Finance Ministry Rejects Rs 20,000-Crore Plan For Local Solar Equipment Firms
The finance ministry has rejected an ambitious Rs 20,000-crore plan to prop up local solar equipment manufacturers with incentives and subsidies to help them withstand the flood of Chinese imports, said a source close to the development. The domestic industry is concerned about rising imports of solar equipment, which rose 38 per cent to Rs 21,400 crore in 2016-17, accounting for 90 per cent of the solar cells and modules used by Indian solar developers. The ministry for new and renewable energy (MNRE) began working on the policy soon after an appellate body of the World Trade Organisation (WTO) upheld a complaint made by the US against the ‘domestic content requirement’ component in India’s Jawaharlal Nehru National Solar Mission in September last year. The solar mission had a provision by which a part of India’s solar capacity target had to be met using locally made solar panels and modules, which the US maintained contravened three separate WTO agreements to which India was a signatory. The September decision was the third time the WTO had upheld the US view, with India having appealed the earlier two decisions in appropriate forums. The renewable energy ministry thus began looking for other ways to support domestic manufacturing, which would be consistent with WTO requirements. That such a policy was in the offing was confirmed by energy minister Piyush Goyal at a media briefing following a Cabinet Committee on Economic Affairs (CCEA) meeting in Februray this year. The plan, intended to help Indian solar manufacturers’ lower their costs through various subsidies and thereby enable their products to match global prices, would have cost the exchequer Rs 20,000 crore, said the source cited earlier. The MNRE did not provide any answers when asked about the progress in drafting the proposed policy. Instead, a senior official noted that there were already incentives for solar manufacturing under the Modified Special Incentive Package Scheme (M-SIPS). “Incentives are available for 44 Fe categories of electronic products and product components including solar photovoltaic equipment – polysilicon, ingots and/or wafers, cells, modules and panels,” he said in an emailed reply. “Units across the value chain starting from raw materials to assembly, testing and packaging of these categories are included.” The incentives comprise 20-25 per cent subsidy on investment in capital equipment and reimbursement of countervailing or excise duties on such equipment for units outside special economic zones. But M-SIPS is an initiative of the ministry of electronics and IT and has been in operation since 2012. The proposed solar manufacturing policy was entirely different. Domestic solar manufacturers have sought support because the local industry’s limited size makes it unable to compete on price with imported products, primarily from China. Justin Anderson Womens Jersey
Tata Power Proposes To Sell 51% Equity In Loss-Making Mundra UMPP At Re 1
Tata Power has approached Gujarat Urja Vikas Nigam (GUVNL) to buy 51 per cent equity in the 4,000 Mw Mundra Ultra Mega Power Project (UMPP) for Rs 1. Adani Power and Essar Power, which also have power projects based on imported coal, are contemplating similar moves. An official said Union Power Minister Piyush Goyal met banks and state government representatives this week to discuss power projects using imported coal and a committee had been set up to look into the fallout of a Supreme Court ruling on compensatory tariffs. “The government has clarified that it will act as a facilitator. Banks and states that are procuring power from these units will take the final decision,” an official said. The State Bank of India will lead a committee of banks to evaluate the assets. The meeting was attended by banks; Power Finance Corporation; REC; the chief secretaries of Gujarat, Punjab, Haryana, and Rajasthan; and representatives of Tata Power, Adani Power, and Essar Power. In a letter to GUVNL, also marked to the Union power secretary, the chief secretary to the Gujarat government, and the principal secretary to Prime Minister Narendra Modi, Coastal Gujarat Power (CGPL) has suggested two options: Renegotiating the power purchase agreement and selling equity. CGPL is the holding company for the Mundra UMPP. “The procurers take over 51 per cent paid-up equity shares of CGPL for a nominal value of Rs 1 and grant relief to the project by purchasing power at a rate to fully address the under-recovery of fuel costs at CGPL,” said the letter reviewed by Business Standard. The letter added: “Tata Power shall continue to operate the plant under an O&M contract and provide all required support the project as a 49 per cent stakeholder.” The Tata Sons board has questioned Tata Power why it went ahead with investments in Mundra when it knew the plant would not be viable at the cost structure available. Sources said Tata Power was also contemplating retrofitting the Mundra plant to use domestic coal to supply power to neighbouring countries such as Bangladesh. This is in line with a new coal linkage policy, which offers coal to projects based on imported coal as well. “Certain sections of investors have been informed about the possibility of having to take a full write-off on investments made in the Mundra UMPP. Lenders have expressed their dissent in wanting to fund even the working capital needs of the plant following the Supreme Court order,” said an executive. “Bankers have made a suggestion that if 51 per cent equity is taken over, the procurers will have the advantage of competitive power for the full life of the plant,” said a statement by Tata Power. Accumulated losses of CGPL are Rs 6,547 crore and its paid-up equity is Rs 6,083 crore. In a project outlay of Rs 17,900 crore, CGPL has a total outstanding long-term loan of Rs 10,159 crore and an additional Rs 4,460 crore loan taken by Tata Power to meet cash requirements of CGPL. Tata Power said the project lenders had stopped disbursal of loans beyond what was disbursed due to non-viability of the Mundra UMPP. “Due to continuous cash losses and downgrade from credit agencies, CGPL has lost its ability to arrange from financial institutions its short-term funding/working capital requirements for its day to day operations,” said the letter. The Mundra UMPP and a 1,980 Mw power plant of Adani Power at the same location, which used coal imported from Indonesia, had sought to pass on escalated coal costs due to changed regulations to the state utilities of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana. On directions of Appellate Tribunal of Electricity (APTEL) and the Supreme Court, the Central Electricity Regulatory Commission (CERC) computed relief for the two firms in an order in December 2016. But the SC in April set aside the judgments of both the APTEL and CERC, hence quashing any relief. It directed the CERC to “go into the matter afresh and determine what relief should be granted to those power generators who fall within Clause 13 of the PPA as has been held by us in this judgment”. The CERC is yet to compute the relief. Joe Mixon Jersey
Gst To Make Oil And Gas Business More Expensive: Shell India CEO Nitin Prasad
Netherlands-based Royal Dutch Shell plc, the world’s second-largest oil company, has been focussing on aligning with the energy markets’ transition underway globally. India being at the heart of that transformation, the company has rolled out aggressive plans for expanding operations in natural gas and alternative fuel segments apart from the traditional fuel retailing business, Shell India CEO Nitin Prasad said in an interview with ETEnergyWorld. Edited excerpts.. Shell Global CEO Ben Van Beurden recently announced an overall investment plan of around $25 billion in 2017. What part of that investment is likely to flow to India and in which priority areas? I may not be able to share investment figures. But we are looking at an aggressive expansion in retail business and that is going to bring capital into the country. We are looking at our lubricants business which is extremely successful and we feel it will become even more successful with the BS VI transition and we are investing quite heavily in that. We are taking a look at new energies as an area. So, investing quite a bit in that space. We are also taking a look at bio-fuels and waste-to-fuel, as that technology proves itself. We are looking at next generation technologies which are being developed in our lab in Bangalore. We are looking at next generation digitisation and data management in our IT hub. We are investing heavily in that space. And, of course, we are investing tremendously in the gas space, too. Given this long list of focus areas, can you give us a perspective on the company’s thinking on HR. What is the size of the job opportunity that Shell is offering in India in years to come and in which segments? Shell in India employed around a few hundred people around ten years ago. Today, we are touching a strength of nearly 7,000 people and we will be 7,500 by the end of this year. We will be the third-largest employer in the entire Shell Group. And this is not going to stop. We will add more jobs to the country going ahead. And this includes only the direct employees. The numbers are much higher if we take into account the contract staff and the support staff. We are spending a lot of time in creating that big base of jobs. At the same time, this process is resulting in skilling India. In the entire base of 7,500 employees, there is a 10-15 per cent attrition rate. And that is an industry standard. Every year, we are bringing in 1,000 new people in our fold and also another 1,000 who are moving out. This ensures that we spend a lot of time building the skill and capacity across the organisation. A number of our competitors who are behind us in terms of setting up an R&D facility and IT Hub etc, are trying to take some of our people. Which are the key areas where most of the new workforce will go? Shell Energy India will attract people who will come and develop the gas market strategy in India. Our retail business, because of the expansion, is also going to attract additional workforce. IT will attract several hundred people. And a couple of hundred people in the Finance wing also. So, across the board, fresh induction in commercial segment will range in tens to hundreds; while IT and Finance segments will each have new people in multiple of hundred. How does GST impact the core areas of your business? GST implementation is a good thing for us in areas which are part of the GST ambit. So, it is good in lubricants, not with-standing the challenges of pace of implementation and logistics. But it is a big issue in gas and petroleum products. If I am producing gas and I am bringing in LNG today, that means that there is a whole amount of products, equipment and services that go into providing that molecule. All of that will attract GST. Who do I charge it to? I have input credits but I have no output credit because I cannot put GST onto the product. So, in effect we have made our entire business more expensive which is a problem. And also, some of the alternatives like coal are in, even as gas is out. So, it will dynamically shift the end-consumer preferences. So, there is a double whammy here. That is a big problem. What is your view on the daily fuel price change? What kind of impact do you see on retail business and consumers? I am a big fan of this move. The implications of the move going down the chain are very positive. Product prices in the global context and for Asia Pacific change daily. Similarly, gas prices change daily, rather hourly. So, when the retail prices are locked, the person at the retail end turns into a trader because he gets a forward contract at a fixed price. With daily pricing, that volatility comes all the way down to the last mile. So, the price prevailing in the market is the same price available at the pump. It is a good thing and a sophisticated concept. It opens a door of opportunity for everybody to compete on pricing. Today, it does not really make sense for all the retailers to have the same price. After all, they are competitors in a market place. They have different offers in different locations. Why should they be offering the same price? RIL and BP have just announced a major plan to jointly invest Rs 40,000 crore in KG Basin blocks apart from partnering to expand retail presence. How do you look at this announcement given that Shell is also now a major player in the upstream segment after the BG acquisition. The BG acquisition has created a lot of opportunity for us in India in the upstream segment. It was a $50-60 billion acquisition. We have brought fields under development and
Reliance Industries, Bp Withdraw Gas Price Arbitration Against Government
Reliance Industries and partner BP have withdrawn the gas price-related arbitration against the government, paving the way for the companies to claim the premium price for output from deep-sea fields in which they plan to invest Rs 40,000 crore. This is the second case of arbitration that RIL and BP have withdrawn, sending another strong signal that the relationship between the oil ministry and RIL, which had become acrimonious during the UPA regime, has normalised enough for the partners to turn their attention from litigation to investment. Last week, RIL chairman Mukesh Ambani and BP Plc CEO Bob Dudley signalled confidence in the policy environment and the regulatory regime by announcing their plan to invest $6 billion in new fields discovered long back in the deep-sea KG Basin block. “Yes. The gas price arbitration has already been withdrawn,” BP said in an emailed response to ET’s query. RIL did not respond but sources with direct knowledge of the matter told ET that the company had written last week to the government that it no more wished to pursue the gas-price arbitration. The communication came around the time Ambani and Dudley announced the new investment in the gas-rich block to produce 30-35 million cubic metres a day in three to five years. The output from these fields can fetch premium prices only if the operators have no litigation against the government, a key condition that has now been met with the withdrawal of gas price-related arbitration. Last year, the government announced a new policy that allows gas from fields in difficult terrains like deep-sea regions to be sold at almost double the price allowed for normal fields. Reliance and BP are developing new fields at a time when the cost of oilfield equipment and services have crashed while their output will begin around the time analysts expect the global gas glut to end. Equipment prices have crashed due to low demand because the fall of crude from about $115 to below $50 have prompted oil firms to stop exploration and development in deep-sea regions, which need a higher price to justify the investment. Three years ago, RIL, which owns 60% participating interest in the KG block with BP owning 30%, invoked an arbitration following the government’s refusal to implement a price formula for domestic gas that could have doubled the prevailing price. The government challenged Reliance’s power to invoke arbitration in the Supreme Court, arguing that the government alone enjoyed discretion on which price policy it should implement and a company can’t force it to apply a certain policy. The case has dragged on for three years with no consequence as yet. Last year, Reliance Industries, which is engaged in a string of arbitration cases against the government, dropped another arbitration in which it had contested the government’s 2013 order to relinquish about 80% of the KG-D6 area. There are four more arbitration cases between RIL and the government. These are over disallowance of cost-recovery in its KG-D6 block, amount the company must pay for unfinished minimum work programme and illegal production of gas from ONGC’s fields in the KG basin. Another dispute related to Panna-Mukta, Tapti fields has received arbitration award but the parties are still seeking more clarity on it. Pedro Martinez Jersey
MoU Between NTPC And MOP For 2017-18
Memorandum of Understanding (MoU) for the year 2017-18 between NTPC and Ministry of Power, Govt of India was signed on 20th June, 2017. As per the MOU, NTPC has generation target of 250 Billion Units during the year under “Excellent” category. Revenue target from Operations under “Excellent” category is Rs 79,280 Crore. In addition to above, parameters related to financial performance, operational efficiency, CAPEX, projects monitoring and HR Management are also part of MoU in line with guidelines of Department of Public Enterprises. NTPC is the largest power utility company in India with a total installed capacity of 51,635 MW. Company has presence in Coal , Gas , Solar PV, Hydro and Wind Power Generation and Coal Mining. Tyrod Taylor Jersey