Govt. to float tenders to restart work on Shivamogga airport
The State government will soon float tenders for recommencement of the airport construction work in the city. In reply to a query raised by K.B. Prasanna Kumar, Shivamogga MLA, in the recently concluded State legislature session, Minister R. Roshan Baig said the State government planned to implement the project in the public-private-partnership model. The government in March 2007 had given its nod for construction of an airport near Sogane on the outskirts of the city, and had acquired 662 acres. Initially, the project was estimated to cost Rs. 194 crore. It was planned to construct a 3.1 km-long runway, a terminal building, and essential infrastructure to handle passengers and cargo. The State had entered into a MoU with Shimoga Airport Developers Pvt. Ltd., a joint venture private firm that bagged the contract in December 2010. According to the MoU, the work was to be completed in 24 months. The work was suspended few months later owing to difference of opinion between the partners of the firm. As the firm failed to complete the work within the stipulated time, the State government cancelled the agreement in January 2015, and the work has been halted since.
The Harmful Impact Of Subsidies On The Oil Industry
Energy subsidies combined with price control can reduce supply when producers do not have a profit incentive to increase supply. Fuel subsidies and price controls can reduce supply Venezuela has a nationalized oil company that is legally required to supply gasoline priced at extremely low levels but despite abundant crude oil reservescannot profitably refine and distribute sufficient gasoline to meet domestic demand. Chinese price controls have caused fuel rationing and shortages in the past. The United States created the Federal Energy Administration in 1974 after the OPEC oil embargo to implement federal oil allocation and pricing regulations. The unhappy result was long lines at gasoline stations and limited supply throughout most of the United States. India’s oil demand increases after fuel subsidies were eliminated Oil demand in India has expanded sharply in the last several years despite the removal of oil product subsidies. The increased demand surprised analysts because excise duties were simultaneously imposed on product sales which did not allow as great a price decline as had been anticipated by the drop in the global price oil that began in late 2014. Fuel Subsidies may hinder low income families climbing the energy ladder While not precisely and directly correlated, rising income levels generally allow households to climb the energy ladder by increasing use of energy generally, and cleaner energy specifically. However, fuel subsidies as described by the International Institute for Sustainable Development (IISD) Global Subsidies Initiative, exhibit what economist Gordon Tullock has called the “transitional gains trap” which can lock consumers into a particular spot on the energy ladder that limits opportunities for advancement to a healthier lifestyle. The IISD describes the related political phenomenon that parallels the lock in: “Subsidies themselves create a pool of money out of which recipients can influence the very political process than channels money to them in the first place. In many instances subsidies redistribute wealth from a large number of unknowing contributors to a smaller number of beneficiaries. The latter lobby vigorously to defend their handouts; the former seldom bother, or are empowered, to prevent them.” In their paper “Energy Subsidies in the Arab World” published by the United Nations Development Programme in 2012, Bassam Fattough & Laura El-Katiri argue that “Energy subsidies distort price signals, with serious implications on efficiency and the optimal allocation of resources. Energy subsidies also tend to be regressive, with high-income households and industries benefiting proportionately most from low energy prices.” Conclusion – fuel subsidies and price controls can hurt the people most meant to help According to the International Monetary Fund, energy subsidies cost the world almost a half a trillion U.S. dollars in 2011. The IMF noted that these subsidies “aggravate fiscal imbalances, crowd-out priority public spending, and depress private investment”. Inevitably these market distortions create disincentive for producing energy that cannot be profitably sold while redirecting previous resources away from households who need to move from using dung and biomass for cooking and heating to cleaner hydrocarbon fuels while also robbing the free market transportation sector from the fuel needed to create and sustain global economic growth.
Government may impose anti-dumping duty on drilling pipes from China
India is likely to impose anti-dumping duty on import of certain types of iron and steel pipes from China used in drilling for oil and gas exploration to protect domestic manufacturers. The Directorate General of Anti-Dumping and Allied Duties (DGAD) has recommended to the revenue department to impose provisional levy ranging between USD 961.33 and USD 1,610.67 per tonne. ISMT Ltd and Maharashtra Seamless had moved the DGAD for imposition of the duty on “seamless tubes, pipes and hollow profiles of iron, alloy or non-alloy steel (other than cast iron and stainless steel), whether hot finished or cold drawn or cold rolled of an external diameter not exceeding 355.6 mm or 14.” They had alleged dumping of the products, originating in or exported from China, and consequent injury to them. In its preliminary findings, the DGAD said it was of the view that imposition of “provisional duty is required” to offset dumping and injury, pending completion of the investigation. Therefore, Authority (DGAD) considers it necessary and recommends imposition of provisional anti-dumping duty on imports of subject goods from the subject country…,” it said in a notification. In July last year, the DGAD had initiated a probe into the alleged dumping, and injury to the domestic industry. The product being considered by the DGAD includes boiler pipes or line pipes used in hydrocarbon industry and casing and tubing of a kind used in drilling for oil and gas exploration. The purpose of anti-dumping duties, in general, is to eliminate injury caused to the domestic industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the market, which is in the general interest of the country. Imposition of the duties might affect price levels of the downstream products and consequently might have some influence on relative competitiveness of these prod
Essar Oil turns around loss-making Stanlow refinery
Nearly five-years after acquiring the strategic Stanlow refinery from Shell, Essar Oil UK has turned around the loss making unit with a record net profit of USD 187 million in 2015-16 as it optimised processes, diversified crude basket and invested in margin improvement programmes. Essar Oil UK, controlled by Mumbai-based Ruia family, reported highest ever EBITDA of USD 340 million in the financial year ended March 31, 2016 as compared to an EBITDA of USD 177 million in the previous fiscal. “EBITDA was negative USD 17 million in FY12 ,” said Naresh Nayyar, Executive Chairman, Essar Oil UK. “Net profit in FY16 is about USD 187 million as compared to USD 70 million in the previous fiscal.” Stanlow today produces over 16 per cent of UK’s transport fuels, serving north-west part of UK
All proposed airport terminals to have green ratings: AAI
All proposed airport terminals under the Airports Authority of India will have GRIHA ratings as the airports management body looks to tap alternative sources of energy in a big way, AAI chairman Sudhir Raheja said today. Raheja said AAI, responsible for creating, upgrading, maintaining and managing civil aviation infrastructure in the country, has implemented best practices, towards reduction in emission levels and in saving fuel. “All new terminal buildings proposed have a GRIHA ‘three star’ minimum rating and AAI has taken steps towards use of solar energy in a big way,” Raheja said during the annual day celebrations of AAI here. “AAI has already commissioned 4.5 MW rooftop solar power plants at Tirupati,” he said. Green Rating for Integrated Habitat Assessment (GRIHA) is an indigenous system developed by TERI with support of Ministry of New and Renewable Energy to rate energy efficiency of buildings. Acting Director, Chennai Airport, L N Tatwani outlined various achievements of AAI in 2015-16 and the infrastructure proposed under Phase-II airport modernisation programme.
AAI draws up road map for non-traffic revenue generation: Sudhir Raheja
The Airports Authority of India has drawn up a road map for generating revenues from non-traffic activity, apart from working on ways to enhance regional air connectivity. It owns and maintains 125 airports, including civil enclaves, and provides air navigation services at all airports across the country. AAI Chairman Sudhir Raheja said it has drawn up a “road map for generation of non-traffic revenue, marketing strategy, making available airport infrastructure in every nook and corner of the country”, according to an official release. Many airport operators worldwide have increased their share of non-traffic revenues by as much as 50 per cent. The airport operator will focus on promoting the regional connectivity scheme as well as work towards training and re-training people, he added. Raheja was speaking at AAI’s annual day function here on Friday.
Private airlines can now bid for loss-making regional routes
Private Indian airlines will be allowed to bid for operations on loss-making regional routes where the government will provide subsidy as part of the regional connectivity plan, a top aviation ministry official has said. This will be the first time private carriers will be allowed to bid for these routes and claim government subsidy. At present, only state-run national carrier Air India gets subsidy for providing connectivity in the northeastern region. The decision is as part of the rules that will govern the regional connectivity plan, which the government plans to implement as soon as the Civil Aviation Policy is approved. It will override the draft aviation policy’s proposal to create a scheduled commuter airline category for the purpose, said the aviation ministry official, who did not wish to be identified. “Both regional and national scheduled airlines can operate flights for the regional routes,” the official said. “Nonscheduled operators will have to convert to scheduled carriers to bid for these flights.” The National Civil Aviation Policy 2016 (NCAP 2016) is likely to be taken up by the Cabinet by the end of this month, the official said. According to the official, the ministry intends to immediately roll out regional flights at 30 airports which have the infrastructure in place. The government has decided to fix fares on regional flights at Rs 2,500 per hour, and the rest of the cost of the flight will be funded by the government through subsidy, he said. Analysts, however, said the government should look at allowing non-schedule operators (NSOPs) on these routes, as scheduled airlines would not like to get into operating smaller aircraft. “The key to regional connectivity being successful in India lies with the surplus and underutilised general aviation fleet in India, which currently stands at over 110 turboprops and nearly 270 helicopters that are capable of connecting airfields and landing grounds that fall within the remote, out-of-reach, displaced category in India,”
Cairn asks government to walk the talk on retro tax
Weeks after being slapped with a Rs 29,000 crore ‘retrospective tax demand’, British oil explorer Cairn Energy today said international investors want the Modi government to walk the talk on resolving retrospective tax issues and send a clear signal that things are changing. Cairn, which gave India its biggest onland oil discovery that now accounts for a fifth of the country’s oil production, said it will continue to press ahead with the arbitration challenging use of a new legislation to tax internal business reorganisation with retrospective effect and will seek USD 1 billion in damages to its value. “The international investment community wishes to see India doing as it has stated in looking to resolve the retrospective tax issue with actions which would send a positive signal to global investors that things are changing under this current government,” Cairn Energy CEO Simon Thomson told PTI in an interview here. The Income Tax Department in February slapped on Cairn Energy a tax demand notice of over Rs 29,000 crore, including Rs 18,800 crore in back dated interest. The Department had on January 22, 2014, issued a draft assessment order of Rs 10,247 crore on alleged capital gains the company made in a 2006 reorganisation of its India business. Two years later, it issued a final assessment order. The actions of the Income Tax Department have been hugely detrimental to Cairn’s business and its UK and international shareholders, Thomson said. “The issuing of a retrospective tax assessment is very disappointing and follows a long period of engagement with the Government of India which has repeatedly given public assurances that it would not resort to retrospective tax measures, introduced by the previous government, given the negative message it sends to the international investment community,” he said. Thomson said Prime Minister Narendra Modi had earlier this year stated that retrospective tax is a matter of the past and he was ensuring that this government and future governments cannot open this chapter. Modi, he said, had stated that “We have clearly articulated that we will not resort to retrospective taxation and demonstrated this position in a number of ways.” “However, Cairn Energy’s outstanding retrospective tax case is yet to be resolved and the matter has been ongoing for more than two years and is having a major detrimental impact on our business and to our UK and international shareholders,” Thomson said. He said the tax issue was a very unfortunate conclusion to a 20 year investment in India where “Cairn Energy has been a model corporate citizen and created a legacy asset which is seen as an example of what can be achieved through India and UK cooperation”. The Rajasthan discoveries generates huge value for India, with revenues of multi-billions for the government, he said. Asked about the government offer to waive interest and penalty if companies facing retrospective tax demand paid the principal tax due, he said Cairn strongly contests the basis of the tax assessment order supported by detailed legal advice on the strength of the protections available to it under international law. “As such, Cairn has a high level of confidence in its case under the UK-India Investment Treaty and is seeking to use the international arbitration process in a non-confrontational manner. “We wish to resolve the issue as swiftly and amicably as possible following a long period of engagement with the government which has repeatedly given public assurances that it would not resort to the retrospective tax measures of the previous government,” he said. Stating that the international arbitration process has begun with the arbitration panel being appointed, he said Cairn welcomes the Indian government’s positive engagement in the process. “We would hope that, like us, the Government of India wants to achieve an outcome as soon as possible in order that this issue is cleared up once and for all. “The preliminary hearings will take place shortly and the formal process will continue from there. There is no pre-set fixed timetable for the arbitration process but it is unlikely to be less than 12 months,” he said. He said the company has had robust legal advice that the action of the government in seeking to apply tax retrospectively to its internal group reorganisation in 2006 and in freezing Cairn’s assets in the country are a breach of the fundamental position of the Treaty which protects against expropriation and ensures a fair and equitable investment environment for British investors in India. “Cairn is claiming full compensation for the about USD 1 billion value of which its shareholders have been deprived,” he said. He said one major US investor in Cairn stated that “It is now time for India to send a message to all international investors that retrospective tax is dead and buried once and for all. Many investments needed to finance India’s growth will not happen if retrospective laws are possible. “Repudiating retrospective laws and adopting international norms would allow the international investment community to see that the Modi government is delivering on its pre-election promise to eradicate so called tax terrorism.”
Indian Oil pulls off record crude processing at 56 million tonnes in FY16
State-owned Indian Oil Corp (IOC) today said it has achieved a new record crude oil processing of 56.1 million tonnes in 2015-16 fiscal, with highest ever distillate production. IOC’s nine refineries operated at 103.5 per cent of the installed capacity in the fiscal, IOC Director (Refineries) Sanjiv Singh said. “IOC’s nine refineries also marked the best-ever combined distillate yield of 80.5 per cent, surpassing the previous best of 78.8 per cent during 2014-15,” a company statement quoted Singh as saying. Singh said that with focused efforts towards energy conservation, the refineries achieved lowest fuel and loss (F&L), Specific Energy Consumption (MBN) and Energy Intensity Index (EII) at 8.53 per cent, 53.8 and 101.2 respectively, as compared to the previous best of 8.77 per cent, 54.4 and 104.5 for the year 2014-15. “Individually, all refineries achieved various milestones. Many refineries achieved all time high crude processing. Almost all refineries achieved highest distillate production with lowest fuel & loss, which is really commendable,” said Singh. The commissioning of 15 million tonnes a year Paradip refinery in Odisha IOC’s refining capacity to 69.2 million tonnes per annum. The commissioning of INDMAX Unit at Paradip (4.17 MMTPA), based on the indigenous technology developed by its R&D Centre was another golden milestone of global recognition as a technology supplier. Continuing with indigenous technologies, IOC on March 6 laid the foundation stone of the ambitious OCTAMAX project at Mathura Refinery. The refinery also commissioned New Propylene Recovery Unit (NPRU) in May 2015, to produce polymer-grade propylene with high purity. Another upcoming project is INDMAX at Bongaigaon, which coupled with Indmax Gasoline Hydrodesulphurization (IGHDS) unit and associated facilities will increase distillate yield of the refinery while also helping it produce Euro-VI fuel. Several new projects have been approved during 2015-16. To meet Euro-VI fuel supply requirement by 2020, various revamps and installation of new units are envisaged at Gujarat, Panipat, Mathura, Haldia, Digboi and Bongaigaon refineries?. In Guwahati, Euro-VI petrol compliance will be achieved with the commissioning of INDAdept-G & Catalyst replacement of HDT unit. Paradip Refinery is ready for supply of Euro-VI grade diesel, it said. “Past several years have witnessed extreme volatility in global oil markets, riding the tide of rise and subsequent fall in the world crude oil and petroleum product prices. In this context, year 2015-16 was an eventful year for all stakeholders,” IOC said.
CNG, piped cooking gas become cheaper in Delhi
CNG price in the national capital was today cut by Rs 0.60 per kg and piped cooking gas by Rs 0.65 per standard cubic meters following a 20 per cent slashing in natural gas rates. Consequent upon notification of government reducing the prices of domestically produced natural gas, Indraprastha Gas Ltd announced revision in the selling prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in NCT of Delhi, Noida, Greater Noida and Ghaziabad with effect from April 1. IGL said CNG price in Delhi has been cut by Rs 0.60 per kg and by Rs 0.70 per kg in Noida, Greater Noida and Ghaziabad. “The new consumer price of Rs 36.60 per kg in Delhi and Rs 41.90 per kg in Noida, Greater Noida & Ghaziabad would be effective from midnight of 1st/2nd April 2016,” IGL said in a statement. “The price of CNG in Delhi remains lowest in the entire country.” With the objective to boost CNG refueling during non-peak hours, IGL will continue to offer a discount of Rs 1.50 per kg in the selling prices of CNG for filling between 12 am to 5 am at select outlets. The consumer price of CNG would be Rs 35.10 per kg in Delhi and Rs 40.40 per kg in Noida, Greater Noida & Ghaziabad during 12 am to 5 am at 230 CNG stations across the region. GL has also announced reduction in its domestic PNG prices from tomorrow. The consumer price of PNG to the households in Delhi has been reduced by Rs 0.65 per standard cubic meter from Rs 24.65 to Rs 24 per scm. Due to differential tax structure in the state of Uttar Pradesh, the applicable price of domestic PNG to households in Noida, Greater Noida and Ghaziabad would be Rs 25.50 per scm, which has been reduced by Rs 0.65 per scm from existing Rs 26.15 per scm. IGL is supplying PNG to over 6,30,000 households in the region. Government had yesterday cut natural gas price by 20 per cent to USD 3.06 per million British thermal unit.