Oil ministry seeks uniform taxes on LPG for domestic, commercial use
The oil ministry is seeking to rationalise taxes on cooking gas sold to all types of consumers in order to block diversion of cylinders meant for domestic use, ministry officials said. It has written to the finance ministry to impose uniform taxes on cooking gas, or liquefied petroleum gas (LPG), used for domestic and commercial consumption. The finance ministry will take a final call on the demand that was also made in the past. Gas cylinders meant for domestic use attract no taxes at present while commercial users have to pay a basic customs duty of 5 per cent, additional customs duty of 8 per cent and a central excise duty of 8 per cent. In addition to central taxes, commercial users have to pay local levies imposed by states. All these duties together make commercial LPG about a third more expensive than domestic. In Delhi, non-subsidised cooking gas costs about Rs 34 per kilogram while the commercial LPG costs about Rs 45 per kg. About 90 per cent of the total LPG consumed in the country is used by households, although it is suspected that some subsidised cylinders meant for household use are diverted for commercial purpose. Besides not having to pay taxes, households also get subsidy on 12 cylinders of gas they consume in a year. The subsidy has sharply shrunk to Rs 64 per cylinder due to a nearly two-thirds fall in crude oil price in the past two years. In the meantime, the consumption of domestic non-subsidised cylinders has also sharply risen, giving rise to suspicion that some of these cylinders might be getting diverted to commercial use since there is a major price difference between the two types of cylinders due to incidence of taxes. The oil ministry wants to put an end to these incentives for diversion by having the same price for all cylinders for domestic or commercial use. One way of doing it could be to scrap all taxes from commercial cylinders, which will result in some loss of revenue that could be offset by lower subsidy due to little need for diversion of domestic cylinders, an official said. Another possible way could be to impose some tax on domestic cylinders to offset loss due to lowering of taxes on commercial LPG, and since oil prices are low, households may not feel the pinch, he said. Uniform taxes will also boost the private sector’s presence in LPG distribution. Private sector refiners Reliance Industries and Essar Oil are keen on carving a big share in LPG distribution dominated by the public sector but are hindered by the presence of subsidy and varying tax structure. India has about 17 crore domestic LPG consumers and plans to add 10 crore consumers in three years as lower oil prices keep cooking gas more affordable and the government’s fuel subsidy burden lighter. LPG consumption in the country grew 8.6 per cent in 2015-16 from that in the previous year. Sergio Romo Womens Jersey
Ludhiana looms far behind when it comes to road infrastructure
For a city that has been dubbed as the “Manchester of Punjab” for its thriving industry, Ludhiana is yet to hit the fast lane when it comes to road infrastructure. Most areas of the city continue to be at the receiving end of roads riddled with potholes. With monsoon at its peak, it is unlikely that commuting in the city is going to be a smooth ride for citizens in the near future. The worst-affected roads and areas include: Focal Point, Jaimal Road, Bhagwan Chowk, Pahwa Hospital Road, Gill Road, Basant Road, Pratap Chowk, and many others. Manoj Gupta, who resides in Model Town, said his office was in Focal Point and the roads there were the worst. “The potholes there are so deep that they damage cars. It takes twice the time to reach there only because of the condition of the roads. Repairs are a far cry. The MC has used sand to fill some of the potholes, but these only add to our woes when it rains,” he said. Atam Park resident Tarun Malhotra commutes daily to office using Gill Road. “Though Ludhiana is an industrial hub and is now touted to become a Smart City, roads have been neglected for long. Gill Road happens to be a busy industrial area, but the roads have made it difficult for the industrialists based there. Deliveries often get late because of the roads,” he said. Haibowal resident Jagdeep Malhotra said roads are basic infrastructure. “But it does not seem to be on the MC’s priority list. I am an avid cyclist, and it gets difficult to cycle on these roads,” he said. Model Town resident Daman Singh said he his car had once gotten damaged because of the poor condition of roads. “Only I had to pay for the damage to my car. Not the MC. The authorities need to fix responsibility when it comes to the condition of such roads,” he said. MC commissioner Ghanshyam Thori admitted to roads in Focal Point being in a bad condition and assured that roads would repaired after monsoon. “They will be in shape after monsoons, possibly around September 15. At Gill Road, work will be done after September 15,” he said. Matt Ryan Jersey
Kerala will get coastal, hill highways: Minister
The State Government is for building coastal and hill highways connecting the northern and southern tips of the state as part of improving road infrastructure. The government intends to complete the project worth about Rs 10,000 crore during its tenure, PWD Minister G Sudhakaran said. The decision for building these two highways was taken up at a meeting in the presence of Chief Minister Pinarayi Vijayan and Finance Minister Thomas Issac, he said. The officials in the PWD have been asked to submit a detailed project report in this regard, he said and added that they were asked to submit the report within four months. Sudhakaran also said that the highways would be constructed using the most modern techniques. The coastal highway will have a length of 606 km and the hill highway 1195 km. The Minister also said that an investigation would be held on how the former UDF government had given sanction for the projects under the District Flagship Infrastructure Project (DFIP) without having enough funds. The probe was only for knowing the reality and not to take action against anyone, he added. Refuting the allegations that the government had abandoned the projects brought by the UDF government, he said that the projects have only be stopped for a short period as funds were not available. Discussions are on with the Chief Minister and the finance minister to raise the funds, he added. He also lashed out at the previous UDF government for its projects under DFIP. As per the budget proposal, 14 projects for 14 districts were announced and an amount of Rs 1,400 crore was announced for this. Later, the number of projects was increased to 21 and sanction was given to the tune of Rs 3,771.47 crore but without any fund allocation, Sudhakaran alleged. He further said that ten of the 21 projects were given priority and administrative sanction of Rs 1,620.30 crore was given. However, he alleged that the projects were taken up without any criteria. The UDF government had proposed the projects without any fund allocation and without any clear cut vision of raising the funds, he alleged. Brian Elliott Authentic Jersey
Gaining momentum: Private players hit the road as new model fuels project pace
A steady ramp-up in the revival of private sector interest in the country’s highways sector is evidenced by an over two-fold increase in sections offered this fiscal for bidding under the government’s new project implementation format — the hybrid annuity model (HAM). This, alongside a pickup in the resolution of stranded projects, has infused fresh traction in the country’s roads sector. Progress on the ground offers some pointers. The average pace of construction for the first quarter of the current fiscal — April-June 2016 — is pegged at 21.86 km per day, up from a daily average of 16.60 km last fiscal and just over 12 km in 2014-15, according to Ministry of Road Transport and Highways (MoRTH) estimates. Since 2014-15, the Centre’s efforts to revive the roads sector saw it progressively shift focus from the default BOT (build-operate-transfer) model to projects being awarded through the EPC format — the engineering-procurement-construction model — which is less capital-intensive and where the developer is responsible for just the delivery of the completed project and thereby remains insulated from the traffic risk. The fact that the private sector is warming up to the new HAM format — a combination of EPC and BOT-annuity models where the Centre bears only a part of the traffic risk — offers fresh evidence of a turnaround in the risk-reward appetite among developers and is being construed as a pointer to renewed optimism in the sector. The numbers offer some indication of the revival in sentiment. As against 92.676 km of highway sections that were awarded under the HAM in the year 2015-16 (worth about Rs 2,582.34 crore), the projects likely to be awarded under this format in the current fiscal are over two-folds higher at 208.21 km (worth Rs 4,363.84 crore). Another 17 projects totalling 873 km have been proposed under this format in 2016-17, government officials involved in the exercise said. Adding to the renewed sense of optimism in the roads sector, widely touted as the only glimmer of hope in an otherwise bleak core sector narrative, is the progress on the resolution of stuck projects. An estimated 46 projects that were identified two years ago by the National Highways Authority of India (NHAI) as “languishing”, totalling a length of 4,860 km and entailing a total project cost of Rs 51,338 crore, is now down to 19 projects. The inherent hurdles have been resolved in 27 cases, which frees up private sector capital and equipment to be deployed in fresh projects. “Currently, no new project is launched unless the pre-construction activities are fully complete, that means in case of PPP projects, 80 per cent land has to be available and for the EPC projects, 90 per cent of land has to be available,” an official said. Apart from this, to address the paucity of equity capital and improve liquidity, the steps taken by the Centre in the last two years include permitting the securitisation of future cash flows, deferment of premium in stressed highway projects, substitution in financially stressed highway projects and 100 per cent equity divestment after two years of construction for all highway projects under PPP (public private partnership) mode. Two other key measures taken by the Centre to speed up project lead time, officials said, pertain to green clearances and coordination with the Railways. Environment clearance procedures have been eased to ensure that EC is not required for length of 100 km and even beyond 100 km, it is not required if widening is restricted to 40 metres and realignment to 60 metres. For the construction of Rail Over Bridges (ROBs) and Rail Under Bridges, the procedure for GAD (General Arrangement Drawing) approved by Railways for ROBs has been simplified and made online. Maintenance charges, which were hampering the progress of many projects, have been waived off by Railways while the standard design has been put online. The private sector participation in the road sector had witnessed severe liquidity crunch in the years 2012-13, 2013-14 and 2014-15, which resulted not just limited or no participation in the new projects awarded on the default BOT-toll format, but it also resulted in delay in completion of ongoing projects. Under the BOT model, the developer funds the project and earns returns from toll collection for the duration of the concession, resulting in the capital being locked in for a long period with the risk of revenue not adequately covering for construction and debt servicing costs. Under the HAM model, the government commits up to 40 per cent of the project cost over a period, even as it hands over the project to the developer to start road building work. A majority of road stretches offered under HAM since April this year has seen a progressive warming up of interest, with over nine road developers bidding for each of the five projects where bids submission happened. This compares with up to four bidders for each of the hybrid annuity projects announced during January-March this year. Even in sections offered under the BOT format, an uptick is palpable, with a total of 27 projects of the NHAI having achieved financial closure during the last three years. In case of EPC projects as well, increased participation among developers has translated into extremely competitive bids in recent months. Of a total of 52 EPC road projects (worth about Rs.26,700 crore) that were awarded between January and June this year, close to 40 projects were won below the NHAI’s estimated cost, according to data compiled by brokerage Equirus Securities Pvt Ltd. Pernell McPhee Womens Jersey
Govt panel clears 16 highway projects for bidding
A government panel on Tuesday cleared for bidding 16 highway projects worth Rs 7,456 crore in 11 states: Uttarakhand, Maharashtra, Haryana, Gujarat, Assam, Arunachal Pradesh, Andhra Pradesh, Sikkim, West Bengal, Chhattisgarh, and Odisha. These projects, totalling a length of 622 km, are fit for bidding now but the award of these contracts can only take place after 90 per cent of the land acquisition process is made available, Secretary, road transport and highways, Sanjay Mitra, told reporters here, after the meeting of Standing Finance Committee that approved these projects. EPC (engineering, procurement, and construction) projects would require government investment of Rs 3,876 crore. Of the total number of projects, 13 would be executed in EPC mode, two in hybrid annuity mode, and one in BOT (build, operate, and transfer) mode. These highway contracts include construction of new roads, widening and expansion of existing highways, and rehabilitation and upgrade of some projects. Mitra said detailed project reports of the projects are complete and the contracts can be put up for bidding. Large infrastructure companies like L&T, Gammon, Jaiprakash Associates and Punj Lloyd have evinced interest in executing highway projects on EPC mode. According to National Highways Authority of India (NHAI) data, in the list of 62 EPC projects, L&T bagged seven EPC highway contracts in 2015-16 and two projects between April and June, this year (2016-17). In 2015-16, 87 per cent of the projects were awarded on EPC basis. In 2014-15, the figure was as high as 91 per cent. Walt Aikens Womens Jersey
Punjab:State goes all out to sell excess power, but finds no buyers
In a desperate effort to sell excess power, the state government has made an offer to all power utilities across the country. In the offer, it says that is willing to “dedicate power from two private thermal plants” recently established in Punjab “with an aim to sell its surplus power” for which it is paying fixed charges to these plants without consuming their power. But not even a single utility in the country has come forward to buy that power. Hence, the state is unable to sell the 2,520 megawatts available with it. Highly placed officials within the Punjab State Power Corporation Limited (PSPCL) confirmed to The Tribune that Secretary (Power), Punjab, recently wrote to many states to sell and “sign a long-term contract for selling power from two of its private thermal plants”. “The letter mentions that the state power utility was willing to enter into a long-term agreement to sell roughly 2,500 MW — 540 MW (2×270 MW) from GVK Thermal power project near Goindwal Sahib and 1,980 MW (3×660 MW) from Talwandi Sabo Power Limited (TSPL),” they said. KD Chaudhri, chairman-cum-managing director, PSPCL, said that before this offer, the state utility tried as many as 19 tenders offering power at Rs 3.90 per unit, “but no buyer came forward”. “The average rate of power in the open market is around Rs 3 while power generated in Punjab costs us roughly around Rs 3.60. We even floated an expression of interest, but there was no response,” he said. Senior officials confirmed that as per agreements already signed by the state government, they would have to pay fixed charges of Rs 1,510 crore to TSPL while GVK will get 413.75 crore “even if Punjab does not utilise their power”. Punjab bought power at Rs 3.01 per unit earlier this year while power from its own plants was available for Rs 3.60. A senior official looking after power management at PSPCL confirmed that Punjab requires 5,000 to 7,000 MW per month during the non-paddy season and it met a demand of 11,400 MW this paddy season. “The excess power available over and above this requirement should ideally be sold to cut cost for other consumers in Punjab, but the problem is that there is no buyer,” he said. “We became power surplus. But instead of power rates going down, these are escalating for consumers, especially domestic,” said a senior official. Interestingly, the majority of the state-owned thermal plants are shut due to low demand and unions within PSPCL claim that the state utility is planning to shut production permanently in state-owned plants. However, senior officials confirm that units from these plants are shut only when demand is low or “there is paucity of coal”. At present, demand is very low and further declining. Craig Anderson Authentic Jersey
Power prices at five years low
The short term prices of power bought through exchanges has dipped five years low, according to a report by Edelweiss. This has led an increase of 30 per cent in power bough through exchanges in the last 6-9 months. “A recent trend in the short-term power market is that exchange traded volumes (IEX and PXIL) have surged sharply — average 30 per cent year on year jump over the past 6-9 months,” said the report. The average power price have touched lows of Rs 2.16 a unit (down to Rs 2.35 in South). “State discoms have been using this opportunity to buy cheaper power and back down the expensive medium/ long term power,” said Edelweiss. It said private independent power producer (IPPs) with some open capacity (Jindal Power, Derang, DB Power, JP Nigrie, among others) and located closer to coal mines have been supplying in the exchange market possibly earning some spread over their marginal cost — Rs 1.8- 1.9 a unit. Meanwhile, the report said that the onset of monsoon has resulted in decline in power off take over the past 45 days. “This year, rainfall has largely been normal, leading to subdued power demand from agricultural and cooling demand,” it said. Garrett Grayson Authentic Jersey
Expert group lists steps to bail out power sector
The Energy and Resources Institute (Teri) has set up the ‘Bangalore Sustainable Development Group’ comprising subject experts from varied field, to come up with all-India based solutions for sustainable development. With Teri organising the World Sustainable Development Summit in Delhi in October, it was decided to form the group in Bengaluru to highlight linkages among key areas of sustainable development by like-minded organisations, said Teri’s senior director P R Dasgupta. In its second meeting held on August 27, experts felt that despite reforms from 1991 and the path breaking Electricity Act, 2003, the power sector had accumulated heavy losses, was short of funds to buy power and diverting state government funds from other activities. As a result, 30% of Indian households are without electricity even today. Power distribution utilities in the country have accumulated losses of around Rs 3.8 lakh crore and their outstanding liabilities is around Rs 5.4 lakh crore. One of the actions suggested is to approach a Constitutional body like the National Green Tribunal to reduce the gross depletion of groundwater as many states are giving free power to agriculture. The experts felt that career professional managers are required to manage power distribution companies. It also recommended to sharply raise penalties for power theft. Other suggestions included, setting up of selection committees to select independent state electricity regulators; changing the culture of appointing retired officers as directors of discoms; setting standards for IP sets and development of smart grid technologies. The group headed by Teri’s fellow emeritus Prof S L Rao meets on last Saturdays of every month. It will submit its recommendations to the government early next year, said Dasgupta. Abry Jones Authentic Jersey
Power trading helps industrial houses bring down costs
To produce electricity or buy it? Industrial houses with captive power plants constantly ask themselves this as power on the exchange can be bought for as low as 2.80, while producing electricity can cost as much as 3.50- 4. Large-scale manufacturing units in the South are currently making use of the cheap excess electricity available on the exchanges, while running their power generation units at half-capacity. “Currently there’s cheap power available on the exchange, but that’s not to say the same situation will continue. Sometime ago I bought electricity for as much as Rs 10-11,” says a top executive at a South Indian cement major. With many states like Tamil Nadu, Maharashtra, Gujarat, Chattisgarh producing power in excess, experts say cheap electricity maybe available for a few more months going forward. With wind season strong in South now, power buyers are sitting on a problem of plenty. While power exchanges are a big help, they still cannot cope with the actual demand and supply chain, say experts. “Only 10% of power consumed in India is being bought off the exchange. More than 90% of power is still being bought from state distributors like Tangedco or utility companies like Tata Power,” says James Rajan, director- service unit, South Asia, Wartsila India. “One must also remember that not everyone has the capacity to lift/access power that has been produced. There are also tranmission constraints on the ground,” adds Wartsila’s Rajan. But the power exchange has also proved useful in another regard — handling excesses of captive power plants of industrial hubs. “See sometimes electricity on the exchange trades above 3.50. When that happens, we have sold electricity – but only when it makes economic sense and is above our production cost. I am currently consuming 120 MW by running at 60%-65% of cement capacity. At full capacity, I might require as much as 180 MW. So its all about the market’s supply and demand dynamics,” says the executive from the cement major. Electricity pricing also varies during peak hours and during the day and night. “It can even be as low as 2.20, buying for night consumption. Usually it is cheaper in the night and more expensive during the day and during peak hours or optimal hours of production,” says Rajan. If the power exchange introduces futures contracts for power buyers, pricing could get more competitive, say experts. “Hedging against eventualities will work better for large-scale electricity consumers — provided one plays the market right. It will also give impetus and increase trading frequency,” says Arjun Bharathan, founder of startup Digigrid. Andrew Billings Womens Jersey
Congress alleges power scandal by SAD
Punjab Congress president Captain Amarinder Singh on Tuesday claimed that a power scandal was unravelling itself in Punjab, where the deputy chief minister Sukhbir Singh Badal allegedly handed over power projects to private companies on a platter, resulting in a loss of hundreds of crores of rupees to the state exchequer, which was being passed on to the Punjab State Power Corporation Limited (PSPCL) consumers. Amarinder announced that the Congress government will review these projects to make up for the losses and ensure that the state’s interests are protected which have otherwise been surrendered to the private power companies by the Akali-BJP government for obvious reasons, the Akalis and the Badals are infamous for. “What was the logic in making commitment to private companies for buying power?” he asked, while adding, “with the result the state, which is already reeling under financial crisis, has to make payment to the companies without consuming their power”. He said, the brunt was being borne by the common consumers who were being slapped with exorbitant bills to facilitate payment to the private companies. He pointed out, much against the prevailing practices and the recommendations of the Central Electricity Regulatory Commission that the power projects to private companies should be allotted through competitive bidding, Sukhbir allotted these through ‘memorandum of understanding’ (MOU) route, which were heavily in favour of the private companies. “And now the state has to bear the brunt and the heavy financial losses”, he pointed out. Referring to the PSPCL’s inability to find buyers for its power produced by the private power companies, Amarinder said, thanks to the terms and conditions dictated by the private power companies, the PSPCL power generation costs Rs 3.60 per unit, while in the national grid electricity is available for around Rs 3 per unit only. The former chief minister said, he had consistently been raising the concern over the way the power projects were allotted to the private companies and his stand has now been vindicated. “Isn’t it strange and surprising that Sukhbir allowed the power companies such terms and conditions that while their interests remain protected, the PSPCL will have to bear the losses?” he asked, while alleging that it clearly proves beyond any doubt the “particular” interest for which Sukhbir has surrendered state’s interests to private power companies. Wesley Matthews Jersey