Transporters in Rajasthan fear cess on fuel will put brakes on business
The decision to impose agriculture infrastructure cess on petrol and diesel prices has become a matter of concern for transporters in Rajasthan who are already battling high fuel prices. Transporters claimed that as opposed to the claims by the Centre, this cess will have an adverse effect on their livelihood as even now they prefer to get diesel from neighbouring states where prices are lower. With both petrol and diesel costing over Rs 90 per litre, the bit of relief which they got from reduction in VAT from the state government would be nullified now, claimed the transporters. Anil Anand Arora, Jaipur Transport Operators Association, elaborating further on the hardships being faced by them, said, “We have been sustaining losses and finding it difficult to maintain earnings as the price of diesel has been continuously increased in the state. With various types of taxes it has become difficult to make ends meet. While the Sensex has surged, which is good news, the additional cess on petrol and diesel inevitably will make it even more difficult for the industry to survive, let alone garner any kind of profit. The negligible reduction of VAT on fuel after repeated requests will also not bring in any relief after this cess.” The transporters further added that owing to high costs of fuel, most of them prefer to get diesel from the neighbouring states as the difference is around Rs 10 per litre. Meanwhile, the central government claimed that the agri-infra cess of Rs 2.5 per litre petrol and Rs 4 per litre diesel will not result in price increase for end users as higher cess will be adjusted with lower customs duty. While fuel dealers agree to this, they also claimed that there was an urgent need to bring down the prices in the state. Sunit Bagai, president, Rajasthan Petroleum Dealers Association told TOI, “During Covid-19, VAT was increased on petrol by 8% and on diesel by 6%, but now when the situation is more like pre-pandemic then the price of fuel should be reduced as we earn more revenue. There are various ways of doing it, including rolling back the Covid tax as well as doing away with the road tax which has been in place for nearly a decade.
Indian Oil to monetise pipeline assets, says many investors interested
State-owned Indian Oil Corporation (IOC) is likely to sell stakes in one or two of its vast network of crude oil and petroleum product pipelines in the country under the asset-monetization plan, but won’t give up control, its Director (Finance) Sandeep Kumar Gupta said Tuesday. “InvIT could be one model which we may look at but we won’t sell 100 per cent. We will remain the operator,” he said on a conference call with analysts and investors. Finance Minister Nirmala Sitharaman in her Budget for fiscal year beginning April 1, announced monetisation of oil and gas pipeline assets of IOC, gas utility GAIL (India) Ltd and Hindustan Petroleum Corporation Ltd (HPCL). Gupta said IOC’s pipeline assets offer huge potential for unlocking value and a lot of investors are looking at investing in such assets. He, however, did not name the investors. IOC operates a network of more than 14,600-km of pipelines that are used to transport crude oil to refineries and fuel to consumption points. Gupta said the company cannot let go of control of the pipelines as they are critical to the operations of the company. Only a minority stake in the pipelines will be sold. The proceeds of such monetisation would initially go towards boosting capital spending of projects such as one for producing hydrogen fuel, renewable energy ones or petrochemical plants, he said. The government, which owns 51.50 per cent of IOC, may also tap into the funds by seeking a special dividend. “We may sell stake in one or two pipelines to begin with,” he said. GAIL too is planning to launch an InvIT of its two gas pipelines between Dahej and Bengaluru. The nation’s top gas marketing and transportation firm plans to monetise the Dahej-Uran-Panvel-Dabhol pipeline and Dabhol-Bengaluru pipeline by setting up an Infrastructure Investment Trust (InvIT). InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual/ institutional investors in infrastructure to earn a small portion of the income as a return. GAIL too plans to retain a majority stake in the pipelines that run from Dahej in Gujarat to Dabhol in Maharashtra and from there to Bengaluru in Karnataka. GAIL owns and operates a natural gas pipeline network that spans 12,502 kilometers, mostly in the western, southern, and northern parts of the country. It is building more pipelines in the eastern part of the country. Asked if IOC can also look at hiving off retail fuel outlets into a separate subsidiary for unlocking value, Gupta said, such a possibility cannot be ruled out but there is no such move on the radar. Gupta expects crude oil prices to soften after March. The current hardening was due to cuts by OPEC plus but fundamentals remain weak, which will exert pressure on prices, he said adding current rates won’t sustain. The rise in international oil prices has driven retail fuel rates to their all-time high levels. IOC owns and operates five pipelines for transporting crude oil from ports on coast to its refineries. The longest among them is the 2,646-km Salaya-Mathura pipeline from Gujarat to Uttar Pradesh. Besides it owns and operates 22 petroleum product pipelines transporting fuels such as petrol, diesel and ATF. IOC also owns two natural gas pipelines – 132-km Dadri-Panipat and 1,421 km Ennore-Tuticorin line, and two LPG lines – 280-km Panipat-Jalandhar and 873-km Paradip-Haldia-Durgapur.
Indian Oil may form subsidiary for retail assets to unlock value
Indian Oil Corp could create a subsidiary for its retail assets to help unlock value, the head of finance at India’s largest refiner said on Tuesday, a day after the government announced plans to monetise IOC’s pipeline assets. “Presently it is not on our radar but a possibility of any such thing to unlock the value cannot be ruled out,” Sandeep Kumar Gupta said on an analysts call when asked if IOC plans to hive off its fuel retailing business into a separate company. Finance Minister Nirmala Sitharaman in her budget for fiscal year from April, announced plan to monetise oil and gas pipeline assets of IOC, gas utility GAIL (India) Ltd and Hindustan Petroleum Corporation Ltd. Shares of IOC fell 27.6% in 2020, while the broader Nifty 50 index gained 14.9%. IOC operates a pipeline network of 14,600 kilometres with a capacity to transport 94.42 million tonnes per annum of crude and fuels and 21.69 million cubic metres per day of gas. The company has not yet decided on how to monetise its pipeline assets, Gupta said, adding IOC would keep control of them as they are critical for its operations and link ports and fuel storage depots with refineries. “One model could be InvIt (infrastructure investment trusts) and it is not necessary we do 100% stake sale of our (pipeline) assets together,” he said. IOC may initially sell stakes in one or two pipelines, he said. The company would use proceeds of the stake sale on new projects such as petrochemicals, renewable energy and hydrogen production.