Prem Watsa’s BIAL stake buy still stuck at security clearance
Security clearance for Prem Watsa’s investment in Bengaluru airport is turning out to be a headache for authorities as the Centre dithers over the issue, raising uncertainties over the stake purchase by the Indian-origin Canadian billionaire. Karnataka has declined to get involved in the process of granting security clearance for the transaction after the Ministry of Civil Aviation (MoCA) sought its comments on the matter, according to sources aware of the developments. Delays in obtaining the approval are holding up the additions of a second runway and a terminal at Bengaluru airport even as passenger and cargo traffic surge. Watsa’s Toronto-based Fairfax Group in March struck a deal to buy a 33% stake in Bangalore International Airport (BIAL) from Hyderabadbased GVK Group, and later another 5% stake from Flughafen Zurich AG. The transactions cannot go through without security approvals from the Union government. According to sources in Delhi, the Ministry of Home Affairs (MHA) has already communicated to the MoCA its go-ahead for granting the clearance. The civil aviation ministry, however, wrote to the Karnataka government seeking its comments on certain security aspects and on proposed appo intments to the BIAL board. The State government has taken the view that granting the clearance falls within the realm of the Union Home Ministry, and that it does not have the expertise to vet security aspects in cases involving foreign direct investments in strategic sectors. Karnataka Infrastructure Minister RV Deshpande confirmed the State government’s response to MoCA. “There has been a delay at Delhi in clearing the stake sale by GVK group. The traffic volumes at BIAL have surpassed projections, requiring us to add a second runway and terminal at the earliest. I hope the Centre will expedite the process,“ he told ET. Quess Corp. “It is not as if (Wat BIAL’s board has kept pending key decisions, related to capital investments and award of contracts, as these involve huge longterm commitment of resources and they do not want to proceed in the absence of the largest stakeholder. Security aspects in BIAL’s case, according to an expert, cover the relationship between the two nations involved, and the backgrounds of the individuals and their firms seeking to make the investment. Watsa is a person of Indian origin and Fairfax group has made investments in India through Thomas Cook and sa) is investing for the first time,“ this expert said, declining to be identified. A former Civil Aviation secretary told that matters related to security clearances come un der the domain of the MHA, and a correspondence such as this betrayed either a lack of application of mind or wilful delay. “The whole purpose of this stake sale by GVK Group is to raise some funds with which it can pare its debt. A prolonged delay will only defeat this purpose,“ the officer said, also seeking anonymity. Bengaluru airport handled more than 11 million passengers in the January-September period, the traffic increasing 22.4% from a year earlier and at a faster pace than at the Delhi, Mumbai and Hyderabad airports. Cargo traffic increased nearly 11%. Gaylord Perry Womens Jersey
India’s fuel demand surges 6.7 per cent in October
India’s fuel demand surged 6.7% in October after declining in September, aided by a sharp rise in petrol and diesel consumption. The fuel consumption rose 7.8% in the seven months through October this year, according to the Petroleum Planning and Analysis Cell (PPAC), an oil ministry’s arm. A fast expanding Indian economy and a relatively lower fuel prices have boosted demand for oil in India. In October, the demand for all oil products rose to 16.5 million metric tonnes (MMT) from 15.5 MMT a year ago. September was the only month demand for petroleum products fell this year, about 2%. The consumption of petrol fell about 3.5% while that of diesel shrank about 11.5% in September mainly due to the rise in prices and higher base in the same month previous year, PPAC said in its monthly commentary. Petrol consumption rose 13.8% to 2.1 million tonnes in October. The demand for diesel, which accounts for 40% of all fuels consumed in the country, climbed 5.1% to 6.7 million tonnes. New car purchases, fuelled by the festive season, helped boost demand for petrol and diesel in October. The consumption of kerosene, mostly used by rural poor for lighting and cooking, fell by a third in a year to 380,000 metric tonnes in October. The consumption dramatically shrank in just a month from September this year when it was 501,000 tonnes or 31% higher. This is mainly a result of the Centre’s decision to cut 5% allocation of subsidized kerosene to states every quarter and some voluntary cuts taken by some states as supply of electricity and cooking gas rise across the country. The demand for liquefied petroleum gas (LPG), mostly used as cooking gas in millions of Indian homes, expanded 10% in October, as the government drive to take cleaner fuel to more homes intensified. State firms have just completed giving away 1 crore fresh connections to poor households this fiscal year. This addition over an effective base of about 17 crore domestic cooking consumers is expected to give a big boost to LPG consumption. The demand for Aviation Turbine Fuel (ATF) also climbed 9% as a festive season drove up air traffic. Ben Roethlisberger Womens Jersey
U.S. shale firms go back to work buoyed by OPEC deal, Trump victory
U.S. shale producers are redeploying cash, rigs and workers, cautiously confident the energy sector has turned a corner after Donald Trump’s election victory and OPEC’s recent signal that it plans to curb production. The downturn produced a leaner, more efficient U.S. shale industry that was forced to develop and quickly adapt new technology to compete with conventional oil supplies during a two-year period of depressed prices. “You’re starting to see a little bit of light at the end of the tunnel,” Ryan Lance, chief executive of ConocoPhillips , the largest independent U.S. oil producer, said in an interview last week. “We’re beginning to put capital back to work, but we’re being cautious.” Specifics of the deal by the Organization of the Petroleum Exporting Countries – especially what it means for each member – need to be finalized at a meeting later this month in Austria. But the tentative agreement indicated OPEC kingpin Saudi Arabia is keen to end a damaging two-year oil price war. That prodded U.S. producers to action. The U.S. oil drilling rig count has grown 6 percent since OPEC’s September accord, according to oilfield analytics firm NavPort, with additions across the country’s top shale fields including the Permian (7 percent) and the Bakken (17 percent). Also, Trump’s victory is expected to bring to the White House an advocate for oil and gas drilling, who will slash regulations and encourage new energy industry development. Occidental Petroleum Corp, Chevron Corp, Pioneer Natural Resources Co and ConocoPhillips are among those adding rigs or preparing to do so. Oasis Petroleum Inc, a major North Dakota producer, bought 55,000 acres last month from SM Energy Co for $785 million, a bullish bet on the future of oil prices. The company also plans to add rigs. “This all reflects more of a confidence around our business plan in a lower oil price environment,” Oasis Chief Executive Tommy Nusz said in an interview last week. “We feel like we can hold our own now in a $40 (per barrel oil) world and grow in a $45 to $50 world.” Citing its technology and other improvements, EOG Resources Inc raised its growth projections and now expects to boost output 15 to 25 percent each year through the end of the decade if oil prices stabilize near $50 per barrel. “After two years of this down cycle, we are more than ready to resume higher-return oil growth,” EOG CEO Bill Thomas told investors in early November. All that activity will have an effect once things ramp up. U.S. unconventional shale oil production is expected to dip 13 percent this year from 2015 levels and continue to slip into 2017 before rebounding 11 percent in 2018, according to data from the U.S. Energy Information Administration. INVESTORS EYE POTENTIAL Investors in the oil sector are also bullish, eager to see returns grow after lagging for several years. “We fundamentally feel that where energy prices are at now are below where they are going to be at some point, and below their long-term equilibrium level,” Tony James, president of private equity investor Blackstone Group LP, told reporters in late October. James’ outlook reflects a broader perception among shale oil producers and their financiers that the industry has turned a corner for the better, analysts said. U.S. oil producers have launched initial public offerings, with Extraction Oil & Gas Inc and WildHorse Resource Development Corp filing this fall alone. That is good news not only for the oil industry but also for its largest lenders, including Wells Fargo & Co and Bank of America Corp. Oil “companies are now entrepreneurial and they’ve cut costs to become viable at these prices,” a senior executive at one of the top private equity firms in New York said last month. The executive declined to be named as he is not authorized to speak to the media. “Those people are going to start producing again.” To be sure, a resurgence in the U.S. oil industry must still contend with market fundamentals, including a large oversupply and sluggish demand that neither Saudi Arabia nor President-elect Trump can fully control. America’s oil inventories rose by more than 14 million barrels in late October, the largest one-week increase on record and one linked to large production of shale oil and natural gas. If American oil companies continue to increase production, they run the risk of abrogating any OPEC output cuts later this month and pushing down prices on their own accord. “Obviously if we pull back to $25 per barrel, that will have an impact upon our investing,” said Al Walker, CEO of Anadarko Petroleum Corp. Yet demand for the light, sweet oil produced across American shale fields continues to rise globally. U.S. crude oil exports hit an all-time high in September, according to U.S. Census data. And many companies have hedged for 2017 at least, taking advantage of the oil price rise this year. That emboldens executives to boost budgets. Pioneer, considered by Wall Street analysts one of the best-run U.S. shale oil producers, has hedged 75 percent of its 2017 output at an average price around $50 per barrel. “The industry is looking forward to a tepid recovery in early 2017,” said John Chisholm, CEO of Flotek Industries Inc , which supplies chemicals used in fracking and other oilfield products. Demand for Flotek’s CnF, a nontoxic fracking fluid, during the first nine months of 2016 has already eclipsed 2015 sales volumes, with projections higher for 2017. “These oil producers have reconstructed their business so they can make money at these low oil price levels. They’re pressing forward.” Doug Baldwin Authentic Jersey
PETRONAS looks to expand its business in India
PETRONAS, Malaysia’s national oil company, is committed to explore business growth opportunities across all segments of the oil and gas value chain in India, said President and Group CEO, Datuk Wan Zulkiflee Wan Ariffin during a series of receptions held for partners and customers in Mumbai and New Delhi. “India has always been an important market for PETRONAS as we see great potential to grow further with our partners and customers,” said Wan Zulkiflee. As part of its business strategy, PETRONAS will continue to invest in expanding its capacity in commodity chemicals and refined products, and enhance its product offerings to include differentiated and specialty chemicals for its customers worldwide. This will be supported by the Sabah Ammonia Urea project in Sabah, Malaysia, which is on track for commercial operations in Quarter 4 this year. SAMUR will have an estimated annual output of 2.6 million metric tonnes, making PETRONAS the second largest granular urea producer in South East Asia. Further to that, PETRONAS is also embarking on the Refinery and Petrochemical Integrated Development (RAPID) located in Malaysia’s southern state of Johor. It is a single largest integrated downstream investment in the country to date, scheduled to commence in 2019. India, one of the most competitive economies and the fourth largest LNG market in the world also presents vast potential for PETRONAS. Wan Zulkiflee said PETRONAS is keen to explore opportunities in the Indian LNG market and is working to establish a liaison office to help grow its business in the country. With decades of experience as an integrated end-to-end LNG player and currently the third-largest producer of LNG in the world, PETRONAS also boasts a sterling reputation of being a reliable supplier among its LNG customers. “Over the years, we have also expanded the scale of our production facilities in Bintulu, and invested in new projects. I’m also exceptionally proud that our world’s first floating LNG facility, PFLNG Satu, was completed earlier this year. PFLNG Satu is a true industry game changer that allows us to monetise stranded gas assets and is currently undergoing commissioning. The first cargo is expected in the first quarter of 2017,” he said. Jordan Reed Authentic Jersey
Jet Airways sells 3 A330 planes, posts modest profit of Rs 85 crore
Jet Airways posted a muted profit growth in Q2 FY 17 on account of provisioning for potential loss on sale of its three Airbus A330 aircraft. While revenue grew 3.2% to Rs 5,682 crore and the airline’s fuel cost dipped, consolidated profit grew 2.4% to Rs 85 crore on a year-on-year basis. In Q2 FY16, the airline made consolidated profit of Rs 83 crore. Sources said Jet Airways has entered into a sale agreement to sell three of its A330-200 planes currently on lease with Turkish Airlines to a lessor. The airline said it had made a provision of Rs 129 crore for potential loss from sale, it said in notes to the profit and loss account. Jet Airways board approved the airline’s Q2 result on Friday. Interestingly, both representatives of Etihad Airways – its CEO James Hogan (who is vice chairman of Jet) and CFO James Rigney did not attend the meeting. “They were travelling in Europe and hence could not attend,” an airline executive said. Etihad has 24% stake in Jet Airways. An airline spokesperson did not immediately respond to an email query. The airline said it was improving its fleet utilisation and network and had lowered net debt by Rs 252 crore in second quarter FY 17. Preston Brown Womens Jersey
UDAN flights on popular metro routes to cost more
If the Narendra Modi government initiative ‘UDAN’ (Ude Desh ke Aam Nagrik) scheme excited you to enjoy your first flight – there is bad news. The government on Friday announced increase in the base fares on popular routes from the metro cities. The scheme aims to connect small places by air, which basically involves Tier 2 and 3 cities across nation. If there is no vacant seat on flight then you’re unlikely to pay more than Rs 50 each way; if all seats are not sold out, citizens will pay additional Rs 100. Popular routes like Delhi, Bengaluru, Chennai and Kolkata will become a bit expensive. The longer the duration of flight higher the fare. The government has cemented three categories: Rs 7,500 for flights covering 1,000 km, Rs 8,000 for for a distance of 1, 500 kms, and Rs 8,500 for distances above 1,500 kms. At the launch of ‘UDAN’ its “Regional Connectivity Scheme”, the government said that flights that are an hour long would cost just Rs 2,500 and vowed to subsidise these cheap flights in under-serviced areas. The government expects to collect around Rs 400 crore with this new hike, this will boost ‘UDAN’ and help for a peaceful take off in January 2017. Zay Jones Womens Jersey
Clogged metro airports: Government plans more plane parking bays
As Indian carriers have lined up over 550 new aircraft for deliveries over next six years, more parking bays are being planned by the government at airports nearest to the over-crowded and clogged metro airports at Delhi, Mumbai, Kolkata airports. The development comes in wake of Directorate General of Civil Aviation (DGCA) conveying its concern to the Ministry of Civil Aviation (MoCA) concerning over-crowding of aircraft at these metro airports. It has pointed out that Indian carriers are adding more aircraft to their fleet, which is creating shortage of parking space at these metro airports and also creating operational problems leading to flight delays. According to a DGCA official, Indian carriers are expected to add at least 63 new and leased aircraft by December 2017. What’s more worrying for the DGCA is that it has allowed 21 percent more flights from the last year for the winter schedule, which started on October 30 and would continue till March 26 next year. DGCA approved a total of 16,600 flights per week to be operated by domestic carriers compared with 13,744 flights during the winter schedule last year. The Airports Authority of India, which is a state-run airport developer and operates 125 airports across the country, of which 77 are functional — has been assigned to assess the requirement for developing more parking space at airports nearing these metro airports. A senior government official said in case of Delhi, the nearest airports where parking bays for aircraft could be developed are at Jaipur, Lucknow, Amritsar or Chandigarh.
Aviation Ministry refutes reports of new UDAN levy on airlines
After the official launch of UDAN scheme last month by the Aviation Minister Ashok Gajapathi Raju, the government has taken its first step towards the implementation of UDAN (Ude Desh Ka Aam Nagrik), a plan that aims to making flying affordable for masses. However, the move is not expected to go down well with the existing flyers. According to news reports, the government plans to impose a levy of Rs 7,500-Rs 8,500 on departure of every flight by scheduled carriers on major routes such as Delhi, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata. The levy will go into regional connectivity fund (RCF) that will provide corpus to the regional connectivity scheme. The state governments will contribute about 20 per cent to RCF. When combined, the government is looking at building around Rs 500 crore corpus each year. When Business Today contacted an official in aviation ministry, he said that civil aviation secretary R.N. Choubey has been misquoted. “It’s a big decision. Such decisions have to be consulted with the finance ministry,” the official said. Owen Tippett Jersey
Domestic flight prices set to increase as govt imposes new levy from Dec 1
Airfares are set to rise with the government deciding to levy up to Rs 8,500 per flight on major routes to fund the regional air connectivity scheme. The levy amount would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight. Civil Aviation Secretary R N Choubey today said the levy would be up to Rs 8,500 per flight depending on distance. The ambitious scheme — UDAN (Ude Desh ka Aam Naagrik) — seeks to connect small cities by air as well as make flying more affordable for the masses. To provide viability gap funding for the flights operated under the regional connectivity scheme, the Ministry would impose a levy on every departure on major air routes such as the national capital, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata. “The levy for an up to 1,000 kilometre length of scheduled flight will be Rs 7,500 per flight, Rs 8,000 for a 1,000 to 1,500 kilometre flight and Rs 8,500 for flights above 1,500 kilometre,” Choubey said here. For UDAN, the government would be creating the Regional Connectivity Fund (RCF). Steven Kampfer Jersey
Cashless on highways, truckers starve for more than 30 hrs
National Highway 334, near Bulandshahr: Rasheed Khan is eating in complete silence. It is, after all, his first meal in over 30 hours. Only once he finishes his meal does the Jammu native start to talk about how demonetisation has affected him. “I left Kanpur for Jammu on Saturday morning. The last time I had a meal was on the outskirts of Kanpur. My next meal came on Sunday, after driving over 500 km. No place is willing to accept Rs 500 and Rs 1,000 notes and that is all I have, besides some change which I do not want to use. I have a long journey ahead,” he says. Khan is not alone. TOI spoke to truck drivers on Bulandshahr-Haridwar NH 334, all of whom are worried about being cashless on the highway. Some say their money is running out between cups of tea and bribes to cops while others are anxious about what they would do if their truck breaks down. “I left my home in Jammu seven days ago – with a bundle of Rs 500 notes which were legal currency at the time. While I was driving to Kanpur, the announcement came that my money was nothing more than pieces of paper. I thought my contractor in Kanpur would be able to give me change, but even he said he didn’t have any. I think he was lying. Luckily, petrol pumps are still taking the old currency and the toll is free. I think I can get this consignment to Jammu before the toll exemption lifts, but I don’t know what will happen after that,” says Sanjay Kumar, who is driving his truck alongside Khan’s on their 1,100 km-long journey from Kanpur to Jammu. With the economy being cash-strapped, most of India’s small towns have fallen back on barter and good faith. But for truckers, who spend most of their days on the move, “good faith” is a luxury. “Most of the people we interact with, except for contractors and other truck drivers, are strangers to us. It’s not like I’m going to my neighbourhood grocer who is fine with me paying him later. When I stop at a dhaba to eat something or stop at a mechanic’s shop for minor repairs, I can’t tell him that I’ll pay later. Why would he trust a stranger? That’s why we are so vulnerable,” Khan says. Ram Avtar Singh from Rampur says Madhuri, a name he has given to his beloved truck, has served him well so far. But he is fearful that if “she” breaks down at any point during his 1,300-km journey to Ahmedabad, he will be stranded for hours, or maybe days. “I was worried about cash, but my contractor gave me a Rs 2,000 note. Unfortunately, someone picked my pocket at a dhaba and I lost the note. Now I am left with mostly old currency notes in my truck, except a few Rs 100 notes. I am trying to save money for emergencies, so I have not eaten much. Since I’ve left Rampur, I’ve only had one cup of tea and a cream roll. Maybe I will eat something once I cross Jaipur. We need to have cash in hand for emergencies. That is why I hope the government can fix this mess soon.” While most of the country is lining up outside banks to withdraw and deposit cash, truckers say that, too, is a luxury for him. Singh says, “We are on the move all the time. We don’t go home for weeks. If we stop at a bank for four hours, our day is gone and we will miss our delivery schedule. When is the time for standing in lines?” Meanwhile, the waiter tells Khan and Kumar that they owe Rs 185. Kumar tries a shot in the dark and asks the waiter if he will accept a Rs 500 note, but he is turned down. He pulls out Rs 200 and pays for them both. Ask them when their next meal will be and Khan says, “See we have Rs 175 left between the two of us. That should be enough for one meal. Maybe we will stop at Rajpura in Punjab and eat.” Rajpura is still over 300 km away for the both of them. Alexander Burmistrov Jersey