IOC faced with prob­lems in re­fin­ery, pipe­line projects

Project Monitor - - POWER - DEBDEEP CHAKRABORTY A view of a su­per ther­mal power plant in Ra­jasthan. Photo: Wikimedia Commons

With In­dia’s elec­tric­ity de­mand ex­pected to more than dou­ble in the next decade, the coun­try’s power sec­tor is con­fronted with two main chal­lenges — ad­e­quately pow­er­ing the pro­jected eco­nomic growth and bring­ing elec­tric­ity to the 300 mil­lion cit­i­zens who cur­rently lack ac­cess, ac­cord­ing to a re­cently re­leased re­port by the Paris-based In­ter­na­tional En­ergy Agency.

“Very few coun­tries have faced chal­lenges of the mag­ni­tude that con­front In­dia in its quest to main­tain strong eco­nomic growth while pro­vid­ing elec­tric­ity to its 300 mil­lion cit­i­zens who now lack ac­cess. The coun­try will need to tap all en­ergy sources and tech­nolo­gies to meet the scale of en­ergy de­mand pro­jected over the next few decades. In es­tab­lish­ing the frame­work for its low-car­bon growth strat­egy, and with fos­sil fu­els cur­rently pro­vid­ing more than three-quar­ters of elec­tric­ity gen­er­ated, In­dia will need to be mind­ful of en­vi­ron­men­tal and so­cial fac­tors,” the re­port ti­tled ‘En­ergy Tech­nol­ogy Per­spec­tives 2014 – Har­ness­ing Elec­tric­ity’s Po­ten­tial’ said, adding

IOC’s Paradip re­fin­ery will not be com­mis­sioned next month as the progress in project ex­e­cu­tion has slipped again. How­ever, rea­sons for these slip­pages are not known. The project is now likely to be com­mis­sioned in De­cem­ber.

The 15-mil­lion tpa re­fin­ery is ex­pected to cost 31,995 crore and the com­pany has al­ready spent 24,741 crore as of Fe­bru­ary 2014.

The re­fin­ery project, which re­ceived PIB ap­provals way back in 1998, has been stalled sev­eral times and was fi­nally re­vived in Fe­bru­ary 2004. The project was de­layed as IOC was un­able to find suit­able joint ven­ture part­ners for the project. The com­pany held ne­go­ti­a­tions with sev­eral in­vestors, namely Hin­du­jas, Kuwait Petroleum Cor­po­ra­tion, Petronas, Aramco and Abu Dhabi Na­tional Oil Com­pany, for eq­uity par­tic­i­pa­tion. As its search for a part­ner failed to fruc­tify, IOC fi­nally de­cided to go it alone.

Mean­while, IOC may aban­don its Na­ri­manam-Trichy pipe­line project if the Supreme Court de­cides not to al­low lay­ing the pipe­line across agri­cul­tural fields and or­ders it to lay the pipe­line only along high­ways. It may be re­called that, in a sim­i­lar case with GAIL pipe­lines, the Tamil Nadu govern­ment had an­nounced that GAIL (In­dia) Ltd would have to re-route its pipe­line along na­tional high- that the coun­try was in­creas­ing both power ca­pac­ity and gen­er­a­tion and mak­ing progress in ad­dress­ing the in­sti­tu­tional and struc­tural bar­ri­ers that ham­pered the much needed ex­pan­sion of the power sec­tor.

Fo­cus­ing on the var­i­ous chal­lenges in­clud­ing the en­v­i­ron- ways due to agri­cul­tural land fall­ing on the orig­i­nal route. The mat­ter is cur­rently pend­ing in the Supreme Court.

IOC is plan­ning to lay 120-km long pipe­lines from Cau­very Basin re­fin­ery, at Na­ri­manam in Nagapattinam district, and con­nect­ing it to the Chen­naiTrichy-Madu­rai Prod­uct men­tal is­sues be­ing faced by the In­dian power sec­tor due its con­tin­ued re­liance on fos­sil fu­els, the re­port said the coun­try would need to heav­ily sup­ple­ment its do­mes­tic sup­plies of coal and gas with im­ports which in turn was go­ing to im­pact power plant de­sign, tech­nol­ogy, Pipe­line Top in Trichy. The project in­volves lay­ing eight 625” OD pipes at an es­ti­mated cost of ` 124 crore. The LoA was is­sued to IOC in 2012 and more than 50 per cent of the work on the project has been com­pleted. How­ever, IOC is fac­ing protests from farm­ers and vil­lagers in Thanjavur district. oper­a­tion and reg­u­la­tions gov­ern­ing power tar­iffs. At present, 68 per cent of the coun­try’s elec­tric­ity comes from coal.

“At 33.1 per cent, the aver­age ef­fi­ciency of its coal-fired power plants is low and emis­sions (over 1,100 grams of CO2 per kilo­watt hour [gCO2/kWh]) are well above global state-of-the-art lev­els (750 gCO2/kWh). Poli­cies to halt con­struc­tion of sub­crit­i­cal units and en­cour­age more ef­fi­cient tech­nol­ogy are in­suf­fi­cient to achieve the CO2 emis­sions re­duc­tion needed,” the re­port said.

Sup­port­ing In­dia’s am­bi­tious plans aimed at bet­ter ex­ploit­ing the abun­dant po­ten­tial for gen­er­a­tion from wind and so­lar while also ex­pand­ing geo­ther­mal, biomass and small hy­dropower, the re­port pointed out that ex­pand­ing nu­clear and large-scale hy­dropower ca­paci- ty would as­sist in man­ag­ing con­gested grids and in­te­grat­ing vari­able re­new­ables ca­pac­ity. Cur­rently, nu­clear power con­sti­tutes a small share of the coun­try’s to­tal power gen­er­a­tion.

The re­port warned that bu­reau­cratic hur­dles and high cost of fi­nanc­ing new projects could slow down In­dia’s am­bi­tious plans in the wind and so­lar power sec­tors. To fa­cil­i­tate ca­pac­ity ex­pan­sion, it said, more ef­fec­tive pro­ce­dures needed to be de­vel­oped so that is­sues re­lated to land ac­qui­si­tion and grant of clear­ances for build­ing on or near pro­tected ar­eas got re­solved in a timely man­ner.

In or­der to ef­fi­ciently deliver power to con­sumers and en­hance the po­ten­tial for ex­pand­ing gen­er­a­tion, the re­port stressed on fur­ther ex­pan­sion of the trans­mis­sion and dis­tri­bu­tion sys­tem and their ef­fec­tive oper­a­tion.

The re­port said that power tar­iffs could be set at lev­els that prompted util­i­ties to im­prove per­for­mance of power gen­er­a­tion plants and at the same time al­lowed for rea­son­able prof­its on gen­er­a­tion. It called for re­view of the prac­tice of pro­vid­ing free or heav­ily sub­sidised elec­tric­ity.

“The pro­jected de­mand growth should make In­dia an at­trac­tive op­por­tu­nity for en­ergy sec­tor in­vestors. Ad­dress­ing the com­plex ad­min­is­tra­tive pro­cesses and in­vest­ment risks is vi­tal to bring­ing down the high cost of fi­nanc­ing new projects,” the re­port said.

The IEA is an au­ton­o­mous or­gan­i­sa­tion which works to en­sure re­li­able, af­ford­able and clean en­ergy for its 29 mem­ber coun­tries. Its main ar­eas of fo­cus are en­ergy se­cu­rity, eco­nomic de­vel­op­ment, en­vi­ron­men­tal aware­ness and en­gage­ment world­wide. In­dia is not a mem­ber of the IEA.

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