Energy firms that have invested more than $12 billion have been hit by delays on required approvals for 52 exploration blocks, some awarded as far back as 1999, Oil Minister S. Jaipal Reddy said in a written response to parliament.Approvals have been delayed due to defence, environment and maritime boundary issues, Reddy said.Of the blocks awaiting approvals, 22 belong to Oil and Natural Gas Corp., 15 to Reliance Industries, five to BHP Billiton, three to Cairn Energy India and two to Australia's Santos Ltd.British firms BG Group, BP and Italy's ENI own one each.Reddy said clearances for larger areas from which these blocks are carved out are obtained from concerned ministries before auctioning them.Contractors then need approvals from the defence, environment and forest, and foreign ministries as well as the relevant state governments to start or continue exploration or production work.The firms have invested $12.4 billion for exploration and development activities in the blocks, Reddy told lawmakers.The world's fourth biggest oil importer, India wants to tap domestic supply to cut its ballooning import bill and widening fiscal deficit.Its crude oil import bill surged 48 percent to 6.72 trillion rupees in the year to March due to rising global oil prices, declining rupee and expanding refining capacity.The economy is growing at its slowest pace in nearly a decade and policy paralysis has stalled major reforms including those on fuel pricing, denting global investors' confidence in the Indian oil sector.In 2010, Brazil's Petrobras and Norway's Statoil <STL.OL> exited from a block operated by ONGC in the hydrocarbon-rich Krishna Godavari Basin off India's east coast.India, which imports about 80 per cent of its oil needs, has awarded 249 blocks under nine licensing rounds since 1999. Oil and gas discoveries have been made in 38 blocks.(Reuters)
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There is nothing better than a blackout to wake you up. The nationwide trip that saw 19 states go without power for hours last week did just that. If you thought big, new power plants were a way out of the darkness, think again. You have a legacy to battle with.India added 19,459 MW new power capacity in 2011-12; the installed capacity stood at 1,92,792 MW at the end of the 11th Plan. But of the total installed thermal capacity of 1,33,363 MW in April 2012, about 22 per cent is under utilised. “You can classify 25,000-30,000 MW as inefficient capacity,” confirms D.K. Jain, former director (technical) at National Thermal Power Corporation (NTPC). These plants produce less power even as they consume as much fuel as an efficient plant. Besides, even as the country battles regular grid failures due to overdrawal by states, 30,000 MW of new capacity — equalling 15 per cent of installed capacity — is lying idle due to fuel shortage. But that’s another matter.76% is the average national efficiency level (or, plant load factor) of all power plantsBihar, for instance, had to shut down most of its installed power capacity because of poorly run plants; the state now depends entirely on centrally allocated power. “While the average cost of generation from a plant comes to about Rs 1.80-2 per unit, inefficient plants increase the cost by three times to Rs 4-6 per unit,” says a senior official of the Bihar State Electricity Board (BSEB).Old Is Not GoldIndia’s power sector started out with plants with low unit sizes — 10, 15, 30, 60, 80 and 100 MW (the first unit of 200 MW came up at Obra in Uttar Pradesh in 1977). These have a non-reheat design, which basically means high auxiliary power consumption and lower efficiency. The Centre tried to retrofit these plants, but found the plan unviable. The government has since asked the respective states to slowly phase out all units up to 100 MW in size. break-page-break According to the Central Electricity Authority (CEA), these sub-100 MW plants add up to 4,750 MW. A Planning Commission working group report has suggested that 4,000 MW each be retired during the 12th and the 13th Plans. The suggestion covers coal units of less than 200 MW (commissioned before 1982) and gas units commissioned before 1992 (more than 30 years old). CEA data shows that 47 units (2,098 MW) were retired till January 2011.D.K. JAIN Former director, technical, National Thermal Power Corporation Says you can classify 25,000-30,000 MW as inefficient capacity.(BW Pic by Tribhuwan sharma)“The problem is that it has not been made mandatory for the state governments to retire such plants. The utilities don’t want to give up on them even if they operate at very low efficiency,” says Jain. A senior power ministry official explains the dilemma: “You cannot retire all inefficient plants without new capacity coming up. Many a time, states prefer to keep these as they cannot afford to close down generation.” Forced outage, which occurs due to equipment failure, is a common occurrence in these old units. Such instances went up to 9.58 per cent in 2010-11 from 7.85 per cent in 2006-07, and have brought down the operational availability to 84.24 per cent in 2010-11. Most of the older units operate at a very low plant load factor (PLF) of 50 per cent. “If a 100 MW plant operates at a PLF of 50 per cent, it is no better than a 50 MW plant,” says a Bharat Heavy Electricals (BHEL) official. The irony is that even as plants operate at a low PLF, the full capacity is still taken into account to tabulate total installed capacity. The Warhorses Soldier OnEven as the focus shifts to supercritical plants of 660 MW, it is the 200-210 MW and 500 MW plants that shoulder most of the burden of powering India. But many of these plants are in the winter of their lifecycle — this affects their station heat rate (SHR), raw material consumption and power output. According to CEA, there are about 160 units of 200-210 MW capacity, which account for 44 per cent of the total thermal installed capacity. Most of these operate at a high PLF, but fuel consumption is on the higher side. Besides, these are close to a quarter century old. What might not come as a surprise is that most of the inefficient units belong to state governments; central and private power utilities maintain a PLF close to the national average of 76 per cent. Among the states whose utilities have a PLF lower than 70 per cent are Bihar (8.12 per cent), Jharkhand (30.02 per cent), Andhra Pradesh (49.7 per cent), Maharashtra (59.03 per cent) and Uttar Pradesh (60.43 per cent). The central and private utilities have performed well above the national average PLF — the only exceptions are Damodar Valley Corporation (65.12 per cent) and Tata Power’s Trombay (64.92 per cent). What makes matters worse is that while many private power plants are forced to perform at a sub-optimal level because of coal shortage, state power utilities get preference over private units in coal despatches. The severity of the problem is not lost on the government; it has taken many steps to identify the sub-optimal plants. An Indo-German Energy Program study has mapped 85 coal-based power generating plants with a capacity range of 100-500 MW. The study was conducted in 2007-09 and covered 14 states, 17 power utilities and 45 thermal power stations. In addition, the PAT (perform, achieve and trade) mechanism of the Bureau of Energy Efficiency (BEE), has identified 144 thermal plants that are the most inefficient in India. Step In The Right Direction“Under PAT, we have fixed targets for power stations. The total target is to save 3.2 million tonne oil equivalent from the 144 stations identified. There are 22 stations, comprising 128 units, that have been set a high target as they are very inefficient. Of these, about 49 units are more than 25-30 years old. The target for these 22 stations is 1.7 million tonne oil equivalent,” says A.K. Asthana, technical director, BEE. The CEA has a National Perspective Plan, which has identified power plants that need to undergo R&M (renovation and modernisation) on an urgent basis. The 12th Plan targets 72 thermal units, accounting for 16,532 MW, and 23 other units, adding up to 4,971 MW, for life extension and R&M programmes. But on-ground implementation has not proved effective in the past. Generation from units under R&M fell to a mere 2,000 million unit (MU) per annum in the 10th Plan from 10,000 MU per annum in the 7th Plan.chhavi(dot)tyagi(at)abp(dot)in(This story was published in Businessworld Issue Dated 13-08-2012)
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Indian power equipment manufacturers will have to learn to live with pain. Swamped by imports from the Middle Kingdom, the Union Cabinet slapped a levy of 21 per cent on the import of power equipment on 19 July. The decision will take effect sometime in September, but it is seen as too little, too late.“It is very likely the decision is going to exclude projects which have already been awarded. These projects top 1,00,000 MW (generation capacity). And given that there are hardly any fresh orders coming from power developers at present, it (announcement) lacks excitement. And given that there is 30-40 per cent import component even for local companies, it does not add to much”, points out a senior level BHEL official.A study done by rating agency, ICRA, says 28 per cent of the capacity addition in the 11th Plan is based on supplies from China. Shanghai Electric Corporation, Dongfang Electric Group and Harbin Power Equipment have stolen a march over domestic players in the supercritical segment. According to ICRA’s estimates, Chinese firms have bagged tenders for 30,000 MW of supercritical tenders or 57 per cent of the orders in the supercritical BTG (Boiler-Turbine-Generator) segment. A key attraction for Chinese equipment is the relatively faster delivery schedule apart from the cost.Domestic power equipment manufacturers are also miffed over the composition of the total duty structure. The levy of 21 per cent comprises a 12 per cent countervailing duty, a five per cent customs duty and a four per cent special addition duty.The government has ensured supercritical orders tendered by the National Thermal Power Corporation and DVC fall into the domestic players’ kitty via conditions in the eligibility criteria — it specifically states bidders must have a manufacturing base in the country and a valid technology transfer arrangement. There is a good chance state-run projects would follow suit.Will these lifelines help domestic players? “There are some private players who have opted for the Chinese players owing to the low cost but at the same time I am aware of some groups who are very clear that they don’t want to go for Chinese equipment. In their perception, Chinese companies are not reliable — in terms of operating characteristic, spares and services components — post commissioning. These companies would rather place their order with BHEL or other joint venture companies even at the cost of a higher cost as they believe that the total cost of ownership may turn out to be better,” says Sabyasachi Majumdar, senior vice president at ICRA. Yet the point remains despite these apparent advantages, it is the Chinese who rule the roost.In February 2010, the Arun Maira Committee had recommended an imposition of 14 per cent duty on overseas equipment to bring the domestic equipment manufacturers on parity with their foreign counterparts. The Chinese equipment companies are supported by their government which allows them to price their equipment at 15-20 per cent cheaper than the Indian companies.
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Coal India will modify the fuel supply pacts before signing them with power companies to incorporate the changes that have been proposed by its board at this week’s meeting, thereby breaking the deadlock over the issue of minimum assured supply of fuel to them.Central Electricity Authority (CEA), in a letter, would inform the power ministry about the necessary modifications to be made in the FSAs.So far 27 companies have signed the pacts, which will also be tweaked in line with the new changes suggested by Coal India Ltd (CIL), sources said.At the board meeting earlier this week, state-owned CIL said it will sign the Fuel Supply Agreements (FSAs) with the power companies for shipping to them a minimum of 80% coal out of the total contracted quantum.The coal major would meet 65% of the supplies from domestic sources and would import the remaining 15%. It is yet to take a final call on whether the company would pool the price of domestic as well as imported fuel.CIL board’s consensus follows a direction from the Prime Minister’s Office to the company to sign FSAs for the supply of 80% of the contracted quantity, or the trigger level, failing which the supplier would be penalised.The Planning Commission and the power ministry have suggested pooling of the prices of imported and domestic coal to neutralise the impact of higher prices of imports.The coal major had, in June, lowered its production target for the financial year 2012-13 to 440 million tonne from the estimate of 452 million tonne in its annual plan, citing various reasons like heavy rainfall, strike and delays in the grant of environmental clearances to coal projects for the downward revision in the production target.The public sector company had missed its April-September target by about 20 million tonne, recording an output of 176 million tonne, as against the target of 196 million tonne.Coal India’s production target of 460.5 million tonne for 2010-11 was revised down to 440.2 million tonne.(PTI)
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At a time when most power plants in the country are struggling to run their operations due to the shortage of coal, Hanjer Biotech Energies, a Mumbai-based waste management company, is setting up India’s first full-scale green power plant that will generate electricity from waste. The 15-MW plant at Surat in Gujarat will be run on refuse derived fuel (RDF).Hanjer processes about 9,100 tonnes of municipal waste a day across 20 cities at its 24 facilities. The RDF for the Surat plant will be sourced from Hanjer’s waste processing units at Surat, Bhavnagar and Vadodara. This RDF is considered “green” because it has minimal amount of plastic (around 5 per cent). The RDF generated from municipal solid waste is dried, crushed, screened and packed into brick form. Currently, the “green” RDF is used as a substitute for conventional fossil fuels in boilers and is sold at Rs 2-3 per kg, double the price of normal RDF.9,100 tonnes of municipal waste is processed by Hanjer Biotech Energies every day.Says Irfan Furniturewala, founder and promoter of Hanjer: “Out of the 9,100-tonnes of waste that we process, around 18-20 per cent is green RDF. With the amount of RDF produced after recycling waste, we can run six 15MW power plants.” About 300 tonnes of RDF a day is required to run a 15-MW power plant; Hanjer processes around 1,800 tonnes of green RDF a day.The RDF-based plant in Surat will be commissioned in about 15-18 months. It will incur a cost of Rs 6.8 crore per MW, says Furniturewala. Although this would be costlier than a normal coal-based power plant — which costs between Rs 3.5 and 5 crore per MW — today the problem for most the thermal-based power plant has been the availability of coal. Says Furniturewala: “The internal rate of return from the power project is fixed at 16 per cent and we can’t do much about it. But compared to the power plant built by Jindal (Jindal Ecopolis, a subsidiary of Jindal SAW), we are far more cost efficient as our project cost is much lower. Besides, the waste they are using to generate power is not green.” A spokesperson for Jindal acknowledged that his company had built a 16-MW power plant at a cost of more than Rs 16 crore per MW. The spokesperson also said that the Jindal Ecopolis plant was using raw waste to generate power.Hanjer has already signed a power purchase agreement with the Gujarat government, which will purchase power from the Surat plant at Rs 6.10 per unit. On the other hand, Jindal sells its power at Rs 2.49 per unit. More than that, the Hanjer power project has the potential to reduce green house gas emissions and will derive an additional revenue stream through carbon credits for Hanjer. “This will have to be shared between Gujarat Urja Vikas Nigam and us,” says Furniturewala. Going ahead, Furniturewala wants to build 110-MW power plants across the country. Although he has most of the raw material (green RDF) in place, he is planning to increase the waste recycling capacity of Hanjer by 5,000 tonnes per day, which will take its total waste recycling capacity to more than 5 million tonnes a year.In July, Hanjer had received funding; $20 from Deutsche Investitions- und Entwicklungsgesellschaft mbH (the German investment and development company), and another $20 million from PROPARCO, the subsidiary of the French Development Agency.While waste-to-energy is not really a new concept in India, scalability has always been a problem. Hanjer for now seems to have got its formula right. But whether Furniturewala is going to succeed in his effort to produce green power, we will have to wait and watch. (This story was published in Businessworld Issue Dated 13-08-2012)
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The Comptroller and Auditor General (CAG) has pulled up state-owned Oil & Natural Gas Corp (ONGC) for not placing desired emphasis on discovering oil and gas and being tardy in monetizing its discoveries.CAG's report on Hydrocarbon Exploration Efforts of ONGC, which was tabled in Parliament today, expressed concern at the company's lack of adequate efforts and results in new fields and wanted the Oil Ministry to reset annual targets set out in MoU that the firm signs with the government."ONGC did not place the desired emphasis on its core exploration activity. Coupled with the low priority on exploration are the anomalies in MoU target setting and reporting as well as performance measurement which can potentially mislead the stakeholder," it said.CAG said ONGC showcases a healthy reserve replacement ratio while production continues to remain static."ONGC was also tardy in monetizing its discoveries which contributed to low production," CAG said. "While external benchmarking of performance was not done, nationally ONGC had among the lowest efficiency in drilling compared to private as well as central public sector enterprise (Oil India Ltd) which led to non-achievement of work commitments and payment of liquidated damages," it said.The official auditor also noted several deficiencies in operations (procurement, hiring and contracting)."Though ONGC operates in a field of cutting edge technology, it did not have a system of independent assessment of its technical capacity which fails to assure its stakeholders," it said."Ministry of Petroleum and Natural Gas/ONGC ought to do a de-novo review of MoU targets placing desired emphasis on performance parameters directly linked to exploration."It should also be ensured that such targets and achievements are measured and reported on an appropriate basis to avoid misleading the stakeholders," CAG said.Listing out deficiencies, CAG said less than 50 per cent of the Basins were only able to meet 2D/3D survey targets as ONGC was tardy in purchase of seismic survey vessel.ONGC lost the weather window for doing such surveys in offshore areas, due to delay in giving away of survey contracts."There was a shortfall of 332,855 metres and 109 wells in ONGC's exploration performance. Except Western Offshore Basin, none of the other Basins could drill the targeted exploratory wells," it said.While ONGC-owned rigs were less efficient than the hired ones, the company took 7 per cent to 16 per cent extra days for drilling when compared to its own norms.It recommended a review of Reserve Replacement Ratio (RRR) as a performance parameter for ensuring performance in exploration efforts."ONGC should formulate Basin wise norms...speed up its processes for placement of survey contracts and efficient coordination to bridge the gap between requirement and availability/utilisation of the equipment and services procured to meet its exploration goals," it said.The company, CAG said, should introduce transparency and competitive tension in the process of hiring consultants/experts."As suggested by the Planning Commission and as decided by its Board, ONGC must carry out an independent assessment of technology in vogue in the company to provide an assurance that it is indeed up-to-date," CAG report added.(PTI)
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GVK Power and Infrastructure won environmental approval for its A$10-billion Alpha coal and rail project in Australia's Queensland state on Thursday, with 19 conditions to protect the environment.The approval came as Australia declared the end of the resources boom that cushioned the country from the global financial crisis, a day after the world's biggest miner, BHP Billito shelved two major expansion plans worth at least $40 billion.The Alpha scheme is the front-runner among several projects in the untapped Galilee Basin in Queensland, where rival Indian group Adani Enterprises is planning a A$10.9 billion coal and rail project.The Galilee Basin projects have been slow to win clearance, facing opposition from environmentalists concerned about coal burning, port dredging and ship traffic along the fragile Great Barrier Reef, as well as from landowners along the proposed rail route.Environment Minister Tony Burke said the approval included measures to protect Queensland's Great Barrier Reef and threatened species in the area.The Alpha coal project is being run by Hancock Coal, 79 percent owned by GVK and 21 percent owned by Australia's richest person, Gina Rinehart.The Alpha project has a mine life of more than 30 years, and would produce 32 million tonnes a year, GVK Vice Chairman G V Sanjay Reddy said."This positive decision also paves the way to ensure more than 1.4 billion people (largely in Asia) that face a major shortage of electricity, are provided with an additional source of coal to enhance supply of electricity to the region, thus improving quality of life and overall economic development," he said in a statement.The Alpha project is vital to the coal ambitions of GVK - a conglomerate with interests in airports, hotels and transportation, besides energy - and could help meet voracious appetite for coal in resource-hungry India, where two-thirds of power production is dependent on the mineral. (Reuters)
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British oil firm Cairn Energy bought a further position to hunt for oil and gas off the coast of Morocco, building on its strategy to balance its exploration portfolio beyond high-risk Greenland.The company said on 28 August that it would pay $60 million towards the costs of an exploration well in Morocco in return for a 50 per cent stake in a licence which it will share with smaller explorers San Leon Energy, Serica Energy and Longreach Oil and Gas.The partners plan to drill there in the second half of next year, Cairn said.Cairn also said it was seeking further exploration ground in Spain, adding that it had made a bid to gain exposure to exploration in Cyprus, and was planning to try to win a position off the coast of Lebanon.The company made its name with huge oil discoveries in India, but has spent the last two years focusing on Greenland, a frontier oil province, where it has so far failed to find oil.This year, it has sought to reshape itself, buying development opportunities and lower-risk exploration in the UK and Norwegian North Sea and developing a strategy to explore in the Mediterranean and off the coast of Morocco.Cairn said it expects to finish 2012 with cash of more than $500 million, the leftovers from a multi-billion payout from selling some of its Indian assets, some of which it returned to shareholders, and some of which it spent on buying North Sea-based Nautical Petroleum and Agora Oil & Gas.Shares in Cairn traded down 1.7 per cent at 291.8 pence at 0718 GMT.(Reuters)
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