Government’s drive to widen LPG customer base faces twin hurdles
The government’s plan to offer cooking gas to 5 crore poor households and expand the overall consumer base by 60% over the next three years may run into twin hurdles: inadequate distribution capacity and low purchasing power. Hoping to drive out smoke-generating fuels from kitchens, mainly in rural areas, the government plans to add 10 crore cooking gas consumers, half of them from poor families – an ambitious target for a country that has 16.5 crore liquefied petroleum gas (LPG) consumers after decades of efforts at taking clean fuel to homes. In the first year, state-run Indian Oil, Hindustan Petroleum and Bharat Petroleum are expected to add 3 crore consumers. “It’s a very stiff target,” said a state oil company executive who didn’t want to be identified. “The biggest challenge will be the logistics needed to serve so many new consumers, especially in the remote areas. Oil companies just don’t have enough distributors for this,” said Deepak Mahurkar, Leader-Oil & Gas Industry, at PwC. State companies currently serve consumers through about 18,000 LPG distributors and plan to add 10,000. Executives at state oil companies say appointing so many distributors quickly wouldn’t be easy. “The hard part will begin now. It will be a challenge for our distributors to reach out to the deeper rural and tribal areas, where we don’t have much presence today and which is where most new consumers will come from,” another state oil company executive said. The purchasing power of potential new consumers could be another hurdle and many of the poor families likely to be provided subsidised gas connections may not necessarily use it much, said Satwant Singh, a former executive director (LPG) at Indian Oil, the country’s top distributor of cooking gas. “In our experience, lower-income rural consumers do not seek more than 4 refills a year, while the government provides for 12 subsidised refills. This means many of these cylinders meant for the poor will end up on the black market,” he said. A commercial LPG cylinder costs about a third more than a non-subsidised domestic cylinder in Delhi due to customs duty and sales tax. The taxes vary from state to state. This difference in prices can become an incentive for consumers and distributors to divert cylinders to the black market, Singh said. Some poor families might be encouraged to give away their existing regular connections to opt for fresh subsidised ones, while some others who have already benefitted in the past under another scheme might seek a fresh subscription as the new one is being issued in the name of women, Singh said. The executives said it would be a headache for oil companies to filter data of poor families eligible for Rs 1,600 subsidy on fresh connections and is putting in place an elaborate system for that. James Bradberry Jersey
ONGC crude oil output up in FY16
State-owned Oil and Natural Gas Corp’s (ONGC) crude oil production has risen for the second consecutive year in 2015-16 but natural gas output continues to decline. ONGC produced 22.37 million tonne of crude oil in the financial year ended March 31, 2016, a notch higher than 22.26 MT in the previous fiscal, a senior company official said. In 2014-15 it had reversed a 7-year declining trend in crude oil production as it brought small and marginal fields in western offshore to production. Output of 22.263 MT of crude oil from April 2014 to March 31, 2015 was higher than 22.247 MT in the previous fiscal. “Most of our major fields are three to four decade old where natural decline has set it. So the challenge before us is to arrest this by investing in enhanced and increased oil recovery schemes and bring newer deposits into production,” he said. ONGC used to produce more than three-fourth of country’s oil needs but that share has slipped down to 60 per cent now. It had produced 26.05 million tons of crude oil in 2006-07, which dipped to 25.94 MT in the following year. That year its share in nation’s oil production of 33.51 MT was 75.7 per cent. ONGC’s production fell to 25.37 MT in 2008-09; 24.67 MT in 2009-10; 24.42 MT in 2010-11; 23.71 MT in 2010-11; 22.56 MT in 2012-13 and to 22.25 MT in 2013-14. Its 22.37 MT of output in 2015-16 is 60.5 per cent of country’s 36.95 MT of production. The company has been under critical scrutiny ever since the BJP government took office in May 2014. Oil Ministry has been monitoring its performance on a monthly basis. The official said output has increased primarily due to about 1 MT of additional production from offshore fields. Natural gas production however continues decline, falling to 21.17 billion cubic meters (BCM) in 2015-16 from 22.02 bcm in the previous fiscal. ONGC, which produced 22.49 bcm of gas in 2008-09, saw output peak to 23.55 bcm in 2012-13 but has since then been falling. Its current output makes up for 65.6 per cent of the country’s production of 32.25 bcm. “We are in the process of developing a series of gas fields on both western and eastern offshore and production will start to look up from this fiscal,” the official said. Alex Mack Womens Jersey
Construction of Highways in Himalayan Region
At present, the connectivity through National Highway for Kedarnath in Uttarakhand is up to Gaurikund, beyond which there is pedestrian pathway of 17 km length. The project of widening and improvement of National Highway to two lane with/without Paved Shoulder from Rudraprayag to Gaurikund for 76 km length is being taken up in a phased manner. The start of development & improvement of works is targeted for commencement from 2016-17 with completion by 2020. During last two years, works amounting to Rs. 350 Cr have already been sanctioned on this National Highway. Jason Pierre-Paul Womens Jersey
ONGC may buy 50% in GSPC block amid Cong vs BJP storm over Rs 20,000 cr
The central government-owned ONGC and the Gujarat government-owned GSPC are in advanced talks to negotiate the price at which ONGC will take a 50%+ stake in the latter’s 1,850 square kilometer KG Basin block, KG-OSN-2001/3, which is set to commence commercial production as early as next month. GSPC is the operator for the block and has an 80% share in the consortium. Neither officials at ONGC nor the GSPC-consortium wished to comment on the contours of the likely sale. Nor did petroleum minister Dharmendra Pradhan. The deal is likely to be completed within the next few months and ONGC is likely to acquire a 50%+ stake in the deal for a price of anywhere between $2 and $2.5bn. Though ONGC and GSPC have been negotiating the deal since November last year, ONGC is reportedly more confident of the viability of the block after having run its own simulations based on the data provided by GSPC and ratified by reservoir-management firm Gaffney, Cline & Associates. GSPC’s external consultants have also designed a new well —global major BP has also been providing some assistance — likely to start producing by September, and officials are hopeful that the flow will be better than in the previous wells. If so, GSPC can legitimately claim to have cracked the extremely difficult extraction of ‘tight’ gas, made worse by the fact that it is also classified as high-pressure high-temperature. GSPC is in the middle of a political storm with the Congress party alleging that the Rs 20,000 crore spent by it so far has been a waste of resources since there is very little gas in the block. GSPC has, however, stuck to the gas-in-place estimate of 14.4 trillion cubic feet (tcf) of which 7.6 tcf is recoverable. Based on the information provided to it by GSPC on its exploration so far, the Directorate General of Hydrocarbons, India’s oil regulator, has okayed gas-in-place estimates of over 10 tcf and recoverable reserves of over 2 tcf — see graphic. While the GSPC-consortium has already spent close to Rs 20,000 crore on the project including borrowing costs of nearly Rs 6,000 crore, it does not have the funds needed to develop the block fully — estimates are it will need another $1.5bn to develop the Deen Dayal West (DDW) field, perhaps another $1bn for DDW Extension and anywhere between $4-6bn to develop other areas such as the Six Discoveries. Though GSPC has been talking about selling a stake to global exploration firms as well, officials are more confident about dealing with ONGC since a PSU-to-PSU deal is easier. Apart from the fact that ONGC may be willing to pay more, a stake sale deal of this type entails intense negotiations which could fall foul of the CAG/CVC. While ONGC has nearly Rs 11,500 crore of cash reserves, it is in the process of embarking on its own $5.1bn gas exploration programme in the KG-DWN-98/2 block which it bought from Cairn India — unlike ONGC Videsh which has spent billions to buy discovered blocks. In September last year, OVL sealed $1.25 billion deal to acquire 15% in East Siberian project Vankorneft from Rosneft. It also forked out about $4.125 billion in a back-to-back 16% acquisitions in Mozambique’s Rovuma Area 1. ONGC has so far not spent too much money on domestic merger and acquisitions. Since 98/2 is close to the GSPC facilities, ONGC could utilize some of the facilities already erected by GSPC. GSPC has already set up well-head platform, processing cum living quarter platform, sub-sea pipeline network and onshore terminal. These facilities have a capacity to process anything between 6 and 17 mmscmd of natural gas. Utilising the existing facilities could save ONGC over $1bn in its own project. GSPC started test production from wells DDW-1 and 2 in August 2014 and from DDW-3 from September 2014. These were conventional wells where initial results were positive but did not sustain for a longer period. Currently, only DDW-2 is under test and producing about 0.1 mmscmd of gas. Later, it drilled another well, DDW-4, where it utilised hydro-fracking technology. This well, the sources said, would be put on stream for commercial production this month. The output is expected to rise after a fifth well· DDW-5 would be completed later this year. At the same time, side-tracking model would be implemented to DDW-1, 2 and 3 to hydro-frack and improve gas production from these wells. Damien Wilson Jersey
Petrol prices slashed 32 times, hiked 21 times since 2013: Nirmala Sitharaman
Prices of petrol were reduced 32 times and increased 21 times while diesel prices were slashed 19 times and raised 28 times since 2013, Commerce Minister Nirmala Sitharaman said today. The prices of ATF, petrol and diesel have been made market determined by the government since April, 2001, June 26, 2010 and October 19, 2014 respectively, Sitharaman said, replying on behalf of Petroleum Minister Dharmendra Pradhan, in Lok Sabha. “Since then, the public sector oil marketing companies (OMCs) take appropriate decision on pricing of these products in line with their international and other market conditions,” she said during Question Hour. The Minister said since April 1, 2013, petrol prices were decreased 32 times and increased 21 times and diesel prices were decreased 19 times and increased 28 times. Sitharaman said retail selling price (RSP) of petrol and diesel in the country are linked to their respective international prices and OMCs are at present applying Trade Parity Pricing methodology to compute the RSP. “Other cost elements in the RSP of petrol and diesel viz. excise duty, BS-IV premium, marketing cost and margins etc. are specific costs which do not increase/decrease with the volatility in international prices of petrol and diesel. “The element of excise duty which is specific in nature has been increased since November 2014. Most of the state governments have also increased VAT on petrol and diesel. After taking into account these factors, OMCs have passed on major portion of decrease in price to consumers of petrol and diesel,” she said. The Minister said the effective prices of PDS kerosene and subsidised domestic LPG have not been increased since June 25, 2011. Sitharaman said price of crude oil in the international market fluctuate depending on various factors including demand and supply of crude oil. Similarly, the requirement of crude oil imports for consumption of petro-products and fulfilling the needs of oil refineries is an inter play of several factors like success in new production of crude oil, blending of bio fuels, success in conservation efforts etc. The public sector oil companies import crude oil on term and spot basis as per the prevalent crude import policy, she said. The Minister said the impression that PSU oil companies make profits when the international crude price falls was “really not right” as they could make just 1.34 per cent profit after tax in 2013-14 and 1.49 per cent in 2014-15. Sitharaman said the PSU oil companies together had suffered around Rs 29,200 cross loss on petrol in the first nine months of last fiscal due to inventory cost and Rs 11,400 on diesel. Ernie Stautner Authentic Jersey
Flipkart no more bellwether of e-tail valuations
Flipkart, poster boy of Indian e-commerce, seems to be losing its bellwether status. While the Bengaluru-based company has witnessed four consecutive markdowns by global venture capital funds, the same trend is not reflecting in the valuations of other prominent e-commerce players. The markdowns, though notional, have narrowed the gap between the valuation of Flipkart and closest rival Snapdeal. While Flipkart’s valuation has dipped from $15.2 billion to $9.5 billion in the past few months, pushing it back to the 2014 level, Snapdeal is a close second with a $6.5-billion valuation. The caveat, however, is that it is only when a company is in the market to raise funds that the real valuation can be known. Flipkart’s previous major fund-raising was pegged at $700 million in June 2015, at a valuation of $15.2 billion. Snapdeal raised $200 million in February 2016, at a valuation of $6.5 billion. In February this year, Morgan Stanley marked down its stake in Flipkart to $103.97 per share, 27 per cent lower than the price at which shares of Flipkart were bought during the last fundraising. This reduced the value of India’s biggest online retailer to $11 billion. Subsequently, mutual fund house T Rowe Price reduced the value of its stake in Flipkart by 15 per cent. Flipkart no more bellwether of e-tail valuations The latest hit came as a double whammy last week when mutual fund investors – Fidelity Rutland Square Trust II and VALIC Co – marked down the value of their holdings in Flipkart by 20 per cent. Some market experts say the latest markdowns have reduced Flipkart’s valuation to around $9.5 billion. “Agreed, the markdowns are all notional and the real test would be when all these companies go out looking for funds. But if there is one more markdown, Flipkart might just end up losing the top spot to the number two player. Such valuations are important to these companies as this is how the market sentiments function,” said a senior consultant from a global financial firm. Flipkart has seen 12 rounds of equity funding worth $3 billion. In December 2014, its valuation went up to $15.2 billion, from $11 billion earlier. While previously, Flipkart’s valuation was used as measuring scale by investors to set the value of other e-commerce players in India, the recent markdowns have had little effect on other Unicorns such as Snapdeal, or Paytm, experts said. “At present, the markdown has only been for Flipkart. Others have not seen it. This, to an extent, shows it is not a market-wide phenomenon. We believe this happened because Flipkart, while doing well in some spheres, was not able to keep up its targets,” said an analyst. However, he added, “It does not mean such markdowns will not happen to Flipkart’s competitors.” To be fair to Flipkart, in the recent past, Morgan Stanley, T Rowe Price and Fidelity have marked down their other investments also. Morgan Stanley has done a markdown in data crunching company Palantir by 32 per cent, and in file storage company Dropbox by 25 per cent. Fidelity marked down its investments in Dropbox, Snapchat and Zenefits. T Rowe Price marked down its stake in Dropbox by more than 50 per cent, as well as in global cab aggregator Uber. Some market experts believe such markdowns are normal and success or failure of a company cannot be gauged by this. “Such a drop in valuation is a momentary phase, similar to rise or fall of a share in the stock market. We cannot just decide on the success or failure of a company on this basis. Global mutual funds have to file the details of their investments with the government authorities and the markdowns are done in line with the present status of their investments. It does not mean the global investors have lost faith in a particular company,” said Anil Kumar, founder and CEO of RedSeer Consulting, a research and advisory firm. Recently, Flipkart co-founder Sachin Bansal said the markdown by an investment firm was a theoretical exercise, and not based on any transaction. Michael Jordan Jersey
Kandla smart city proposal to be presented on May 11
It’s just not mega cities that are looking towards a transformation-of being smart cities-but even port towns will have this privilege. The union government had already announced development of 12 major port towns. But Kandla port form Gujarat will be one of the first to put forth its smart city plan. A presentation on Kandla’s smart city will be made on May 11 in New Delhi. The smart city plan will be executed by the Kandla Port Trust over 900 hectare. It will even extend to the neighboring Gandhidham town. The KPT has appointed Tata Consultancy to prepare a report on the smart city plan. The projects will be implemented by a special purpose vehicle and most projects will be executed through PPP mode. His is to introduce paid civic services. The KPT will handle construction of roads that connect public areas, while while internal roads and other civic infrastructure facilities will be constructed by developers. Joonas Donskoi Womens Jersey
PMC yet to receive Smart Cities Mission funds from state
The Pune Municipal Corporation (PMC) is still waiting for funds for the Smart Cities Mission even a month after the allotment was announced. The Union government had announced that Rs 194 crore would be given to Pune under this mission as part of the first instalment. The funds were to be deposited in Pune smart city project’s account within one week. Along with funds from government, PMC and the state government are expected to raise funds for the actual implementation of this project. The civic body wants to give thrust to involving private investors. The funds will be used for starting the projects in area development section i.e. Aundh-Baner-Balewadi and pan-city areas. PMC would start 15 projects under this scheme in the next three months. Smart city initiatives are estimated to cost Rs 3,480 crore. As per PMC officials, the funds were handed over to the state government on April 6. They confirmed that the funds should have reached PMC in a week’s time. “We have come to know that the funds will be dispatched soon. They are expected this month. We are following up at the state as well as the Union government level,” said PMC official Ashish Agrawal, who is working on the smart city project. Speaking about the delay, he said that the process of making budget allotments and other formalities, such as approvals from different stakeholders, are under-way, leading to the delay. The special purpose vehicle (SPV), which was registered in March, would implement the project. Named ‘Pune Smart City Development Corporation Limited,’ it has seven stakeholders. Of them, six include the mayor, standing committee chairman, leader of the House, leader of opposition, PMC commissioner and additional commissioner. The divisional commissioner would be the seventh stakeholder as a state representative. “If the PMC has to participate in the process of allocation of funds, we will be informed accordingly. We are yet to get the details about status of funds,” said Ulka Kalaskar, chief accountant of PMC, replying on what role PMC will play to utilise the funds. Conor Sheary Authentic Jersey
Bengaluru : The City needs a sustainable and realistic plan
Citizens expecting solutions to traffic woes, mounting garbage and missing municipal services may be disappointed as the plan does not address these sectors directly . Following the diktats of the Karnataka Town and Country Planning Act 1961, it addresses land use, road networks, reservations, and building regulations. These limited aspects, however, have a significant impact on the city’s future.Key opportunities include: 1) Reviving the city centre to avoid the `donut’ effect: Twenty nine wards are witnessing declining population growth rates. These areas within the inner ring road of the city have the highest levels of municipal services and public transport access. Relaxing rigid zoning, introducing mixed uses, increasing densities and FAR (built up area) will encourage redevelopment and increase the affordability and supply of building stock.Attempts to lower FAR artificially, below than what is already consumed, could be counterproductive. The unsustainable `donut’ effect -where the city centre empties out and un-serviced peripheries become the destinations for housing and jobs -must be avoided. 2) Uniting urban form with mass transportation: With billions being spent on the metro rail network, the shape and pattern of urban development must complement it. The highest mix of uses, FAR, dwelling unit densities, parking maximums and quality public spaces need to be encouraged to form `transit-oriented development’.This will reduce time and distance of travel, encourage people to walk, bicycle and use public transport and reduce reliance on personal vehicles. 3) Involving local stakeholders through local area planning: Implementing the generalised city master plan locally will be futile without interactive participation. The Master Plan and the KTCP Act 1961 must enable Local Area Plans (LAPs) at the ward level to bring in local knowledge, dynamism, values and priorities. LAPs serve as the common platform to bring together planning agencies, service provision agencies and people to implement proposals on the ground. 4) Adopting alternatives to compulsory land acquisition: Critical projects such as the Peripheral Ring Road have been languishing due to resistance from land owners and prohibitive costs. Alternatives with better success are being used in other states, such as land readjustment and land pooling.These mechanisms only readjust enough land to provide roads and amenities while the remaining is returned to the owner. The plots reduce in size but increase dramatically in cost, reducing dissent.Master plans unfortunately , are notorious for their violations than their implementation. Routine setback encroachment, disproportionate FAR consumption, non-permissible uses, and buildings on reservations occur. Fixes are later attempted through self-assessment fees for violations or change of use, de-notification, begging the question whether such controls-based planning is effective at all. While debates and complexities abound on whether to adopt the more effective international planning frameworks or leave it to the Bangalore Metropolitan Planning Committee, the BDA is getting ready to release its draft plan. Let’s hope a sustainable and realistic plan awaits us. Josh LeRibeus Jersey
Only 40% of funds cleared for highway maintenance: Panel
Governments have come and gone announcing projects worth lakhs of crores of rupees to build new highways and expressways, but none has allocated required budget for maintaining the expanding National Highway stretches. A parliamentary panel has cited how this allocation is barely 40% of the requirement. “Since, maintenance is a non-plan activity, governments have a tendency to apply ad hoc cuts due to resource constraints,” the committee has observed in its report submitted to Parliament last week. This comes as a wake up call for the present government, since highway minister Nitin Gadkari has announced plans to bring more state roads under NH network and increase its length from the present 1.3 lakh kilometres to two lakh kilometres. Once a state road is notified under NHs, state governments stop maintaining them. The committee has observed, “For 2016-17, only Rs 2,834 crore has been allocated for maintainance as against the estimated fund requirement of Rs 7,070 crore.” The non-plan allocation for maintenance of NHs in budget estimate of 2015-16 was Rs 2,701.40 crore. This was decreased to Rs 2,698.40 crore at revised estimate stage. The panel has recommended that maintenance work be given increased priority and to enhance fund flow. “This can be done by diverting funds from those heads where savings are expected,” the panel has suggested. Lavonte David Authentic Jersey