PNGRB constitutes high-level committee to formulate Model CGD Policy
India’s downstream oil sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has constituted a high-level committee for creating a draft city gas distribution (CGD) policy, which can act as a reference point for state governments to formulate their own CGD policies for streamlining the process of setting-up CGD networks. “CGD Industry is considered to be the major stakeholder in the exercise. Accordingly, PNGRB has constituted a high-level Committee for a detailed review of all the issues and other aspects for fast development of CGD networks throughout the country and to draft such policy. The Committee includes senior officers from CGD entities as well as PNGRB,” PNGRB said in a notice. The draft CGD policy will include guidelines on setting up a nodal agency by state governments to coordinate to get single-window clearance, procedure to grant time-bound right of way permissions for CGD network, procedure for timely availability of permissions from National Highway Authority of India (NHAI), railways, environment approvals and timely allocation of domestic natural gas, beside others. The regulator said that concerns referred by CGD entities by and large come within the purview of the state governments and it was felt that a CGD Policy for the entire country would work as a guide for the states to formulate their own policy and would also lead to uniform policy to an extent and help in expeditious development of CGD infrastructure. “The entities are required to pay very high charges to the state governments and municipal corporations for permissions to lay pipelines. The policies for CGD sector and single-window clearance mechanism is in-place in a few states. Multiple and time-consuming permissions and clearances are required for starting CNG stations, availability of land for stations is another challenge. Most importantly, GST remains to be applicable on natural gas,” PNGRB Chairman D K Sarraf had recently said on the commencement of work of projects under the tenth CGD round. Post the completion of the tenth CGD round, natural gas will be available in 228 Geographical Areas, covering 27 states and union territories, which will result in access to gas for 70 per cent of the country’s population and 50 per cent of its geographical area. Under the revised 2018 CGD policy, pre-determined penalty will be levied on players within three months from the end of each contract year, if the physical performance target provided by the player is not achieved at the end of one contract year. The regulator will impose a penalty of Rs 750 for shortfall in each piped gas connection, Rs 1,50,000 for missing each inch-kilometer of pipeline, and Rs 20 lakh for each natural gas station not installed. The regulator has invited stakeholder inputs for formulation of draft CGD policy by 30 November.
BPCL chief hails privatisation move
Bharat Petroleum chairman has hailed the government move to privatise the company as ‘tremendous value’ creator, pitting him against union of employees of his company and other state oil firms who are strongly opposing it. In a letter to BPCL employees, Chairman D Rajkumar has tried to address their anxiety on privatisation and sought their support in ensuring that daily business goes ‘without any disruption’ during transition. “As the organisation experiences this transition, I urge all of you to be the ambassador of this change, in your own unique ways,” Rajkumar wrote. “Disinvestment of BPCL is expected to unlock tremendous value by way of enhanced professionalism, access to advanced technologies, newer global market, diversified product portfolio and improved availability of resources, further propelling our growth journey.” Employee unions have been outraged at the government’s decision to sell all its stake in BPCL. “The decision is ill thought, regressive & anti-people and other avenues for raising finances without sale of stake or without transfer of management has not been examined,” the Federation of Oil PSU Officers (FOPO) and Confederation of Maharatna Companies (COMCO) said in a press statement after their executive committee meeting on Friday. “The decision will erode precious wealth, goodwill and working spirit built over the years and is therefore grossly against the interest of common public,” they said.
Oil India incorporates JV firm in Assam
Oil India said it incorporated a joint venture company, Purba Bharati Gas, in Assam on 19 November 2019. The joint venture company was formed pursuant to a joint venture agreement dated 11 July 2019, between Assam Gas Company, Oil India, and GAIL Gas for development of city gas distribution (CGD) network in Kamrup & Kamrup Metropolitan (Guwahati) and Cachar, Hailakandi & Karimganj districts in Assam. The announcement was made post trading hours on Friday, 22 November 2019. The consortium of Assam Gas Company, Oil India and GAIL Gas (48%:26%:26%) won the bids for development of CGD network in Kamrup & Kamrup metropolitan districts and Cachar, Hailakandi and Karimganj districts, under 9th round of CGD bidding. Letter for grant of authorisation from Petroleum and Natural Gas Regulatory Board (PNGRB) was received in September 2018. Shares of Oil India ended 0.68% lower at Rs 153.90 on Friday. Oil India’s consolidated net profit fell by 38% to Rs 6.6153 billion on a 14.3% decline in net sales to Rs 32.2120 billion in Q2 September 2019 over Q2 September 2018. The company is engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of liquid petroleum gas. It is the second largest hydrocarbon exploration and production Indian public sector company with its operational headquarters in Duliajan, Assam, India. The company is a state-owned Navratna under the administrative control of India’s Ministry of Petroleum and Natural Gas. As on 30 September 2019, the Government of India held 59.57% stake in the company. The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi on Wednesday, 20 November 2019, approved cutting government’s stake in select PSUs below 51% while retaining management control.
Natural gas, false hope in climate change campaign?
Natural gas is cleaner and produces fewer global warming emissions than other fossil fuels, making it key to our transition to a low-carbon future, but it comes with its own serious drawbacks. The International Energy Agency (IEA) said recently that natural gas is crucial to its sustainable development model which requires oil and coal use to fall sharply if we are to get anywhere near the Paris agreement climate change targets. Natural gas is relatively cheap, abundant and produces 50 per cent less CO2 than coal, used widely, especially in Asia to generate electricity for fast growing economies. In its latest annual report, the IEA pencilled in a 10 per cent increase in natural gas use through to the end of the 2020s while oil use would have to return to levels last seen in the 1990s. Some NGOs, however, attack the IEA — set up after the first great oil shock in 1973-74 to advise countries how to manage their energy needs — for being overly beholden to nae-say governments such as the United States, and the huge fossil fuel companies. Rather than recommending an increase in the use of natural gas, the IEA should be calling for a reduction, they say. Murray Worthy at Global Witness said “governments should not be misled… and should rather work on closing down existing oil and gas fields, and halting exploration for new reserves.” Significantly, the European Investment Bank (EIB), the lending arm of the European Union, recently announced that it would halt funding new fossil energy projects, including natural gas, from 2022. For some, natural gas is the ideal transition fuel, with major companies such as Total and Shell producing increasing amounts and launching new projects which stretch for decades into the future. “When it burns, natural gas releases less CO2, nitrous oxide and sulphur than coal or oil,” said Nicholas Browne of energy consultants Wood Mackenzie. “Replacing coal with gas, for example, has had a huge impact on air quality in northern China, with immense benefits in terms of public health,” Browne said. The question however is “if gas and LNG (Liquified Natural Gas) are better, are they good enough?” he added. Extracting and transporting natural gas notably results in significant emissions of methane, a greenhouse gas 30 times more potent than CO2. “Methane emissions linked to… natural gas are largely under-estimated,” said Cecile Marchand of Friends of the Earth. Taken together, it is not necessarily the case that natural gas is so much better than other fossil fuels, Marchand said, and on that basis, it may “not allow us to face up to the climate change challenge.” The gas industry is trying to meet these criticism, committing to reducing methane emissions and developing CO2 capture systems in the hope of keeping global warming at manageable levels.
BPCL asset valuer asked to submit valuation of company in 50 days
In part indication of timelines for privatisation of India’s second biggest state oil refiner, the government has set a 50-day deadline for an outside ‘asset valuer’ to carry out the valuation of all assets of Bharat Petroleum Corp Ltd (BPCL), a process once completed will trigger invitation of price bids from potential acquirers. The Cabinet Committee on Economic Affairs (CCEA) had on November 20 given a go-ahead for sale of government’s entire stake in BPCL, Shipping Corporation of India Ltd (SCI), power generator THDC India Ltd (THDCIL) and North Eastern Electric Power Corp Ltd (NEEPCO) to a strategic investor along with management control. It had also approved sale of 30.8 per cent out of its 54.8 per cent interest in Container Corp of India Ltd (Concor). The stake sale will follow a two-stage process of first inviting expression of interest (EoI) from potential bidders who will after due diligence will be asked to submit price bids in the second part, officials said. In the run-up to the decision, the Department of Investment and Public Asset Management (DIPAM) — the department in finance ministry responsible for disinvestment in PSUs — had on October 11 issued advertisements seeking transaction and legal advisors as well as asset valuers for the stake sale but masked the identity of the state-owned firm by merely saying they operate under administrative control of the Ministry of Petroleum and Natural Gas, or Ministry of Power, or Ministry of Shipping or Ministry of Railways. Soon after the Cabinet approval, DIPAM unmasked the identity of disinvestment targets by issuing ‘corrigendum’ to the October 11 Request for Proposals (RFPs). The RFP wanted Asset Valuer to “identify, describe and list all properties and assets, including intangibles” and value them according to “comparison method, income capitalisation, discounted cash flow, cost approach method or replacement valuation” method. It wanted the asset valuer to complete its “valuation report within a period of 50 days from the date of issue of appointment letter ” in case of BPCL, according to RFP. Last day for submission of bids for appointment as asset valuer was November 4. Official said DIPAM may invite EoI from potential bidders pending receipt of valuation report but price bids will come in only after getting the valuation report. A similar process will be followed for India’s biggest shipping line SCI and country’s largest onland cargo mover Concor, they said. THDCIL and NEEPCO will be sold to state-owned NTPC Ltd based on valuation report of DIPAM advisers. Three separate sets of advisors will be appointed for each of the firms for conducting the transaction, preparing legal documents and doing asset valuation. DIPAM in the corrigendum said: “Strategic disinvestment of state of Government of India in a CPSE may be read as ‘Strategic disinvestment of Government of India shareholding of 53.29 per cent in BPCL (except its equity shareholding of 61.65 per cent in Numaligarh Refinery Ltd (NRL) and management control thereon) along with transfer of management control to a strategic buyer.” The 61.65 percent of BPCL shareholding in NRL along with management control will be transferred to “a central public sector enterprise (CPSE) operating in the oil and gas sector”. It said the government will see 30.8 percent out of 54.8 percent stake in Concor to a strategic buyer along with management control and all of government holding in SCI.
BPCL sale: Workers to go on strike; Firm says output wont be affected
Thousands of workers of Bharat Petroleum will go on strike on November 28 to protest the government’s decision to privatise the company, workers union leaders said. The strike, however, will not affect production or availability of fuel, according to the state-owned oil refining and marketing company. The move to sell the government’s entire majority stake in Bharat Petroleum Corporation Ltd (BPCL) has stoked fears that a change of ownership could lead to job losses and a sharply different working climate unsuitable for many current employees, prompting protests from company workers and executives. “We need to strongly protest as privatisation is not in our interest,” said Praveen Kumar P, general secretary of Cochin Refineries Employees Association, an affiliate of Indian National Trade Union Congress (INTUC). “It’s going to be a daylong strike on November 28. But if the government refuses to withdraw its decision on privatisation, we would be forced to undertake longer strikes, which can spread to several days.” He said all workers unions in BPCL are together in this cause and the proposed strike will hurt production at two refineries. Contract workers, too, will participate in it, he said. BPCL expects no impact on production or fuel availability. “The refineries and marketing locations would be running normal and all arrangements have been made so that there is no impact in refinery production and distribution of petroleum products to retail outlets, plants, installations and filling stations and to customers,” the company said in an emailed response to ET’s query. BPCL sale: Workers to go on strike; Firm says output wont be affected BPCL has more than a dozen workers unions operating at its two refineries in Kochi and Mumbai and its marketing division. The company has about 12,500 permanent employees, almost equally split between executives and workers. Contract workers run into tens of thousands, according to union leaders. The company’s executives, too, are upset at the proposed privatisation but have decided against going on strike. Instead, they have decided to wear black badges to work every Monday and also skip company-provided lunch and dinner on November 27, Anil Medhe of Bharat Petroleum Officers Association said. Multiple workers unions and officers associations have raised concern that privatisation will totally change the character of the company, ending job security for current employees and endanger national energy security. “Indira Gandhi had nationalised BPCL for energy security. And now it is being reversed,” Praveen of Cochin Refineries Employees Association said. “The supply security will be compromised.” Labour leaders also highlighted that BPCL, after privatisation, wouldn’t be required to reserve jobs for weaker sections of the society, making such people more vulnerable.