$23 billion to be invested in KG Basin’s oil & gas fields: Dharmendra Pradhan
About $23 billion is planned to be invested in the oil and gas fields of the KG Basin, Oil Minister Dharmendra Pradhan told Parliament on Monday. “The operators of blocks /fields in KG basin under Production Sharing Contract (PSC) regime and nomination fields have submitted DoC (Declaration of Commerciality)/FDP (Field Development Plans) for the commercial oil and gas discoveries along with projected investment estimates,” Pradhan said, adding that the estimated investment from these plans were $22.9 billion. The new oil and gas production from these fields in the KG Basin is expected to reach up to 22.27 billion cubic meters of gas and 4.68 million metric tonnes of oil by 2021-22, Pradhan said. Last month, Reliance Industries and BP announced a $6 billion investment plan to develop three new fields in the KG Basin. The two companies plan to award contracts to develop the ‘R-Series’ deep water gas field that is expected to produce up to 12 million cubic meters of gas a day from 2020. They plan to submit development plan for two more projects by the end of 2017. Together, the three fields are expected to produce 30-35 million cubic meters of gas a day by 2022. Last year, ONGC unveiled a $5 billion investment plans for developing its fields in the KG Basin. Russell Wilson Authentic Jersey
Government mulls LPG-like subsidy transfer for PDS foodgrain
Food ministry is working on a pilot to emulate the direct cooking gas subsidy transfer scheme model for public distribution system (PDS) of subsidised foodgrains. The beneficiaries will get the subsidy amount in advance in their bank accounts and they will have to buy the foodgrains from any ration shop, which has got the electronic point of sale (e-PoS) devices. The food ministry recently sent three trainee IAS officers (assistants) to assess the ground situation in Ranchi where a pilot is likely to be rolled out. This initiative will ensure zero leakage of the subsidy and foodgrain as well. A government source said the beneficiaries’ failure to buy the foodgrains from the e-PoS enabled ration shop would result in no transfer of the subsidy for the next month. This will also ensure that beneficiaries under National Food Security Act don’t use the subsidy amount for anything else. “In case of cooking gas subsidy, the consumer has a connection from a particular LPG supplier and government transfers the subsidy through the supplier concerned. But in case of PDS, this mechanism is not possible. Therefore, the provision is being made that the beneficiary buys the foodgrains from ration shops and e-POS will ensure the authenticity,” said a source. At present, 81 crore identified beneficiaries get subsidised foodgrains at Rs 1-3 per kg from ration shops. This costs the exchequer about Rs 1.4 lakh crore annually. The other provision of direct cash transfer for subsidised foodgrains is being implemented in only three Union Territories of Chandigarh, Puducherry and Dadra & Nagar Haveli. In these cases, the entire subsidy amount is transferred to the beneficiaries’ account and they are free to buy the grains from anywhere. The new model is under serious consideration as an alternative to the nationwide roll-out of DBT, which, would throw up several questions for the government on whether it can continue to procure grains at MSP when it will have no mechanism to release them. Marcus Sherels Jersey
ONGC-HPCL merger to be completed this fiscal, Jaitley to head panel: Dharmendra Pradhan
Oil minister Dharmendra Pradhan on Monday announced that Oil and Natural Gas Corporation (ONGC) merger with Hindustan Petroleum Corp (HPCL) will be completed in the current financial year. He added the Cabinet Committee on Economic Affairs (CCEA) has approved the setting up of a special ministerial panel headed by Finance Minister Arun Jaitley which will oversee and expediate the merger process. “The proposed acquisition in the oil sector will create a vertically integrated public sector ‘Oil Major’ company having presence across the entire value chain. This will give ONGC an enhanced capacity to bear higher risks, take higher investment decisions and to neutralise the impact of global crude oil price volatility. The acquisition of HPCL by ONGC will result in significant synergies in terms of optimisation of logistics costs, R&D activities, economies of scale of purchase of crude oil and optimization in refinery operations,” Pradhan said in Parliament on Monday. He added for overseeing this transaction, CCEA approved setting up of an alternative mechanism, headed by the Finance Minister, which will help in taking quick decision with regard to the timing, price, terms and conditions and other related issues to the transactions. Also, the Department of Investment & Public Asset Management (DIPAM) has invited bids by August 10 from investment bankers and legal advisers who are expected to advise the government on the valuation of HPCL and ‘professionally guide during the negotiation with ONGC,’ according to an advertisement published on DIPAM site. According to senior ministry officials, the merger will not have an impact on HPCL’s cultural and corporate identity, which will remain distinct from ONGC. The deal which is expected to cost ONGC around Rs 30,000 crore, according to HPCL’s current market valuation, will be given the final nod by the Union Cabinet only after a clear process for the merger is determined. The recent flurry of activity to integrate government-owned Oil Marketing Companies (OMCs) with oil and gas exploration companies follows Finance Minister Arun Jaitely’s announcement during the 2017-2018 budget speech on the government’s plan to create an integrated public sector ‘Oil Major’ rivalling international and domestic private sector oil and gas companies. Ambit Capital, an equity research firm in its recent report stated that the merger would not bring much synergy benefits to the two companies and on the contrary will result in the weakening of high-performance culture at the target company. Also, ratings agency ICRA, in its note released last week on the merger, stated that the transaction could affect the financial strength of ONGC for future large acquisitions and capex programmes. It added that ONGC may face several challenges related to integration and probable delay in decision-making due to multiple hierarchies as a result of the merger. The government, after the ONGC-HPCL merger, reportedly plans to embark upon divesting its 66 percent stake in upstream oil and gas company Oil India to Indian Oil Corporation (IOC) India’s largest fuel retailer. Justin Reid Jersey