Relaxed airline FDI norms to have security implications: FIA
Raising red flags over dilution of FDI norms for local carriers, the Federation of Indian Airlines (FIA) has said the decision would place domestic players at a disadvantage as well as have serious implications on national security. FIA, whose members are IndiGo, SpiceJet, Jet Airways and GoAir, have been vociferous in their opposition against relaxation of foreign direct investment norms for airlines. In a strongly-worded letter to the Civil Aviation Ministry, the grouping has suggested that any dilution in substantial ownership criteria for domestic carriers should be done only on a reciprocal basis. Emphasising that dilution in the substantial ownership criteria should be applied strictly on reciprocal basis, FIA said any unilateral concession by India would place the local carriers at a serious competitive disadvantage vis-a-vis their foreign counterparts. As part of liberalising norms to overseas investments, foreign non-airline players can own up to 100 per cent stake in local carriers. According to FIA, once foreign controlled airlines are established as Indian carriers, they would gain automatic access to defence airfields. Since an unfriendly foreign country can easily route its investment through other countries or through shell companies, allowing effective control to lie outside the country has “huge implications”, it added. FIA also noted that the amendment would enable a foreign airline, through its group companies to be able to own a domestic airline in India. As per the grouping, changing from SOEC (Substantial Ownership and Effective Control) to Principal Place Business (PPB) in Air Service Agreements (ASAs) would impact capacity entitlements. “Accepting PPB will also open the back door for entry by foreign airlines into India’s lucrative domestic market at a time when the Indian carriers are still at a fairly nascent stage of their growth. The grouping, which has legally challenged granting of Air Operator’s Permit (AOP) to AirAsia and Vistara, cited that even the US and Canada, allow only 25 per cent of voting rights to foreign nationals and entities in their airlines. “Foreign governments, including those of Singapore and Malaysia, do not allow airlines in India to set up subsidiaries in their countries. Therefore, it is not understood why India should extend them this courtesy,” the letter, dated December 30, said. Mike Singletary Authentic Jersey
IndiGo, SpiceJet raise red flag over FDI norms in aviation
IndiGo and SpiceJet have raised “security” concerns over the government’s decision to allow 100 per cent foreign ownership by non-airline players in the Indian carriers. Spicejet CMD Ajay Singh and IndiGo President Aditya Ghosh have recently raised this issue during their meeting with Commerce and Industry Minister Nirmala Sitharaman. During the meeting, the two airlines said aviation is a “sensitive sector” and the FDI policy relaxation would have “security implications”, according to sources. Spokespersons of IndiGo and SpiceJet could not be immediately reached for comments. The meeting also assumes significance as the government is considering removal of an anomaly restricting foreign direct investment (FDI) in the civil aviation sector. The sector is faced with a Catch-22 situation where a foreign investor, excluding overseas airlines, can acquire up to 100 per cent stake in a local carrier. However, at present they cannot seek a scheduled operator’s permit since it can only be given to a company where substantial ownership and effective control is in the hands of Indian nationals. As this condition restricts and prevents foreign investors from acquiring a domestic airline, there is a need to amend Aircraft Rules, 1937, to facilitate FDI in the sector. Due to this anomaly, the moment foreign investors buy 51 per cent or a controlling stake in a domestic airline, the scheduled air operator permit gets withdrawn. “So, this sectoral norm needs to be amended,” sources added. As per the current policy, 100 per cent foreign investment is allowed in scheduled air transport service, domestic scheduled passenger airlines and regional air transport. Only non-airline players will be allowed to bring in 100 per cent FDI in local carriers. Under the new set-up, 49 per cent will be through the automatic route and for anything beyond, government nod will be required. At present, up to 49 per cent FDI is permitted in scheduled airlines. The government is working to remove all anomalies which are restricting FDI into the country. FDI in 2015-16 grew 29 per cent to USD 40 billion. Morgan Burnett Jersey
Demonetisation impact: Investment proposals fall to decadal low
The effects of demonetisation of large currency notes will have longer-lasting effects than initially expected, the think-tank Centre for Monitoring Indian Economy (CMIE) said in a recent note. According to data on its website, new investment proposals by India Inc fell to low of Rs 1,25,000 crore in the just-concluded December 2016 quarter, compared to the average Rs 2,36,000 crore worth of new investments seen per quarter in the preceding nine quarters of the Modi government. From October 1 to November 8, 2016 (that day the demonetisation decision was enforced), 227 new investment proposals worth Rs 81,800 crore were announced. In comparison, only 177 investment proposals worth Rs 43,700 crore were made between November 9 and December 31, 2016, slowing the pace of new proposals considerably. In fact, the total number of new project proposals of 404 for the quarter is the lowest in over a decade. Mahesh Vyas, CEO, CMIE, told BusinessLine that he expects the lingering effects of demonetisation to have a negative impact in new investment proposals at least till the June 2017 quarter. “Entrepreneurs will announce fewer manufacturing projects when they expect consumption of their end-products to be affected, be it biscuits, shoes, or even of films. Industry is already running at only about 70 per cent capacity utilisation, so entrepreneurs will wait even longer before spending on expanding capacity.” New investments worth Rs 2,097 crore were announced, on an average, per day during the 39 pre-demonetisation days from October 1 through November 8. This average dropped sharply by 61 per cent to Rs 824 crore during the 53 days in the post-demonetisation period. The number of projects announced per day dropped from six to three by a similar comparison. Vyas expects consumption to take even longer to recover. He said, “When people start spending less, it becomes habit-forming and it will take a while before they can break out of the cycle.” CMIE’s data on investment proposals covers the spectrum of listed and unlisted companies, based on their disclosures to stock exchanges, government bodies and other public information. The think-tank’s extensive database on the economy extends to over two decades. According to this data, the March 2009 quarter saw the highest value of investment proposals – at Rs 8,21,564 crore – while the most number of projects were announced in the March 2011 quarter, a total of 1,676. CMIE also found that the implementation of projects that collectively envisaged investments worth Rs 77,700 crore was stalled during the December 2016 quarter. “This is 38 per cent higher than the value of projects stalled during the preceding (September 2016) quarter,” a note on the think-tank’s website said. “It is also more than 10 per cent higher than the average value of projects getting stalled midway through their implementation during the past year.” Separately, CMIE estimated that demonetisation has led to lost wages of about Rs 15,000 crore as workers are forced to spend their time instead waiting in queues to exchange old currency notes for new ones. Fred VanVleet Womens Jersey
RFQ invited for Mumbai-Nagpur Super Communication Expressway
The Maharashtra State Road Development Corporation (MSRDC) has invited Request for Qualification (RFQ) from construction companies for the Mumbai-Nagpur Super Communication Expressway project, which is estimated to cost ?46,000 crore. The project is popularly known as Maharashtra Samruddhi Corridor. There are plans to develop new towns with agriculture hubs along the 706 km corridor. The RFQ has been invited for 16 packages in the EPC mode. The project is expected to be completed by 2019, a press statement issued MSRDC said. Out of the total project cost, civil works for which the tenders are invited is estimated at ?27,650 crore. The land acquisition cost will be around ?13,000 crore. The state government has adopted the land-pooling method wherein farmers whose land is acquired would be returned developed land in the new towns, besides being given annuity for the loss of agriculture income, the statement said. The statement said that MSC Corridor is essentially a 706 km super expressway between Nagpur and Mumbai, connecting 10 districts, 27 talukas and 385 villages of the state. It will effectively slash travel time along this axis by half, bringing it down to a mere eight hours. Out of the 34 rural districts, 24 will get connected to the MSC. The corridor will eventually be integrated with the Golden Quadrilateral and the Western corridor to ensure seamless connectivity across the state, the statement said. Calvin Ridley Womens Jersey
Incentives to states progressing under UDAY: Piyush Goyal
The government will consider incentives for states whose power distribution utilities are progressing well under Ujwal Discom Assurance Yojna (Uday). Power minister Piyush Goyal on Wednesday asked power ministry to launch two-three schemes to laud efforts of states that have joined Uday and been able to revive their power distribution utilities losses. Assam and Telangana on Wednesday joined Uday, taking the count of states that are part of the discom revival scheme to 20. Tamil Nadu, with Discom losses of Rs 50000 crore, is likely to join Uday next week. Telangana is likely to reap net benefit of Rs 6116 crore to and Assam at Rs 1663 crore through Uday, an official statement said. Bennie Logan Womens Jersey
Indian Spot market power prices flat in December
Spot market power price remained flat at Rs 2.32 per unit last month, same as the previous month and about 10 per cent less over prices of Rs 2.56 per unit in December, 2015. The Day-Ahead Market at India Energy Exchange witnessed transactions of 3101 million units in December despite low demand due to the cold wave in North and congestion in Inter-State Transmission Network, an official statement said. With the average daily purchase bid of 119 MUs and average daily sell bids of 229 Million Units, the market remained highly liquid and thus the prices were buyer friendly. Large industrial consumers consumers were key buyers in the market followed by distribution companies, it said. Unavailability of transmission corridor continued to be a deterrent and led to market splitting and price variations. Jay Bouwmeester Womens Jersey
Kerala State Electricity Board: Dip in reservoirs to intensify drought
This summer, parched Kerala will get only half the normal supply of water for irrigation and drinking purposes from the reservoirs of Kerala State Electricity Board (KSEB), a top official cautioned. The water discharged from the hydro-electric power stations are used in the summer months for the consumption of people and for the survival of farms in drought-prone areas of the state. On this New Year day, across its 16 dams, KSEB had only enough water left to produce 1,923 million units of electricity.On the same day last year, the figure was 2,738 million units. “The low water levels in the dams hint at the severity of the drought Malayalis are going to face this year. KSEB might be able to release only 50% of the quantity of water it had given to the irrigation department last year,” said a top official with the KSEB. According to him, Idukki dam had been discharging 3.6 million cubic metres (mcm) of water on a daily basis last summer, which will be down to 1.8 mcm this summer. “This drop in quantity will affect the irrigation of Muvattupuzha and Piravom areas of Ernakulam district, as the people in these areas had been depending on water from Idukki reservoir during summers,” the official said. “Similarly , the water from Idamalayar, Pallivasal and Sengulam projects reach the Bhoothathankettu reservoir, which again irrigates the nearby areas of Ernakulam district. This year, the total supply from these projects will come down to 2 mcm per day, compared to last year’s figure of 4 mcm per day ,” the official said.Chalakudy area of Thrissur district will face severe water shortage as the water level is down at the Sholayar reservoir. As Kakki dam’s water level is also low, some parts of the Pathanamthitta district will be affected. While water scarcity during this summer is an unsolved problem, KSEB has sorted out the expected drop in electricity generation from the hydroelectric projects. “Our strategy is to meet 90% of state’s electricity demands through imports from other states and the rest with domestic generation,” the official said. KSEB expects the electricity consumption to go up to 2,000 million units (mu) during January and 2,100 – 2,200 mu during February . This will go up to 2,300 mu by April. The board is planning to use the existing storage of water in its reservoirs and the expected inflow from summer rains to generate enough hydro-electric power to cover the lean months. During January , KSEB is targeting to produce be 8 million units of hydel power on a daily basis. This will go up to 9 muday during February , 12 muday for March and 11 muday for April and May .
CERC access rate hike plan clouds power market
The Central Electricity Regulatory Commission (CERC) has proposed to increase the short—and medium-term transmission corridor charges (STOAs and MTOAs) for open access by 35% and 25%, respectively, from the current levels. While the regulator says this would compel participants to move towards long-term access (LTA), which is critical for efficient planning of transmission networks, many stakeholders including power exchanges, private transmission companies and generators contend that the move could deal a blow to the thriving short-term electricity market. LTAs, they say, are not happening because states’ power demand hasn’t grown as anticipated. The CERC invited public comments on the draft regulations and is believed to be working on the final version. Transmission planning in the country is done by the central transmission utility (CTU), Power Grid Corporation. Network planning relies heavily on the generators’ requests for LTA. These applications provide the CTU with critical input on the upcoming generation and demand for the same. However, in the last few years, the demand for short-term and medium-term power has spiked. The volume of short-term transactions has increased from 24.69 billion units (BUs) in 2008-09 to 63.96 BUs in 2014-15. However, the price of electricity in short-term transactions has come down from about R7.29 per unit to R4.28 per unit over the same period; in May this year, the price was even lower at R2.50 per unit. “(The volume of short-term transaction could rise further in future). In this scenario, it is likely that generators may not apply for LTA and evacuate power under STOA/MTOA or it is likely that there is less long-term PPAs (power purchase agreements) leading to lack of LTAs, thereby inefficient transmission planning,” the draft regulations said, explaining the rationale behind jacking up charges for STOA and MTOA connections. Currently, the charges for all types of connection are the same. While the duration for LTA is from 7 to 25 years, MTOA is given for 1-7 years. The STOA is for any duration less than a year but no specific capacity is built to cater to STOA, instead margins available in LTA are used for the same. While officials from Power Grid and its subsidiary Posoco, which manages the national and regional grids, defended the CERC’s proposal, electricity exchanges, private transmission players and generating companies are critical of the move. “With more power being contracted on short- and medium-term basis, any increase in charges for open access would be a regressive step. Instead, the CERC should be looking forward to considering access on the basis of general network access (GNA) — with long, medium and short term rolled into one system — from point of injection to point of any drawal, in the true sense of a unified grid,” Ashok Khurana, director general of Association of Power Producers, told FE. GNA is a transmission network planning process whereby the operator doesn’t necessarily need the information about actual generation and demand but can design and build a system through forecasting while ensuring enough redundancy in the system to avoid any congestion. The proposal, according to industry sources, also contradicts the CERC’s own observations on transmission planning and the Electricity Act, which calls for non-discriminatory open access to be provided to all the consumers. “The CERC has also said that transmission planning was possible without prior knowledge of points of injection and drawal using the GNA especially after 2016-17, once a strong all-India network had emerged but the proposal contradicts the earlier stand,” Purnendu Kumar Chaubey, vice-president, Kalpataru Power Transmission, told FE. On condition of anonymity, an official from the electricity exchange said that charging a premium for STOA and MTOA was unjustified as there are no separate capacity created for these connections. While transmission corridors are made according to LTA requirements, other connections only use the underutilised capacity, thus generating revenue for the operator. The official added that STOA and MTOA were dominating the connections as most states do not require long-term PPAs. The thriving market for STOA and MTOA is a result of tepid electricity demand. While the Central Electricity Authority had estimated that the power demand would be around 200 GW by 2017, the same has been hovering around 150 GW. Tre Flowers Authentic Jersey
Power demand touches record level of 11,400 Megawatt in Madhya Pradesh
Power distribution companies of Madhya Pradesh recorded all-time high power supply in December. The demand for power went above 11400 megawatt (MW), highest ever in the state’s history. Sources from power discoms say on December 23 the demand for power reached 11,421 MW, the highest recorded demand against which 21.92 crore units of power were supplied, the highest in the state so far. The increase in demand was attributed to agricultural sector for on-going Rabi season. The demand has not come below 11,000 MW since December 12, said official sources. When the power demand was at its peak, the Sasan Utra Mega Power Project and other individual power producers only contributed to around 2,126 MW, which makes up 20% of the demand, sources said. Of this, maximum power was obtained from the Sasan and individual power producers’ contribution was negligible. Around 3,000 MW was contributed by the state- owned thermal power stations and 3,100 MW was supplied by state’s share from central pool, sources added. Hydel projects have contributed around 1,400 MW and unconventional sources’ share accounts for 600 MW. This apart, the state also received 1200 MW power through power banking, said sources. Trey Hopkins Womens Jersey
Two states to join UDAY scheme on Wednesday: Power minister Piyush Goyal
Union Power Minister Piyush Goyal on Tuesday said two more states will join the Ujwal Discom Assurance Yojana (UDAY) on Wednesday and the third a week thereafter. “Almost the entire country has now joined UDAY. Tomorrow (Friday), two large states will join the scheme, followed by one more very large state after one week,” he said. He did not name the states. “Thereafter, about 90-95 per cent of the national electricity utility debt of the discoms will come under UDAY. Maybe, one or two states will be left. I urge those states to join the scheme,” he said after addressing a Confederation of Indian Industry National Council meet. He claimed there was no shortage of power anywhere in the country. Asked whether the government will scale down coal production in the light of surplus power and coal, the minister said: “It is a dynamic situation. We continuously keep monitoring on how the demand-supply situation evolves. Power production has grown over 8.5 per cent in November. I would like to make sure we never relapse into coal shortage situation.” Loui Eriksson Authentic Jersey