India’s Top Oil Producer Spends $1.2 Billion to Buy Gas Block
India’s biggest oil and gas producer will pay as much as $1.2 billion to buy a majority stake in a gas field off the country’s east coast, aiming to boost production as the country seeks to cut energy imports. State-owned Oil and Natural Gas Corp. Ltd.’s board approved the purchase of an 80 percent stake in Gujarat State Petroleum Corp.’s deepwater block in the Krishna Godavari basin, it said in a statement on Friday. The New Delhi-based company will pay $995.26 million for the Deen Dayal West Field, the largest discovery in the KG-OSN-2001/3 block, with estimated natural gas reserves of 1.1 trillion cubic feet. It will pay? another $200 million for six other discoveries in the block located in the Bay of Bengal. The block has likely total reserves of at least 11.2 trillion cubic feet, according to GSPC’s annual report for the year ended March 31. “The acquisition fits well with the strategy of ONGC to enhance natural gas production from domestic fields on a faster pace,” the company said, adding that trial gas production from Deen Dayal West Field has already started. The deal will help expedite production of gas from the block critical to achieve Prime Minister Narendra Modi’s goal of reducing import dependency of hydrocarbons by 10 percent by 2022. The companies will share infrastructure and reduce costs in an area where both have spent or plan to spend at least $3 billion each. The deal is critical for GSPC, a company owned by the government of the western state of Gujarat, as it is at least four years behind schedule in starting commercial gas production despite having completed construction of a processing platform, gas pipeline and an onshore terminal. ONGC said the acquisition will help it develop faster its discoveries in the Yanam and Godavari areas as well as gas discoveries in its KG-DWN-98/2 block. Marcus Allen Authentic Jersey
Infra Ministries to gauge value of big projects in FY18
Planning to cash in on smart city bonanza by buying a property near a new metro line or highspeed rail corridor? It won’t come cheap now. Starting next fiscal, the government will tap into the premium that public investments generate for private landowners. The government looks set to initiate value capture financing (VCF) for all infrastructure projects in 2017-18. According to sources, the policy will be formally launched by Prime Minister Narendra Modi in February next year. The public financing tool, which is popular the world over, is based on the logic that the government makes large investments in public infrastructure, leading to rapid economic development in those areas, including higher land prices. A value capture financing tool would mean tapping into this increment through additional taxes and then using finances to fund future infrastructure projects in the same area. The move will require all infrastructure ministries to first identify the area of influence, which would not only include the actual project area, but also where the project would have an impact. Then the ministry would make a value impact assessment and understand how much financial value the project would generate over the next decade or two. These studies would be a part of the detailed project report (DPR). The infrastructure ministry would then need to identify a VCF tool and then initiate consultations with the state government. An MoU would be signed between the Centre and the state government and urban local body (if present). The MoU would include the ratio in which funds collected from application of VCF tool would be shared. The funds collected would be put aside in an escrow account. Sebastian Janikowski Womens Jersey
Road projects may lose pace
While the National Highways Authority of India (NHAI) will soon start disbursing funds locked up in arbitration to builders, it could take a couple of quarters before bidding for road projects picks up pace. Of the R2,500 crore worth of claims put in by developers, the first tranche of R1,800 crore is expected to be paid out to a clutch of concessionaires by NHAI shortly. Manish Sharma, partner (infrastructure), PwC India, told FE the step is a sentiment booster and will improve the cash flows of builders.“However, for this to translate into fresh bidding activity would take a good 6-8 months,” Sharma said. Indeed a potential R26,000 crore could be back with builders in the next few months if things go their way but much of this money could be used to pare debt. For the moment, developers are going slow on new projects — that’s clear from the many hybrid annuity projects which are yet to see financial closure. The government had been hoping to award 25,000 km of roads in FY17 and construct 15,000 km. Till end-October, NHAI and MoRTH had between them awarded 4,443 km and constructed 3,591 km.However, companies say the release of money stuck in arbitration cases will enable them to improve their leveraging and eventually bid for more projects. Praveen Sood, CFO, HCC, a big beneficiary of the move says the firm’s leverage will come down from 2.5 times to 1.2 times. “We will be more profitable and with a leaner balance sheet should be able to raise fresh money and bid for more roads,” Sood said. Mukund Sapre, managing director, IL&FS Engineering and Construction, said the money would bring in much-needed liquidity for the company. “Being an EPC player, our working capital requirements are high and the payments will ease cash flows,” Sapre said. Apart from HCC, several other concessionaires stand to gain. The arbitration tribunal is yet to decide on the cases of Gammon India, Gammon Infrastructure, IVRCL and Ramky Infrastructure. According to Bloomberg, the combined total debt of these five players stood at about Rs 35,400 crore at the end of March 31, 2016. Other companies who have filed claims include IL&FS Engineering and Construction for over Rs 150 crore and AFCONS for Rs 140 crore. In August, the Cabinet approved releasing of 75% of the amounts locked up in litigation against margin-free guarantee for cases where awards have been given but have been contested. It was also decided that all arbitration cases will be resolved within a year. The government’s hybrid annuity scheme, however, has not got off to a great start. Alok Deora, analyst, IIFL Wealth, observes that since the model is a new one and builders are financially stressed, it has been a challenge to achieve financial closure. “With just 2,300-odd km awarded so far achieving the target in just three months looks difficult because acquiring 90% of the land before the project is handed over is not easy. Also companies who do receive their claims will first fix their balance sheets,” Deora said. Greg Mancz Authentic Jersey
Doosan Heavy sews up India power plant orders worth $2.3bn
Doosan Heavy Industries & Construction shares rose slightly on Monday, after the South Korean company announced it had landed 2.8 trillion won ($2.3 billion) worth of thermal power plant orders from an Indian state government. Doosan Heavy shares closed at 28,150 won apiece, up 0.54%. With South Korean exporters catching a tailwind created by a weak home currency, the stock is riding a three-day winning streak that started Thursday and is nearing the one-year high of 28,700 logged on Nov. 14. The company said affiliate Doosan Power Systems India secured orders for two plants from the government of Uttar Pradesh in northern India. The Obra-C and Jawaharpur plants will each have two 660-megawatt generators, according to Doosan. “We could strike the deals thanks to our aggressive localization strategy, paying attention to the growth potential of the power market in India,” said Kim Heon-tak, head of the engineering, procurement and construction business group at Doosan. Kim added that the orders would accelerate Doosan’s expansion in the Indian thermal power market, which he said is expected to reach an annual average of 18 gigawatts by 2020. The fresh orders come two months after Doosan snagged 1 trillion won worth of power plant-related business from Saudi Arabia and 950 billion won from the Philippines. Doosan said its orders have topped 9 trillion won this year, with 5 trillion won in the fourth quarter alone. Looking at the broader South Korean market, the sliding won is buoying exporters such as Samsung Electronics, SK Hynix and LG Display — all three of which expect their sales and profits to increase in the fourth quarter. Winners and losers The won hit 1,203 to the dollar on Friday, its weakest level in nine months. The currency has slipped by 9.23% since the end of September, from 1,101.3. Market watchers say Samsung’s quarterly operating profit increases by 500 billion won every time the currency weakens by 100. SK Hynix’s sales climb about 100 billion won when that happens. Dick Butkus Authentic Jersey
Power demand down 6% after note ban
With industrial activity slowing and an acute cash crunch in the aftermath of demonetisation, power demand is set to come down drastically. According to experts tracking the sector, peak power demand is down six per cent between September and November 2016. On a year-on-year basis, though, demand grew 11 per cent in September 2016, according to the latest data of Central Electricity Authority. With demonetisation kicking in from November 8, 2016, from medium, micro and small enterprises (MSMEs) have reduced their power demand owing to slow activity. Peak power demand deficit — the gap in power supply and demand – has also reduced owing to decline in power demand during the past month. The peak demand deficit in November was 0.6 per cent, down from one per cent in October and 1.6 per cent in September 2016. “Small enterprises are facing the brunt of cash crunch and labour shortage,” said a power sector expert, who did not wish to be identified. Agricultural power demand is also likely to go down as the current sowing season has been hit by cash crunch. The country received good monsoon this year, which was expected to boost rural demand, say experts. Several power-guzzling sectors such as automobiles, hotels and textiles have been hit by the cash crunch. While weavers and textile traders have stalled production, the auto sector is looking at one of the worst sale periods, which could affect production in the coming quarters. Commercial vehicles, and two- and three-wheelers posted a decline. This was the steepest in the past 44 months. The sector declined 7.75 per cent in March 2013. The last time the sector posted a decline was in December 2015, when volumes fell by 0.17 per cent. Exporters expect demonetisation to lead to a fall in outbound trade this month, and a greater decline in the coming months. Exporters have warned that the government’s ban on old Rs 500 and Rs 1,000 notes would lead to a production decline in the short term. Stagnant power demand forced 30 power-generating companies to reduce their coal offtake, even below their lowest permissible threshold under the respective fuel-supply agreements with Coal India. Rod Carew Womens Jersey
Electricity connection and ease of doing business: Tracking the pace of power delivery
Niti Aayog, along with the Department of Industrial Policy and Promotion (DIPP), will now be constantly reviewing the on-ground improvements in 87 cities regarding one of the most critical aspects of ‘ease of doing business’ — time taken to obtain a commercial and industrial electricity connection. The DIPP and the Niti Aayog would be collecting the above data from various states and their implementing agencies. “As a pilot, we plan to start with sourcing information related to ‘average number of days to obtain a commercial and industrial electricity connection’ for a period of six months directly from the states through their implementation agencies,” said Bibek Debroy, member, Niti Aayog, in his letter to Ramesh Abhishek, secretary, DIPP, on August 3 this year. Further, based on the response to this initiative, information related to on-ground improvements of few other parameters of ‘ease of doing business’ as listed by the World Bank, like the time taken for getting construction-related permits or labour permits, would also be sought by the Aayog from the state governments. In response to Debroy’s letter, Abhishek in his October 19 letter said: “The idea of conducting an exercise to get data regarding actual implementation of the reform in a particular area (getting electricity connection) in selected cities is commendable. We should be able to understand the ground realities through this exercise. DIPP would be happy to support the same.” According to the plan presented by Debroy in his August 3 letter, Uttar Pradesh’s seven major cities — Lucknow, Kanpur, Agra, Meerut, Varanasi, Moradabad and Gorakhpur — would be surveyed in the time period of six months. Five cities, each of West Bengal, Chhattisgarh, Bihar and Gujarat would be surveyed to check the actual number of days required to take an industrial electricity connection. The days would be counted from the date of receipt of application for the connection, to the date of on-ground installation at the applicant premises. India improved its ‘ease of doing business’ ranking — released annually by the World Bank — by just one notch, to 131 from last year’s 130, despite several government measures. The latest World Bank rankings were released on October 25. The assessment for these rankings is done on the basis of ten different parameters — some of which include starting a business, dealing with construction permits, getting electricity connection, registering property and getting credit among others. India’s ranking fell in five out of ten parameters. However, the country also showed improvement in four parameters — the biggest improvement was seen in the area of ‘getting electricity’ where the ranking jumped to 26 from the last year’s 51st position. “On getting electricity, the report recognised the efforts of Tata Power in Delhi to make it faster and cheaper to obtain a connection. These efforts, combined with efforts in Mumbai last year, have allowed India to improve its rank on this indicator …,” said a government statement on October 25. The government is pushing to make India break into the top 50 of the international rankings quickly. Recently, it came out with the ‘ease of doing business’ rankings for all the states, which were based on 340 different parameters. Andhra Pradesh and Telangana were jointly ranked number one in the exercise which involved The World Bank and the DIPP. Abhishek’s letter to Debroy mentioned the 340-point parameters for the states.”DIPP has developed a 340-point Business Reform Action Plan for States and Union Territories. The recommendations are spread across 10 broad parameters — access to information and transparency enablers; single window; environment registration enablers; obtaining electricity connection; availability of land, construction permit enablers; inspection reform enablers; labour regulations; online tax return filing and commercial dispute resolution.” While discussing Debroy’s letter, a DIPP official did mention in an internal note that such an exercise, of sourcing data from the states on 340-point ‘ease of doing business’ parameters, is already being done by the department. “All the critical indicators, mentioned in the letter (of Debroy) have already been taken into consideration by DIPP, and hence it would only be a repetition of the work if Niti Aayog undertakes the same exercise,” said Faiz Aq Ahmed Mumtaz, assistant secretary, DIPP. In last two years, the central government, as well as various state governments, have taken different steps to improve their ‘ease of doing business’ rankings. As reported by The Indian Express, the Prime Minister’s Office (PMO) itself has set the targets for various departments in relation to the steps that have to be taken to improve ‘ease of doing business’ in the country. The PMO has asked the Central Board of Excise and Customs (CBEC) to cut down the examination of consignments at ports, terminals etc to just 10 per cent of the present value through “risk-based criteria”. “CBEC will follow up with the heads of all agencies (port regulators, airport terminal operators, etc) to address the issue of bringing down number of consignments for examination to 10 per cent through risk-based criteria,” said the minutes of the meeting chaired by Nripendra Mishra, principal secretary to the Prime Minister, on May 7 this year. At the same meeting, the prime Minister’s Office directed the shipping ministry to increase the share of “direct delivery” consignments at Indian ports to 40 per cent by the end of this year. Under the direct port delivery (DPD) system, the imported containers are directly delivered to the pre-approved clients, instead of waiting at container freight stations for clearance. Olli Maatta Womens Jersey
NTPC signs 160 MW PPA with Nepal Electricity Authority
State-owned NTPC today said that its wholly-owned arm NTPC Vidyut Vyapar Nigam has signed power purchase pact with Nepal Electricity Authority to supply 160 MW power for January-May 2017. “NTPC Vidyut Vyapar Nigam Limited (NVVN)…Has signed Power Purchase Agreement(PPA) with Nepal Electricity Authority (NEA) for supply of up to 160 MW power for the period January 2017 to May 2017 through Muzaffarpur-Dhalkebar transmission line,” the company said in a statement. The agreement was signed by Arun Kumar Garg, CEO, NVVN and Kul Man Ghising Managing Director, NEA, the statement said. NVVN is the only government company in the power sector engaged in the business of power trading. Marc Staal Womens Jersey
New power tariff structure in works, large domestic consumers to be charged more
The burden of subsidising the power bills of agricultural and low-income families is set to move from industrial consumers to large domestic and commercial consumers of electricity. The government plans to introduce a new tariff structure to charge more from large domestic power consumers rather than industrial units that currently share the cross subsidy burden. Most states categorise households consuming more than 800 units of power a month as large domestic consumers. The government is also working on simplifying tariff patterns by classifying consumers in two to three categories and sub-categories to bring transparency in power billing. An expert committee has been set for this. It comprises senior officials from various states and the power ministry to work on the new tariff structure that encourages energy conservation by residential consumers and reduces the power bill of industrial consumers. The committee is also studying the possibility of increasing fixed charges on connected load of domestic consumers to encourage them to surrender unutilised load. Most states continue with electricity tariff structures created since their formation and are often criticised for political interventions and biases against industrial units that, despite being regular payees, are levied cross-subsidy and other charges.Domestic power consumption, on the other hand, is subsidised, though tariffs increase with consumption. Nowhere in the world except India are power consumers charged for regular payments and bulk consumption. These patterns have never been altered though tariffs have changed over the years. In fact, most countries give sops to industrial consumers onhigher power consumption, a top government official said, not wanting to be identified. Encouraging industrial units to increase power usage is the need of the hour since India has moved away from being a power-deficit country to a power-surplus country, said a senior official in the power ministry, who too did want to be named.Industrial units can absorb the excess generation capacity of power plants operating at about 60% of capacity due to lack of demand from distribution utilities and an ongoing economic slowdown. The utilisation of thermal power plants may fall to 48% by 2022 as the government plans to add 175 GW of renewable energy capacity and 50 GW of new power projects in the pipeline. The Electricity Act, 2003, enabled industrial consumers to choose their sources of power through open access. States initially implemented the reform with enthusiasm but later started imposing financial and non financial barriers on industries to discourage them from purchasing electricity from sources other than their distribution utilities. The Economic Survey 2015-16 highlighted the need for progressive tariff schedules for domestic consumers through which charges for the poor could be reduced and burden on industrial units eased. It said high-cost and low-quality power supply is rendering the units uncompetitive affecting the government’s aim to make India a global manufacturing hub. The report said compared to other developing countries, India’s domestic power tariff schedules have greater scope for progressivity. Increase in tariffs for rich households can be achieved while maintaining or reducing tariffs for the poor. It said regulators should undertake broad welfare analysis while deciding on tariff schedules and cross subsidisation rate for different categories. Patrick Maroon Authentic Jersey
Gazprom says Russia supplied nearly one-third of Europe’s gas in 2016
Russia supplied nearly a third of Europe’s gas needs in 2016, a record amount despite tensions with the European Union and a desire by the bloc to reduce its dependence on Russian supplies. The latest issue of Gazprom’s magazine Blue Fuel said “the share of Gazprom’s gas in Europe grows steadily and has almost reached about 1/3rd in the European gas consumption”. The company has estimated it supplied 31 percent of European gas supplies in 2015, which was already a record. “We are also on track to hit this year an absolute record of annual gas exports, both of Soviet times and the history of modern Russia,” it added. The EU overall imports around half of its natural gas needs, but the bloc has become increasingly concerned about Gazprom’s role as a dominant supplier since Russian supplies were twice disrupted during price disputes with Ukraine. With some eastern European states nearly completely dependent on Russian gas, the EU suspected Gazprom may have abused its dominant position to charge higher prices and opened a probe. Talks between the two sides have progressed in recent months on reaching an amicable agreement where Gazprom avoids paying a fine. For months, Gazprom officials have been arguing that the increasing shipments despite greater availability of liquefied natural gas shows that Europe can’t do without Russian gas and should allow the construction of additional pipelines. “Gazprom remains the only supplier able to securely provide significant additional volumes to its clients in Europe,” said the company magazine. Oliver Ekman-Larsson Authentic Jersey
Petroleum Minister directs Oil Marketing Companies to take all possible remedial measures to ease out the situation in Manipur
In view of the economic blockade imposed by United Naga Council (UNC) on vehicles going to Manipur from 1st November, 2016, supplies of POL products have been severely constrained. MOS (I/C), Petroleum & Natural Gas Dharmendra Pradhan today reviewed the stock position in the State of Manipur. He directed the Oil Marketing Companies (OMCs) to take all possible remedial measures to ease out the situation. Currently, the OMCs are moving supplies under heavy security protection via alternate route NH-35 (via Jiribum) after shifting supply base to Guwahati, from normal base at Tinsukia. So far, the OMCs have moved 8 (eight) convoys to Manipur which consisted of 975 TTs. Last convoy, which entered Manipur via Jiribum border on 25th December early morning, is now reaching Imphal. The OMCs and the Ministry are in constant touch with the State Government. The convoy movement is being done as per advice of State Government. Loaded TTs for the next convoy have already been lined up at Jiribum (Assam – Manipur border). Aaron Nola Womens Jersey