Core sector growth at 5.2 % pushed by cement, coal, electricity - Business Guardian
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Core sector growth at 5.2 % pushed by cement, coal, electricity



India’s eight infrastructure sector grew 5.2 per cent in March 2024 driven by positive growth in production of cement, coal, electricity, natural gas, steel and crude oil as compared to March 2023. The combined index of eight core industries (ICI) which measures the combined and individual performance of the production of eight core industries — cement, coal, crude oil, electricity, fertilizers, natural gas, refinery products and steel – “eased to 5.2 per cent with five of the components reporting a flattening trend in the sequential months,” notes Aditi Nayar, Chief Economist ICRA.

Cement production increased by 10.6 per cent in March 2024 over March 2023, coal production increased by 8.7 per cent yoy and electricity generation increased by 8.0 per cent in March 2024, displaying healthy expansion and maintained a robust pace in April 2024, with rising heat likely boosting agricultural and household demand, notes Nayar. Crude oil increased by 2.0 per cent yoy, but two segments displayed a contraction, namely petroleum refinery products with production declining by 0.3 per cent and fertilisers production declining by 1.3 per cent in March 2024 over March, 2023.

Natural gas production increased by 6.3 per cent yoy. Steel production increased by 5.5 per cent in March, 2024 over March, 2023. Its cumulative index increased by 12.3 per cent during 2023-24 over corresponding period of the previous year. Nayar expects IIP growth to moderate somewhat in March 2024, as the leap year effect fades at 3.5-5 per cent in March 2024.

This was on account of the reduction in gas cost by 6 per cent yoy due to easing of APM gas price and efficient gas sourcing. This helped ATGL pass on the benefit of lower gas price to consumers. For the quarter the company achieved 59 per cent increase in net profit at Rs 165 crore, 49 per cent increase in EBIDTA at Rs 305 crore and revenue from operations atRs 1,257 crore.

In terms of operations, the overall volume was up by 20 per cent yoy in Q4 FY24 and the CNG network increases to 547 stations inclusive of 108 DODO/CODO stations. The PNG household increased to 8.20 lakh homes. The year saw Barsana CBG plant phase 1 commissioned and spread of 606 EV charging points across 14 states. Suresh P Manglani, ED & CEO of Adani Total Gas credits the transformative year for ATGL to a robust operational and financial performance.

The company is on track to invest in creating world class infrastructure across its geographical areas (GAs) and diversifying into areas adjacent to core CGD business. According to Manglani, the company is incubating new business opportunities in the areas of compressed biogas, EV charging infrastructure, and lng for trucking and mining (LTM).

During the quarter, it commissioned the first phase of one of the India’s largest diversified feedstock-to-CBG plant at Barsana in Mathura and also expanded the e-mobility footprint to 23 states. “These, along with LTM are the next big growth drivers and ATGL is steadily executing a sustainable business plan around these neo-opportunities,” said Manglani.

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India cuts oil windfall tax again, now down to Rs 5,700 per tonne



The central government has implemented a reduction in the windfall tax imposed on crude petroleum, as per a recent government notification. Effective immediately, the special additional excise duty (SAED) on crude petroleum has been decreased from Rs 8,400 per tonne to Rs 5,700 per tonne.

This adjustment in taxation, which is subject to revision every fortnight, maintains the special additional excise duty (SAED) at zero for diesel and aviation turbine fuel, keeping it unchanged.

The government’s decision to lower the windfall tax on petroleum crude follows a series of adjustments in recent weeks. On May 1, the windfall tax on petroleum crude was set at Rs 8,400 per ton, down from its previous level of Rs 9,600 per ton. However, just earlier on April 16, the government had raised the windfall tax on petroleum crude to Rs 9,600 per ton from Rs 6,800.

A windfall tax is levied on unexpectedly large profits, aiming to regulate situations where companies experience unforeseen or unusually high gains. In India, this tax was introduced in July 2022, targeting crude oil producers and exports of gasoline, diesel, and aviation fuel. Its implementation was reportedly in response to efforts by private refiners to prioritize overseas sales over domestic distribution, seeking to capitalize on favourable refining margins.

The rationale behind the windfall tax lies in its role as a mechanism to mitigate potential distortions in the market and ensure a level playing field among industry participants. By imposing taxes on windfall profits, the government aims to discourage excessive gains resulting from exceptional market conditions, thereby promoting fair and equitable economic outcomes.

The reduction in the windfall tax on crude petroleum signifies a nuanced approach by the government to balance revenue generation with industry dynamics. While the tax reduction may provide some relief to petroleum producers, it also reflects the government’s responsiveness to evolving market conditions and its commitment to fostering a conducive environment for economic growth.

Furthermore, the decision to maintain the special additional excise duty (SAED) at zero for diesel and aviation turbine fuel underscores the government’s strategic considerations in addressing sector-specific challenges and priorities. By refraining from imposing additional taxes on these essential fuels, the government aims to support sectors critical to sustaining economic activities and ensuring smooth transportation networks.

Looking ahead, the trajectory of the windfall tax on petroleum crude is likely to remain contingent on various factors, including global market dynamics, domestic demand-supply dynamics, and fiscal considerations. As the government continues to monitor these variables, future adjustments in taxation policies may be warranted to align with broader economic objectives and industry imperatives.

In summary, the central government’s decision to reduce the windfall tax on crude petroleum reflects a nuanced approach to taxation and economic management. While aimed at ensuring fairness and stability in the petroleum sector, this measure also underscores the government’s responsiveness to changing market conditions and its commitment to fostering a conducive environment for sustainable economic growth.

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India Showcases Green Hydrogen Progress at Global Event



India’s participation in the World Hydrogen Summit highlights its dedication to propelling sustainable energy solutions amidst a global gathering of over 15,000 delegates.

India’s presence at the World Hydrogen Summit 2024 in Rotterdam marks a significant milestone as the nation makes its debut with a sprawling pavilion, organized by the Ministry of New and Renewable Energy. This pavilion, touted as one of the largest at the summit, serves as a platform to showcase India’s strides in the domain of Green Hydrogen, a crucial component in the global green energy landscape.

With over 15,000 delegates converging from across the globe, the World Hydrogen Summit is a prestigious gathering fostering discussions on the future of green hydrogen. India’s participation underscores its commitment to advancing sustainable energy solutions on the global stage.

The Indian delegation boasts representatives from key ministries including New and Renewable Energy, Science and Technology, Railways, Petroleum and Natural Gas, alongside participants from private sector entities. This diverse representation facilitates not only government-to-government engagements but also enables Indian industries to forge partnerships with global counterparts.

India’s National Green Hydrogen Mission, launched in January 2023 with a significant allocation of Rs 19,744 crores, epitomizes the nation’s ambitious targets in this sphere. By aiming to achieve a green hydrogen production capacity of 5 million tonnes by 2030, India is aligning itself with global efforts towards sustainable energy transitions.

As of now, the Ministry of New and Renewable Energy has already awarded tenders for establishing 412,000 tonnes of Green Hydrogen production capacity and 1,500 MW of electrolyzer manufacturing capacity, demonstrating tangible progress towards these goals.

India’s pursuit of green energy alternatives is underscored by its commitments made at COP26 in 2021. The “Panchamrit” pledge outlines a multifaceted approach encompassing the expansion of non-fossil electricity capacity to 500 GW, generating half of all energy from renewables, and reducing emissions by 1 billion tonnes by 2030.

Furthermore, India aims to slash emissions intensity of GDP by 45 percent and achieve net-zero emissions by 2070. Union Minister RK Singh, overseeing power and renewable portfolios, emphasized that India’s current reliance on non-fossil energy sources stands at 44 percent, surpassing expectations set at COP26. Projections suggest this figure could surge to 65 percent by 2030, underscoring India’s unwavering commitment to sustainable development.

The World Hydrogen Summit serves as a testament to India’s evolving role in the global green energy discourse. By leveraging platforms like these, India not only showcases its technological advancements but also fosters collaborations crucial for driving the transition towards a sustainable future.

As discussions unfold at the summit, India’s participation is poised to catalyze synergies, accelerate innovation, and propel the nation towards its green energy objectives. With concerted efforts and strategic initiatives, India is poised to emerge as a key player in the global hydrogen ecosystem, contributing significantly to the collective endeavor for a greener, more sustainable planet.

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Govt plans interstate bus electrification with route charging



The government is aiming to introduce electric buses on long-distance routes and may offer incentives to promote their adoption.

The government plans to introduce electric buses on long-distance routes, potentially offering incentives to boost their adoption. This initiative focuses on interstate passenger travel, targeting the current fleet of 1.25-1.45 million buses, of which about 250,000 are state-controlled. Most of these buses currently rely on diesel, and transitioning to electric models would notably reduce emissions, according to the report.

To support this initiative, the government plans to expand charging infrastructure along highways, including fast chargers on major routes connecting urban centers. Additionally, a roadmap for assisting state governments in purchasing electric buses for long-distance operations is in development.

Citing a government official, electric buses are viable for continuous travel of up to eight to nine hours, and incentives are being considered to facilitate their widespread use. While electric buses are currently subsidized for urban transportation under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (Fame India) Scheme, the government may introduce a similar scheme or extend the existing one to cover interstate transport.

Efforts are also underway to encourage private bus fleet operators, as well as institutional buyers such as schools and colleges, to transition to electric mobility. The official highlighted the potential for electric school buses, which typically operate for short durations within cities, to contribute to this shift and mentioned the consideration of incentives for private players to adopt electric buses.

In December last year, reports emerged that the government was devising a plan to replace 800,000 diesel buses, which make up around one-third of all buses on roads, with electric ones over the next seven years. The replacement strategy was to involve deploying 200,000 electric buses for state transport undertakings (STUs), 550,000 for private operators, and 50,000 for schools and employee transportation by 2030.

The Ministry of Heavy Industries initiated the Fame India scheme in 2015. In 2019, the scheme received funding of Rs 10,000 crore for three years. The official deadline for Fame II was March 2024.

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India faces power crunch in June, worst shortage in over a decade



India is facing its most significant power shortfall in 14 years for June, attributed to a decline in hydropower generation and delays in commissioning new coal-fired plants. To mitigate potential outages, the government is deferring planned plant maintenance and re-opening idled units.

The Central Electricity Authority (CEA) forecasts a peak shortage of 14 GW in June, particularly during nighttime when solar capacity is offline. This gap, the widest since 2009-10, has prompted urgent measures by the Power Minister, R K Singh, who deferred shutdowns for maintenance and revived 5 GW of idled coal plant capacity.

The Ministry emphasizes that all efforts are being made to maximize generation to meet power demand adequately. Grid-India projects a maximum nighttime demand of 235 GW in June, with approximately 187 GW of thermal capacity and 34 GW from renewable sources available. These figures highlight the challenge of balancing supply and demand amidst growing energy needs.

The power ministry recently invoked emergency measures to ensure gas-based and imported coal-based power plants operate at full capacity. This move underscores the government’s commitment to addressing the immediate power crisis while navigating its long-term energy transition goals.

India’s reliance on coal has been a subject of debate, with efforts to balance energy security with environmental sustainability. Prime Minister Narendra Modi’s administration has prioritized the green energy transition, aiming to achieve net-zero emissions by 2070. However, plans for new coal power plants gained momentum last year, highlighting the complexity of transitioning away from coal dependence.

Existing coal-fired and solar plants are expected to play a crucial role in meeting electricity demand, particularly during daytime hours. While the government is striving to bridge the power deficit, challenges remain in ensuring reliable and sustainable energy supply for India’s growing population and economy.

The current power shortfall underscores the need for strategic planning and investment in diverse energy sources to enhance resilience against future disruptions. As India navigates its energy transition journey, balancing short-term energy needs with long-term sustainability goals will be crucial for ensuring a stable and prosperous energy future.

The power shortfall in India serves as a wake-up call, highlighting the urgent need for diversified energy sources and robust infrastructure to meet growing demand while transitioning towards cleaner energy alternatives. The government’s swift response in deferring maintenance and reviving idle coal plants underscores the importance of agility in managing energy crises.

However, the reliance on coal-fired power generation presents challenges in achieving environmental sustainability and meeting ambitious emission reduction targets. Prime Minister Modi’s administration’s commitment to the green energy transition signals a shift towards cleaner and more sustainable energy solutions, but the pace of implementation remains a concern.

As India grapples with its energy challenges, it must prioritize investments in renewable energy infrastructure, grid modernization, and energy storage technologies to build a resilient and sustainable energy ecosystem. Collaborative efforts between government, industry, and civil society are essential to drive innovation, improve energy efficiency, and accelerate the adoption of renewable energy sources.

By embracing renewable energy technologies and implementing comprehensive energy policies, India can mitigate its dependence on fossil fuels, reduce greenhouse gas emissions, and pave the way for a cleaner, more sustainable energy future.

This transition will not only address the immediate power shortfall but also contribute to India’s long-term economic growth, environmental stewardship, and global leadership in combating climate change.

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LNG trading booms in anticipation of India’s needs



In April, liquefied natural gas (LNG) futures trading volumes experienced a significant surge amidst rising demand and geopolitical tensions, indicating robust activity in anticipation of the upcoming summer season. India, a key player in the global LNG market, has witnessed a steady increase in LNG imports driven by various sectors such as power, industry, and transportation.

Data from March 2024 revealed that India’s total LNG imports, including both long-term contracts and spot purchases, amounted to 1.9 million metric tonnes (MMT), valued at USD 1113 million. Over the fiscal year 2023-24, India’s cumulative LNG imports reached 23.3 MMT, totaling USD 13266 million. Forecasts suggest a further 7-8% increase in LNG imports in 2024, driven by growing demand and ongoing infrastructure development initiatives.

India’s aspirations to enhance its LNG import capacity align with its goal to increase the share of natural gas in its energy mix to 15% by 2030, aiming to reduce reliance on more polluting fossil fuels like coal and oil. Market data from S&P Global Commodity Insights indicated a significant uptick in Japan Korea Marker (JKM) LNG futures and JKM LNG balance-month next-day futures trading volumes in April, reflecting heightened market activity.

According to the Intercontinental Exchange (ICE), LNG futures trading volumes experienced a notable month-on-month increase of 5.65% and a remarkable year-on-year rise of 134.43%, with 87,209 lots cleared. These derivative contracts, equivalent to approximately 16.77 million metric tonnes or 264 cargoes, underscore strong trading interest in LNG futures. Open interest for these contracts reached a 26-month high of 107,972 lots by the end of April, demonstrating robust market participation.

Analysts attribute the surge in LNG futures trading to various factors, including a spike in Asia-Pacific spot LNG prices amidst geopolitical tensions. Market sentiment turned cautious following increased risks, particularly the conflict between Iran and Israel in mid-April. The Platts JKM, a key benchmark reflecting LNG delivered to Northeast Asia, witnessed an increase in April, with the average price rising to USD 10.07/MMBtu compared to USD 9.15/MMBtu in March.

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Non-Fossil Fuel capacity surges11% in FY24, fossil fuels up 2.44%



India’s power generation landscape witnessed notable shifts in fiscal year 2023-24, according to official data. Fossil fuel-based power capacity saw a modest increase of 2.44%, reaching 243.22 GW, while non-fossil fuel capacity, primarily driven by renewable sources, surged by 10.79% to 190.57 GW. This includes solar, wind, and hydropower. Nuclear power capacity also grew by 20.64% to 8.18 GW. India’s total power generation capacity expanded by 6.22% to 441.97 GW.

Coal-based capacity showed a 3% uptick, reaching 210.97 GW, while renewable energy capacity soared to 143.64 GW, emphasizing the nation’s commitment to green energy. The increase in fossil fuel-based power capacity suggests a continued reliance on traditional energy sources like coal, gas, and diesel. While these sources remain significant contributors to India’s energy mix, the substantial growth in non-fossil fuel-based capacity reflects the country’s concerted efforts towards renewable energy adoption. This shift aligns with India’s ambitious renewable energy targets and commitment to combat climate change.

Renewable energy sources, including solar, wind, and hydropower, played a pivotal role in driving the surge in non-fossil fuel-based capacity. The substantial growth of renewable energy capacity underscores India’s growing investment in clean energy infrastructure and the implementation of supportive policies and initiatives.

Solar power emerged as a frontrunner in India’s renewable energy expansion, with significant capacity additions in FY24. The declining costs of solar technology, coupled with favorable government policies and incentives, have spurred widespread adoption across the country. Wind energy also saw notable growth, driven by technological advancements and increased investments in wind power projects.

Hydropower, a longstanding source of renewable energy in India, continued to contribute to the country’s energy mix. Despite challenges related to environmental concerns and project delays, hydropower capacity witnessed a modest increase, highlighting its enduring significance in India’s renewable energy portfolio.

The rise in nuclear power capacity signifies India’s efforts to diversify its energy sources and enhance energy security. Nuclear energy, with its low carbon footprint and potential for baseload power generation, offers a sustainable option for meeting India’s growing energy demands. The expansion of nuclear power capacity reflects strategic investments in nuclear infrastructure and technology development.

India’s total power generation capacity surpassed the 440 GW mark in FY24, indicating steady growth in the country’s energy sector. This growth is driven by a combination of factors, including increasing energy demand, infrastructure development, and policy support for both conventional and renewable energy sources.

Despite the progress in renewable energy deployment, challenges remain, including grid integration, intermittency issues, land acquisition, and regulatory hurdles. Addressing these challenges will be crucial for sustaining the momentum of renewable energy growth and achieving India’s renewable energy targets.

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