Daily Current Affairs for UPSC IAS | 22nd December 2021

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1.  Crude oil and gas industry of India

UPSC Syllabus: Mains: GS Paper 3: Energy and Infrastructure |
Sub Theme: Status, challenges and government initiatives| UPSC

Important pointer for prelims and Mains:

  • As of December 01, 2020, India’s oil refining capacity stood at 259.3 million metric tonnes (MMT), making it the second-largest refiner in Asia. Private companies own about 35.29% of the total refining capacity in FY20.
  • India’s existing strategic oil reserves (SPR) is ~5.3 million tonnes.
  • Assam, Gujarat and Rajasthan account for more than 96% of oil production in India
  • According to IEA (India Energy Outlook 2021), primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent, as the country’s gross domestic product (GDP) is expected to increase to USD 8.6 trillion by 2040.
  • Crude oil production stood at 4.9 MMT in FY22 (April-May 2021) and was 30.5 MMT for FY21.
  • FY20, crude oil import increased to 4.54 mbpd from 4.53 mbpd in FY19. Natural Gas consumption is forecast to reach 143.08 million tonnes (MT) by 2040. India’s LNG import stood at 33.68 bcm during FY20. LPG penetration rate of households reached ~97% in early 2020 compared with 56% in 2016. India’s oil demand is projected to rise at the fastest pace in the world to reach 10 million barrels per day by 2030, from 5.05 million barrel per day in 2020.
  • According to the International Energy Agency (IEA), consumption of natural gas in India is expected to grow by 25 billion cubic metres (bcm), registering an average annual growth of 9% until 2024.
  • According to the International Energy Agency (IEA), India’s medium-term outlook for natural gas consumption remains solid due to rising infrastructure and supportive environment policies. Industrial consumers are expected to account for ~40% of India’s net demand growth. The demand is also expected to be driven by sectors such as residential, transport and energy.
  • India’s consumption of petroleum products grew 4.5% to 213.69 MMT during FY20 from 213.22 MMT in FY19. Exports of petroleum products from India reached 56.8 MMT in FY21 from 60.5 MMT in FY16. Diesel was the most-consumed oil product in India, accounted for 39% of petroleum product consumption in 2019. It is used primarily for commercial transportation and further, in the industrial and agricultural sectors.
  • India is set to expand India’s natural gas grid to 34,500 kms by adding another 17,000 km gas pipeline. The regasification capacity of the existing 42 MMT per annum will be expanded to 61 MMT per year by the year 2022.
  • Several initiatives have been taken by the Government of India, including the launch of Open Acreage Licensing Policy (OALP) and Coal Bed Methane (CBM) policy. It has allowed 100% Foreign Direct Investment (FDI) in companies and 49% in refining under the automatic route.
  • In July 2021, the Department for Promotion of Industry and Internal Trade (DPIIT) approved an order allowing 100% foreign direct investments (FDIs) under automatic route for oil and gas PSUs.
  • According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), FDI inflows in India’s petroleum and natural gas sector stood at US$ 7.96 billion between April 2000 and June 2021. The Government is planning to invest US$ 2.86 billion in upstream oil and gas production to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022. Further, rising demand for oil in India is expected to drive investment in refining capacity expansions and upstream production*. The Indian oil and natural gas sector is likely to witness an investment of US$ 206 billion in the next eight to ten years.
  • As of September 01, 2021, the sector’s total installed provisional refinery capacity stood at 246.90 MMT and IOC emerged as the largest domestic refiner, with a capacity of 69.7 MMT.
  • In September 2021, Indraprastha Gas Limited (IGL) signed a memorandum of understanding with South Delhi Municipal Corporation (SDMC) to build waste to energy plant in Delhi to fuel vehicles.
  • India aims to commercialise 50% of its SPR (strategic petroleum reserves) to raise funds and build additional storage tanks to offset high oil prices.

Challenges:

Shortage of Petroleum Crude:

Petroleum industry in India has been suffering from the problem of shortage of raw materials, i.e., petroleum crude. Total refining capacity in the country has reached the level of 148.97 million tonnes in 2006-07 as against the total indigenous production of only 34.0 million tonnes.

Thus, the petroleum industry has to depend too much on the imported crude. Due to the increasing volume of demand-supply gap, the petroleum refineries in India have failed to utilise their production capacity fully.

Dependence on Foreign Countries

Petroleum industry in India has been depending too much on foreign countries for the supply of petroleum crude and machineries. Total consumption of petroleum crude has increased to 146.5 million tonnes in 2006-07 as against the total production of petroleum crude of 34.0 million tonnes. This has resulted in the import of 105.5 million tonnes of petroleum crude in 2006-07.

Moreover, the petroleum industry of the country depends too much on some foreign countries for meeting its requirement of various drilling and refining machineries.

Price Hike:

The international prices of petroleum goods have been maintaining a constant hike since 1973-74. This has led to the excessive rise in our import bill on petroleum goods. In 2011-12, total import bill on petroleum oil and lubricants was to the tune of Rs 7, 43,075 crore as against Rs 5,587 crore in 1980-81.

Shortage of Oil Refining Capacity:

In India there is a shortage of oil refining capacity as compared to total demand for petroleum products. Total refining capacity of the country stands at 214.1 million tonnes as compared to the total consumption of 220.5 million tonnes of petroleum products in 2011-12. This has necessitated the expansion of existing refineries and also setting up of new refineries under the joint sector.

Exploration of New Reserves

In India, the production of petroleum crude of existing old reserves has been shrinking due to normal technical reasons. The proved oil reserves in India constitute only 0.5 per cent of the world oil reserves (proved). At this present level of consumption, the proved reserves will be depleted within next 15 to 20 years.

The country has now increasingly facing the growing demand-supply gap of petroleum crude. The country has also been facing the problem of mounting import bill of POL items. Under the present circumstances, it is quite urgent to intensify the exploration activities of the oil sector sincerely.

Technical Problems:

The petroleum industry of the country is also suffering from numerous technical problems in respect of production of middle distillates, activating its fire fighting systems etc. which need to be corrected and updated at the earliest possible time. The RD facilities in the industry should be expanded with the maximum possible limit to face these technical problems.

Pollution:

The growing pollution near the refineries and oil fields is a big problem for the industry. The Government is trying to control such pollution by adopting certain effective measures.

Lack of Market-Determined Pricing System

The lack of a well functioning market determined pricing system, partly because of the lack of vibrant competition among the companies with diversified ownership, continues to constrain the performance of petroleum industry.

Despite the surge of international prices of petroleum touching record level, the petroleum companies are not allowed to revise their market price of petrol and HSD accordingly and allowed only a limited freedom to revise the prices as per revised methodology. This has resulted a serious drain of the financial resources of the petroleum companies.

Government Initiatives

Some of the major initiatives taken by the Government of India to promote oil and gas sector are:

  • In November 2021, India announced that it will release 5 million barrels of crude oil from its strategic petroleum reserves in a concerted effort to bring down global crude oil prices. This is roughly equivalent to a day’s consumption in the country.
  • In November 2021, the government has set up a committee to work out measures needed to make natural gas available to power plants at reasonably stable prices.
  • In October 2021, the Union Ministry of Petroleum & Natural Gas approved a revised project cost of Rs. 28,026 crore (US$ 3.8 billion) to increase refining capacity–for the ongoing Numaligarh Refinery Expansion Project–from 3 mmtpa to 9 mmtpa
  • In September 2021, Bharat Petroleum Corporation Ltd. (BPCL) announced its plan to invest over Rs. 1 lakh crore (US$ 13.66 billion), over a period of five years, to enhance petrochemical capacity and improve refining efficiency, gas proliferation, upstream oil & gas exploration and production and augment the (fuel) marketing infrastructure
  • In September 2021, Indian government approved oil and gas projects worth Rs. 1 lakh crore (US$ 13.46 billion) in Northeast India. These projects are expected to be completed by 2025.
  • In September 2021, India and the US agreed to expand their energy collaboration by focusing on emerging fuels. This was followed by a ministerial conference of the US-India Strategic Clean Energy Partnership (SCEP).
  • In July 2021, the Department for Promotion of Industry and Internal Trade (DPIIT) approved an order allowing 100% foreign direct investments (FDIs) under automatic route for oil and gas PSUs.
  • In July 2021, the Minister for Road Transport and Highways, Mr. Nitin Gadkari inaugurated India’s first liquefied natural gas (LNG) facility plant in Nagpur, Maharashtra.
  • In July 2021, India diversified procurement for crude by announcing its first shipment from Guyana scheduled next month. This move also indicates a future roadmap for extended alliance with Guyana in the oil & gas sector.
  • In June 2021, the government announced that it will auction unmonetised large oil and gas fields of state-owned ONGC and OIL to boost hydrocarbon production.
  • In February 2021, Prime Minister Mr. Narendra Modi announced that the Government of India plans to invest ~Rs. 7.5 trillion (US$ 102.49 billion) on oil and gas infrastructure in the next five years.
  • In Union Budget 2021, the government allocated funds worth Rs. 12,480 crore (US$ 1.71 billion) for direct benefit transfer of LPG (liquefied petroleum gas) and Rs. 1,078 crore (US$ 147.31 million) to feedstock subsidy to BCPL/Assam Gas Cracker Complex.
  • In Union Budget 2021, the Finance Minister announced to provide 1 crore more LPG connections under Pradhan Mantri Ujjwala Yojana (PMUY) scheme.
  • The Ministry of Petroleum and Natural Gas released a draft LNG policy that aims to increase the country’s LNG re-gasification capacity from 42.5 million tonnes per annum (mtpa) to 70 mtpa by 2030 and 100 mtpa by 2040.
  • The Ministry of Petroleum and Natural Gas released an ‘Ethanol Procurement Policy’ on a long-term basis under the ‘Ethanol Blended Petrol (EBP) Programme’ (October 11, 2019), which covers modalities for long-term ethanol procurement, proposed mechanisms for long-term procurement contracts, pricing methodology and other topics.
  • As per Union Budget 2019-20, Indian Scheme ‘Kayakave Kailasa’, the Ministry of Petroleum & Natural Gas has enabled SC/ST entrepreneurs in providing bulk LPG transportation. State run energy firms, Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation, plan to spend US$ 20 billion on refinery expansions to add units by 2022.
  • The Government is planning to set up around 5,000 compressed biogas (CBG) plants by 2023.
  • The Government is planning to invest US$ 2.86 billion in the upstream oil and gas production to double natural gas production to 60 bcm and drill more than 120 exploration wells by 2022.

 

2.  Rare Flapshell turtle species rediscovered in Telangana

UPSC Syllabus: Mains: GS Paper 3: Environment and biodiversity
Sub Theme:  Location and IUCN status| UPSC

What?

A rarely species of Albino Indian Flapshell turtle.

Where?

Telangana’s Sirnapally forest.

Why such name?

Presence of femoral flaps located on the plastron.

IUCN status:

Vulnerable

3.  ‘Chillai kalan’ puts kashmir in a deep freeze

UPSC Syllabus: GS Paper 1: Geography
Sub Theme:  Chillaikala, Chillaikhurd, Chillaibacha| UPSC

Context– Kashmir is in a deep freeze as the 40day harshest spell of winter, locally called
‘chillai kalan’, started on Tuesday, with the minimum temperature already subzero in
the entire Valley.

What?
· A cold wave condition in entire Kashmir Valley which last for around 40 days.
· It starts from 2 nd half of December and lasts till the end of January.
· Temperatures drop considerably during this period leading to freezing of water
bodies including Dal Lake.
· Persistent and frequent cold wave conditions push the limits of discomfort across
the region.
· Chillai Kalan ends on 31 st  Jan and is followed by Chillai Khurd, 20 days long event
between 31 st  Jan to 19 th  February. The last in the series is Chillai- Bachha( baby cold)
for 10days, from 20 th Feb to 02 nd  March.

4.  World press freedom index 

UPSC Syllabus: Prelims: Events of international importance
Sub Theme:  Indian ranking and issues| UPSC

Context– The Centre does not agree with the conclusions drawn by Reporters Without

Borders about press freedom in India based on the index published recently.

Key facts:

Published by a foreign non-government organisation, Reporters Without Borders.

  • India’s ranking- 142/180
  • A questionnaire is used to calculate scores on six parameters in the index –

o Pluralism

o Media independence,

o Media environment and self-censorship

o Legislative framework

o Transparency

o Quality of infrastructure that support production of news and information.

This score is combined with quantitative data on abuses and acts of violence against

journalists, to arrive at the overall WPFI score.

Reasons why India disagrees with the findings:

  • One of the primary concerns raised has been the opaqueness of the WPFI survey.

Question-wise or category-wise scores used in computing scores for the six

parameters are not made public, nor is the list of respondents provided.

  • Clearly defined, credible sources are not available for quantitative data on abuse and

violence against journalists, nor is any attempt made to clarify such data with

Government or country-wise sources.

  • The term “Press Freedom” is not clearly defined.
  • Limited sample of approximately 150 respondents and 18 NGOs are asked to analyse

and respond to 83 questions for each country. On an average, 1 respondent is asked

to provide parameter-wise assessments for 1 country; the implausibility of one

respondent being able accurately assess press freedom in a country render the WPFI

rankings highly subjective at best.

5.   How the code on wages legalises bonded labour

UPSC Syllabus: Mains: GS Paper 3: Economy
Sub Theme:  Code on wages and implications| UPSC

This article has appeared in the newspaper in the context of the recent decision of the Government to start implementing the 4 new labor codes from next financial year. This article highlights various lacunae in the Code of Wages 2019 and how it would end up promoting Bonded Labour in India.

Details about Code on Wages

  • The Code on wages seeks regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.  The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.
  • Earlier, under the Minimum Wages Act, 1948, the Government was required to specifically bring various employment under the Minimum wages. However, the Code on Wages 2019 does not require the Government to explicitly bring a particular employment under the ambit of minimum wages. The new code automatically extends the guarantee of minimum wages to all the workers in the organised and unorganised sector.

Highlights of the Article

The rules framed under Minimum Wages act, 1948 had put restrictions on (a) amount of loans which can be given by employees to workers (b) deductions from the wages for the recovery of loans. These provisions were included to prevent bonded labour. However, the Code on Wages 2019 has diluted certain provisions related to these aspects, which in turn can lead to exploitation of workers.

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