Adani, JSW and SembCorp in race to buy BC Jindal group’s Odisha power plant
Jindal India Thermal Power Ltd (JITPL), a part of the BC Jindal group, is in talks with prospective buyers to sell its 1,200MW thermal power plant in Odisha, three people familiar with the development said. The plant in Odisha’s Angul district has so far received competing offers from Singapore’s SembCorp, Adani Power and JSW Energy, one of the three people cited above said, requesting anonymity. “The sell side mandate was given to EY around three months ago following which SembCorp has made an upfront cash offer of close to Rs1,600 crore for the equity component of the project,” said the person cited above. “JSW and Adani have offered a higher price of more than Rs2,000 crore, but the offer involves an upfront cash payment of around Rs500 crore to Rs600 crore towards equity and the remaining upon fulfilment of certain conditions linked to singing of power purchase agreements and coal linkages,” the person said. “JSW is keen to replicate the same structure it followed while buying JSPL’s (Naveen Jindal-led Jindal Steel and Power Ltd’s) 1,000MW thermal unit this year, where it paid Rs500 crore cash advance while tying up the rest of the payment to pre-defined conditions regarding fuel security and power offtake,” the person added. Emails sent to Adani group, SembCorp and EY did not elicit any response at the time of going to press. A JSW Energy spokesperson denied that the company is in talks to buy the asset. “Your query is completely speculative and baseless. The company reiterates that there is no truth and categorically deny any discussion by JSW Energy with them,” the spokesperson said. JITPL is controlled by listed firms Jindal Poly Investments Ltd (JPIL) and Jindal Photo Ltd (JPL) through Jindal India Powertech Ltd, a holding company owned by JPIL and JPL. “The promoters have been in talks to sell the unit in the past too, but a deal did not materialize due to valuation mismatches. However, things are likely to be different this time because JITPL needs some immediate cash infusion to pay lenders and is already behind its repayment schedule,” the second person said, also declining to be named. “Also, a section of minority shareholders want the promoters to divest from power and focus on the core poly films business,” the person added. An email sent to JITPL and BC Jindal group did not receive a response. The Angul project was completed at a cost of Rs7,537 crore with overall debt of Rs5,900 crore and an equity of Rs1,637 crore. Industry analysts said that if the SembCorp offer is accepted, JIPL and JPL could get Rs600 crore and Rs160 crore, respectively, of the proceeds and another Rs685 crore to Jindal Poly Films Ltd, the listed operating entity of the group. JITPL currently has long-term power purchase agreements (PPAs) for 256MW capacity (156MW with Odisha Gridco and 100MW with Kerala State Electricity Board Ltd) and has also executed a 12-year PPA with Tata Power Trading Corp. Ltd (TPTCL) for a capacity of up to 900MW at a guaranteed base tariff of Rs2.70 per unit. Concerns over fuel supplies, high interest cost and absence of long-term PPAs among thermal power producers in India has led to distress among several power companies and has led to many assets changing hands. In July, Sajjan Jindal-promoted JSW signed a definitive agreement to acquire Jaiprakash Power Ventures’ 500MW thermal plant at Bina in Madhya Pradesh at base enterprise value of Rs2,700 crore. In April last year, Adani Power completed the acquisition of Lanco Infratech’s Udupi Power plant for Rs6,300 crore, one of the largest takeovers in the country’s thermal power space. Irving Fryar Jersey
Rs1.5 trillion refinery complex to be set up in Rajapur
A Rs1.5 trillion mega refinery and petrochemical complex proposed by oil marketing companies (OMCs) will come up in Rajapur city of Ratnagiri district in Maharashtra, said two senior OMC officials aware of the development. The OMCs and the Maharashtra government have been looking for land for the past 10 months, ever since Union oil minister Dharmendra Pradhan announced the project on 28 December 2015. Rajapur is a city in the Ratnagiri district of Maharashtra, around 385km from Mumbai. The OMCs—Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)—plan to jointly build a 60 million tonnes per annum (mtpa) refinery at a cost of Rs1.5 trillion in two phases of 40 and 20 mtpa. “The piece of land identified is exactly what we wanted. It is near a potential port and around 14,000 acres. We recently received a confirmation from the Maharashtra government that they have found the required land. Now MIDC (Maharashtra Industrial Development Corporation) will go ahead with the acquisition of this land,” said the first of the officials cited earlier. Emails sent to the three OMCs on 28 October remained unanswered. The second of the officials added that the land identified is only for the refinery. “We still need some piece of land to set up a jetty and a desalination plant for captive water supply. So we are looking for land for that,” he said. Mint had reported in September that the OMCs and the state government were finding it difficult to find 15,000 acres of contiguous land in the Konkan region for the complex. Government officials had asked the OMCs to reduce the land requirement. The first official cited earlier said around 20-30% of the land parcel identified is rocky and the OMCs may need to invest Rs10,000-15,000 crore to flatten this portion of land. “However, we are happy that the land that has been finalized,” he added. The OMCs will form a special purpose vehicle for the project. While Indian Oil will hold a 50% stake, HPCL and BPCL will hold 25% each. The official said they are keen on bringing in a strategic partner in the project and may rework the equity structure post that. “Some international partners have shown interest in the project but they will participate only after we have some concrete plans in place (for the refinery) to present to them,” said the official. Pradhan had said on 6 June that the refinery had been offered to Saudi Aramco as a prospective partner. The OMCs have finalized the configuration and petrochemical linkages that the refinery will have. The government has appointed Engineers India Ltd as the technical agency to prepare a detailed feasibility report (DFR). The two OMC officials added that with the identification of the piece of land, the DFR can now be commissioned and that the report may take 8-10 months to prepare. Besides, the process for environmental approvals, deliberations on financing options, tax concessions and various board approvals can be put in place now. An analyst with a domestic brokerage said, “India has been an exporter of petroleum products and its existing refineries are also being further expanded. Though the country’s own demand for petro products is growing at a fast pace and there is infrastructure development happening, it remains to be seen how far we will be able to absorb additional supply (of products).” Calais Campbell Womens Jersey
BP, Rosneft entry set to challenge Indian oil companies
Global oil majors BP Plc and Rosneft PJSC are eyeing a piece of India’s $117 billion retail market for fossil fuels, threatening to shake up government-owned companies that have faced little competition for a decade. BP has already secured licenses to open as many as 3,500 fuel stations in the world’s second most-populous nation. Rosneft gained access to about 2,700 pumps through last month’s acquisition of Essar Oil Ltd, which has plans to add 2,600 more outlets. Along with Reliance Industries Ltd and Royal Dutch Shell Plc, the private players will try to chip away at the dominant position of three state-owned enterprises that control 90% of market volume. “Competition is expected to intensify with the entry and expansion of private players and multinational companies,” said Rahul Prithiani, a Mumbai-based director at CRISIL, a unit of S&P Global Ratings. Private players and multinational companies are expected to increase their market share though government companies will probably still dominate given their vast network of fuel retailing stations, he said. Retail sales have become more viable for private-sector refiners ever since Prime Minister Narendra Modi’s government scrapped diesel-price controls two years ago. Pricing freedom coupled with record oil consumption as the number of trucks, cars and motorbikes multiply is helping India stand out as a country that global oil majors can’t ignore. The Paris-based International Energy Agency predicts India will be the world’s fastest-growing oil consuming nation through 2040. “This sort of growth they will not get anywhere,” said Lalit Kumar Gupta, chief executive officer of Essar Oil. “Europe is virtually saturated, there is hardly any growth. In the US there is tough competition. India is the only country which is growing and which is growing by a big number and they feel there is scope.” Companies including Saudi Aramco and France’s Total SA have shown an interest in India, while existing players such as Shell are planning to expand their footprint, oil minister Dharmendra Pradhan said in June, flagging further reforms in the oil and gas sector. More fuel retailers will increase competition and benefit consumers, he said. This is India’s second attempt at deregulation. Billionaire Mukesh Ambani-owned Reliance Industries had captured 14% of retail diesel sales and 7% of petrol sales in 2006, after the government deregulated prices more than a decade back. The company had to close down pumps after price caps were re-introduced. The October 2014 deregulation is an opportunity for Reliance Industries to re-enter the retail market and ramp up volumes, according to the company’s latest annual report. “RIL plans to launch aggressive customer acquisition programs to quickly regain targeted market share,” it said. Reliance Industries has re-secured over 4.5% of sales to bulk users of diesel, such as railways and state-operated bus services, the company said. It has opened about 1,100 stations so far, with plans to increase the number to 1,400 by March. Rising consumption India’s fuel demand grew 11%in the year ended 31 March, the fastest pace in records going back to fiscal 2001. Consumption expanded 8% in the first half of the financial year that started 1 April, according to the oil ministry’s Petroleum Planning and Analysis Cell. “BP sees a strong future for transportation fuels in India,” the British oil major said in an emailed statement last week. “We are keen to be involved in this market and contribute to its development.” Still, private players have a long battle on their hands given the dominating position of the three government-owned companies, Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd, which together operate almost 53,000 fuel stations in India. “If we compare with 10 years ago when private players had come, since then the state-run oil marketing companies are much better prepared,” said Sanjiv Singh, head of refineries at Indian Oil, the country’s biggest fuel retailer. “It will definitely bring in efficiency. The challenge before us is that while private players target the very-prime market, our commitment is to feed the total market.” International companies may first make a dent in the large-scale industrial and commercial market, since public-sector companies have established themselves at prime locations for fuel pumps, Vikas Halan, vice president at Moody’s Investors Service, said by phone. “That’s where the competition heats up with the foreign players,” he said. Austin Romine Jersey
ONGC, Cairn face Rs 1,922 crore service tax on royalty payments
In a setback to energy firms like ONGC and Cairn India, the government will from this fiscal levy service tax of about Rs 1,922 crore on royalties they pay to the exchequer on oil and gas they produce. Companies currently pay 9.09 per cent of the price they realise on oil and gas produced from onland or onshore fields and 16.67 per cent on the same from offshore areas. The Central Board of Excise and Customs (CBEC), in a recent clarification, has stated that the licence granted by the government to a company to exploit a natural resource is a taxable service and hence liable for service tax. As a rule, service tax is paid by the entity providing the service, but in certain cases it is the liability of the party that receives the service to remit the levy under a system called reverse charge. In the circular clarifying on service tax liability on use of wireless spectrum, CBEC stated that all periodic payments such as royalty on use of natural resources will attract 15 per cent service tax. Following the clarification, the Service Tax department has sent letters to companies like Oil and Natural Gas Corp (ONGC), Cairn India Ltd and Reliance Industries seeking information on royalty payments, industry sources said. These companies had paid a total of Rs 4,885 crore royalty on oil and gas produced in 2015-16 to the Centre and another Rs 7,932 crore to states. Considering change in prices and production profile, the service tax liability would come to over Rs 1,922 crore this fiscal on top of the royalty payout. CBEC is using the logic that since service tax is leviable on wireless spectrum, which is a natural resources, the same should extend to oil and gas as well. Sources said energy explorers through their association have taken up the matte with the Oil Ministry saying their profitability has been severely impacted by slump in oil and gas prices to multi-year low and the additional levy would erode it further. CBEC in the circular stated that one-time payments for natural resources are exempt from service tax but not any periodic payments. Oil companies have to pay royalty on a monthly basis. Exemption from payment of service tax is applicable only to “one time charge, payable in full upfront or in installments, for assignment of right to use any natural resource and not to any periodic payment required to be made” such as Spectrum User Charges, license fee in respect of spectrum, or monthly payments with respect to the coal extracted from the coal mine or royalty payable on extracted coal and other natural resources, CBEC has said. Brett Hull Womens Jersey
Freight corridor land cost increases by 75 per cent
The dedicated railway freight corridor has finally managed to award all contracts for the Dadri-Mumbai link over 11 years after the flagship infrastructure project was announced. But on the eastern front -that will connect Ludhiana with Dankuni in West Bengal -nearly 10 per cent of the land, which is close to 450 hectare, is yet to be acquired even as funding has now been tied up. For the Rs 81,450 crore project, land acquisition and clearances have been the biggest headache so far. The project needed around 11,600 hectare -6,000 hectare for the western and 4,587 hectare for the eastern stretch. While it was battling court cases and arbitration, a third blow came by the way of the new land acquisition cost, which pushed up the average price from around Rs 1.3 crore a hectare to around Rs 2 crore -an increase of around 54 per cent. Project cost has also been increased as the land acquisition cost rose 75 per cent from the budgeted level of around Rs 8,000 crore to nearly Rs 14,000 crore now . This could go up further depending of the arbitration awards. In recent years, land acquisition has been a major headache for most infrastructure projects -highways, railways, power generation and special economic zones (SEZs). In several cases, the projects needed to be reworked, if not shelved. The corridors running across 3,360 km are aimed at building electrified railway system to enable each train to carry a load of up to 13,000 tonnes -which is the load carried by 1,300 trucks. On each corridor, Dedicated Freight Corridor Corporation of India (DFCCIL) is laying double lines, which will treble the average speed of the double-stack goods trains from 25 kmhour to 75 kmhour.While the western leg is funded by Japanese agency JICA, eastern stretch is financed by the World Bank. “There is no escalation in the project cost. Whatever increase is there is on account of higher cost of land,“ said DFCCIL managing director Adesh Sharma, adding that the project would be fully ready by 2019-end, a year behind the original deadline. But, before that it needs to battle nearly 2,000 court cases and over 9,500 arbitration awards, of which nearly half are yet to be disposed off. DFCCIL planned the project in a way that it avoided large cities, where land acquisition was going to be a problem. But, challenges have come mainly from areas around the large cities, where prices are higher and “fertile“ agricultural land is being acquired. Sample this: Nearly half the arbitration cases that are pending are in Haryana (2,277 out of 4,679 cases). When it comes to court cases, Uttar Pradesh tops the list with 669 out of the 1,020 pending cases. “Most of the arbitration cases relate to compensation based on the latest registration price. Wherever, there is an award, we are paying higher compensation,“ Sharma said. Gary Zimmerman Womens Jersey
Price of making DND Flyway free to use amounts to Rs5,000 crore
The New Okhla Industrial Development Authority (Noida) will have to pay Rs.5,000 crore to the company operating the DND Flyway connecting Delhi and Noida if the government entity terminates a 30-year contract at its mid-point and takes over the toll road. Last week, the Allahabad high court barred Noida Toll Bridge Co. Ltd, which operates the flyway, from collecting toll. The 117,000 vehicle owners using the 9.2km toll road every day save money—cars pay Rs.28 for a one-way trip. But Noida Toll Bridge, which is promoted by IL&FS and is a listed company, is losing Rs.30 lakh a day and its market capitalization has eroded by about 30%. The first memorandum of understanding to build a New Delhi-Noida expressway was signed under the public-private partnership (PPP) mode in 1992, a year after India initiated economic reforms. The toll road started operations in 2001. This is a 30-year build-own-operate-transfer (BOOT) contract, where Noida Toll Bridge would operate the flyway for 30 years or until it recovered its investment. Further, it was promised an assured return of 20% on its total cost, which included the initial project cost, the running cost and the shortfall in profit. The result: the road cost Rs.378 crore to build, but this unmet assured return of 20% has led to the total cost under the agreement spiraling to Rs.5,000 crore in 15 years. After a slow start, DND Flyway is now reporting healthy profits with three-fourths of toll revenue coming in as profits. In 15 years, Noida Toll Bridge earned Rs.1,052 crore via toll collection and a cumulative net profit of Rs.348 crore. Nearly eight out of 10 vehicles crossing the toll booth is a car, probably fuelled by development of residential areas in Noida and Greater Noida. Total number of vehicles crossing has increased by nearly six times in the last 15 years. Linus Ullmark Authentic Jersey
Real Time Tracking of Bags to Save Industry $3 Billion
The global deployment of Radio Frequency Identification (RFID) technology, which can accurately track passengers baggage in real time across key points in the journey, can enable the air transport industry to save more than US$3 billion over the next seven years. Global IT provider SITA and the International Air Transport Association (IATA) revealed that the highly accurate tracking rates of RFID technology could reduce the number of mishandled bags by up to 25% by 2022, mainly through efficient tracking. The SITA/IATA business case, released at the IATA World Passenger Symposium in Dubai, outlines how this will provide a major saving for airlines and deliver more certainty for passengers. Initial deployments of RFID by airlines, such as Delta Air Lines, show a 99 percent success rate for tracking bags. In particular, RFID will address mishandling during transfer from one flight to another, one of the key areas identified by SITA and IATA where the technology could help improve baggage handling rates. RFID technology will ensure that airports, airlines and ground handlers are able to keep track of bags at every step of the journey and ensure the right bag is loaded onto the correct flight. The technology also supports IATA’s Resolution 753 that requires by 2018 airlines keep track of every item of baggage from start to finish. The deployment of RFID would build on the already significant savings delivered by the smart use of technology for baggage management. According to the SITA Baggage Report 2016, technology has helped reduce the number of mishandled bags by 50% from a record 46.9 million mishandled bags in 2007, saving the industry US$ 22.4 billion. This improvement comes despite a sharp rise in passenger numbers over the same period. Tony Esposito Authentic Jersey
Air India looks at a bigger operating profit in FY 17
Air India is confident to substantially increase its operating profit in the present financial year after clocking its first operating profit in the last fiscal since the merger between AI and Indian Airlines. AI made an operating profit of Rs 105 crore in the last fiscal as compared to an operating loss of Rs 2,636 crore in 2014-15. With fuel prices remaining low and AI set to add new planes – Boeing 787 Dreamliners and Airbus A320 Neos – things should only get better for the national carrier, believe industry experts. AI, under Ashwani Lohani, has expanded both its international and domestic network since August 2015 adding destinations like San Francisco and Vienna. Montae Nicholson Womens Jersey
Vadodara’s Airport Became the Country’s Second Green Airport
The Indian Prime Minister inaugurated a new integrated airport terminal in Vadodara recently. The airport has now become the country’s 2nd green airport after Kochi being the first. Taking proud, the P.M said, such projects will encourage people and promote an environment-friendly construction interests. After since holding the PMO, Modi had arrived at the city for the first time. Modi told, “I am happy that after the formation of the new NDA government, two airports in the country have become a part of the green movement.”The first was in Kochi and the second such airport is being dedicated to the nation at Vadodara. This airport will be zero discharge, waste to wealth, energy saving, and environment-friendly.” “The airport will be considered as one of the top-class airports of the country,” Modi said. He added that the airport has been constructed on the principle of green infrastructure using bricks of fly ash, and it will surely add another bright spot to the city. Chris Hubbard Womens Jersey
Mumbai’s search for a new terminal
There is little doubt that Mumbai needs another airport — the one that serves it now just can’t handle the skyrocketing traffic growth. Consider this: By 2034, Mumbai Metropolitan Region (MMR) will have traffic of 100 Million Passenger Per Annum (MPPA). As per forecasts, passenger traffic for MMR is set to cross 45 MPPA by fiscal 2018. Mumbai airport has already handled 42 million passengers in fiscal 2016. Considering airside constraints, Mumbai airport may not be able to handle peak traffic above 45 MPPA. The opinions, however, are divided as to where the new airport should come up. Should it be in Navi Mumbai, the first choice that has many things going against it, including some environmental concerns? Or should it be set up in Kalyan, the new favourite among the experts but not exactly next door? Both have their pluses and minuses and different groups rooting for them. But whatever the decision, it has to be made quickly as the existing airport in Mumbai is bursting at its seams. Joe Staley Authentic Jersey