NCLAT stays Vedanta’s take over of Videocon
The National Company Law Appellate Tribunal (NCLAT) has stayed Vedanta Group’s winning bid for debt laden Videocon Industries after an appeal by dissenting creditors who were unhappy with the value realised through the resolution. A two judge bench headed by officiating NCLAT chairman Ashok Iqbal Singh Cheema has stayed the implementation of the resolution plan and adjourned the matter to September 7 till which date the company will be continued to be managed by the resolution professional. Bank of Maharashtra and IFCI had filed a plea opposing the existing plan arguing that the value ascribed to the company was very close to the liquidation value and even a part of the payment to dissenting creditors was through non convertible debentures (NCDs) which is in contrast to the Supreme Court order in the Jaypee Infratech case which had set a precedent by directing that dissenting creditors should only be paid by cash. “This stay now means that the deal could be stuck for months as it will be caught up in the legal whirlwind of replies and counter replies. This NCLAT order is a result of the unease on the large haircut that the creditors had agreed to though it is fact that the best offer was chosen from what was available,” said a person involved in the process. In December over 94% of the creditors by value voted for Vendanta arm Twin Star Technologies as the preferred bidder. Vedanta’s offer of a little over Rs 3,000 crore was a haircut of more than 95% on admitted claims of Rs 61,770 crore. NCLT had approved the plan in June but had commented that Vedanta had paid “almost nothing” to take over the company, noting the huge haircut the lenders had taken. Vedanta’s offer includes NCDs of Rs 2700 cr and cash unfront of Rs 551 crore. It also includes some equity to financial creditors in the company. Videocon has 54 financial creditors with about 33 of them in the committee of creditors. State Bank of India with 19.15% vote is the largest financial creditor, followed by IDBI (16.63%) and Central Bank of India (8.69%). All these large financial creditors have voted for Twin Star. “We can only vote for offers in front of us. We decided on the bid based on the information available. We cannot help it in case the court has taken a different view,” said a banker involved in the process. Vedanta had also sweetened its offer by giving a corporate guarantee indicating its seriousness in completing the plan. The assets include Ravva Oil and Gas Fields in the Krishna Godavari Basin in which Vedanta can now become the single largest shareholder by consolidating its holding and taking over Videocon’s 25%. Vendanta arm Cairn already owns 22.5% in the field, while state-owned ONGC has 40%. “The fear now is that this resolution which was one of the few sucesses in a Covid year will be delayed beyond repair. One hopes that Vedanta is patient to complete this plan because if this offer is not completed getting a new one looks very difficult and banks stand to lose whatever little they have got,” said the first person cited above. Videocon’s 15 companies were taken to the National Company Law Tribunal (NCLT) one by one between June and September 2018. In August 2019, SBI took lead and petitioned the NCLT, which gave permission to consolidate 13 companies. Vedanta’s plan is for these 13 companies. Two other companies, its kitchen appliances division, KIAL Ltd and Trend Electornics are undergoing separate bankruptcy processes.
Gujarat Natural Resources subsidiary buys additional 70% in oil fields
GNRL Oil & Gas Limited (GOGL), a Subsidiary of Gujarat Natural Resources Limited, had acquired an additional 70% participating interest in fields which put together made the total participating interest to 100%. “We hereby state that signed amended Production Sharing Agreement (PSC) has been received by us. The PSC for Allora, Dholasan, North Kathana oil fields was between the President of India acting through the Additional Secretary, Ministry of Petroleum & Natural Gas, Government of India, Gujarat State Petroleum Corporation, and GNRL Oil & Gas limited,” company said in a filing. Considering the above the consolidated revenue/profitability of the Company is expected to increase, it added.
FM Nirmala Sitharaman downplays oil price hike, inflation concerns, says economy on recovery path
Finance Minister Nirmala Sitharaman on Monday downplayed the high petroleum prices fuelling inflation and reiterated that fundamentals of economy are strong and India will continue to attract investment. “The weight of fuels like petrol, diesel and other fuels in the total CPI-Combined is only 2.52%,” Sitharaman said, adding that the CPI- combined inflation in June 2021 was 6.26%, as against the average CPI-combined inflation of 6.16% during 2020-21. The prices of petrol increased 63 times and diesel 61 times between January 1, 2021, and July 9, 2021 and the price of liquefied petroleum gas (LPG) increased five times during this period, the government informed the Lok Sabha on first day of the monsoon session, as many leaders raised the issue of high price of petroleum products. According to the Minister of State for Finance Pankaj Chaudhary, excise duty collections in April-June 2021 was Rs 1010 billion. Excise duty collection from petrol and diesel by the Indian government has increased by 88% to Rs 3350 billion between April 2020 and March 2021, the government told Lok Sabha on Monday, adding that this was up from Rs 1780 billion registered in the FY20. This number includes ATF, natural gas and crude oil as well, along with petrol and diesel. But the fact that petrol remaining above Rs 100 in many major cities is fuelling inflation in other products also, putting pressure on retail inflation. In the last financial year also petrol price was increased on 76 occasions and reduced 10 times. Diesel on the other hand was increased 73 times and reduced 24 times. Quoting the FDI inflows, the Finance Minister said FDI inflows into India rose by 25.4% to reach $64 billion in 2020, from $51 billion in 2019, making the country the fifth largest recipient in the world in 2020, up from eighth position it held in the previous year. “As has been witnessed in overall FDI inflows, India’s strong fundamentals and market size will continue to attract market-seeking greenfield investments,” she said. Excise duty collection doubled in FY21 Excise duty collection from petrol and diesel by the Indian government has increased by 88% to Rs. 3350 billion between April 2020 and March 2021.
Adani offers discount for LNG-fuelled vessels at Mundra port
The Adani Group will offer a 50% discount on charges to liquefied natural gas (LNG)-fuelled ships at Mundra, India’s largest commercial port, according to a notice seen by Reuters, as the country seeks to cut emissions under its green ports plan. Using LNG to fuel ships allows a significant reduction in CO2 as well as of other forms of pollution compared with conventional shipping fuel. “Port will offer 50% discount on Port Dues, Pilotage and Berth hire charges,” the notice to shippers, issued by Adani Ports and SEZ Ltd (APSE.NS), said. The company, controlled by billionaire Gautam Adani, said the waiver scheme will apply to vessels with dual fuel engines that use LNG as a primary fuel. The scheme will be valid for six months from Aug. 1. However, the waiver on port charges would not apply for vessels carrying LNG cargo and using LNG fuel, it said. Adani Ports and SEZ Ltd were not immediately available for comment.
India reduced support to the fossil fuel industry by 4%
Although most G20 governments have announced ambitious climate targets to reach Paris Agreement goal of limiting global temperature rise to 1.5 degree Celsius, they have continued providing support for coal, oil, gas, and fossil-fuel power to the tune of $3.3 trillion between 2015 and 2019 India reduced support to the fossil fuel industry by 4% from 2015 to 2019 even as the countries in the G20 forum of the world’s major economies are not walking the talk in addressing the climate crisis, a new report by BloombergNEF, a global research organisation, and Bloomberg Philanthropies released on Tuesday said. The G20 countries provided $636 billion in direct support for fossil fuels in 2019, which is just 10% less than that in 2015, it added. The report noted India has reduced the support, but it has 66 coal power plants in the pipeline. India is second only to China, which has 247 coal power plants in the making among G20 countries while Indonesia has 33. Most G20 countries have announced ambitious climate targets to reach the Paris Agreement goal of limiting global temperature rise to 1.5-degree Celsius compared to pre-industrial levels. But the report said they provided $3.3 trillion support for coal, oil, gas, and fossil-fuel power between 2015 and 2019. It added the sum could have funded 4,232GW new solar power plants or over 3.5 times the size of the current US electricity grid. The G20, as a whole, has cut fossil fuel funding by 10% during 2015–19. But there are significant variations across countries. Eight countries of the forum–Australia, Canada, the US, Brazil, France, Indonesia, Mexico and China–increased their support to the fossil fuel industry. “This support encourages the (potentially wasteful) use and production of fossil fuels. It can also distort prices and risks carbon ‘lock-in’— whereby assets funded today will be around for decades, locking in high levels of future emissions. All of these factors hinder the climate transition,” the report said. In a statement, Günther Thallinger, a member of the Board of Management of Allianz SE and chair of the UN convened Net-Zero Asset Owner Alliance, said as of today policy frameworks across most G20 countries are not sufficient to drive a real economy to net zero transition to achieve the 1.5 degree Celsius goal with reasonable likelihood. “The new NDCs (nationally determined contributions) and 2050 net zero targets from some G20 countries are warmly welcome, however pledges and targets alone will not be sufficient to change course. The development and publication of credible 2030 emission reduction plans, which create a rising price on carbon and have clear regulatory standards, including on climate-related financial disclosures are urgently needed.” India is under pressure to clarify its short- and long-term climate ambitions after other major economies announced carbon-neutrality goals, the report said. It added India has set up a task force to consider potential timelines and pathways for reaching net zero emissions. India is likely to request financial support from other countries in return for a net zero pledge. It could also opt for a near-zero emission target to balance the need to tackle climate change and to enable economic development. Over half of electricity generation capacity is owned by the Centre and state governments and it is mostly dependent on fossil fuels. The Centre aims to divest state-owned companies and raise ₹1.75 trillion, Union finance minister Nirmala Sitharaman said in her budget speech in February, the report noted. India does not yet have any national carbon pricing mechanism or a policy on climate risk reporting. The Climate Policy Factbook of BloombergNEF has pointed to three areas for which immediate government action is needed to limit global warming to 1.5 degrees Celsius. They include phasing out support for fossil fuels, putting a price on emissions, and encouraging climate risk disclosure. In each of these areas, the report found the policies of G20 countries were off course. The report said France and Germany have made the most progress in terms of implementing carbon pricing. Russia, Saudi Arabia, Brazil, Indonesia and India have no pricing policies. Climate-risk policies can also assess the effects of environmental changes and climate policies on the current performance of companies and financial products, the report said. Financial institutions do not have the data needed to assess climate-related risks associated with their investments. This puts the onus on regulators to enforce disclosure regulations focusing on physical assets and environmental data, the report added. A few countries have made policies on such disclosure. They include France, Germany, Italy and the UK. “G20 is a very diverse group of countries. The wealthy countries in this group are yet to meet the Paris Agreement’s climate finance goal of $100 billion, though they spent an estimated $189 billion last year on fossil fuels. For developing countries in the G20, such as India, the imminent drying up of coal finance and the EU’s new carbon tax on imports are serious signs that our industry needs to prepare to shift to low carbon technologies. This new report gives importance to carbon pricing as a way to incentivise shifts to cleaner fuels and technologies. The government of India’s Apex Committee for Implementation of Paris Agreement, set up in December 2020, is authorised to issue guidelines on carbon pricing,” said Ulka Kelkar, director of the climate programme at the World Resources Institute, India.
Chinese hackers breached 13 US gas pipeline operators from 2011 to 2013: Report
Chinese state-sponsored hackers successfully breached 13 US natural gas pipeline operators from 2011 through 2013, the Cybersecurity and Infrastructure Security Agency (CISA) announced on Tuesday (local time). “The US government identified and tracked 23 US natural gas pipeline operators targeted from 2011 to 2013 in this spearphishing and intrusion campaign,” CISA advisory said. “Thirteen were confirmed compromises, three were near misses, and eight had an unknown depth of intrusion.” The security agency said the US federal government had specifically attributed the attacks to state-sponsored forces backed by the Chinese government. “The US government has attributed this activity to Chinese state-sponsored actors. CISA and the FBI assess that these actors were specifically targeting US pipeline infrastructure for the purpose of holding US pipeline infrastructure at risk,” the advisory said. US security agencies have assessed that the attacks were ultimately intended to help China develop cyberattack capabilities against US pipelines to physically damage pipelines or disrupt pipeline operations, it added. This comes a day after the US and its foreign allies accused China of overseeing widespread attempts to extort money in cyberspace. US security agencies have issued a new advisory about a major threat to the cyberspace assets of the United States and its allies from Chinese state-sponsored cyber activities, including ransomware attacks. In a coordinated announcement, a Joint Cybersecurity Advisory (CSA) issued on Monday states that state-backed cyber actors aggressively target political, economic, military, educational, and critical infrastructure (CI) to steal sensitive data, and emerging key technologies, intellectual property, and personally identifiable information (PII). An unprecedented group of US allies and partners, including the EU, the UK, Australia, Canada, New Zealand, Japan, and NATO, have joined in exposing and criticising China’s Ministry of State Security’s malicious cyber activities. Meanwhile, China had denied accusations that actors linked to its government were behind the Microsoft Exchange hack and other “malicious cyber activities.”
Shell will appeal landmark Dutch climate ruling
Royal Dutch Shell on Tuesday confirmed it will appeal a Dutch court ruling ordering the energy company to accelerate its carbon emission reduction target. Shell had previously said it will appeal the May 26 ruling ordering it to reduce greenhouse gas emissions by 45% by 2030 from 2019 levels, significantly faster than its current plans. The Anglo-Dutch company also said it will seek to ramp up its energy transition strategy in the wake of the ruling. “We agree urgent action is needed and we will accelerate our transition to net zero,” said Shell Chief Executive Ben van Beurden said in a statement on Tuesday. “But we will appeal because a court judgment, against a single company, is not effective. What is needed are clear, ambitious policies that will drive fundamental change across the whole energy system.”
BHP considering exiting oil and gas business – Bloomberg News
Global miner BHP Group is considering getting out of oil and gas in a multibillion-dollar exit as it looks to speed up its retreat from fossil fuels, Bloomberg News reported on Tuesday, citing people familiar with the matter. The world’s biggest miner is reviewing its petroleum business and considering options including a trade sale, the report said, adding that the deliberations were still at an early stage and no final decision has been made. “BHP does not comment on rumor or speculation,” company spokesperson Judy Dane said. Mining companies around the world are under growing shareholder pressure to reduce their carbon footprint and take stringent climate actions to cut emissions, as calls for a shift towards cleaner forms of energy accelerate. Analysts at RBC said they valued BHP’s oil and gas portfolio focused on the U.S. Gulf of Mexico, eastern Canada and Australia at $14.3 billion. “With rising ESG (environmental, social and governance)pressures facing the industry, but also as this business potentially enters into a re-investment phase, we can see why management might be contemplating an exit,” they said in a note. Considering options for the oil and gas portfolio is part of BHP’s scenario planning, said two banking sources, who declined to be named as the talks are private. BHP, the bulk of whose earnings come from its iron ore and copper units, sold its shale business to British oil major BP Plc for $10.4 billion in 2018.