration activities. ONGC's intensified exploration is for the long-term growth. Meanwhile, 14 Indian energy companies were listed in the 2015 Platts Top 250 Global Energy Company Rankings, a financial performance roster of publicly traded companies with assets greater than $5 billion. With the first-time showing of National Hydroelectric Power Corporation LTD (NHPC) in the Top 250 Rankings, India scored a personal best in representation, with 14 energy companies on 2015 list, versus 13 a year ago. India's top three energy companies in the 2015 list were Reliance Industries at 14th position, ONGC at 17 and Coal India at 38. Last year, these three corporations were positioned at 22, 21 and 47 in global rankings which are based on assets, revenues, profits and return on invested capital for the prior fiscal year. Coal India was rated as the largest pure coal mining company in the world. Others in the list were Bharat Petroleum Corp Ltd, Indian Oil Corp Ltd, GAIL (India) Ltd, Power Grid Corp of India Ltd, Hindustan Petroleum Corp Ltd, Cairn India Ltd, Essar Oil Ltd, Reliance Infrastructure Ltd, NTPC Ltd and Oil India Ltd. (PTI)
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Government will announce 100 PPP projects in 2016-17 and is looking to award 10,000 kilometres of roads, 70 per cent of which should get completed by 2019. Ashish Sinha reports Roads, highways and shipping minister Nitin Gadkari said on Tuesday, October 26, 2015 that after the amendments to the regulations on roads and highway projects coming into effect, the Public Private Partnership (PPP) projects have become viable. As a result the government is set to announce 16 road projects under PPP mode before the year ends. But for 2016, the government is looking at rolling out at least 100 PPP projects, Gadkari said. “There is a need for capacity building and of increasing the number of contractors and investors in the sector to fast-track projects in PPP mode,” said Gadkari, at the fourth edition of FICCI’s ‘India PPP Summit’. Gadkari said that the government has taken decisive action to promote the hybrid model of PPP for encouraging investments by the private sector. According to the new norms, 40 per cent project cost would be funded by the government and the necessary land acquisition and environment clearances would be handed over to the private contractor prior to the commencement of the project. The private player would then need to invest the balance 60 per cent in the project, of which half would come from banks and financial institutions. Also, in such projects the toll would be collected by the government and a fixed annuity with a profit margin would be given to the private partner. Gadkari assured the industry that the government was committed to liberalizing regulations without compromising on quality to allow more private investors to enter the sector. He urged FICCI to play an active role and encourage investors to look at infrastructure as a profitable sector. According to the roads minister, the government is revamping the entire transport sector by giving a facelift to rail linkages, inland waterways, and ports. The government was working towards developing dry and satellite ports as well to provide better connectivity for moving cargo efficiently. The minister said government is looking to resolve the litigation issues with mutual consent to save time, money and move the projects ahead rapidly. He added that to maintain an ecological balance, a Green Highways Policy has been evolved to promote greening of highway corridors with participation of the community, farmers, private sector, NGOs, and government institutions. “One per cent of the total project cost as plantation fund will be kept in a separate account with NHAI,” he said. The roads ministry, according to the Secretary Vijay Chibber, is proposing to award 12,000 kms of national highway construction next year, of which around 7000-7500 kms will be completed in the next three years. In 2015-16, the ministry was involved in awarding 10,000 kms of roads of which 6,000 kms is nearing completion ashish.sinha@businessworld.in
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India's integrated power player, Hindustan Powerprojects has commissioned 1200 MW phase 1 (600 MW each for both the units) Anuppur thermal project by successfully conducting the boiler light-up test for the 2nd unit.The test signifies the readiness of the boiler for power generation process and the company has started the work for steam blowing and synchronization of the unit well within the scheduled timeline.Ratul Puri, Chairman, Hindustan Power said, “India has a unique opportunity over the next few years to become one of the leading economies, globally. For this to happen, we need a robust growth in our energy sector hence the objective of the organization is to deliver a state-of-the-art thermal project capable of sustainably generating high efficiencies. Needless to say that improved performance would also mean increased power availability. We are now at the doorsteps of commissioning 1200 MW which would play a critical role in addressing energy gap in the power deficient region. This milestone would not have been possible without the support and guidance of the community, local administration and stakeholders.”Raghav Trivedi President, Thermal business, Hindustan Power said, “The team of highly trained engineers conducted this test as per the prescribed best practices and standards. The focus now shifts to the take up steam blowing of the Unit which would signal the readiness of the power generation. Built using ESP technology, the plant at Anuppur is already being spoken about for its non-polluting operations.”The clean energy arm of Hindustan Powerprojects, the largest solar developer in the country has recently achieved the distinction of entering in to the credit enhanced bond market with the the Issue fully underwritten by Yes Bank. The clean energy arm is set to issue secured, rated, listed, partially guaranteed, debentures of Rs. 380,00,00,000 (Rupees three hundred and eighty crore) on a private placement basis to YES Bank Limited for three of its AA+ SO rated projects in, Gujarat.(Reuters)
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Simar SinghPiyush Goyal, Union Minister of State for Power, Coal, New and Renewable Energy on Monday said that state-owned Coal India Limited has clocked in a 9.4 per cent growth rate during the first half of the current fiscal year and expressed confidence that it would certainly achieve the targeted growth of 50 million tonnes in the annual production. The union minister also claimed that the company had achieved an impressive growth rate in the previous year which was more than the accumulated growth in production during the previous four years when the UPA was in power. Goyal was in Nagpur to inaugurate two open cast projects of the Western Coalfields Limited (WCL) at Dinesh and Yekona in the industrial Umped area. He said that the inauguration marked the fulfilment of the assurance that he had previously given, that one new mine would be opened per month. Cumulatively, the two projects, at their peak, are estimated to add to the current coal production capacity by 6.75 million tonnes. Out of this around 5.7 million tonnes of coal will be given to Maharashtra State Power Company (Mahagenco) and other powerhouses and is expected to generate an additional 1400 megawatts. Goyal added that these projects would provide job opportunities for 1,773 people and open up hundreds of indirect employment opportunities.
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By Amit Bhandari | IndiaSpend India’s state electricity utilities collectively owe Indian banks Rs 545,922 crore ($90.5 billion), according to the Power Finance Corporation’s latest report. This is a sum equivalent to two-and-a-half times the defence budget; roughly six times the amount that will be spent this financial year on building roads; and enough to wipe out India’s fiscal deficit. The data reveal the urgent need for electricity reforms and the amount of money being wasted at a time when India is cutting back on health and social-sector spending. Electricity utilities incurred a net loss of Rs 62,154 crore–$10.3 billion–during the financial year 2013-14. This is not a one-off: losses have been in this range for the past several years in a row. The annual loss of state utilities is more than twice the total allocation to Department of Health and Family Welfare and 10 times the budgetary allocation to the Ministry of Drinking Water and Sanitation. This money is enough to pay for 300 light combat aircraft Tejas–sufficient to meet Indian Air Force’s need for new squadrons. If supplying electricity were an actual business–as it is in many countries–it would have been bankrupt, with lenders worrying about recovering their money. As it happens, since the borrowers are owned by the state governments, they continue to be shown as viable, as are their standard assets. Why are state utilities such loss makers? The primary business of these utilities is to sell electricity to consumers – industries, commercial establishments, households and agriculture. During FY14, their average cost of supply was Rs 5.15 per unit while the average selling price was Rs 4 per unit. So, these utilities lose Rs 1.15 per unit. However, this is not an across-the-board loss that is incurred on all electricity sales–far from it. Utilities are losing money because large groups of customers are either paying very little or not at all for power. India’s power companies lose a large volume of power to unmetered consumers, to outright theft and to technical losses due to poor systems. During FY14, these losses accounted for 22.7% of all electricity generated by utilities–meaning, for over one-fifth of their product, the utilities got no revenue. There are other consumers that pay only a fraction of the actual price of electricity. Agricultural consumers used 22% of total electricity during FY14 but accounted for only 8% of the revenue. This is because electricity for farmers is free in many states and is highly subsidised in most others. In short, 44.7% of the product gets in just 8% of the revenue. As a result, other users end up paying much more. For instance, in Haryana, agricultural users pay less than 50 paise per unit, while industrial users pay more than Rs 5 per unit. A similar trend is visible in states like Andhra Pradesh (before the division) and Uttar Pradesh–industry pays prices 4-10 times higher than those for agricultural users. In cities like Mumbai, industrial and commercial users often pay over Rs 10 per unit for electricity, which IndiaSpend has reported earlier. At an all-India level, agricultural users pay less than Rs 2 per unit, while industrial and commercial users pay upwards of Rs 6 per unit and Rs 7 per unit, respectively. The result: State companies are driving away their best customers One impact of this distorted pricing structure has been that large industrial consumers–the kind who subsidise agriculture and make up the losses from power theft–are gradually moving away from state electricity boards. Large electricity users can and do set up captive generation plants–which added up to 36,500 megawatts of capacity by 2012, according to the erstwhile Planning Commission. This was almost a sixth of the electricity generation capacity of utilities. By overcharging them, the state electricity boards are driving away their best and biggest customers–and sinking further. Second, because they incur heavy losses, the utilities cannot upgrade infrastructure, and since they lose money on electricity sales, they try to source only the cheapest possible electricity–generated using subsidised fuel from Coal India. This means several private-sector power plants, which buy their coal internationally, have little incentive to generate electricity. From April to September 2015, central-government-owned NTPC’s coal-based power plants operated at 72% of their capacity while private-sector utilities operated at 57%. State-sector plants are in a worse situation; paying for fuel/operations isn’t always possible, and they operate at 54% of their capacity. Finally, the losses also mean that state utilities cannot or will not pay for renewable energy, which doesn’t pollute the environment but is more expensive than coal or nuclear power. It is a nascent technology with a high, but decreasing, cost. For 2015-16, Central Electricity Regulatory Commission (CERC) has set a tariff of Rs 7-12 per unit for solar electricity generated from different technologies. A financially unviable electricity sector means investments in next-generation technologies, such as renewable energy, will be seriously hobbled. (Amit Bhandari, is a media, research and finance professional. He holds a B-Tech from IIT-BHU and an MBA from IIM-Ahmedabad.)
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