Author: Anshu Sharma

Electricity amendment bill: No final decision yet, RK Singh tells Lok Sabha 

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has been proposing changes to the Electricity Act to bring in operational and financial efficiencies in power distribution companies majorly run by states. The Union Ministry of Power had proposed delicencing discoms, cost-reflective tariff, simplification of tariff structure and reduction of cross-subsidy, among others. The proposed changes under electricity amendment bill are listed for discussion in the winter session of Parliament. 

When asked whether the government proposes to bring in legislation to amend the Electricity Act, 2003, Minister of Power RK Singh replied, “The condition of most state government-owned distribution companies is a matter of grave concern. Discoms have not been able to pay generation companies for the power procured, and the dues are estimated to be in excess of Rs 1.56 lakh crore [close to 11 months of the generation companies’ revenue]. Therefore, reforms have been deliberated upon in consultation with the states and all stakeholders. No final decision has been arrived at so far.” 

The reply also highlighted that discoms’ supply losses at the end of FY20 range from an average of 21% to a maximum of 60.16 %. Similarly, the gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR) — excluding regulatory assets and Ujwal DISCOM Assurance Yojana (UDAY) grants — averages 60 paise per unit in FY20. 

Also read: Indian Energy Exchange expects electricity demand to grow at 8.5% in FY22

“The sector is in doldrums. Discoms are bankrupt. Given the urgency of energy transition and the increasing role of the private sector, it is of utmost importance to improve the financial health of Discoms,” said Mohit Kumar, senior vice-president, DAM Capital. 

Kumar said the only way to rectify the dire situation is to alter the logistics of the distribution business. “An electricity amendment bill is crucial to bring in the desired reforms. Its high time that state governments came on board to revive investment, improve consumer welfare and push for smooth energy transition,” he added.

Also read: Energy crisis: Govt warns states against selling power at high price on exchanges

By 2019-20, accumulated losses of all discoms in India had risen to more than Rs 5.07 lakh, crore as per the reply given to Lok Sabha today. Power sector lenders Power Finance Corporation (PFC) and Rural Electrification Corporation Limited (REC) have so far disbursed about Rs 85,000 crore to discoms as part of Rs 1.35 lakh crore under the Aatma Nirbhar Bharat stimulus package. As of today, discoms owe electricity generation and transmission companies Rs1 lakh crore in dues. Public power generating companies are owed Rs 23,000 crore, transmission companies are due Rs 2,606 crore,  private power generation companies await Rs 54,567 crore in arrears and renewable energy companies are owed Rs 20,502 crore. 

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2022: Aluminium, copper industries share recommendations, expectations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The pre-budget meetings have begun and the Finance Ministry is slated to meet the aluminium and copper industry association on Tuesday.

The Mines Ministry has recommended an increase in customs duty from 7.5 percent to 10 percent on primary aluminium products and downstream products between 10-12.5 percent from the current 7.5 percent to 10 percent, sources have told CNBC-TV18.

The Aluminium Association of India, which comprises Hindalco, Vedanta, and NALCO, had sought an increase in customs duty for primary aluminium to 10 percent in the upcoming budget, on account of 2.1 MT import of primary aluminium products in FY21 as against domestic demand of 3.4MT and manufacturing capacity of 4.1MT.

“To entail cost-competitiveness, the domestic aluminium industry has requested the government’s help in the reduction of basic customs duty and correction of inverted duty structure on critical raw materials including pet coke, caustic soda, aluminium fluoride, alumina, etc for aluminium industry value chain. We have also requested for an increase in tariff rate of basic customs duty for aluminium and article from 10 percent to 15 percent in line with the steel sector,” the Aluminium Association of India told CNBC-TV18.

It added that an increase in the basic customs duty of primary aluminium from 7.5 percent to 10 percent, aluminium scrap from 2.5 percent to 10 percent, and downstream aluminium products from 7.5 percent to 10 percent has also been requested.

The Ministry has batted for a reduction in customs duty and correction of inverted duty structure for important raw materials like calcined pet coke, raw petcock, caustic soda lye, etc.

Sources say the Mines Ministry may have recommended a reduction in duty from 7.5 percent to 5 percent for the raw materials meant for aluminium production. The industry had highlighted that the government needs to reduce customs duty and correct inverted duty structure on important raw materials like pet coke, caustic soda, etc as an increase in the cost of production is not helping the industry to become globally competitive.

Interestingly this time, the Mines Ministry has also recommended nil duty on import of copper concentrate. This, after the copper industry has been lobbying for over 4-5 years. Most recommendations have been given keeping in mind the government’s big focus on manufacturing. Also, copper and aluminium are the key metals in many newer areas of focus like renewable, advanced chemistry cells, etc.

However, the industry’s demand for higher import duty on both aluminium and copper scrap has not been taken up for consideration by the ministry yet. The aluminium industry had highlighted that the imports have increased to 66 percent in FY21 leading to a forex outgo of Rs 15,000 crore and the copper industry had sought an increase in the duty for scrap for responsible recycling and to restrict the import of low-grade copper scrap.

The aluminium industry has also fielded that coal cess, which is at Rs 400 per million tonne (MT), needs to be rationalised to support the power-intensive industry. This expectation comes on the back of the fact that the GST Compensation Cess on coal under the GST regime was to be levied only for the first five years from July 1, 2017 to July 1, 2022.

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Govt plans to bring uniform base price for city gas distribution

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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To boost consumption of natural gas under City Gas Distribution (CGD) and increase availability of gas, CNBCTV18 learns Ministry of Petroleum and Natural Gas has prepared a mechanism for uniform base price for gas. The uniform base price formula will be based on Regassified Liquified Natural Gas (RLNG) Compressed Bio Gas (Gas) and domestically produced gas.

The idea to bring in a uniform base price is to meet the increasing demand for gas required for CGDs which cannot be just met by domestic sources of gas. Uniform base price will help increase availability of gas from different sources and also meet the gas requirements of the CDGs.

It is expected that price of gas for CGDs will increase once uniform base price kicks in and at current pricing of all sources of gas it is expected to cost around $4 per mmbtu. The domestic gas price is at $2.9 per mmbtu for H2 of FY22.

The uniform base price will have an impact on the margins for the CGD companies and also consumers if the companies decide to pass on the cost. Once approve guidelines will be framed by the Petroleum and Natural Gas Regulatory Board (PNGRB).

This move is also expected increase share of natural gas in the energy basket to around 8-9 percent in the next 3-4 years from current 6.2 percent. The ministry has concluded all stakeholders discussion on uniform base price mechanism and it is expected to be approved within a fortnight.

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Hindustan Zinc divestment: Vedanta likely to withdraw 2009 arbitration today

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Supreme Court paved way for the government’s residual stake sale in Vedanta’s Hindustan Zinc on November 18. Hindustan Zinc is a subsidiary of Vedanta Limited.

The divestment exercise will start once the 2009 arbitration is withdrawn by the company, sources told CNBC-TV18. The government’s stake dilution in Hindustan zinc will be exercised through the exchanges via offer for sale or block deal.

Vedanta had first acquired 26 percent of government stake in Hindustan Zinc in 2002 and later acquired more stake via the first call option and open offer. In 2009, the company exercised the second call option as per the shareholders’ purchase agreement, which was disputed by the government and the company subsequently filed an arbitration to claim settlement.

CNBC-TV18 has learned that Vedanta is likely to withdraw its 2009 settlement arbitration on Friday.

Once the arbitration is withdrawn, the government is likely to move to the alternate mechanism on divestment headed by Union Finance Minister Nirmala Sitharaman and Minister of Road and Transport Nitin Gadkari along with related ministries. The alternate mechanism panel will decide on the size, number of tranches, and timing of the stake sale.

The government holds a 29.5 percent stake in Hindustan Zinc and expects around Rs 40,000 crore from the sale at the current market price.

Also Read: Vedanta promoters looking to up stake in co; details here

During the Supreme Court proceedings, the Centre sought closure of preliminary inquiry into 2002 Hind Zinc divestment. However, the court held that there existed a prima facie case of violation of divestment norms in the 2002 government stake sale and disallowed the closure. The top court had directed that a regular Central Bureau of Investigation (CBI) probe be conducted into the matter.

In 2014, the Central Public Sector Enterprises (CPSEs) had moved an application in the court alleging undervaluation of shares during 2002 divestment. Following the allegations, the apex court stayed any further divestment of government stake in the company in 2016.

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Power companies seek sustainability in investments, send SOS to govt on dues

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The electricity distribution companies mostly run by states owe power generating companies over Rs 96,000 crores as of November 2021. CNBC-TV18 learns that the association of power producers’ (APP) has sought immediate intervention from the Power Ministry to find a solution for the sustainability of current and prospective investments.

The association of power producers met power minister RK Singh on Monday in the presence of Power Secretary Alok Kumar and representatives from Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).

The state-run discoms owe over Rs 51,000 crore to the private power generating companies and almost Rs 20,000 crore dues are pending for the renewable energy generating companies. The channel has learned the association raised the issue of delayed payment by discoms and reiterated that there needs to be a solution for sustaining investments made in the power sector. It also highlighted that the delayed payment can potentially jeopardize existing and prospective investments.

“There is a need to make current investments sustainable and the investors need to remain interested in the power sector. There needs to be a framework devised by the government to ensure electricity generators are paid in time for the power sold. There is a need to generate positive sentiment for further investments. The vicious circle of delayed payment needs to be broken to a virtuous cycle, the current position on investment is unsustainable,” AK Khurana, DG, Association of Power Producers said.

Also Read | Green hydrogen push: Govt plans Rs 15,000 crore PLI scheme for electrolyser manufacturing

The association has also apprised the ministry that private power companies are at a stage where it needs to issue notices for regulation of power. Meanwhile, the ministry urged companies to enforce payment security mechanisms.

Some of the states with high overdue include Tamil Nadu, Maharashtra, Rajasthan, Uttar Pradesh, Madhya Pradesh, and Karnataka. Total overdue from the discoms to the power generating companies at the start of November 2021 stood at Rs 96,170 crore.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Explained: Why India negotiated coal ‘phase down’ instead of ‘phase out’ at COP26

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The negotiations at the COP26 climate summit in Glasgow ended with an agreement to phase down the use of coal instead of phasing it out as India wanted to negotiate terms for the usage of all forms of fossil fuels and not just coal.

Here at CNBC-TV18, we explain India’s coal ‘phase down’ stand based on 3 reasons

Phase down has no definite timeline to end coal usage

India has committed to becoming a net-zero nation, that is it will offset its emission impacting the climate, by 2070. The coal phase down will mean a developing country like India will have its own resources like coal to meet energy requirements without putting a timeline to end usage of the fossil fuel.

This phase down will give a breather to recently commissioned coal-based plants that may have a life cycle of another 20-30 years. At present, India has 200 GW electricity generation capacity based on coal.

Phase down allows time to transition to renewable

At the COP26 summit, Prime Minister Narendra Modi announced that India would increase the installed capacity of renewables to 500GW by 2030. The country already has 100 GW of installed renewable capacity as of date. The coal phase down will help expand the commercial viability of technologies and storage needed to scale up renewable capacities.

Phase down assures investors of coal-based projects

Coal-based projects are facing difficulty in terms of funding and a phase-down will give some assurance to financiers of such projects.

Most of the funding in the sector comes from domestic financiers only. The auction of coal for commercial use has also seen a tepid response with big coal players shying away from participating.

India expects 1.5 billion tonnes of coal requirement by 2030 for its existing capacities.

Also Read: India being unfairly blamed for stance on coal at COP26 meet, say govt sources

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Green hydrogen push: Govt plans Rs 15,000 crore PLI scheme for electrolyser manufacturing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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On the Independence Day, Prime Minister Narendra Modi announced ‘National Hydrogen Mission‘ to make India the new global hub of green hydrogen.

CNBC-TV18 learns from sources that a production-linked incentive scheme of Rs 15,000 crore is being worked out to push for electrolyser manufacturing in India.

The green hydrogen is produced by splitting of water using an electrolyser using electricity from renewable sources.

The PLI for electrolysers is likely to be computed on sales volume, performance multiplier, base PLI quote which is expected to be at $60 per kilowatt of electrolyser capacity. It is expected that $10/kw cost reduction will be seen each year during the period of the PLI scheme for the electrolyser manufacturing.

Also Read: India’s hydrogen fuel journey – from 2006 to 2021

Domestic value addition like other PLI schemes will be key. The timeline for the scheme is expected to be 5 years starting FY24. The ultimate aim of the government is to bring down the cost of green hydrogen to $1 per kg and have 5 million metric tonne per annum (MMTPA) green hydrogen capacity by 2030 in India.

Sources also tell CNBC-TV18 that government may also look at concessional goods and services tax (GST) at nil for domestically manufactured electrolysers for the 5-year period.

The target of the green hydrogen mission will be to accelerate cost reduction, bring in free transmission, green open access, reduce capital cost by way of dollar dominated bids and renewable energy certificates to make green hydrogen cheaper and viable in India.

*In India, green hydrogen can help in two ways – energy security and decarbonisation of the economy. It can substitute fossil fuels used in industries including fertilisers, chemicals, petrochemicals, refineries and steel units. Kickstarting a small share of green hydrogen to substitute grey hydrogen can create a substantial market. Gradually, with the economies of scale and innovation green hydrogen could become a competitive fuel,” said Rajat Seksaria, CEO, ACME Group.

What is Blue hydrogen and is it really better than fossil fuel?

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NTPC eyes slice of power exchange, may buy 7-10% stake

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The state-run power giant NTPC Limited may buy a 7-10 percent stake in Power Exchange of India Ltd (PXIL), which is promoted by NSE India and National Commodity and Derivatives Exchange (NCDEX), sources exclusively told CNBC-TV18 on Tuesday.

CNBC-TV18 has learned that the talks are at an advanced stage. NTPC has not yet responded to queries sent by CNBC-TV18.

In 2018, NSE was looking to sell PXIL as the firm ran into losses but the sale never happened. As per March 31, 2020 filing, other shareholders in the company include GMR Energy Limited, Tata Power, Power Finance Corporation (PFC), Gujarat Urja Vikas Nigam Limited (GUVNL) and West Bengal state electricity distribution company.

Given the electricity shortage and volume increase on power exchanges, it is expected that NTPC’s foray into the exchange will bring more competition following volume increase on account of renewables and also due to policy changes in the long-term power purchase agreement.

The Ministry of Power on October 8 released a framework for the implementation of market-based economic despatch (MBED) to enhance competition in the power sector and lower the cost of electricity in the country.

The move will enable state discoms to plan power purchases from the day-ahead market at power exchange. They will also get a chance to meet electricity demand from the cheapest generating sources in India. Overall, it will benefit discoms, power generating companies and ultimately bring down some burden of electricity cost on consumers.

As reported by CNBC-TV18 on October 4, NTPC has prepared a Rs 15,000 crore divestment plan, which entails listing three of its 100 percent subsidiaries by 2024. The three subsidiaries are Renewable Energy (NTPC REL), North Eastern Electric Power Corporation (NEEPCO) and NTPC Vidyut Vyapar Nigam (NVVN).

Analysts believe NTPC could look at a higher stake in the power exchange to bring in competition in the sector and a turn around the company but it will also help the company in its divestment plans.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

PM Modi to meet top global leaders in oil & gas sector in run up to CERAWeek’s India Energy Forum

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Prime Minister Narendra Modi is slated to meet as many as top 30 global leaders in the oil and gas sector in the run-up to CERAWeek’s India energy forum, CNBC-TV18 learned on Monday.

The event is likely to focus on India-specific dialogues ranging from oil prices, balance between oil producer and consumer to focus on green hydrogen amidst the energy crisis witnessed by the world.

With fuel consumption 15-16 percent higher than the pre-COVID period, India is looking to raise the issue of high crude prices and increase in supply to aid global economic recovery.

“For India any price above $70 per barrel is high. Now, China as a market has saturated, India is the biggest consumer and if India does not buy then sellers will be at the back end. The energy transition from fossil to green energy is not a favour of oil-producing countries rather it is spiralling. If economic recovery goes down, everyone will suffer. ” a government source said.

The Indian basket crude price comprises Brent and Oman and Dubai average. It stood at $73.13 per barrel in the month of September, 2021. Meanwhile, in Delhi itself, petrol prices have increased by over Rs 25 per litre and diesel Rs 20 per litre in 2021.

“My view is that the centre and state together need to reduce incidence on taxation fuel in India. The petroleum ministry is continuously in touch with the finance ministry over taxation on fuel prices, it wants petrol and diesel prices to come down,” a source said.

Since May 2020, LPG subsidy is not being disbursed to consumers. As per the Ministry of Petroleum and Natural Gas’ analysis cell PPAC, the government continues to provide some subsidies on LPG cylinders on account of difficult transportation in some areas.

“Subsidies need to be specific and have to be degressive and the government needs to take all sustainable economic decisions,” the source said, adding that oil subsidy is reducing and the number of LPG connections under Ujjwala is increasing and the government is finding ways to deal with it.

Sources have told CNBC-TV18 that at one point, select districts in 15 states were getting subsidy but now only eight states and union territories like Ladakh, Lakshadweep, Andaman and Nicobar and some eastern states are among the subsidy beneficiaries at select locations.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Coal supplies to non-power sector curtailed and not suspended: Sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With coal supplies improving at power plants, the non-power sector companies steel, aluminium, chemical, cement, etc are feeling the pinch of diversion of coal as power plants are accorded the highest priority now.

CNBC-TV18 learned from sources that for the next fortnight or so, supplies to the non-power sector will be curtailed and not suspended. This comes on the back of various reports suggesting Coal India (CIL) has directed its subsidiaries to refrain from conducting e-auction of coal for non-power companies on October 13.

Reports also suggest Coal India subsidiaries are also informing Railway authorities about the suspension of coal supplies to the non-power plants.

Coal India is ramping up supplies to power plants in preference over non-power plants but record volumes have been offered in the first half of FY22 to the sector as per demand until two weeks back, government sources told CNBC-TV18.

Also Read | Coal shortage issue partly seasonal; opportunities in autos and banks: Tata MF

“With a view to stock up coal at thermal power plants, coal companies are ramping up more supplies to them in preference over non-power. In the H1, CIL offered record volumes of coal auction to the non-power. Most of them stocked up. Even now until 2 weeks back they received coal as per their demand. And that too at proves contracted before the surge in international prices. So, they have received full support. For the next fortnight or so, their supplies will be curtailed and not suspended. Auctions will also be done as per availability which is the established norm. Overall coal supply to non-power this year will be a record high ever is assured,” said a source in the government.

The Aluminium Association of India (AAI) and Federation of India Mining Industries (FIMI) have both raised the issue of suspension of coal supplies under linkage and unavailability of coal for spot e-auction at a time imported coal prices are at a high.

Also Read | No power-cuts in Tamil Nadu despite coal shortage, here’s why…

“The recent decisions for stoppage of secured coal supplies and rakes for Non-Power Sector is detrimental for Aluminum industry and will jeopardize the sustainability as these continuous process based plants are not designed for Adhoc shutdown and start of operations. The coal stocks of operational plants have depleted to alarmingly low critical stocks of 2-3 days, from the level as high as 15 days in the month of April, 21, and plants are forced to operate at reduced power generation with a huge risk of closure with the threat of loss of huge employment and deterioration of MSMEs. Moreover, the ongoing global Aluminium shortage due to supply-demand mismatch is also adding to the woes for the industry with the current coal situation in India,” said the Aluminium Association of India.

Meanwhile, the Ministry of Power has said that coal-based capacity under outage due to coal shortage has reduced 11,000 Mega Watt (MW) on October 12 to 6,000 MW on October 13. As of October 12, 65 coal-based power plants had less than 4 days of coal stock which is considered supercritical and the peak shortage was recorded at 5,591 MW on the same day with electricity demand met at 3,918 million units.

Also Read | Power crisis: These countries rely on coal to generate electricity; find out where India ranks

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow