Fuel tax cut unlikely as Centre projects Rs 30,000 crore revenue hit
As Andhra Pradesh joined Rajasthan in reducing VAT on petrol and diesel , the Centre on Monday seemed to be holding out against a cut in taxes amid rising pressure, with officials indicating that the government did not want its welfare schemes to suffer for want of revenue. While opposition parties supported the Congress-called Bharat bandh , BJP blamed global factors for the rise in pump prices of petrol and diesel. “We are standing with people in their problem. We are trying to redress the issue and will do that,” law and IT minister Ravi Shankar Prasad told a press conference. Government officials, however, suggested that the Centre may not lower duties as a Rs 2 per litre reduction would impact revenue by Rs 28,000 crore to 30,000 crore. Instead, more states are expected to reduce VAT, which will lower prices without impacting the Centre’s tax collection. “We pass on over 40% of the taxes that we collect to the states. So, any reduction by us will impact everyone,” said the official, after the Andhra government announced a reduction of Rs 2 in the prices of auto fuel. Besides, officials argued, states follow a system of ad valorem levies, which pushes up the revenue, whenever prices go up. Fuel tax cut unlikely as Centre projects Rs 30,000 crore revenue hit Fuel prices have been hitting record highs due to the falling rupee and high global crude prices. Prices in Delhi, where rates are cheapest among all metros and most state capitals, saw petrol touch an all-time high of Rs 80.73 a litre on Monday, while diesel was at a record Rs 72.83 a litre. Petroleum minister Dharmendra Pradhan is understood to have met BJP chief Amit Shah on the situation. The government is of the view that a weak rupee along with high international crude oil prices can impact fiscal deficit as well as current account deficit. In its assessment, a cut in duties will hit the rupee as well as interest rates due to the fallout on the bond market and leave a far deeper dent than a revenue loss of Rs 28,000-30,000 crore. “Then, you have to make budget cuts in developmental expenditure. This is the real consequence of oil tax cut,” said a source. Suggesting that it is not possible to significantly reduce tax burden on oil, an official said, “Even when UPA was in power or in any state where UPA and others are in power today, oil is a source of revenue for the state government. The rational approach has to be that we increase the taxation base of direct taxes flowing from income-tax and GST, and improve GDP to nonoil tax ratio so that burden of taxation on oil can be reduced.” said an official. Jake Rudock Authentic Jersey
Maharashtra government tries to get fuel under GST ambit
Chief Minister Devendra Fadnavis on Sunday said that the state government is working on various proposals to provide relief from the rising fuel prices. He further mentioned that bringing petroleum products under GST (Goods and Services Tax) is one of the ways of reducing prices. The state government expects that by bringing the fuel prices within GST ambit the prices will reduce roughly by Rs 5 to 6 per litre. Fadnavis spoke to a news agency in New Delhi before returning to Mumbai and made it clear that the subject is with the GST Council. He said that if GST council takes a decision to bring it under goods and services tax then Maharashtra Government would support it. Chief Minister Fadnavis also slammed the opposition for calling ‘Bharat Bandh’ on Monday over the issue. The Congress has given a call for a nation-wide shut-down on Monday to protest the increasing petroleum prices. The state government is in favour of bringing petrol and diesel into the Goods and Services Tax regime and it would plead the case for the same during GST council meeting. Finance minister Sudhir Mungantiwar on Tuesday told media persons after the Cabinet meeting that the state government would request the GST council, comprising of finance ministers of all states, to bring fuel within the ambit of the GST. Mungantiwar pointed out that the state government had reduced the Value Added Tax (VAT) on petrol twice last year and had given a relief of Rs 3,067 crore to the people of Maharashtra. He told that as far as diesel prices were concerned, Maharashtra stands 8th in the country but petrol is costliest in Maharashtra. According to an official from the finance department, the petrol and diesel prices are likely to reduce by Rs 5 to Rs 6 per litre. There will be input credit to the industries using diesel and to the oil companies for the tax they pay for their services, machinery resulting in a reduction of prices. State government’s annual income from the VAT on petrol and diesel is to the tune of Rs 26,000 crore. Cory Spangenberg Womens Jersey
Rajasthan CM announces a 4-pc reduction in VAT on petrol, diesel
Rajasthan Chief Minister Vasundhara Raje announced a four-per cent reduction in value-added tax (VAT) on petrol and diesel on Sunday, which will reduce their prices by Rs 2.5 per litre in the state. VAT on petrol will be reduced from 30 to 26 per cent and on diesel from 22 to 18 per cent, Raje announced at a public meeting organised in Rawatsar in Hanumangarh district as part of her ‘Rajasthan Gaurav Yatra’. The revised rates will be effective from this midnight. The decision will cost the exchequer Rs 2,000 crore and will provide the people a relief of Rs 2.5 per litre on petrol and diesel. “We have decided to reduce VAT on diesel and petrol by 4 per cent, which will provide much-needed relief to the people of the state, be it farmers or women or others,” Raje told reporters in Rawatsar after making the announcement. Petrol and diesel prices set new records Sunday as they continued their upward march on fall in rupee and surge in global crude oil rates. The opposition Congress has called for a nationwide shutdown on Monday over rising fuel prices and depreciation of the rupee. Targeting the Congress, the chief minister said that the party had failed to play the role of an effective opposition and came out of its shell just before the election. Assembly election in Rajasthan is scheduled for later this year. Reacting on the decision, AICC general secretary and former chief minister Ashok Gehlot said that Raje had to take the decision because of public support the Congress was gaining for Bharat Bandh on Monday. “The chief minister had to reduce VAT on diesel and petrol because of the public support Congress was gaining for Bharat Bandh on Monday. The reduction is not enough and the relief should also be provided on gas cylinder without any further delay,” Gehlot said in a statement. He said that the former Congress government led by him in the state had reduced Rs 25 per cylinder and looking at the prices of today, there should be a cut of at least Rs 100 on the gas cylinder. Matt Milano Authentic Jersey
Qatargas agrees on 22-year LNG supply deal with China
Qatargas said on Monday it had agreed on a 22-year deal with PetroChina International Co, a unit of PetroChina Co, to supply China with around 3.4 million tonnes of liquefied natural gas (LNG) annually, as the nation stepped up efforts to combat air pollution. The Qatari state-owned company will supply LNG from the Qatargas 2 project – a venture between Qatar Petroleum, Exxon Mobil Corp and Total – to receiving terminals across China, with the first cargo to be delivered this month. The deal allows flexibility in delivering LNG to Chinese terminals including those in Dalian, Jiangsu, Tangshan and Shenzhen, using the Qatargas fleet of 70 conventional, Q-Flex and Q-Max vessels, the company said. China requires LNG for its push to replace coal with cleaner burning natural gas, a way to reduce air pollution. After Beijing started the programme last year, China has overtaken South Korea as the world’s second-biggest buyer of LNG. China’s LNG imports may surge 70 percent to 65 million tonnes by 2020, according to consultancy SIA Energy. Last year, China imported a record 38.1 million tonnes, 46 percent more than the previous year. Meanwhile Qatar, the world’s biggest LNG producer, is seeking buyers for a planned expansion of its output. Mike Adams Authentic Jersey
Massive 15% natural gas price hike on anvil; households’ kitchen, auto fuel budget may take a hit
A natural gas price hike to the tune of a massive 15% may be on the cards, as the government has decided to raise the price of domestically produced natural gas to $3.50 per million metric British thermal units for the next six-month period, CNBC Awaaz reported citing sources. This could raise domestic cooking gas for households and CNG bills for automobile users. Earlier this year, the government raised domestic natural gas price by 6% to $3.06 per million metric British thermal units, applicable for the current six-month period Apr-Sep 2018. The revised prices are based on the government’s formula and calculated on gross calorific value basis. The 15% rise is indeed massive, and the the increase in prices of natural gas has a strong likelihood of it leading to rise in prices of PNG (piped domestic cooking gas) and CNG (auto fuel), as it will put pressure on margins of the retail fuel distributors, fertiliser makers and power producers, which use natural gas as feedstock. Fertiliser and power companies also import LNG (liquefied natural gas) in addition to buying the domestic gas, and pool the prices to calculate their overall costs. This may provide some cushion to their margins, as they would look to increase the mix of imported LNG, depending on its prices in the international open markets. The government had approved a new formula in October 2014 to set the price of the natural gas produced at the domestic fields and revise it every six months based on the movement in prices in the US (Henry Hub), the UK (National Balancing Point), Canada (Alberta) and Russia. The latest potential hike in natural gas prices is also seen to boost the profits of oil marketing companies ONGC and Oil India. According to a recent Jefferies report, though the contribution of gas business is less on the revenue and operational front, a $1 per mmBtu rise can lift the earnings per share of ONGC and Oil India by at least 10%. Ben Lovejoy Womens Jersey
Gasoil emerges as winner as India tweaks oil product yields
Refiners in India have strategically altered their oil products output to maximize gasoil yields, as new cokers and robust margins in international markets have provided them an opportunity to lift both output and exports of the middle distillate. Traders and analysts said the growth in gasoil production, which has risen by an unusually high rate of 8% year on year in the first seven months, would maintain a similar momentum for the rest of the year. But exports could slow during the rest of the year as domestic demand recovers after the monsoon season. “India’s gasoil exports have been rising this year as refiners have raised output of the product over gasoline due to attractive margins,” said Lim Jit Yang, director for Asia at S&P Global Platts Analytics. “Furthermore, India’s domestic gasoline demand was growing at a very strong pace of nearly 10% year on year over January-July, while gasoil demand growth was more modest at 6% over the same period. This also helped gasoil exports,” he said. The Asian gasoil swap crack — the spread between the front-month 10 ppm sulfur gasoil derivative and front-month Dubai crude derivative — is currently hovering at a three-month high, reflecting the strength in the gasoil market. At the Asian close Tuesday, the gasoil crack stood at $16.48/b, up from $15.97/b seen a week ago, and up 14% from the start of the month. MIDDLE DISTILLATE FOCUS On the production side, gasoil’s gain has been gasoline’s loss. India’s gasoil production rose by 171,000 b/d to 2.3 million b/d over January-July, a year-on-year growth of 8%. On the other hand, gasoline output in the same period rose by 31,000 b/d to 911,000 b/d, a year-on-year growth of only 3.5%. “There has been a significant shift in overall product yields, away from fuel oil to maximize middle distillates,” said Senthil Kumaran, senior oil analyst at Facts Global Energy. Cokers at Bharat Petroleum Corporation Limited’s Kochi refinery and Indian Oil Corporation’s Paradip refinery have ramped up to their full rates this year, while Chennai Petroleum Corporation had added a coker earlier this year as well. “This reduced fuel oil output, while boosting production of distillates. Temporary length in gasoil resulted in higher gasoil exports by India over H1 2018. Also, crude runs have been consistently rising since the beginning of this year, largely due to recent expansions at BPCL and stable operations at Paradip,” Kumaran added. India’s refinery runs averaged 5.2 million b/d over January-July, a growth of about 5.2% year on year. “Diesel yields have increased due to several coker additions. Stronger markets this year compared to gasoline has also incentivized refiners to maximize diesel production. This trend will continue through 2020,” said Nevyn Nah, oil products analyst at Energy Aspects. EXPORT OUTLOOK Analysts said the trend of higher gasoil production could continue in the near to medium term as domestic demand is expected to remain robust over the next year. India is scheduled to hold general elections in 2019, when demand for diesel normally shoots up. Gasoil consumption growth is expected to be particularly strong in Q4 2018, with provincial elections planned in some states. Analysts added that a force majeure at Reliance and ongoing maintenance at the Bina refinery of Bharat Oman Refineries would result in a pull back in gasoil supplies over the next few months. In addition, Nayara’s Vadinar refinery is expected to shut mid-November for maintenance. “With all these developments, we expect gasoil exports to trend lower moving forward,” FGE’s Kumaran said. Platts Analytics’ Lim said: “India’s demand for diesel is expected to pick up after the monsoon season, and exports of the product are likely to ease.” India’s domestic demand for diesel witnesses a seasonal downturn during the monsoon season, when traveling is reduced due to heavy rains and hydro power generation is used instead of diesel. Sean Weatherspoon Womens Jersey
IOC will commission Ennore-Manali LNG pipeline on schedule by end of 2018
Indian Oil Corporation (IOC) today said it has lined up Rs 220 billion capex plan for the current fiscal year and will commission the Ennore-Manali LNG pipeline on schedule by the end of the year. Sanjiv Singh, the chairman of the nation’s largest oil marketing company, said the board has approved a capex plan of Rs 220 billion for FY19, of which around Rs 60 billion will be towards upgrading refineries to meet BS-VI emission norms. Addressing reporters after the AGM here, Singh also said the company is confident of commissioning the over Rs 40 billion, the 1,170-km-long pipeline linking its Ennore LNP terminal near Chennai to Manali in Himachal in 2018. The over Rs 5,000-crore LNG terminal at Ennore will be commissioned as scheduled by October, he added. “More than 50 percent work on the pipeline is already completed and we have tied up with all our target customers in Manali and most of them in Chennai region as well, Singh said. On crude imports from Iran, Singh said there is no clarity how the sanctions will pan out from November 4 and accordingly they have tied up many national oil marketing companies to ensure that crude supplies are not disrupted. “We don’t procure crude from private suppliers. We have sounded out enough national oilcompanies for supplies to source oil depending on the impact of the US sanctions on Tehran,” he said. He also denied that IOC has reduced its intake from Iran as saying on a net-net basis there is no cut-down. “There could have been some fluctuations in some months but overall we are procuring as per our contracts,” said Singh. Giving a break-up of the capex plan, finance director AK Sharma told PTI that around Rs 60 billion will go into refinery upgrades to meet the BS-IV emission norms, Rs 40 billion into marketing of which half will be used to procure new LPG cylinders and around Rs 30 billion into new businesses like biofuels, and Rs 10 billion into Paradeep petrochemicals expansion among others. On fundraising plans, though Sharma said the company does not need any funds now, towards the end of the fiscal year, they will hit international bond markets along with a domestic debt market, as the firm has not tapped it for long. According to the annual report presented to the shareholders today, the company sought shareholders’ approval for raising around Rs 200 billion through an NCD issue this year. The company has around Rs 530 billion of debt as of June, of which 70 percent are forex loans. The chairman also said, IOC, which was the first oil company to set up an electric vehicle charging station a few years ago in Nagpur, will increase its footprint more. But he did not offer more details. On new businesses, especially after entering the city gas distribution arena on its own after the last month’s auctions, he said IOC is very bullish about this segment and will invest over Rs 150 billion into this vertical over the next three years. It can be noted that IOC has a joint venture with Adani group for city gas distribution and at the auctions last month it has on its own won rights to seven cities, including Coimbatore and Salem in Tamil Nadu and Guna in MP. Together with its JV partner Adani, it has marketing rights in nine more cities, including Allahabad. He also said in the medium term, the company expects around 15 percent profit to come from the gas business, and 15-20 percent from petrochemicals vertical. On the ethanol plant, Singh said the first 100 tons per day plant in Panipat, with an investment of Rs 5 billion, will be commissioned over the next two years. The company has also taken land for two more biofuel plants in UP and Gujarat, he added. Jake Rudock Womens Jersey
IOC eyes 52,000 fuel retail outlets in 3 years
State run-Indian Oil Corporation aims to almost double its fuel retail network to 52,000 outlets over the next 3 years from 27,000 now. IOC, India’s largest fuel retailer, accounts for 44% of the market despite the entry of private sector in the segment. “IOC is also investing in the retail segment. With over 50,000 new fuel stations and LPG distributorship coming up in the next few years, benchmarking to global standards and generating additional revenue streams from non-fuel business is an idea worth exploring by oil marketing companies,” chairman Sanjiv Singh said. The company’s executives said that the three state-run oil marketing companies are likely to add 50,000 fuel retail outlets over the next three years, of which 25,000 would be by IOC while the rest will be split equally between Bharat Petroleum Corporation and Hindustan Petroleum Corporation. This will help the company maintain its market share. “The company aims to double its refining capacity to 140 million tonne per annum by 2030, and has accordingly undertaken brownfield expansions at Chennai Petroleum Corporation, and is also preparing to set up a 9 million tonne per annum refinery at Nagapattinam in Tamil Nadu,” Singh said. IOC, which sources a substantial share of crude for running its refineries from Iran, is awaiting the Indian government’s decision on imports from the country. The US has told all countries, including India and China, to stop their oil imports from Iran by November 4 or face sanctions. “Iran imports are suitable for us as they offer us good terms and conditions. We will be perfectly fine with whatever the government will decide. We have other options available and the flexibility with other countries to source crude,” Singh said. IOC is upbeat on gas marketing business and has plans of investing on infrastructure to support it. “Investments close to Rs 20,000 crore are being envisaged in city gas distribution alone over the next five to eight numbers,” Singh said. Martavis Bryant Jersey
India’s Biggest Gas Utility Is Opening Up Its Pipeline Network
India’s largest natural gas pipeline operator has invited users to book surplus network capacity online as the country prepares to create a distribution hub that sets benchmark prices. State-run GAIL India Ltd., which controls 70 percent of the nation’s network, on Monday launched a website for online bookings of pipeline capacity to ship gas across the country. GAIL, with 11,400 kilometers (7,084 miles) pipelines, is investing 250 billion rupees ($3.6 billion) to add another 5,000 kilometers, Chairman Bhuwan Chandra Tripathi said. Lion’s Share Greater sharing of infrastructure will allow quicker trading and movement of natural gas supplies and boost utilization of GAIL’s pipelines. India, home to some of the world’s most polluted cities, is seeking to cut emissions and its oil import bill by doubling the share of gas in the energy mix to 15 percent. “This is going to pave the foundation for the gas hub,” Tripathi said. “The online booking allows transparent and hassle-free access and increases the ease of operations, and pushes the country toward a gas-based economy.” Why Gas-Gorging Asia Wants an End to Faraway Pricing: QuickTake GAIL already has more than a hundred customers using its pipeline network on an open-access basis. Once the gas hub is operational, it will increase utilization of the company’s pipelines, which are operating at half capacity, Tripathi said. The Petroleum and Natural Gas Regulatory Board, which has been tasked with setting up the gas-trading exchange, expects the hub to be operational by December. India’s cabinet of ministers is expected to approve the gas exchange plan “soon,” Oil Minister Dharmendra Pradhan said Monday, without elaborating. Todd Frazier Jersey
IOCL plans to invest Rs 18.23 bn to expand east India’s first LPG pipeline
Oil marketing major Indian Oil Corporation Ltd (IOCL) is planning to augment eastern India’s first pipeline, the Paradip-Haldia-Durgapur LPG Pipeline and its extension up to Muzaffarpur and Patna, with an investment of Rs 18.23 billion. “Under the augmentation of Paradip-Haldia-Durgapur LPG Pipeline, new facilities will be added at Paradip and Balasore. We expect to commission the project by December 2020. This line will be extended to Muzaffarpur and Patna”, said P C Choubey, Executive Director (pipelines division), IOCL. The LPG requirement at Patna and Muzaffarpur are now met by train wagons and bullets. The investment is in addition to Rs 13.30 billion LPG pipeline planned by IOCL, the first in eastern India and proposed from Paradip to Durgapur for transportation of LPG from Paradip refinery, Choubey added. The Paradip-Haldia–Durgapur LPG pipeline will cater to the LPG demand of Odisha, Jharkhand and West Bengal and originates from Paradip. The pipeline will have pump stations at Paradip and Haldia and delivery stations at Balasore (Odisha), Budge Budge, Kalyani and Durgapur (West Bengal). IOCL has already commissioned the Paradip-Balasore section of the pipeline. “With the commissioning of 157-km Paradip-Balasore section pipeline, construction of pump station at Paradip and delivery station at Balasore, the road transportation of LPG from Paradip is eliminated, thereby reducing carbon emissions and traffic congestion,” sources said. Similarly, IOCL has already started work on laying of its Rs 23.21 billion Paradip-Hyderabad pipelines. It has already commissioned its Rs 18 billion Paradip-Raipur-Ranchi pipeline (PRRPL) for transport of products from Paradip refinery. IOC’s 15-mtpa capacity refinery at Paradip is spread over an area of 3,345 acres with an estimated cost of Rs 345.55 billion. The refinery can process 100 per cent high-sulphur and heavy crude oil to produce various petroleum products, including petrol and diesel of BS-IV quality, kerosene, aviation turbine fuel, propylene, sulphur, and petroleum coke. It is also designed to produce Euro-V premium quality motor spirit and other green auto fuel variants for export. Nathan Shepherd Authentic Jersey