NATURAL GAS AS AN ALTERNATE FUEL FOR ELECTRICITY GENERATION IN INDIA

Summer Project Report

Presented To The Academic Faculty By Varun Kumar Choudhary Roll no.- 11BM60019

Industry GuideDr. A. P. Dash Senior Faculty, Project Management Institute, NTPC Ltd. New Delhi. Mr. B. P. Rath Manager, New Project Development NTPC Ltd.

Faculty GuideDr. Kalyan Kumar Guine Professor, Vinod Gupta School of Management, IIT Kharagpur.

Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur

1

Acknowledgement
I express my profound gratitude to my supervisors, Professor A.P Dash and B. P Rath sir whose benign guidance has enlightened my path through the course of this work. Besides their dedication to academic life, their disciplined and austere habits have been a source of constant inspiration to me. They are humane with willingness to help others, care for everyone, and always being concerned about the progress. It was an enriching experience to work and learn under them.

Varun Kumar Choudhary

Table of Contents
1. Executive Summery - ........................................................................................................ 5 2. NTPC PROFILE:- ............................................................................................................ 6 3. Project Objective- ........................................................................................................... 11 4. Introduction- ................................................................................................................... 12 4.1 4.2 4.3 4.4 Electricity is prime mover of Indian economy: ............................................................................. 12 Electricity demand in India-........................................................................................................... 14 Dependence of Electricity demand on GDP growth rate-.............................................................. 15 Major available resources for electricity generation-..................................................................... 17

5. Coal as a fuel for electricity generation- ....................................................................... 19 5.1 5.2 5.3 5.4 5.5 Predominant Position of Coal- ....................................................................................................... 19 Inventory of geological resources of coal in India- ....................................................................... 19 Type and category-wise coal resources of India-........................................................................... 20 Consumption pattern of coal-......................................................................................................... 21 Factors Affecting Coal Prices in India-.......................................................................................... 21 Domestic coal production and demand: .............................................................................. 23 Coal Import- ........................................................................................................................ 23 Domestic Coal Price Fixation- .................................................................................. 24 Quantity of Coal to be sold at market price:- ...................................................................... 25 Impact of crude oil price on Thermal coal prices:- ............................................................. 25 Impact of Exchange rate on coal prices:- ............................................................................ 26 Impact of availability of land on coal prices-...................................................................... 27

5.5.1 5.5.2 5.5.3 5.5.4 5.5.5 5.5.6 5.5.7

6. Renewable resources in India:-...................................................................................... 29 7. Natural Gas in India:- .................................................................................................... 37 7.1 7.2 7.3 7.4 7.5 7.6 7.7 Current Natural Gas Scenario in India-.......................................................................................... 37 Demand and Forecasts for India- ................................................................................................... 38 Competitive demand from Fertilizer & City Gas Sector- .............................................................. 39 Structure of the natural gas sector in India- ................................................................................... 40 Domestic Natural Gas in India- ..................................................................................................... 41 Domestic Gas pipe lines network in India- .................................................................................... 43 Trance-national gas pipe lines- ...................................................................................................... 44 TAPI- pipeline- ................................................................................................................... 45

7.7.1

7.7.2 7.7.3 7.8

IranPakistanIndia pipeline- ............................................................................................. 46 Myanmar-Bangladesh-India Pipeline- ................................................................................ 47

Liquefied Natural Gas (LNG) ..................................................................................................... 49 Regasification Capacity of India-........................................................................................ 49

7.8.1 7.9

Coal gasification in India-.............................................................................................................. 50

8. 8 Factors affecting Natural gas pricing:- ...................................................................... 51 8.1 Natural gas pricing in India- .......................................................................................................... 51 APM (Administered Pricing Mechanism) Gas Pricing:- ....................................................... 54 Pricing of Gas under Pre-NELP Production Sharing Contracts (PSC)................................... 55 Pricing of Gas with reference to NELP Provisions-.............................................................. 55

8.1.1 8.1.2 8.1.3

8.2 Imported Gas (LNG) Pricing- .......................................................................................................... 55 8.3 Pricing Issue:- ................................................................................................................................. 57 8.4 Framework of New Pool Pricing Mechanism:- .............................................................................. 59 8.4.1 8.4.2 Need for Pool Pricing:- ........................................................................................................ 59 Proposed Roadmap of Pool Pricing Mechanism:-............................................................... 60

8.5 Effect of Globalization of Gas market on gas prices:- .................................................................... 62 9. 9 Shale Gas:- .................................................................................................................... 66 9.1 Shale gas historical back ground and development:- .................................................................... 66 9.2 Shale Gas Reserve:- ........................................................................................................................ 68 9.3 Hydraulic fracking- breakthrough in shale gas:- ............................................................................ 69 9.4 Issues with Hydraulic fracking:- ..................................................................................................... 71 9.5 Implication of shale gas reserve on traditional gas producers in US:- .......................................... 71 9.6 Implication on Indian gas market:- ................................................................................................ 72 9.7 China planned for shale gas development:- .................................................................................. 72 10. Energy Security in India:- .............................................................................................. 74 11. Findings & Recommendations:- .................................................................................... 79 12. References:- ..................................................................................................................... 82

1 Executive Summery In India installed capacity for power generation is 199.87 Gigawatt (GW) as of March 2012; the worlds fifth largest, of which approximately 30,000 MW running idle due to shortage of fuel supply. The International Energy Agency estimates that estimates India will add between 600 GW to 1200 GW of additional new power generation capacity before 2050. Due to acute shortfall in domestic coal production to meet demand and higher exchange rate is severely affecting power sector in India. Exploration of huge shale gas reserve of USA and China and natural gas have changed prospective of fuel supply. Indian coal is of high ash content and low sulfur content. Its contribution to power sector is around 56.4% and natural gas contribution to power sector is around 9.2% of total power generation. Our objective is the scope of natural gas as an alternate fuel for electricity in India. Due to higher prices of coal and petroleum, substitutively fuel demand can be met by natural gas. Natural gas demand is continuously increasing and furcating is done at different scenarios of growth rate. There are three options for natural gas- domestic natural gas, piped natural gas and imported liquefied natural gas. Domestic gas production in India is continuously falling down is not viable option. Presently we have a country wide network of 12,000 km of gas pipeline and having capacity to transport 230 mmscmd of gas. Study of natural gas pricing method in India and factors affecting natural gas pricing and scope of new pricing method pool pricing in India. Demand from different sectors i.e. fertilizer, city gas sector and power sector. And scope of shale gas exploration and production. With a burgeoning population, we have to recognize that resources are scarce and plan accordingly. End use efficiency, reduction of wastage and accountability has great potential for improvement. Investment in coal base electricity needs critical appraisal because of availability, land requirement, pollution, green house gas emission and ash disposal and increasing cost of environment needs critical appraisal. Natural gas based electricity generator are generally not approved because of lack of domestic availability of natural gas besides domestic gas sector has received a thrust with shale gas and Hydraulic fracking technology in US. A relook into fuel import i. e. import of coal vis a vis import of natural gas is a national imperative in view of the need for electricity keeping in view all other collateral concerns. Diesel generator can be replaced by natural gas plant- In India electricity generated by DG set- 1200 MW at cost of Rs. 12/kwh and grid power at cost of Rs 3/kwh. This market will grow at the rate of 20% for coming years. Natural gas can be used for distributed power generation-Due to heavy distribution and transmission losses (around 30%) distributed generation by natural gas is better option as it can be produced at cost of Rs. 6 to 7 per kwh.

2 NTPC PROFILE:NTPC Limited (formerly National Thermal Power Corporation) is the largest stateowned power generating company in India. Forbes Global 2000 for 2010 ranked it 341th in the world. It is an Indian public sector company listed on the Bombay Stock Exchange although at present the Government of India holds 84.5%(after divestment the stake by Indian government on 19october2009) of its equity. With a current generating capacity of 34194 MW, NTPC has embarked on plans to become a 75,000 MW company by 2017. It was founded on November 7, 1975. NTPC's core business is engineering, construction and operation of power generating plants and providing consultancy to power utilities in India and abroad. The total installed capacity of the company is 34,194 MW (including JVs) with 15 coal based and 7 gas based stations, located across the country. In addition under JVs, 5 stations are coal based & another station uses naphtha/LNG as fuel. The company has set a target to have an installed power generating capacity of 1,28,000 MW by the year 2032. The capacity will have a diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable Energy Sources(RES) including hydro. By 2032, non fossil fuel based generation capacity shall make up nearly 28% of NTPCs portfolio.

NTPC has been operating its plants at high efficiency levels. Although the company has 18.79% of the total national capacity it contributes 28.60% of total power generation due to its focus on high efficiency. NTPCs share at 31 Mar 2001 of the total installed capacity of the country was 24.51% and it generated 29.68% of the power of the country in 200809. Every fourth home in India is lit by NTPC. As at 31 Mar 2011 NTPC's share of the country's total installed capacity is
6

17.75% and it generated 27.4% of the power generation of the country in 201011. NTPC is lighting every third bulb in India. 170.88BU of electricity was produced by its stations in the financial year 20052006. The Net Profit after Tax on March 31, 2006 was INR 58,202 million. Net Profit after Tax for the quarter ended June 30, 2006 was INR 15528 million, which is 18.65% more than for the same quarter in the previous financial year. 2005). In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as fresh issue and 5.25% as offer for sale by Government of India. NTPC thus became a listed company in November 2004 with the Government holding 89.5% of the equity share capital. In February 2010, the Shareholding of Government of India was reduced from 89.5% to 84.5% through Further Public Offer. The rest is held by Institutional Investors and the Public. Pursuant to a special resolution passed by the Shareholders at the Companys Annual General Meeting on September 23, 2005 and the approval of the Central Government under section 21 of the Companies Act, 1956, the name of the Company "National Thermal Power Corporation Limited" has been changed to "NTPC Limited" with effect from October 28, 2005. The primary reason for this is the company's foray into hydro and nuclear based power generation along with backward integration by coal mining. (NTPC) is in the 138th position in Fortune 500 in 2009. 10 Indian companies make it to FT's top 500.

Vision
To be the worlds largest and best power producer, powering Indias growth.

Mission
Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco-friendly technologies and contribute to society.

Core Values BCOMIT

Business Ethics Customer Focus Organizational& Professional Pride Mutual Respect & Trust Innovation & Speed Total Quality for Excellence

Diversified Growth
As per new corporate plan, NTPC plans to become a 75 GW company by the year 2017 and envisages to have an installed capacity of 128 GW by the year 2032 with a welldiversified fuel mix comprising 56% coal, 16% gas, 11% nuclear energy, 9% renewable energy and 8% hydro power based capacity. As such, by the year 2032, 28% of NTPCs installed generating capacity will be based on carbon free energy sources. Further, the coal based capacity will increasingly be based on high-efficient-low-emission technologies such as Super-critical and Ultra-Super-critical. Along with this growth, NTPC will utilize a strategic mix of options to ensure fuel security for its fleet of power stations. Looking at the opportunities coming its way, due to changes in the business environment, NTPC made changes in its strategy and diversified in the business adjacencies along the energy value chain. In its pursuit of diversification NTPC has developed strategic alliances and joint ventures with leading national and international companies. NTPC has also made long strides in developing its Ash Utilization business.

Hydro Power: In order to give impetus to hydro power growth in the country and to have a balanced portfolio of power generation, NTPC entered hydro power business with the 800 MW Koldam hydro project in Himachal Pradesh. Two more projects have also been taken up in Uttarakhand. A wholly owned subsidiary, NTPC Hydro Ltd., is setting up hydro projects of capacities up to 250 MW. Renewable Energy: In order to broad base its fuel mix NTPC has plan of capacity addition of about 1,000 MW through renewable resources by 2017. Nuclear Power: A Joint Venture Company "AnushaktiVidhyut Nigam Ltd." has been formed (with 51% stake of NPCIL and 49% stake of NTPC) for development of nuclear power projects in the country. Coal Mining: In a major backward integration move to create fuel security, NTPC has ventured into coal mining business with an aim to meet about 20% of its coal requirement from its captive mines by 2017. The Government of India has so far allotted 7 coal blocks to NTPC, including 2 blocks to be developed through joint venture route. Power Trading: 'NTPC VidyutVyapar Nigam Ltd.' (NVVN), a wholly owned subsidiary was created for trading power leading to optimal utilization of NTPCs assets. It is the second largest power trading company in the country. In order to facilitate power trading in the country, National Power Exchange Ltd., a JV of NTPC, NHPC, PFC and TCS has been formed for operating a Power Exchange. Ash Business: NTPC has focused on the utilization of ash generated by its power stations to convert the challenge of ash disposal into an opportunity. Ash is being used as a raw material input by cement companies and brick manufacturers. NVVN is engaged in the business of Fly Ash export and sale to domestic customers. Joint ventures with cement companies are being planned to set up cement grinding units
8

in the vicinity of NTPC stations. Power Distribution: NTPC Electric Supply Company Ltd. (NESCL), a wholly owned subsidiary of NTPC, was set up for distribution of power. NESCL is actively engaged in Rajiv Gandhi GraminVidyutikaranYojanaprogramme for rural electrification. Equipment Manufacturing: Enormous growth in power sector necessitates augmentation of power equipment manufacturing capacity. NTPC has formed JVs with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC has also acquired stake in Transformers and Electricals Kerala Ltd. (TELK) for manufacturing and repair of transformers.

Future Capacity Additions

NTPC has formulated a long term Corporate Plan upto 2032. In line with the Corporate Plan, the capacity addition under implementation stage is presented below:
PROJECT STATE MW

Coal 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Hydro 1. 2. 3. Total

Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) Sipat I (3 x 660) Simhadri II Unit - IV( 500) Vallur I -JV with TNEB ( 2 x 500) Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Bongaigaon(3 x 250) Mauda ( 2 x 500) Rihand III(2X500) Vindhyachal-IV (2X500) Muzaffarpur Expansion (2x195) JV with BSEB Nabinagar TPP-JV with Railways (4 x 250) Barh II (2 X 660) Barh I (3 X 660) Koldam HEPP ( 4 x 200) TapovanVishnugad HEPP (4 x 130) Singrauli CW Discharge(Small Hydre)

Haryana Chhattisgarh Andhra Pradesh Tamilnadu Tamilnadu Assam Maharashta Uttar Pradesh Madhya Pradesh Bihar Bihar Bihar Bihar Himachal Pradesh Uttarakhand Uttar Pradesh

1000 1980 500 1000 500 750 1000 1000 1000 390 1000 1320 1980 800 520 8 14748

Subsidiaries
NTPC Electric Supply Company Ltd. (NESCL) The company was formed on August 21, 2002. It is a wholly owned subsidiary company of NTPC with the objective of making a foray into the business of distribution and supply of electrical energy, as a sequel to reforms initiated in the power sector. NTPC Vidyut Vyapar Nigam Ltd. (NVVN)
9

The company was formed on November 1, 2002, as a wholly owned subsidiary company of NTPC. The companys objective is to undertake sale and purchase of electric power, to effectively utilise installed capacity and thus enable reduction in the cost of power. NVVN NTPC Hydro Ltd. (NHL) The company was formed on December 12, 2002, as a wholly owned subsidiary company of NTPC with an objective to develop small and medium hydroelectric power projects of up to 250 MW. More>> Pipavav Power Development Co. Ltd. (PPDCL) A memorandum of understanding was signed between NTPC, Gujarat Power Corporation Limited (GPCL) and Gujarat Electricity Board (GEB) in 2004 for development of a 1000 MW thermal power project at Pipavav in Gujarat by forming a new joint venture company between NTPC and GPCL with 50:50 equity participation. Pursuant to the decision of Gujarat Government, NTPC Ltd. has dissociated itself from this company. PPDCL is under winding up. Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali Power Generating Company Limited) To take over Muzaffarpur Thermal Power Station (2*110MW), a subsidiary company named Vaishali Power Generating Company Limited (VPGCL) was incorporated on September 6, 2006 with NTPC contributing 51% of equity and balance equity was contributed by Bihar State Electricity Board. This company was formed to renovate the existing unit and run the plant. The second unit has been successfully re-synchronized on October 17, 2007 after 4 years of being idle. Renovation and modernization of the first unit is under progress. The company was rechristened as Kanti Bijlee Utpadan Nigam Limited on April 10, 2008. Bharatiya Rail Bijlee Company Limited (BRBCL) A subsidiary of NTPC under the name of Bharatiya Rail Bijlee Company Limited was incorporated on November 22, 2007 with 74:26 equity contribution from NTPC and Ministry of Railways, Govt. of India respectively for setting up of four units of 250 MW each of coal based power plant at Nabinagar, Bihar. Investment approval of the project was accorded in January, 2008.

10

3 Project ObjectiveTo find out viable option for fuel supply to set new power plant on India. Study of power sector in India and all available fuel supply option for electricity generation in India to find out scope of natural gas as an alternate fuel for electricity generation. Electricity demand projection in India at different growth rate scenarios. Natural gas supply option as domestic natural gas reserve and natural gas import. Study of piped natural gas and LNG import. To find out viable natural gas supply option while keeping in mind price, gas reserve, infrastructure requirement and time period required to be operational. Natural gas as a fuel for distributed power generation to reduce transmission losses and replacement of DG sets by natural gas based turbines. Natural gas price mechanism in India and in different regional gas market and impact of globalization of gas market. Scope of shale gas exploration and impact of it on India and traditional natural gas producer.

11

4 Introduction4.1 Electricity is prime mover of Indian economy:

Electricity is the prime mover of growth and is vital to the sustenance of a modern economy. The projected growth of the Indian economy depends heavily on the performance and growth of the power sector. It is the endeavor of the Government to ensure that agriculture, industry, commercial establishments and all households receive uninterrupted supply of electricity at affordable rates. The electricity sector in India had an installed capacity of 199.87 Gigawatt (GW) as of March 2012, the world's fifth largest. Captive power plants generate an additional 31.5 GW. Thermal power plants constitute 66% of the installed capacity, hydroelectric about 19% and rest being a combination of wind, small hydro, biomass, waste-toelectricity, and nuclear. India generated 855 BU electricity during 2011-12 fiscal year. In terms of fuel, coal-fired plants account for 57% of India's installed electricity capacity, compared to South Africa's 92%; China's 77%; and Australia's 76%. After coal, renewal hydropower accounts for 19%, and natural gas for about 9%. In December 2011, over 300 million Indian citizens had no access to electricity. Over one third of India's rural population lacked electricity, as did 6% of the urban population. Of those who did have access to electricity in India, the supply was intermittent and unreliable. In 2010, blackouts and power shedding interrupted irrigation and manufacturing across the country. The per capita average annual domestic electricity consumption in India in 2009 was 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity, in contrast to the worldwide per capita annual average of 2600 kWh and 6200 kWh in the European Union. India's total domestic, agricultural and industrial per capita energy consumption estimate vary depending on the source. Two sources place it between 400 to 700kWh in 20082009. As of January 2012, one report found the per capita total consumption in India to be 778 kWh. India currently suffers from a major shortage of electricity generation capacity, even though it is the world's fourth largest energy consumer after United States, China and Russia.The International Energy Agency estimates India needs an investment of at least $135 billion to provide universal access of electricity to its population. The International Energy Agency estimates India will add between 600 GW to 1200 GW of additional new power generation capacity before 2050.This added new capacity is equivalent to the 740 GW of total power generation capacity of European Union (EU-27) in 2005. The technologies and fuel sources India adopts, as it adds this electricity generation capacity, may make significant impact to global resource usage and environmental issues.

12

India's electricity sector is amongst the world's most active players in renewable energy utilization, especially wind energy. As of December 2011, India had an installed capacity of about 22.4 GW of renewal technologies-based electricity, exceeding the total installed electricity capacity in Austria by all technologies. India's network losses exceeded 32% in 2010 including non-technical losses, compared to world average of less than 15%. Both technical and non-technical factors contribute to these losses, but quantifying their proportions is difficult. Some experts estimate that technical losses are about 15% to 20%, A high proportion of nontechnical losses are caused by illegal tapping of lines, but faulty electric meters that underestimate actual consumption also contribute to reduced payment collection. A case study in Kerala estimated that replacing faulty meters could reduce distribution losses from 34% to 29%. Key implementation challenges for India's electricity sector include new project management and execution, ensuring availability of fuel quantities and qualities, lack of initiative to develop large coal and natural gas resources present in India, land acquisition, environmental clearances at state and central government level, and training of skilled manpower to prevent talent shortages for operating latest technology plants. For the past two decades, India has had to face increasing deficit in power supply, both for meeting its normal energy requirements as well as its peak load demand. The problem is acute during peak hours and summers, and necessitates planned load shedding by many utilities to maintain the grid in a healthy state. The average all-India shortages in 2009-10 were at 10 per cent in terms of normal energy requirement and about 13 per cent in terms of peak load. With the shortage at both the normal and the peak levels, Indian power industry does not exhibit much cyclicality. Further, with assured returns, the margins of players and their profitability is almost independent of the economic cycles. Electricity is the most important component of primary energy. Indias electricity consumption has grown at an average rate of 7.3 per cent during the period 2002-07 to about 577.9 TWh. Consumption has increased at a faster rate since 2002-03, reflecting buoyant industrial demand. Industrial consumers are the largest group of electricity consumers, followed by the domestic, agricultural and commercial consumers, in that order. Indias per capita electricity consumption increased from 178 kWh in 1985-86 to 704.4 kWh in 2007-08. Over the period, 2001-08, per capita consumption has increased at an average rate of 4.45 per cent. It is still much lower compared to the international standards.

13

4.2 Electricity demand in IndiaElectricity demand at peak load and at normal load is mentioned below in table. In past ten years normal energy shortfall is regularly increasing, in 2003-04 it was 7.1 % and in 2008-09 it was 11.1% of demand. Peak load energy shortage is also high. Indian economy is one of fastest growing economy of world. As economy is growing energy demand is also growing to meet industrial demand.

FY

Table- Electricity Demand and Supply Energy Peak Demand (MU) Demand Availability Shortage 497,890 519,398 548,115 578,511 624,716 664,660 691,038 746,644 811,100 48,093 39,866 43,258 52,513 68,341 72,392 86,001 83,950 50,491 % 8.8 7.1 7.3 8.3 9.9 9.8 11.1 10.1 5.9 Demand 81,492 84,574 87,906 93,214 100,715 108,866 109,809 118,472 152746 Met 71,547 75,066 77,652 81,792 86,818 90,793 96,785 102,725 (MW) Shortage 9,945 9,508 10,254 11,422 13,897 18,073 13,024 15,747 % 12.2 11.2 11.7 12.3 13.8 16.6 11.9 13.3

2002-03 545,983 2003-04 559,264 2004-05 591,373 2005-06 631,024 2006-07 693,057 2007-08 737,052 2008-09 777,039 2009-10 830,594 2010-11 861,591

137013.2 15732.84 10.3

Table- Electricity demand projection at different growth rateEnergy Requirement (Billion kWh) GDP growth at 2011-12 2016-17 2021-22 2026-27 2031-32 6.00% 1097 1407 1804 2267 2850 8.00% 1,097 1,524 2,118 2,866 3,880 9.00% 1,097 1,586 2,293 3,219 4,518 6.00% 158 203 260 327 411 8.00% 158 220 305 413 560 Peak Demand (GW) 9.00% 158 228 330 464 651 6.00% 199 255 327 411 517 8.00% 199 276 384 520 704 Installed Capacity Required (GW) 9.00% 199 288 416 584 820

14

Electricity demand projection as mentioned in above table was done on basis falling elasticity of electricity, data source- report of planning commission of India.
Table- Elasticity used for projectionYear Electricity (falling Elasticity) 0.85 0.78

2011-12 to 2021-22 2021-22 to 2031-32

4.3 Dependence of Electricity demand on GDP growth rateElectricity is prime mover of growth rate. As industrialization grows power demand also grows to maintain higher production rate. By analyzing past 20 years data, shows that growth in electricity demand is varies as per GDP growth rate and we got following relationship between electricity demand and growth rateY = 29167X + 227827 Where Y= Electricity Demand X= GDP growth rate Also electricity demand projection was done for GDP growth rate of 6%, 8% and 9% for next 20 years at falling elasticity of electricity.

15

Chart-As per data in Annexure -2

1000000 900000 800000 E l e c t r i c i t y M U 700000 600000 500000 400000 300000 200000 100000 0 4 G r o 2 w t 0 h

Electricity Demand and GDP Growth Rate

12 10 % 8 G D 6 P

Year Electricity Demand(Mus) GDP Growth Rate(%)

Electricity Demand and GDP

1000000 E l c t r i c i t y D e m a n d ( M U ) 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 5.5 4.8 6.7 7.6 7.6 4.1 6.2 7.4 4 5.2 3.8 8.4 8.3 9.3 9.3 9.8 7.6 9.1 8.8 6.9 GDP growth rate y = 29167x + 227827 R = 0.9736 Linear (Electricity Demand and GDP)

Electricity Demand and GDP

16

4.4 Major available resources for electricity generation-

Major power resources option Nuclear Energy

Hydro Energy

Coal

Wind Energy

Solar Energy

Natural gas

Domestic coal

Domestic gas

Imported coal

Piped Natural gas

Blended Coal

LNG

Legnite

17

Sector wise power generation in 2012 in India

Oil 1% gas 9% Neclear 2% RES 12% hydro 19% coal 57%

The 17th electric power survey of India report claims Over 201011, India's industrial demand accounted for 35% of electrical power requirement, domestic household use accounted for 28%, agriculture 21%, commercial 9%, public lighting and other miscellaneous applications accounted for the rest. The electrical energy demand for 201617 is expected to be at least 1392 Tera Watt Hours, with a peak electric demand of 218 GW. The electrical energy demand for 202122 is expected to be at least 1915 Tera Watt Hours, with a peak electric demand of 298 GW.

18

5 Coal as a fuel for electricity generation5.1 Predominant Position of Coal -In terms of fuel, coal-fired plants account for 57% of India's installed electricity capacity, compared to South Africa's 92%; China's 77%; and Australia's 76%. After coal, renewal hydropower accounts for 19%, and natural gas for about 9%. -A cumulative total of 285862.21 Million Tonnes of Geological Resources of Coal have so far been estimated in India as on 1.4.2011. -Coal is likely to remain our mainstay of fuel for power generation till 2030-31. However, current shortage is cause of concern.

5.2 Inventory of geological resources of coal in IndiaAs a result of exploration carried out up to the maximum depth of 1200m by the GSI, CMPDI, SCCL and MECL etc, a cumulative total of 285862.21 Million Tonnes of Geological Resources of Coal have so far been estimated in the country as on 1.4.2011. The details of state-wise geological resources of coal are given as under:
GONDWANA COAL FIELDS: - Annexure -2 TERTIARY COAL FIELDSAnnexure- 3

Categorization of coal resourcesThe coal resources of India are available in older Gondwana Formations of peninsular India and younger Tertiary formations of north-eastern region. Based on the results of Regional/ Promotional Exploration, where the boreholes are normally placed 1-2 Km apart, the resources are classified into Indicated or Inferred category. Subsequent Detailed Exploration in selected blocks, where boreholes are less than 400 meter apart, upgrades the resources into more reliable Proved category. The Formation-wise and Category-wise coal resources of India as on 1.4.2010 are given in table below:

(in Million Tonnes)

Proved Formation Gondwana Coals Tertiary Coals Total 113407.79 593.81 114001.60 Indicated 137371.76 99.34 137471.10 Inferred 33590.02 799.49 34389.51 Total 284369.57 1492.64 285862.21

* Includes 749.92 M.T. of Inferred resources established through mapping in NorthEastern region.
19

5.3 Type and category-wise coal resources of IndiaThe Type and Category-wise coal resources of India as on 1.4.2011 are given in table below:(in Million Tonnes)
Proved Type of Coal (A) Coking :-Prime Coking -Medium Coking -Semi-Coking Sub-Total Coking (B) Non-Coking:(C) Tertiary Coal Grand Total Indicated Inferred Total

4614.35 12572.52 482.16 17669.03 95738.76 593.81 114001.60

698.71 12001.32 1003.29 13703.32 12368.44 99.34 137471.10

0 1880.23 221.68 2101.91 31488.11 799.49* 34389.51

5313.06 26454.07 1707.13 33474.26 250895.31 1492.64 285862.21

* Includes 749.92 M.T. of Inferred resources established through mapping in NorthEastern region. Status of Coal Resources in India during Last Five Years:
As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and SCCL etc, the estimation of coal resources of India has reached to 267.21 Bt. The estimates of coal resources in the country during last 5 years are given below:

(in Million tonnes)

Geological Resources of Coal As on 1.1.2006 1.4.2007 1.4.2008 1.4.2009 1.4.2010 Proved 95866 99060 101829 105820 109798 Indicated 119769 120177 124216 123470 130654 Inferred 37666 38144 38490 37920 36358 Total 253301 257381 264535 267210 276810

20

5.4 Consumption pattern of coalBy analyzing past 30 years data, shows that coal consumption is increasing year by yearas power demand increasing in India. Due to limited coal reserves, if coal consumption keep growing at same rate as per past trend, all economic coal reserve will be extracted within 30 years.we got following relationship for coal consumption pattern in India. Y = 18035X + 41974 Where Y= Coal consumption X= Year
Annexure- 4
900000 C 800000 o a 700000 l 600000 T o n n e s 500000 400000 300000 200000 100000 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Consumption % Change -0.05 0 0.2 y = 18035x + 41974 R = 0.9425

0.15

0.1

0.05

Year

5.5 Factors Affecting Coal Prices in India21

Significant demand from China and India is increasingly accounting for the bulk of worldwide coal usage. Hence, coal demand and consequently coal prices will depend on the strength of the economic recovery in the emerging markets, particularly China and India as mentioned. As several of coal commodity currencies (Aussie Dollar, SA Rand and the Columbian Peso) have floating exchange rates, any appreciation in the value of these currencies consequently increases the prices for holders of non-commodity currencies.

Coal price

Coal Demand and Production

Coal Import

Domestic coal pricing

Coal to sold at market price

Cost of Land

Crude oil prices

Exchange
rate

22

5.5.1 Domestic coal production and demand:

Domestic coal production is not meeting demand. Currently around 37,000 MW capacities of power plants running idle due to shortage of fuel supply. Coal India is also not meeting coal production target. Due to coal supply shortage prices are going up. Due to industrialization, power demand is growing. It is estimated that at the end of terminal year of 11th Five Year Plan (2011-12), the coal demand would be about 713 Million Tonnes, whereas the indigenous availabilitywould be about 630 Million Tonnes. Therefore, there is likely to be a gap of 83 Million Tonnes, which is required to be met through imports. The details are given below:(Fig. in million tonnes)

Source Actual CIL SCCL Others Total indigenous supply Demand Gap to be met through imports Total Import (a+b)

2008-09 Actual 01.44 4.54 4.03 90.01 50 9.98 9

2009-10 BE 4 15.88 4 9.37 4 9.25 4 14.5 5 97.98 5 3.48 5 3.25

2010-11 RE 4 60.5 4 7.05 4 5.87 5 73.42 5 56.31 8 2.89 7 2.89

2010-11 2011-12 4 33.5 4 0.5 6 2.05 5 36.05 6 24.78 8 8.73 8 8.73

XI Plan Proj. 4 86.5 5 7 5 6.41 5 29.91 6 13.24 8 3.33 8 3.33 4 4 9 6 7 8 8

5.5.2 Coal ImportAs per the present Import Policy, coal can be freely imported (under Open General License) by the consumers themselves, considering their needs and exercising their own commercial prudence. Due to higher international coal prices and regularly depreciating rupees value, import of coal is not economical option for power generation. Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel sector manufacturing unites mainly to bridge the gap between the requirement and indigenous availability and to improve the quality. Coal based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders import non- coking coal. Coke is imported mainly by Pig-Iron manufacturers and Iron &Steel Sector consumers using mini-blast furnace. Details of import of coal and products during the last five years are as under:
23

Table:-Coal import (Fig. in million tonnes)

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Coking Coal Non Coking coal Coke Total Import

16.89 21.7 2.62 41.21

17.88 25.2 4.69 47.77

22.03 27.76 4.25 54.04

21.08 37.92 1.88 60.88

23.46 44.28 2.2 69.94

27.6 52.02 4.63 84.05

5.5.3 Domestic Coal Price FixationGovernment of India deregulated the prices of Non-Coking Coal of grades A,B&C, Coking coal and Semi/Weakly coking coal on 22.03.1996. Subsequently, on12.03.1997, Government of India deregulated the prices of non-coking coal of grade D, Hard Coke and Soft Coke and also allowed Coal India Ltd to fix coal prices for grades E,F&G till Jan'2000 on every six months by updating cost indices as per escalation formula contained in the 1987 report of the Bureau of Industrial Cost & Prices. With effect from 01.01.2000, CIL was free to fix the prices of all grades of coal in relation to the market prices. Pursuant of the above, CIL fixed the prices of coal from time to time and last such revision has been made on26.02.2011, to be effective w.e.f 00 hrs of 27-02-11. Grade wise Basic Price of coal at the Pit-head prices of all varieties of Run of Mine Coal have been given in Table I to V applicable to the Power Utilities (including IPPs), Fertilizers and Defense and in Table VI to X applicable to consumers other than the Power Utilities, (including IPPs), Fertilizers and Defense excluding statutory levies for Run-of-mine (ROM) Non-LongFlame Coal ,Long flame Coal, Coking Coal, Semi Coking Coal & Weakly Coking Coal, direct feed Coal, Assam Coal for various subsidiaries of CIL as shown below: COMPANYWISEGRADEWISECOALPRICESOFCILFORPOWER UTILITIES (INCLUDINGIPPs), FERTILIZERSANDDEFENCE
Basic Price of Run of Mine Non-Long-Flame Non-Coking Coal- Annexure- 5 Basic Price of Run of Mine of Other Non-Coking CoalBasic Price of Run of Mine Long-Flame Non-Coking CoalCoking Coal (Run of Mine) Semi Coking & Weakly Coking Coal (Run Of Mine) Direct feed Coking Coal (Run of Mine) Assam Coal (Run of Mine) Annexure- 6 Annexure- 7 Annexure- 8 Annexure- 9 Annexure- 10 Annexure- 11

24

5.5.4 Quantity of Coal to be sold at market price:Coal distribution through e-auction was re-introduced in the new coal distribution policy in 2007 mainly to provide access to companies that do not have regular sources of supply. Most of the through e-auction is transported through roads. Only 10% of total coal production of Coal India Ltd is being sold by e-auctioning and prices for remaining are being administered by Government of India. Coal India is being asked to sign fuel supply agreement with power sector companies and not increase supplies to other sectors. Present spot market prices are at least 60% higher than notified prices of coal. Coal prices in domestic spot market have risen by 50% over past three years. As mentioned below in table Coal India may cut e-auctioning 10 to 7% by 2016-17. Diversion of coal from e-auction is expected to enable CIL to offer 47 MT more coal to power sector. Table- Coal e-auction plan for Coal India Ltd. up to 2016-17
Year Production(MT) e-auction% Amount(MT) 2012-13 464 10 46 2013-14 486 10 49 2014-15 508 9 46 2015-16 530 8 42 2016-17 556 7 39

5.5.5 Impact of crude oil price on Thermal coal prices:The coal demand revived upon the energy price surges during the two oil crises. The primary factor having spurred the revival was that coal was priced much cheaper than the- then skyrocketing oil and gas prices. Then such demerits as handling difficulties and environmental load, if taken into account, can undermine utility of coal unless it should be priced cheap, the greatest merit. In short, the oil price sets the ceiling of coal prices. Particularly up to first half of the 2008, coal has demonstrated price advantages over crude oil. After that at the time of uncertainty during global recession, crude oil prices fall abruptly while not in case of coal. Again in 2009 prices of both coal and crude oil started rising, and from January, 2011 coal again demonstrated advantages over crude oil. As it is clearly shown in graph coal prices are directly related to crude oil prices, varies according to crude prices change. Namely price ratio of steaming coal to crude oil has been as small as staying within the 0.38 0.45 range. For these reasons, the ceiling on of coal prices can be put at around 75% of the crude oil price equivalent heat value.

25

140 120

Relationship Between Crude oil and coal prices

250

U S $ / b a r r e l

200 100 80 60 40 20 0 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Oct-11 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Jan-12 Apr-12 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 0 U S 150 $ / t 100 o n 50

Table- Crude oil prices and coal prices per month

Crude oil Price per barrel Coal price per metric ton

Annexure- 12 5.5.6 Impact of Exchange rate on coal prices:A sharp decline in the value of the rupee is bound to affect the power generation capability of power plants that are heavily dependent upon imported coal for electricity generation. This would mean an increase in the level of energy deficit in the country. Moreover, a fall witnessed in power generation capacity is likely to have an adverse effect on all the three sectors of the economy namely agriculture, industry and services. Another dimension to the rupee depreciation episode is that not only has the expenditure on imports increased but this coupled with an inflexible tariff structure means that the power companies are going to suffer huge losses. The global prices of thermal coal in November 2011 were lower than that in May 2011. Yet, the depreciation of rupee has meant that the importer has to pay an additional Rs. 684.6 per tonne to import the same quantity of coal. Please refer to table below:
Table: Impact of Rupee Depreciation on Thermal Coal PriceMonth May November Difference Price $ 127.6 121.9 -5.7 Exchange rate 45.05 52.7 7.7 Price Rs 5739.5 6424.1 684.6

Annexure- 13 26

9000 8000 7000 R u p e e s 6000 5000 4000 3000 2000 1000 0 8-Apr 9-Apr 7-Jul 8-Jul 9-Jul 10-Apr 11-Apr 12-Apr 10-Oct

250 200 150 U S 100 50 0 $

11-Jul

0.00

10-Jul

8-Oct

7-Oct

9-Oct

11-Oct

8-Jan

9-Jan

10-Jan

11-Jan

coal price in RS per MT

coal price in US& per MT

Exchange rate

5.5.7 Impact of availability of land on coal pricesDue to soaring up of land prices and compensation to land owner as per new land acquisition policy hues amount of money is paid for coal mining lease and that cost further increasing coal prices. New land pricing policy detail is given bellow-

Land Acquisition Policy in India:The Indian Ministry of Rural Development introduces its new draft Land Acquisition and Rehabilitation & Resettlement Bill which is a policy framework to balance between land acquisitions for industrialization with the concerns of those who depend on that land for livelihood. The new draft Land Acquisition and Rehabilitation & Resettlement Bill of 2011 which will go through a cabinet vote very soon, has been designed to address the concern of balancing the need for land to support rapid industrialization on one hand, and the needs of the people who depend on it for their livelihood. India is the third largest economy in the world today, but it faces an urgent need for growth through industrialization, especially through manufacturing. This puts the nation in need for land for a number of purposes from fuelling the inevitable process of urbanization and greater industrialization, to a variety of 'public purposes'. The nation has had a land acquisition act since 1894 which as over the time, seen quite a few amendments. But the recent heightening of public concern over land acquisition issues and the absence of a comprehensive law covering the issues of resettlement, rehabilitation and compensation of livelihoods, has highlighted the need for a wholesome law. The bill states the legitimate reasons for land acquisition as the above mentioned ones and additionally defines the purview of the term public purposes as the following:
27

12-Jan

1. Strategic purposes: e.g., armed forces, national security; 2. Infrastructure and Industry: where benefits largely accrue to the general public 3. Land acquired for R&R purposes 4. Village or urban sites: planned development -residential purpose for the poor and educational and health schemes 5. Land for private companies for public purpose; 6. needs arising from natural calamities. Rehabilitation and Resettlement It has been observed in the past that the rehabilitation and resettlement aspect is frequently neglected once the acquisition is over, leading to widespread resentment and rebellion from the affected families, who are basically those people who either lose the and that they own, or livelihood that they had derived from the acquired land. The current draft necessitates the application of its rehabilitation and resettlement requirements if the land acquired by private companies exceeds 100 acres. The new bill states that the Government can either acquire land for its own use or for the use of private companies for stated public purpose. But the draft makes it clear that no acquisition can take place until 80% of the project affected families give their consent to the acquisition. Also, the government can make no acquisition of multi-cropped or irrigated lands or even land for the private purposes of private companies. The rehabilitation and resettlement requirements which are a major highlight of this draft included a number of minimum entitlements making a special provision of scheduled castes and scheduled tribes. Compensation and benefits As per the compensation package, the award amount paid for the land acquired in case of urban areas should be not less than double the market value determined, and not less than six times in case of rural areas. For landowners the entitlements include a subsistence allowance of Rs. 3000 per month per family for 12 months along with Rs. 2000 per family as annuity for 20 years, with the use of appropriate indexes for inflation. The loss of a house has to be compensated with the building of a new one adhering to some minimum size requirements. Entitlements for transportation and employment provisions also need to be guaranteed. An unemployment benefit has to be paid if not even a single member of the family is given employment opportunities. For those who lose their livelihood, the bill states similar entitlements.

28

6 Renewable resources in India:Status of renewable energy resources in IndiaNew & Renewable Energy Cumulative deployment of various Renewable Energy Systems/ Devices in the country as on 30/04/2012
Renewable Energy Program/ Systems Target for 2012-13 Achievement during April,2012 Total Cumulative achievement achievement u during 2012- p to 30.04.2012 13

I. POWER FROM RENEWABLES: A. GRID-INTERACTIVE POWER Wind Power Small Hydro Power Biomass Power Bagasse Cogeneration Waste to Power -Industrial Solar Power (SPV) Total B. Waste to Energy Urban -Industrial Biomass(non-bagasse) Cogeneration Biomass Gasifiers Rural- Industrial Aero-Genrators/Hybrid systems SPV Systems (>1kW) Water mills/micro hydel Total 800 4125.00 -Urban 20 37.72 103.62 37.72 103.62 979.00 25017.88 2500 350 455 36.65 5.75 16.00 7.50 (CAPACITIES IN MW) 36.65 5.75 16.00 7.50 17389.31 3401.06 1166.10 1992.73 89.68

OFF-GRID/ CAPTIVE POWER 20.00 1.20

(CAPACITIES IN MWEQ) 1.20 102.95

60.00 1.50 10.00 0.50 30.00 2.00(500 Nos.) 126.00

2.50 -. 3.70

2.50 3.70

385.00 16.12 134.09 1.64 85.21 1877 Nos. 725.01

II. REMOTE VILLAGE ELECTRIFICATION No. of Remote Village/Hamlets provided with RE Systems -

III. OTHER RENEWABLE ENERGY SYSTEMS Family Biogas Plants (No. in 1.25 29 45.09

lakhs) Solar Water Heating - Coll. Areas (Million m2) 0.60 5.46

Solar Energy in India:Solar water heaters have proved the most popular so far and solar photovoltaic for decentralized power supply is fast becoming popular in rural and remote areas. More than 700000 PV systems generating 44 MW have been installed all over India. Under the water pumping program more than 3000 systems have been installed so far and the market for solar lighting and solar pumping is far from saturated. Solar drying is one area which offers very good prospects in food, agricultural and chemical products drying applications. The Jawaharlal Nehru National Solar Mission (JNNSM) has set ambitious targets for power generation from solar energy in India. The Mission aims to have about 10 GW of grid-connected solar power plants by 2022. The mission is divided into 3 phases and the targets for grid-connected solar PV plants for each phase are-

Phase 1 Phase 2 Phase 3 Total

2010-2013 2013-2017 2017-2022

500 MW 1,500 MW 7,000 MW 10,000MW

In addition to the JNNSM, several state governments have separate solar policies (Rajasthan, Gujarat and Karnataka) and many other state governments (Tamil Nadu, Maharashtra, Andhra Pradesh etc) are drafting solar policies on their own. Apart from this, the Renewable Purchase Obligation (RPO) is expected to drive the growth of the solar PV power generation sector. India is densely populated and has high solar insulation, an ideal combination for using solar power in India. Much of the country does not have an electrical grid grid, so one of the first applications of solar power has been for water pumping; to begin replacing India's four to five million diesel powered water pumps, each consuming about 3.5 kilowatts, and off-grid lighting. Some large projects have been proposed, and a 35,000 km area of the Thar desert has been set aside for solar power projects, sufficient to generate 700 to 2,10 Gigawatts. The Indian Solar Loan Program, supported by the United Nations Environment Program has won the prestigious Energy Globe World award for Sustainability for helping to establish a consumer financing program for solar home power systems. Over the span of three years more than 16,000 solar home systems have been financed through 2,000 bank
30

branches, particularly in rural areas of South India where the electricity grid does not yet extend. Launched in 2003, the Indian Solar Loan Programme was a four-year partnership between UNEP, the UNEP Risoe Centre, and two of India's largest banks, the Canara Bank and Syndicate Bank. Announced in November 2009, the Government of India proposed to launch its Jawaharlal Nehru National Solar Mission under the National Action Plan on Climate Change with plans to generate 1,000 MW of power by 2013 and up to 20,000 MW grid-based solar power, 2,000 MW of off-grid solar power and cover 20 million sq. meters with collectors by the end of the final phase of the mission in 2020. Also, TERI's Lighting a Billion Lives Campaign started in 2008 aims to replace kerosene and paraffin lamps with CFLs to provide off-the-grid lighting to villages and thus ease the load on the power grid while at the same time provide the people with safe, non-polluting light at night. So far, it has provided 35,000 CFLs to 640 villages in 16 states in India and also about 500 CFLs in Myanmar. This campaign has reportedly benefited 175,000 people.
India's largest photovoltaic (PV) power plants- Annexure -2

Wind Energy:In progress are wind resource assessment programme, wind monitoring, wind mapping, covering 800 stations in 24 states with 193 wind monitoring stations in operations. Altogether 13 states of India have a net potential of about 45000 MW. The development of wind power in India began in the 1990s, and has significantly increased in the last few years. Although a relative newcomer to the wind industry compared with Denmark or the United States, India has the fifth largest installed wind power capacity in the world. In 2009-10 India's growth rate was highest among the other top four countries. As of 31 March 2011 the installed capacity of wind power in India was 16078 MW, mainly spread across Tamil Nadu (6007 MW), Maharashtra (2310.70 MW), Gujarat (2175.60 MW), Karnataka(1730.10 MW), Rajasthan (1524.70 MW), Madhya Pradesh (275.50 MW), Andhra Pradesh (200.20 MW), Kerala (32.8 MW), Orissa (2MW), West Bengal (1.1 MW) and other states (3.20 MW). It is estimated that 6,000 MW of additional wind power capacity will be installed in India by 2012. Wind power accounts for 6% of India's total installed power capacity, and it generates 1.6% of the country's power. India's wind atlas is available. The worldwide installed capacity of wind power reached 197 GW by the end of 2010. China (44,733 MW), US (40,180 MW), Germany (27,215 MW) and Spain (20,676 MW) are ahead of India in fifth position. The short gestation periods for installing wind turbines, and the increasing reliability and performance of wind energy machines has made wind power a favored choice for capacity addition in India.

31

Suzlon, an Indian-owned company, emerged on the global scene in the past decade, and by 2006 had captured almost 7.7 percent of market share in global wind turbine sales. Suzlon is currently the leading manufacturer of wind turbines for the Indian market, holding some 52 percent of market share in India. Suzlons success has made India the developing country leader in advanced wind turbine technology.

Wind Power projects in India-

Power Plant Vankusawade Wind Park Cape Comorin KayatharSubhash Ramakkalmedu Muppandal Wind Gudimangalam Puthlur RCI LamdaDanida Chennai Mohan Jamgudrani MP Jogmatti BSES PerungudiNewam

Producer Suzlon Energy Ltd.

Location Satara Dist.

State Maharashtra Tamil Nadu Tamil Nadu

Total Capacity 259 (MWe) 33 30 25 22 21 20 15 15 14 14 12 11 10 10 10 20.4

AbanLoyd Chiles Offshore Kanyakumari Ltd. Subhash Ltd. Subhash Ltd. Muppandal Wind Farm Kayathar

Ramakkalmedu Kerala Muppandal Tamil Nadu

Gudimangalam Wind Farm Gudimangalam Tamil Nadu Wescare (India) Ltd. Danida India Ltd. Mohan Breweries & Distilleries Ltd. MP Windfarms Ltd. BSES Ltd. Newam Power Company Ltd. Puthlur Lamda Chennai Dewas Andhra Pradesh Gujarat Tamil Nadu Madhya Pradesh

ChitradurgaDist Karnataka Perungudi Kethanur Tamil Nadu Tamil Nadu Andhra Pradesh Tamil Nadu Tamil Nadu Tamil Nadu

Kethanur Wind Farm Kethanur Wind Farm

Hyderabad APSRTC Andhra Pradesh State Road Hyderabad Transport Corp. Muppandal Madras PoolavadiChettinad Shalivahana Wind Madras Cements Ltd. Chettinad Cement Corp. Ltd. Muppandal Poolavadi

Shalivahana Green Energy. Tirupur Ltd.

32

Tidal Energy Tides generated by the combination of the moon and suns gravitational forces Greatest affect in spring when moon and sun combine forces Bays and inlets amplify the height of the tide In order to be practical for energy production, the height difference needs to be at least 5 meters Only 40 sites around the world of this magnitude Overall potential of 3000 gigawatts from movement of tides

India set to get Asias first power plantWith the proposed commissioning of a 50-Mw tidal power project off the coast of Gujarat in 2013, India is ready to place its first seamark that will be a first for Asia as well. London-based marine energy developer Atlantis Resources Corporation, along with Gujarat Power Corporation Ltd, has signed a memorandum of understanding (MoU) with the Gujarat government to start this project. The cost for the plant is expected to be in the vicinity of Rs 750 crore. This plant is also is expected to be scaled up to 250 Mw. Timothy Cornelius, CEO, Atlantis Resources Corporation, said with just about 2 giga watt of tidal power installations in the world today, this is a completely new and uncharted power sources with immense potential. Tidal power today is what wind energy was 10 years back, he said. Due to the high investment in setting up the project, a typical tidal power project is expected to break even between 8 and 12 years after commissioning. Despite the long gestation period to make it commercially viable, tidal power has unparalleled environmental advantages. Tidal current power uses turbines to harness the energy contained in the flow of ocean tides. It is unique as like tidal movements, power output is highly predictable and sustainable with zero visual impact and the turbines are completely submerged. Tidal power is like putting a wind turbine subsea and the turbine rotors rotate slowly, causing very little environmental impact to marine flora and fauna, said Cornelius. The power offtaker would be Gujarat Power Corporation. The final cost of power per unit will be determined at the completion of front-end engineering and design (FEED) phase, but was expected to be competitive when compared to the large solar power projects planned for development in Gujarat, the company said. The project is currently owned by Atlantis and GPCL and project equity participants will be sought at the completion of FEED phase.

33

Late last year, Atlantis became the turbine supplier to the largest planned marine power project in the world, MeyGen, a 378-Mw tidal power project in the Pentland Firth in Northern Scotland. Current estimates suggest 15 per cent of the worlds power demands can be met by tidal current power sources, while the estimates for India are currently around 5 per cent of its annual demand for power. It is only an estimate, but it could be certainly more than 5 per cent, inclusive of wave power and tidal power, from what we know now. However, resource investigation has just begun and with so much coast line, I would expect this number to increase significantly, said Cornelius. Sea water, which is 832 times denser than air, gives a 5 knot ocean current more kinetic energy than a 350-km an hour wind, thus allowing ocean currents to have a very high energy density. Accurate predictions of tidal current movements also make this one of the most predictable and, therefore, reliable sources of renewable energy available today.

Nuclear EnergyThe global nuclear industry is moving forward at a brisk pace, only slightly slowed by the Fukushima accident. The International Atomic Energy Agencys most realistic estimate is that 90 new nuclear plants will enter service by 2030. Ten new nuclear plants went online over the past two years. The home of more than one billion people, India has had one of the worlds fastest-growing economies over the past decade. During this same time frame, the country has made big strides in increasing its capacity for nuclear generation of electricity. India now envisages increasing the contribution of nuclear power to overall electricity generation capacity from 3.2% to 9% within 25 years. By 2020, India's installed nuclear power generation capacity will increase to 20,000 MW. India now ranks sixth in terms of production of nuclear energy, behind the U.S., France, Japan, Russia, and South Korea. There are now 439 nuclear reactors in operation around the world in over 30 countries, providing almost 16% of the worlds electricity. Given the emphasis on rapid expansions in the Indian nuclear power industry, it is imperative to bring the Indian know-how and resources together with global nuclear skills and experience to introduce a new dimension to the upcoming nuclear power projects. Looking at all above important issues, UBM India is bringing its 4th International Exhibition and Conference from 25 to 27 September 2012 at Mumbai. The exhibition and the concurrent summit will be an excellent global networking opportunity for the exhibitors, visitors and delegates. It will provide an opportunity for all companies showcase

34

their nuclear expertise and know-how and identify business opportunities in the Indian market.
Presently Nuclear power is the fourth-largest source

of electricity in India after thermal, hydroelectric and renewable sources of electricity.As of 2010, India has 20 nuclear reactors in operation in six nuclear power plants, generating 4,780 MW while seven other reactors are under construction and are expected to generate an additional 5,300 MW. In October 2010, India drew up "an ambitious plan to reach a nuclear power capacity of 63,000 MW in 2032", but "populations around proposed Indian NPP sites have launched protests, raising questions about atomic energy as a clean and safe alternative to fossil fuels". There have been mass protests against the French-backed 9900 MW Jaitapur Nuclear Power Project in Maharashtra and the 2000 MW Koodankulam Nuclear Power Plant in Tamil Nadu. The state government of West Bengal state has also refused permission to a proposed 6000 MW facility near the town of Haripur that intended to host six Russian reactors. A Public Interest Litigation (PIL) has also been filed against the governments civil nuclear program at the Supreme Court. Despite these impediments the capacity factor of Indian reactors was at 79% in the year 2011-12 as against 71% in 201011. Nine out of Twenty Indian reactors recorded an unprecedented 97% Capacity factor during 2011-12. With the imported Uranium from France, the 220 MW Kakrapar 2 PHWR reactors recorded 99% capacity factor during 2011-12. The Availability factor for the year 2011-12 was at 89%.

Bio-mass EnergyBio-energy contribution to the total primary energy consumption in India is over 27%. Indeed, this is the case for many other countries, because biomass is used in a significant way in rural areas in many countries. However, the contribution of biomass to power production is much smaller than this - currently, biomass comprises only about 2650 MW of installed capacity, out of a total of about 172000 MW of total electricity installed capacity in the country (May 2011). India is the pioneer in biomass gasification based power production. While gasification as a technology has been prevalent elsewhere in the world, India pioneered the use of biomass gasification for power production. As a result, prominent Indian solution providers in biomass gasification are implementing their solutions in other parts of the world. EAI estimates the total installed capacity of biomass gasification based power production in India will be about 140 MW, out of a total of about 2600 MW of biomass based power (cumulative of grid connected and off grid). Of the total, biogas based power generation has the share (about 1400 MW), followed by combustion-based biomass power production (about 875 MW). While biomass gasification currently contributes little to power production, EAI foresees significant growth for this sector in future.
Waste Resource35

Every year there is an estimated 30 million tons of solid waste and 4,400 million cubic meters of liquid waste generated in urban areas of India alone. The problems caused by solid and liquid wastes can be significantly mitigated through adoption of environmentfriendly waste-to-energy technologies. These technologies hold the promise of reducing quantity of wastes and in addition, generate a substantial quantity of energy from them, and greatly reduce pollution of water and air. In spite of the unquantifiable level of benefits, they are still not seen as an attractive business opportunity. The reason for this is the lack of understanding about the various (technology/process) options available and long term viability of the waste to energy projects. We at EAI have been researching the waste to energy industry for the past few years and have developed a thorough understanding of the various technology options and their viabilities. Diverse business opportunities along the value chain, the global scenario and the market segment for each of the waste to energy technologies are well known to us and we are poised to provide a balanced opinion about waste to energy industry. can provide extensive research and consulting assistance for value generation from the following types of waste:

Industrial solid waste Municipal solid waste Hazardous waste Industrial liquid waste Sewage and Fecal Waste Agro and crop waste

We can also provide customized inputs for value and energy generation based on the following processes:

Anaerobic digestion Pyrolysis Gasification Combustion Fermentatio

Limitation of Renewable energy resources in India Renewable energy often relies on the weather for its source of power that is unpredictable and intermittent. Solar power is dependent on availability of sunlight. Thus the availability of power fluctuates from zero to maximum every day. The current cost of renewable energy technology is also far in excess of traditional fossil fuel generation.

36

7 Natural Gas in India:7.1 Current Natural Gas Scenario in IndiaIndia is the worlds seventh largest energy producer, accounting for 2.49% of the worlds total annual energy production. It is the fifth largest energy consumer, accounting for about 3.45 % of total energy consumption in 2004, which has been increasing by an average of 4.8 % percent a year since 1990. The share of commercial energy in total primary energy consumption increased from 59.7 % in 1980-81 to 79.3 % in 2008-09. Indias GDP has grown at more than 8-8.5 % during the last few years, and is expected to grow minimum at the rate of 7.5-9 % in the coming few years. The growth has taken place despite the huge deficit in energy infrastructure and infrastructure. Even today, half of the countrys population does not have access to electricity or any other form of commercial energy, and still use non- commercial fuels such as firewood, crop residues end during cakes as a primary source of energy for cooking in over two-thirds of households. Major gas projects in IndiaProject RGPPL, Anjanvel Dadri Paguthan Auraiya Jhanor-Gandhar Kawas Faridabad Anta Vemagiri Power Generation Ltd. State Maharashtra Uttar Pradesh Gujarat Uttar Pradesh Gujarat Gujarat Haryana Rajasthan Andhra Pradesh Commissioned Capacity (MW) 1480 817 654.73 652 648 645 430 413 388.5 350

Rajiv Gandhi CCPP Kayamkulam Kerala

37

7.2 Demand and Forecasts for IndiaThe demand of natural gas has sharply increased in the last two decades at the global level. In India natural gas was first discovered off the west coast in 1970s, and today, it constitutes 10 % of Indias total energy consumption. Over the last decade it has gained importance as a source of energy and its share is slated to increase to about 25 % of the total energy basket by 2025-2030. In its Reference Scenario, the IEA expects Indian gas demand to increase to 94 billion cubic meters by 2020 and to 132 billion cubic meters by 2030, driven by the industrial and power generation sectors. This means anannual increase of 5.4 % one of the highest in the world. In the 450 Scenario, demand by 2020 would be slightly lower (89 billion cubic meters), but by 2030 would almost remain at the same level as in the Reference Scenario 132 billion cubic meters as gas would be needed to displace coal. The latest available th Indian demand forecasts for the 11 Five- year plan (2007-12) show gas demand increasing by between 37 % and 58 % over that period and the power sector being the main driver for incremental gas demand (see Table below).

38

Natural Gas Demand Projection

Reference- http://ebookbrowse.com/rr07-23-india-natural-gas-indd-pdf-d132734147

7.3 Competitive demand from Fertilizer & City Gas SectorFurther, ICRA expects the prospects for the CGD business to remain good in the long term, given the under-penetration of city gas in India in the absence of adequate gas and transmission pipeline capacity. Natural gas allocation will invite Expression of Interest (EOI) from those interested, henceforth called applicant, in the use of the gas as advertised. It will also indicate the compression/transportation charges, as applicable, to each field in advance and clarify that these shall have to be borne by the applicant (s). EOIs shall be submitted in a sealed cover super scribing the priority sector they belong to. The sectors have been prioritized as given below. a. Gas-Based Urea fertilizer plants b. LPG Plants c. Power Plants supplying power to the grid/state utilities at regulated rates under PPA. d. CGD systems for domestic and transport sectors e. Steel/Refineries/Petrochemicals for feedstock purposes. f. CGD for industrial and Commercial Consumers. g. Any other customers for captive and merchant power, feedstock or fuel purpose. Allocation shall start from applicants highest in the priority as mentioned above. Further, only if the full gas demands of all applicants in the preceding sector are met, will the succeeding priority sector be taken up for allocation in that sector.
Reference- http://www.petroleum.nic.in/

39

7.4 Structure of the natural gas sector in IndiaUntil recently, the exploration and production of natural gas in India was undertaken exclusively by the state owned Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Ltd (OIL). As a result of government initiatives to encourage private sector investment in exploration and production activities and to deregulate the oil and gas sector, several private sector participants are also now engaged in exploration and production (gure 17; PETROTECH Society and PwC 2007; GAIL 2007). Under the New Exploration Licensing Policy (NELP), operating since 1999, foreign and domestic private sector companies acquire exploration blocks and undertake exploration activities either as joint venture consortiums with state owned companies or independently. Reliance Industries Ltd (RIL) is the largest oil and gas acreage holder among the private sector companies in the country. It is also Indias rst private sector company in the exploration and production sector to have discovered large natural gas reserves in the eastern offshore KrishnaGodavari basin in late 2002. Other private sector participants in exploration and production activities include BG India, Nikko Resources and Cairn Energy. Pipeline gas transport is primarily undertaken by state owned GAIL (India) Ltd, formerly the Gas Authority of India Ltd. GAIL is Indias largest gas transmission and marketing company, with a high pressure pipeline network of around 5600 kilometers. The largest pipeline network, HaziraVijaipurJagdishpur, with a total length of more than 2800 kilometres, covers the states of Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana and Delhi in the north west of the country. The 610 kilometer long DahejVijaipur pipeline owned by GAIL transports regasied LNG received at the Dahej terminal operated by Petronet LNG Ltd (PLL). GAIL also has regional gas distribution grids, totalling around 1 800 kilometers of varying length and diameter in Ahmedabad, Assam, Baroda, Cauvery basin, Hazira, KrishnaGodavari basin, Mumbai, Rajasthan and Tripura. Other regional natural gas pipeline operators include Gujarat Gas Company Ltd (GGCL) and Gujarat State Petronet Ltd (GSPL) in Gujarat, Assam Gas Company Ltd (AGCL) and Tripura Natural Gas Company Ltd (TNGCL) in Assam and Tripura respectively. Indraprastha Gas Ltd (IGL) in Delhi, Mahanagar Gas Ltd (MGL) in Mumbai and GGCL in Gujarat are also developing city gas distribution networks for the supply of compressed natural gas (CNG) and city gas in their respective areas.

The gas produced by ONGC and part of the gas from joint venture consortiums, such as the Panna/ Mukta and Tapti joint venture formed by BG India, ONGC and RIL, is marketed by GAIL. The gas produced by OIL is marketed by OIL itself, except in Rajasthan where GAIL markets its gas. Gas produced by Cairn Energy and Gujarat State Petroleum Corporation Ltd (GSPC) is being sold directly by the respective companies. Companies operating Indias LNG import facilities include Petronet LNG Ltd (PLL) and Shell Hazira. PLL, the operator of Indias rst LNG receiving and regasication terminal at
40

Dahej, Gujarat, is comprised of four state owned oil and gas companies GAIL, ONGC, Indian Oil Corporation Ltd (IndianOil) and Bharat Petroleum Corporation Ltd (BPCL). The Hazira LNG Terminal and Port is partnered by Shell Gas BV and Total GazElectricit Holdings France, representing two of the largest private LNG suppliers in the world. Ratnagiri Gas and Power Private Ltd (RGPPL) is a special purpose organisation that has been incorporated to take over assets and revive the former Dabhol Power Company project in the state of Maharashtra. The Dabhol project is an integrated facility consisting of a gas red power plant and an associated LNG receiving and regasication terminal. The RGPPL shareholders include GAIL, state owned National Thermal Power Corporation Ltd (NTPC), Maharashtra State Electricity Board Holding Co Ltd (MSEB) and Indian nancial institutions.

Production ONGC OIL BG India GSPC RIL Cairn India Nikko Resources

LNG Supplier PLL (Daheg& Kochi) Shell (Hazira) RGPLL (Dabhoi) ONGC (MangAlore)

Transport GAIL IOL GSPC RIL AGCL ONGC

CNG distribution GGCL(Gujrat) MGL(Mumbai) IGL(Delhi) RIL BG India

Gas Marketing GAIL GSP ONGC AGCL RIL Indian Oil BPCL OIL BG India Cairn India

Available option for Natural gas supply In India:1). Domestic Natural Gas Resource 2). Natural Gas Import- (A) Piped Natural Gas - (B) Liquefied Natural Gas 3). Gasification of Coal

7.5 Domestic Natural Gas in IndiaAccording to Oil and Gas Journal, India had approximately 38 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2011. EIA estimates that India produced approximately 1.8 Tcf of natural gas in 2010, a 63 percent increase over 2008 production levels. The bulk of India's natural gas production comes from the western offshore regions, especially the Mumbai High complex, though fields in the Krishna-Godavari (KG) are increasingly important.

41

In 2010, India consumed roughly 2.3 Tcf of natural gas, more than 750 billion cubic feet (Bcf) more than in 2008, according to EIA estimates. Natural gas demand is expected to grow considerably, largely driven by demand in the power sector. The power and fertilizer sectors account for nearly three-quarters of natural gas consumption in India. Natural gas is expected to be an increasingly important component of energy consumption as the country pursues energy resource diversification and overall energy security. Despite the steady increase in India's natural gas production, demand has outstripped supply and the country has been a net importer of natural gas since 2004. India's net imports reached an estimated 429 billion cubic feet (Bcf) in 2010. Sector Organization State-owned companies play a predominant role in India's gas sector, although their share of production is smaller than in the oil sector. ONGC accounted for about half of India's natural gas production in 2009-2010. Reliance Industries will also have a greater role in the natural gas sector in the coming years, as a result of a large natural gas find in 2002 in the KG basin. In June 2011, the Indian government approved a $7.2 billion joint venture agreement between Reliance and BP that will focus on expanding offshore development. Natural gas prices in India are regulated by the government. Administered Pricing Mechanism (APM) natural gas gas produced from fields handed to ONGC and OIL by the Indian government more than doubled in price in May 2010; from $1.8/million (MM) Btu to $4.2/MMbtu, although some customers still receive subsidies. Prices for privately produced gas, which are indexed to the price of oil, are slightly higher. The Gas Authority of India Ltd. (GAIL) holds an effective monopoly on natural gas transmission and distribution activities. Although the transmission sector was opened to foreign investment in 2006, 80 percent of natural gas consumed in India was transported through GAIL's 4,100-mile trunk pipeline network. The company expects to double the size of this network by 2014. Reliance Industries is also investing heavily in the transmission sector to move its KG-basin gas to market. Exploration and Production Until 2008, the majority of India's natural gas production came from the Mumbai High complex in the northwest part of the country. Recent discoveries in the Bay of Bengal have shifted the center of gravity of Indian natural gas production. In April 2009, production from Reliance Industries' Dhirubhai 1 and Dhirubhai 3 gas fields in the D6 block of the KG Basin has led to a massive expansion in domestic supply. The block holds estimated reserves of 11.5 Tcf. Of the nearly 1.4 Bcf/d of initial production, nearly half went to gas based power plants, the rest to fertilizer, LPG plants, and city gas distribution entities. After reaching a production peak of 2.8 Bcf/d in December 2009, Reliance decided in July 2010 to cap production of KG-D6 at 2.1 Bcf/d pending resolution of infrastructure and field maintenance problems. Industry analysts expect the BP-Reliance partnership to address these issues. In addition to these new offshore finds, India plans to expand the development of unconventional gas resources. The country already produces some coalbed methane and seeks to expand these volumes soon. In addition, an EIA-sponsored study on world shale gas resources reports that India possesses 63Tcf of technically recoverable shale gas resources. The country has yet to hold a licensing round for its shale gas blocks.
42

As per the Ministry of petroleum, Government of India, India has 1,437 billion cubic meters (50.71012 cu ft) of confirmed natural gas reserves as of April 2010. A huge mass of Indias gas production comes from the western offshore regions, particularly the Mumbai High complex. The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also major producers of natural gas. India imports small amounts of natural gas. In 2004, India consumed about 1,089109 cu ft (3.081010 m3) of natural gas, the first year in which the country showed net natural gas imports. During 2004, India imported 93109 cu ft (2.6109 m3) of liquefied natural gas (LNG) from Qatar. As in the oil sector, Indias state-owned companies account for the bulk of natural gas production. ONGC and Oil India Ltd. (OIL) are the leading companies with respect to production volume, while some foreign companies take part in upstream developments in joint-ventures and production sharing contracts. Reliance Industries, a privately-owned Indian company, will also have a bigger role in the natural gas sector as a result of a large natural gas find in 2002 in the Krishna Godavari basin. The Gas Authority of India Ltd. (GAIL) holds an effective control on natural gas transmission and allocation activities. In December 2006, the Minister of Petroleum and Natural Gas issued a new policy that allows foreign investors, private domestic companies, and national oil companies to hold up to 100% equity stakes in pipeline projects. While GAILs domination in natural gas transmission and allocation is not ensured by statute, it will continue to be the leading player in the sector because of its existing natural gas infrastructure.

7.6 Domestic Gas pipe lines network in IndiaPresently we have a country wide network of 12,000 km of gas pipeline and having capacity to transport 230 mmscmd of gas. The UPA government under the Union Minister of Petroleum and Natural Gas Minister, Shri S. Jaipal Reddy has dedicated a 2200km long natural gas pipeline to the nation. The gas pipeline inaugurated on 23 March 2012 is built at a massive budget of 13100 crores wherein 505 crore were paid to the landowners whose lands were acquired by GAIL (Gas authority of India Limited) for the purpose. The new pipeline is capable of carrying 66 MMSCMD of natural gas and generating power up to 3500 MW. It will also help to provide the CNG/PNG/ natural gas in the areas from where it will pass. The construction of the pipeline was completed in 45 months and it crosses 25 national highways, 56 state highways, 35 railway crossings, 399 water bodies and 53 other pipelines while passing through the states of Gujarat, Madhya Pradesh, Uttar Pradesh, Rajasthan, Delhi, Haryana, Punjab and Uttrakhand.

43

7.7 Trance-national gas pipe linesA. Tapi- pipeline B. Iran-Pakistan-India pipeline C. Myanmar-Bangladesh- India pipeline

44

7.7.1 TAPI- pipelineThe 1,680-kilometre Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline, Ashgabats dream project that first appeared in 1995, has been on hold for many years due to the Taliban insurgency in Afghanistan. The presidents of Turkmenistan, Pakistan, and Afghanistan met for the first time to discuss the project, while India was represented by the countrys Energy Minister MurliDeora. They signed an intergovernmental agreement on the Tapi pipeline, with energy ministers signing a separate framework document on the project, but no deal was reached on future sales or the consortium for the future construction tender. Gas Authority of India (GAIL) the state-owned company has signed this natural gas sale and purchase agreement with TurkmenGaz for Turkmen gas shipped via the TurkmenistanAfghanistan-Pakistan-India (TAPI) pipeline. Turkmenistan would be exporting 90 MSCMD through this pipeline of which 14 MSCMD would be taken by Afghanistan and 38 MSCMD each by India and Pakistan. The pipeline will be built at an estimated investment of $ 7.6 billion approximately. Afghanistans President Hamid Karzai called it a highly important project and assured that he would put in efforts to ensure security both during construction and after completing the project. Security of the pipeline inside Afghanistan has been questioned as the route would go through a number of turbulent regions, including the Helmand and Kandahar provinces which have become epicenters of violence. The pipeline would also go through Quetta and end in Fazilka, an Indian city near the India-Pakistan border. We are witnessing a historic project, said Haruhiko Kuroda, president of the Asian Development Bank which will fund the project. It is not easy to make it happen. Efforts must be made to ensure its security and the ADB is ready to help realize it. Turkmenistan, which is believed to hold the worlds fourth largest reserves of natural gas, has been working to diversify away from its reliance on Soviet pipelines and has had rows with Moscow over the projected trans-Caspian pipeline to Europe, Nabucco. Ashgabat has also opened export routes to China and increased gas supply to Iran in the recent years. Recently Mr. Reddy, the GSPA, signed by national oil companies of the four nations, was witnessed by Turkmenistan Oil Minister, B. Nedirov, Pakistan's Petroleum Minister Asim Hussain and Afghanistan's Minister of Mines Wahidullah Shahrani. Without a doubt, the economic benefits of the TAPI gas pipeline will be immense for our energy-starved economies. The flow of natural gas will bring in industrial and economic development in our countries, Mr. Reddy said. The Bangladesh government recently expressed its willingness to Afghanistan government and sent a proposal in this regard. The Energy and Mineral Resources Division last month sent a letter to Economic Relations Division (ERD) to move for connecting the country with the multi-billion dollar project through the foreign affairs ministry. Later, the foreign
45

affairs ministry forwarded the governments expression of interest letter to the Afghan energy ministry, the official said.

7.7.2 IranPakistanIndia pipelineThe IranPakistanIndia (IPI) pipeline was proposed more than a decade ago to transport gas from the Persian Gulf through southern Iran and Pakistan to link with existing pipeline infrastructure in north western India. Gas would be sourced from the South Pars/North Dome gas field, which straddles the territory of Iran and Qatar in the Persian Gulf. The current proposed pipeline route is around 2800 kilo meters in length. The Iranian share of the gas eld is estimated to contain around 13 trillion cubic meters of gas. The volume of gas supplied by the IPI pipeline could reach 55 billion cubic meters a year. India has sought around 37 billion cubic meters (equivalent to 27 million tonnes of LNG), roughly equal to its current supply from domestic sources, while Pakistan would take around 18 billion cubic meters. The Indian Government is optimistic that the IPI pipeline could begin delivering gas to India by around 2015. However, since the inception of the project, a number of factors have caused substantial delays in its commencement. These include disagreements related to gas pricing between India and Iran, as well as capital cost increases to around US$7 billion. In addition, geopolitical tensions in IndiaPakistan relations, international concerns
46

over trade with Iran, as well as domestic opposition in Iran to gas exports, have also hindered progress. The signicant hurdles associated with the project, the potential for further delays, the lengthy construction period and high capital costs heighten the uncertainty surrounding a potential startup date. In this study, it is assumed that the project will not be operational until sometime after 2020. The prospects of IPI ever becoming a reality are also very bleak, despite the fact that Pakistan has repeatedly expressed its resolve to go ahead with the venture. The US is deadly against the IPI and has been applying continuous pressure on Pakistan to abandon this project, going as far as threatening of dire consequences. Secretary of State Hillary Clinton responding to questions in the House Appropriations Sub Committee on State and Foreign Operations on 1, March 2012 warned that Pakistan could face US sanctions if it pressed ahead with its proposed gas pipeline project with Iran. She said that the US administration recognizes Islamabads essential energy needs. However, she added, construction of a gas pipeline from Iran to Pakistan would mean a violation of US legislation on sanctions against Iran.

7.7.3 Myanmar-Bangladesh-India PipelineThe lack of convergence in the energy security policies of India and Bangladesh has impacted the outcome of the Myanmar-Bangladesh-India (MBI) pipeline project. This project, envisaged as an important aspect of the energy security policy of India, has in the
47

past failed to accommodate the needs of Bangladesh; this has resulted in an indefinite delay in project implementation. However, recent changes in the energy scenario of Bangladesh have enabled greater convergence in the energy policies of both countries leading once again to prospects of a revival of the project. Project implementation has also been stalled by the construction of the Myanmar-China pipeline project which consists of dual oil and gas pipelines originate at Kyaukryu port on the west coast of Myanmar and enter China at Yunnan's border city of Ruili. Competition between the two projects stems from uncertainty regarding just how much gas Myanmar actually has for export. The respective national energy security policies of India and Bangladesh constitute the main determinants of the success or failure of this project. The extent to which these policies have been able to accommodate each other and the effect this has had on the Myanmar-Bangladesh-India pipeline project is the crux of the following analysis. Interestingly changes in the importance of natural gas and of natural gas pipelines to both countries are important drivers in the evolution of the energy security policies of both countries.

Myanmar-Bangladesh-India Pipeline Route

To be sure this is not a new project but trails back through current history to an initial lack of convergence in the energy security policies of both countries which led to a breakdown in negotiations in 2005; however changes in Bangladeshs energy policies since then have enabled the establishment of some common ground in the energy security policies of both states leading to prospects of renewed collaboration over the last 24 months. Recently our Prime Minister Mr. Manmohan Singh visits to Myanmar, once again creates hope for revival of this project.

48

7.8 Liquefied Natural Gas (LNG)

India began importing liquefied natural gas (LNG) in 2004. In 2009, India imported 434 Bcf of LNG, nearly 65 percent of it from Qatar, making it the sixth largest importer of LNG in the world. Currently, India has two operational LNG import terminals, Dahej and Hazira. India received its first LNG shipments in January 2004 with the start-up of the Dahej terminal in Gujarat state. Petronet LNG, a consortium of state-owned Indian companies and international investors, owns and operates the Dahej LNG facility with a capacity of 6.5 million tons per year (mtpa) (975 Bcf/y). India's second terminal, Hazira LNG, started operations in April 2005, and is owned by a joint venture of Shell and Total. The facility has a capacity of 3.6 mtpa (488 Bcf/y). New terminals at Kochi and Dabhol are scheduled to come online in 2012. Demand for LNG will only expand to the extent that domestic production plans fall short of stated goals. Further, plentiful and cheap domestic gas that sells at a discount to imported LNG makes the international spot market a marginal option and complicates negotiations for long-term supply contracts. LNG is a clear, colorless, non-toxic liquid that can be transported and stored more easily than natural gas because it occupies up to 600 times less space. When LNG reaches its destination, it is returned to a gas at regasification facilities. It is then piped to homes, businesses and industries.

LNG Terminal Dahej DahejExp Kochi Shell Hazira Dabhol Mangalore Kakinada Total

Capacity (MMTPA) 5 5 2.5 2.5 2.5 5 2.5 25

Reference- http://petrofed.winwinhosting.net/upload/19-21_Oct_11/Session%20II_RKGarg.pdf

7.8.1 Regasification Capacity of IndiaIndias LNG re-gasification capacity is expected to increase fourfold in the next five years. Currently, the country has an LNG re-gasification capacity of 13.6 MMTPA, which is expected to gallop to 53.5 MMTPA by 2016-17 as new terminals are commissioned.
49

On a yearly basis, the LNG import terminal capacity is projected to increase from 13.6 MMTPA in 2011-12 to 19.8 MMTPA in 2012-13, to 28.5 MMTPA in 2013-14, to 31 MMTPA in 2014-15, to 46 MMTPA in 2015-16 and further to 53.5 MMTPA in 2016-17. In 2011-12, the LNG re-gasification capacity in the country stood at 13.6 MMTPA, comprising 10 MMTPA at PLLs terminal at Dahej and 3.6 MMTPA at Shells terminal at Hazira.

Regasification Capacity
60 50 M 40 M T 30 P A 20 10 0 2011-12 2012-13 Year Regasification Capacity 2013-14 2014-15 2015-16 2016-17 46 53.5

28.5 19.8 13.6

31

7.9 Coal gasification in IndiaIntegrated Gasification Combined Cycle (IGCC), an advanced coal-based power generation technology, may be an important technology to help India meet its future power needs. It has the potential to provide higher generating efficiency, can be adapted to efficiently burn India's high-ash coal, and has the potential to do so with greatly reduced emissions and offers the longer term potential to assist India to manage its C02 emissions. Efficient gasification technology also offers India the potential to produce a variety of fuels, particularly transportation fuels, and chemicals. These potential benefits would be useful in a country that has coal shortages, runs inefficient power plants, and imports the majority of its transportation fuels. Driven by these potential benefits the Central Government-owned power generating equipment manufacturing company (BHEL) is developing a fluid-bed gasifier designed for Indian coals, but has not yet demonstrated it at a size larger than 6 MW. Outside of BHEL, there are many factors holding this technology back. First, the technology is projected to be more expensive than pulverized coal (PC) power generation. In the Indian environment, the capital costs are estimated to be 1.5 times higher, and the levelized cost of electricity is estimated to be 33 % higher than for PC power generation.

50

Gasification is a general term for various processes that converts fuels such as coal into synthesis gas (Syngas) by reacting them with air/oxygen and steam at elevated temperatures. Syngas is primarily made up of CO, H2 and CH4. Due to high ash content in Indian coal, there is no suitable technology for coal gasification. Still it is on pilot scale demonstration projects. ONGC drilled two pilot wells near Mehsana city in north Gujarat. Indias first fluidized bed coal gasification pilot plant established in Nashik, Maharastra by Chimeto technologies ltd. Gail-Coal India plan coal gasification project Gail (India) Ltd and Coal India Ltd have entered into a memorandum of understanding for setting up a surface coal gasification project for production of synthesis gas for fertilizer production. Recently, Gail had signed a similar MoU with Rashtriya Chemicals and Fertilizers Ltd (Project monitor, January 7-13, 2008). The coal gasification project will entail an investment of around Rs 2,400 crore. The two companies will form a joint working group to evaluate detailed feasibility report prepared by Gail to evaluate the viability of the project in terms of techno-economic feasibility for the project. Gail had earlier commissioned a study by Udhe India Ltd for examining the potential of the project and it is estimated that the project will consume around 5,000 tonnes per day of coal to produce 7.76 mmscmd of synthesis gas (equivalent to 3,000 tpd of ammonia) for production of 3,500 tpd of urea. Gail will focus on the production and marketing of synthesis gas.
Reference- http://dspace.mit.edu/handle/1721.1/38569, http://fossil.energy.gov/international/Publications/ucg_1106_cmri.pdf

8 Factors affecting Natural gas pricing: Natural gas pricing in India Hennery Hub Pricing Globalization of Natural Gas Market Transportation cost Alternate fuel pricing Exchange Rate

8.1 Natural gas pricing in IndiaPricing and Allocation of Upstream and Midstream Gas Natural gas is a scarce resource in India and Govt. of India plays an important role in its allocation. Historically, gas has been allocated in priority to end-users such as fertilizer producers and power plants. In 2007, the Govt. of India started working on a new Gas utilization Policy. This was mostly a consequence of the dispute between the Ambani brothers and the related issues on gas pricing and utilization, which created a very hot debate in India. In2007, a price was agreed between RIL and the government
51

under the PSC so that RIL was to sell gas at USD 4.20/BTU for first five year of the production. This price level, often reported, reflects the calculation under a formula linking the price of gas to the price of oil: GP= 2.5 + (OP 25)^0.15 Where, OP is the annual average Brent crude price for the previous FY, with a cap of USD 60/bbl and a floor of USD 25/bbl. Since 2007, the annual Brent price has always been above USD60. This and the large gap between demand and available supplies prompted the government to develop a Gas Utilization Policy and to go back to administrative control over prices (Govt. of India introduced a price formula for all discoveries under the first six NELP rounds) and over volumes to be allocated to end-consumers. Therefore, in 2008, the government introduced Natural Gas in India new guidelines called the Gas Utilization Policy, which effectively took away gas producers' rights to sell the gas they discover on the open market. These guidelines would be applicable for the next five years and be reviewed afterwards. The recent ruling of the Supreme Court in May 2010 regarding the dispute between RIL (Reliance Industries Ltd.) and RNRL (Reliance Natural Resources Ltd.), reaffirms the role of the government in the allocation and pricing of gas. Currently, the rules of the General Policy for the gas market imply that gas will be allocated according to industry-wise priorities set up by the government. This does not imply that the gas is reserved: if one customer is not in a position to take the gas, the next one on the list becomes eligible. Existing users have priority over Greenfield users. The gas is allocated as follows: For Existing customers: Fertilizer producers LPG and petrochemicals Power plants City Gas Distribution (CGD) Refineries Others. For Greenfield users, the priorities are: Fertilizer producers Petrochemicals CGD Refineries Power plants. The above lists clearly show the preference for fertilizer producers, petrochemicals and power plants as first category customers. CGD usually comes in second position. Govt. of India gave priority to power generators and fertilizer producers, making them the major customers supplied at the lowest rate (Administered Pricing Mechanism prices decided by the government) by the state-owned oil and gas companies. Industrial users, which are interested in switching to gas, do
52

not have access to low-priced gas resources and have to pay higher prices to private companies and LNG importers. This makes sense when gas is more economical than the fuel they use (for example naphtha). This situation has changed with the increase of APM (Administered Pricing Mechanism) prices to USD 4.2/ Million British thermal units in May2010. Regulations for Pricing Downstream Gas Historically, gas markets were entirely serviced by PSU with prices determined by the central government. From 1987 to 2005, production and transport prices were fixed by the Empowered Group of Ministers (EoGM). The APM mechanism for oil was formally phased out in 2002, but most of the gas produced by ONGC and OIL and distributed by GAIL continues to be sold at APM prices. In 2006, the regulator PNGRB was created to set up the bases for a competitive market and has been developing regulations since then. In the transmission sector, Govt. of India wishes to develop a policy concerning the approval of pipeline construction that would be consistent, market-friendly, and would help avoid duplication of gas transport routes. In December 2006, the monopoly on transmission networks for GAIL was abolished enabling other companies to build and operate networks. The regulator PNGRB setup the Access Code requiring third-party access for one third of the capacity and setting the tariffs of transportation for third parties. PNGRB has therefore to determine tariffs for existing pipelines as well as for pipelines authorized by the government (before PNGRB was created). Typically, transport along the Hazira-Bijaipur-Jagdishpur pipeline costs USD 0.58/Million British thermal units; GAIL proposed to charge USD 0.88/ MBtu for its 572 km-long Dahej-Uran-Panvel pipeline. For its 1400 km-long East-West pipeline (EWPL), RGTIL (Reliance Gas Transportation Infrastructure Ltd.) opted for a twozone tariff and wanted to charge USD 0.3-0.4 /MBtu for the first zone and USD 1.25 /MBtu for the second zone.

Current Pricing Mechanism in India

The natural gas pricing scenario in India is complex and heterogeneous in nature. There are wide varieties of gas price in the country. At present, there are broadly two pricing regimes for gas in the country-gas priced under APM and non-APM or free market gas. The price of APM gas is set by the Government. As regards non-APM/ free market gas, this could also be broadly divided into two categories, namely, domestically produced gas from JV fields and imported LNG. The pricing of JV gas is governed in terms of the PSC (Production Sharing Contract) provisions. It is expected that substantial gas production would commence from the gas fields awarded by the Government under the New Exploration Licensing Policy (NELP). As regards LNG, while the price of LNG imported under term contracts is governed by the SPA (Special Purchase Agreement) between the LNG seller and the buyer, the spot cargoes are purchased on mutually agreeable commercial terms.

53

8.1.1

APM (Administered Pricing Mechanism) Gas Pricing:-

APM gas refers to gas produced by entities awarded gas fields prior to the PSC regime. The prices of gas from these fields are administered by Govt. of India. In 2005, the price of APM gas of ONGC and OIL was revised. Based on recommendations of the Tariff Commission, the Cabinet Committee on Economic Affairs decided that APM gas prices would be increased. All available APM gas would be dedicated to power generators, fertilizers as well as specific end users covered by Court orders and small-scale consumers having allocations upto 0.05 MCM/day. At that time, ONGC and OIL produced about 55 MCM/day APM gas from nominated fields. The Government raised the consumer price be revised from Rs. 2,800/ MSCM to Rs. 3,200/ MSCM with effective from July 1st 2005 for the following categories of consumers. It was also decided that all the APM gas will be supplied to only these categories. Power sector consumers Fertilizers sector consumers Consumers covered under court orders Consumers having allocations of less than 0.05MMSCMD This increase was on an adhoc basis and it was decided that the Tariff Commission would examine the issue of producer price of natural gas. The Tariff Commission (TC) has since submitted its report and has recommended Producer price of Rs. 3710/MSCM and Rs. 4150/MSCM for ONGC and OIL respectively. TC has also recommended that the consumer price should be somewhat higher than the producer price, considering the substantial difference between the recommended producer price and the price of market gas /alternative fuels. Govt. of India also decided that the price of gas supplied to small consumers and transport sector (CNG) would be increased over the next 3 to 5 years to the level of the market price. With effect from May 6th 2005, the APM gas price to small consumers and CNG sector has been increased by 20% to bring it to Rs.3840 / MSCM. The price of natural gas for customers in the North-East has been kept at 60% of the price in the rest of the country. Accordingly, the price for power and fertilizers sector in the NorthEast is Rs. 1920/MSCM and that for court-mandated and small scale consumers in the region is Rs.2304/MSCM. APM gas prices for the transport sector (CNG), small industries and consumers would be progressively increased from INR 3200/1000m3 (USD 1.79/MBtu) over the following years to reflect the market price. As they became the second category after fertilizers and power producers, small users/CNG saw prices increasing from INR 3 200/1000m3(USD 1.79/MBtu) to INR 3 840/1 000m3 (USD 2.15/MBtu) in 2006 (INR 2 304/1 000m3 in the North East).

54

8.1.2 Pricing of Gas under Pre-NELP Production Sharing Contracts (PSC)

Production Sharing Contracts (PSCs) were executed by GOI with Ravva consortium and PMT (Panna Mukta Tapti) consortium on October 28, 1994 and December 12, 1994 respectively. The price of natural gas is determined by the provisions of PSC signed by the consortium with GOI. Around 17.3 MMSCMD, 1 MMSCMD and 0.9 MMSCMD are supplied from PMT fields, Ravva fields and Ravva Satellite fields respectively under the pre- NELPPSCs. Out of this, GAIL supplies 5 MMSCMD from PMT fields and the production (1 MMSCMD) from Ravva fields at APM rate to APM consumers; the difference between PSC price and APM price is being made up through the gas pool account mechanism.

8.1.3 Pricing of Gas with reference to NELP ProvisionsAs regards the gas from NELP fields, the Government constituted an Empowered Group of Ministers to consider interlaid issues relating to pricing of natural gas, produced under the NELP regime. It has been decided there in that the provisions of the NELPPSC should be honored. The following price basis/ formula for the purpose of valuation of natural gas has been approved by the Government in case of KG-D6 Block of RIL/Niko. Selling price (in US$/MMBTU)= 2.5 + (CP-25)0.15 (in US$/MMBTU), Where CP= crude price in US $/barrel, with cap of CP=US $60/barrel. The price basis formula comes to US $4.2/MMBTU for crude price greater or equal to US $60/barrel. It was decided that price discovery process on arm's length basis will be adopted in the future NELP contracts, only after the approval of the price basis formula by the Government. Reference- http://petroleum.nic.in/nelp6.pdf

8.2 Imported Gas (LNG) PricingA contract was signed with Ras Gas, Qatar for supply of 5 MMTPALNG (equivalent to about 18 MMSCMD) by Petronet LNG Limited (PLL) and supplies commenced from April 2004. This quantity has subsequently increased to 7.5 MMTPA effective from January 2010. The price for LNG has been linked to JCC crude oil under an agreed formula. However, the FOB price for the period up to December 2008 has been agreed at a constant price of $ 2.53/MMBTU. This price translates to RLNG price of $ 3.63/MMBTU ex-Dahej terminal. The price would vary on monthly basis from January 2009. Further, in July 2007, PLL has signed another contract with Ras Gas, Qatar for supply of 1.25 MMTPA LNG from July 2007 to September 2009 to meet the requirement of Ratnagiri Power Project in Maharashtra. In order to make the price of spot RLNG affordable, EGoM has decided in the meeting held on January 11th 2007 for pooling of prices of spot cargoes with LNG being imported on term contract basis. This Ministry accordingly issued orders on March 6 th 2007 in compliance with the decision of EGoM. In addition to the above term contracts, LNG is also being
55

Sourced from spot market by PLL and Hazira LNG Pvt. Ltd. During 2007-08, an average quantity of about 5.7 MMSCMD was brought into the country as spot cargos. Table 3:Summary of Prices prevailing across India

Long-term contract with Qatars Ras Gas (Dahej) For the first five years, Petronet paid a fixed-price agreed in the contract (USD 2.53/MBtu for 5mtpa). In January 2009, this price was raised to USD 3.12/MBtu while volumes increased to 7.5 mtpa in Q4 2009. Short-term contracts Petronet negotiated with Ras Gas until December 2008 for 1.5 mtpa, Petronet paid USD 8.50/MBtu, but the price for end-consumers was pooled with the USD 2.53/MBtu Petronet paid for LNG under the long-term contract.

56

Spot cargoes During the summer of 2009, several companies including Petronet and GAIL contracted spot cargoes for Dahej. Delivered prices were at USD 4.50-4.75/MBtu. Similar prices were observed for Hazira, a sharp drop compared to the cargos imported in October 2008 at USD 2022/MBtu. Petronets terminal in Kochi to be commissioned by 2012 has contracted to receive LNG from Exxon Mobils 25% stake in Australias Gorgon project in all likelihood at much higher prices than existing LNG contracts. LNG supplies will start in 2014-15. The previous wide disparity between APM prices and non-APM prices, whether for gas from pre-NELP or NELP, has narrowed. Under long-term contract, LNG is at an idle point between APM and non-APM prices but gas sold under the new long-term contracts is likely to be more expensive. Spot LNG prices are usually the highest but depend on global market conditions: they were effectively at the same level as non-APM prices during the summer of 2009 (see Table 4). Table 4: Gas Price Differentiation in Indian Market (2010)

8.3

Pricing Issue:-

The pricing issue in India has always been quite complex. Firstly, APM gas supplies have been declining while non-APM gas saw a dramatic increase in volume and share. Furthermore, APM gas has been allocated in priority to power producers and fertilizers, two sectors expected to see their demand increasing over the coming decade. While the Ministry of Petroleum and Natural Gas has been pushing for higher prices to limit losses from the PSU, this has met with strong resistance from the Ministry of Power and Ministry of Chemicals and fertilizers. The subsidies to fertilizers have already multiplied by five over the last five years to reach INR 75849 crore (USD 16.6 billion) in 2008/09.

Supply Side Issue:From the supply side, keeping artificially low APM prices of ten sends the wrong signals indeed, gas prices have to be high enough in order to attract upstream investments, and cover production costs and the recovery of capital in order to limit under-recoveries from PSUs (the difference between the international market prices and the domestic retail price). These, unsurprisingly, complained that low prices had been resulting in substantial losses for them.
57

Furthermore, India is likely to need increasing LNG supplies and has to be able to contract additional LNG supplies on global markets or spot LNG cargoes when these are available to meet a growing supply-demand gap. Even if the slope in long-term contracts is no longer at the 0.17 seen in the Asian region in 2008, it is certainly likely to result in higher prices that the USD 3/MBtu price with Qatar.

Demand Side Issue:On the demand side, the challenge is to perform a transition to prices closer to market prices while maintaining the consumers competitiveness. KG-D6gas price for the first five years of production, namely USD 4.21/MBtu, will soon represent around half of Indias supplies.This price, more than twice the former APM price level fixed by the government, has unsurprisingly become a reference point. Being a private sector company, RIL cannot sell gas at under cost; therefore their clients have to be able to pay cost-plus for any of their gas. Indeed gas availability and affordability for customers are crucial for gas development in India. Demand for gas is infinite at USD 2-3/MBtu but limited at USD 7-8/MBtu for Indian major, priority customers fertilizer production and power generation. There are two direct competing fuels for gas in these two sectors: Coal (in the power sector) and Naphtha, as well as the option to produce fertilizers off shore. Gas represents currently a small portion of total power capacity. In most cases, coal-fired generation will be cheaper than gas, but when one compares a coal-fired plant is located far from coal fields or using imported coal with a gas-fired plant near the existing gas transmission infrastructure, this will not be the case. Certainly, these two sectors will be tested by the increase of APM prices. The fertilizer industry represents a big issue as increasing the gas price is likely require some policy solution: this could be increasing the subsidies of these customers, something that the finance ministry is unlikely to accept easily, or produce fertilizer in other countries which would face opposition from the fertilizer producers themselves and would also affect Indias selfsufficiency with respect to agricultural production.

Road Ahead:There have been many attempts under taken by Indian governments to liberalize revise the dual system until the decision was taken in May 2010. Several suggestions had been made: one was to increase the price paid to ONGC and OIL to USD 2.3/MBtu in 2010, to link it to a

58

Wholesale Price Index in the future, or to increase it progressively to USD 4.2/MBtu by 2013. Another idea developed by the Ministry was a uniform domestic price instead of a multitude of prices. This would be achieved through a removal of the dual APM market pricing by gas pooling, which should stabilize prices and thus serve as a benchmark. The government has made a big leap forward by increasing APM prices directly to USD 4.2/MBtu, creating a reference price representing currently to an estimated two thirds of gas supplies. Additional changes may happen. The idea of pooling gas prices is still under study. The question is now to see how this will affect the market in the future and how gas users, which had been allocated cheaper gas than the new reference price, will be adversely affected. Whatever the choice, a new future pricing mechanism would need to incentivize gas production, attract new LNG supplies, while being transparent to attract foreign or private investors.

8.4 Framework of New Pool Pricing Mechanism:8.4.1

Need for Pool Pricing:-

The Indian gas market needs to match customer expectations, gas infrastructure expansion with providing flexibility for new and marginal suppliers to enter the market. Price pooling is a mechanism where the potential for balancing the customer and developer expectation with that of suppliers. The need and benefits of pooling for the Indian gas markets need to be considered in the context of the market development objectives. These could be summarized as follows: 1. Introducing new gas sources in the market; 2. Ensuring stable price signals for long gestation investments based on gas; 3. Deepening the pipeline network to expand the gas markets geographically; 4. Sending appropriate price signals for efficient use of gas; The Indian gas markets are relatively small as compared to the size of the economy, but are expanding rapidly. However, as commented earlier, the expansion has not kept pace with the demand. Domestic gas finds, while substantial, are inadequate to meet the burgeoning demand for gas. In particular, the demand from bulk consuming sectors like power and fertilizer is growing at a rapid pace. At the other end, the demand from city gas is also expected to increase rapidly in the coming years. As a result of this expansion of demand, the country is looking seriously at LNG as a potential source of supply expansion. LNG, as an internationally traded commodity presents two challenges. Firstly, the price of LNG is generally linked to the price of crude oil, especially for long term supplies. The resultant prices of RLNG are typically significantly higher than the prices of domestic gas,

59

including from the NELP fields. Secondly, the prices of such supplies being linked to crude are inherently volatile. The combination of relatively high prices and high volatility make it difficult for user industries like power and fertilizer to plan investments based on LNG. Price pooling can serve the objectives of introducing substantial quantities of new LNG supplies. The existing base of the pool would serve to reduce the price volatility, and given the impetus for infrastructure development. The graphic below illustrates the impact of 5 MMTPA of new LNG supplies (approximately adequate for 5000 MW of new power projects), on the existing cost pool in India, at various supply price points. Figure1: Pool Price at Various LNG Prices for 5 MMTPA New Supply

8.4.2 Proposed Roadmap of Pool Pricing Mechanism:The pooling options have been broadly divided into two major categories viz. Cost Based pool and Bid Based pool. Cost based pool has been further divided into General pool and Sectoral pool. The following section defines the various pools considered for this study. General PoolIn this type of pooling arrangement all the gas producers or traders participate in the pool. Gas is supplied to all the customers through the pool administrators. This could feature two basic options as variants. (i) Mandatory or compulsory pool- In mandatory pool all the gas producers or traders have to participate in the pool and subsequently all the sale of gas will happen through the pool. Similarly, all demand would be required to contract through the pool for supplies. (ii) Facilitated pool - Facilitated pool does not make it compulsory for the gas producers or gas suppliers to participate in the pool. The gas producers or traders can participate in the pool and exit from the pool as per the defined rules of the pool. The same would apply for buyers from the pool.
60

Figure2: Pooling Options in India

(Source: Reporton Common Pool Pricing 2010, MoPNG)

Sectoral Pool Sectoral pool is specifically for pre-identified sectors. As regards this study, this has been considered for Power and Fertilizer segments, although variants could extend to other sectors as well. Two basic forms of sectoral pools have been considered. (i) Combined pool- In combined pooling arrangement there is a single pool for Power and Fertilizer. The gas at pooled price is supplied to customers from both the sectors through an identified mechanism. (ii) Individual pool- In this type of pooling arrangement there will two different pools for Power and Fertilizer separately. The pool operator may or may not be same. The gas at pooled price is supplied to the respective customers through on identified mechanism. The pooled price may or may not be same for both the pools.

61

The above options have been discussed in the subsequent sections. It needs to be noted that in all options presented herein, the existing cost structures of the gas supply from producers (or importers) remain unchanged, and the revenues to be generated would correspond to these costs, plus the transportation costs, taxes and duties as at present. Hence there is no impact on subsidies as a whole, although the cost of gas to individual consumer costs would be rationalized as a result of the pooling arrangements. In subsequent years, with expansion of supplies in the pool, this would be altered based on the cost and quantum of additional gas supplies. Hence, irrespective of the option selected, specific pool rules would need to be agreed on the cost and quantity limits and implemented by the pool operator accordingly.

8.5

Effect of Globalization of Gas market on gas prices:-

Potential for energy independence as fuel switching to natural gas, efficiency, and domestic production lessen our dependence on oil imports from unstable regions. We are now in the 45 to 50 % range, trending down from above 60. Potential for economic growth in the petro -chemical sector as production returns to the US, attracted by current feedstock pricing. The Sierra club and other NGOs are concerned exports will drive more aggressive shale development. Industrial gas consumers and some gas utilities who prefer todays price. Balance that with legitimate questions from the free trade lobby: One would hope we take full advantage of this resource. Canadians are investing in natural gas transportation fuel infrastructure just north of our border; combined heat and power distributed generation enjoys improving economics; and the gas industry and regulators must assure gas generation facilitates rather than discourages development of renewable power. The price difference between a commodity that is 5% oversupplied (the approximate level of oversupply of NG in North America today) and one that is 5% under supplied is literally unimaginable. Recall that as recently as mid-year 2008, at the onset of the most severe portion of the recession, natural gas sold for $13+ per million BTUs. Some of the fall to todays approximately $2/MMBTU was due to lost demand, but much of that has been recovered. For example, there was exactly zero fertilizer industry in the U.S. at those NG prices. Most of those plants are now back on line. The real driver was/is on the supply side. Natural gas is a North American commodity. As such, it is priced by commodity-oncommodity competition. LNG is a global market. It is priced proportional to crude oil, the price of which is dictated primarily by the national oil companies and traders. There is
62

absolutely no reason to believe that prices will not retrace the 85% price drop seen in the last four years if enough LNG export is allowed. Going the other way, that translates to a 550% increase in price. Say goodbye to the fertilizer industry. And to the displacement of coal-fired power generation. The current, ultra-low prices will not obtain for even the medium term. While there is an enormous shale gas resource which can be drilled with very high technical probability of success, only the liquids-rich areas like the Marcellus Shale are currently under development in North America. As the price rises, which it inevitably will, that other, lower liquids content shale gas opportunities will become economic. That will provide a governor on the domestic price of natural gas for literally decades. Unless we export LNG. The current North American oversupply of natural gas is due to excessive enthusiasm on the parts of its developers. Now they wish that we the People to socialize their shortfall via exports, bringing them up to world prices. There are three distinct regional gas markets, each of which sets natural gas prices differently. The US has gas-on-gas competition, Europe sets prices indexed to certain oil products although nascent gas hubs are starting to change this pricing structure, and Asia indexes its natural gas prices to crude oil, enforce in very long term contracts; this means that Asian prices are around $16 per mmbtu, making LNG exports from the US a very attractive option. There is limited trade between these three regional markets. MIT modeled the price impacts in 2030 of a continuation of these regional markets compared to a global market in gas where there is substantial trade between regions, like todays oil markets. The price impacts in the US were substantial, around a 30% drop in prices for US consumers (I am remembering the numbers, not looking at them, they can be seen in the MIT Future of Natural Gas study). Surprisingly, US production didnt drop in this scenario, it remained steady. This was due to the fact that overall demand for natural gas increased in the US because prices were low. US entry into LNG exports would certainly hasten the development of this global market. Although I have very high regard for Lews work and observations, I do not find the story line of a sensational movie to be a compelling reason to oppose either LNG exports or imports. I believe that Sandia National Laboratory did a lot of LNG safety research after 9/11. I will try and find some links to this work but I dont think the conclusions remotely tracked the apparent thrust of this film. I am generally leery of Hollywood efforts to present facts on energy and point to the China Syndrome as exhibit A, Gas land as exhibit B. One is entertainment, one is advocacy, and both distort or conflate the real and sometimes serious impacts of the ways we produce energy (none of which is benign, including renewables). These films should not guide our responses to these impacts; analysis, observation and data should. Brookings just released a study on gas exports from the US (disclaimer: I was a member of the studys advisory group) and concluded that the USG should do nothing to either
63

encourage or discourage exports. I tend to agree although I expressed reservations about the political reaction to exports; this is borne out by the listing above of Sierra Club, industry, etc. opposition to exporting gas, all of which is generated by advocacy positions, which should be considered as such. At the rollout of the Brookings study, I highlighted the investment uncertainty associated with converting current LNG import sites in the US to liquefaction and export facilities (not a small capital investment by any means). I noted that, as an investor, I might be concerned about the development of global shale resources and its overall impacts on LNG demand. China for example has 1275 Tcf of technically recoverable shale resources and only consumes around 3Tcf of gas per year. The US import market is a prime example of how shale gas can affect LNG import opportunities. In the Bush Administration, the US increased LNG import capacity by an order of magnitude (including Mexico and Canada volumes, destined for US markets), from around 2 bcfd to 22 bcfd. In 2010, we imported just over 1 bcfd, leaving significant stranded assets out there around the country. This is a cautionary tale for potential investment in exports, and to me, suggests that any export volumes of LNG from the US would likely be relatively small and self-limiting. Finally, the US has a horrible track record on natural gas policy. Example 1 is the LNG import debacle noted above. I also remind people, as example 2, that the Congress outlawed the use of natural gas in power generation in 1978 (based on a completely flawed understanding of what was really going on in US gas markets at the time). This coupled with Three Mile Island (accompanied by the hysteria generated by the movie, The China Syndrome), gave us the ancient, creaky, CO2 emitting coal fleet we have in the US today; this underscores the fact that the energy infrastructure choices we make today will likely be with us for the next 40-50 years. Finally, I encourage everyone to consider Example 3, namely theoverbuild of NGCC merchant plants when wholesale electricity markets were de-regulated in the mid-90s. We have a fleet of highly efficient gas generation units that are operating at 41% capacity factors, when they are designed to operate at 85-87%. Volatility in gas prices has ensured that old, inefficient coal generation tends to get dispatched first over more efficient, much lower CO2 and other criteria pollutants + non-mercury emitting NGCC plants. Shale gas production has greatly diminished this price volatility, making the NGCC overbuild a good luck/bad luck story slowly but surely our old coal plants are being retired and we dont require new builds to replace them because we have so much surplus NGCC capacity. It has however, taken 15 years or so to start correcting this market miscue, and perhaps the capital that was stranded over that time period might have been put to better use. The MIT groups finding that N. American natural gas prices would enjoy a 30% drop given the establishment of a global LNG trading market is very interesting. However, given the already-85% drop in wholesale prices, perhaps some of its assumptions deserve
64

revisiting. Moreover, the excess LNG import capacity provides the U.S. an option on the benefits of such a market. Should MITs indicated results obtain, imports would once again be competitive. Should the the situation suggest that export of LNG would be an act beneficial to the national economy, such a policy could be pursued at that time. Import/export control has historically been an element of the policy initiatives of most nations. In this case, simply declining to enable LNG exports would be a relatively passive policy imposition. Secondly, you should be a bit cautious in applying the term stranded assets to either the unused LNG import facilities or the oversupply of NG-fired combined cycle plants. The term has previously been applied to electric utility assets that existed because of actions within the framework of a regulatory compact. They became an issue in the context of deregulation of that industry under the assumption that rate-of-return based retail rates were going to be abandoned in the onslaught of deregulation (they werent). By contrast, both of the over investment situations you cite above result from private decisions regarding the deployment of capital. As such, the possibility of having employed that capital differently is a subject utterly NOT a governmental policy question in a capitalist system. I repeat, there is every reason to avoid socializing those failed investment decisions on the part(s) of private enterprise(s) and every reason except the desire to benefit a select group of investors to keep cheap NG prices at home. Salient among them, retiring that ancient, creaky, CO2 emitting coal fleet we have in the US today. Dont export LNG at this time.

65

9 Shale Gas:9.1 Shale gas historical back ground and development:Shale gas was first extracted as a resource in Fredonia, NY in 1825, in shallow, lowpressure fractures. Work on industrial-scale shale gas production did not begin until the 1970s, when declining production potential from conventional gas deposits in the United States spurred the federal government to invest in R&D and demonstration projects[18] that ultimately led to directional and horizontal drilling, micro seismic imaging, and massive hydraulic fracturing. Up until the public and private R&D and demonstration projects of the 1970s and 1980s, drilling in shale was not considered to be commercially viable. Early federal government investments in shale gas began with the Eastern Gas Shale Project in 1976 and the annual FERC-approved research budget of the Gas Research Institute. The Department of Energy later partnered with private gas companies to complete the first successful air-drilled multi-fracture horizontal well in shale in 1986. The federal government further incentivized drilling in shale via the Section 29 tax credit for unconventional gas from 1980-2000. Micro seismic imaging, a crucial input to both hydraulic fracturing in shale and offshore oil drilling, originated from coal beds research at Sandia National Laboratories. In 1991 the Department of Energy subsidized Texas gas company Mitchell Energy's first horizontal drill in the Barnett Shale in north Texas. Mitchell Energy utilized all these component technologies and techniques to achieve the first economical shale fracture in 1998 using an innovative process called slick-water fracturing. Since then, natural gas from shale has been the fastest growing contributor to total primary energy (TPE) in the United States, and has led many other countries to pursue shale deposits. According to the IEA, the economical extraction of shale gas more than doubles the projected production potential of natural gas, from 125 years to over 250 years. In 1996, shale gas wells in the United States produced 0.3 trillion cubic feet (8.5 billion) cubic meters), 1.6% of US gas production; by 2006, production had more than tripled to

66

1821: Natural gas is first extracted from shale in Fredonia, NY

1970s: Domestic gas production on the decline; Morgantown Energy Research Center (MERC) initiates the Eastern Gas Shales Project.

1976: Two MERC engineers patent early technique for directional drilling in shale.

1977: DOE successfully demonstrates massive hydraulic fracturing in shale(MHF).

1980: Congress creates Section 29 production tax credit for unconventional gas (lasts until 2002).

1986: First successful multi-fracture horizontal well drilled by joint DOE-private venture in Wayne County, West Virginia.

1991: GRI subsidizes Mitchell Energys first successful horizontal well in the Texas Barnett shale.

1998: Mitchell Energy engineers achieve commercial shale gas extraction.

2000s: Natural gas generation grows faster than any other energy source; shale gas boom pushes prices to record lows.

67

1.1 trillion cubic feet (31 billion cubic meters) per year, 5.9% of US gas production. By 2005 there were 14,990 shale gas wells in the US. A record 4,185 shale gas wells were completed in the US in 2007. In January 2008, a joint study between Pennsylvania State University and State University of New York at Fredonia professors Terry Engelder and Gary Lash increased estimates as much as 250 times over the previous estimate for the Marcellus shale by the U.S. Geological Survey. The report circulated throughout the industry. In 2008, Engelder and Nash had noted a gas rush was occurring and the New York Times' "Theres Gas in Those Hills" was an in-depth look at the development, noting investments by Texas-based Range Resources and increased leasing amongst Anadarko Petroleum, Chesapeake Energy and Cabot Oil & Gas.
Reference- http://geology.com/energy/world-shale-gas/

9.2 Shale Gas Reserve:The development of shale gas plays has become a "game changer" for the U.S. natural gas market. The proliferation of activity into new shale plays has increased shale gas production in the United States from 0.39 trillion cubic feet in 2000 to 4.87 trillion cubic feet in 2010, or 23 percent of U.S. dry gas production. Shale gas reserves have increased to about 60.6 trillion cubic feet by year-end 2009, when they comprised about 21 percent of overall U.S. natural gas reserves, now at the highest level since 1971. [3] The growing importance of U.S. shale gas resources is also reflected in EIA's Annual Energy Outlook 2011 (AEO2011) energy projections, with technically recoverable U.S. shale gas resources now estimated at 862 trillion cubic feet. Given a total natural gas resource base of 2,543 trillion cubic feet in the AEO2011 Reference case, shale gas resources constitute 34 percent of the domestic natural gas resource base represented in the AEO2011 projections and 50 percent of lower 48 onshore resources. As a result, shale gas is the largest contributor to the projected growth in production, and by 2035 shale gas production accounts for 46 percent of U.S. natural gas production.

68

1400 1200 1000 800 600 400 200 0

Shale Gas Reserves

Reserves

Annexure -2 In total, the report assessed 48 shale gas basins in 32 countries, containing almost 70 shale gas formations. These assessments cover the most prospective shale gas resources in a select group of countries that demonstrate some level of relatively near-term promise and for basins that have a sufficient amount of geologic data for resource analysis.

9.3 Hydraulic fracking- breakthrough in shale gas:Hydraulic fracturing (fracking) is the method used to make hard shale rock more porous, thus allowing natural gas to flow through the shale to the wellbore. First, producers drill into the earth several thousand feet until they reach the natural gas reservoir. Next, steel casings are inserted to a depth of 1,000 to 3,000 feet, and the space between the casing and the drilled hole is filled with cement to stabilize the well and prevent any leakage. After the cement has set, this process is repeated, using a series of successively smaller casings until the reservoir is reached, usually a distance of 6,000 to 10,000 feet. There are numerous state and federal regulations that govern the casing and cementing process. Once the drilling and casing is complete, typically 3 to 5 million gallons of water, mixed with sand and fractional amounts of chemical additives, are pumped into the wellhead at high pressure, creating cracks in the rock beds. Several videos provide a detailed explanation of the fracking process. The hydraulic fracturing mixture is 95 percent water, 4.5 percent sand and 0.5 percent chemical additives formulated to promote gelling and cleaning according to the Ground Water Protection Council and U.S

69

Over the past 50 years, there have been significant advances in hydraulic fracturing technology. Different types of fracture treatments have been developed ranging from packer and pumping equipment to variations in treatment fluids and prop pants. Each natural gas reservoir is unique due to the variability in geology and geo mechanics.

70

As a result, there will be different types of hydraulic fracturing treatments used depending on what result is needed in the end and what the parameters of the zone are. Recent developments of fracture technology coupled with horizontal drilling have allowed numerous tight gas reservoirs to yield economic volumes on natural gas. These technological breakthroughs have enabled significant natural gas resources to be added to the countrys energy resource base and extending the potential supply by over 100 years.

9.4

Issues with Hydraulic fracking:-

This potentially poisonous method of natural gas drilling is now being used nationwide to release rock bound natural gas formations and has been exempt from U.S. federal oversight by the E.P.A. These natural gas drilling and exploration firms were also allowed to keep secret the list of toxic chemicals they are using to inject into the ground....many of these chemicals have seeped into wells and ground water formations near fracking operations and poisoned people, caused gas explosions and poisoned/killed livestock. Although state governmental agencies are required to regulate "fracking" for natural gas being done by various firms. The drilling method seems to be going largely unregulated with a wink and a nod by regulators.....perhaps because of the enormous profits/income to be reaped by various individuals in the private and public sector. Up until recently these fracking operations were done, largely, in remote, sparsely populated rural areas out west, but now, in the eastern U.S., fracking is being done in close proximity to urban drinking water supplies. Reference-http://www.thepetitionsite.com/1/fracking-for-natural-gas-poisoning-us-water/
http://www.scientificamerican.com/article.cfm?id=fracking-linked-water-contamination-federalagency

9.5 Implication of shale gas reserve on traditional gas producers in US: In the last 10 years during which shale gas became commercial in the US its use has grown from near zero to about 20% of the already enormous US gas stream. Booked shale gas reserves, at present rates of production, may still be onstream 100 years into the future, a figure that will increase if gas begins to approach oil on a price parity basis. In the case of shale gas, other countries are inverting that approach and bringing capital in US, investing billions in the expertise and reserves of US shale gas companies: Statoil of Norway, CNOOC of China, Mitsui of Japan, Reliance of India, and Total of France, to name a few.
71

 US developing and converting gas import terminals into export terminals. The distribution of shale gas is so widespread that locally produced shale gas may become the standard fuel in many places. Traditional gas imports (by pipeline or as LNG) may become incremental sources. This unexpected development hits global LNG prices three ways: One, US demand no longer supports extreme gas prices. Two, we may compete for LNG customers or help other nations establish their own production. Three, the economics of gasto-liquid projects have seemingly been immutably changed. Gas exporting countries will still be suppliers but likely not as they anticipated.

9.6 Implication on Indian gas market: The Ministry of external affairs taken up the matter with the US, requesting approval of shale gas/LNG export from all LNG exporter terminals in the US. This is coming in way of GAILs efforts to finalize liquid shale gas export from USA to India. Reliance (India) is signing JV deals with US to gain experience and replicate the shale gas success in home country. And Reliance Industries has invested $3.5 billion in US shale gas assets. Washington, however, allows gas exports only to free-trade partners. India do not have a FTA (free trade agreement) are not allowed to tap into the US energy lifeline. So FTA with US will be helpful for India to import shale gas from US.

9.7 China planned for shale gas development:China has released its first five-year plan for the development of shale gas, setting ambitious production targets and emphasizing the need for foreign co-operation and better technology in developing the sector. The worlds biggest consumer of energy, China is estimated to have huge shale gas reserves but it is still unclear whether the country will be able to develop them on a commercial scale due to geological and technological challenges. Shale gas is natural gas that is trapped inside shale rock and is extracted by using highly pressurized water mixed with chemicals to crack open the rock. Its increased prominence has revolutionized the energy sector in the US and sent natural gas prices there to the lowest for a decade. Chinese policymakers are seeking to replicate the success of shale gas in the US, and the blueprint released on Friday is the first official detailed statement about policies during the 2011-15 periods.

72

It sets a goal of 6.5bn cubic meters of shale gas production by 2015, which is equivalent to 2-3 per cent of projected 2015 Chinese gas production, and more than 60bn cu m of shale gas production by 2020. While those numbers are small compared with the scale of US shale gas production, analysts say the 2020 target will be very difficult to attain given the nascent state of Chinas shale gas industry. China does not have any commercial production of shale gas, but exploratory drilling for shale has increased greatly in the past year. The new blueprint emphasizes the need for foreign co-operation to develop shale gas technologies, and companies including BP, ConocoPhillips, Chevron and Royal Dutch Shell are involved in shale gas exploration joint ventures in China. The five-year plan also states that competition within the shale gas sector will be encouraged and market entry conditions will be clearly defined for companies wishing to work in shale gas; these companies will be also highly encouraged to work with foreign partners. The plan also promised supportive financial policies and subsidies for shale gas, including price subsidies, preferential tax treatment and land subsidies. However, analysts have pointed out that as long as Chinas state-controlled prices for natural gas remain at their current levels, companies will not have an incentive to develop shale gas resources because they can make more money from oil. There is a lot of talk about shale, but not a lot of action by the government in terms of natural gas pricing reform, said Gordon Kwan, an analyst at Mirae Asset Securities, adding that natural gas prices needed to rise in order to make shale profitable.

China and India join forces in Exploration & Production:This MoU signed between ONGC and CNPC marks the intention of the fast emerging countries India and China to establish and consolidate their energy portfolios globally instead of competing to get access to oil and gas reserves, and in the development of technologies to catch up with Majors IOCs. The companies have already set up a robust relationship, mainly in the areas of upstream exploration and production business. With this MoU, the companies have agreed to foster their cooperation either directly or through their subsidiaries by expanding cooperation in: - Upstream exploration and production areas including LNG. - Midstream including construction and operation of oil and gas pipelines. - Downstream projects from refining or processing of crude oil and natural gas up to marketing and distribution of petroleum products. The areas of cooperation between ONGC and CNPC will also extend to joint participation in suitable hydrocarbon projects in other countries of interest by exchanging information and working for mutual growth and benefit by extending cooperation in hydrocarbon sectors globally.
73

This MoU has been initiated upon the positive and productive experience of ONGC working with CNPC in ONGC Videsh Ltd (OVL), the overseas arm of ONGC, in international operations in Syria, Sudan and the Myanmar Pipeline Project where CNPC is a key participant. OVL invested $2.5 billion in petroleum exploration and production in undivided Sudan as part of Greater Nile Petroleum Operating Co., in which it owns a 25% stake. Its partners are CNPC (40%), Petron as Carigali Overseas SdnBhd (30%) and Sudapet Co. Ltd (5%).The last years co-operation through affiliates between both companies was also marked by ONGCs great achievements in E&P infrastructure at a level where only a few companies worldwide can be proud of. CNPC and ONGC did have an earlier arrangement, but limited to hydrocarbon exploration and production. The primary purpose of the new agreement, however, seems to be to ensure that bidding for global energy assets doesnt get out of hand as it has in the past.

10 Energy Security in India:Indian energy consumption profile is varied. We use bio mass like agricultural waste and animal waste like cow dung and wood, char coal for heating and cooking purposes as well as refinery products like kerosene and LPG. While a small amount of electrified transportation has been adopted by the railways most other transportation by road and water is dependent on diesel and to a lesser extent petrol both of which are refinery products. Industry depends on electricity as well as coal and fuel oil or diesel for its energy needs. Today we are importing over 80% of our oil needs which gets refined into kerosene, LPG, petrol, diesel, fuel oil, naphtha etc. hence not only all our energy needs but also fertilizers and plastics needs are susceptible to international crude prices. Even though India has recoverable coal of about 70-80 billion tons, our needs are rising and our annual coal consumption has crossed 800 million tons. Due to various restrictions on coal mining due to environmental or forest issues or bottlenecks in railways for internal transportation; imports of coal from South Africa, Australia and Indonesia are rising and many Indian companies are buying mines in these countries to secure these supplies and building plants in India along the western and eastern coastline. Imported coal is expensive but it has already reached over 110 million tons this year and is expected to rise dramatically as energy needs increase. Thus our economy is not only dependent on international crude prices but also coal prices which are again getting linked to crude prices as natural gas prices already have. Electrification is an important component of modernizing the countrys productive forces and increasing the quality of life of people. Interestingly, Lenin in the emerging Soviet Union realized it very clearly and accordingly the GOELRO ("State Commission for Electrification of Russia") was set up as early as
74

1920. He endorsed the slogan, The age of steam is the age of the bourgeoisie, the age of electricity is the age of socialism. He said in a report in Feb 1920, We must show the peasants that the organization of industry on the basis of modern, advanced technology, on electrification which will provide a link between town and country, will put an end to the division between town and country, will make it possible to raise the level of culture in the countryside and to overcome, even in the most remote corners of the land, backwardness, ignorance, poverty, disease and barbarism. We shall tackle the problem as soon as we have dealt with our current, basic task, and we shall not allow ourselves to be deflected for a single moment from the fundamental practical task. The Soviet Plan included construction of a network of 30 regional power plants, including ten large hydroelectric power plants, and numerous electric-powered large industrial enterprises. It was intended to increase the total national power output per year to 8.8 billion kWh, as compared to 1.9 billion kWh of the Imperial Russia in 1913.The Plan was basically fulfilled by 1931. Indias current per capita electricity consumption is less than 750 KWH per annum where as it is already 1500 in China. It is to be noted that in almost all economic indicators like electricity, steel, telecom etc. India and China were on par in 1991. The consumption in advanced countries of Europe and North America is much higher, while the world average itself is 2500 KWH per capita. There are still over 10% villages which are not electrified and according to 2009 data 33% of rural households and 6% of urban households still do not have access to electricity. The demand in India for electricity far outstrips supply reportedly the shortage varies between 8-12%, which amounts to a huge 15,00020,000 MW of power. Leave alone rural areas even large cities and giant metropolises are subjected to regular load shedding that is brown outs and black outs. There have been many instances of riots in many provinces especially during the sowing season due to these brown outs when they need electricity for tube wells and pumps. India needs rapid electrification to raise the standard of living as well as for agriculture and industry. In terms of medium and long term planning, Indian coal needs to be mined efficiently. However it has large amount of silica, which appears as large amount of fly ash in power stations, when it is burnt. This ash needs to be disposed of in a way that does not harm the surrounding air and rivers and lakes. However much needs to be done in this respect. Imported coal has much higher calorific value but also has sulphur and nitrogenous content which leads to large release of sulphuric and nitric acids during rain, that is dangerous to forests and environment. The fact that open pit mining itself needs to be handled properly to limit the damage to the environment is only recently being addressed in India. According to scientific studies, the fly ash emitted by a power planta by-product from burning coal for electricitycarries into the surrounding environment 100 times more radiation than a nuclear power plant producing the same amount of energy. Some of the ecologically disastrous effects of coal based thermal power plants are already visible in
75

Chhattisgarh, where large clusters of pithead coal powered thermal power plants are scheduled to come up. From the long term energy security perspective Indian coal reserves will get exhausted in less than 50 years. Even worldwide the coal reserves are shrinking. Increasing reliance on imported coal will lead to Indian economy being more and more at the mercy of global coal prices as it already is with respect to oil prices. This is in addition to the extraordinary burden that will be borne by our ports and railways for carrying coal. The effect on greenhouse gases and climate; effect of ash on pulmonary diseases and peoples health and so on are additional things to be worried about. Coal already provides 65% of power capacity and will likely play a major role in the future also. Natural gas offers a much cleaner alternative and power stations can also be set up quickly. However while some discoveries of natural gas have been made by ONGC and Reliance they are still relatively small compared to the existing demand. Imported gas through pipelines of Central Asia, Iran, Bangladesh and Myanmar will also be expensive since the gas prices are linked today to oil prices, assuming of course that political relations with these and intervening countries were permitting such pipelines. More over gas is required for urea fertilizer, plastics and steel industry as well and there will be a scramble for the same. Thus gas will play a small role as it does at present (10%). Methane from Coal Beds is another source that is being explored in Eastern India. Many blocks have been auctioned to various companies and it will add a significant but still small amount to the current gas availability. Recently ONGC has drilled a R&D well for Shale Gas in PaschimBanga (West Bengal) and studies are continuing. Shale Gas has been a great new success story in energy and has meteorically risen to provide 25% of gas in US. However new environmental concerns are being raised about the chemicals that are used in hydraulic fracking to release the gas from layers deep down. Like Coal Bed Methane, Shale Gas too promises to be another source of much needed gas for India. Geophysicists tell us that India sits on a large ocean of Gas Hydrates at great depths. However the technology to exploit these is not yet available globally and they may provide a valuable gas source in the future. Hydroelectricity is a renewable source of energy, since we expect every rainy season to fill up our dams. However due to our high population density such dams lead to large scale submersion of villages and forests causing social displacement and social tension. Himalayas have great hydroelectric potential and that is why dams are being built feverishly in Bhutan, Arunachal Pradesh, Uttarakhand, Himachal Pradesh, Sikkim and Jammu & Kashmir. But Himalayas are very young mountains and there is a lot of soil erosion and the dams would be silted heavily very soon. More over the dams are affecting forests and causing submersion of agricultural land and villages there too, though on a smaller scale than in the plains as in the Narmada Basin. That is why there is already a strong opposition to these dams in the hill states even though we have tapped a very small
76

amount of this potential. Thus hydros contribution to power generation will remain at about the current levels of 20% and falling. Many NGO believes in the mantra of small is beautiful, say that mini and micro hydro projects are the answers to Indias energy problems. However, the facts on the ground show that such potential is hardly 2,500 MW and that too at a high cost per megawatt making it hardly a panacea. Recently wind farms have come up in several regions. However inherently wind in India is not enough to produce power efficiently unlike in some Nordic countries. It has been estimated that the efficiency of production from wind is around 35%-25% in Europe and North America but only about 15% in the windy regions of India. More over wind farms also require large amount of land which is a problem in land starved India. Of course one has to keep in mind that wind can only add on to an existing steady base level of production in the grid and cannot be relied upon for continuous supply. Though India has impressive figures in wind energy installation, it is a known fact that it has become a source for exploiting tax loop holes for corporations and not a serious source of electricity supply to the grid. Many people naively believe that India having been blessed with ample amounts of sun light, Solar would be a natural choice as a major source of electricity. However, converting sunlight to electricity is a very expensive process and it currently costs about 4 times the conventional. Even though the technology is more than 100 years old, a lot more advancement has to happen in basic research in new materials to convert sunlight to electricity more efficiently (currently it is only 12-16%) and cheaply. People who claim that solar is environmentally friendly do not understand that the silicon chip making process uses some of the most toxic chemicals, which are then let out as effluents. Today India is buying a lot of solar panels from China and if we decide to start fab for the same in India to lower prices then we will come across the associated environmental issues as well. Moreover, solar electricity needs to be stored in expensive and environmentally harmful lead batteries, since there is no Sun in the night. Any large scale use of solar power would lead to serious issues over disposing of the batteries. Thus environmental friendliness of solar technology is a over simplification. It is expected that further advances in science and technology of materials, efficiency and storage will happen in perhaps the next 50 years. We should also recognize that solar plants of say even a modest 100 MW require several square kilometers of land. India has developed nuclear power reactors using natural uranium and has been improving the technology in the last 40 years. India does not yet have the technology for large enriched uranium reactors and is hence planning to import them from Russia, France and US. Indian Uranium resources are of very small and of very low quality. However the opening up of international trade in nuclear materials in 2008 by the Nuclear Suppliers Group has allowed India to import Uranium from large Uranium producing countries like Kazakhstan and Russia. In the future, it can also do so from Canada and Australia. India has also developed the technology to process the radioactive waste from these reactors and extract useful plutonium from the waste. This reprocessing of fuel has largely resolved the
77

waste disposal problem, which is very serious in North America and Europe. Plutonium thus obtained has been used for making bombs as well as to develop power generation in Fast Breeder Reactors. In fact that is the reason the reprocessing technology has been strictly controlled by US and other powers. The first large Fast Breeder Reactor designed by India is soon coming online in Kalpakkam near Chennai and will take India to the cutting edge of this technology globally. India is also blessed with large amounts of Thorium. The first Thorium reactor of the world has also been designed by India and the construction of a 300 MW Thorium reactor known as AHWR will start soon. The world will be looking forward to these innovations. Nuclear reactors are small in size but need a radius of few kilometers around them to be ready for evacuation in order to diminish the danger to human life in the highly unlikely case of an accident. So far, in the nearly 42 years of operation there have been no serious accidents in Indian reactors. Todays reactors have been designed to take care of many accidental scenarios of earthquakes, tsunamis, terrorist attacks etc. that have the potential to damage the reactor core. The reactors are being designed to safely shut down in an emergency. Thus no radiation need be leaked to the environment. Uranium mining, handling, reactor maintenance are all potential sources of radiation exposure to workers. Thus extreme care has to be taken regarding prescribed safety procedures during the entire cycle. Many people ask, Is it (nuclear power) dangerous? Since radiation is invisible it leads to many irrational fears. The short answer is, Yes it is and it needs scientifically trained staff to handle it at all stages. However looking at the energy security of India in the future and considering the strengths and weaknesses of other sources of electricity available to us, which have been discussed above, nuclear remains an important source of energy security for India as our planets fossil fuels dwindle and become extremely expensive. It is also environmentally benign due to no carbon emission or fly ash disposal and other problems. Nuclear power especially with Fast Breeders and Thorium Reactors will be an important source that can provide electricity at competitive rates to the teaming Indians for more than 100 years based on our own Thorium reserves. It is clear that India cannot rely on one source of electricity: be it coal (domestic or imported); gas (domestic or imported); hydro or nuclear. The bouquet will have all these components. The weight of different components in the bouquet can change as economic costs and environmental costs vary in the future. This requires rational and pragmatic planning and not dogmas and irrational prejudices. The problems of land acquisition and rehabilitation exist in all large industrial and urbanization projects and are not peculiar to nuclear projects as in Jaitapur. The state apparatus needs to handle these sensitively. Any laymans concerns on safety, technology etc. can be addressed adequately. We need to see the energy scenario 20-50 years ahead and prepare for it while trying to address the rising expectation of people in terms of living standards and energy availability for the same.
78

11 Findings & Recommendations: With a burgeoning population, we have to recognize that resources are scarce and plan accordingly. End use efficiency, reduction of wastage and accountability has great potential for improvement. Solar PV and offshore wind energy resource can to some extent. Yet the reality is that we have to rely for the next 20 years on fossil fuel i.e. coal or natural gas. Investment in coal base electricity needs critical appraisal because of availability, land requirement, pollution, green house gas emission and ash disposal and increasing cost of environment needs critical appraisal. Natural gas based electricity generator are generally not approved because of lack of domestic availability of natural gas besides domestic gas sector has received a thrust with shale gas and Hydraulic fracking technology in US. A relook into fuel import i. e. import of coal vis a vis import of natural gas is a national imperative in view of the need for electricity keeping in view all other collateral concerns.

S. No. 1. 2.

Description Domestic gas reserves Piped Natural gas reservesA). TAPI pipeline B). Iran-Pakistan-India C). MyanmarBangladesh-India LNG Henery-hub gas market

Reserve 1075 BCM

Price 4.3 $/MMBTU

13 $/MMBTU 16 TM3 14 TM3 283.2 BM3 Worldwide huge gas reserve 16 $/MMBTU 10.15 $/MMBTU

3. 4.

79

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Projected Natural Gas Demand at 10% GDP growth rate(C) 189 205.065 222.4955 241.4076 261.9273 284.1911 308.3474 334.5569 362.9942 393.8487

Year

Projected Natural Gas Demand at 10% GDP growth rate 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 427.3259 460.6573 496.5886 535.3225 577.0776 622.0897 670.6127 722.9205 779.3082 840.0943

Domestic gas production is decreasing and not violable option for new power projects. ONGC also have recommended that domestic gas exploration is not viable bellow $7 to $8/MMBTU. Piped natural gas is better option for new power projects. Estimated timeline for gas pipeline projects to be operational-

S. No. 1. 2. 3.

Pipeline TAPI pipeline Iran- Pakistan-India pipeline Myanmar-Bangladesh-India pipeline

Estimated time to be operational 5years (By 2017) 8 years (By 2020) 4 years (By 2016)

Capacity 38 MSCMD 21.5 MSCMD 7 MSCMD

80

 Due to uncertainty of completion of pipeline gas project, LNG import is better option of fuel supply for power plants. Diesel generator can be replaced by natural gas plant- In India electricity generated by DG set- 1200 MW at cost of Rs. 12/kwh and grid power at cost of Rs 3/kwh. This market will grow at the rate of 20% for coming years. Natural gas based power plant can be used to supply uninterrupted power to some specified industries such as hospitality and healthcare. Natural gas can be used for distributed power generation-Due to heavy distribution and transmission losses (around 30%) distributed generation by natural gas is better option as it can be produced at cost of Rs. 6 to 7 per kwh.

81

12 References: Report- The planning commission of India, Integrated Energy Policy (2006), Page no.-20 Paper- Brian OKeefe (2012), Exxon big bets on Shale gas, Page no.- 43 Paper- Crish Rumely et. All (Dec. 2007), Natural gas in India, prospects for LNG imports, Page no.- 27 http://www.cea.nic.in- Monthly executive report, (06/2012) Central Electricity

Authority, Ministry of Power retrieved on 5 June 2012 from

http://www.cea.nic.in/reports/monthly/executive_rep/jun12/8.pdf

Paper Shivanand Kanevi, Energy security and India (8 Jan. 2012)

Inventory of coal resources of India, (2011) Ministry of Coal retrieved on 7 May 2012 from http://www.coal.nic.in/welcome.html. GDP growth annual (n. d.) The World Bank from http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG . Paper - Simpson, Lori Allison, Massachusetts Institute of Technology. Technology

and Policy Program, The suitability of coal gasification in India's energy sector (2006)

Paper- Abrahm Lustgarten, Nicholas and ProPublica, EPA-Natural gas fracking linked to water contamination, (Dec. 09) -Seventh offer of the block (2007) Ministry of petroleum and Natural gas retrieved on 11 May 2012 from http://petroleum.nic.in/nelp6.pdf. Natural gas (n. d.) Ministry of petroleum and Natural gas retrieved on 15 May 2012 from http://petroleum.nic.in/ng.htm Monthly crude oil prices (n. d.) retrieved on 10 May 2012 from http://www.indexmundi.com/commodities/?commodity=petroleum-priceindex&months=60. World shale gas resources (n. d.) News and information about Geology retrieved on 7 June 2012 from http://geology.com/energy/world-shale-gas/ Monthly Thermal coal prices (n. d.) retrieved on 17 May 2012 from http://www.indexmundi.com/commodities/?commodity=coal-australian&months=60.

82

Annexure-1 Table- Indian GDP and Electricity Demand Indian growth (%) 5.5 4.8 6.7 7.6 7.6 4.1 6.2 7.4 4 5.2 3.8 8.4 8.3 9.3 9.3 9.8 7.6 9.1 8.8 6.9 GDP rate Electricity Demand(MUs) 291250 305266 323252 352260 389721 413490 424505 446584 480430 507216 522537 545983 559264 591373 631554 690587 737052 777039 830594 861,591

Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

% Change 4.812361 5.891911 8.973804 10.63447 6.098979 2.66391 5.201117 7.578865 5.575422 3.020607 4.486955 2.432493 5.741296 6.794527 9.347261 6.728334 5.425262 6.892189 3.731908

Annexure -2 GONDWANA COALFIELDS State Andhra Pradesh Assam Bihar Chhattisgarh Jharkhand Madhya Pradesh Maharashtra Orissa Sikkim Proved 9296.85 0 0 12878.99 39760.73 8871.31 5489.61 24491.71 0 Geological Resources of Coal Indicated Inferred 9728.37 3029.36 2.79 0 0 160 32390.38 4010.88 32591.56 6583.69 12191.72 2062.70 3094.29 1949.51 33986.96 10680.21 58.25 42.98
83

(in Million Tonnes)

Total 22054.58 2.79 160 49280.25 78935.98 23125.73 10533.41 69158.88 101.23

Uttar Pradesh West Bengal Total

866.05 11752.54 113407.79

195.75 13131.69 137371.76

0 5070.69 33590.02

1061.80 29954.92 284369.57

Annexure -3 TERTIARY COALFIELDS State Proved Arunachal Pradesh Assam Meghalaya Nagaland Total 31.23 464.78 89.04 8.76 593.81

(in Million Tonnes)

Geological Resources of Coal Indicated Inferred Inferred(Mapping) (Exploration) 40.11 12.89 6.00 42.72 0.50 2.52 16.51 27.58 443.35 0 8.60 298.05 99.34 49.57 749.92

Total 90.23 510.52 576.48 315.41 1492.64

Annexure -4 Coal consumption patternYear 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 consumption 122,928.70 144,012.60 150,294.60 157,906.10 186,706.20 194,065.20 208,829.60 210,933.90 221,892.00 236,378.50 247,863.50 269,813.80 281,854.40 295,959.60 312,526.20 change 0 17.15% 4.36% 5.06% 18.24% 3.94% 7.61% 1.01% 5.20% 6.53% 4.86% 8.86% 4.46% 5.00% 5.60% year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 consumption 326,294.10 351,419.10 362,411.30 388,133.80 403,408.50 417,498.20 424,971.90 437,462.20 483,579.60 504,908.20 539,485.50 587,255.30 640,524.50 705,204.80 721,986.40 change 0.90% 7.70% 3.13% 7.10% 3.94% 3.49% 1.79% 2.94% 10.54% 4.41% 6.85% 8.85% 9.07% 10.10% 2.38%

84

Annexture-5 Basic Price of Run of Mine Non-Long-Flame Non-Coking Coal Field/ Co. ECL (for 12 units vide Annex II) ECL/Mugma (for 19 units vide Annex III) IV) ECL/Rajmahal (for 2 units vide) AnnexV BCC ) L CCL NCL SECL MCL A 3690 3690 3690 3690 3690 3690 3690 B 3590 3590 3590 3590 3590 3590 3590 C 1290 1500 1250 1220 1100 1050 1050 D 1040 1240 1040 1000 920 880 880 E 780 990 1020 830 790 740 730 730 (In Rupees/Tonne) F G 610 430 740 870 660 630 580 570 570 480 700 470 450 430 430 430

Annexure-6 Basic Price of Run of Mine of Other Non-Coking Coal Field/ Co. ECL / Raniganj (for 110 units vide Annex I) ECL / SP Mines (for 3 units vide Annex III) CCL (for 7 units vide Annex VI) CCL( for 16 units vide Annex VII) WCL SECL Premium Collieries Coal produced in Korea Rewa Coalfields) A 4100 B 3990 C 1820 D 1560 E 980 (In Rupees/ Tonne) F G 730 480

4100

3990

1860

1610

1080

830

580

4100

3990

1500

1250

990

750

510

4100 4100

3990 3990

1410 1410

1180 1330

1090

860 650

4100

3990

1300

1110

870

630

440

85

Annexure-7 Basic Price of Run of Mine Long-Flame Non-Coking Coal Field/ Co. ECL/Rajmahal BCCL Long Flame Coal NCL Long Flame Coal SECL Long Flame Coal of Korba &RaigarhCoalfields MCL Long Flame Coal A 4100 4100 4100 4100 B 3990 3990 3990 3990 C 1430 1280 1180 1180 D 1330 1210 1080 1010 1010 (In Rupees/Tonne) E F G -

Annexure-8 Coking Coal (Run of Mine) (Rs./Tonne) Washary Washary Washary Washary Grd I Grd II Grd III Grd IV 2740 2020 2390 1960 1710 1980 1680 1990 1620 1410 1480 1240 1470 1200 1290 1370 1150 1370 1120 -

Subsidiary BCCL(for units vide AnnexVIII) BCCL ECL CCL WCL Annexure-9 53

Steel Grd I 3750 -

Steel Grd II 3140 -

Semi Coking & Weakly Coking Coal (Run Of Mine) Subsidiary Eastern Coal fields Limited (Raniganj) South Eastern Coal fields Limited Semi Coking GrdI 215 0 174 0 (Rs./Tonne) Semi Coking GrdII 179 0 145 0

86

Annexure-10 Direct feed Coking Coal (Run of Mine) (Rs//Tonne.) Grade of Coal Direct feed Coking Coal of Collieries Listed in Annexure IX (14 Units) (Ash exceeding 20% but not exceeding 21%) Per 3720

(Note: Bonus/penalty @ Rs. 130/te. percent decrease/increase in Ash)

Annexure-11

Assam Coal (Run of Mine) Unit/ Grade of Coal North Eastern Coal fields "A" North Eastern Coal fields "B" UHV Range (K Cal/Kg.) Exceeding 6200 K cal/Kg, But not exceeding 6299 K. Cal./Kg. Exceeding 5600 K cal/Kg, But not exceeding 6200 K. Cal./Kg. (Rs./Tonne.) Price 4100 3900

Note:-In Grade "A" for every additional UHV of 100 KCal/Kg. exceeding 6299 KCal/Kg, Additional Rs.145/MT one shall be added to the price of "A" Grade. For UHV exceeding 7099 kCal./kg. the price of coal shall be Rs. 6010 per tone for ROM Coal and the price difference among the steam, slack and run of mine coal shall remain same.
Annexure-12 Crude oil Coal price Price per per metric barrel ton 65.1 60.13 65.1 60 68.19 66 73.67 72.12 70.13 74.3 76.91 73.33 Crude oil Coal price Price per per metric barrel ton 77.56 84.43 74.88 89.04 77.12 103.93 74.72 100.92 79.3 101.12 84.14 107.3

Month 12-Apr 12-May 12-Jun 12-Jul 12-Aug 12-Sep

Month 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr 87

12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr 12-May 12-Jun 12-Jul 12-Aug 12-Sep 12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr 12-May 12-Jun 12-Jul 12-Aug 12-Sep 12-Oct

82.15 91.27 89.43 90.82 93.75 101.84 109.05 122.77 131.52 132.55 114.57 99.29 72.69 54.04 41.53 43.91 41.76 46.95 50.28 58.1 69.13 64.65 71.63 68.38 74.08

80.15 90.64 97.5 98.3 141.43 126.7 131.79 142.71 171.16 192.86 169.71 160.71 115.71 98.84 84.27 85.71 80.76 65.36 68.1 69.11 76.48 79.07 77.68 72.47 76.15

12-May 12-Jun 12-Jul 12-Aug 12-Sep 12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr 12-May 12-Jun 12-Jul 12-Aug 12-Sep 12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr

75.54 74.73 74.52 75.88 76.11 81.72 84.53 90.07 92.66 97.73 108.65 116.32 108.18 105.85 107.88 100.45 100.83 99.92 105.36 104.26 106.89 112.7 117.79 113.75

107.28 105.2 102.84 96.19 101.66 104.41 114.81 126.74 141.94 137.53 135.14 131.25 126.84 127.8 128.57 127.79 131.3 127.49 121.93 117.49 124.18 123.38 112.59 107.95

Annexure-13
Month Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07

Rupee exchange rate

coal price per metric ton in Coal price per metric ton in US $ Indian rupees 60.13 2526.518 42.0176 60 2433.366 40.5561
40.5905 40.28 40.6791 40.17 39.366 39.3168

66 72.12 74.3 73.33 80.15 90.64

2678.973 2904.994 3022.457 2945.666 3155.185 3563.675

88

Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11

39.3752 39.2704 39.6724 40.1452 39.9668 41.8814 42.7633 42.723 42.9248 45.4264 48.6196 48.7905 48.4804 48.7326 49.1914 51.2062 50.06 48.55 47.75 48.4358 48.3314 48.3606 46.7192 46.5619 46.5987 45.9216 46.3472 45.4982 44.4714 45.8716 46.5758 46.8363 46.5791 45.9904 44.425 44.9986 45.1192 45.3975

97.5 98.3 141.43 126.7 131.79 142.71 171.16 192.86 169.71 160.71 115.71 98.84 84.27 85.71 80.76 65.36 68.1 69.11 76.48 79.07 77.68 72.47 76.15 84.43 89.04 103.93 100.92 101.12 107.3 107.28 105.2 102.84 96.19 101.66 104.41 114.81 126.74 141.94 89

3839.082 3860.28 5610.868 5086.397 5267.225 5976.895 7319.366 8239.558 7284.768 7300.477 5625.774 4822.453 4085.443 4176.871 3972.697 3346.837 3409.086 3355.291 3651.92 3829.819 3754.383 3504.693 3557.667 3931.221 4149.148 4772.632 4677.359 4600.778 4771.781 4921.105 4899.774 4816.645 4480.444 4675.384 4638.414 5166.289 5718.407 6443.721

Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12

45.423 44.9699 44.3954 44.9377 44.8426 44.4151 45.365 47.6585 49.2856 50.7911 52.5228 51.1976 49.1978 50.404 51.7775

137.53 135.14 131.25 126.84 127.8 128.57 127.79 131.3 127.49 121.93 117.49 124.18 123.38 112.59 107.95

6247.025 6077.232 5826.896 5699.898 5730.884 5710.449 5797.193 6257.561 6283.421 6192.959 6170.904 6357.718 6070.025 5674.986 5589.381

Annexure- 14

India's largest photovoltaic (PV) power plants Name of Plant Mithapur Solar Power Plant - Mithapur, Gujarat (Tata Power)[8] Waa Solar Power Plant - Surendranagar, Gujarat (Madhav Power)[9] Gujarat Solar Park - Charanka, Gujarat Adani Power Bitta,Gujarat Moser Baer Clean Energy Limited Banaskantha, Gujarat [12] Sivaganga Photovoltaic Plant Kolar Photovoltaic Plant Itnal Photovoltaic Plant, Belgaum Azure Power - Photovoltaic Plant DC Peak Power (MW) 25 10 214 40 30 5 3 3 2 90 GWh /year[7] Capacity factor Notes Commissioned February 2012 Commissioned December 2011 Commissioned April 2012 Commissioned January 2012 Commissioned October 2011 Completed December 2010 Completed May 2010 Completed April 2010 2009

India's largest photovoltaic (PV) power plants Name of Plant Jamuria Photovoltaic Plant NDPC Photovoltaic Plant Thyagaraj stadium Plant-Delhi Gandhinagar Solar Plant Tata - Mulshi, Maharashtra Azure Power - Sabarkantha, Gujarat Tata - Mayiladuthurai, Tamil Nadu REHPL - Sadeipali, (Bolangir) Orissa TATA - Osmanabad, Maharastra Green Infra Solar Energy Limited- Rajkot, Gujarat [26] Total DC Peak Power (MW) 2 1 1 1 3 10 1 1 1 10 363 GWh /year[7] Capacity factor 2009 2010 April, 2010 January 21, 2011 Commissioned April 2011 Commissioned June 2011 Commissioned July 2011 Commissioned July 2011 Commissioned 1st Aug 2011 Commissioned November 2011 Notes

Annexure-15
Technically Recoverable Shale Gas Resources by Country Country Algeria Argentina Australia Bolivia Brazil Canada Reserves 231 774 396 48 226 388 91

Chile China Colombia Denmark France Germany India Libya Lithuania Mexico Morocco Netherlands Norway Pakistan Paraguay Poland South Africa Sweden Tunisia Turkey Ukraine U.K. United States Uruguay Venezuela Western Sahara Total (rounded)

64 1,275 19 23 180 8 63 290 4 681 11 17 83 51 62 187 485 41 18 15 42 20 862 21 11 7 6,622

92

Company Certificate-

93