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Zuari to set up gas turbine & ammonia storage as part of its fert blending project

Oct 1: The Ministry of Environment and Forests (MOEF)-constituted expert panel for industrial projects has approved amendments to the terms of reference (TOR) for environment impact assessment (EIA) studies on Zuari’s fertilizer blending unit and extension of its validity by one year.
8Amended TOR provides for incorporation of 25 MW gas turbine (GT),heat recovery steam generator (HRSG) generation and one 5000-tonnes atmosphere ammonia storage tank in the project.
8The project, as originally envisaged, provides for setting up of fertilizer blending unit with an investment of Rs 50 crore. The unit would have capacity to produce 30 tonnes/hour of customized grades of complex fertilizers at Zuari’s existing fertilizer complex in Goa.
8After the enlarged scope of the project, its cost has been revised to Rs 288.86 crore.
8TOR was originally issued in March 2013 under the name Zuari Holdings Limited (ZHL) that was later changed to Zuari Agro Chemicals Ltd (ZACL).

PNGRB seek public consultations gas pipeline tariff alternatives

Oct 1: Petroleum and Natural Gas Regulatory Board (PNGRB) has issued a draft consultation paper on ‘Structure of Natural Gas Pipeline Tariff’ to seek stakeholders’ views on four methods of recovery of pipeline tariff and related issues.
8The four different methods for the recovery of the computed, levelized transportation tariff over the life of the pipeline are: (i) Postalized recovery of tariff; (ii) Zonal recovery of tariff; (iii) Telescopic recovery of tariff and (iv) Entry Exit recovery of tariff .
8The Paper says: “The tariff structures, while they may result in differential tariffs, lead to the same overall revenue realisation for the pipeline operators computed on the basis of the levelized tariff and capacity of the pipeline.”
8It adds: “PNGRB has been receiving inputs regarding the current zonal transportation tariff structure for recovery of transportation charges for existing as well as bid out pipelines. The purpose of this discussion paper is to elicit responses regarding the current (i.e. zonal and postal within zone) tariff structure and other alternative methods of recovery of pipeline tariff.”
8The Paper has disclosed that PNGRB has received a communication dated 29th August 2014 from the Ministry of Petroleum & Natural Gas on this subject.
8The Ministry has suggested that the transportation tariff design should aim to achieve six objectives. These are: “(i) The tariff should reflect the real cost of gas transportation incurred by pipeline entities; (ii) It should be just, equitable and non-discriminatory between different network users in different locations; (iii) It should be competitive and at the same time should provide level playing field to all gas marketers, regardless of location of gas source and end users; (iv) It should promote efficient and optimum use of gas pipeline transport system; (v) It should promote network expansion across the country and should avoid any iscrimination between existing and new users and (vi) It should be transparent, predictable and easy to understand for implementation by considering all possible kinds of gas transportation arrangements involving, inter-alia Swapping, Clubbing and Diversion arrangements.”
8PNGRB has so far determined provisional tariff for 19 natural gas pipelines. Of these, 11 pipelines are of a length less than 300 kms hence they do not have a zonal tariff structure and operate on a single tariff. The remaining 8 pipelines of length greater than 300 kms operate on zonal tariffs. In the case of 4 of these 8 pipelines, the average of the variation between each zonal tariff and the levelized tariff is less than 1 percent and in case of the remaining 4 pipelines this average ranges between 10 to 25 percent.

RCF seeks consultancy for diversification, supply chain review & for a growth roadmap for Trombay complex

Sept 30: Rashtriya Chemicals and Fertilisers Limited (RCF) has invited bids from select consultancy firms for evaluating prospects for diversification in specified areas, developing strategic plan for its Trombay complex and identifying opportunities for improvement in Fertilizer supply chain.
8The company says: “This tender is issued on a limited basis and is published on the Company’s web-site and CPP portal for INFORMATION only. Unsolicited bids will not be accepted in this tender.”
8RCF has divided the scope of work for consultant into three work streams that shall be followed in parallel. The first work stream envisages development of a strategic plan for Trombay production complex after reviewing operation of existing plants, exploration improvements in their operations and studying prospects of manufacture of new products.
8The second work stream provides for assessment of prospects for diversification by the company into six specified areas including seeds, pesticides and specialty chemicals.
8The third work stream requires the consultant to carry out a review of supply chain and logistics strategies for fertilizers and identified diversification opportunities.

STC & MMTC separately scout for agents for Fert Exports to Nepal

Sept 30: State Trading Corporation of India Limited (STC) and MMTC Limited have invited separate expression of interest (EOIs) from Nepalese entities for appointment as their respective agents for fertilizer exports to Nepal.
8For MMTC, this is a second attempt to select an agent for its Nepalese fertilizers business. Towards July-end, it had solicited EOIs for the same assignment.
8According to STC’s EOI document, “STC is considering for appointment of a reputed well-established organization in Nepal to act as an agent of STC for export of Fertilizers to Nepal. The agent is expected to have adequate experience in similar fields and is expected to liaise with all concerned Government Departments and Agencies in Nepal. The engagement as agent shall be purely on contractual basis for an initial period of one year from the date of appointment which may be extended further for another one year at the sole discretion of STC based on the satisfactory performance of the agent.”
8MMTC Invite says: “MMTC is considering appointment of a reputed well-established Organization in Nepal to act as an agent of MMTC for export of fertilizers to Nepal. The agent is expected to have adequate experience in similar fields and is expected to liaise with all concerned Government Departments and agencies in Nepal. The engagement as agent shall be purely on contractual basis for an initial period of two years which may be extended based on performance.”

Gas pooling for power sector-I: PMO exercise indicates a base gas price of $4.2/mmbtu

Sept 29: The Prime Minister's Office and the petroleum and power ministries have assumed a base gas price of $6.5/mmbtu for conducting a series of calculations for pooled gas prices for the power sector.
8When tariff rates, service tax, VAT and CST are included, the price comes to $7.98/mmbtu.
8There are strong indications from this exercise that the delivered price of gas that the government is contemplating is around $8/mmbtu.
8Another exercise has been done assuming a price tag of $4.20/mmbtu for existing gas and $6.50/mmbtu for new gas.
8Shortfall in domestic as supply coupled with high prices for domestic and imported gas have rendered gas based power projects non operational. Considering pooling of gas prices as a step in the right direction, the Prime Minister Office has come out with a series of calculations for pooled gas prices.
8The exercise involves pooling of domestic and LNG prices to provide a viable gas price to kick start stranded gas based power plants with the aim of selling the power at a ceiling price of Rs 5.50/kwh.
8The gap between the price of gas and of electricity is sought to be plugged through a series of tax concessions.

Gas pooling for power sector-II: Problems galore for gas based projects

Sept 29: The proposal to implement pooling of gas prices is gaining currency as the current situation of the gas based power plants worsens.
8Against a requirement of 63 mmscmd of gas only 21 mmscmd is available leaving the gas based plants non-operational for want of gas.
8RLNG being supplied at $17.38/mmbtu is a costly option and the power developers are reluctant to use imported gas as expensive power does not get scheduled in the merit order of despatch.
8Low gas availability has forced gas based power plants to operate at a extremely low PLF of 19% to 21% making gas based power generation an unviable option.
8Currently, 8,044 MW of gas based capacity is using APM and operating at PLF of 19% while 6,996 MW capacity is dependent on NELP gas (substantially KG D6) and therefore non-operational as no gas is being made available from this quota.
8Moreover, 1,584 MW capacity is commissioned and is awaiting gas allocation.
8Another 7,525 MW capacity is ready for commissioning.
8The current scenario has forced the government to scout for options for reviving the gas based power generation and not letting the existing capacity or investment go waste.
 (Click on 'Details' for more information)

Gas pooling for power sector-III: Gas supply low in next two years, but jump likely thereafter

Sept 29: The shortfall in gas supply which has adversely affected power generation and has put many gas based power projects on the brink of turning into an NPA is expected to continue for two years. However, the PMO, is hopeful of a turnaround in gas supply situation in FY17.
8The incremental additional availability in the country in 2014-15 is pegged at a mere 3.95 mmscmd and only slightly above at 5.78 mmscmd in 2015-16.
8However, projections show gas availability jumping to 33.628 mmscmd in 2016-17.
8These figures paint a very optimistic picture with gas supply increasing by almost six times within a year's time.
8The incremental gas supply will go up by 44.078 mmscmd in 2017-18
8RLNG supply too is expected to move up from 61.2 mmscmd in 2014-15 to 72 mmscmd in 2015-16, and then to 117 and 147 mmscmd in the subsequent two years.
8Incremental supply is expected from Petronet's Dahej terminal, Hazira LNG's Hazira terminal, GAIL's Dhabol terminal.
8Additionally, commissioning of Petronet's Kochi terminal, PLL's Gangavaram terminal and APGDC's Kakinada terminal will help bring in greater gas imports.
 (Click on 'Details' for more information)

Gas pooling for power sector-IV: Assumptions under PMO model

Sept 29: In its latest calculations of pooled gas price, the Prime Minister Office (PMO) has taken the following assumptions:
8Pooling will mix cheaper APM/NELP gas with expensive RLNG and supply this to all users at a common rate.
8The price would be higher for current users and the power may be too expensive. Cost sharing mechanism will be worked out.
8All incremental NELP gas production will be allocated to the power sector.
8Price of domestic gas is pegged at $ 7.96/mmbtu ($6.5 + margins/tariffs + taxes).
8Price of imported RLNG is taken to be $ 17.38/mmbtu ($13.5 + others).
8PLF target for gas based power plants is 65%
8Fixed price cost is Rs 0.91/KWh.
8The sale price of the power is capped at Rs 5.5/KWh.
 (Click on 'Details' for more information)

Gas pooling for power sector-V: Revenue gap of Rs 30,000 crore to be plugged through various means

Sept 29: Pooled gas prices are calculated by taking the weighted average annual pooled price of between $11.43/ mmbtu and $13.79/ mmbtu for the period 2014-15 to 2017-18. The price of power will be capped at Rs 5.5/KWh.  At this price, the revenue gap is expected to be approximately Rs 30,000 crore over this period.
8The Prime Minister Office (PMO) is considering various measures to plug this staggering revenue gap.
8Lowering the fixed cost from the assumed Rs 0.91/KWh to Rs 0.85/KWh will only result in savings of Rs 1,400 crore.
8In addition to this, a waiver of 14.5% VAT on sale of gas will also help fill the revenue gap to the tune of Rs 13,100 crore.
8If the CST currently applicable on inter state sales is removed then the revenue gap will be down by another Rs 2,100 crore.
8Custom Duty waiver is another way of reducing the adverse financial impact by a significant Rs 3,634 crore. While custom duty waiver was agreed to by the Ministry of Finance earlier it was not implemented due to administrative issues. A suitable mechanism could not be developed by the ministry for refund of custom duty.
8While a 20% reduction in pipeline tariff will help save Rs 1,800 crore, but it is assumed that the proposal is unlikely to be implemented as the tariff is fixed by the PNGRB and any reduction in tariff will have a major impact on transporter.
8The PMO has also suggested that the balance gap could be filled with support from a green energy cess. With lower gas availability and higher pooled prices in the first two years of the pooling proposal, there will be a need to fund approximately Rs 2,500 crore and Rs 3,321 crore through the cess.
8However, with improvement in gas supply and decline in pooled prices expected in FY17 and FY18, the PMO calculations show that surplus amount will be returned to the green energy fund.
 (Click on 'Details' for more information)

NFL gears up to implement pilot project of DOF's mFMS Phase-II scheme

Sept 29: National Fertilizers Limited (NFL) has invited bids for development and implementation of mFMS Phase- II Pilot Project at in Sehore district of Madhya Pradesh as per the mandate given by The Department of Fertilizers (DOF).
8According to NFL, “as fertilizer is an important ingredient for agriculture production, to ensure information visibility across the Supply Chain, Mobile based Fertilizer Monitoring System (mFMS) has been introduced by the DoF, Government of India. This will cover stock reporting by manufacturers, wholesalers and retailers and receipt and sales confirmation by wholesaler and retailers.”
8It says: “NIC is the executing organisation of the project and Deptt. of Fertilizers is its owner. All fertilizer manufacturers were directed to adopt mFMS with FMS also running in parallel. A few Lead Fertilizer Suppliers (LFS) have been entrusted with the implementation of the Pilot Project for mFMS Phase-II i.e. the Sales from Retailer to Farmer.”
8DOF had assigned two such projects to NFL - one in SBS Nagar (Nawanshahar) district of Punjab that was launched in Jul’2014 and the 2nd one in Sehore.
8The scope of the work of prospective contractor would include software development and implementation as required for mFMS Phase-II Pilot Project solution at Sehore district of Madhya Pradesh. The contractor shall deploy all the resources required like manpower, scanning devices, mobile applications etc. to capture, digitize and upload data to mFMS etc. as required for the implementation of project.
8The contractor would also study the set-up of Dealers in the District covering Retailers and their spread in the district and their role in the supply chain of fertilizer. This would involve assessing the infrastructure and IT awareness of Retailers so that corresponding training needs can be mapped. The assignment provides for development and implementation of the software to manage field operations, digital capturing of the retailer’s sales data, application for digitization of data and intermediate server to do the de-dup checks, data mining, trend analysis and exceptions management, maker/checker concept for data approval (if required), integration with govt system to upload the approved data to the DoF’s system.
8As reported earlier, under the ICT-enabled mobile Fertilizer Monitoring System (mFMS), fertilizer buyers would be identified either through Aadhar number & Kisan Credit Card or Core Banking Account.

Agro Phos to set up SSP unit in Madhya Pradesh

Sept 29: Agro Phos (India) Limited has proposed to set up a single super phosphate (SSP) plant in Jabhua district of Madhya Pradesh.
8The plant will have a capacity to manufacture 115,000 tonnes per annum (tpa) of powder SSP/granulated SSP and 3300 tpa of di calcium phosphate. It would rely on outsourced sulphuric acid.
8The company has submitted environment impact assessment report to MP authorities in the run-up to securing environmental clearance for the project.

DOF eyes CCEA nod for a fresh initiative to promote SSP units

Sept 26: The Department of Fertilizes (DOF) is contemplating fresh policy push for growth of single super phosphate (SSP) industry and application of this indigenous fertilizer.
8In its Results Framework Document (RFD) for 2014-15, DOF has disclosed that it is targeting to secure Cabinet Committee on Economic Affairs’ (CCEA’s) approval for a a “policy note for promotion of SSP industry in the country” in the current fiscal year.
8DOF is also working on a CCEA note on “Long-Term Contracts for Procurement of P&K Fertilizers/Raw Materials” for which it would strive for approval during the remaining part of the year beginning 31st August 2014.
8The Department would also like to facilitate formation of two overseas fertilizer joint ventures during the period beginning 31st October 2014.
8RFD also contains information on several other proposals of DOF and the timelines during which it would like to put them in place during 2014-15.

Sept 26: DOF eyes CCEA nod for urea policy reforms in Q4 2014-15   Details
Sept 25: RPL's fert expansion project to make recycle & reuse its operational mantra   Details
Sept 24: Dr. Mallya might lose MCFL chairmanship if the willful defaulter tag is upheld by the judiciary   Details
Sept 24: FACT hits capacity barrier with sole reliance on imported ammonia   Details
Sept 23: India runs into trouble dealing with Iran: India looks for a better gas price than $2.9/mmbtu for urea plant   Details
Sept 23: SPIC mulls dual feedstock option for its fertilizer plant   Details
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