BJD joins Paradip battle – IOCL making huge profits, no need for concession
The BJD today justified state government’s decision to withdraw tax concession extended to the Indian Oil Corporation Limited (IOCL)’s Paradip oil refinery on the ground that the project had started making profit. The BJD articulated its stand on the issue, now the focus of a verbal war with the BJP, after Union petroleum minister Dharmendra Pradhan accused the state government of violating the spirit of the MoU with the IOCL by reneging on its earlier promise with an ulterior motive in mind. The state government on February 23 had withdrawn the tax concession given to the 15-million tonne public sector refinery raising the hackles of BJP leaders. Pradhan said: “Odisha had agreed on the tax deferment for 11 years in 2004. Now, upset with their debacle in the panchayat polls and their grudge against me they have violated the spirit of the MoU.” Pradhan said the ministry of petroleum has an ambition plan to invest Rs 1250 billion in the state. “But by withdrawing tax concession the state government is blocking the investments coming to the state. This will affect job opportunities of Odia youths,” he said. Denying the allegation, BJD spokesperson Pratap Keshari Deb said: “The MoU has two operative parts. The main objective of the state was to provide all facilities to make the refinery viable. But after petroleum products were de-regularised and the subsidy to them withdrawn. There is no need to provide tax exemption to the refinery.” The state government had signed the agreement for the refinery in 2004 when the oil market was not favourable. To make the project viable, the state government had agreed to provide all sorts of tax exemptions including interest-free loan. “The refinery was to commence operation in 2008-09. But the work was delayed and it started its commercial production in 2015-16 only,” he said adding that the refinery had made a profit of Rs 158 billion last year. “When it is making such huge profits, where is the need for concessions like tax exemption?” asked Deb. Besides, the IOCL had unilaterally enhanced the refinery’s production capacity from nine million tonnes to 15 million tonnes. However, according to the agreement the concession had been given on a production capacity of nine million tonnes. Deb said that by extending tax concessions to the project the state government would be incurring a loss of Rs 227.45 billion, which would be much higher than the loss of Rs 44.12 billion on account of these concessions that was projected when the MoU was signed. He said: “The state continues to extend support to the project in the form of waiving taxes like octroi. They got concessions to the tune of Rs 5.76 billion last year. They should not ask for more.” The party also raised questions over the claims about the employment opportunities that the project would generate. Taking on the Union minister, Deb said: “The refinery has been constructed using modern technology. It has created only a few white-collar jobs. Pradhan should tell people how many Odias have got jobs at the oil refinery?” Deb clarified that the decision to withdraw was an administrative decision. “The state government had issued a noticed to the IOCL in December 29, 2016, seeking a reply as to why the provision of tax exemption should not be withdrawn. The IOCL replied to the notice on January 17, 2017, and the state government took up the issue on February 9, 2017. Later, the state cabinet took the decision to withdraw concession on February 22, 2017,” he said. The issue may find an echo in the Assembly tomorrow when finance minister Pradip Amat presents the budget in the House. The size of the budget that is expected to reflect state government’s larger planning as well its financial constraints may be in the order of Rs 1060 billion. Kareem Martin Jersey
Discovered Small Field activities in the State of Tamil Nadu
The Cabinet Committee on Economic Affairs (CCEA) has approved the award of 31 contract areas as part of the Discovered Small Field (DSF) Bid Round 2016. These fields were offered under new policy for small fields known as Discovered Small Field (DSF) policy, 2015, which offers improved fiscal terms with the aim to enhance Oil and gas production and reducing import dependency of the country. These fields were offered through an open and transparent international competitive bidding process. The bidding was open to all, including National Oil Companies (i.e. ONGC & OIL) and other central and state PSUs. Currently, there are 03 operational Exploration Blocks (Approximately 1461 sqkms) under Production Sharing Contract System in Tamil Nadu where hydrocarbon exploration is going on. Under Nomination regime, 31 Mining leases (approximately 3500 sqkms) have been granted in the State from where 600 tonnes of Oil and 3 million cubic meter of Natural Gas are produced per day. Till date, more than 700 wells have been drilled for extraction of Oil and Gas in the Tamil Nadu. These active operations are not hampering agriculture in nearby areas and do not pose any known environmental impact or health hazards on living beings of the operational area. The two contract areas, Karaikal (10.4 Sqkm) located in Puducherry and Neduvasal (10.0 Sqkm) located in Tamil Nadu awarded under DSF bidding round have an in-place volume of 4,30,000 metric tonne of oil and oil equivalent gas. In the past weeks, some concerns have been raised over the impact of E&P activities proposed to be undertaken in these oil and gas fields on agriculture & soil condition in the region, contamination of ground water table, effect of Methane generation, etc. Extraction of Oil and Gas from sub-surface is a well-established practice and the E&P industry uses state-of-the-art technology for the operations and takes maximum care for environmental effects. The operators also get Environment Impact Assessment done before carrying out any drilling activities and other activities. Process of drilling and production requires very limited surface land area (generally 120X120 square meter) which will not affect agriculture or the soil of the entire lease area. Additionally, operators are required to follow strict environmental norms for the use of operational land. Oil and gas extraction are being carried out from deeper earth area (generally > 1000m), and thus doesn’t affect ground water aquifers which are located at much shallower levels. Hydrocarbon extraction method is being used worldwide which has not seen any direct impact to water resources of the mining area. Also, while drilling for oil & gas, cement casing is used; hence, there is no impact on groundwater as such. As the principal component of Natural Gas, Methane is being used as house hold fuel globally in the form of PNG. Others concerns about adverse environmental impact on nearby areas and the people living there are also misplaced, as all petroleum operations require prior environmental clearances from Ministry of Environmental and Forest, wherein public hearing is an integral part of obtaining these clearances. As per the contract terms, these fields are to be put on production within three years from the date of Mining Lease (ML). Hydrocarbon production from these fields will result in several economic benefits to state and its people in the form of royalty, VAT, additional employment generation and economic development of the state. As per estimates, the two contract areas are expected to generate gross revenue of INR 3 billion, royalty to State Government of INR 400 million and additional employment for about 500 persons. Darian Thompson Jersey
ONGC may acquire HPCL in $6.6 billion deal
Oil and Natural Gas Corporation (ONGC) may acquire India’s third-biggest fuel retailer HPCL in an about Rs 440 billion (USD 6.6 billion) deal as part of the government’s plan to create an integrated oil giant. Following up on Finance Minister Arun Jaitley’s Budget announcement of creating an integrated oil company, India’s biggest oil and gas producer ONGC may buy all of the government’s 51.11 per cent stake in Hindustan Petroleum Corporation Ltd (HPCL). This will have to be followed by an open offer to acquire additional 26 per cent from other shareholders of HPCL. “The government is looking at creating an integrated oil company and the idea is to merge an oil producer with a refiner,” a top source said. There are only six major companies in the sector – ONGC and Oil India Ltd being the oil producers, Indian Oil Corp (IOC), HPCL and Bharat Petroleum Corp Ltd (BPCL) in refinery business and GAIL in midstream gas transportation business. The rest such as ONGC Videsh, Chennai Petroleum Corp (CPCL), Numaligarh Refinery Ltd and Mangalore Refinery (MRPL) are already subsidiaries of one of these six PSUs. “So, the options are very limited. One option is to merge refiners HPCL and BPCL with ONGC and merge IOC and OIL. Now this would create two large vertically integrated oil companies. But this would also mean limiting the choice for consumers to just two companies for buying fuel,” he said. The possible way out is to merge HPCL with ONGC while keeping BPCL separate. BPCL already has a flourishing upstream arm in Bharat PetroResources Ltd which can be strengthened further. “This way consumers will continue to have three fuel retailers in IOC, ONGC-HPCL combine and BPCL,” he said. HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC’s portfolio, making it the third-largest refiner in the country after IOC and Reliance Industries. ONGC already is majority owner of MRPL, which has a 15-mt refinery. The source said ONGC buying HPCL will require two sets of Cabinet approval – one where the government approves sale of its all or part of its 51.11 per cent stake to ONGC, and the other for allowing ONGC to spend the money on stake buy. Considering today’s trading price of Rs 561, ONGC will have to pay the government Rs 291.28 billion for 51.11 per cent stake. It will then have to buy another 26 per cent from the open market for Rs 148.17 billion, taking the total acquisition price to about Rs 440 billion. The merger will help the world’s third-largest oil consumer better compete with global majors in acquiring foreign assets. More than 12 years after a proposal to merge oil PSUs was first mooted by the then oil minister Mani Shankar Aiyar, Jaitley in his Budget for 2017-18 proposed to “create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies”. The behemoth so created will not just compete globally, but withstand oil price volatility by using profits the refining business make in low oil prices to make up for losses in upstream and vice versa. Ryan Callahan Womens Jersey
Bring natural gas under GST fold: BC Tripathi, CMD GAIL
Chairman of Gas Authority of India Limited (GAIL), B C Tripathi on Monday sought waiver off customs duty on LNG and raised his decibel for bringing in “natural gas” into GST fold, yelling that India desperately requires “a well crafted integrated energy policy” in the absence of which, it cannot move towards gas based economy and hardly create an intense urge and addiction for mass consumption of natural gas. Inaugurating a Conference on “India Moving Towards Gas Based Economy-Roadmap Ahead” under aegis of PHD Chamber of Commerce and Industry on Monday, Tripathi demanded that “an assured rate of return of 12 percent is essential for GAIL on its investments to connect entire India with gas pipeline network without entering into any partnership deed to accomplish the objective. “No country in the world, barring USA created a national gas grid entering into partnership arrangement and that it has been done by the national oil companies on their own and therefore, if an assured ROR of 12% is guaranteed to us, GAIL can connect India with such a network including north east and Tripura”, said Tripathi. “Natural gas sector has not been able to realize its full potential until now due to apathetic government policies including multiple stiff taxation on it like excise, VAT, octroi and other such local levies and therefore, it needs to be subsumed in GST regime with new integrated energy policy in place which can offer a preferential treatment for natural gas”, Tripathi said, cautioning that natural gas share in energy basket could increase to intended 15% only with suggested prescriptions. The CMD also felt that preferential treatment for natural gas sector has become necessary to produce clean energy by pouring in huge investments into it rather than reviving the retired thermal power plants with additional investments which could neither be cost competitive and continue to abet the pollution and pollutants that arise out of them. Tripathi also added that GAIL on its own way would promote campaign such as “Swachh Bijlee” for cleaner environment on lines of natural gas which is completely a cleaner fuel for mass consumption and has already set-up a Start-up fund of Rs.1 billion to promote innovation in the field of natural gas engines. Speaking on the occasion, Director Finance, Petronet LNG, R K Garg though welcomed reducing customs duty on LNG by 50%, however, felt that in view of its commercial significance, the duty on it should have been brought to zero per cent. President, PHD Chamber, Gopal Jiwarajka in his remarks promised that all concerns and roadmap suggested by Tripathi for transformation of natural gas sector will be taken to the highest level of policy making by the PHD Chamber as the suggested proposals mooted by GAIL are fully justified for promotion of natural gas. Derek Anderson Authentic Jersey
India to fill gaps in aerial vigilance
With Pakistan and China rapidly modernising their air forces, India has intensified efforts to fill the gaps in its aerial surveillance. After handing over the first indigenously developed airborne early warning and control system, Netra, to the Indian Air Force at Aero India last week, the Defence Research and Development Organisation has set its sights on a much larger and more capable system. India is also in negotiations with Israel to buy two more Phalcon Airborne Warning And Control System (AWACS) mounted on Russian IL-76 aircraft to add to the three systems in service. Officials are hopeful of concluding the deal before Prime Minister Narendra Modi visits Tel Aviv possibly in June. Addressing journalists after handing over the first system, Defence Minister Manohar Parrikar said the gaps in AWACS were being corrected. Various programmes were being pursued simultaneously. “We have improved the serviceability of our AWACS by purchasing the shortfalls through emergency powers, so their availability is better,” he said referring to the recent emergency purchases of spares by the IAF for its platforms. The DRDO has The DRDO has planned to develop a long-range AWACS with a 360-degree coverage akin to the Phalcon. He said it would take six years to get the system “totally functional”. Gale Sayers Jersey
More intra-state flights may take UDAN on government’s regional connectivity push
The regional connectivity scheme is set to give a boost to intra-state connectivity in a number of large states in the country, as several bids under the regional connectivity scheme, or Ude Desh ka Aam Nagrik (UDAN) plan, are favouring intra-state connectivity. “Looking at the bids, we can comfortably say that a number of states will get air connectivity between the state capital and various key cities in the state,” said a senior aviation ministry official, who did not want to be identified. He, however, did not reveal the names of those states, as the counter bidding process is under way. The official also explained that Delhi itself is going to get connected to at least ten new cities after regional flights start operations. Among the ten destinations, flights to two cities — Kanpur and Bhatinda — have already been started by Air India and will start charging subsidised fares of Rs 2,500 per hour of flight once they win bids for the routes. Analysts said that this could be a game changer, as it would generate a lot of traffic for bigger carriers too. “Intra-state flights would generate huge number of air fliers not just in the country but would also generate business for national airlines, which can provide onward feeds to air passengers being brought to the state capital by regional carriers,” said Mark Martin, founder and CEO of Martin Consulting. Martin, however, said that the scheme would have been much more effective if the government had removed some complexities. “The scheme today is a complex one, where there are a lot of processes before the subsidy is actually released. If the government had provided airlines subsidies on the cost of fuel, which is the highest operating cost for airlines, it would have been much more effective,” said Martin. The government is also hopeful of announcing the award of regional flights post March 11, after the code of conduct gets over post the announcement of election results. “We will be able to finish the award of routes by the first week of March. The announcement can only be made after March 11, 2017. We expect regional flights to begin by the end of March,” said the ministry official quoted above. The government expects that the subsidy outgo during the first year of regional operations would be to the tune ofRs 350 crore and the government would generate it by charging the airlines. Trevor Williams Womens Jersey
Work on Bhogapuram airport will begin soon : Aviation Minister
Visakhapatnam as a modern growing industrial city needs a new international airport and therefore the Centre has taken up the project at Bhogapuram in Vizianagaram district. Work on the project will begin once the land acquisition process is completed, Civil Aviation Minister P. Ashok Gajapati Raju, has said. He was interacting with members of the local branch of the Confederation of Indian Industry (CII) here on Monday. He said, “The Collector of Vizianagaram district has told me that most of the lands have been acquired for the project,” he said. The project falls in Vizianagaram Lok Sabha constituency, represented by the minister himself. He said the Civil Aviation Ministry was spending more than Rs. 1,500 crore on improving the Rajahmundry, Vijayawada and Tirupati airports in the state. “We are extending the runways at Gannavaram (Vijayawada) and at Madhurapudi (Rajahmundry) airports. We are also creating other facilities and also improving the Tirupati airport. Nightlanding facilities are being created at these airports to improve connectivity,” he said. Air cargo from Vizag: O. Naresh Kumar, the CEO of a local software company, and several others raised the issue of setting up an air cargo complex at the Visakhapatnam airport to meet the needs of the local industry. They wanted a specific assurance from the minister on the issue. The minister said there were some procedural problems, which were being sorted out. On the whole, he said, on the cargo front Indian airports were way behind and “except at Chennai airport, we are not handling much cargo. The Government and the industry and trade should work together on the issue. You should tell us what kind of policy intervention you require.” A representative from Brandix India Apparel Ltd sought a direct flight to Colombo from Visakhapatnam and the minister said he would look into the demand. Local member of Parliament, K. Haribabu, said 30 major projects were coming up in and around Visakhapatnam city, after the bifurcation of the State, tremendously increasing the importance of the city and correspondingly air connectivity was also being improved. G.S Shiv Kumar, the chairman of the CII (Andhra Pradesh), presided over the session. Calle Rosen Jersey
JSW group to foray into aviation business
Sajjan Jindal’s JSW Group is entering the civil aviation business. It has bid for the Bengaluru-Vijayanagar route under the government’s regional connectivity scheme, its top executive said. “Our Group has submitted the bid under the government’s scheme and the bid is only for one route, which is Vijayanagar to Bengaluru. No listed company is involved,” joint managing director and Group’s chief financial officer Seshagiri Rao said. The foray into civil aviation would mean that the proposed SPV will need to get approvals from the aviation ministry and the Directorate General of Civil Aviation as a scheduled commuter airline before it launches operations. He added that the group is not looking at this venture as an entirely commercial venture. “It is not a purely commercial venture for us and we are looking at it more from a perspective of providing connectivity to our plant. It may become a big business in the future but as of now our investment is only in the range of about Rs 20 crore,” Rao said. Rao, however, did not reveal any details on the type of aircraft that will be used to launch operations saying he is not aware of those details. He further said that about 25 to 30 people from their company travel to Vijayanagar daily. “This route will also help tourists travelling to Hampi,” he said. Tourists traveling to Hampi now have only the road and rail routes, which take about six hours from Bangaluru. Hampi is a popular tourist destination, dotted with temples and a UNESCO World heritage site, with monuments dating as far back as 1442 from the Vijayanagara empire. An Airports Authority of India official, when contacted, confirmed that JSW Group has applied, but refused to reveal any further details, as the bidding process is still on. Another aviation ministry official, when contacted, said: “The proposals are from 11airlines, including Air India and SpiceJet, and they expect to kickstart operations at about 15 unserved or underserved airports soon.” The Modi government, in June last year, announced a plan to provide regional air connectivity at a fare of Rs 2,500 per hour of flight. According to the scheme, the government would bridge the gap between cost of operations through the regional subsidy fund that has been created by charging domestic airlines a charge per flight. J.J. Watt Jersey
Centre mulls dedicated cargo airport for Telangana, UP
The Centre is considering a proposal each from Telangana and Uttar Pradesh for setting up a ‘dedicated cargo airport.’ Telangana wants a dedicated cargo airport to be built in northern Hyderabad, while Uttar Pradesh is seeking the green signal to construct one such airport in the western part of the state, official sources said. The Centre has informed these two states that the Airports Authority of India (AAI) had appointed a consultant to study and suggest name(s) of airport(s) or site(s) in the country that can be ‘developed’ or ‘converted’ as ‘dedicated cargo airport(s)’ – which may also be termed as ‘merchant airport(s).’ The AAI, subject to the Centre’s approval, would facilitate the construction of such dedicated cargo airport(s) once the site(s) and plans are finalised, and after finding that the same would be geographically suitable for air transportation, the sources said. They added that the cargo airport(s) may also act as ‘air cargo hub(s)’ in the country. Yadier Molina Womens Jersey
Will start receiving ordered Boeing planes from mid-2018, says SpiceJet
Stating that Indian aviation market is the fastest growing in the world, SpiceJet on Monday said that it aspires to be the most profitable airline in the country. “We have the best on-time performance in the industry. We will try to reduce costs and increase ancillary revenue,” it said. The low-cost carrier also said that it will start receiving the ordered Boeing planes from mid-2018. Meanwhile, India’s domestic travel demand in 2016 touched nearly 100 million mark, with the Indian airlines flying a total of 998.88 lakh (99.88 million) passengers between the January-December period of 2016 as compared to 810.91 lakh in 2015, an increase of 23.18 per cent over 2015. The data showed that the low-cost carrier (LCC) SpiceJet had the highest passenger load factor (PLF) during the month under review at 93.7 per cent. “Not only have we scored a hat-trick with the best OTP (on-time performance) for the third consecutive month in a row, we have also recorded over 90 per cent passenger load factor for 21 successive months,” G.P. Gupta, Chief Administrative Officer, SpiceJet, said in a statement. Recently SpiceJet also changed the uniform of its workforce. The uniforms retain the carrier’s signature red colour largely, while incorporating new designs. Inspired by the airline’s image of “Red.Hot.Spicy”, the new range of uniforms has been introduced to enhance the style quotient. The new range includes a unique design for each department, specifically styled to suit the different seasons. For instance, the summer wear for the female cabin crew will include a one-piece dress. The range for pilots includes a single button slim cut black suit for men. Patrik Laine Jersey