Air India board discuss FY15-16 financial performance
Air India’s board today discussed the national carrier’s financial performance in the last fiscal for which it has been projected to record an operational profit of Rs 8 crore. During its meeting here, the board also discussed about independent directors as some of them would be completing their respective terms soon, a senior official said. The board mainly discussed the carrier’s financial performance during the last financial year, according to the official. Battling tough market conditions and stiff competition, the airline has been registering losses for quite some time, but its performance has improved in the last few quarters. “Air India’s all-time performance has increased. This year, it is making profit, which is the first time in the last 10 years. It is making an operating profit. Air India is doing good work,” Civil Aviation Minister Ashok Gajapathi Raju had said earlier this month. The airline is expected to post an operating profit of Rs 8 crore in 2015-16. There are 11 members on the board, including CMD Ashwani Lohani. Director (Finance) V Hejmadi, Director (Personnel) N K Jain and Director (Commercial) Pankaj Srivastava. The government nominees include Gargi Kaul and B S Bhullar, both joint secretaries at the Civil Aviation Ministry. There are five independent directors — Gurcharan Das, Prem Vrat, K K Nohwar, R H Dholakia and Renuka Ramnath. In March, Minister of State for Civil Aviation Mahesh Sharma had said Air India was “expected to earn operating profit of Rs 8 crore as compared to the operating loss of Rs 2,636.18 crore in the previous year”. “This is the first time that the company is going to achieve operating profit since its merger in 2007-08,” he had said. Air India ran up losses to the tune of Rs 5,859.91 crore in 2014-15. The improvement is anticipated mainly on account of a steep fall in the jet fuel price, which accounts for 40 per cent of an airline’s operating expenses. In 2012, the government had extended a Rs 30,231-crore lifeline to the national carrier under a turnaround plan stretching over a period of nine years to keep it afloat. Under the 2012 Turn Around Plan (TAP), the government would infuse Rs 18,929 crore for repayment of government- guaranteed loans/interest till 2010-21. Reid Duke Authentic Jersey
Only 27 per cent passengers at international airport aware of customs rules: Survey
There seems to be an awareness gap among passengers about customs norms with a survey by a government agency revealing that only 27 per cent of the respondents travelling at the city international airport claim to fully know them. “There is a gap between what passengers should know and what is currently available. While only 27 per cent were fully aware of the Indian Customs rules and regulations, what is permissible and not permissible, the vast majority was either partly aware or unaware of the legal requirements,” according to a survey initiated by the Central Board of Excise and Customs (CBEC). CBEC, along with a management school, conducted a survey about the Passenger Satisfaction Levels (PSL) of customs clearance process at the Chhatrapati Shivaji International Airport (CSIA), which is one of the largest airports in India in terms of the international passenger traffic. The survey’s scope was to assess PSLs with the customs clearance process. It was conducted for a week and its sample size involved 731 passengers. While only 28 per cent of passengers felt that their experience with Mumbai customs vis-a-vis international customs was much better, 41 per cent passengers felt that the experience was somewhat better, it said. Only 4 per cent travellers felt that it was worse. The survey also found that 35 per cent of the respondents mentioned that the clearance process has drastically improved and 37 per cent said there was a marginal improvement. About 50 per cent passengers took 1 to 14 minutes for their immigration clearance while 59 per cent took the same time in baggage handling and 38 per cent in customs clearance, the survey found. Rob Gronkowski Jersey
New DGH Atanu Chakraborty promises level playing field for E&P players
With contractual disputes dampening India’s efforts to step up investment in its oil and gas hunt, the new DGH Atanu Chakraborty has promised to expeditiously resolve issues, iron out bottlenecks and make decision-making transparent. The Directorate General of Hydrocarbons (DGH), which had been at the centre of controversies, is looking to start with a clean slate by supporting exploration and production (E&P) activities of oil and gas to cut down import dependence. The IAS officer, who took over as the head of DGH last month, in his first message on the regulator’s website said accelerated indigenous exploration efforts are required to meet Prime Minister Narendra Modi’s target of reducing import dependence by 10 per cent to 67 per cent by 2022. “The need of the hour is to make utmost efforts to smoothen out bottlenecks with mutual cooperation and support with the highest level of transparency and procedural alignment. In line with the same approach, we intend speedy resolution of contractual and technical issues within the ambit of DGH in the near term,” he wrote. Of late, DGH has been accused of over-regulation by controlling expenditure of operators as well as insisting on its own set of technical parameters for recognising gas discoveries. It also found itself at the receiving end when it was seen approving a higher capex for KG basin gas fields when production did not match targets. According to Chakraborty, DGH’s contribution in creating a progressive and conducive atmosphere for the E&P sector would be “to adopt the role of an enabler, facilitator and ensure a level-playing field”. Reaching out to E&P companies and service providers for “all-out positive support”, he invited stakeholders to provide suggestions and ideas on upcoming projects. “At the same time, I urge my able DGH team to further expand their horizon and deliver to newer expectations to the best of their capacities,” he said. For better efficiency, he proposed that DGH and the E&P fraternity be more linked and synergistic. “Let’s us help each other in developing a transparent and effective interface that ensures implementation of government policies in order to provide the required impetus to the growth of E&P sector of the country,” Chakraborty added. The world oil and gas scenario, Chakraborty felt, is at the point of inflection. “Low oil prices coupled with technological developments have changed the oil economics all around the world. Shale gas evolution and falling LNG prices have broken all the barriers, compelling the select nations to undo prevailing cartel practices and prevent artificially jacking up of crude oil prices,” he said. Jamal Adams Jersey
As no deal with Iran yet, ONGC may lose gas field to Saudi Arabia
India’s flagship explorer ONGC is facing a repeat of KG fiasco in Iran as lengthy negotiations on terms may drive it to a point where its discovered gas reserves in Farzad-B field in the Persian Gulf may be drawn out by neighbouring Saudi Arabia. State-owned Oil and Natural Gas Corp (ONGC) alleges that 11.12 billion cubic meters of natural gas worth Rs 11,055 crore has flowed from its idling Krishna Godavari basin blocks in Bay of Bengal blocks to neighbouring KG-D6 fields of Reliance Industries. And the same is now on the verge of repeating in the Farzad-B field, which it had discovered in 2008 but no contract to exploit the 12.5 trillion cubic feet of recoverable reserves has so far been concluded with Iran. Sources said a portion of Farzad-B field extends into territorial waters controlled by Iran’s regional arch-rival Saudi Arabia. Saudi Arabia has already drilled wells on the area falling in its territory, which it has named Hasbah field, and has begun production. The two fields are connected, with the area falling in Iranian territory holding larger share of 12.5 Tcf of recoverable reserves while the Saudi territory has only 3 Tcf or so. But the two fields are connected and whosoever is able to move first would extract more benefits. Sources said in the dispute with RIL, ONGC is claiming compensation for its gas flowing through under-sea connected reservoir to KG-D6 and the government has constituted a one-man committee to look into the issue and suggest compensation. But such a thing may not be possible for Farzad-B as rivalry between Saudi Arabia and Iran may prevent from arriving at any internationally recognised practice of splitting the spoils in conjoined fields. It was expected that Prime Minister Narendra Modi’s visit to Tehran today and tomorrow may see finalising of a contract, giving developmental rights of Farzad-B field to ONGC Videsh Ltd, the overseas arm of the state explorer. But Iran is yet to agree to USD 4.3 billion master development plan submitted by OVL. Also, it is yet to agree on the price at which OVL can take all of the gas produced from the field, they said adding that no definitive contract for the development of the field would be signed during Modi’s visit. Previously, Iran was to pay OVL a fixed fee for its effort for discovering and producing gas from Farzad-B field. The gas ownership was to be with Iran and so Tehran was pushing for a low price of gas. But now a new modified contract is being talked about which will part ownership of the gas produced to OVL. And so naturally, Iran is now seeking a higher gas price, they said. Once investment in the field and the gas price are frozen, possibly by August-end, an agreement confirming development rights on OVL will be signed. But after that negotiations on the terms of the contracts – fixed fee or ownership of gas as well as marketing of the fuel, will begin, sources said adding the entire process may take one year time. Also, Iranian Parliament, Majlis is yet to approve new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium. IPC ends two-decade old buyback system that prevented foreign companies from booking reserves or taking equity stakes in Iranian companies. Under some circumstances, the new model allows reserves to be booked, but foreign companies would still not own oil fields. While previously foreign firms were paid a fixed fee for discovering and bringing to production an oil and gas field, the new model raises their profit by grading the fee based on the risk of the fields, allows contracts to last for up to 25 years and no ceiling on capital expenditure. Foreign firms are to be paid a fee per barrel and they will also be entitled to an increase in profits in the face of dramatic oil price fluctuations. Back home, ONGC believes the KT-1/D-1 gas find in its Krishna Godavari block (KG-D5) and G-4 Pliocene gas find in Godavari Block extend outside the block boundaries into KG-D6. According to ONGC, RIL’s D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from the G-4 field while the D6-B8 well may be sucking out gas from DWN-D-1 field of KG-DWN-98/2 block. RIL has denied allegations saying RIL it has “scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block” in Krishna Godavari basin. Edgar Martinez Jersey
GMR to set up an LNG terminal at Andhra’s Kakinada port with a funding of Rs 471 crore
GMR Group is in the process of setting up an LNG ( liquefied natural gas ) terminal at Andhra Pradesh’s Kakinada sea port with an investment of Rs 471 crore. According to minutes of the meeting held by Expert Appraisal Committee (EAC) under the Ministry of Environment and Forests , the project envisages a start-up capacity of 1.75 million tonnes per annum (MTPA) which comprises of captive use by GMR Energy Limited to the tune of 0.85 MTPA, with the balance for domestic piped and non-piped users within a radius of 450 kms. GMR Holding Pvt Ltd has proposed for development of LNG facility with capacity of 1.75 MTPA at Kakinada Deep Water Port (KDWP) berth 7 located adjacent to survey no. 317/318, GMR barge mounted power plant located at survey no. 411, 413, tehsil Kakinada, district East Godavari, Andhra Pradesh. “The proposed LNG facility consists of the following…development of necessary facility/ equipment for ship berthing and mooring, LNG unloading arms with all safety measures, LNG storage and transportation, onshore insulated cryogenic pipeline, LNG regasification facility and pipeline for connectivity to existing gas distribution grid,” the EAC said. While recommending the term of reference for the project, the EAC asked the company to conduct a public hearing, besides laying down other conditions. “During presentation, project proponent (GMR) informed that regasification plant will also be installed at berth no. 7. Cost of project is Rs 471 crore. Power requirement will be 8 MW. Coringa Wildlife Sanctuary is located at a distance of 1.5 kms south,” it said. Meanwhile, the EAC deferred its decision on environmental and CRZ clearance in case of proposed greenfield facility for import of 5 MMTPA LNG Floating Storage Unit (FSU) and handling facility within Krishnapatnam Port Ltd, Nellore, Andhra Pradesh by LNG Bharat Pvt Ltd. The committee suggested the project proponent that it should submit all the requisite documents to Andhra Pradesh Coastal Zone Management Authority as sought by them. Pierre Pilote Authentic Jersey
Crude spike sparks call for duty cut
There is a growing pressure on the Narendra Modi-government to cut excise duty on petrol and diesel at a time global crude prices have spiked to a six-month high of about $50 per barrel and inflation is showing signs of inching up. However, officials said they would “watch the trend before taking any action as they cannot let inflation go out of hand”. After showing a downtrend since June 2014, crude prices have been on the rise since January 20 this year. Brent has declined from the high of $115 per barrel to a low of $26.39 a barrel in January and surged to around $50 last week. The excise duty on petrol has increased 126.6 per cent to around Rs 21.48 per litre from Rs 9.48 per litre in July 2014. In the case of diesel, it has been hiked 386.8 per cent to Rs 17.33 per litre from Rs 3.56 per litre. “The government could look at reducing the excise duty at some point. This would be when the price of petroleum products increases and the burden falls on the consumers. The government’s primary responsibility is to give relief to consumers and we will do this,” petroleum minister Dharmendra Pradhan had said. The Indian Foundation of Transport Research and Training (IFTRT) has written to finance minister Arun Jaitley seeking a rollback of the nine excise duty hikes on diesel between November 2014 and January 2016. “The central government and later various state governments periodically increased excise duty and sales tax on diesel to retain the benefit of plummeting international crude oil prices. Now, the international crude oil prices have shot up… the truck rentals, too, are shooting up more because of the diesel price hike and other reasons. It is high time that the Centre reduces/rolls back at least half of the excise duty increase on diesel since November 2014,” S.P. Singh, senior fellow at the IFTRT, wrote in a letter to Jaitley. Goldman Sachs had said supply disruptions from Nigeria – Africa’s biggest crude oil producer – would lead to a deficit. This triggered the prices to head north and touch a six-month high last week. The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of another price crash to as low as $20 per barrel. The NDA government took the benefit of a drastic fall in oil prices and hiked the excise duty on auto fuel several times since November 2014 to garner up to Rs 700 billion. India is highly dependent on imports to fulfil its energy needs. Therefore, the fall in crude prices has not only helped the government control its current account and fiscal deficits but also rein in inflation, which had been posing a serious challenge to the economy. However, the recent spike has again raised concerns of current account deficit rising as soaring oil prices have the potential to push up inflation besides increasing costs for the industry.
ONGC struggling to exploit 12.5 trn cubic feet of discovered gas reserves in Iran
India’s flagship explorer ONGC is facing a repeat of KG fiasco in Iran as lengthy negotiations on terms may drive it to a point where its discovered gas reserves in Farzad-B field in the Persian Gulf may be drawn out by neighbouring Saudi Arabia. State-owned Oil and Natural Gas Corp (ONGC) alleges that 11.12 billion cubic meters of natural gas worth Rs 110.55 billion has flowed from its idling Krishna Godavari basin blocks in Bay of Bengal blocks to neighbouring KG-D6 fields of Reliance Industries. And the same is now on the verge of repeating in the Farzad-B field, which it had discovered in 2008 but no contract to exploit the 12.5 trillion cubic feet of recoverable reserves has so far been concluded with Iran. Sources said a portion of Farzad-B field extends into territorial waters controlled by Iran’s regional arch-rival Saudi Arabia. Saudi Arabia has already drilled wells on the area falling in its territory, which it has named Hasbah field, and has begun production. The two fields are connected, with the area falling in Iranian territory holding larger share of 12.5 Tcf of recoverable reserves while the Saudi territory has only 3 Tcf or so. But the two fields are connected and whosoever is able to move first would extract more benefits. Sources said in the dispute with RIL, ONGC is claiming compensation for its gas flowing through under-sea connected reservoir to KG-D6 and the government has constituted a one-man committee to look into the issue and suggest compensation. But such a thing may not be possible for Farzad-B as rivalry between Saudi Arabia and Iran may prevent from arriving at any internationally recognised practice of splitting the spoils in conjoined fields. It was expected that Prime Minister Narendra Modi’s visit to Tehran today and tomorrow may see finalising of a contract, giving developmental rights of Farzad-B field to ONGC Videsh Ltd, the overseas arm of the state explorer. But Iran is yet to agree to USD 4.3 billion master development plan submitted by OVL. Also, it is yet to agree on the price at which OVL can take all of the gas produced from the field, they said adding that no definitive contract for the development of the field would be signed during Modi’s visit. Previously, Iran was to pay OVL a fixed fee for its effort for discovering and producing gas from Farzad-B field. The gas ownership was to be with Iran and so Tehran was pushing for a low price of gas. But now a new modified contract is being talked about which will part ownership of the gas produced to OVL. And so naturally, Iran is now seeking a higher gas price, they said. Once investment in the field and the gas price are frozen, possibly by August-end, an agreement confirming development rights on OVL will be signed. But after that negotiations on the terms of the contracts – fixed fee or ownership of gas as well as marketing of the fuel, will begin, sources said adding the entire process may take one year time. Also, Iranian Parliament, Majlis is yet to approve new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium. IPC ends two-decade old buyback system that prevented foreign companies from booking reserves or taking equity stakes in Iranian companies. Under some circumstances, the new model allows reserves to be booked, but foreign companies would still not own oil fields. While previously foreign firms were paid a fixed fee for discovering and bringing to production an oil and gas field, the new model raises their profit by grading the fee based on the risk of the fields, allows contracts to last for up to 25 years and no ceiling on capital expenditure. Foreign firms are to be paid a fee per barrel and they will also be entitled to an increase in profits in the face of dramatic oil price fluctuations. Back home, ONGC believes the KT-1/D-1 gas find in its Krishna Godavari block KG-DWN-98/2 (KG-D5) and G-4 Pliocene gas find in Godavari Block extend outside the block boundaries into KG-D6. According to ONGC, RIL’s D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from the G-4 field while the D6-B8 well may be sucking out gas from DWN-D-1 field of KG-DWN-98/2 block. RIL has denied allegations saying RIL it has “scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block” in Krishna Godavari basin. Kris Versteeg Jersey
India, Iran sign Chabahar port deal
At the ceremonial signing of trilateral Transport and Transit agreement between India, Afghanistan and Iran Modi said, “It will open new routes for India, Iran and Afghanistan to connect among themselves. India and Iran also share a crucial stake in peace, stability and prosperity of the region.” The pact to develop Chabahar Port for which India will provide USD 500 million is a key milestone. Chabahar is a port in south-east Iran that will enable India to bypass Pakistan and open up a route to land-locked Afghanistan with which New Delhi has close security ties and economic interests. From Chabahar, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 kms from the port. The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland Highway, setting up road access to four major cities in Afghanistan — Herat, Kandahar, Kabul and Mazar-e-Sharif. Besides signing a deal on development of Chabahar port, India is looking at doubling oil imports from Iran which a few years back was its second-biggest oil supplier, as well as getting rights to develop a giant gas field. Jay Novacek Authentic Jersey