The Indian renewable energy industry is on the cusp of a major transition. The new government, under Prime Minister Narendra Modi, has charted a vision for clean and affordable energy with emphasis on renewables. Thus, renewables will play a significant role in achieving the energy security objective, promising to offer 24x7 energy access to all by 2019. The foundation for this role will be laid in 2015.
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Trade unions on Tuesday began a five-day coal industry strike, terming it as the biggest industrial action for any sector since 1977. The unions have gone on strike to protest against "disinvestment and restructuring of state-run Coal India" and to press for their other demands including the roll-back of what they call as "process of denationalising of coal sector". While All India Coal Workers Federation leader Jibon Roy said in a statement that about seven lakh workers are joining the strike, the government has also called a meeting on Tuesday with representatives of major trade unions - BMS, INTUC, AITUC, CITU and HMS - to sort out the issue. The strike can affect coal production of up to 1.5 million tonnes a day and may also hit supplies to power plants which are already grappling with fuel shortages. "We are hopeful the situation would be resolved in an amicable manner. The precise impact of the strike would be known later and it would be premature to predict (the impact) at this juncture," Coal India's newly appointed chairman Sutirtha Bhattacharya said. "It is true that production picks up tempo in the last quarter, as the closure of fiscal draws near. It is unfortunate that the unions have called the strike. We have appealed to them to withdraw the strike in national interest and even now our efforts are on to persuade them to refrain from going into strike," he said. The trade unions have boycotted earlier meeting called by the government twice. "The workers across the nation have proceeded on strike," Indian National Mineworkers' Federation (INMF) Secretary General S.Q. Zama said. He said the strike began from the first shift starting 6 am. "Almost 100 per cent of Coal India (CIL) workers are participating in the agitation. Only handful of emergency services are continuing," he said, while adding that around 70-80 per cent of SCCL (Singareni Collieries Company Ltd) workers are also protesting. A Coal India official said "there is picketing outside CIL headquarters in Kolkata as of now." The protest comes at a time when the power plants across the country are grappling with fuel shortages. Coal India Ltd had earlier said that it has already stepped up supplies of the power plants, which have been facing fuel shortages, to tide over the likely disruption of supplies due to the strike. But with a fifth of India's 100 power plants monitored by the Central Electricity Authority running on coal stocks of less than 4 days, the strike could aggravate the shortage and lead to power cuts in parts of the country. "CIL is suppling extra volumes of coal to the power plants and the Railways is fully cooperating with the coal PSU," an official said on Monday. CIL, which accounts for over 80 per cent of domestic coal production, has a workforce of over 300,000. All five major trade unions of the coal PSU had boycotted a meeting called by Coal Minister Piyush Goyal last week. Electricity workers union EEFI has also extended its support to the strike call. (Agencies)
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The selloff in global oil markets showed little signs of slowing in the new year, with prices down as much as 6 percent on Monday, the lowest since spring 2009, as fears deepened a supply glut that has vexed the market for six months would continue. U.S crude crashed below $50 a barrel while benchmark Brent tumbled under $53 after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports near 35-year peaks. U.S. driller ConocoPhillips added to the bearish mood by announcing it struck first oil at a Norwegian North Sea project. Top crude exporter Saudi Arabia revealed it made deep cuts to its monthly oil prices for European buyers, the sixth time since June it has slashed prices, corresponding with the rout in crude futures markets over the period. Analysts read the latest cut as reflecting Saudi Arabia's fierce defence of its market share. The Organization of the Petroleum Exporting Countries kingpin also trimmed its prices for U.S. refiners for a sixth straight month, while raising rates for Asia. The euro's tumble to 2006 lows, and slower-than-expected growth in U.S. manufacturing, completed the perfect storm for the oil markets. "There's no doubt that we have a combination of supplies hitting their zenith at a time when demand is weakening," said Phil Flynn, an analyst at Price Futures Group in Chicago. U.S. crude settled down $2.65, or 5 percent, at $50.04 a barrel, and was at a post-settlement low of $49.77 by 3:15 p.m. ET (2015 GMT). The last time U.S. crude traded below $50 was in April 2009. Front-month Brent closed down $3.31, or almost 6 percent, at $53.11 a barrel. It dropped earlier to $52.66, its lowest since May 2009. Oil has plunged nearly 55 percent in value since June, when Brent traded above $117 a barrel and U.S. crude above $107. The selloff, which began on concerns of oversupply in high quality U.S. shale crude, accelerated after the OPEC meeting in November, when Saudi Arabia ruled out production cuts as a means of boosting prices. The kingdom reasoned that reducing output will hurt its market share instead. Some traders seem certain that U.S. crude will be trading in the $40 region later in the week if weekly oil inventory numbers for the United States on Wednesday show another supply build. "We're headed for a four-handle," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York. "Maybe not today, but I’m sure when you get the inventory numbers that come out this week, we definitely will." Open interest for $40-$50 strike puts in U.S. crude have risen several fold since the start of December, while $20-$30 puts for June 2015 have traded, said Stephen Schork, editor of Pennsylvania-based The Schork Report. Russia's oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7 percent thanks to small non-state producers, Energy Ministry data showed. Iraq's oil exports were at their highest since 1980 in December, an oil ministry spokesman said, with record sales from the country's southern terminals. The Russian and Iraqi data overshadowed reports of drops in Libya's oil output because of conflict in that country. Libya's oil output has fallen to around 380,000 bpd after the closure of the OPEC producer's biggest oil port, Es Sider, along with another oil port, Ras Lanuf. (Reuters)
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The Coal India management has appealed to its workers' unions to reconsider their call for a five-day strike from Tuesday. According to a release issued by the Western Coalfield Ltd (WCL), a subsidiary company of Coal India Ltd, the proposed strike would disturb coal supply to the power plants in the country. The strike has been called by all unions of Coal India Ltd and its subsidiary companies. Appealing to the unions to reconsider their decision, WCL Chairman and Managing Director Rajiv Ranjan Mishra said that the strike would hit the company's financial position again and lead to losses this year as well. Central trade unions, including INTUC, BMS, AITUC, HMS and CITU, have given a strike notice to Coal India and called the stir from January 6 to January 10. INTUC Public Relations Officer Pradeep Kokase told PTI that the government plans to introduce a Bill in order to privatise the sector. "We have called a strike over our demands, which would favour workers. We have trained manpower, which the private sector does not have. We are confident that we will achieve our target production," he said. WCL has said that since coal industry is a public utility, it is illegal for the workers associated with it to go on a strike. Extra Coal For PlantsCoal India is transporting extra volumes of coal to power plants ahead of the strike that threatens to cut much of its per-day output of 1.6 million tonnes, two company officials told Reuters on Monday. The company accounts for about 80 per cent of India's total output and worker strikes have previously crippled power plants. Coal fuels 60 per cent of the country's power production. To cover for the loss from the strike, Coal India has been transporting coal in 225 trains over the past few days instead of 207 per day, said one of the officials. A train, called a rake by the commodities industry, can transport 4,000 tonnes of coal per day. But with a fifth of India's 100 power plants monitored by the Central Electricity Authority running on coal stocks of less than 4 days, the strike could still aggravate the shortage and lead to power cuts in parts of the country. This could also boost shipments into India, the world's third largest coal importer. (Agencies)
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Prime Minister Narendra Modi has ramped up his target for solar energy as he bets on renewables to help meet rising power demand and overcome the frequent outages that plague Asia's third largest economy, a senior official told Reuters. India gets twice as much sunshine as many European countries that use solar power. But the clean energy source contributes less than 1 per cent to India's energy mix, while its dependence on erratic coal supplies causes chronic power cuts that idle industry and hurt growth. Modi now wants companies from China, Japan, Germany and the United States to lead investments of $100 billion over seven years to boost India's solar energy capacity by 33 times to 100,000 megawatts (MW), said Upendra Tripathy, the top official in the Ministry of New and Renewable Energy. That would raise solar's share of India's total energy mix to more than 10 per cent. In Germany, a leader in renewable energy, solar accounted for about 6 per cent of total power generated in 2014. India had earlier set an investment target of $100 billion for the next five years for all types of renewable energy, with wind taking up two-thirds of the total. In an interview, Tripathy said Modi's new solar target was ambitious, "but if you do not have a higher goal, you will not achieve anything". Canadian Solar and China's JA solar told Reuters they are looking at making cells or modules - used in solar panels - in India. JinkoSolar Holdings said recent announcements have also raised their interest. US based First Solar and SunEdison Inc have sizeable businesses in India, and together with local firms will invest $6 billion in India for the fiscal year to March 31. Tripathy expects new and existing companies to invest about $14 billion annually starting next fiscal year through to 2022. Among First Solar's top projects are two plants with Kiran Energy Solar Power and Mahindra Solar One totalling 50 MW in Rajasthan. SunEdison is working on a 39 MW project in India and hopes to participate in the solar expansion plan, said regional managing director Pashupathy Gopalan. Cost ChallengeSolar energy in India costs up to 50 per cent more than power from sources like coal. But the government expects the rising efficiency and falling cost of solar panels, cheaper capital and increasing thermal tariffs to close the gap within three years. Modi promised on high-profile visits to Japan and the United States last year to help solar companies overcome barriers to entering the Indian market. "Their basic problems are who is the buyer, where is the land and can India have a regime where they can raise low-cost capital?" Tripathy said. "These three issues have to be addressed and we are addressing them." To create sufficient demand, power distributors will have to raise renewable energy purchases to 8 per cent from 3 per cent by 2020. There is also a plan to require new thermal plants to have a 10 per cent renewable mix, which they can generate or buy from solar companies as credit. India recently signed a $1 billion agreement with the Export-Import Bank of the United States for companies willing to ship equipment from that country. India is also thinking of solar bonds and helping foreign firms raise rupee bonds to cut costs. Foreign companies say they are enthused by Modi's personal interest, but red tape is still an issue. "The policy framework needs to be improved vastly. Documentation is cumbersome. Land acquisition is time-consuming. Securing debt funding in India and financial closures is a tough task," said Canadian Solar's Vinay Shetty, country manager for the Indian sub-continent.
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India has raised factory gate duties on petrol and diesel by 2 rupees ($0.03) a litre to fund infrastructure projects in the current and next fiscal years. The increase, the third since Prime Minister Narendra Modi lifted diesel price controls in October, seeks to cash in on lower world oil prices to bolster strained government finances without stoking inflation. The allocation of these resources to fund 15,000 km of road projects would spur economic activity and boost employment, the government said in a statement. The higher excise duties came into effect from January 2. The government last raised excise duties on petrol and diesel by 2.25 rupees a litre and 1 rupees a litre respectively on December 2. India's fiscal deficit was 5.25 trillion rupees ($83 billion) during April-November, or 98.9 per cent of the full-year target. The deficit was 93.9 per cent during the same period a year ago. The third excise duty hike since November will help raise additional Rs 6,000 crore during remaining three months of the current fiscal. The oil firms have skipped cutting rates of the two fuels that had become necessary as international oil rates plunged to their lowest level since May 2009. The excise duty hike has now been set off against the reduction in rates that was due because of slide in oil prices. The slump in global oil rates had warranted a price cut of Rs 3.22 per litre in petrol and about Rs 3 in diesel and even after adjusting the excise increase, oil firms will have a neat margin of over Re 1 per litre. "In order to fund the ambitious infrastructure development programme of the government, particularly the building of 15,000-km of roads, during current and next financial year, the government has decided to increase basic excise duty on petrol and diesel by Rs 2 per litre," an official statement said. Together with Rs 1.50 a litre excise duty hike effected on both products from November 12 and Rs 2.25 per litre increase in duty on petrol and Re 1 on diesel from December 2, the government will mop up about Rs 17,000 crore this fiscal to contain fiscal deficit. (Agencies)
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Oil prices fell on Wednesday to a 5-1/2-year low and ended with their second-biggest annual decline ever, down by half since June under pressure from a global glut of crude. Just before the close, Brent and U.S. oil futures bounced off session lows. But prices still settled at their lowest since May 2009. Weekly U.S. data showed crude oil stockpiles fell more than expected, but inventories at the oil hub at Cushing, Oklahoma, grew, keeping prices depressed. Oil prices have collapsed as the Organization of the Petroleum Exporting Countries opted to maintain the same level of output despite a global glut caused by expanding U.S. shale output and diminished demand growth from China. Phil Flynn, an analyst at Price Futures Group, said the mood was "sour" and trade choppy as dealers continued to hunt for a bottom, with volatility exacerbated by thin holiday volume. "We are sowing the seeds for a rally down the road, but it doesn't look like any time soon," he said. Brent settled down 57 cents at $57.33 a barrel, bouncing off an intra-day low of $55.81 but closing below $60 for a fourth straight day. U.S. crude fell 85 cents to settle at $53.27 a barrel, down 45 percent from a year ago. Trading seesawed as traders balanced positions for the new year and digested a mixed report on U.S. crude stockpiles from the Energy Information Administration (EIA). U.S. crude closed with its second-largest annual decline on record. The biggest came in 2008, when prices collapsed in the wake of the financial crisis. The last round of OPEC output cuts eventually brought them off lows near $30 a barrel. In contrast, OPEC at a Nov. 27 meeting this year decided against cutting output. Despite its own forecasts of a growing surplus, the group opted to defend its market share against shale oil and other rival supply sources. Turmoil in Libya dented OPEC supply in December to a six-month low, a Reuters survey showed, although forecasts still point to a glut. The EIA reported a weekly drawdown U.S. crude inventory, along with small increases in demand for gasoline and heating oil and a rise in stocks for gasoline and distillate. Oil prices came under further pressure from a survey showing China's factory sector shrank in December for the first time in seven months. This should hurt energy demand in the world's No. 2 consumer. (Reuters)
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Oil dropped towards $56 a barrel on Wednesday and was heading for its biggest annual decline since 2008, pressured by weakening demand and a supply glut prompted by the US shale boom and OPEC's refusal to cut output. Global benchmark Brent crude has fallen 49 per cent in 2014 as demand growth slowed, the United Statesexpanded output and OPEC, dropping its strategy of trimming supply to keep oil around $100 a barrel, chose instead to defend market share. On Wednesday (31 December), prices came under further pressure from a survey showing China's factory sector shrank for the first time in seven months in December - a bearish indication on the strength of oil demand in the world's second-largest consumer. "Clearly, demand concerns are one of the issues for the oil market," said Michael McCarthy, chief market strategist at CMC Markets. Brent was down $1.42 at $56.48 by 1035 GMT, after dropping as low as $56.27, its lowest since May 2009. US crude was down 86 cents at $53.26. The annual decline for Brent is set to be the biggest since 2008, when demand crumbled in response to the financial crisis. Prices were, eventually, propped up by OPEC's last formal decision to cut production. In contrast, OPEC at a November 27 meeting this year decided against a cutback to defend its market share against shale oil and other competing supply sources, despite its own forecasts of a growing surplus in 2015. Turmoil in Libya has effectively led to a drop in OPEC supply in December to a six-month low, a Reuters survey showed on Tuesday, although forecasts still point to a large excess supply next year. Later on Wednesday, traders will focus on the latest US government report on oil inventories to see if it confirms the unexpected increase in stockpiles reported on Tuesday (30 December) by industry group the American Petroleum Institute. U.S. crude inventories rose by 760,000 barrels last week, the API said, compared with analysts' expectations for a decrease of around 100,000 barrels. The Obama administration on Tuesday bowed to months of growing pressure over a 40-year-old ban on exports of most domestic crude, taking two steps expected to increase the flow of ultra-light oil, or condensate, onto the global market. "We expect a gradual, but slow increase of stabilized condensate exports over the next year," analysts at JBC Energy said in a report. (Reuters)
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