Shah panel report on RIL-ONGC dispute puts government in a fix over compensation
The official panel’s report on the Reliance-ONGC gas dispute has left the government in a fix as the report has not quantified the compensation to be paid for the gas that flowed into RIL block. This can further delay the resolution of a key issue for which the committee was set up, sources familiar with the development said. Industry executives said the report has also created consternation in ONGC, which faced stern words from the committee although the company which had gone to court against Reliance and the oil ministry alleging that Reliance was illegally pumping out its gas. Company executives resent the panel’s view that ONGC deserves no compensation from RIL. “For the government, the main issue in the terms of reference of the committee was to quantify ‘unfair enrichment, if any’, but the committee has thrown the ball back to the ministry’s court,” an official source said. The panel, which had a purely advisory status, said lack of data and “inherent technical limitations” prevented it from quantifying ‘unfair enrichment’. When the panel was appointed, RIL and Niko said it had no power to adjudicate, its decisions were not binding, and that the government’s intervention in the matter meant that the dispute could be resolved only by arbitration. Reliance has not reacted to the panel’s report but its position has been that all its drilling and field development decisions were taken with the prescribed regulatory and official approvals, and that it had extracted natural gas from wells drilled strictly within the boundaries of its own block. It said ONGC had no basis to claim a compensation. ONGC was seeking compensation for the gas that flowed out of its block, while Reliance had contested that claim. The panel said only the government could claim compensation, and criticized ONGC for not developing its own block. It suggested proper scrutiny of the company’s role in India’s oil and gas sector. ONGC declined comment on the matter, but its former chairman, RS Sharma, who led the company for five years from the middle of 2006, slammed the committee. “It’s extremely disappointing,” said Sharma, whose stint partly coincided with the period during which Reliance allegedly made “unjust enrichment” from gas that flowed into its block. “The contention of the committee that compensation should go to the government, not ONGC, is absolutely wrong. The committee has made a gross error of judgement. If the government agrees to this part of the recommendation, it will send a negative signal to all investors. ONGC by virtue of having the mining lease owns the rights to all revenues from sub-surface production,” Sharma said. The Directorate General of Hydrocarbons had initially made a similar plea to the Shah panel, arguing that ONGC possessed a “right to the economic benefits” under the contract for the gas that migrated beyond its block. Subsequently, its advocate put forth a different argument that “ONGC had no right to any restitution,” since ONGC has not produced any gas. The government later told the panel to take an independent view on the issue. “What is the sanctity of the contract if all revenues were to go the government?” said Sharma, who also heads the hydrocarbon committee of FICCI, an industry lobby. Ashok Varma, who retired as director at ONGC last year, said the panel has established two key things that the gas has migrated and that it was pumped out. “This is a key step in the long battle forward,” he said. But the resolution won’t be easy, he said. “The ministry will take a long time in quantifying the gains made by Reliance. And Reliance is not going to accept the findings anyway,” he said. Sharma vehemently denied the panel’s observation that ONGC probably had prior information about gas migration but didn’t act promptly. “The ONGC management at any level had no prior knowledge about the connectivity of the reservoirs, or that the gas was migrating from one field to the other, or that it was being siphoned off. That was a shock to me when I heard about this in 2013,” he said. ONGC had first flagged the issue in 2013. The panel has also criticized ONGC for delaying projects and recommended a further enquiry into it. Responding to this, Sharma said the deep water discovery in the KG Basin was ‘not commercially viable’ at the then prevailing price and which is why its development was delayed. “ONGC needed $6-7 per unit of gas price to make it commercially viable. But the domestic gas price was $4.2/unit. This government has now given a higher pricing for deep water gas which will now help develop this block,” he said. Case Keenum Womens Jersey
GMR subsidiary will pay 36.9% of topline for 38 years to operate new airport in North Goa
GMR Airport Ltd will pay 36.9 per cent of the topline during the concession period for managing the greenfield airport in Mopa, Goa. During a call with analysts late on Monday, senior GMR officials said that though the concession period is for 40 years, the pay-out will for 38 years as there is a two-year moratorium on the payment. GMR Airport Ltd, a subsidiary of GMR Infrastructure Ltd, won the international competitive bid for the development and operation of Mopa airport in North Goa late last Sunday. BOT mode The airport is to be built through Build Operate Transfer (BOT) initially for a period of 40 years after which it will be thrown open for bidding. The winner of the bid will get to run the airport for another 20 years. At that time, The Right of First Refusal will be with the GMR Group which will be allowed to match the bid for the airport in case it is not the winner in that round. Mopa airport is likely to become operational in late 2020 or early 2021 and will have a capacity to handle 7 million passengers. The existing airport at Dabolim and the one in Mopa will operate simultaneously and compete with each other for traffic. Operational hours “The new airport will be operational for 24 hours and unlike the existing airport where there are restrictions on the hours that it can be used by commercial airlines this problem will not exist in Mopa. Passengers will get a better airport experience,” a senior official said. Mopa is 35 km from Panjim while the existing airport is about 20 km. At the existing airport no flights are allowed between 8 a.m. and 1 p.m. Last year there was a demand for 12 charters from an international company but due to restrictions at the existing airport only five could be operated. The GMR Group already operates and controls the airports in Delhi and Hyderabad as also Cebu airport in the Philippines. Capex plans For the first phase of the project, a capex of ?1,500-1,800 crore is expected and this will be funded through a mix of debt and equity in the ratio of 70:30. While the design of Mopa airport is yet to be finalised, it is being planned as a tourist destination on the lines of Koh Samuai airport in Thailand where the sea and its cool breeze welcome passengers. Nate Hairston Authentic Jersey
Karnataka tweaks Aerospace Policy
Karnataka Cabinet has approved amendments to the Karnataka Aerospace Policy 2013-23 to make the state a favourable destination for maintenance, repair and overhaul (MRO) investments. Briefing reporters after the Cabinet meet, State Law and Parliamentary Affairs Minister TB Jayachandra said, “The amendment pertains to providing special incentives for the development of the MRO sector to complement the incentives provided in the Civil Aviation Policy and also provide incentives for the first two MROs in the state on case-to-case basis.” The policy also offers incentives for an exclusive defence park. A fully integrated defence and aerospace infrastructure facility is also planned in Bengaluru. “This is being planned in view of the Centre opening up the defence production sector through exclusive defence parks. The state plans to tap huge investments in the sector,” he said. For the development of MRO centres in the state, the state government had earlier planned the cluster approach, making Bengaluru the hub. In the amended policy, the state government is planning south cluster (Bengaluru, Mysuru, Managaluru and Tumkuru). Tumkuru hub Tumkuru is an emerging hub where HAL is building its helicopter plant at Gubbi. Bangalore Aerospace Park at Devanahalli and MRO centres at BIAL and Mysore, and a defence manufacturing cluster at Managaluru are also being planned. The amendments have been made in view of the 33 project proposals received at ‘Invest Karnataka’ meet held early this year. The proposals are to the tune of ?14,520 crore with the potential to generate over 10,000 jobs. Jayachandra said state government is determined to demolish all buildings, including massive malls and apartment blocks, built on major storm water drains in Bengaluru. It also includes massive apartment block built by Prestige Developers in Bellandur area. The demolition drive by the BBMP to clear encroachments on storm water drains during recent rains had come under criticism as people alleged that while homes of the poor were being demolished, large buildings belonging to the rich and influential builders were spared. “We will demolish all buildings illegally built on such drains, be it a massive apartment blocks, malls or an ordinary house,” he said. Borje Salming Jersey
Government approves Rs 7,457 crore highway projects in 11 states
Government approved 16 highway projects in 11 states to be executed at a cost of Rs 7,457 crore. “The standing finance committee (SFC) today cleared 16 projects worth Rs 7,456.88 crore for 622 km,” Road Transport and Highways Secretary Sanjay Mitra told reporters. Of these, two projects will be built on hybrid annuity mode, 13 on engineering, procurement and construction mode and remaining one on build, operate and transfer (BOT) mode. The projects are in Maharashtra, Odisha, West Bengal, Andhra Pradesh, Gujarat, Chhattisgarh, Haryana, Uttarakhand, Arunachal Pradesh, Assam and Sikkim. Mitra said two of the projects pertained to Char Dham Yatra connectivity in Uttarakhand on EPC mode. These include Rs 248 crore and Rs 200 crore projects for geometric improvement and widening of stretches on NH 58. The two projects to be built on hybrid annuity mode (HBA) include Rs 905 crore and Rs 1,338 crore projects in Maharashtra for upgradation of NH 66 stretches under National Highways Development Project (NHDP) phase IV. The BOT project pertained to four laning of Haryana/Punjab border Jind section of NH 71 design, build, finance, operate and transfer mode. The projects sanctioned today include five projects under SARDP-NE for Arunachal Pradesh, Assam and Sikkim. Joe Thuney Womens Jersey
L1Bidding creates shabby roads: Deepak Parekh
Pitching for public-private partnership to build urban roads, Housing Development Finance Corporation Chairman Deepak Parekh blamed the bidding process for the “shabby” and “very poor” quality of city roads in the country. “Quality is very poor and every monsoon after rains, we have to redo the roads. This is because state governments have to award to L1, to the lowest tender,” he said at an event in New Delhi. “So the lowest contractor, lowest price bidder will always build a shabby road…I think some (PPP) experiment could be done with city roads.” As Chairman of HDFC, which is India’s largest mortgage lender, Parekh also asked the government to have proper pricing for building infrastructure. “We need better contractors. The government and states must pay proper pricing. They don’t have the resources, they go for the lowest bid. We have to build more permanent roads, which don’t get damaged after every monsoon every year,” he said. Referring to the capital, which gets into a state of chaos every time it rains, Parekh said that while the odd-and-even rule for plying cars on roads didn’t work here, Mumbai and Bengaluru have the added problem of the quality of roads, besides traffic. As a possible solution, Parekh said municipal authorities should be allowed to raise funds by issuing bonds, which will help create quality urban infrastructure. Brett Hundley Jersey
Adani’s Udupi power plant to add 1600 MW by 2020
Udupi Power Corporation Ltd (UPCL), a subsidiary of Adani Power Ltd, will produce an additional 1,600 MW of power at its thermal plant in Udupi by 2020, according to Kishore Alva, Executive Director (Project Development and Corporate Affairs). At present, the plant produces 1200 MW of power. Speaking to a few media persons from Mangaluru, who were taken on a visit to the thermal power plant in Udupi on Wednesday, Alva said the company has signed a memorandum of understanding with the Karnataka Government to set up 2X800 MW coal-based power plant in Udupi with an investment of ?11,500 crore, in its second phase expansion. Stating that the expansion is in the preliminary stage of land acquisition, he said the project is expected to be completed by 2020. UPCL is paying a compensation of ?40 lakh per acre for the land losers. The expansion requires around 725 acres of land. At present, the company has two units of 600 MW each spread across 590 acres in Yellur and Santhuru villages of Udupi district. Set up at a cost of ?6,000 crore, the commercial production from the unit-1 began in 2010 and unit-2 in 2012. The power generated at UPCL is evacuated through 220 kV and 400 kV transmission lines and is supplied to five electricity supply companies owned by the Karnataka government in the State. Jetty at NMPT He said UPCL maintains its own jetty at New Mangalore Port to handle imported coal. The port handles around 3.5 million tonnes of coal for UPCL a year. The company uses the Konkan Railway network to transport coal from New Mangalore Port to the thermal plant in Udupi. Alva said about ?500 crore will be invested for the development of an additional jetty at New Mangalore Port. It will add another six million tonnes of annual handling capacity in the next three years. UPCL has a 15-year agreement with the coal mining companies in Indonesia and Australia for sourcing coal, he said. Wil Lutz Womens Jersey
Power discoms’ turnaround will hinge on efficiency gains, tariff hikes: Fitch
The success of the Indian government’s ambitious power distribution reforms programme including the Ujjwal Discom Assurance Yojana (UDAY) will depend upon efficiency gains registered by the utilities and frequent tariff revisions, research firm Fitch Ratings has said. The Singapore-based ratings firm said in a special report published today the voluntary rehabilitation scheme UDAY for financial and operational turnaround of distressed state distribution utilities has already seen a large number of important states signing up for the programme. “However, the immediate relief provided by interest-expense reduction, while beneficial to the cash flow positions of the discoms, is inadequate to turn these entities profitable. Achieving this goal by March 2019 as per the plan is highly predicated on the ambitious efficiency improvements, coupled with tariff increases that are politically sensitive in India,” Fitch said. UDAY, launched in November 2015, is more comprehensive than previous packages which had focused primarily on debt restructuring. The merits of UDAY include its four-pronged strategy that targets not only a reduction in interest burden but also operational efficiency improvement, reduced cost of power purchased, and financial discipline. There are also financial implications for states signing up for UDAY that do not meet the agreed targets under the programme. Twenty states and one union territory have given in-principle approval so far for UDAY. Of these, 16 have already signed up for the scheme. “Participation by a number of states which are not ruled by the key ruling political party at the centre – the Bharatiya Janata Party – reflects the various merits and wider acceptance of the package. The committed states and UT accounted for almost 77 per cent of the total 2013-14 net cash losses reported by discoms and around 58 per cent of the total debt outstanding at end-September 2015,” the report said. These states house about 56 per cent of India’s total installed capacity. Tamil Nadu stands out among those which have not opted for UDAY and accounted for 25 per cent of 2013-14 net cash losses of all discoms. The Fitch report also states the debt-restructuring slated within the scheme will provide some immediate breathing space following the transfer of 75 per cent of outstanding debt to the states and capping the interest cost on the balance. However, discoms in as many as 12 of the 16 committed states reported cash losses in 2013-14. The aggregate technical and commercial (AT&C) loss in the Indian power sector is very high – ranging from 11 per cent to 71 per cent. UDAY aims to get the discoms to cut these losses significantly — more than 50 per cent in many cases — through 2018-19. The savings benefits from lower AT&C losses alone account for around half of the total savings on average for the states that have committed. For the majority of states, tariff increases are required to reach break-even status even after the other savings to which they are committed. A meaningful improvement in discoms’ economics will especially benefit power generation companies through higher utilisation and timely clearance of dues. The current low capacity utilisation of power plants is driven primarily by stressed discoms, which are unable to buy electricity because of weak financial positions. Fitch said financially stronger discoms will support India’s drive for renewables and financings of those projects. Charles Haley Authentic Jersey
Delhi may see 445 mw of power supply shortage
Aravali Power Company has served a power supply regulation notice to Delhi distribution companies, BSES Rajdhani Power Ltd (BRPL) & BSES Yamuna Power Ltd (BYPL) for non-payment of dues. The regulation will deprive Delhi of 445 MW of power midnight of September 5. Power allocated to these DISCOMs from Aravali Power Company is 445 MW and the average monthly energy bill is around Rs 87 crore for the current fiscal. “Payments by the DISCOMs have become irregular for quite sometime. The matter was brought before the Supreme Court of India, who in their judgement dated 26.03.2014 directed the DISCOMs to ensure payments of all current energy bills with effect from January 2014. However, despite clear directions of the Supreme Court, dues continued to accumulate. On Thursday, the outstanding amounts are Rs 961.58 crore,” said Aravali Power in a statement on Thursday. “In a meeting held by Delhi Electricity Regulatory Commission (DERC) both BRPL & BYPL had given plan for liquidation of outstanding dues based on which regulation notice issued by Aravali Power earlier was withdrawn. Aravali Power has to pay in advance to its fuel suppliers which constitute about 70%-80% of its monthly energy bills. If the above situation continues, APCPL being a single power station company is unable to meet any of its commitments including payment to fuel suppliers, debt servicing requirements and even payment of salaries to its employees,” the company said. Under the circumstances, Aravali Power has no other option but to regulate power to the DISCOMs. A notice for regulation of power supply has been served to BRPL & BYPL which will deprive Delhi of 445 MW of power. Dustin McGowan Jersey
BSES says power regulation notice not to impact supply to Delhi
Reliance Infrastructure-backed BSES has said its two distribution companies have sufficient power at their disposal and the power regulation notice from Aravali Power will not have any impact on the power supply situation in Delhi. Aravali Power, a joint venture company with 50 per cent share of NTPC, 25 per cent of Haryana Power Generation Corporation and 25 per cent of Indraprastha Power Generation, today served a notice to BSES Rajdhani and BSES Yamuna for regulation of 445 Megawatt from midnight Sep 5. The power company said the total outstanding amount from BSES Rajdhani and BSES Yamuna was Rs 961.58 crore as on date which has led to difficulties for Aravali Power in paying to coal suppliers, servicing debt and giving salaries to employees. “BSES is under huge financial stress due to non liquidation of regulatory assets estimated to be over Rs. 16,000 crore as on March 31, 2016. As compared to this, dues payable by BSES to Aravali Power Company Private Limited (APCL) are around Rs 900 crore,” BSES said in a statement. The company further said the payment of dues to power utilities by BSES discoms is sub judice in the Supreme Court. “The judgement in the matter is reserved since February 2015. We are awaiting the Supreme Court judgment, which will clear the path for recovery / liquidation of regulatory assets,” it said. Aravali Power Company, Jhajjar has been supplying power to the BSES DISCOMs in Delhi, viz BSES Rajdhani Power and BSES Yamuna Power since March 2011. The power allocated to these discoms from Aravali Power is 445 MW (372 MW and 73 MW respectively) and average monthly energy bill is presently of the order of Rs 87 crore (Rs 73 core and Rs 14 crore respectively) for the current financial year. Tedy Bruschi Authentic Jersey
No increase in power tariff for consumers in Haryana
Haryana Electricity Regulatory Commission (HERC) has notified the tariff order for 2016-17, under which there is no increase in tariff for any category, and it has been reduced by 37 paise per unit for consumers of all categories. The salient features of this order state that for LT industry with load up to 50kW, fixed charges where applicable and have been reduced from Rs 170/kW to Rs 160/kW, which would benefit 16,728 consumers. For rooftop solar system installed under the new solar policy, the incentive has been increased from 25 paisa per unit to Re 1 per unit from August 1, 2016. Besides, the wheeling charges for open access consumers have been reduced from 85 paisa per unit to 71 paisa per unit. Rebate of 5%would be allowed for the consumers availing supply through prepaid meters. Chris Godwin Womens Jersey