Boeing to invest in new factory in India
Aerospace major Boeing will invest in a brand new factory in India and create an entire aviation ecosystem as far as its ‘Make in India’ plans for its fighter aircraft the F/A-18 Super Hornet are concerned, said the company’s F/A-18 Program vice-president Dan Gillian. He was speaking to a visiting Indian media team now in the U.S. The multirole, dual seat aircraft is reported to be of interest to India, and now features in “Make in India” offers. He said that in the India plan, huge opportunities exist in the supply and manufacture of avionics, engine parts and landing gear components. Further, with improvements in displays, which now worked like an iPad, there were prospects in the fields of graphics too. Adding to his remarks, Boeing India’s president Pratyush Kumar called it a “crown jewel project” which includes indigenisation and tapping into a supplier chain of vendors. This will attempt to mirror the system around the Super Hornet production line at St. Louis, U.S., which is now supported by 800 vendors in 44 states and employs 60,000 people. Mr. Kumar added that with this plant, India could not only look forward to manufacturing the Block II Super Hornet and even an Advanced Super Hornet but also help it design and build an Indian-made ‘next generation’ fighter. According to him, this would also help advance the country’s aerospace capabilities. Mike Nugent Authentic Jersey
Govt softens stand in case against Reliance Industries
The oil ministry has decided not to take any coercive action to recover the $1.55 billion it has demanded from Reliance Industries Ltd (RIL) as compensation for producing gas allegedly at the expense of state-owned Oil and Natural Gas Corp. (ONGC) from a shared offshore reservoir while the dispute remains under arbitration, an official aware of the development said. Keeping the demand, raised on 4 November, in abeyance is a departure from the approach the government had taken in several past disputes that have gone into arbitration, including with RIL and Cairn India Ltd. The development will avert an immediate financial impact on RIL, one of the largest private investors in the oil and gas sector. The move is also set to signal certainty of the regulatory regime governing resolution of disputes in the natural resources sector, and is in line with the Modi administration’s intent to improve the country’s track record on enforcing commercial contracts, an indicator in World Bank’s ease of doing business ranking. The oil ministry has been campaigning for investments into hydrocarbon exploration and has set a target for reducing oil and gas import dependence by 10 percentage points to 67% by 2022. The ministry raised the demand after the Justice A.P. Shah panel, which looked into ONGC’s claim of gas flow between the neighbouring fields of the two companies, recommended on 31 August that RIL should compensate for the “unfair enrichment” it had by way of retaining the gains of gas flow into its block KG-DWN-98/3 (KG D6). “Recovery of the compensation will be kept in abeyance. There is little sanctity in arbitration if coercive measures are taken simultaneously,” a person briefed about the oil ministry’s position said on condition of anonymity. An email sent to RIL on Thursday remained unanswered at the time of publishing. This contrasts with the approach the government had taken earlier. When gas price was raised by 33% to $5.61 per million British thermal unit on 18 October 2014, the government insisted that since an arbitration with Reliance was pending since November 2011 on recovery of cost of gas production, the incremental revenue from price hike should be kept in an account maintained by GAIL (India) Ltd till legal proceedings are over. That arbitration is still on. Also, the government had in May 2014 attached the residual stake of 10% that UK’s Cairn Energy Plc holds in Cairn India Ltd in relation to a tax dispute arising from the controversial 2012 retrospective amendment to the Income Tax Act. That dispute too is in arbitration. Dispute resolution is one area the government is working on to improve investor interest in the country’s sedimentary basins, the entire unexplored part of which will be opened up for bids next year under a new open acreage policy. Director General of Hydrocarbons Atanu Chakraborty told Mint in an interview published on 13 October that the upstream regulator was planning to set up a portal to facilitate communication among stakeholders in the industry that will help in reducing disputes. At the moment, there is no such mechanism for companies operating different blocks which are adjacent to one another. According to Kalpana Jain, senior director, Deloitte in India, prolonged disputes do not augur well for the natural resources sector considering the high risk and capital-intensive nature of the industry. Maliek Collins Authentic Jersey
Indian Oil loses market share in bulk diesel, ATF
Indian Oil Corporation Ltd (IOCL), the country’s largest refiner and marketer, has lost market share in bulk diesel and aviation turbine fuel (ATF) while Reliance Industries, Essar Oil, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have gained in these segments. IOCL, still the market leader in the bulk diesel sales segment, has in the past two years seen its market share drop from over 80% to over 70% now. “Industrial sales have become a challenge due to entry of new players. Earlier we were the only player in the market with majority share. But now we have private players as well and so our share has dropped,” an IOCL official said on condition of anonymity. He said IOCL is competing aggressively and trying to match prices with the private players. “We have list volumes but can’t afford to keep losing. Besides, we have the infrastructure and are most consistent suppliers. That will always work in our favour.” IOCL did not reply to an email sent on Wednesday. Moneycontrol.com on 18 October quoted a CLSA report as saying that among PSUs, IOC had seen the biggest loss in market share in retail diesel (around two percentage points in two years) and in bulk sales by around 10 percentage points in two years as competition increased. The government had in 2013 deregulated the sale of bulk diesel. Public sector companies—Indian Oil, Hindustan Petroleum and Bharat Petroleum—were meeting almost the entire requirement for bulk diesel users until 2013. Of the total diesel sales in the country, around 20% are in bulk. Bulk customers fall in two categories—defence, railways and state transport undertakings which form 60% —and industries like power plants, cement plants and chemical plants etc which form the rest. Diesel sales are the mainstay for all fuel retailers. “In bulk diesel and ATF, IOCL has lost market share. This business is basically based on tenders. So sometimes it happens and it will continue to happen that you win a significant tender and your volumes are immediately added. Somebody bids aggressively and you lose the volumes. So, I think these are something which will continue to happen as far as the bulk diesel segment is concerned and this may change from quarter-to-quarter,” AK Sharma, IOCL’s director finance told analysts in a conference call post second quarter earnings on 28 October. Bulk consumers include state-run bus transport corporations, the Indian Railways, and small and medium-size enterprises that use gasoil to run their facilities. They buy fuel directly from refineries. Private fuel retailers—Essar Oil, Reliance Industries and Shell India—form less than 10% of India’s fuel retail business. Government-owned companies—IOC, HPCL and BPCL—dominate the fuel retail business, with a more than 90% share. In the past, diesel prices have been controlled by the government due to the sensitive nature of the product as an auto fuel and its impact on inflation. RIL said ATF sales volume grew by 31% during the second quarter over the last year and it re-secured its customer base with an over 4.5% market share post deregulation in the bulk diesel segment. Bulk marketing initiatives contributed to domestic market share gains, RIL told analysts in a presentation. It added that RIL had a leading market share in 10 out of 25 airports where it operates. “Award for 30 Railway Consumer Depots (RCDs) under a new Rate Contract with all India share-out at 11.6% for diesel requirement of Indian Railways,” RIL said. It has also accelerated expansion of its network in Southern India. Essar Oil, BPCL and HPCL hold over 2% market share in the bulk diesel segment. BPCL and HPCL did not reply to an email sent on Wednesday. “IOCL had always been the powerful retailer in the market so with the opening of the segment, they are bound to lose market share. BPCL has been growing and we are getting aggressive on the segment,” said a BPCL official on condition of anonymity. “Right since 1960s the entire government’s business was with IOCL and thus the company had 100% share in the bulk diesel segment. After deregulation, most state utilities went in for a tender system which saw private players participate and end IOCL’s monopoly,” said the head of the industrial and commercial segment at one of the oil marketing companies on condition of anonymity as he is not allowed to speak to the media. “When it comes to Railways and state-run utilities, it will be difficult for private players to penetrate that as public sector companies have superior infrastructure and reach. Besides, they look at supplying fuel at an all India basis. Newer players however, may be able to capture markets in and around their refineries,” said an industry official on condition of anonymity. RIL and Essar Oil have refineries in Gujarat and are aggressively marketing in the Western region. Minnesota Vikings Authentic Jersey
Petroleum ministry may put brakes on railways’ crude oil import plan
The Indian Railways has been denied approval by the ministry of petroleum and natural gas to import and refine crude oil. The national carrier’s plan was to import 500,000 tonne of crude oil on a pilot basis as part of its strategy to import and refine crude oil on its own to reduce fuel bill by around Rs.3,000 crore annually. Given low crude oil prices, the Indian Railways sought permission from the petroleum ministry to import crude oil and refine it at state-run Indian Oil Corp. Ltd’s (IOC) refineries. The strategy included selling other refined products extracted from the crude through IOC to garner additional revenue, as reported by InfraCircle on 2 September. “The petroleum ministry is not agreeing. We had sought permission to import 500,000 tonne. Its (petroleum ministry) argument is that it did not give permission to the ministries of defence and aviation either to import crude oil. It looks like it is not happening, though the railway minister’s letter is yet to be replied by the petroleum ministry,” said a senior railway ministry official requesting anonymity. Diesel expenditure is the second-largest component of the railways’ revenue expenditure. The railways consumes 2.6 billion litre of diesel, costing around Rs.20,000 crore annually and accounting for almost 3.2% of the total diesel consumption of India’s transportation sector. The national carrier spends around Rs.30,000 crore on energy bill annually. “We have communicated it to the ministry of railways that it shall be difficult to give permission due to a lot of issues. We are yet to send them an official letter. The matter is still is process and is being discussed,” said a petroleum ministry official who also did not want to be named. Queries emailed to the spokespersons of the ministries of railways and petroleum on 17 November remained unanswered. According to experts, many countries follow the practice of unbundling refining from the downstream activities such as marketing. “As a practice, in countries with competitive markets, refining is unbundled from supply and trading. Crude is procured and supplied to refineries to refine for a charge who in turn supply products at gate. New Zealand and Kenya are good examples. Entities who cannot buy all products can find the method challenging though,” said Deepak Mahurkar, leader-oil and gas industry at PwC India, a consultancy. The national carrier estimates its energy demand to triple by 2030 to 49 billion units of electricity. The national carrier is saddled with falling revenues and non-availability of funds and is looking to reduce costs. The railways capital outlay for the financial year 2016-17 is Rs.1.21 trillion compared with around Rs.1 trillion in the last budget. Any savings will help the railway which plans to invest Rs.8.5 trillion in the next five years. Alex Iafallo Jersey