1. Prologue
2. [Act 1] Petroleum
   1. P1: Refineries in India
   2. P2: Survey: Oil production challenges
   3. P3: OVL assets abroad
   4. P4: Budget 2014: Diesel & LPG
   5. P5: Petrol pricing
      1. What is under-recovery?
      2. Petrol price deregulation
      3. Benefits of Deregulation?
3. [Act 2] Clean Energy
   1. C1: Bagasse Cogeneration
   2. C2: Budget 2014: Clean energy
   3. C3: Green Energy Corridor Project
4. [Act 3] Telecom Sector
   1. T1: Teledensity
   2. T2: New Telecom Policy 2012: Salient features
   3. T3: Mobile number portability
   4. T4: Spectrum Auction
   5. T5: Unified License
   6. T6: Survey recommendations on Spectrum
   7. T7: USOF and naxal areas
   8. T8: NFON: national optical fibre network

Prologue

Economic Survey Ch11. Energy, Infrastructure and Communications. Total five subparts

1. Energy: Coal, Shale Gas, CBM, Natural gas
2. Petrol, Diesel, Clean Energy & Tele-Communication
3. Roads, Industrial corridors, PPP, Infrastructure problems & reforms
4. Shipping, aviation
5. Railways infrastructure

[Act 1] Petroleum

• Ranking energy consumers: China > US > Russia > India (4^th largest)
• by 2025: India will become 3^rd largest consumer of energy

P1: Refineries in India

Joint Venture	2
Private	3
Public Sector	17
Total	22

 

List of Joint Venture refineries (2)

JV between	Where?
Bharat petroleum + Oman	Bina (Madhya Pradesh)
HPCL + Mittal	Bathinda, Punjab

 

List of private sector refineries (3)

Reliance	Jamnagar SEZ, GJ Mothikhavdi, Jamnagar, GK
Essar	Vadinar, GJ

 

List of Public sector refineries (17)

1	IOCL	Guwahati, Assam	9	HPCL	Mumbai
2	IOCL	Barauni, Bihar	10	HPCL	Visakhapatnam, Andhra
3	IOCL	Koyali, Guj.	11	BPCL	Mumbai
4	IOCL	Haldia, W.Bengal	12	BPCL	Kochi, Kerala
5	IOCL	Mathura, UP	13	CPCL	Manali, Tamilnadu
6	IOCL	Digboi, Assam	14	CPCL	Nagapattinam, TN
7	IOCL	Panipat, Haryana	15	NRL	Numaligarh, Assam
8	IOCL	Bongaigaon, Assam	16	MRPL	Mangalore, Karnataka
			17	ONGC	Tatipaka, Andhra

Demo Question: Find correct statement(s):

1. India’s refining capacity exceeds demand.
2. India has only 3 private sector refineries
3. Both A and B
4. Neither A nor B

Ans. C Both correct, as per Economic Survey 2013, ch.11

P2: Survey: Oil production challenges

• Except KG basin and Rajasthan- all Indian oil fields are ageing, therefore declining production
• Refineries are not upgraded, shortage of men, crude oil and capital.
• Environmental issues, bandh/blockades aggravating the problem.
• Solution: OVL should acquire more assets abroad.
• Related topics: Ethanol blending program and Bharat Emission norms click me

P3: OVL assets abroad

• OVL: ONGC Videsh ltd.
• Has petroleum assists in from Sudan, Vietnam, Venezuela, Brazil, Columbia, Russia, Syria and South Sudan.
• But production declined due to Geopolitical problems in S.Sudan & Syria.
• OVL also has operations in South China Sea near the coast of Vietnam.
• But China is objects, stating that
  • Entire area belongs to us. Brunei, the Philippines and Vietnam have no rights over it.
  • Therefore, none of them can partner with India to explore hydrocarbons in S.China sea.

P4: Budget 2014: Diesel & LPG

Diesel	LPG
Will deregulate diesel, unless international crisis causes negative impact on crude oil supply (e.g. ISIS-Iraq, Syria, Israel-Palestine) As such Government’s plan is to raise the diesel prices at 0.50 paisa per month. Thus by, December 2014 diesel will be completely “deregulated.”	We’ll continue providing subsidized LPGs. Earlier UPA Government had changed no. of subsidized LPGs to 6, then 9 and finally 12. We’ll decide a “realistic” number of subsidized cylinders for each family.

 

LPG subsidy mechanism

	Subsidized cylinder	Non-subsidized
Price	400+	1200+
Who ?	Oil Ministry decides the price	PSU oil companies decide the price 1st of every month. They use formula of Average imported cost and rupee dollar rate during last month. You’ll have to buy additional cylinders @this market priceprice.
2012	6 cylinders.
2013	9. Money will be sent via DBT
2014, UPA	12 (after Rahulbaba’s demand)
2014BJP	We’ll decide a “reasonable” number of subsidized cylinders.

P5: Petrol pricing

What is under-recovery?

(Before this “deregulation” thing came into picture)

• In India, Petrol, diesel, LPG and kerosene were sold at lesser than the international oil prices. Because, Government would fix their retail prices.
• Obviously the oil marketing companies (OMC) would make losses.
• So, Government would compensate by giving them “oil bonds”.
• Oil bonds promise to pay cash at later date. e.g. after 10 years with 8% interest.
• OMCs call such amount “under-recovery”.  In reality this is not “loss” but money not available at present.

Petrol price deregulation

• For long, Government subsidized the petrol prices.
• But then fiscal deficit reached in danger level after subprime crisis- Because tax collection had declined. Government was unable to keep up with FRBM targets.
• 2010: Government deregulated petrol prices based on Kirit Parikh Committee recommendations-
• From now on, Public Sector Oil Marketing Companies (OMCs) will fix the petrol and diesel prices in consultation with the Ministry of Petroleum & Natural Gas.
• But LPG and Kerosene were kept out of ‘deregulation’ system. And diesel prices were still kept below the market rate.
• January 2013: Government began deregulation of diesel prices as well- increasing 50 paisa per litre every month.

Benefits of Deregulation?

1. Government’s fuel subsidy bill will decline= fiscal deficit will reduce.
2. Government can spend more funds on social sector schemes
3. Less “under-recovery” for oil companies = they get immediate cash, can expand business, buy new technology, acquire oil assets abroad.
4. companies will design more fuel efficient vehicles= less GHG
5. Junta will use more public transport =less GHG
6. Less nuisance of motorcycle stuntmen and eve-teasers (well, atleast in theory).

[Act 2] Clean Energy

Not going into hydroenergy, wind energy etc. because Economic Survey and budget hardly gave any points.

C1: Bagasse Cogeneration

word	meaning
Bagasse	fibrous matter- left over while sugarmills extract juice from the sugarcane
Cogeneration	Converting Single fuel into multiple energy forms

In this process, Bagasses is converted into two energy forms

1. Heat: used in the sugar production.
2. Electricity: Sold to consumers.

C2: Budget 2014: Clean energy

 

Reduced custom duties

Item	Custom duty
Solar cell Raw material: EVA sheets, flat copper wire etc.	0%
Any other plant/machine required to setup solar plant and Compressed Biogas plants (Bio – CNG)	5%
Wind mill raw material: steel rings used in ball bearing	5%

• Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Ladakh.  (500 cr)
• Solar pump sets for farmers. (1 lakh units)
• 1MW solar parks on Canal banks. (100 cr)
• Green Energy Corridor Project: will hasten its implementation

C3: Green Energy Corridor Project

Who? Power Grid Corporation of India

Why? To integrate renewable energy into national power grid.

component	by
Intra-state	Power Grid Corporation of India Ltd (PGCIL). it operates five grids – Northern, Western, Southern, Eastern and North Eastern
Inter-state	respective state electricity utility  boards

Challenges: unlike thermal power plant, the solar / wind plants

1. cannot be run on 24/7 basis
2. have voltage fluctuation depending on sunlight/wind strength

International funding to this project

1. Germany promised $1 billion
2. USA PACE (promoting energy access through clean energy)
3. EU for offshore wind farm, Chennai

[Act 3] Telecom Sector

T1: Teledensity

Teledensity  = % of telephone connection per 100 persons living in the given area.

Teledensity in India (%)

Rural	44.01
Urban	145.46
Overall	75.23

• India: 2nd largest telephone network in the world (after China)
• As such, Tele density is not a good indicator of economy. For example:
• Tax havens like Cayman island= thousands of post-box companies = teledensity will look higher. Same for tourism based economies- because hotels will have more connections than the actual residents.
• Even Soviet Union had high teledensity but their per capita national income (PPP-wise) was low.

T2: New Telecom Policy 2012: Salient features

Mobile:

1. All India Full Mobile Number Portability, One Nation – Free Roaming
2. Increase rural teledensity: 70 (2017); 100 (2020).
3. Make mobile phone an “instrument of social and financial empowerment”
4. make India a global hub for manufacturing telecom instruments

Internet:

1. Right to broadband for all – with minimum 2Mbps download speed
2. Facilitate VoIP, cloud computing, IPv6 and next generation networks

Spectrum

1. allot spectrum in transparent manner, using market determined process (i.e. auction, resale etc)
2. Periodic audit of spectrum utilisation to ensure its efficient use.
3. Increase spectrum availability every 5 years.
4. Unified licenses. Delink Spectrum from license.
5. Simplify the Merger & Acquisition regime in telecom service sector.

T3: Mobile number portability

• It is the facility to switch mobile service provide company without having to change your mobile number.
• Until now, mobile number portability was permitted within given telecom circle only. (there are 22 circles in India)
• New telecom policy (NTP-2012) wanted All India mobile number portability. But deadline missed- next target by 2015.
• BizGK: MNP is implemented by two companies Syniverse Technologies and MNP Interconnection Telecom (they manage the forms and coordinate between the two mobile service providers when you apply for MNP).

T4: Spectrum Auction

2012: Government designed new telecom policy (NTP) – for allocating spectrum in transparent manner.

Specturm (Mhz)	2013 auction	2014, Feb auction
800	bought	not listed (Because already sold in 2013)
900	companies showed no interest	companies bought both 900 and 1800.Government earned >61,000 crores.
1800
2300	Not auctioned. Mukesh Ambani’s Reliance Jio already owns it. Higher the Mhz=faster dataspeed. 2300 ideal for 4G.

SMRA: Simultaneous Multiple Rounds Ascending (SMRA). This is the “e-auction” method used by government for auctioning spectrum.

T5: Unified License

• NTP-2012 envisages “One nation One License” system.
• Department of Telecom has designed unified licence guidelines accordingly.
• Now, the Spectrum allocation is delinked from the licence

1. Company will have to apply for license.
   • Only one unified license is required for all telecom services in entire India- for all 22 circles.
   • Although, company will need to get separate permissions for ISD calls, internet service provider [ISP] services etc.
2. After getting the license, the Company will have to buy the spectrum separately.

T6: Survey recommendations on Spectrum

• Permit smoother trading and sharing of spectrum.  (2G case = companies bought sprecum but did not use them. They instead sold it to other companies at higher price- similar to cinema ticket black-marketing)
• Revamp policy for better spectrum Management.
• reduce the spectrum cost

T7: USOF and naxal areas

• USOF = Universal service obligation fund
• Under Dept. of Telecom
• To improve phone and internet connectivity in rural areas
• Non lapsable fund.
• Gets money from two sources
  • 5% revenue from all telecom providers
  • Centrally sponsored schemes for rural infra / BRGF/ LWE areas
• officially there are nine states affected with LWE (left wing extremism) viz. : Andhra, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, UP and WB
• BSNL is setting up mobile and internet facilities there, using USOF funding.

T8: NFON: national optical fibre network

Why?	To provide broadband connection to all 2.5 lakh Gram Panchayats of India. as per latest TRAI guideline, broadband means internet speed of 512 Kbps
Who?	Bharat Broadband Network Ltd (BBNL) (under BSNL)
Deadline	50,000 Gram Panchayat by March 2015 1 lakh by March 2016 remaining by March 2017
Money?	from USOF-Universal service obligation fund
Benefit?	will help extracting maximum potential of other e-governance projects, online monitoring of SSA, MNREGA, e-health, e-banking, e-education (CLICK initiative) etc.

PS: “Communication” also involves postal department. But Survey and budget hardly said anything about it, hence not dwelling. But for Postal-GK part, you may refer to

1. Last year’s summary click me.
2. PIN-2014, list of new stamps released click me