India’s 2016 Iran oil imports hit record high with refiners resuming purchase
India’s annual oil imports from Iran surged to a record high in 2016 as some refiners resumed purchases after the lifting of sanctions against Tehran, according to ship tracking data and a report compiled by Thomson Reuters Oil Research and Forecasts. The sharp increase propelled Iran into fourth place among India’s suppliers in 2016, up from seventh position in 2015. It used to be India’s second-biggest supplier before sanctions. For the year, the world’s third biggest oil consumer bought about 473,000 barrels per day (bpd) of oil from Iran to feed expanding refining capacity, up from 208,300 bpd in 2015, the data showed. In December, imports from Iran trebled from a year earlier to about 546,600 bpd. In 2015 refiners slowed purchases due to sanctions which choked payment routes, insurance and halved Iran’s exports. Indian refiners Reliance Industries, Hindustan Petroleum, Bharat Petroleum and HPCL-Mittal Energy Ltd (HMEL) last year resumed imports from Tehran, attracted by the discount offered by Iran. “In most of 2016 there was a fight among Gulf producers to increase their market share and lifting of sanctions against Iran has intensified that fight,” said Ehsan ul Haq, senior analyst at London-based consultancy KBC Energy Economics. In April-December, the first nine months of this fiscal year, Iranian supplies to India averaged a record 530,300 bpd, up from about 400,000 bpd before sanctions tightened against Tehran. India’s 2016 Iranian oil imports were the highest in at least six years, according to the Reuters data. Government data going back over a longer period shows the average was the highest since the 2001-02 fiscal year. Overall, India imported 4.3 million bpd oil in 2016, up 7.4 percent from the previous year. Middle-East Jump Rising imports from Iran and Iraq lifted the Middle Eastern share in India’s crude diet to 64 percent in 2016, reversing a declines in recent years, partly due to rising prices for Atlantic Basin oil tied to Brent. The average premium for Brent jumped against Dubai crude to more than $3 a barrel in 2016 from around $1.80 in 2015. “In 2016 Iran ramped up its output to regain market share while Iraq segregated its production into Basra Light and Heavy to attract customers. Basra Heavy was sold at a discount, making it more attractive than rival grades,” said Haq. Iran’s share of Indian oil imports surged to 11 percent in 2016 from 5 percent in 2015. Saudi Arabia remained the top supplier to India last year followed by Iraq and Venezuela. Imports from Latin America declined for a second year, with its share of imports shrinking to about 16 percent from 18 percent, while Africa’s share fell to about 15 percent from a fifth. “Low oil prices brought down production in Latin America while Nigerian barrels were impacted by violence in the Niger Delta. Also falling U.S. oil output impacted trade flows, with some Latin American and African oil finding a place in the U.S.,” Haq said. Nick Perry Authentic Jersey
Hit by losses, DND Flyway operator seeks rejig of contract
Hit by a revenue loss on account of suspension of toll charges and embroiled in litigation, Noida Toll Bridge Corporation Ltd (NTBCL), which owns the Delhi-Noida-Delhi (DND) Flyway, now wants to renegotiate its contract with the government. It is also looking to raise revenue from other sources. NTBCL Vice-Chairman Pradeep Puri told BusinessLine the company will consider making DND toll-free provided the Centre extends the contract period and allows shareholders to get revenue from other avenues, such as ads or installing solar panels, which can be used to generate 10-15 MW. Legal wrangle The DND Flyway became toll-free following a decision by the Allahabad High Court. The Supreme Court has now asked the Comptroller and Auditor General (CAG) to verify the costs. “I am ready to live without toll, provided you do some other things for me. You have some ad revenues there…I have 15 years of balance of concession (contract) period. Consumer interest and public safety should not be compromised…,” Puri said. The Allahabad High Court has not called for contract cancellation, he said, adding: “We can find a way to have a shareholder return without taking recourse to toll. We can put in a solar power facility along the carriageway and the buildings.” “If the revenues were to go up, instead of receiving (toll), I may even end up giving some value back to the government,” he said, adding that the contract was signed during the days when the cost of capital was 16 per cent and it was one of the earliest projects of its kind. The bid documents had been vetted by ADB, SBI Capital and the World Bank at that time. “We are conscious of the fact that in the public eye, the 20 per cent compounding and 20 per cent return is not palatable…. It was an experiment and the first project of its kind. But, it prevented us from being thrown out,” said Puri. The contract has a clause under which the extent of the company’s revenue shortfall will be added to the project cost in the subsequent year while calculating 20 per cent return to the project cost. Claiming that the increase in users in the past few months, after the booths were made toll-free, is marginal, Puri said: “Earlier, there were 1,30,000 lakh daily users. After the tolls were done away with, there are 1,40,000 lakh users.” “About 73 per cent (of NTBCL) is owned by the public. My concern is the welfare of about 82,000 shareholders,” he said. “We have raised funds abroad based on this contract. The sanctity of the contract will have to be maintained.” NTBCL is owned over 70 per cent by IL&FS. LIC, Abu Dhabi Investment Authority and Orix hold stakes in it. Connor Brown Authentic Jersey
Airbus France to set up aerospace, defence cluster at Dholera
Airbus France today signed an MoU with Gujarat government’s Dholera Industrial City Development Ltd (DICDL) for setting up an aerospace and defence cluster at Dholera Special Investment Region near Ahmedabad. The agreement was signed during the ongoing Vibrant Gujarat Global Summit at Mahatma Mandir here. According to the Gujarat government, officials from Airbus France have already visited the place where the company wishes to start their operations. “Airbus France has signed an MoU with state government’s DICDL for collaborating on setting up of aerospace and defence cluster,” state government’s Additional Chief Secretary, Industries and Mines, P K Taneja said. “The MoU will create aerospace and defence manufacturing ecosystem in Dholera region. Airbus France officials have also visited the spot and given their nod to go ahead with the project,” Taneja said. Giving more details about the MoU, Gujarat Deputy Chief Minister Nitin Patel said the company would start its operation with a helicopter manufacturing facility. “This is a very big project coming to Gujarat in aerospace sector. In the initial phase, Airbus France would start production of helicopters at this facility. Investment details are still being finalised,” Patel said. Jaylon Smith Womens Jersey
SpiceJet places order for 205 Boeing aircraft worth Rs 1,50,000 cr
Spicejet has placed an order for 205 Boeing aircraft valued at $22 billion or Rs. 1,50,000 crore at list price. With the earlier order for 55 planes and additional 100 new 737-8 MAX aircraft, the airline has now firmed up order for 155 planes, besides purchase rights for 50 B737-8 MAX and wide body aircraft. The new aircraft will be delivered between 2018 and 2024. “Largest Boeing order in India,” Ajay Singh, promoter of Spicejet, said. He said that the airline could look at launching low-cost long haul service if they decide to acquire widebody. No firm decision as yet. Currently, the budget carrier has 32 next generation B737s and 17 Bombardier Q400s. “We are honoured to build upon more than a decade of partnership with SpiceJet with their commitment of up to 205 airplanes,” Boeing Company Vice Chairman Ray Conner said. Ajay Singh said the induction of the new aircraft, which burn 20 per cent less fuel, would help SpiceJet reduce costs and enhance its ability to compete. “This is a composite transaction for purchase of up to 205 aircraft valued at $22 billion,” Singh said, adding that the focus is on growing the airline in a responsible and profitable manner. After being on the verge of going belly up two years ago, the airline has been in the black for the past seven straight quarters. When asked about financing of the deal and its impact on debt to equity ratio, Singh said there would be no “equity dilution” and the balance sheet would be healthy. In the 2016 July-September quarter, the airline had posted its highest-ever quarterly profit of Rs. 59 crore. In the year-ago period, the same stood at Rs. 29 crore. Jon Niese Authentic Jersey
‘Air India is getting as aggressive as the private sector’
ew routes, aircraft purchase, recruitments will turn the airline around, says CMD One-and-a-half years after he took over as Air India CMD, Ashwani Lohani is confident of a turnaround of the airline. In an interview with BusinessLine, Lohani shared his plans and ambitions for the national carrier. Excerpts: Air India was recently featured as the third worst airline in the world. What do you have to say about that? There were no details, no analysis given in the report. Several international airlines are not on the list. We’ve asked for the basis of the findings — we don’t agree with the findings. We have scope to improve but we are not that bad. We are fairly good. How would you rate your performance in the last one-and-a-half years? The performance has definitely improved. In the past, we were getting abused by the media everyday but now we are getting praise as well. Recently, Amartya Sen tweeted about us, appreciating our service. Yes, issues are there but the main thing is not the presence or absence of issues. The main thing is whether we are doing anything to address them. The fact is the airline is trying its best. What are your biggest focus areas for Air India’s turnaround? Our biggest problem is heavy debt. Because debt servicing itself requires so much money that we are unable to find that kind of money. And if we don’t service that debt we become defaulters. On an operational basis we are doing well. Last year we were operationally profitable, this year also we’ll have operational profits more than last year. We have introduced a lot of flights in both domestic and international circuits. We have progressed. We have recruited pilots and crew members. Last year, we used to have strike calls so often — all that has vanished. The airline is stable. There are a lot of internal issues that lead to processes and that’s what we keep discussing with the staff. What are your growth plans? On the domestic route we’ve already started over 12 new connections and another dozen connections will be added this year. On on the international routes we’ve started four non-stop flights including direct flights to San Francisco and Madrid from Delhi. We are soon going to connect to Washington as a new port of call in the US. We’ll also connect to Copenhagen to connect with Scandinavia and we’ll have some connections with Africa and Tel Aviv. A lot of expansion plan is there because any company which is in an operational business has to be active. If I stop, I start stagnating. Despite your increased connections, the load factor remains low. In such a case is it financially prudent to add more connections? Before we started the Madrid flight, three international flights which we had started used the aircrafts that we had on the ground. We didn’t buy any new aircraft. Most of these flights that we are increasing on the domestic route are using existing aircraft. We are therefore increasing the utilisation of planes. Even though load factor has marginally gone up by 1-1.5%, overall passengers carried has gone up at a higher proportion because we added more flights using the same planes. Our load factor is about 76 per cent totally and it should go to 85 per cent. We are coming out with a lot of new schemes. We are trying to be as aggressive as the private sector. We are becoming competitive in pricing, we are meeting travel agents. How are you looking to reduce debt? All I can say is that the airline needs to be financially restructured. Some of it can be turned to equity. There are several options. What is your fleet induction and fleet retirement plan? For retirement, we had 15 classic aircraft (Boeing 747s) which are very old. Four of them have already been retired. Eleven more are to be retired. About seven will go in 2017 and the remaining in 2018. At the same time, we would inject 22 new aircraft. We’ve already entered into an agreement for leasing 22 aircraft. Fourteen Airbus 320s will come in this year. Five Boeing 787 are coming; three Boeing 777s will come in next year. We’ve also placed an order for 10 ATRs that’ll come in this year. So, we’ll have at least 29 aircraft coming in this year. In the next two years, we are looking at inducting about 100 planes in Air India and its subsidiaries. How are you working towards improving operational efficiency? We are empowering our staff at the field level. We are authorising them to take decisions, take financial calls. Even though it is termed risky in a government company. We want them to take on-the-spot decisions. For example, we’ve given our cargo managers full power to quote rates that they deem correct without taking permission from the headquarters and wasting valuable time in the process. So far we’ve been losing business because by the time the quote comes from the headquarters, we would’ve lost it to competition. We are similarly empowering our managers in commercial operations to ensure simplicity of operations. How are you addressing the staff shortage issues? That is getting resolved now. We have injected a lot of cabin crew. We’ve just inducted 50 cabin crew who are joining the 777 fleet and we are recruiting 300 cabin crew from Chennai. We recruited 300 separately from Delhi. We are now doing regular recruitment for pilots as well. This never happened earlier. We are an aged airline with staff having an average age of 50 years. It is unthinkable to have 50-years average age in the service sector. Other airlines have average age of staff at about 30 years because you require youngsters. We don’t have youngsters. We just have oldies including me. We haven’t done recruitment in 18 years and this is the result of that. Other than pilots and cabin crew, we would be hiring another 300-400 people. Nick Shore
Ministry leaning towards second generation ethanol from agri waste: Pradhan
The Petroleum and Natural Gas Ministry is gearing up to move towards second generation ethanol from agriculture waste. Dharmendra Pradhan, Minister of State – Independent Charge, Ministry of Petroleum and Natural Gas, said the country is moving heavily towards ethanol blended fuel, although for the present, it is committed to procuring from sugar industries. “Nevertheless, we are also contemplating second generation ethanol from agriculture waste, ethanol from rice straw, from different biodiversity, through chemical processes and using alternative technology.“Incidentally, towards this move, we laid the foundation for one such plant in Punjab on December 25. We are planning 11 more such pilot plants in different parts of the country, including one in Tamil Nadu,” he said in reply to a query. The Punjab project is expected to become operational in two years, he said without further elaboration. Kyler Fackrell Jersey
India, Japan should co-operate on long term LNG contracts: Minister
India and Japan should co-operate on long term contracts for LNG with a defined cost of energy which would provide a stabilizing factor for the renewable energy thrust that India is currently giving, Indian minister for power, coal, new & renewable energy and mines, Piyush Goyal said January 11 on the side-lines of the seventh India-Japan Energy Forum in New Delhi. The minister said that India’s power demand is going to expand four-fold in the next 15 years to become one of the largest energy markets globally and it would open immense business opportunities for Japan. Being a major LNG importer, India has been advocating for some time that Asian LNG buyers should come together so that they get a better deal in the global market. Large Asian LNG buyers, including India, could benefit by joining hands and thereby, possibly, bring in more equitable trade deals, Indian oil minister Dharmendra Pradhan said during the fifth IEF – IGU Ministerial Gas Forum that was held in New Delhi December 6 on the sidelines of Petrotech 2016. In 2014, Gail India and Japanese trading house Sumitomo Corporation agreed to work together in the fields of gas procurement and petrochemicals. Jason Kidd Jersey
Government to sell 51% stake in Pawan Hans
Moving ahead with the strategic sale of Pawan Hans, the government today said it will sell its entire 51 per cent stake and transfer the management control of the helicopter service operator. Pawan Hans is a joint venture where state-owned ONGC holds 49 per cent. The government has sought applications from entities to act as transaction advisor for the proposed disinvestment of its stake in the company. “The government of India intends to divest its entire shareholding of 51 per cent in Pawan Hans Ltd, through strategic disinvestment with transfer of management control,” a public notice said. As per the notice, issued by the Department of Investment and Public Asset Management, a transaction advisor is to be roped in from “reputed professional consulting firm, investment bankers, merchant bankers, financial institutions and banks” who would provide advisory services and manage the strategic disinvestment process. The deadline for sending the applications is February 2. Set up in 1985, Pawan Hans currently has a fleet of 46 helicopters. It was incorporated with the primary objective of providing helicopter support services to the oil sector for off-shore exploration operations, services in remote and hilly areas as well as for charter services. Earlier this month, defence equipment maker BEML said government would offload 26 per cent stake through strategic disinvestment that could fetch the exchequer Rs 10 billion. Government has set a disinvestment target of Rs 565 billion for the current financial year and so far around Rs 240 billion has been mopped up through share sale and buy backs. Shawn Lauvao Womens Jersey
Global corporate funding in solar sector falls 64 per cent in 2016
Total global corporate funding in the solar sector, including venture capital/private equity (VC), debt financing, and public market financing, raised by public companies came to $9.1 billion in 2016, compared to $25.3 billion in 2015, a 64 percent drop, clean energy consulting firm Mercom Capital said. “It was a tough year for solar companies in terms of fundraising even though demand was robust. Several factors made 2016 a volatile year for the sector,” commented Raj Prabhu, CEO and Co-founder of Mercom Capital Group. “The Chinese module price crash, the slowdown in US rooftop solar, competitive auctions, net metering uncertainty, high debt levels and lack of profits all contributed to a challenging year across the solar supply chain. However, 2017 looks better than expected as lower module prices are expected to boost installation levels,” he further commented. Global VC investments came to $1.25 billion in 77 deals in 2016, compared to $1.1 billion in 83 deals in 2015. Solar downstream companies accounted for 80 percent of the VC funding in 2016, with $985 million of the $1.3 billion raised. Investments in PV technology companies came to $97 million and thin-film companies brought in $95 million. Balance of Systems (BoS) companies raised $37 million. Service providers raised $24 million. In one deal each, the CPV category raised $10 million and the CSP category raised $2.3 million. Among the Top VC deals in 2016, the largest was the $300 million raised by Sunnova Energy, followed by the $220 million raised by Solar Mosaic. Origis Energy and Silicon Ranch each raised $100 million. There were 100 investors that participated in funding rounds in 2016, with five involved in multiple rounds: Energy Access Ventures, ENGIE Rassembleurs d’Energies, International Finance Corporation (IFC), KawiSafi Ventures, and Neo Solar Power. Public market financing was lower this year with $1.8 billion in 27 deals, compared to the 2015 record of $6 billion in 38 deals. There were three IPOs which brought in $230 million – they were BCPG (a subsidiary of Bangchak Petroleum), Azure Power, and Ripasso Energy. Four yieldcos raised public market financing. There was no IPO activity by yieldcos in 2016. Debt financing in 2016 totaled $6 billion compared to the $18.3 billion in 2015. There were three securitization deals in 2016 totaling $387 million. SolarCity raised a total of $234.6 million in two securitization deals and Shenzhen Energy had one securitization deal for $152 million. Announced large-scale project funding in 2016 came to $9.4 billion in 133 deals this year, compared to 2015 with $11.6 billion in 124 deals. A total of 153 investors funded about 5.9 GW of large-scale solar projects this year. The top investors for large-scale project funding were Santander, which invested in eight projects, followed by Bpifrance, Natixis and NORD/LB which invested in five projects each. There was a total of $4.9 billion raised in 30 residential and commercial solar project funds in 2016 compared to $5.7 billion raised in 24 funds in 2015. SolarCity, Sunrun, Solar Mosaic, Spruce Finance, and Tabuchi Electric were the top fundraisers in 2016. Since 2009, solar residential and commercial firms offering lease, PPA and loans have raised more than $22.5 billion. In the last three quarters of 2016, loans made up almost 47 percent of residential/commercial funds announced. There were 68 corporate M&A transactions in the solar sector in 2016 compared to 81 transactions in 2015. Solar downstream companies were involved in 38 of these transactions. BayWa r.e., DNV GL, Golden Concord Holdings, and Voltalia acquired two companies each. The largest and the most notable transaction in 2016 was the $2.1 billion acquisition of SolarCity by Tesla Motors. There were a record 218 large-scale solar project acquisitions for more than 12.2 GW, compared to 2015 when 12.7 GW changed hands in 204 transactions. Mercom also tracked 133 large-scale project announcements worldwide in quarter four 2016 totaling 5.8 GW and 826 project announcements totaling 40.4 GW for all of 2016. Malcom Brown Authentic Jersey
Toll operators saved from worst fears as urban traffic shows signs of recovery
Operators of large toll road projects were expected to suffer a severe decline in toll revenue and traffic volume in the aftermath of India’s demonetisation exercise, but early signs of recovery are already visible in key urban markets, officials at these companies said. MEP Infrastructure Developers Ltd, which operates 30 toll plazas on national highways, has seen traffic volume recover in its Mumbai projects after a decline in December, said managing director Jayant Mhaiskar. “On national highways, however, toll revenue has seen a decline of 15%-18% and traffic volume decline of 8%-10% due to low trucks movement,” Mhaiskar said. He added that growth is likely to be flat for the sector in the current quarter ending March. Toll operators were mandated by the government to exempt all vehicles from paying toll across national highways between 9 November and 2 December to ensure smooth flow of traffic after the withdrawal of Rs500 and Rs1,000 banknotes on the evening of 8 November. Toll collections resumed from 3 December but traffic volume had plunged on account of low economic activity. Road projects had seen traffic growth of about 6% in fiscal 2016 and equivalent in the first half of the current fiscal, but overall traffic growth at the end of the current fiscal is expected to be lower. For Sadbhav Infrastructure Projects Ltd, toll collection across its portfolio of road projects for the 29 days in December had fallen 3.7% year-on-year with some projects showing growth and others a decline, according to brokerage Equirus Securities. “Projects (of Sadbhav) with high commercial traffic like Bijapur Hungund, Dhule Palasner and Maharashtra Border have been impacted the most on a year-on-year basis. On the other end, certain projects like Shrinathji Udaipur and Aurangabad Jalna have witnessed y-o-y growth. Projects like Ahmedabad Ring Road, Hyderabad Yadgiri and Rohtak Panipat have been impacted the least,” Equirus said in a note to clients on Monday. But traffic is returning, according to Shubham Jain, vice-president at rating agency ICRA Ltd. “Toll operators had seen low traffic and toll-collections in the initial two weeks of December but have since recovered, and now toll-collections are reaching similar levels as pre-demonetisation,” Jain said. Various factors can hurt traffic volume and toll-revenue growth in road projects, including weak economic activity, presence of alternative routes, low rate of inflation and a declining trend in the Wholesale Price Index (WPI). Rise in traffic and toll collections recorded by several highway operators last year had helped improve investment sentiment at a time when many companies have looked at monetizing operational assets. “Overall I think there is some reduction in traffic but it varies across our projects as some have also seen an increase in traffic. December numbers for us would largely be flat year-on-year than a decline. Traffic has already started improving,” said K Ramchand, managing director of IL&FS Transportation Ltd (ITNL), one of the largest developers of build, operate, and transfer (BOT) road assets in India. India has the world’s second largest road network, with about 4.8 million km, but national and state highways constitute a small percentage of that network. Only 24% of the national highways have four lanes or higher, indicating opportunities for expansion. Chris Ivory Womens Jersey