The Energy Regulation and Markets Review - Stikeman Elliott

India
(a consortium of public and private stakeholders) to accelerate the development of
smartgrid technologies. According to media reports, the Ministry of Power is in the
process of finalising and implementing smartgrid technology-related projects on a pilot
basis. These pilot projects will focus on areas such as integration of renewable energy
sources with the grid, reduction of aggregate technical and commercial losses and peak
load management.
VIi
THE YEAR IN REVIEW
The past year has been significant in terms of the government as well as state governments
prioritising renewable energy and enhancing competitiveness. On account of the new
CERC regulations for interstate transmission charges, wheeling power from large
projects to customers across longer distances is expected to become cheaper and is also
expected to bolster spot market trading. The Ministry of Power’s direction to the CERC
to draft regulations to take bulk consumers outside the purview of regulated tariff in a
distribution licensee’s area could be a significant move in terms of increasing competition
and efficiency.
In the context of thermal energy, despite the ongoing uncertainty over assured
supplies of coal, coal-based thermal power projects remain the mainstay of the Indian
energy sector accounting for well over half of India’s annual generation of electricity. In
order to address existing uncertainty over the coal supply, the Ministry of Coal directed
Coal India Limited (‘CIL’) and its subsidiaries to enter into fuel supply agreements by
31 March 2012 (for projects commissioned after 31 March 2009 and those scheduled to
be commissioned by 31 March 2015). CIL, however, did not adhere to these directions.
Consequently, a decree was issued by the President of India on 3 April 2012 directing CIL
to give effect to the Ministry of Coal’s directions. While the legality of the presidential
decree may be questionable, such an action by the government does display its approach
toward energy issues.
On the oil and gas front, with the aim of overcoming problems such as availability
of gas, access (due to unidirectional flow) and need for specific gas type, the MoPNG
recently approved guidelines for gas-swapping transactions.
The PNGRB’s recent determination (in April 2012) of network tariff and
compression charges payable for use of CGD networks in Delhi has created a flurry, due
to significant reduction from the provisional tariff and retrospective application of the
recent tariff determination from 2008 (i.e., from when the CGD tariff regulations were
notified).
The MoPNG has been in the process of preparing the policy for allowing bidding
on shale gas projects and is expected to announce it by early 2013, which will be followed
by the first round of bidding. As in the United States, shale gas may hold the potential of
enhancing gas availability in India, reducing the reliance on imports.
Media reports suggest that the MoPNG is likely to offer the 10th round of
exploration blocks under the NELP in 2012.
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