enGUAGE- The CII Energy Barometer Bi-monthly publication from CII Energy Department

1. THE CII ENERGY BAROMETER MAY 2015 | VOLUME I, ISSUE I
Transparency,
the game changer
A paradigm shifts for
India’s coal sector
BANKING ON
BIOFUELS
MADE IN
ANDHRA PRADESH
ENRICHING THE
ENERGY SECTOR
‘We expect investments of $250 billion in the
Indian power sector in the next five years’
Piyush Goyal
‘We will attract investments of $30 billion
and create 6 million jobs in the next decade’
N Chandrababu Naidu
‘Biofuels are the new
socioeconomic change agent’
Nitin Gadkari

2. Chandrajit Banerjee
Director General
Confederation of Indian Industry
DG’S DESK
Energy is a critical ingredient
underpinning a nation's long-term
economic growth and security. Secure,
sustainable, available and affordable
energy is fundamental to modern
societies and to the well-being of citizens
as well as for industry competitiveness.
Nonetheless, energy supply is and will
remain a major challenge for developing
and developed countries alike.
In India as well, the energy sector is
facing tremendous changes and
challenges even as it strives to improve
the sustainability and security of supply.
With demand outpacing supply by a
huge margin and the goal of universal
electrification being far from reality, our
energy architecture has been under
severe strain. Moreover, rising energy
demand, coupled withless-than-expected
improvements in the production of
domestic crude oil, natural gas and coal,
has led to a strong reliance on imports.
The Government is taking many
proactive steps to address the challenges
in the energy sector. Indeed, we have
over the last one year witnessed the
implementation of several path-breaking
reforms across the energy value chain.
These include the introduction of the
‘New Domestic Natural Gas Pricing
Guideline, 2014’; setting a target to
increase coal production to 1 billion
tonnes by 2019, and putting in place an
efficient and transparent process for
auctioning and allotment of coal blocks,
amongst others.
Keeping in mind the twin concerns
of climate change and energy security,
renewable energy development in the
country is also undergoing a steep
development with a significant target of
175 GW of renewable power by 2022.
We, at CII, are committed to partnering
with the Government and industry through
our various Committees and Councils to
identify and enable key policy interventions
that would put the sector on a strong
growth trajectory.
To capture our efforts in this direction and
bring you news and views from the sector,
we are launching enGUAGE -The CII Energy
Barometer.ThefocusofenGAUGE,abi-monthly
newsletter, will be to collate core stakeholder
perspectives to give you a definitive picture
of the progress of the sector as a whole.
The highlight of the first edition of enGAUGE
is an interview with Coal Secretary Mr Anil
Swarup, who provides a comprehensive
roadmap for increasing coal production.
We have also included the views of some of
the stalwarts of the sector on the near- and
long-termmeasuresbeingtakentomovetowards
an energy-secure future for the country.
We hope you find value in this new
publication from CII, and look forward to
your feedback on our first edition.
1GAUGE
INSIDE
TRANSPARENCY,
THE GAME
CHANGER
PERSPECTIVE
ANIL SWARUP
10
POWER PLAY:
REVIVING THE
SECTOR
CEO.SPEAK
ANIL SARDANA
13
16
8MADE IN
ANDHRA PRADESH
STATE.MENT
N CHANDRABABU
NAIDU
ADB - FINANCING
INDIA’S CLEAN
ENERGY COMMITMENT
FINANCE
ANDREW JEFFRIES
2ENRICHING
THE ENERGY
SECTOR
ROADMAP
PIYUSH GOYAL
4BANKING
ON BIOFUELS
ROADMAP
NITIN GADKARI

3. The overarching theme is
to keep costs low, create a
secure environment where
our dependence on imports
is reduced, and ensure that
businesses prosper.
Energy security has to be at the top of
the Government’s agenda. It is critical to
provide 24x7 power to every citizen and
make the country free of diesel generators.
There are two main aspects of an
energy-secure India. One is the ability to
influence and withstand international
pressure and appropriately utilise global
resources. Second is to be able to fully
harness and optimise domestic resources
like coal, wind, sun, water and
technological superiority effectively.
The Government is looking to ramp up
coking coal production rapidly to free
India from coal imports. Coal India’s
production has gone up by 7 per cent in
the last year, and with modern technology
and innovations, it can reach a target of
1 billion in the next 5 years. Clearly,
India will not have to import thermal
coal in the next two to three years.
The power sector is also witnessing
strong growth. India is now producing
1 trillion units of electricity, an increase
of 8.4 per cent in the last year. In fact, in
these few months, the power sector has
added 22,700 MW of installed thermal
capacity; peak shortages are at 3.6 per cent,
the lowest in the history of the nation,
and the transmission sector has added
22,000 circuit kilometres of capacity.
Coal production has grown by 8.3 per
cent in the last 10 months, the highest
rate in the past 23 years.
In the renewable energy sector, the
Government is looking at innovative
financing mechanisms, lowering
counterparty risks and bringing down
the cost of solar and wind energy. We
are working on a model to get the cost
of solar power down to INR 4.5 per unit,
with 1 per cent increment over a year.
Other solutions being considered
include dollar tariffs, and an escrow
facility which will work on a hedging
mechanism. These will lower solar and
wind power costs to sub-INR 4 per unit
in the near future.
In the area of energy efficiency, the
Government is looking to save 100
billion units of electricity consumed
by 2017. In 2017-18 we should be able
to demonstrate a saving of 10 per cent
energy consumption vis-à-vis the
current utilisation through LED
lights, street lamps, and industrial
efficiency. These savings could light
up the lives of 280 million Indians
who today are deprived of electricity.
These achievements have encouraged
the Government to think more
aggressively for the coming years
and look at scaling up the targets
while scaling down the time to
achieve them. The overarching theme
is to keep costs low, create a secure
environment where our dependence
on imports is reduced, and ensure
that businesses prosper.
This is a shared responsibility of
stakeholders across the spectrum -
manufacturers, distributors,
generators, consumers, the
bureaucracy, Government, political
establishments, judiciary and media.
Everybody needs to build trust to
achieve a growth of 100 per cent by
2019 in the power sector, with
2 trillion units being generated,
150 per cent growth in coal production
with 1.5 billion tonnes of coal being
produced, and renewable energy
growing 5 times from the current
60 billion units of energy.
We need to work together and take
the responsibility to change India from
an energy-starved nation to an
energy-surplus one which is not only
self-sufficient but also exports energy
to the SAARC countries.
2 GAUGE 3GAUGE
ROADMAP
ENRICHING
THE ENERGY
SECTORMr Piyush Goyal, Minister for Coal,
Power and New and Renewable Energy,
addressed the session
‘Securing India’s Energy Future’
at the CII National Conference
and Annual General Meeting 2015
in New Delhi on April 7. Edited excerpts.
We expect investments
of $250 billion in the
Indian power sector
in the next five years.
Piyush Goyal

4. ROADMAP
4 GAUGE
Biotechnology should be used
to create marketable value for
biomass. Conversion of bio-waste
into fuel pellets is becoming a
lucrative industry. Agri-residue
such as cotton stalk and wheat
straw worth Rs 3,000 per acre is
wasted by burning when they
could instead be converted into
fuel pellets which cost 40 per cent
less than commercial gas.
An experimental project was
initiated in Nagpur to convert
cotton stalks into pellets for use
in restaurants kitted with special
stoves. It has today expanded
into twelve factories employing
over 15,000 people. The next
step is to take this idea to every
village to demonstrate how agri-
waste can be a profitable
resource. Pellets can also be made
from municipal bio-waste after
segregating elements like plastic,
metal and glass.
systems, particularly in metros,
to biofuels or electric. This will
result in huge savings in fuel
costs and yield a good internal
rate of return, besides
exponentially improving air
quality and generating avenues
to process municipal waste.
For instance, Mumbai’s state
transport utility BEST runs up a
diesel bill of Rs 12,000 crores
annually. By converting the
vehicles to biofuel or electric, they
can save about half that cost.
Often there are bureaucratic
delays in matters that require the
consensus of multiple Ministries.
While the Cabinet has already
decided to allow sale of blended
biodiesel to both bulk and
general consumers as long as
standards and norms are
followed, the Ministry of
Petroleum and Natural Gas is yet
to notify the formal order as they
are conducting their own tests.
Meanwhile, the Transport
Ministry is implementing
100 per cent biofuels which meet
international standards -
bioethanol, biodiesel and bio-
CNG, while working on hybrid
models like electric and biofuels.
Media should create public
awareness about biofuels. CII must
encourageindustry toinitiate pilot
projects in biofuels with the
specific target of commercial
application in the near term.
Biogas is another avenue to
convert waste into wealth. In
Stockholm, Sweden, methane
extracted from sewage water is
being used to make bio-CNG to
fuel buses. This innovation has
been brought to Nagpur, where a
joint venture is being formed
with a Swedish company to
produce biogas from sewage
water. Within the next six
months, at least a hundred buses
will operate on this bio-CNG,
while the residual water will
be recycled for use in power
generation.
In fact, Nagpur is the first city in
India where the sale of sewage
water has generated a royalty of
Rs 18 crore for the Government
of Maharashtra. The city also
boasts buses running on 95 per cent
bioethanol since the past six
months.
Seventy per cent of India is
wasteland. Biotechnology can
help raise the cultivability of
these wastelands, thus increasing
production of feedstock from
which non-edible oil can be
extracted and used to make
biodiesel.
Also, globally, a large volume of
edible oils are discarded after
being used for frying. Though this
used oil is sold for Rs 22-28 per litre,
a 35 per cent duty is levied onit to
deter thetemptation to mix it with
edible oils. Adding copper
sulphate to the oil to change its
colour will help prevent
adulteration and allow it to be
used as a source of biodiesel.
One of India’s twelve major
ports, West Bengal’s Haldia has
eight oil refineries which import
palm oil from Malaysia. The oil-
residue is being processed into
3 lakh litres of biodiesel per day
for use by trucks and railway
engines, making Haldia the first
major green port in India.
The time has come to convert
conventional fuel-based transport
5GAUGE
The National Green Tribunal recently banned diesel
vehicles aged over ten years in Delhi to control air
pollution. We need to concentrate on biofuels to reduce
carbon emissions and improve air quality. The Transport
Ministry is already working to bring biofuels, including
bioethanol, biodiesel and bio-CNG, to the capital.
In fact, the highest priority should be given to
mainstreaming biofuels as they can be socioeconomic
change agents, with the potential to address complex issues
like farmer suicides and agri-surpluses in the sugar, wheat
and rice industries. Developing a bio-based economy and
diversification of agriculture into the energy and power
sectors is essential for the success of the ‘Make in India’
initiative and to boost the rural and agricultural segments.
Biofuels can also directly reduce petrol, diesel and gas
imports which presently cost the nation over Rs 6 lakh
crores annually.
BANKING ON
BIOFUELSMr Nitin Gadkari, Minister for Road, Transport and Highways, and Shipping, addressed the
session ‘Biofuels in Road Transport’ at the CII Biofuels Roundtable 2015 in New Delhi on
April 15. Edited excerpts.
Nitin Gadkari
Biofuels, a socioeconomic change
agent, are the need of the hour.
I have personally been
involved in experiments with
biofuels and diversification
of agriculture into fuels and
power for a decade. I am
hopeful that these will
provide alternatives to
farmers who are severely
burdened by food crop
failures. Prime Minister Modi
is also very invested in this.

5. The best tool to fight vehicular pollution is ethanol as it
contains 35 per cent oxygen which helps complete fuel
combustion. Ethanol can reduce emissions by as much as
75 per cent and save fuel costs of $149.2 billion. Incentives such
as reduced taxation or excise duty exemption will encourage
the use of renewable fuels. ASRTU suggests setting up
biofuel outlets in metros like Delhi, Mumbai, Hyderabad and
Bangalore to gauge customer response.
We believe people will be more than happy to use these fuels.
Dr P S Anand Rao, Executive Director,
Association of State Road, Transport Undertakings (ASRTU)
If India, with the largest diversity and quantity of biomass,
cannot produce sufficient ethanol, there is cause for concern.
The answer lies in new technologies, and the challenge lies in
feedstock options. We must test our technologies on a variety
of feedstock, and commercial plants need to be set up with
multi-feedstock options. We need to look at algae as a
feedstock as India has the distinct advantage of having the
largest biodiversity of algae strains. We are also developing a
roadmap for synthetic biology.
Dr Renu Swarup, Senior Adviser, Department of Biotechnology,
Ministry of Science & Technology, Government of India
Road transport is the biggest GHG-producing segment in
India, accounting for about 64 per cent of the sector’s total
diesel consumption. A 50 per cent cut in GHG emissions per
mile by 2030 is possible through a mix of conventional
technologies and biofuels. From April 2016, it will be
mandatory for passenger vehicles to follow fuel efficiency
norms which will save 5,76,000 MTOE of gasoline, diesel and
CNG worth Rs 4,000 crores. It will also prevent 14,40,000 MT
of carbon dioxide emissions over a ten-year period.
Mr V K Srivastava, Additional Director, PCRA,
Ministry of Petroleum & Natural Gas, Government of India
BIOFUELSTHE
BIG B
OF THE
FUTURE
The power generation potential from bioenergy sources such as surplus
biomass, bagasse, urban and industrial wastes, and animal waste is about
36,000 MW. Over a 100 MT of biofuels can be generated from these sources;
add forest residues and energy plantations, and the numbers could be
much larger. With this, we could replace over 80 per cent of petroleum
product consumption for transportation. The benefit in terms of power
generation is about Rs 2 crore per MW, and in terms of fuels,
Rs 2 crore per 3,000 tonnes of biofuels.
This also has the potential to generate 200 million man-days of direct
employment, more if combined with feedstock supply management. The
value biofuels add to the rural economy is huge and cannot be ignored.
Dr A K Dhussa, Former Adviser,
Ministry of New & Renewable Energy, Government of India
The panel for 'Biofuels in Road Transport' (L-R): Mr G S Krishnan, Dr A K Dhussa, Mr Pramod Chaudhari,
Mr Nitin Gadkari, Dr Renu Swarup, Mr V K Srivastava, Dr P S Anand Rao, Ms Soma Banerjee
The time has come to move towards a bio-
based economy. Flexibility of feedstock is
essential: ethanol can be made from a variety
of feedstock - sugarcane, sweet sorghum, etc.
A clear and consistent roadmap is necessary
to take biofuels to the next level. A Bioenergy
Mission or Task Force is required to take the
momentum forward in an organised manner.
Mr Pramod Chaudhari, Chairman, CII National
Committee on Bio-Energy and Chairman,
Praj Industries Ltd
With bioenergy, we will need to place lesser emphasis on
electricity and far more on transportation and heating. 2018
could be the biofuels year for which the policy framework is
being set now.
Mr K Krishan, Chairman, Malavalli Power Plant Pvt Ltd
Biofuels have reached a crucial point in India with
technology waiting to be pushed to the commercial side. We
at the MNRE are working towards policy measures to enable
this push. This sector is a work-in-progress as development
of second generation biofuels and creation of biomass supply
are still complex issues. Also, adherence to targets is essential
as actual implementation and production have not kept pace
with intention.
Ms Varsha Joshi, Joint Secretary,
Ministry of New & Renewable Energy, Government of India
Proliferation of biodiesels depends on the fuels being genuinely sustainable and
cost-efficient. Successful inclusion of biodiesel in the fuel mix of railways promises
to change the landscape of freight and public transport in India by reducing our
dependence on imported fossil fuels, providing a clean energy alternative, and
generating employment for a large segment of the population across urban and rural
India.
We need to address the pricing mechanism for biofuels across the supply chain.
Policies such as the Renewable Purchase Obligation could be developed for oil
marketing companies and the National Clean Energy Fund could be used to support
technological development. Greater involvement of banks and financial institutions
in the sector is an urgent necessity.
Dr V K Saraswat, Member, NITI Aayog, Government of India
The mandate for ethanol blending in India has to be immediately increased. A roadmap
to achieve the 20 per cent level over the next 3-5 years must be formulated. We also need
to support second generation ethanol production.
Mr G S Krishnan, Regional President, Novozymes South Asia Pvt Ltd
Ms Varsha Joshi in conversation with Mr Pramod Chaudhari
6 GAUGE 7GAUGE

6. STATE.MENT
MADE IN
ANDHRA
PRADESH
During his second term in office
Mr Naidu had outlined his Vision
2020, to provide welfare measures
like low-cost education and healthcare
to the state’s denizens while
systematically eradicating poverty by
generating rural employment and
upgrading small investors into large
corporations to raise profitability and
stability. This vision is being
recalibrated to account for the changed
circumstances, and will now focus on
the development of the 13 districts of
residuary Andhra Pradesh, covering
both social and industrial development
as has been the hallmark of his
governance.
Speaking at the Indo-Japan Energy
Forum 2015 co-organised by the
Confederation of Indian Industry
and the New Energy and Industrial
Technology Development
Organisation (NEDO) on 29 April,
Mr Naidu asserted that the new
capital region of Andhra Pradesh
will offer industry a USD 30 billion
opportunity in the next decade.
It will also see the creation of over
6 million jobs in traditional ventures
as well as new ones such as smart
cities, advanced transport systems,
clean energy, efficient power and
water utilisation processes, and
manufacturing.
The new state of Andhra Pradesh is
the eighth largest in India, with a
population of almost 50 million. It
has several intrinsic advantages,
including a strong agrarian base,
abundant coal, granite and mineral
reserves, and a range of renewable
energy resources like sun, wind and
water. Decades of proactive
governance has created financially-
sound state utilities and efficient
public infrastructure like power and
road networks. This has given the
government a strong foundation to
build the new state upon, with the
agenda to enable infrastructure and
encourage mega strategic projects
through targeted policies and
transparent governance. Several key
policy interventions are already in
place, including a business-friendly
single-desk system to allot clearances
for certain categories of projects
within 21 days, and more are on the
anvil.
In fact, Andhra Pradesh is one of
the three states – along with Delhi
and Rajasthan – to be chosen for the
Central Government’s flagship
Power For All (PFA) programme.
The state has enlisted both
conventional and renewable sources
in its fuel mix to balance
availability, accessibility and
affordability for all types and
classes of consumers. Clean coal
technologies are a major focus area,
and the state has started
commissioning super- and ultra-
supercritical power plants.
APGENCO, the state generation
utility, is the first in the country to
commission an 800 MW super-
critical power plant. In addition, it
is already planning an ultra-
supercritical 4000 MW project in
Srikakulam. NTPC is installing a
similar project at Vishakhapatnam.
Meanwhile, Andhra Pradesh is
targeting 10,000 MW of solar power
(10 per cent of the national target of
100 GW) by 2022, about a fourth of
its total estimated potential of
38,500 MW. Wind is another core
resource, with 5,000 MW capacity
being targeted by 2019 of the
untappedpotentialofabout 13,000MW.
State transmission utility
APTRANSCO is implementing a
green energy corridor to evacuate
3,000 MW of solar and 1,000 MW of
wind energy.
The Government of Andhra
Pradesh is looking to partner with
global investors to set up state-of-
the-art infrastructure and
manufacturing systems. Aligned
with community and environmental
sustainability goals, the creation of
this hi-tech, knowledge-based
society is likely to make the state
India’s commercial gateway to
South East Asia by 2050. It will also
take Andhra Pradesh closer to its
target of having the highest
Happiness Quotient among its
Indian counterparts by 2029.
AP2.0THE NEW VISION
N Chandrababu Naidu has always
been a man with a mission. In his
first run as Chief Minister from 1995
to 2004, he developed the erstwhile
state of Andhra Pradesh into one of
India’s most progressive and
profitable with a series of bold and
far-reaching reforms, including
leveraging the then-nascent
information technology industry to
transform Hyderabad into a global
economic hub. Now, he is back to
lead the post-bifurcation state to an
even higher zenith.
Primary Sector
Urban Development
Industries
Infrastructure
Services
Skill Development
Social Empowerment
7 MISSIONS
5 GRIDS
WATER
GAS
ROADPOWER
FIBRE
5 CAMPAIGNS
Enrollment of Students
Environmental Sustainability
Victory over Poverty
Revival of Agriculture
Cleanliness and Health
9GAUGE
We will attract
investments of
30 billion and
create 6 million jobs
in the next decade.
$
N Chandrababu Naidu
Chief Minister of Andhra Pradesh
My vision
is to make
the new
Andhra Pradesh
one of top
three states
in India
by 2022.
8 GAUGE

7. What are some of your key
takeaways since the first ordinance
was passed and the recent coal
auctions?
The use of IT applications to achieve
transparency in a situation as
complex as the coal auctions is the
biggest key takeaway here. The
coal issue is complex because
of cancellation of blocks by the
Supreme Court. In the past all
actions related to coal were
questioned, some rightly and some
not so rightly. Given the many
stakeholders in this sector, bringing
in transparency and objectivity was
essential to mitigate challenges. This
is why we opted for the auction
route and it seems to have gone fine
so far. In fact, the auctions have
clearly demonstrated that even a
complex issue such as coal can be
tackled efficiently and efficaciously
through application of IT in a
transparent manner.
In your earlier avatar you were
looking to put various processes
online. Taking this lesson forward,
do you think this could be the way
to bring transparency into
government functioning like public
procurement for other mineral
resources?
Absolutely. This is just the beginning.
Natural resources are going to
continue to be handled by the
Government and in future this
process will be used.
In the past, we have seen that
companies have projected or bid
aggressively but have been unable
to follow through accordingly.
What is your assessment of this?
The Ministry’s objective is to create a
process that generates optimum
value of the natural resource for the
Government. My assumption is that
the bidders would have done what
they did with their eyes wide open.
Our primary focus was on putting
together a transparent process for
coal auctions. As long as the process
is transparent the results are not in
our hands. The revenue will go to
the State Governments. If the
companies do not mine and pay as
per the mining plan, there is an
option to invoke their performance
guarantees and re-auction the blocks.
In your view will this be the
process for the future blocks as
well? Do you think this auction
process can become the model of
allocation for other minerals?
We would follow the same auction
methodology with minor
modifications on the basis of our last
experience. But this process would
by and large remain the same for all
204 blocks.
As far as the other Ministries are
concerned, it will be their decision.
But my understanding is, having
demonstrated a successful auction
process it would be useful for other
Ministries to customise this for their
purpose.
The Government has set a target of
coal production of 1 billion tonnes
(BT) by 2019 – 2020. What in your
view are the milestones to achieve
this target and what is the roadmap
to reach these milestones?
The Ministry is targeting coal
production of 1.5 BT. Of this, 1 BT
will come from Coal India and the
remaining 500 million tonnes (MT)
will come from non-Coal India
sources, particularly from the mines
that are presently being auctioned or
allocated to non-Coal India entities.
For the 42 Schedule-II mines, the
peak rate is 90 MT and for the 32
additional Schedule-III mines the
peak rate is 130 MT. That said, the
204 coal blocks together have an
estimated coal production potential
of over 800 MT. Therefore, we can
safely assume that by 2020, around
500 MT will be produced from these
mines.
For the mines currently held by Coal
India, the Ministry has drawn up a
mine-wise plan clearly detailing
what is required to take a mine from
level X to level Y. This framework
includes evacuation, land acquisition,
environment clearance, law and
order, etc. All issues associated with
increasing production or productivity
have been clearly identified and a
strategy has been chalked out for
each mine.
In fact, the strategies are already
being implemented. The progress is
evident in the coal production in
recent months. To my knowledge
coal production has never grown by
7 – 8 per cent in the past decade, so
this has given us hope that we can
ramp up production.
Mr Anil Swarup assumed charge as Secretary, Ministry of Coal in October 2014. In less than
six months, he has not only successfully put in place a transparent process for coal auctions
and spearheaded the first ever e-auction of coal in India, but has also drawn out the roadmap
to achieve the target of 1 billion tonnes of coal production by 2019 - 20. In an interview with
CIIthis April,hediscussedhisplansforthe sector.Editedexcerpts.
In conversation with Mr Anil Swarup,
Secretary, Ministry of Coal
PERSPECTIVE
10 GAUGE 11GAUGE
Transparency,
the game changer
A paradigm shifts for India’s coal sector
Transparency,
the game changer
A paradigm shifts for India’s coal sector

8. What are the challenges to
achieving the 1.5 BT targets?
Evacuation, environment and
forest clearance, land acquisition,
and local law and order problems
are the four major challenges to
varying degrees in different mines.
Fortunately the Ministry has been
able to identify these issues and we
will follow a specific strategy to
address each issue.
For example, earlier all evacuation
activities were done by the
Railways. Now a decision has
been taken, along with State
Governments, to set up Joint
Ventures in each concerned state.
For these JVs each evacuation line
will be an independent profit
centre, unlike Railways where
evacuation is one of their many
projects.
The State Governments have in
principle agreed to this
arrangement and Memorandums
of Understandings will be signed
with them within the next month.
The Ministry is in the process of
circulating a draft which is at
various levels of approval. This
arrangement will work especially
well in the coal-bearing states as
the intent is to move coal from
accessible to inaccessible areas.
These will primarily be projects to
evacuate coal to the main lines.
India sits on 300 BT of coal
reserves. However, there is no
evacuation where these reserves
exist. If this issue is addressed,
production will not be a challenge.
We have situations where it takes
around 12 hours to fill a rake,
while in others it is done in an hour
and a half. Therefore, the Ministry
is also considering mechanisation
to improve the turnaround time for
efficient evacuation.
Which entities are a part of the
JVs being formed?
The JVs will be formed between
Coal India with 64 per cent stake,
Ircon with 26 per cent stake, and
the concerned State Government
with 10 percent stake. The State
Governments are necessarily party
to the agreements because many
issues rest with them. It is believed
that once they have a stake in the
JVs the clearances will move faster.
The major chunk of investment
will come from Coal India and
Ircon.
How are the other challenges of
land acquisition, law and order,
etc. being addressed?
Like I mentioned, a clear strategy is
already being implemented.
All coal-related projects with the
Ministry of Environment, Forests
and Climate Change are being
reviewed on a monthly basis, and
the benefits of a transparent
application and monitoring process
are already visible. Clearances are
taking lesser time. In the Western
Coalfields, a mine will be opened
for mining every month for the
next 12 months.
Also, state-related issues such as
land acquisition and local law and
order are being addressed in
conjunction with state officers.
Partnering with the states has
clearly changed the whole
landscape.
For example, in West Bengal, a
few blocks were stuck for the
last six years because the State
Government was not providing
land to Coal India for mining.
Once they realised that the royalty
from mining would accrue to the
state, the matter was resolved.
What is the Ministry’s approach to
coal swapping?
We are contemplating two types of
swapping. Bilateral swapping, which
has been approved, is relatively
simple. It is being done at the level of
existing linkages where coal is
unnecessarily being carried to users
located at a greater distance when it
can be utilised for closer units. So far
15 swaps have happened across the
country, with the first set of
swapping entailing a saving of
Rs 1,100 crore annually. Ultimately,
swapping is likely to lead to savings
of Rs 6,000 crore per annum.
We are also contemplating other
options like trilateral and multilateral
swapping. These are more complex
as multiple stakeholders are involved
and these take longer to execute.
What are the challenges in
executing the swapping?
The challenges are multi-fold.
Initial swapping was simple but in
trilateral and multilateral
swapping, while one entity may
have to sacrifice, gains will accrue
to the other entity. The mechanism
of transferring the gain from one
stakeholder to the other will need
to be worked out. The Government
is facilitating such negotiations
with the stakeholders.
What is the objective of the
Government behind auctioning
coal linkages?
We are not just looking at the
auctioning coal linkages but are
looking into the whole process of
allotting linkages. The reason
behind such thinking is that for
any such allocation we have to
clearly identify the price at which
the coal linkage should be given
and who it should be given to.
There has to be transparency in this
process as well. We are evaluating
whether the pricing and allocation
methodology is transparently
determined in the existing system.
Given that energy is the engine
that drives the pace of an
economy, for India - an
aspiring economic
powerhouse, a well-oiled
power sector is critical. Our
power sector has had a bumpy
ride over the last 4-5 years,
affecting all key stakeholders:
Consumers - with load-shedding
and irregular supply
of power due to financially
distressed distribution utilities
Private and public sector
companies - with their assets
operating at sub-optimal levels
due to lack of fuel supply (both
coal and gas) and uncertainty
from the cancellation of captive
coal blocks
The Government - with an
increased current account deficit
arising from coal imports
Community - impact of land
acquisition disputes
While the new Government is
pursuing measures to address
exigencies such as the reallocation
of captive coal blocks, we need a
broad-based and holistic approach
to alleviate the long-term structural
issues plaguing the sector.
CEO.SPEAK
12 GAUGE 13GAUGE
Mr Swarup speaking at the CII Roundtable on 'Impact of
Coal Reforms on the Power Sector' earlier this month.
POWER PLAYREVIVING THE SECTOR
Transmission planning
should enable the system
to always remain ahead
of generation capacity.
Mr Anil Sardana, Chairman CII National Committee on Power and
Managing Director & CEO, Tata Power Company Ltd

9. It is also critical to reform the
domestic coal mining sector to attract
private investment and open up
mining to entities beyond Coal India.
Additional initiatives are required to
improve coal logistics to ensure smooth
offtake of the increased production.
While the bulk of India’s coal
requirement should come from
domestic sources, imported coal does
have a role to play in our energy mix.
This is especially so in the coastal
states where it is more economical to
import coal than transporting domestic
coal or investing in augmenting
transmission infrastructure to wheel
power to the demand centres.
The risks associated with imported
fuel can be mitigated through
Government to Government
securitisation of fuel resources
outside India. This approach is
adopted by countries such as Korea,
Japan, Australia, etc.
G2G engagement is also essential to
lock in natural gas options, a fuel
source India must have in the mix
given the increasing peaking power
requirements. The absence of credible
peaking power options has resulted
in an inefficient and sub-optimal
model where the less suitable coal-
based plants are being deployed to
meet the requirement.
Addressing the Generation Challenge
The generation sector is facing a
plethora of issues which may lead to
a slowdown in capacity addition. A
number of challenges need to be
addressed to turn this sector around.
Managing Coal Shortage
Domestic coal production has not
kept pace with the growth in
generation capacity. Further, India’s
share of the global investment in the
exploration of coal mines is an
abysmal 0.5 per cent. The result is an
acute shortage of coal, leaving
around 15 GW of thermal power
generation capacity stranded across
the country. The demand for
imported coal has escalated to an
alarming 200 million tonnes per
annum (MTPA), despite India having
7 per cent of the world’s coal
reserves.
The Government is addressing the
issue of coal shortages through
allotment of coal blocks for captive
production and through the
augmentation of domestic coal
production by Coal India. The recent
coal block auctions witnessed
aggressive bidding, with all six
power sector blocks being won at an
additional premium after reaching
zero fuel prices. Consequently,
private power producers with a
cumulative capacity of about 10 GW,
who bid the highest, are staring at
around 65 paise per unit under-
recovery in variable cost.
CRISIL estimates that these players
might clock under-recoveries to the
tune of Rs 1,350 crore in 2015-16
because variable tariffs will not cover
mining costs and production-linked
payments to the Government.
Therefore, to safeguard returns, they
will have to evaluate increasing fixed
tariffs. But developers who have
already signed PPAs – accounting for
a third of the 10 GW capacity – will
not have this option. Even those that
are yet to sign PPAs will find it
difficult to quote significantly high
fixed tariffs due to intense
competition. So the offset available,
at best, will be partial.
The Government has also set a steep
production target of 1 billion tonnes
over the next five years for Coal
India. To ramp up coal production, it
is necessary to catalyse the exploration
and development of coal mines.
Allotment of coal blocks with pre-
approved environmental clearances
may be a feasible solution.
The introduction of the new Standard
Bidding Documents for Case I and
Case II bids has not been effective.
The Develop-Build-Finance-Operate-
Transfer (DBFOT) model proposed
for Case II bids is perhaps better
suited for businesses such as road
and transport, and not so much for
generation.
Recently, all private players in the
power sector pulled out of ultra-
mega power project bids in Odisha
and Tamil Nadu, leaving only NTPC
in the fray. The Ministry of Power
perhaps needs to revert to the Build-
Own-Operate (BOO) bidding
framework to ensure lower tariffs
and better plant operation efficiency.
The new framework should also allow
complete pass-through of fuel price
cost and make fixed costs a biddable
parameter along with conversion
efficiency.
Several initiatives are needed to
accelerate power generation projects,
including a fast -track mechanism for
land acquisition for infrastructure,
and procedural and structural
reforms for environmental and other
statutory and non-statutory
clearances. Time bound procedures
for clearances, with provisions for
deemed permission to avoid stalled
projects, are also critical. In addition,
India needs to adopt a robust policy
to guide state regulatory
commissions in planning bulk fuel
supply / procurement in line with
the basket of fuels.
Aligning the Transmission System
Increasing congestion in inter-state
transmission systems has created a
fragmented market despite the
presence of a national grid. Slow
intra-state transmission capacity
addition has also significantly
affected power transmission.
Over the next few years, the demand
for transmission capacity is expected
to increase dramatically, driven
primarily by increases in generation
capacity (20 GW per year versus 10 -
12 GW per year in the past). Also,
emerging requirements of open
access, trading, and inter-regional
transfers will increase demand.
Besides enhancing capacity, the
transmission system has to be made
more flexible with higher margins/
redundancies to enable integration of
power sources. Transmission
planning should enable the system to
always remain ahead of generation
capacity.
The key challenges to augmenting
transmission capacity include obtaining
land, right of way, and statutory
clearances for the project. A fast-track
clearance mechanism for land
acquisition and procedural reforms
for statutory clearances are essential
to accelerate growth across the power
value chain. While Power Grid
Corporation of India, the central
transmission utility, is executing
inter-state transmission projects at a
reasonable pace, intra-state projects
need attention.
Transmission capacity can also be
augmented by upgrading the thermal
rating of existing lines by technology
adoption, such as using high capacity
conductors.
The boom in renewable power will
be rendered ineffective if not
accompanied by a corresponding
enhancement in transmission capacity.
Hence, implementation of the green
corridors is of utmost importance.
Also, it is critical to quickly adopt
technologies to create storage
capacity to ensure adequate system
balancing capabilities.
Restructuring the Distribution
Business
The losses of India’s state electricity
utilities have once again assumed
alarming levels, having come a full
circle since the implementation of the
Electricity Act of 2003 and various
central schemes for financial
restructuring of power entities.
Reasons for the discoms’ financial
distress include:
• Lack of cost-reflective tariffs,
with a cost-revenue gap of about
Rs 0.5 per unit
• The national average of AT&C
losses continue to be 25 per cent,
with many states reporting over
40 per cent losses
• Slowdown in market development
Innovation
Energy security also implies a thrust
on innovation – an area where both
the private sector and the Government
have not invested adequately. While
initiatives discussed earlier will
facilitate long-term energy security,
the issues of the future will be
different from the current ones.
Future issues will revolve around the
environment, and optimum utilisation
of natural resources. Hence, focused
research and innovation in the
following areas is essential:
• Making Indian coal more
environment-friendly by enhancing
the efficiency of washeries to
reduce ash and putting in place
relevant policies for this purpose
• Energy storage to handle the
expected scale-up in renewables,
which can also serve as peaking
solutions
• Optimum utilisation of allied
resources like land, water and
fossil fuels in the power sector
In conclusion, it would be appropriate
to state that persistent and consistent
policy effort is essential to turn
around the sector and to make it an
effective catalyst for Government
initiatives such as the ‘Make in India’
programme.
It will also be the roshni that will
make the dream of achhe din a reality
for India.
has led to stranded / idle
generation capacities and minimal
investment in network upgradation
• Poor implementation of open access
due to high cross-subsidy surcharge
Lack of distribution reforms has
strained the segment’s growth. This
has led to ripple effects on the generation
and transmission segments as well as
on the economies of the states.
Restoring the financial health of state
electricity utilities and improving
their operating performance continue
to be critical issues for the sector.
Accelerated distribution reforms with
efficiency improvements and
introduction of cost-reflective tariffs
are the need of the hour.
The Government is moving in the
right direction with stakeholder
engagements on the latest
amendments to the Electricity Act
proposing a segregation of wires and
supply businesses. This new model is
expected to increase private sector
participation and competition in the
supply sector, and bring in focus on
efficiency, cost competitiveness and
reducing AT&C losses. Increased
competition will not only increase
consumer choice but also improve
consumer focus for a sector which is
otherwise apathetic to consumer
needs like reliable 24x7 power supply,
accurate and timely billing, etc.
Rapid but flawless execution of wires
and supply segregation will enhance
the health of the distribution sector
which is critical for the growth of the
entire value chain.
14 GAUGE 15GAUGE
Mr Sardana addressing the CII
Roundtable on the 'Impact of Coal
Auctions on Power Sector' at
New Delhi on 8 May 2015
Accelerated
distribution reforms
with efficiency
improvements and
introduction of cost-
reflective tariffs are
the need of the hour.

10. energy resource rich areas to the
national grid (solar and wind power
in Rajasthan, hydropower in
Himachal Pradesh), as well as the
transmission interconnection and
some common facilities for Gujarat’s
Charanka solar park. ADB’s
recently approved loan programme
with the Indian Renewable Energy
Development Agency (IREDA),
which lends funds to RE projects,
is expected to provide a significant
boost to the sector.
We are working closely with the
Power Grid Corporation of India
on their green energy corridor
initiative. We are also engaged with
the Ministry of New and Renewable
Energy and Solar Energy Corporation
of India (SECI) on the Government’s
solar parks programme.
ADB’s public sector assistance helps
create an enabling environment for
investments in renewables,
particularly where transmission
connectivity to a distant grid is a key
constraint in opening up investments
in resource rich locations. Increasing
transmission capacity and deploying
grid management tools will help
India’s power grid absorb higher
penetrations of variable renewable
energy more effectively.
Our intent is to develop stronger
state utilities and better
functioning systems by working
with distribution companies to
provide metering and other means
to reduce technical and commercial
losses and improve their financial
health. In a country as large as India,
targeted and sustained assistance
over time in select states enables us
to make a more meaningful impact
in specific areas.
Given the massive financing needs,
two key questions we ask ourselves
are, how do we remain relevant,
and how do we make the maximum
impact with a finite amount of funds.
We do this in several ways. As an
early financier in India’s solar PV
and CSP projects, we have
demonstrated the success of projects
funded by the PSOD, which has
helped manage the risk perception
and attract investors to the sector.
The PSOD is constantly working to
attract more financiers, in
particular investors from other
parts of Asia, to the Indian RE sector,
thus leveraging additional foreign
capital alongside ADB investments.
This includes ADB establishing a
new $400 million private equity
fund named Asia Climate Partners
to promote RE across Asia with the
UK Government, Japan’s Orix
Corporation, and Robeco SAM
from the Netherlands.
To promote solar power knowledge
sharing, ADB has founded the Asia
Solar Energy Forum, an international
platform that helps private sector
companies, government
representatives and other
stakeholders interact, develop
partnerships, and organise major
conferences. Officials and private
sector executives from India have
been active participants. Within
India, ADB has funded solar power
knowledge and capacity building
activities through IIT Jodhpur in
Rajasthan,andat thePandit Deendayal
Petroleum University in Gujarat.
The Government of India’s
increased targets for renewable
energy (RE) capacity expansion are
a ‘quantum leap’ and underscore its
commitment to expand clean energy
contributions into the country’s
power sector. The Asian
Development Bank (ADB) supports
India’s RE sector through both
sovereign and non-sovereign lending
windows.
Our public sector energy
operations in India involve
concessional funding of projects
agreed upon with the Ministries of
Power and New and Renewable
Energy to support renewables, and
with the Department of Economic
Affairs of the Ministry of Finance.
Our rolling pipeline of projects
includes borrowers from public
sector utility companies and state
and central level institutions.
ADB’s Private Sector Operations
Department (PSOD) offers non-
concessional commercial financing
to private companies, public entities
and projects, including independent
power projects. It also leverages
funds from commercial sources, and
provides debt and equity funding to
RE project developers. ADB has
funded wind and solar projects in
multiple states including
Maharashtra, Gujarat, Karnataka,
Madhya Pradesh, Rajasthan and
Telangana. The 40 MW Dahanusolar
photovoltaic (PV)power project -
India’s first utility-scale solar PV
facility, and a 100 MW concentrated
solar power (CSP) project in Rajasthan
were successfully commissioned in
December 2014. ADB has also
invested equity in early-stage off-grid
energy companies such as Simpa
Networks, which provides off-grid
solar services in Uttar Pradesh.
Since renewable energy generation
is still predominantly a private
sector business, much of ADB’s
support for public sector projects is
indirect. These include transmission
programmes that connect clean
Andrew Jeffries
Energy Head (India), Asian Development Bank
Given the massive financing needs, two
key questions we ask ourselves are, how
do we remain relevant, and how do we
make the maximum impact with a finite
amount of funds.
FINANCE
FINANCING INDIA’S
CLEAN ENERGY
COMMITMENT
ADB’s dual approach thus
includes helpingbothpublicand
privatesector projectsleverage
furtherinvestments, and
promoting an enabling
environment for future
investment and sector growth.
Along with our knowledge
sharing activities, we are
looking forward to supporting
India in its journey towards
achieving its ambitious
renewable energy goals.
16 GAUGE 17GAUGE
Image: Shutterstock

11. POWER
India plans to hike imports of liquefied natural gas
(LNG) to revive power plants with a cumulative gas
grid-linked generation capacity of 24,150 MW worth
over Rs 1 trillion of investment. Of these, 60 per cent
are at the threshold of becoming toxic assets while
the rest are operating below capacity due to low
domestic gas output.
Increased LNG imports will boost power supply by
79 billion units valued at about Rs 420 billion, and
could spur spot prices of LNG trading at about
US$ 7.60 per MMBTU in Asia. The Gas Authority of
India will be importing LNG to revive these power
plants, located outside Gujarat, to improve generation.
To make imported gas affordable to consumers, the
Union and State Governments will allow tax
concessions while the importers will charge less for
regasification, transportation and marketing.
India to hike LNG
imports to boost
power generation
India's electricity generation registered a growth of
8.4 per cent during 2014 – 15, touching the 1 trillion
units mark for the first time. Since 1991-92,
electricity generation has clocked a compounded
annual growth rate (CAGR) of 5-6.6 per cent, with
the most prolific contributors being the coal-based
power stations which grew at an annual rate of
about 12 per cent. Of the 22,566 MW added during
2014-15, the thermal power sector contributed
92 per cent (20,830 MW).
Government data reveals a decline in energy
shortage to 3.6 per cent from 7-11 per cent over
the past two decades due to capacity addition,
higher generation and improved transmission.
India generates
1 trillion units
of electricity a year
for the first time
Private miners and mining companies owned-and-
operated by provincial governments will be able
to participate in the third phase of coal block
auctions, due to start in May 2015. But the
Government’s decision to not implement a free
pricing regime will not allow the miners to set sale
prices for end-users. Also, no private, domestic or
foreign entity would be permitted to export the
mined coal.
However, options are still being reviewed for the
final price regulating mechanism. One option is
the weighted average method based on notified
coal price charged by Coal India and international
coal prices. Further, the successful bidders of the
94 coal blocks to be auctioned through the
competitive bidding route for commercial mining
will not face end-use restrictions.
No free pricing regime
for commercial
coal miners
The Government has undertaken major initiatives for
rapid implementation of power projects in the eight
North Eastern states, and has earmarked investments
worth Rs 10,000 crore for the sector.
It has approved a scheme to strengthen the
transmission and distribution system in Arunachal
Pradesh and Sikkim at a cost of Rs 4,754 crore. In
addition, the Government has initiated the North
Eastern Region Power System Improvement Project
for the other six states at an outlay of Rs 5,111 crore,
including budgetary support of Rs 2,600 crore. There
is also a plan to restart the Teesta Hydroelectric
Project in Sikkim with an investment of Rs 13,000
crore.
Some transmission projects nearing completion in the
region include the 6,000 MW Bishwanath Chariali-
Agra line, the Rs 1,000 crore Bongaigaon-Balipara
line, and the Rs 500 crore Silchar-Imphal line.
Centre to invest
Rs 10,000 cr in the
North East power sector
NEWS
The third round of coal auctions, set for May 2015,
will see 23 ready-to-operate blocks being offered
through forward- and reverse-bidding
mechanisms. The Government expects the auction
to fetch proceeds of over Rs 2 lakh crore. 15 mines
are earmarked for the power sector and the
remaining eight for unregulated sectors like steel,
cement and captive power.
So far, of the 204 coal blocks cancelled by the
Supreme Court, the Government has allocated
67 coal mines through auction and allotment in
2015 in accordance with the provisions of the
Coal Mines (Special Provisions) Act, 2015.
The Government has earned Rs 2.09 lakh crore
from the first two rounds of the auction of 29 coal
blocks, and the entire amount will be transferred
to the governments of the states where these
mines are located. Allocation of 38 mines to state-
run companies is likely to take total proceeds to
Rs 3.35 lakh crore over the next 30 years.
The seven coal-rich states where the mines are
located include Jharkhand, which has the
maximum number of coal blocks at 20, followed
by Chhattisgarh, West Bengal, Madhya Pradesh,
Maharashtra, Odisha and Telangana. Consumers
are also set to benefit from the resultant reductions
in electricity tariffs, saving over Rs 69,000 crore.
Auction of
23 coal blocks
to earn Rs 2 lakh crore
Coal India missed its FY2014 target with a
production of 463 million tonnes (MT), but
recorded a 7 per cent growth in FY2015 with
494 MT, its highest growth rate in about 2 decades.
The public sector unit is believed to be on course
to achieve its production target of 550 MT for the
current fiscal, part of the overall target of a billion
tonnes by FY2020.
Supply side issues are also being addressed. With
higher domestic production and increased imports
(primarily by power plant developers), the stock
position at thermal power plants has improved
despite persistent problems of coal evacuation.
Coal India output
ramps up stocks
at power plants
HYDROCARBONS
First-ever
gas price
cut from April 1
The price of domestic natural gas saw a
7.6 per cent reduction from USD 5.61/mmBtu
to USD 5.18/mmBtu from April 1, 2015 due to
the global benchmark prices staying
considerably low in the second half of 2014.
The price was hiked to USD 5.61/mmBtu from
USD 4.2/mmBtu in November 2014 after a gap
of over five years.
The new price, based on net calorific value, will
be valid for the first half of 2015-16. This is
likely to have the maximum impact on the
state-run ONGC (which produces three-fourths
of domestic gas) and Oil India, and private
player Reliance Industries.
India’s current gas price is far lower than the
USD 11.90/mmBtu that China pays its gas
producers.
State-run oil companies ONGC, OIL and BPCL
will invest USD 6 billion in the next four years
to develop the Rovuma Area 1 gas field off the
Mozambique coast. The field is estimated to
hold recoverable gas reserves of up to 75 trillion
cubic feet. ONGC Videsh and BPCL units
together hold 30 per cent interest in the field.
With the capacity to produce 20 MT of LNG
annually, this project will be the world's largest
LNG export site after the Exxon Mobil-run
RasLaffan in Qatar. LNG production is targeted
to start from end-2018 or early 2019.
Investments of
USD 6 billion in
Mozambique on
the anvil
18 GAUGE 19GAUGE

12. 21GAUGE
In a bid to revive Rs 60,000 crore worth of
stranded power projects, the Cabinet, on
25 March, 2015 approved financial support for
gas-based power generators to help them use
costly imported LNG to generate electricity.
31 stranded power stations with a combined
capacity of 14,305 MW can now bid for support
from the Power System Development Fund
(PSDF) to generate 30 per cent plant load factor
using imported LNG.
The Government approved a reverse bidding
process through which power plants will quote
a rate, the subsidy for which will be released
through PSDF. The fund, intended for grid
stability and security, will be used to subsidise
gas-based plants which are best suited to meet
the peak load demand.
The bidding, to be conducted by MSTC, is set to
begin at Rs 5.5 a unit. The new arrangement
would help about 5,500 MW of gas plants in
southern India, particularly Andhra Pradesh
and Telangana.
Centre approves
subsidy for stranded
gas-based power
generators
NEWS
HYDROCARBONS
Gas price pooling
approved for
fertiliser sector
The Cabinet has approved pooling the prices of
domestic natural gas and imported LNG used by
fertiliser plants to make the cost of gas uniform
and affordable with effect from April 2015. The
Gas Authority of India is likely to be the pool
operator.
Fertiliser plants currently consume about
42.25 million metric standard cubic metres per day
(mmscmd) of gas to manufacture subsidised urea.
Of this, 26.50 mmscmd is domestic gas priced at
USD 5.18 per mmbtu, which is about half the cost
of the balance 15.75 mmscmd of imported LNG.
At present, gas supplied to fertiliser units is
priced based upon the combination of domestic
gas and imported LNG. This causes variations in
input price, and consequently in the final
production cost.
This reform is expected to augment indigenous
manufacturing capacities and lead to the revival
of sick fertiliser units. Over the next four years, an
additional production of around 37.13 lakh MT of
urea is expected from existing fertiliser units,
resulting in savings of Rs 1,550 crore of subsidies.
Dutch oil behemoth Shell has agreed to buy out the British Gas (BG) Group for USD 70.2 billion. This is the first
major energy merger in over a decade, closing the gap on market leader Exxon Mobil after a plunge in prices.
This is the third largest oil and gas deal ever by enterprise value and will provide Shell assets in Brazil, East Africa,
Australia, Kazakhstan and Egypt, besides boosting its proven oil and gas reserves by 25 per cent. Shell expects the
deal to yield pre-tax annual savings of about USD 2.5 billion.
Shell will pay for the acquisition with a mix of cash and stock. BG shareholders will receive 383 pence a share in
cash and 0.4454 of Shell’s B shares for each BG share held, cumulatively owning 19 per cent of the combined firm.
Shell to buy BG for USD 70 billion
RENEWABLE ENERGY
Government set to initiate 100 GW solar energy plan
The Government is starting the process to install 100 GW solar energy capacity by 2022 through the award of
10,000 MW of projects in the next three months. Of this, about 6,000 MW will be set up by NTPC, 2,500 MW by
Solar Energy Corporation of India (SECI), and around 2,500 MW by the Government of Madhya Pradesh (GoMP).
The balance will be set up as solar parks in other states. India's present solar capacity is a meagre 3,382 MW.
NTPC will build 3,300 MW of own projects and tender 3,000 MW under the power bundling scheme as part of its
plan to harness 25 GW of solar power in six years, of which NTPC’s share will be 10 GW. Land clearances and
tenders for transmission for NTPC’s proposed solar parks at Anantpur, Andhra Pradesh (1,500 MW) and Coonoor,
Tamil Nadu (1,000 MW) have been completed. Capacity will be awarded through rate-based bidding.
SECI, a fully-owned subsidiary of the Ministry of New and Renewable Energy, is set to tender 2,000 MW of
projects by next month. SECI will also be a part of a JV agreement with the GoMP to develop India's first solar
ultra-mega power plant at Rewa. Bids for batches of 250 MW and 500 MW will be called by May.
Tenders are also expected soon from Telangana, Tamil Nadu and Andhra Pradesh. In addition, Rajasthan is
analysing a model to harness large-scale solar power in desert areas.
20 GAUGE

13. NEWS
RENEWABLE ENERGY Power tariff policy
amendments to revise
renewable generation
targets
The Ministry of Power has proposed amending
the 2005 tariff policy to add the promotion of
renewable generation sources as its fifth objective.
The amendment seeks to raise Renewable
Purchase Obligation (RPO) to 8 per cent by 2019
from the earlier target of 3 per cent by 2022, exempt
renewable energy sources from inter-state
transmission charges, and allow discoms to
procure bundled solar power from existing
conventional power generators on a cost plus
basis to meet their RPOs.
The hike in RPO target implies an aggregate solar
capacity of 69 GW by 2019. This means capacity
growth of 87 per cent per annum, which is in line
with the 100 GW by 2022 target.
Further, exempting renewable power from inter-
state transmission charges would encourage
growth of solar plants in resource rich states such
as Rajasthan and Gujarat, if transmission capacity
is hiked accordingly. Green corridors to evacuate
renewable power are already being planned.
The amendments propose that all coal-fired
power plants installed after a specified date be
accompanied by a renewable power plant for at
least 10 per cent of their coal generating capacity.
Also, after receiving consent from the off-taker,
existing coal power plants will be allowed to set
up renewable capacity for bundled power to be
sold on a cost-plus basis.
While discoms will still have the option to buy solar
power by allocating capacity through competitive
bidding, the amendment will enable them to also
buy bundled power directly from conventional
producers such as NTPC, NHPC, Reliance, Jindal
and Adani.
Conventional power generators already have an
obvious advantage over renewable IPPs in terms
of scale and evacuation infrastructure. Now,
being able to directly pass through costs for solar
on a regulated cost-plus basis is likely to boost
their advantage further.
While the proposed amendments are sound in
terms of policy, weak enforcement and lack of
cooperation from states will be the key challenges
for the Government in actual implementation.
Maharashtra targets
14,400 MW non-
conventional power
generation by 2019
To lower carbon emissions, the Maharashtra
government has decided to use non-conventional
resources to generate 14,400 MW of electricity by
2019. Of this, 7,500 MW will come from solar and
5,000 MW from wind. Sugar industries will
generate 1000 MW, besides 200 MW from
cogeneration, 300 MW from biogas and 400 MW
from industrial waste.
According to officials, a policy on this issue will
be sent for Cabinet approval soon. The State
Government will invite private companies to
invest Rs 70,000 - 80,000 crore in the ventures, and
purchase a portion of the power generated by
them.
Further, to check electricity theft, feeder managers
will be installed at specific places, with five
feeders per location. Feeders are medium voltage
lines used to distribute electricity from a sub-
station to consumers or to smaller sub-station. At
present the Maharashtra State Electricity
Distribution Company (MSEDCL) has 17,000
feeder managers.
India Inc turns
to green bonds
to fund sustainable
projects
India is exploring multiple avenues to finance its
plan to augment renewable energy capacity by
175 GW by 2022. The Government has asked
select financial institutions, including public
sector entities like Rural Electrification
Corporation (REC), Power Finance Corporation
(PFC), IDBI Bank, Indian Renewable Energy
Development Agency (IREDA), and private sector
entities like India Infrastructure Finance Limited,
ICICI Bank and Yes Bank to raise funds through
the issuance of green bonds.
YES Bank and Export Import Bank of India (EXIM
Bank) have jumpstarted the green bonds market
in India. In February, YES Bank raised Rs 1,000
crores (USD 160 million) against the target of
Rs 500 crores through its 10-year green infrastructure
bonds to fund solar, wind, biomass and small
hydro projects. In March, state-owned EXIM Bank
raised about Rs 3,100 crore (USD 500 million)
through a 5-year green bond issue to international
investors in the first such dollar-denominated
offering from the country. At present, EXIM
Bank’s dollar portfolio is USD 9-10 billion.
Cricket goes solar!
The four decade old M Chinnaswamy Stadium at Bengaluru has become the first cricketing venue in India – and the
world - to have a rooftop solar power plant. The Karnataka State Cricket Association (KSCA) installed the 400 KW
rooftop plant, designed, engineered and managed by RenXSolEcotech.
The solar plant is designed to generate 5.90 lakh units per year, equivalent to powering 200 AEH (All Electric
Homes) using 3 KW power annually. It will also save 600 tons of carbon dioxide emissions each year. The Bangalore
Electricity Supply Company (BESCOM) Grid will buy the excess power generated at Rs 9.56 per unit under the Net
Metering policy. KSCA will only pay for the net of power generated and consumed.
At the inauguration of the plant in April 2015, Karnataka Energy Minister D K Shivakumar said that the State
Government would allow construction of an extra floor as an incentive for people to install solar power panels on
their rooftops.
CLIMATE CHANGE
Ban on diesel vehicles
in Delhi suspended
The National Green Tribunal’s ban on diesel
vehicles aged over 10 years has been stayed till
May 18 while the authorities work out ways to
implement the Tribunal’s instructions
effectively without inconveniencing the public.
Slamming the Centre, the Delhi government
and other concerned authorities for not
sincerely implementing pollution control
initiatives like capping the number of vehicle
registrations and hiking parking fees, the
Tribunal recently announced strong measures
to curb air pollution in Delhi. Besides banning
diesel vehicles, it also banned petrol cars aged
over 15 years and cracked down on illegal
construction in the capital and surrounding
satellite towns.
Lawyers representing the Delhi government
appealed to the Tribunal for more time as it was
impacting essential services such as garbage
collection and transportation of eatables which
were being done using old trucks.
India may submit
climate change
plans in September
India is likely to submit its plans to manage
climate change, including the proposed steps
to curb carbon pollution, by September 2015.
Given the Union Government's thrust on
manufacturing, its commitment to ensure total
electricity coverage by 2022, and the demands
of urbanisation, ironing out India's post-2020
pledge to tackle climate change is challenging.
So far, the European Union, the United States,
Switzerland, Norway and Mexico have
submitted their plans to the UN Climate
Change Secretariat. The deadline for
submissions is September 30, after which the
Secretariat will publish a report on the
submissions on November 1, 2015.
22 GAUGE 23GAUGE

14. 24 GAUGE
156,191
22,971
1,200
5,780
40,867
31,692
All-India Installed Capacity
Of Power Stations (MW)
Coal
Gas
Diesel
Nuclear
Hydro
Renewable Energy
DATA AS OF 31 JAN 2015
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
(March)
2.499
5.06
6.811
8.249
8.922
9.73
11.632
10.901 10.76
11.463
7.958
TOTAL LNG IMPORTS IN INDIA (Million Metric Tonnes)
Source: PPPAC (Reliance LNG import data not included)
STATISTICS
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14
NATURAL GAS CONSUMPTION IN INDIA (Billion Cubic Metres)
Source: PPAC (Natural gas available for consumption after deducting gas flared from gross production by producers)
30.78 31.33 30.79 31.48 31.75
46.49
51.23
46.33
39.76
34.55
Content of oxygen in ethanol,
which helps complete
combustion of fuel and thus
reduces harmful tailpipe
emissions, making ethanol an
efficient tool to combat
vehicular emissions.
68 million
tonnes
Annual diesel consumption in
India, of which 64 per cent is
used by road transport. Petrol
consumption is about 16 MT.
$143
billion
Financial burden of oil
imports on Indian foreign
exchange in 2013 – 2014
(Indian Petroleum & NG
Stats 2013-14, MoPNG).
Rs 4000
crores
Cumulative amount that may
be saved in the next 10 years
by including passenger cars
under Fuel Efficiency Norms,
saving 5,76,000 MTOE of fuel
and reducing carbon
emissions by 14,40,000 MT.
NUMEROLOGY
35%
This issue of enGAUGE is supported by:
1.9 tonnes
India's carbon emissions
per person per year.
China produces 7.2, and
the US, a whopping 16.4.
750 MW
The capacity of the world's
largest solar power plant
in development at Rewa,
Madhya Pradesh, 35 per
cent more than California’s
much-hyped 550 MW
Desert Sunlight solar project.

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