Government weighs options on Air India’s Rs 30,000 crore debt
The government is weighing multiple options to raise money from Air India, going beyond the recommendation to take over Rs 30,000-crore debt suggested by NITI Aayog, which suggested stake sale of the cash-sucking carrier. One of the options is to go for a reverse bid that will pit the Rs 30,000-crore debt against rights such as landing slots and other operating assets that are owned by the national airline, which give it an edge over all its rivals, many of which are finding ways to reduce costs when they fly abroad, sources said. In addition, Air India enjoys a nearly unmatched infrastructure presence at Indian airports. “There are ways to improve the returns for the government, which will be considered, but at the moment these are all options and the panel of ministers will chart the best course of action,” said a source. Air India has nearly Rs 60,000-crore debt on its books, of which around Rs 22,000 crore is linked to its aircraft purchase programme. There are also loans of around Rs 6,000-7,000 crore related to its operations, which will go with the airline. NITI Aayog had suggested that the remaining amount could be taken over by the government to make the airline an attractive proposition for the new buyer. The sources said that writing off the amount will impose a burden on the exchequer as the government will have to take over the loans extended by banks. The lenders have refused to restructure the loan as it is seen to be an unviable proposition. “Through a reverse bid, we can realise better value and also make the whole process more transparent,” said a source. Investment bankers said that other options were also possible and they could look at the global experience if mandated. The details, including the extent of the sale, will be worked out by a panel of ministers headed by finance minister Arun Jaitley. Jahleel Addae Authentic Jersey
No plans to expand, invest in India: Oman Air
Oman Air will not expand its operations to India or buy a stake in Air India, under current circumstances, an official from Oman Air has confirmed. It was reported that Oman Air was likely to invest in the Indian carrier if the open skies agreement was worked out between the two countries; however, with troubled times for the aviation industry, the plan has been put on hold, along with the scheme to increase operations to India. “We have no plans to extend, unless entitlements are further increased for specific domestic airports,” Paul Gregorowitsch, chief executive officer (CEO) of Oman Air told the Times of Oman when asked about expanding operations to India. He stated that there was “no appetite to invest in foreign airlines,” implying that there was no plan to invest in Air India. Jared Spurgeon Jersey
Clarity on GST over aircraft imports soon
The finance ministry has assured airlines that confusion over the applicability of the goods and services tax (GST) on imported aircraft that resulted in double taxation will be sorted out soon and a clarification will be issued at the GST Council meeting likely to be held next month. The matter is related to taxation on aircraft imported before July 8. “Basis that assurance from the finance ministry, we have got our aircraft approved on Saturday. We have given a letter of undertaking, which says that we will pay if the government does not issue a clarification in the next GST Council meeting,” said a senior Air India official, who did not want to be identified. Apart from Air India, one aircraft each of IndiGo, Vistara and AirAsia India are stuck because of the confusion, as are planes of other airlines. “Our aircraft is still stuck as we await clarity on it from the government,” said a senior executive of an airline whose aircraft is still awaiting clearance. The next GST Council meeting is likely to be held on August 8, 2017. The council makes recommendations on matters related to the tax. David Booth Womens Jersey
What is the divestment of Air India all about?
The Union Cabinet on June 28 gave its ‘in-principle’ nod to divest stakes in Air India — a wholly owned government airline. The Cabinet decided to go for Air India’s strategic disinvestment, which means the government is willing to shed a substantial portion of its stake and hand over the management of the ailing airline to the private sector. The Cabinet also approved strategic disinvestment in five of Air India’s subsidiaries — its MRO unit Air India Engineering Services (AIESL), ground handling arm Air India Transport Services, Air India Charters which operates Air India Express and Airline Allied Services which operates Alliance Air and Hotel Corporation of India (which owns Centaur Hotels), along with a joint venture AISATS. How did it come about? Civil Aviation Secretary R.N. Choubey said at a press conference on June 29 that government think-tank NITI Aayog’s recommendation on strategic disinvestment of Central public sector units, including Air India, was the immediate trigger for its stake sale. In its report earlier this year, the NITI Aayog recommended an outright sale of Air India. The proposal was then sent for consideration of a core group of secretaries on disinvestment, chaired by the Cabinet Secretary. The recommendations given by the Cabinet Secretary-led group were forwarded to the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, which gave its ‘in-principle’ nod for the national carrier’s strategic sale. Air India’s privatisation was first proposed in 2000 when the previous National Democratic Alliance (NDA) government decided to sell 51% of equity of the erstwhile domestic airline Indian Airlines, with 26% stake to a strategic partner. It also decided to allow disinvestment of 60% of Air India, which was running international operations, with 26% foreign entity stake. The move was dropped after opposition from the then Civil Aviation Minister Sharad Yadav. Why does it matter? The government’s efforts to turn around the finances of Air India seem to have failed with the national carrier’s eroding market share, continuous losses and a mountain of debts. Air India has not registered profit since over a decade after the merger of the erstwhile Indian Airlines (domestic operations) with Air India (international operations) in 2007. However, the primary reason for Air India’s disinvestment was the government’s inability to cope with its debt of ?52,000 crore. Around ?22,000 crore of the total debt accounts for aircraft acquisition loan and the rest is related to debt for meeting its daily and operational expenses. Air India Chairman and Managing Director Ashwani Lohani recently said the “mountain of debt” which the present management “acquired appears insurmountable and is at the root of all the problems.” Bradley McDougald Authentic Jersey
Discom engineer death: Why power thieves fear no one
Monday’s incident in which a discom engineer lost his life and four others were seriously injured while fleeing a mob in west Delhi’s Jaffarpur is not a one-off case. A few weeks ago, a 15-member power theft detection team was roughed up in Mundka as well. Such attacks are on the rise and they are getting more brazen and organised, of late. Power pilferage is a common offence in India, which still loses over 14-15% of electricity to thefts. Jaffarpur alone has seen losses of around 60%. In the past five years, nearly 14,000 cases (33,000KW) have been detected in the area. “Since privatisation in 2002, the overall loss figures have reduced by 43%. However, many areas continue to witness 25-50% of the power supply being lost to such thefts,” said a BSES spokesperson. BSES Yamuna manages power supply in east and central Delhi areas while BSES Rajdhani caters to south and west Delhi. The notorious localities include Najafgargh, Jaffarpur, Mundka, Nand Nagari, Turkman Gate, Yamuna Vihar,Wazirabad and Shaheen Bagh. However, discoms officials clarify that the malpractice is not restricted to any particular consumer profile, but all types of people are equally involved in the theft of electricity. For Tata Power, which manages north and northwest Delhi, supply thefts are decreasing by 10-12 % every year, but it continues to face resistance in areas like Bawana, Narela, Kirari and Bhakhtawarpur besides JJ clusters of Jahangirpuri, Sultanpuri and Mangolpuri. “These pockets not only cause revenue loss but also overload the distribution network, thus impacting the reliability of power supply,” said a discom official. According to power companies, whenever enforcement teams reach these places, the unscrupulous elements “gherao” them and prevent them from checking their premises. Officials are threatened and attacked if they insist on inspecting their houses. Till 2009, power theft detection teams were accompanied by CISF personnel. The security arrangement was withdrawn in 2009 due to elections and hasn’t been resumed since. Power experts are of the view that a similar arrangement will help curbing attacks on its staff. Despite the use of tamper-proof meters and smart meter reading devices, the cat and mouse game between the power thieves and suppliers continues. Jason Witten Authentic Jersey
Government fears solar developers may delay projects to ‘gain’ from fall in tariffs
With the steep fall in solar tariffs in the last two years, the ministry of new and renewable energy (MNRE) has written to all states to ensure that solar developers do not get “undue benefits” from the development by insisting that solar projects meet the deadlines initially set for them without any extensions. Tariffs have fallen from Rs 7-8 per unit in mid 2015 to Rs 2.50-3.50 per unit at present. The lowest tariff was Rs 2.44 per unit at a solar auction conducted for projects at the Bhadla Solar Park, Rajasthan. The fall is largely due to the lowering of prices of solar cells and modules in the global market, especially in China, which has seen considerable overproduction. The MNRE is concerned that developers who signed power purchase agreements (PPAs) at fairly high tariffs while solar equipment prices were also high, could earn a windfall over the next 25 years – most solar PPAs are for 25 years – if they delayed buying their requirements and did so after prices had dropped. “One of the reasons of falling tariff is lowering of prices of solar cells/modules internationally,” said a letter from Dilip Nigam, adviser, National Solar Mission in the MNRE, to principal secretaries (energy) of all states. “Falling prices may give undue benefits to developers at the cost of the government if project duration is extended.” Developers take a completely different view. “When a developer is putting in a bid, certain assumptions about panel prices are made months in advance,” said one of them, not wanting to be named. “If that’s the way the MNRE wants it, it should allow developers to bid without considering panel cost and then add it later. You can’t have the cake and eat it too. If panel costs fall, developers will obviously want to take advantage of it.” Others feared the letter could be used by state distribution companies as a pretext to renegotiate earlier contracts at tariffs lower than already signed for. Recently, Uttar Pradesh reworked contracts it had signed with developers following an auction in September 2015 at prices between Rs 7.02 and Rs 8.60 per unit. It insisted that, since solar tariffs had fallen, all of them should sign fresh contracts at the lowest tariff reached during that auction ie. Rs 7.02 per unit. “The letter doesn’t say so, but states might take a cue from it and start renegotiating the way UP has,” said another developer. The construction period usually allowed for a solar plant can vary between 13 and 18 months, with stiff penalties for delays. But given the difficulties of locating suitable land, and other impediments, projects are often delayed and extensions usually allowed. “It is important that already awarded projects are commissioned on time,” the July 3 letter added. Alexandre Burrows Authentic Jersey
Mizoram to set up 20 Megawatt solar park
Mizoram’s Solar Power Project Approval Committee (SPPAC) has approved the proposal for setting up of a 20 MW solar park today. The project will be implemented by the state power and electricity department and Zoram Energy Development Agency (ZEDA), an official statement said. A meeting chaired by Secretary for Power and Electricity H Lalengmawia discussed wide ranging issues concerning generation of power through solar energy, it said. The Solar Power Policy of Mizoram, 2017 envisaged all government office buildings should harness solar energy in their building premises, the statement said adding, the committee decided to convene a meeting of all heads of departments to ensure implementation of the policy. Mark Barron Womens Jersey
Wind, solar do not harm power grid reliability-draft U.S. study
The growth of renewable power, including wind and solar, has not harmed the reliability of the U.S. electricity grid, according to a draft U.S. Department of Energy study, echoing the findings of grid operators across the country. The conclusion of the draft, dated July and viewed by Reuters, could ease fears in the renewable energy industry that the widely anticipated study would be used by President Donald Trump’s administration to form policies supporting coal plants at the expense of wind and solar. “Numerous technical studies for most regions of the nation indicate that significantly higher levels of renewable energy can be integrated without any compromise of system reliability,” the draft says. It added that growth of renewables could require the building of more transmission lines, advanced planning, and more flexibility to balance generation and meet demand. But it said that baseload power – coal and nuclear power – “is not as necessary as it used to be” given advances in grid technology. Shaylyn Hynes, an Energy Department spokeswoman, said the draft was “outdated” and had not gone through “any adjudication” from career or political staff. The final report had been slated for release in early July, but is now expected within a couple of weeks, she said. The draft can be seen at http://tmsnrt.rs/2v9PJ9l. Bloomberg first reported on it on Friday. Energy Secretary Rick Perry had called in April for his department to examine whether regulations backing renewable energy use imposed by former president Barack Obama and other administrations “threaten to undercut the performance of the grid well into the future.” Critics of wind and solar energy have argued that those technologies leave the U.S. power system vulnerable to shortages when the sun is blocked or the wind does not blow – meaning that coal, nuclear, and natural gas plants that do not depend on weather should remain the bulk producers. Renewable energy is seen by many state and local government as a cost-effective way to reduce emissions linked to climate change. Nuclear energy is virtually emissions-free but poses potential safety risks and the thorny issue of disposing radioactive plant waste. Renewables and natural gas have displaced a slew of coal and nuclear plants in recent years, due to lower prices, environmental regulations and government subsidies. The draft said this is “not yet a problem for grid reliability and resilience – but further study is needed,” to determine how much of this “baseload” power can be lost while still ensuring reliability. GRID OPERATORS SEE NO THREAT Officials at four grid operators, serving about 133 million customers, agreed renewables do not harm energy security or reliability. “I don’t see them as threatening, no,” said Woody Rickerson, vice president of the Electric Reliability Council of Texas. “We can perform reliably with renewable generation; there are just things you have to do with renewables that you don’t have to do with (conventional) power generation.” ERCOT, which serves Texas and a small part of Nevada, said the region got about 15 percent of its power from wind generation in 2016, and the region’s solar power will grow quickly. Grid operators said that as renewables become more common they depend more on weather forecasting. Storm fronts and cloud covers sometimes require grid operators to ensure that conventional power is readily available as solar and wind power generation waxes and wanes. Stu Bresler, senior vice president for operations at PJM Interconnection, which coordinates the movement of power in all or parts of 13 states from New Jersey to Tennessee, said renewables have not harmed reliability in his region. Steven Greenlee, senior spokesman at the California Independent System Operator, said on one day in May wind and solar served 67 percent of CALISO’s demand. “We don’t see the security at risk,” he said. Omar Infante Jersey
Italy’s Saipem set for Novatek’s Arctic LNG 2 platform contract – sources
Russian gas producer Novatek is expected to select Italy’s Saipem to build offshore platforms for its second liquefied natural gas (LNG) facility in the Arctic, four sources said. Novatek is aiming to produce as much LNG as the world’s biggest exporter Qatar and is drawing up plans to build a second plant, known as Arctic LNG 2, on the Gydan Peninsula that juts into the Kara Sea. “The contract is not signed yet, (but Saipem) are expected to become a subcontracting party for the Technip-Linde-NIPIGas consortium,” one source close to the project said. A second source familiar with the details confirmed that Saipem was expected to work as a subcontractor to build the LNG units, which will be gravity-based platforms near the coast held in place on the seabed with ballast. Novatek and Saipem did not respond to requests for comment. In May, Novatek signed an agreement with Technip, Linde and the Russian Research and Design Institute for Gas Processing (NIPIGas) to design and develop gravity-based LNG facilities for Arctic LNG 2. Novatek has also agreed to buy Linde’s licence for gas liquefaction technology for the plant. The fact that Novatek has now chosen all four main contractors suggests the Russian company is serious about proceeding with the project, which is expected to start operating in the early 2020s. One source with direct knowledge of the matter said Novatek would start drilling its first exploratory gas wells in 2018. Two more sources, one close to Saipem and a Western energy source, said the gravity-based structures should allow Novatek to build the plant more cheaply than its first Arctic LNG project at Yamal. They did not give an estimate of the savings. Arctic LNG 2 is expected to have an output matching or exceeding Yamal. Its first line, which will produce 5.5 million tonnes of LNG a year, is expected to be launched later this year and Yamal will be producing 16.5 million tonnes by 2019. For now, Russia has just one operational LNG facility, run by Gazprom on the Pacific island of Sakhalin. Novatek is under U.S. sanctions over Moscow’s role in the Ukraine crisis, which limits the company’s ability to deal with U.S. financial entities. Novatek raised financing for Yamal from China, Russia and some European lenders. A source close to Saipem and a source close to the project said the company was expected to build the platforms in the northwestern region of Murmansk. They would then be delivered by sea to Gydan, some 2,000 kilometres (1,245 miles) away. A.J. Klein Authentic Jersey
Second Indian Company Buys U.S. Crude
Bharat Petroleum has become the second Indian refiner to start buying U.S. crude oil, after Bharat purchased 500,000 bpd of Mars and the same amount of Poseidon crude, to be delivered between late September and early October, according to Reuters. Indian Oil Corp., the country’s top refiner, was the first Indian company to purchase US crude, purchasing 1.6 million barrels of Mars crude last week. An unnamed source said that the seller was Shell, the operator of the Mars field and the Poseidon pipeline system. Both deals follow a visit last month by India’s PM Narendra Modi to the U.S., at which President Trump said that the U.S. is looking to expand its international reach by starting oil and gas exports to India. The price of the U.S. sour crude blends that Indian refineries are showing an appetite for is “reasonably competitive,” according the Bharat Petroleum’s head of refineries, R Ramachandran. So far, India’s biggest suppliers of crude have been Middle Eastern producers, Asian ones, and producers from Africa, but now the world’s third-largest consumer of the commodity is looking to diversify its sources of crude as U.S. and Canadian crude become more competitive after an overhaul at Indian refineries that made heavier crude blends a new favorite since they are cheaper than lighter ones. The US-India energy cooperation doesn’t stop there—it also includes Indian energy companies signing more than US$30 billion in long-term contracts for U.S.-produced liquefied natural gas, including from Louisiana and Maryland, and an upcoming trade mission of U.S. technologies that can optimize the performance of India’s oil refineries. U.S. crude oil exports have been on the rise, hitting a record-high 1.3 million bpd in the last week of May, with the average for that month at 1.02 million bpd. Besides Asian nations, European countries and a few South American ones were among the importers of American crude. Canada was the top importer, buying 372,000 bpd from its southern neighbor in May. Jake Ryan Womens Jersey