Fuel price hike: Chidambaram slams government for ‘celebrating’ 4 years in office
Congress leader P Chidambaram has slammed the NDA government for “celebrating” the completion of its four years in office saying petrol prices is rising and job creation is dismal during the period. In a series of tweets, Chidambaram said the agricultural growth anaemic and farm wages stagnant during the NDA government rule. “Read the graphs in newspapers ‘celebrating’ 4 years of Modi government: growth rate declining, rupee depreciating. “And petrol prices and inflation rising, IIP stagnant, exports struggling to cross USD 300 billion. And job creation dismal,” he said. The Modi government has completed its four years in office yesterday. Vernon Davis Womens Jersey
Oil Roil: How About Some Self-reliance?
Every economic crisis in India has been triggered by excess of dollar spending over dollar earnings leading to a foreign exchange crisis. The first two, in 1957 and 1965, were caused by dystopian policy on capital goods and drought-driven food imports. Since then, almost in every decade, in 1974, 1979, 1982, 1991, and more recently in 2013, the economy has mostly slipped on the oil slick. The baritone of rising crude prices and the shrieking falsetto of the falling rupee have announced crises amidst operatic politics. The spectre is back to haunt the economy in 2018. The dollar is over Rs.68 and Brent crude prices are hovering between $75 and $80 per barrel, which is $10 per barrel higher than estimated in the budget—a rise by one dollar adds around Rs.8 billion or about $120 million to the import cost, and more if the rupee slips further. The gap between exports and imports, dollar earnings and expenditure in 2017-18 was around $157 billion. Crude oil accounts for roughly a fourth of the imports. The headline attention is on the cost consumers must now pay following 12 hikes—prices have touched the highest yet, and the per-litre price of petrol is `85.78 and diesel is `73.36 in Mumbai. The government, following public outrage, has promised a long-term plan to ease the price pain. There is talk about shifting petro goods on to GST to curb the current structure of ad valorem tax on tax. The state governments have been urged to cut VAT and there is some buzz about structuring subsidies. All this is par for the course. There is no doubt the angst and anger is real. The issue is the grief of rising costs on the ground, but the bigger issue is the cost of vulnerability to the economy. Amidst the oil roil it would be pertinent to look at domestic output. India’s output of oil in 2017-18 dipped to 35.68 million tons—the lowest in six years. Can a $2.5 trillion economy with rising consumption and GDP afford to be dependent for 82 per cent of its needs on imports? India’s tryst with oil exploration dates back to the 1800s. The global oil industry was born in August 1859, in a creek in Pennsylvania in the US. Eight years later, in 1867, oil was discovered in Digboi in Assam, digging started around 1889, and the first refinery was set up in 1901. After Independence, PSUs were set up to explore and produce to fuel the new republic. The big boost came with Bombay High and other discoveries followed when the sector was opened up post-liberalisation. The subsidy regime, through the years, thwarted expansion, investment and pricing of risk and reward. Every five-year plan repeated the mantra of self-reliance, urging encouragement to national and international oil companies to explore oil and gas, suggested induction of new technology and set targets for higher domestic production. However, ambition has not translated into outcomes. The 12th Plan, for instance, had set a target of 216 MMT for crude oil production between 2012 and 2017. Actual production was 186.06 MMT. It is not just crude oil; the target for gas was 341 MMSCMD and the actual output was 173.88 MMSCMD—lower than the previous plan period. The reasons, the ministry told the Parliamentary Standing Committee, ranged from ageing fields to clearances to delays. For sure there are many programmes for the sector and a plethora of acronyms—NELP, HELP, NSP, OALP, DSF et al. There is also the aspiration of bringing down import dependence by 10 per cent by 2022. The road map includes promoting energy efficiency, demand substitution, tapping biofuels and refinery process improvement. What about new discoveries? India has 26 sedimentary basins across 3.14 million sq km. Of this the government does not have geo data on nearly half or 1.5 million sq km. A National Seismic Programme is under way to map these areas. At the current pace, investment interest and output levels, the 2022 deadline seems unlikely to be met. Could India learn some lessons from the United States on leveraging natural resources? Since 2001, the US government brought geopolitics into play in economic policy. It has promoted development and induction of technology to enable multiple methods of extraction, including fracking, and eased regulatory hurdles. Policy and market incentives combined to boost production and create thousands of jobs. At a fundamental geopolitical and market level the domination of Opec is challenged by the ability of shale producers to bring wells in and out of production as per pricing changes. In less than ten years, the United States ramped up its oil output from 4.8 million barrels per day in 2008 to over 9.3 million barrels per day in 2017. Unsurprisingly, net crude imports to US slid from nearly 13 million barrels per day in 2006 to around 3 million barrels per day, the lowest since 1982. In March 2018, for the first time since November 1970, US output crossed 10 million barrels per day. The International Energy Agency estimates that the US could be the world’s largest oil producer in five years at 12.1 million barrels per day. For sure the scale, geography and the geology are different. However, geopolitics and the consequences of dependence are not dissimilar for any economy. The way out of dependence is self-reliance. And India has substantial potential. In fact, the March 2018 report of the Parliamentary Standing Committee reveals that the estimate of “prognosticated conventional hydrocarbon resources” has gone up from 28.1 billion tons (oil and oil equivalent of gas) to 41.87 billion tons. The potential to reduce dependence on imports is there. This potential, though, has to be leveraged. This requires a champion, a C Subramaniam, and a fast-track policy. Patrick Chung Jersey
Bangladesh Govt to import 77,000 tons of diesel from India
The government is going to import 77,000 tons (578,420 barrels) of diesel from India through rail wagon to meet the domestic demand for a period of May-December this year. Bangladesh has to spend about Tk 4.10 billion to import the bulk of diesel, said Bangladesh Petroleum Corporation (BPC) officials. Sources said the wagons will reach Parbatipur oil depot in Bangladesh from Shiliguri terminal. The government is expected to save money by importing diesel through a pipeline from Shiliguri in India instead of traditional sources. Traditionally, diesel is imported through the Chittagong port and then is taken to Daulatpur in Khulna in oil tankers. From there, it is taken to Parbatipur by rail wagons. Indian state-owned Numaligor Refinery Limited (NRL) will supply the fuel from its Shiliguri marketing terminal through 35 wagons. Each wagon will carry 22,000 tons of diesel. According to official sources at the Energy Division, the state-owned Bangladesh Petroleum Corporation (BPC) has already completed negotiation with the Indian authorities to this end. The price of each barrel of diesel was fixed at $79.690 on the basis of standard operative procedure (SOP) while the premium of each barrel was set at $5.50. The price was estimated as per Plutts’ reference price of diesel on March 26, 2018 in the international market. The dollar rate was estimated at Tk 83.50. Officials said the diesel is being imported from India as part of the government’s 15-year deal under which a cross-border pipeline is being built from Numaligor refinery in the Indian state of Assam to Parbatipur oil depot, located in the north-western bordering area of Dinajpur in Bangladesh. Of the 130km cross-border pipeline, named as ‘Indo-Bangla Friendship Pipeline’, some 125km is located in Bangladesh side while only 5km in Indian side. Luis Tiant Authentic Jersey
Northeast to be Connected with Gas Pipeline
Petroleum and Natural Gas Regulatory Board (PNGRB) member S. Rath said that the plans are afoot to connect the northeastern states with a gas pipeline. “The project will be executed by a consortium of Indian Oil Corporation, Oil India Limited, Numaligarh Refinery Limited and GAIL. We are expecting that the project will e awarded in the next couple of months and become operational by 2023,” he said at the sixth road show for the 9th city gas distribution bidding round in Guwahati. Rath said that under the project, 1,500 km pipeline will be laid at a cost of Rs 60 billion. He also said that Assam will be connected with Barauni in Bihar by 721-km gas pipeline by 2021. “By Urja Ganga project, Guwahati will be connected to the national gas grid by a pipeline. The Haldia-Paradip-Barauni pipeline will connect Guwahati and is likely to be commissioned by 2021 at a cost of Rs 30 billion. The project will be executed by GAIL,” he added. PNGRB Chairperson Dinesh K. Sarraf said that gas will be provided to Kamrup(metro) and Kamrup districts, besides Cachar, Karimganj and Hailakandi. “Gomati and West Tripura is also part of the scheme,” Sarraf said adding that the PNGRB has on offer 86 geographical areas covering 174 districts in 22 states and union territories. Lorenzo Alexander Authentic Jersey
Tax department to sell Cairn Energy’s attached shares at ‘appropriate time’
The Tax Department will sell at an “appropriate time” the shares owned by British firm Cairn Energy plc which were attached following a Rs 10,247-crore tax demand, a senior tax official said. The tax department had in January 2014 used a two-year-old retrospective tax law to raise a Rs 10,247-crore demand on alleged capital gains made by Cairn Energy on a decade-old internal reorganisation of India business. This was followed by attaching the company’s residual 9.8 per cent shares in its erstwhile subsidiary, Cairn India. Cairn India was subsequently merged with its new parent Vedanta Ltd, in which Cairn Energy now holds about 4.95 per cent stake. These shares continued to be attached for four years but the tax department had earlier this year got them transferred to it. “We will sell the shares at an appropriate time,” the official of the tax department said. The tax department had come close to selling the shares in March but aborted the move at the last moment. Cairn Energy has challenged the retrospective tax demand through an international arbitration, the final outcome of which is expected later this year. The official said the tax department will not wait for arbitration panel hearing to sell the shares. The Central Board of Direct Taxes (CBDT) had last month in response to a PTI query stated that “there is no legal advice against the sale of the attached shares”. Besides attaching shares, the Income Tax Department has seized a total of Rs 11.06 billion of dividend income due to Cairn Energy Plc to recover a part of the Rs 102.47 billion tax demand. The tax department, which had previously seized Rs 6.66 billion of dividends due to Cairn from its 4.95 per cent residual holding in Vedanta Ltd, in March seized another Rs 4.40 billion. It has also refused to pay tax refund of Rs 1,594 crore due to Cairn as a result of overpayment of capital gains tax to recover the dues. The Tax department says that during the financial year 2006-07, Cairn India Ltd, now known as Vedanta Ltd, had purchased about 251 million shares of Cairn India Holdings Ltd (CIHL), a company registered in Jersey, from Cairn Energy subsidiary Cairn UK Holdings Ltd (CUHL) for Rs 266.81 billion. “Since the shares of CIHL which were acquired by CIL from CUHL derive their value solely from the assets located in India which consists of 27 companies engaged in India in oil and gas exploration, therefore in accordance with section 9(1)(i) of the Income-Tax Act, the capital gains arising in the hands of CUHL from transfer of these assets are chargeable to tax in India,” the CBDT says. It, through a final assessment order dated March 9, 2015, raised a tax demand of Rs 102.47 billion. Cairn India was in 2011 acquired by Vedanta but the British firm continued to hold 9.8 per cent shareholding. Cairn India was last year merged into Vedanta Ltd. On merger, Cairn Energy’s holding in Vedanta came to 4.95 per cent. Bernie Kosar Womens Jersey
Petronet to partner ONGC Videsh for stake in Qatar Petroleum LNG project
Petronet LNG Ltd is keen to partner with ONGC Videsh Ltd to buy a stake in Qatar Petroleum’s upcoming gas exploration and liquefied natural gas (LNG) projects, its MD and CEO Prabhat Singh said. Qatar Petroleum plans to expand LNG production capacity from 77 million tons per year to 100 million tons in next few years. Petronet is keen to take 5 per cent stake in the expansion project along with associated upstream gas development, he said. State-owned Qatar Petroleum, which consolidated its two LNG producing companies — Qatargas and RasGas into itself earlier this year — is looking to form a joint venture with international partners to deliver the North Field expansion. “We had meetings with them and they have asked us to give a business proposal,” Singh said, adding the joint team of Petronet and OVL is keen to visit data room to firm their views. Petronet currently buys 7.5 million tons of LNG per annum from RasGas of Qatar under a 25-year contract. RasGas had in the contract promised to give 5 per cent stake to Petronet or its nominee in the liquefication plant in the Gulf nation. But Oil and Natural Gas Corp (ONGC), which was assigned to pick up the equity, hesitated in making the $135-million payment. The stake is now worth $2 billion. Singh said Qatar has announced plans to produce 100 million tons of liquefied natural gas (LNG) annually — equivalent to a third of current global supplies — in the next five to seven years, up from current 77 million tons. Petronet is keen to get ownership of gas molecule at the well-head and so wants a stake in both the upstream development and LNG production facility, he said. The stake would help Petronet, which is India’s biggest LNG importer, better understand the business of converting natural gas extracted from under-sea fields are converted into a liquid at sub-zero temperature, shipped and marketed world over. This will be its first investment in an LNG production plant. Petronet operates a 15 million tons per annum terminal at Dahej in Gujarat for import of LNG and converting the liquid fuel back to its gaseous state before piping it to customers. Singh said Petronet wants to acquire a stake that will guarantee it a board position. The offer made to Petronet in lieu of LNG purchases was the same that RasGas had promised Korea’s KoGas in an LNG supply deal. Article 30.7 of the agreement with Petronet promised the stake at “no premium” but RasGas reneged on its commitment and demanded a premium from ONGC, which was nominated to take the stake. The talks broke down on the premium asked, sources said. Mike Evans Jersey