Focussing on getting stuck projects operationalised: Essar Power
Debt-laden private utility Essar Power today said its focus is on getting stuck projects operationalised and profitable. The company is burdened with Rs 20,369 crore debt and is evaluating possibilities of reducing it. “Our focus and priority is to get our plants operational and profitable. We have no plans now to monetize any assets for now,” a company spokesperson said. Earlier, a company’s senior executive had said that to reduce debt Essar Power was mulling monetization of some units plants, including some of its gas-based plants in the country. Esaar Power has said it is planning to fully operationalise its 1,200 mw Mahan project in Madhya Pradesh as well as its two captive gas-based plants in Gujarat. It has two captive gas-based plants in Hariza in Gujarat with a capacity of 500 mw and 515 mw each, which are currently shut for want of fuel. The 500-mw Bhander plant in Hazira was commissioned in 2006 and commenced full commercial operations in 2008, but due to high fuel price, the firm shut the plant three years ago. The 515-mw Essar Power Hazira plant had signed power purchase agreements (PPAs) with Essar Steel and Gujarat Urja Vikas Nigam and was commissioned in October 1997. “Both these plants are ready and can go operational once we have fuel supply. We are hopeful of commencing operations on the Bhander project this quarter,” the spokesperson added. The company is also in the process of tying up for coal linkages for its 1,200 mw coal-based Tori project in Jharkhand in the next fiscal. Meanwhile, the firm has sought easier terms of repayment for some of its power plants so it matches the life-cycle of the project. Banks have given a go-ahead to that under 5:25 refinancing scheme. It extends loan repayment for infrastructure companies by up to 25 years, which can be refinanced every five years. Essar Power has already restructured Rs 10,000-crore under the scheme and hopes to complete up to Rs 18,000 crore this calendar year. Blake Wheeler USA Authentic Jersey
Government set to start talks on merging 13 state oil companies to create behemoth
The government is set to start consultations for an ambitious plan to merge 13 state oil firms to create a giant corporation whose revenue dwarfs global energy major Chevron which competes with US conglomerate General Electric in the Fortune-500 ranking. The Cabinet Secretariat has referred the idea of the integrated giant, which would also absorb various institutions related to safety, development and analysis, to the oil ministry, sources familiar with the development told ET. Following this, the oil ministry has begun the process of evaluating the prospects of creating the conglomerate, which will have a bigger market value than Russian state oil giant Rosneft and India’s Reliance Industries Ltd, sources said. It plans to consult all stakeholders including the state firms that may be combined to create the mega corporation that will be the country’s No. 1 in turnover, net profit, capital expenditure and market capitalisation, they said. The oil ministry declined comment for the story. A similar proposal was considered more than a decade ago. But the government in July 2005 said that the official committee that studied the matter felt that a merger or formation of the holding company “may not be advisable for the present”. Oil and Natural Gas Corporation (ONGC), the top oil producer and one of the largest companies in the country, leads the pack of 13 state oil companies that are being considered for the merger. Other companies include Indian Oil Corporation, the nation’s largest refiner and fuel retailer, Bharat Petroleum CorporationBSE 2.19 %, Hindustan Petroleum, GAIL, Mangalore Refinery and Petrochemicals (MRPL), Chennai Petroleum, Numaligarh Refinery and Oil India. A consolidated entity could rival the likes of Russia’s Rosneft ($55 billion in market cap) and UK’s BP Plc ($112 billion) in market value and financial power. The top six listed Indian state oil firms have a market value of $77 billion. In 2015-16, all state oil firms together reported a profit of Rs 45,500 crore on a revenue of Rs 9,32,000 crore. In the current fiscal year, they have planned a capital expenditure of Rs 87,600 crore. The government is also evaluating if the consolidated entity can include all non-corporate government bodies in the oil sector such as Oil Industry Development Board (OIDB), Petroleum Planning and Analysis Cell (PPAC) and Petroleum Conservation Research Association. A powerful integrated company would have the muscle to consider proposals like a significant stake in Rosneft. Oil minister Dharmendra Pradhan recently said Indian state firms were considering a stake in the company that pumps more oil than Exxon. The NDA government under AB Vajpayee and the UPA government in its first term had seriously explored the possibility of merging state oil companies or reorganising them in fewer units to give them heft and efficiency that would help them compete globally. In 2005, the government had also appointed a panel led by V Krishnamurthy, which advised against merging the state oil firms, arguing the dominance of a mega entity may not be good for competition in an energy-starved economy and that there were several examples of smaller specialist firms doing better. It also argued that globally, less than a third mergers succeeded in enhancing shareholder value mainly due to their inability to manage employees. The option of cutting jobs to slash costs mostly undertaken by private players after mergers is not easily available to state firms where lay offs have big political fallouts. And it requires greater political will and smart manoeuvring to offset that. Moreover, the competing interests and ambitions of top leaders and diverse cultures at companies also obstruct a smooth merger. In the last decade since the merger talks were buried, state oil firms have also changed in character, growing in size and pushing for vertical integration. Refiners like Indian Oil, HPCL and BPCL have acquired several exploration and production assets in India and overseas while ONGC has enhanced presence in refinery and petrochemicals. Kyle Wilber Womens Jersey
Air India Jul 2016
Twenty-nine Air India employees, including six airhostesses, will soon join the national carrier in the cockpit as pilots. These employees, currently working as cabin crew, aircraft engineers and dispatchers have got the rare opportunity to fly aircraft thanks to Air India chairman Ashwini Lohani’s idea of grooming in-house talent. These 29 who will soon receive their letters of intent (LOI) and join as trainee pilots on a five-year contract, qualified the technical knowledge test held on July 2. In a letter informing them of their successful selection, Vikas Gupta, senior manager (personnel), said that the candidates would now undergo an endorsement course before joining the cockpit. Of the 29, eight are deputy chief cabin crew members, 14 are senior cabin crew members, one is a senior aircraft engineer and two are from flight dispatch. An assistant manager in the commercial department will also be joining the national carrier as a trainee pilot. Air India officials informed that a similar practice of grooming employees like loaders, baggage handlers, and cabin crew to become pilots was initiated by Malaysiabased budget airline, AirAsia’s Tony Fernandes. Sam Bradford Authentic Jersey
Government is attempting to take the fuss out of flying – but airlines won’t let the plan take off
India might be the fastest developing economy in the world but 98% of the country’s citizens have never been inside an aircraft. The Narendra Modi government is trying to change that. Apart from connecting remote locations with aircrafts, the air travel regulator has been ushering new policies that will make it more attractive for travellers to fly. These policies range from faster redressal of complaints to lower charges levied on excess baggage or cancellation. The Directorate General of Civil Aviation which acts as a regulator for the aviation sector in India recently introduced a new civil aviation policy and has mandated that airlines follow its new passenger-centric rules. Behind these rules is the philosophy that airline operators shouldn’t harass or extort money from travellers in the name of extra charges – something that even the so-called budget airlines have resorted to do. DGCA has taken a stand and mandated that airlines will be charged harsher penalty than before on cancellation or delays of flights. For instance, about 1% of all domestic flights in the country are cancelled each year, causing great inconvenience to customers and a financial drain for the operator. In 2015, Jet Airways paid Rs 3 crore in compensation to passengers while Air India ended up paying a hefty Rs 13 crore. Now, this amount will go up substantially. Starting August 1, airlines will have to shell out upto Rs 10,000 per passenger on cancellation or delay in a flight beyond two hours. Moreover, carriers that deny boarding permission to passengers will have to pay Rs 20,000 in damages to the passenger. These measures are not only aimed at providing customers with fair compensation but could also end up enforcing discipline amongst the carriers. Over the three month period between March to May, almost one in five domestic flights was delayed. The ratio was even higher for state-owned operator Air India which saw 25% of its flights failing to reach on-time, according to data collected at the four metro airports of Delhi, Mumbai, Chennai and Kolkata. Jordan Jenkins Jersey
Airport devpt: Collector seeks legal opinion on FRA certificate
The district collector has sought the opinion of legal experts on whether a Forest Rights Act certificate (FRA) is necessary to acquire land for the airport’s expansion. The project office of the integrated tribal development agency had said that the FRA certification is not necessary for the pending airport proposal. The airport needs some 10 hectares of forest land from Gadmudshingi village. Before its acquisition, a certificate is necessary to ascertain that no violations have been committed under the act. The agency had said that as there have been no such cases, the FRA certificate is not necessary. District collector Amit Saini, who also heads the district aviation committee set up to clearing the pending issues of the airport, however has sought legal opinion to clarify the issue. “I need legal opinion because it is a tricky issue and I need to check all sides before going ahead for commencement of the airport. Generally, the state commissioner for tribal development issues a certificate regarding Forest Rights Act violations. In Kolhapur’s case, I need to check whether the certificate from the agency would be sufficient. If yes, then we can go ahead and speed up the procedure of land acquisition. If I need to obtain a certificate from the tribal commissioner, I will have to initiate communication accordingly,” Saini said. Patrick Mahomes II Jersey
Aviation on cusp of vertical take-off
When real estate tycoon Niranjan Hiranandani of the Hiranandani Group was asked during a seminar organied by Indian Merchants’ Chamber (IMC) four years back to talk on “what needs to be done to bailout the Indian aviation industry”, the businessman was quick to reminisce his early days when he had to call someone in the Prime Minister Office (PMO) for cancelling and rescheduling of his air ticket. “It used to be a huge task then for even trivial things like booking or cancelling an air ticket,” Niranandani said. “The industry has certainly come a long way since the pre-liberalisation days. I can recollect during those days people would literally beg for getting plane seats, especially during emergency situations,” said Devesh Agarwal, a Bengaluru-based aviation expert and blogger. Speaking to dna, Agarwal, a frequent flier, recounts as how when his grandfather took seriously ill during early 1990s, his father drove all the way to Chennai during the night (roughly about six hours) to catch flight next morning from Chennai. “There were hardly three flights from Bangalore then.” he said. “Also, these fares then used to cost a bomb as a result of which it was away from reach of common man.” Experts say the industry has since then come a long way with flights lined up every few hours on most major and non-major routes. With India’s GDP forecast to grow at around 7.5% in FY2017, aviation industry consultant CAPA expects double-digit traffic growth of around 8-10% for international and close to 15% for domestic sectors. This would result in international traffic increasing to 54-55 million passengers and domestic traffic to around 80 million. Domestic traffic could rise higher if airlines engage in extended periods of aggressive pricing. The number of fliers was about 7.27 million passengers in 1994-95. Eric Weddle Authentic Jersey
PFC, REC will drop interest rates to double lending in three years
State-run power financiers Power Finance Corp (PFC) and Rural Electrification Corp (REC) will slash rates to single digits when lending to renewable energy projects following the government’s order setting tough targets for the two companies to double their exposure in the next three years. In order to achieve the targets, PFC will have to sanction Rs 1.5 lakh crore loans and REC Rs 1 lakh crore by 2019. Both the companies are likely to make formal announcements very soon. In a three-hour long review meeting with Piyush Goyal, minister for power, coal, renewable energy and mines, the two companies on last Thursday were asked to grow their businesses by 100 per cent by 2019, with specific focus on renewable energy projects. The meeting with industry and the two PSUs had lot of surprise elements with REC and PFC unaware of the presence of industry while the private firms were not informed about Goyal’s presence. In early July, Goyal had asked PFC and REC for presentations on special focus on renewable energy. After industry complaints, the minister prodded the companies to take up smaller renewable projects and asked the two firms to reduce cycle time for loan evaluation to disbursal to 60-90 days for renewable energy projects that take about a year to get commissioned. The companies take about 170 days for the same which has been constantly reducing.The time has significantly dropped from 292 days in 2015-16. The ministry has also asked the two companies to form external committee consisting of sectoral experts for an independent evaluation of lending to renewable energy projects. REC sanctioned Rs 2,966 crore in 2015-16 to renewable energy projects, up four times from Rs 548 crore in 2014-15 The two companies have recently reduced their interest rates to renewable projects. REC lends to renewable energy projects at between 10.5 per cent and 11.5 per cent depending on factors like project viability and promoter’s strength. Whereas interest rates on loans to conventional and hydropower projects are higher at 11.75 per cent to 13.40 per cent. The move is aimed to boost renewable sector as well as utilise cash that the two financiers will receive in lieu of loans lent to state-run power distribution companies post implementation of Ujwal Discom Assurance Yojana (UDAY). Under the debt recast scheme, REC and PFC will recover their debt exposure to state discoms in cash. The two companies have an exposure of over $20 billion to state discoms. The non-banking Finance companies plan to utilise the cash to finance energy projects, mainly green energy plants such as solar, wind and biomass power plants. Lack of new conventional coal and gas projects by private companies has prompted the two companies to shift focus to renewable sector. Presently, renewable energy projects constitute nearly 10 per cent of the loan portfolio of REC and PFC. Brendan Gallagher Womens Jersey
NTPC plant’s prospects hinge on LNG pricing
The survival of National Thermal Power Corporation (NTPC) Ltd’s thermal power plant at Kayamkulam is linked to the pricing mechanism of natural gas, that is, the plant can solve the energy crisis of Kerala if the global pricing system takes a new turn. Alternatively, the Union government will have to take measures to end the disparity in the prices of domestic and imported gas. Global prices are set according to an international system. There are a few popular formulae to calculate the prices. Two of the most widely accepted pricing systems are Japan Crude Cocktail (JCC) and Henry Hub pricing. Both are linked to international crude prices, according to experts in the industry. Natural gas is supplied mostly on long-term contracts. The gas can be brought through spot markets as well. With increased availability of natural gas, spot prices have become more attractive. In the event of natural gas-based power production at the NTPC unit, gas could be sourced from the Petronet LNG terminal where gas is supplied on a long-term international contract. The price of imported gas reaching Kayamkulam could be a matter of concern to Kerala State Electricity Board, which is the sole purchaser of power from the plant. Unless the prices are low, the cost of production will go up, resulting in higher price for electricity generated at the plant. The NTPC has been providing electricity under its naphtha-based fuelling system at about Rs.7 a unit, whereas the KSEB has been getting power at cheaper rates from other sources. If LNG is made available at lower prices, the plant could function at its installed capacity of 350 MW. The plant has a plan to increase the capacity to 1,050 MW. Again, the expansion plan is hinged on the profitability of operation. At present, the prices of imported LNG offered to entities in Kerala are above $12 per million Btu (British thermal units), while the gas available from domestic sources are provided at less than half that price. Kerala being not connected to the national gas grid, it has to depend on imported gas. Rob Havenstein Womens Jersey
Power sector acquisitions to get cheaper next year: CESC
RP Sanjiv Goenka Group flagship CESC Ltd is expecting acquisition opportunities in the power sector to get cheaper over the next 12 months. “Opportunities will come cheaper in a year or so. This is our articulated calculation for it,” the group’s Chairman Sanjiv Goenka said recently on the sidelines of the company’s annual general meeting (AGM). He was responding to questions on acquisition of stressed assets in the power sector. “A dedicated team is working towards identifying stressed assets and we have well articulated principles laid down for it. We look only at assets which are completely viable in terms of inputs and output. “Unless the basic operation of an asset is profitable, we are not interested even if it comes cheap,” he said, adding that the power ministry has sorted out several issues facing the sector. In 2009, CESC acquired Dhariwal Infrastructure Ltd’s 600 MW Chandrapura thermal project in Maharashtra. However, the project now has accumulated losses of ?600 crore, but is expected to turn revenue positive once a Power Purchase Agreement (PPA) for 150 MW is signed over the next three months. “We have so far tied up for almost 300 MW and another 150 MW is expected over the next three months. With this, our total PPA for Chandrapura will be 450 MW, out of 540 MW effective capacity. Annual revenue will be about ?600 crore and with this, we will be profitable,” Goenka said. Haldia Energy, which operates a 600-MW thermal power plant at Haldia, has achieved 100 per cent ash utilisation and is exporting ash to Bangladesh for cement making. Ronnie Harrison Authentic Jersey
People restore power transmission in Siang
The residents of Pangin, under the guidance of Siang DC Rahul Singh, have created a record of sorts by repairing and restoring power transmission between Yembung and Pangin. The power supply had remained disrupted for a long time even after the restoration of Yembung Hydel Plant three months ago. The department concerned was not being able to transmit power to Pangin as the two poles were totally damaged because of construction of Trans Arunachal Highway and landslides. Official reports stated that the power department had failed to restore the system for the past three months owing to the alleged paucity of government funds. DC Singh had mobilized the locals, including officers and staff of various departments, local leaders and villagers to make a joint initiative in the area. With the help of power department, they successfully erected two new poles without any financial assistance from the government and revived the transmission after hours of toiling. The DC, while appreciating the locals for their endeavour, asked them to make such united efforts in future whenever the need arises. He promised all possible help to the power department officials to carry out their duties, a report said here on Saturday. A.J. Derby Jersey