India tries harder, with foreign investors’ help, to come clean

India tries harder, with foreign investors’ help, to come clean

India is soon to be the world’s third-biggest oil consumer and will overtake Japan, International Energy Agency (IEA) estimates show. Encouragingly, India and the US have signed a Memorandum of Understanding (MoU) to establish the PACESetter Fund to support the Promoting Energy Access through Clean Energy (PEACE) to accelerate the commercialisation of off-grid clean energy. On cue, SoftBank will tie up with Bharti Enterprises and Foxconn Technology Group in a US$20 billion solar power venture in India, to add 20 gigawatts of solar generating capacity, as the nation seeks to expand clean energy output fivefold by 2022.  Read More

Oil Addiction Will Put India into Top 3 Global Guzzlers

Bloomberg reports:

India’s growing middle class will soon make it the third-biggest oil consumer, reshaping the global energy map as China uses less and the U.S. produces more.

India will overtake Japan this quarter, International Energy Agency estimates show. The country’s galloping demand growth may eventually surpass China’s, a shift that was unforeseen just a few years ago.

As living standards improve, the number of Indians buying cars and trucks has risen, boosting gasoline use by 19 percent in April alone from a year earlier. The International Monetary Fund predicts the economy will swell by 7.5 percent this year as Prime Minister Narendra Modi makes business reforms, beating Chinese growth for the first time in a quarter-century.

India “reminds me of China a decade ago,” said Amrita Sen, chief oil analyst at London-based consultants Energy Aspects. “The demand growth is unbelievable.”

The country’s unbridled thirst for oil has helped bolster crude prices as they start to recover from a six-year low. It’s a further jolt to the energy market after the U.S. shale revolution pushed Russia out of the top spot for natural gas production and paved the way for the first American exports.

The IEA estimates India will consume about 4.1 million barrels of oil a day this quarter, compared with Japanese demand of 3.8 million barrels a day. The U.S. and China are the world’s top oil users.

“India will be a big center of oil and gas demand growth in the next few years,” IEA Executive Director Maria van der Hoeven said in Vienna, where she’s attending an Organization of Petroleum Exporting Countries conference.

Japan’s consumption will drop further as nuclear power stations are restarted, replacing oil-fired plants, she said.

Price Recovery

Oil has rebounded to about $60 a barrel from $45 a barrel in January. A price of $65 would be “equitable,” Indian Oil Minister Dharmendra Pradhan said Wednesday in Vienna, where the Organization of Petroleum Exporting Countries is meeting to discuss production limits. India imports about 85 percent of its oil, with the majority coming from OPEC countries.

In April, the country’s oil use rose by about 300,000 barrels a day, similar to the growth rate seen in January and February. If that pace is maintained for the rest of the year, India may overtake China, whose annual growth is estimated at 295,000 barrels a day by the IEA.

“India is growing: We have a new government, a new confidence in the economy, people are driving more,” said Lalit Kumar Gupta, chief executive officer of Mumbai-based refiner Essar Oil Ltd. “Even with oil prices rising, demand is continuing to increase here and will keep growing.”

Car Sales

Passenger-vehicle sales rose about 16 percent in April, according to the Society of Indian Automobile Manufacturers. It expects vehicle sales to grow as much as 8 percent this financial year.

“Cars are cheap and finance is available,” said Anand Dorairajan, a 32-year-old human-resources executive at a shipping firm in Mumbai. He bought a Hyundai car eight months ago to add to the Suzuki his family already owned, paying about $11,300. “When young people start working, they want to buy a vehicle with their first salaries. That’s what I did.”

As part of his ambitions for economic growth, Prime Minister Modi has proposed an end to government controls on fuel pricing, putting more money in the hands of state-run refiners. He has called on them to expand to meet demand as he works to shift the economy more toward manufacturing from services.

New Refinery

Indian Oil Corp. started a 300,000-barrel-a-day refinery on India’s east coast in April and plans to add capacity at a plant in Gujarat in western India. Bharat Petroleum Corp. intends to expand its refinery in central India and Chennai Petroleum Corp. will boost capacity in the south.

In all, processing capacity will rise more than 30 percent to about 6.2 million barrels a day by the end of the decade, according to Oil Ministry targets.

The jump in energy consumption is reminiscent of the early days of China’s demand boom. That country’s growth in gross domestic product soared toward 10 percent in the first half of the 2000s, pushing oil use beyond Japanese demand in 2003. China’s economy will grow by an estimated 6.8 percent this year, according to the IMF.



Report from EQ International:

India & USA Launch Of A New Initiative “Promoting Energy Access Through Clean Energy (PEACE)”; Signs A MoU On Cooperation To Establish The PACESetter Fund

India and the United States of America signed a Memorandum of Understanding (MoU) on Cooperation to Establish the PACESetter Fund – A fund to support the Promoting Energy Access Through Clean Energy (PEACE) track of the U.S.-India Partnership to Advance Clean Energy (PACE) to accelerate the commercialization of off-grid clean energy through early-stage grant funding grants to develop and test innovative products, systems, and business models

The MoU was signed by Shri Upendra Tripathy, Secretary, Ministry of New and Renewable Energy from Indian side and by Shri Richard Verma, United States Ambassador to the Republic of India from USA side on 30th June, 2015 at New Delhi.The Government of India and the United States of America have announced the launch of a new initiative “Promoting Energy Access through Clean Energy (PEACE)”. This ambitious cooperation is a new tract under the U.S.-India Partnership to Advance Clean Energy (PACE), a flagship initiative on Clean Energy that combines the resources of several U.S. agencies and GOI Ministries. This has also been listed in the Joint Statement during the visit of President of USA to India in January, 2015.

India-U.S. corpus of about Rs.500 Million ($8 Million U.S. Dollars) have been drawn on 50:50 sharing basis.Under this, a Steering Committee comprising the Secretary of the Ministry of New and Renewable Energy and the United States Ambassador to India, and three representatives from each side has been constituted.It was agreed to cooperate through technical and commercial innovation and the advancement of clean energy in off-grid space.


SoftBank plans $20 billion Indian solar power joint venture

Japan Times reports:

SoftBank Corp. will tie up with Bharti Enterprises Pvt. and Foxconn Technology Group in a $20 billion solar power venture in India, as the nation seeks to expand clean energy output about fivefold by 2022.

The project will aim to add 20 gigawatts of solar generating capacity, SoftBank’s billionaire founder Masayoshi Son said at a briefing in New Delhi on Monday. He spoke alongside Bharti’s Sunil Mittal, who said SoftBank will control the venture, with Bharti and Foxconn having minority stakes.

Indian Prime Minister Narendra Modi’s goal is for India to have 100 gigawatts of solar capacity to curb blackouts and pollution, up from 4.1 gigawatts now. The challenge is finding the $94 billion needed to pay for a clean-energy overhaul that reduces India’s reliance on dirty, coal-fired plants. Son’s venture, if successful, would account for a fifth of Modi’s objective.

“The question is whether Japanese investors can get comfortable with the Indian market, where local companies have been bidding extremely aggressively in tenders, and there are risks around land ownership and transmission build that may not be what SoftBank is used to in Japan,” said Vandana Gombar of Bloomberg New Energy Finance in New Delhi. Still, “there is no shortage of opportunity in India.”

SoftBank shares have gained 2.7 percent this year, compared with the 18 percent gain for the Nikkei 225 stock average.

Son said he will aim to invest $20 billion over the next decade, with the pace depending on the cooperation he receives from India’s central and state governments.

India has two times more sunshine than Japan, with construction costs for solar parks half those of Japan, Son said. “Twice the sunshine, half the cost; that means four times more efficient,” Son said. “So it makes a lot of sense to create large-scale solar power generation.”

The new venture will look at potential sites in Rajasthan and Andhra Pradesh states, Mittal said. It also will aim to manufacture solar panels in India.

The intention is to start the first project in 1 to 1½ years, Mittal said.

“Finding good projects is a challenge for every developer, and spending $20 billion on good projects may not be easy,” Gombar said.

Son said SoftBank can bring its experience of the solar industry in Japan to India, adding the company has invested $1 billion in Asia’s third-largest economy in the past nine months.

Japan is the second-largest market for solar cells, after China. India ranks fifth.

Modi’s solar ambition encompasses both rooftop projects and utility-scale plants. Adani Enterprises Ltd., Reliance Power Ltd. and SunEdison Inc. are among those pledging investment. Trina Solar Ltd. said last week that it plans a $500 million solar plant with India’s Welspun Energy Ltd.

Telecommunications company SoftBank set up a unit in 2011, SB Energy Corp., to develop clean energy projects following the Fukushima nuclear disaster in Japan the same year.

Mittal’s Bharti Airtel Ltd. is India’s biggest wireless provider. SoftBank has stakes in more than 1,000 companies, including an Indian chat application venture with Bharti.

The largest member of Terry Gou’s Taiwanese group Foxconn is Hon Hai Precision Industry Co., maker of Apple Inc. iPhones.

A gigawatt, or one thousand megawatts, is about the amount of power produced by one nuclear reactor.


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