Fresh tax demand of Rs 10,200 crore from Cairn Energy
Indian tax authorities have made a fresh demand of Rs.10,200 crore in taxes from Cairn Energy Plc in the old case of retrospective tax on alleged capital gains made in 2006 but dropped the demand for heavy interest, the company has said in a notice to shareholders. Cairn Energy has all along contested the government demand of tax on a transaction, which it considers mere reorganisation of assets before listing its local unit Cairn India on the exchange. An arbitration in underway to decide on the validity of the tax demand. “The final assessment order was appealed to the Income Tax Appellate Tribunal, Delhi (“ITAT”) which ruled on March 9, 2017 that tax in the amount of Rs.10,200 crore remained payable but that Cairn Energy could not be required to pay interest under the relevant sections of the Indian Income Tax Act, 1961 on the basis that the legislation introduced in 2012 was a retrospective amendment and Cairn could not have anticipated that payment of tax would be required,” the company said. The Income Tax Department had earlier raised a tax demand of Rs.10,247 crore and another Rs.18,800 crore as interest for 10 years. “Following the ruling of the ITAT, an amended tax demand, received on March 31, 2017 noted that late payment interest would now be charged from February 2016, i.e. from 30 days following the date of the original 2016 final assessment order,” the company said. The decision of the ITAT is potentially subject to appeal, the company added. In 2011, Cairn Energy sold its stake in Cairn India to Vedanta but retained just about 10 per cent. In 2014, Cairn Energy received an order from tax authorities restricting it from selling its residual 10 per cent shares in locally-listed Cairn India, valued at $1billion then, pending a review of an internal group reorganisation carried out in 2006, the company said. Jonathan Huberdeau Authentic Jersey
R-Power to seal Bangla project today
Anil Ambani’s Reliance Power (R-Power) will on Monday seal the power purchase agreement (PPA) with Bangladesh Power Development Board (BPDB) to get the $1-billion first phase of its proposed power project and liquid gas import terminal in Bangladesh off the ground in less than two years of signing the MoU. The PPA marks a major power stroke by the Indian private sector on the sidelines of Bangladeshi Prime Minister Sheikh Hasina’s visit, indicating that bilateral ties have come of age under her commitment and PM Narendra Modi’s stewardship of India’s relationship with its neighbours. Indeed, it was during Modi’s June 2015 visit to Bangladesh that R-Power and BPDB had signed the MoU for the three-phase project, altogether worth $3 billion. The $1-billion investment in the first phase of 750MW alone will be the largest by an Indian private sector company. For Bangladesh, it will mark the single-largest FDI. The power plant will be set up in Narayanganj district’s Meghnaghat area, around 40km southeast of Dhaka, and the floating gas import terminal at Kutubdia island in Chittagong. BPDB has provided land for the power station. A parallel deal is in the works, wherein R-Power will source gas but PetroBangla will use the full capacity of the import terminal and sell fuel to the power plant and other industries. Bangladesh has a demand of nearly 8,000-9,000MW but produces about 7,000MW. A major chunk of power stations run on fuel oil or diesel, resulting in a tariff of 15-16 cents a unit. Industry analysts said given the current economics of liquid gas price, power from R-Power’s project could be 15-20% cheaper. Reliance Power plans to move equipment it had imported from US gear-maker GE for a 2,400 mw plant proposed at Samalkot in Andhra Pradesh. Sources said these equipment still remain unpacked and carry guarantee from suppliers. The project was built around the promise of gas from Reliance Industries Ltd’s KG-D6 discovery off the Andhra coast but scrapped after output fell to a tenth of the target. By 2021, demand for electricity in Bangladesh is expected to touch 24,000 mw and 40,000 mw by 2030. The Bangladesh Vision 2010 document envisages developing 10,000 mw generation capacity. The Tata group had proposed $3 billion investment to build a coal-fired power station in Bangladesh some 7-8 years ago but scrapped the project citing inordinate delays by the government. Since then, government-to-government deals have dominated power ties between India and Bangladesh. India supplies some 600 mw through West Bengal and Tripura and is examining the possibility of ramping up wheeling capacity to 1,000 mw. Besides, NTPC and BPDB are jointly building a $1.2 billion coal-fired power plant. William Karlsson Authentic Jersey
Surplus power generation capacity, enough coal likely to beat summer heat
The summer of 2017 may not prove as uncomfortable for electricity consumers across India as the season in previous years, thanks to surplus power generation capacity, adequate coal stocks and improved purchasing ability of distribution companies. Barring pockets in certain states such as Uttar Pradesh, Punjab and Jammu & Kashmir which lack inter-state transmission connectivity, consumers in most other regions are likely to have sufficient electricity access. Generators are looking forward to better utilisation of power plants, resulting in better revenues, as the Meteorological Department has predicted a warmer summer this year. Power prices in the spot market touched Rs 3 per unit in the last week of March, following a sudden spurt in temperatures due to heat wave conditions in most parts of the country. The prices have now been settled at about Rs 2.85 per unit with increased supply from underutilised projects, but rates for southern states have risen to Rs 3.65 per unit. A senior official in the Central Electricity Authority said states such as Bihar, Telangana, Chhattisgarh and Punjab have made affordable short-term power arrangements for the summer season at an average tariff of Rs 3.5 per unit. Haryana, Arunachal Pradesh, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Telangana and Tamil Nadu are among the states that often buy electricity from power exchanges. After many years, Uttar Pradesh has tied up short-term power for April and May, and has for the first time begun buying electricity from the spot markets, said the official, speaking on condition of anonymity. ICRA Ratings’ sector head Girishkumar Kadam said, “The debt refinancing under Uday scheme is resulting in an improvement in the liquidity profile of the discoms in these states and is likely to improve the ability of the discoms to buy power and pay power generators in a timely manner.” Power producers expect better utilisation or plant load factors this summer, said Ashok Khurana, director general of the Association of Power Producers. CEA data shows that plant load factor at thermal plants was 67% in April 2016, 62% in May and 54% in June. “The demand is likely to pick up substantially this summer. A 10-15% growth in peak demand led by air cooling based on weather predictions is expected,” said a Mumbai-based analyst, who did not wish to be identified. There is adequate power to meet demand and enough coal to produce power, Khurana said, while pointing out that much depends on the financial condition of the states and their intention to buy power. The last mile transmission connectivity in some states may, however, prove a constraint in some states such as Bihar and Uttar Pradesh. Twenty seven states and a union territory, representing 97% of discom debt have joined the Centre’s Ujwal Discom Assurance Yojana (Uday) launched in November 2015. Rural Electrification Corporation CEO Ritu Maheshwari said the states have derived benefits of Rs 11,900 crore in the nine months since joining the scheme while revenue gap of the discoms in 16 early states has fallen 49 paise from 61 paise and the power technical losses have reduced to 22.5% from 24%. Owing to the forecast of above normal temperatures, the power ministry expects power demand in northern region to peak to 56 GW between April and September. Electricity demand in the southern region has already peaked to 42 GW while in the western region it has touched 50 GW. The peak demand across the country during the summer is expected to be 165 GW compared to 140 GW at present. Michael Frolik Womens Jersey