OVL steps up efforts to recover $400 mil from Sudan in oil dues
ONGC Videsh Limited has stepped up efforts to recover $400 million as dues from Sudan on its investment in oil assets including setting up a pipeline network connecting to the Red Sea, company officials said on Wednesday. In 2003, OVL, the overseas arm of state-owned Oil and Natural Gas Corporation, bought a 25% stake in the Greater Nile Oil Project that managed blocks 1, 2 and 4 in undivided Sudan. China Petroleum Company has a 40% stake in GNOP, Malaysia’s Petronas a 30% share and state-owned Sudapet holds the remaining 5%. These blocks are located in the Muglad basin, about 780 km southwest of Khartoum, the capital of Sudan. The project had started production in 1999 with an initial area of 49,500 sq km in the Muglad basin. But after the creation of South Sudan and Sudan as two separate countries in July 2011, blocks 2A, 2B and 4N came under Sudan, while blocks 1A, 1B and 4S went to South Sudan. At present, the total area of the blocks under GNPO is 29,749 sq km. The Sudanese project produced around 50,000 b/d while the 4N project was in the exploration stage, officials said. OVL’s outstanding dues were related to Sudan’s local refineries using crude from GNOP as against its share. After the division of the African country, the Sudanese government’s share of total crude output in Sudan was not sufficient to meet demands of local refineries and foreign companies such as OVL were asked to sell their share of crude oil to the government. “We have intensified efforts to recover our dues through the diplomatic channel. But it is difficult to predict when the amount will be received,” said a senior OVL official. OVL has 37 projects across 16 countries, including Azerbaijan, Bangladesh, Brazil, Colombia, Kazakhstan, Mozambique, Myanmar, Russia, South Sudan, Sudan, Venezuela, Vietnam and New Zealand. Andre Hal Authentic Jersey
IOC, Oil India, BPCL in talks to buy 49% stake in Russia’s Vankor field
Indian Oil Corp (IOC) and its partners are in talks to buy 49 per cent stake in Russia’s Vankor cluster oilfields to consolidate their presence in the energy-rich Arctic region. IOC, Oil India Ltd and Bharat PetroResources Ltd (a unit of Bharat Petroleum Corp. Ltd or BPCL) is looking at buying a stake in Suzunskoye, Tagulskoye and Lodochnoye fields – collectively known as Vankor Cluster, sources privy to the development said. ONGC Videsh Ltd (OVL), the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is also interested in the fields. Rosneft, Russia’s national oil company that owns the fields, wants to retain a majority stake and is keen to sell only up to 49 per cent stake. In case OVL is accommodated, the entire 49 per cent stake would have to be split between the Indian companies. OVL may possibly take 26 per cent in proportion of the stake it bought in the main Vankor oilfield. OIL-IOC-BPRL may take 23.9 per cent stake in line with its holding in the main Vankor field. Vankorneft, a subsidiary of Rosneft, is developing the Vankor oil and gas condensate field, situated in the northern part of Eastern Siberia. In 2013, Vankorneft was chosen as an operator on development of new fields of Vankor cluster – Suzunskoye, Tagulskoye and Lodochnoye fields, located close to the Vankor field. The reserves of Suzunskoye field exceed 56 million tonnes of oil and condensate, and 35 billion cubic meters of gas. Last year, OVL first acquired 15 per cent stake in Russia’s second biggest oilfield of Vankor for $1.268 billion and then bought another 11 per cent for $930 million. The 26 per cent stake would give OVL 7.31 million tonnes of oil. The consortium of OIL-IOC-BPRL acquired 23.9 per cent stake in the field at a cost of $2.02 billion, giving them 6.56 million tonnes of oil. Rosneft continues to hold the remaining 50.1 per cent shares of JSC Vankorneft. The field has recoverable reserves of 2.5 billion barrels. Besides, the OIL-IOC-BPRL consortium has taken another 29.9 per cent stake in a separate Taas-Yuryakh oilfield in East Siberia for $1.12 billion. The investments have taken the total outlay in Russia this year to $5.46 billion. These investments will give India 15.18 million tonnes of oil equivalent. The investment made compares to $28.48 billion investment by Indian companies overseas in the past 50 years, giving it about 10 million tonnes of oil equivalent. While Vankor produces about 442,000 barrels of oil per day (4 per cent of Russian crude oil production), Taas currently produces about 21,000 barrels per day of oil, and a peak of 1,00,000 bpd is expected by 2021. Ray Bourque Authentic Jersey
On the road: A changing fortune, and Gadkari to the rescue
Nitin Gadkari might not have been a man of his word, but the goal-setting minister in charge of road transport, highways and shipping can take heart that he hasn’t shot too far off the mark, either. And in the ministry’s achievements, no less its missed targets, can be seen the broader narrative of infrastructure that is being rewritten under him. In only three years, the ministry has managed to drive private participation in the sector, adopt a more reasonable model for implementing projects – all this while shrugging off a media which has been nitpicking over Gadkari’s misses. To be sure, there have been a few of misses, as well. By December 2016 Gadkari’s ministry had awarded only 27 percent of the budgeted projects for FY16. Even construction target was 30 percent of the targeted number. By and large, Gadkari has been on the ball. According to a Crisil report, project awards in the roads sector have picked up thanks to the new hybrid annuity model (HAM) and engineering, procurement and construction (EPC) projects. Order book of 50 EPC-focused road developers grew two-fold from Rs 41,000 crore in FY14 to Rs 85,600 crore in FY17. In the current fiscal year, the order book is likely to touch Rs 1 lakh crore considering the expected Rs 48,000 crore worth of orders. Government’s strategy of moving away from the build-operate-transfer (BOT) model seems to be working. In 2013, all projects were under the BOT model but these have been reduced to just 20 percent by FY16 and in FY17 was only 10 percent. Road developers are enjoying their day under the sun with order book to sales at around 2.5 to 3 times the revenue as compared to 1.5 times revenue when the present government assumed office in 2014. There are a number of reasons why there has been an improvement in the overall performance of the ministry. A Kotak Securities report quoting a member of finance at NHAI (National Highways Authority of India) says that a focused attention to implementation and smoothening the process helped improve performance. Out of 73 stuck road projects at the start of the current government’s term, only nine are still languishing for varied reasons. The clearance processes were expedited by the creation of inter-ministerial committees and a periodic review directly by the PMO (Pragati programme). Rather than acquiring land after announcing the project, which resulted in time delays and cost escalation, NHAI now tenders new highways only after securing at least 90 percent of land along the corridor. In a rare display of team work between central and state government bureaucracy, the central government has roped in various states and their departments/bureaucrats to help NHAI handle the large volume of projects on the anvil. States like Maharashtra are helping to prepare a large number of DPRs (detailed project report) for NHAI. In order to incentivize private sector participation in roads, the government is clearing projects which are stuck in arbitration. In cases which are stuck in arbitration, the government has released 75 percent of the amount subject to bank guarantees even while hearings are on in higher courts. NHAI has processed all 53 of such arbitration cases and has released payments in seven of them. The rest of the payments will be released as soon as bank guarantees are furnished by the private parties. This move has helped build the confidence of private sector players who could not participate in bidding as a sizeable chunk of their money was locked up in arbitration. Moving to a hybrid-annuity model (HAM) where 40 percent of the construction cost is being funded by NHAI over the construction period through five milestone-based payments, private players are comfortable taking these projects on as are banks who feel comfortable with NHAI putting in a sizeable amount of money. However, the key to growth and implementation is the financing power of NHAI. Though the government has allocated Rs 64,000 crore for the ministry in the current fiscal, NHAI would need more resources to meet its borrowing plan of Rs 2.1 trillion over the next five years. An Rs 5,000-crore denominated Masala Bonds issue is lined up by the company but it would still need more resources to keep the sector moving. Further, with a new avenue in the form of Infrastructure Investment Trust (InvIT) NHAI can securitize its highway assets and raise funds for future growth. However, a parliamentary panel recently pulled up NHAI for failing to raise targeted funding. NHAI was given a target to raise Rs 59,279 crore during FY17 but it could raise only Rs 27,831 crore till January 2017.Looking at the performances of road developers and their order books which gives a better visibility, Crisil upgrades are now twice as many downgrades in FY16. This is a sharp improvement to one upgrade for every nine downgrades in FY14, thus reflecting the changing fortunes of road sector. Allen Robinson Jersey
23 Blatant irregularities hastened Air India’s downfall: CBI
The Central Bureau of Investigation’s three FIRs in the ‘Air India scam’ which took place during the UPA regime have alleged blatant irregularities which hastened the downfall of the national carrier. The FIRs, accessed by TOI, said the civil aviation ministry decided to purchase 111 aircraft for Air India costing about Rs 70,000 crore at a time when the airline was showing a profit of about Rs 100 crore and didn’t have the capacity to purchase even a few aircraft. Due to this particular decision, the airline immediately went into huge losses, which increased every year to reach tens of thousands of crores, the CBI said, quoting from the allegation levelled by activist-lawyer Prashant Bhushan in his PIL before the Supreme Court. The FIRs mentioned an internal Air India report of 2000-01 which said the airline should only lease aircraft and not go for purchase. The view was overruled by the aviation ministry, the FIR said, quoting from Bhushan’s allegations which led the SC to direct a CBI probe. It was decided in 2004-05 that Air India will buy 68 aircraft instead of 28, as originally planned, a decision which quadrupled the expenditure from Rs 10,000 crore, as originally estimated, to Rs 44,000 crore. This apart, the government also decided to buy 43 planes for Indian Airlines at a cost of Rs 8,399 crore. “Concerns regarding potential difficulties of Indian Airlines in successfully funding the acquisition process with a positive NPV (net present value) was raised within civil aviation ministry, but were ignored,” the CBI FIR said, referring to one of the main allegations which led the court to direct the CBI to probe the alleged scam. Interestingly, the CBI said the acquisition programme had been under consideration since 1996 but never got traction, until 2004 when it suddenly picked up speed. “Between August 2004 and December 2005, the proposals were formulated by Air India, approved by its board, examined and approved by ministry, Planning Commission, department of expenditure, group of ministers and the cabinet,” the FIR said. Not just that, Air India signed the contract with Boeing to buy 68 aircraft on the same day, December 30, 2005, that the government cleared the purchase order. The CBI said NACIL (National Aviation Company of India Ltd), incorporated to merge Indian Airlines and Air India, had an equity base of only Rs 145 crore, yet it made a commitment to pay Rs 44,000 crore for procuring 111 new aircraft. It said loans for the purchase were taken from US and Indian banks, pushing the airline into debt and huge losses. Similarly, the CBI FIR into the leasing of planes said the ministry and officials of Air India/Indian Airlines decided to lease planes “dishonestly without due considerations regarding proper route study and marketing or price strategy”. “The leasing was done despite airline running with very low load because of largescale aircraft acquisition and several flights, especially overseas flights running almost empty at a huge loss,” the CBI said. For example, Air India leased 15 expensive planes when it did not have pilots to fly the aircraft, the FIR said, emphasising that this was “known to everyone”. In another instance of alleged irregularity, Air India dry leased four Boeing 777s for a period of five years in 2006 even when new planes for the airline were set to arrive in July 2007. This “resulted in five Boeing 777s and five Boeing 737s standing idle, leading to an estimated loss of Rs 840 crore during 2007-2009”, the CBI said. The third FIR to probe Air India giving up profitable routes and schedules for private airlines alleged that “foreign airlines were given unrestricted entry into India and major routes were given to them without taking any reciprocal benefits”. Air India gave up Kolkata-Bangkok, Kolkata-Dhaka, Doha-Kochi, Kochi-Kuwait and domestic routes like Ahmedbad-Jaipur, Mumbai-Vadodara, Pune-Goa and Mumbai-Patna and others. “On all these routes, private airlines like Jet Airways, Kingfisher, Go Air, Indigo, Spicejet, Paramount Airways etc started operating and made profits,” the FIR said. On lucrative routes like Mumbai-Dubai and Mumbai-Doha, Air India reduced its flights and gave private airlines major market share, it added. Maliek Collins Authentic Jersey
As hints get stronger, privatisation of Air India is now looking inevitable
The government may soon offload the loss-making Air India with Finance Minister Arun Jaitley favouring divestment of the national carrier. Mired in debt for years, the state-owned airline has been staying afloat on taxpayers money and the government now seems to think that it is not worth spending more funds on its revival. In an interview with DD News over the weekend, Jaitley said that Air India’s market share today is around 14 percent but the debt is Rs 50,000 crore. “In this country, if 87 or 86 percent flying can be handled by the private sector… then they can also do 100 percent,” he added. This has been the strongest indication from the NDA government regarding privatisation of the state-owned airline. Recently, the government seems to have warmed up to the idea of divesting its stake in Air India. The statement by Arun Jaitley resonates with the views of many top government officials who have recently floated the idea of privatising the carrier. The aviation ministry is currently exploring various options, while the government’s policy think-tank NITI Aayog is also looking into the issue, including a possible strategic sale. Back in 2012, the Manmohan Singh-led United Progressive Alliance government had gave a Rs 30,000 crore bailout package spread over a decade to prop up Air India’s equity. Out of this fund, the company has already received Rs 22,280 crore. In an interview, then Civil Aviation Minister Ashok Gajapathi Raju told The Hindu that despite the Rs 30,000 crore bailout package approved for Air India in 2012, the national carrier remained a debt trap. He had said that the government cannot commit the taxpayers’ money for an eternity to revive the ailing company. Dennis Rodman Authentic Jersey
UDAN: Truejet, Alliance Air set to spread wings; check out the fares structure
Occupancies on the first of the UDAN routes, Delhi to Shimla, are nudging 100%, with apple traders, employees of the Indian Statistical institute (ISI) and tourists making use of the new service. In contrast, passenger loads on the other two Udan routes, operated by TrueJet, are around 60% currently, company sources said. The average uncapped fare on the Simla-Delhi route, which was around Rs 17,000-Rs 18,000 when operations kicked of on April 27, have come down to levels of Rs 15,000. The capped fare from Delhi to Simla is Rs 2,304 and the government provides a subsidy of Rs 3,340. Alliance Air, a subsidiary of Air India, offers 48 seats from Delhi to Simla and 15 on the return flight. The subsidised fare on the Hyderabad – Cuddapah route is Rs 1,920 and the subsidy received by the airline is Rs 3,402; on the Cuddapah – Hyderabad route the fare is Rs 2,000 while the government funds a subsidy of Rs 3,456. For the Nanded – Hyderabad route the current fare is Rs 1,610 and the subsidy provided is Rs 3, 060. “The uncapped fares are not too high since we want to generate demand. We hope to increase the occupancy on these routes in the next six months,” an executive from TrueJet told FE. Both Alliance Air and TrueJet plan to add routes and acquire more ATR aircraft. Alliance Air will start its operations on Delhi – Gwalior, Gwalior -Indore and Indore – Mumbai route from May 31. TrueJet will acquire two ATR 72-500 and one ATR 72-600 aircraft in the coming month to expand its fleet to seven ATR aircraft. Tyler Higbee Jersey
Why is the Government treating Boeing with kid gloves?
Even after chronic technical failures of Dreamliner aircraft and Air India’s reputation taking a beating, the government is yet to take the US-based aircraft manufacturer, Boeing to task. In the last 3 weeks, a number of flights between Kolkata and Delhi were cancelled due to technical snags in the Dreamliner and such glitches are being reported very often in the airline’s international sectors as well. Air India’s Engineering Union had urged the management last year to defer deliveries of the remaining aircraft. It also urged that the manpower for frequent unscheduled snags be compensated, including damages for hampering the airline’s on-time performance. But, the Ministry of Civil Aviation has still not initiated any action and is rather still taking delivery of the 5 remaining aircraft. Meanwhile, according to officials, Boeing is in talks with Air India to revise the delivery schedule for the remaining aircraft. Boeing wants to deliver all of them by March 2018. On the other hand, the Central Bureau of Investigation (CBI) is yet to conclude its investigation into this deal. The Comptroller and Auditor General (CAG) had in its report, submitted to Parliament in 2011, found fault with the then Aviation Minister, Praful Patel, for not supporting the airline, which has lurched from one crisis to another over the past few years and now finds itself in a debt trap. Malik Jefferson Authentic Jersey
Wind power competitive bidding will reduce tariffs, squeeze returns: CRISIL
Competitive bidding in the wind power sector would change the market landscape leading to a sharp reduction in tariffs, pressure on returns across the value chain, and consolidation of the market towards independent power producers, according to research and ratings agency CRISIL. According to its report released today, under-construction capacities without Power Purchase Agreements (PPAs) are the most at risk. “To compete in bids, developers are likely to put pressure on wind power original equipment manufacturers (OEMs), denting their profitability. Also, developers would go for the self-development model, piling more pressure on OEM margins as the premium charged for value-added services like clearances, wind resource assessment and grid connectivity would come down,” said Prasad Koparkar, Senior Director, CRISIL Research. He also stated OEMs having land banks with high wind potential and proximity to the central transmission utility will be less impacted because these would fetch a premium. The report notes that while deployment of latest technology and lower financing charges would reduce generation cost, aggressive bids by developers to scale up their portfolios will mean suboptimal equity internal rate of return. ”However, the market for wind power would expand with more active participation by the central government, which reduces the risk for developers. Higher offtake from power distribution companies with lower tariffs will also support capacity additions, “the report said. Crisil also said that eventually, overall compliance with the renewable purchase obligation is expected to increase due to bidding, particularly by non-windy states such as Uttar Pradesh, Haryana, Delhi, Odisha and Chhattisgarh. Mike Remmers Authentic Jersey
India to be first in world to run all government ports on green energy
All 12 major domestic ports will soon switch to renewable energy to meet their entire power requirements, making India the first country to have all government-owned ports running on solar and wind energy. The government plans to install almost 200 megawatt solar and wind power generation capacity at the ports by 2019, officials said. Almost 150 mw of this will be solar power and 50 mw wind power generation capacity. The capacity could be ramped up to 500 mw in the next few years. On Tuesday, a high-level conference attended by shipping minister Nitin Gadkari, top officials and chairmen of several port trusts was held at JNPT in Mumbai to discuss the road map of implementing the green ports project. “Total initial investment in the project is expected to be Rs 500 crore. These renewable energy projects will help in reduction of carbon emission and lead to improvement of environment around the ports,” said a senior government official, who did not wish to be identified. The government has also decided to meet the power requirements of smart port industrial cities coming up at Kandla Port and Paradip Port to be met though green renewable power sources. “All our ports are cash-rich and we made total profit of Rs 5,000 crore in the last fiscal. The ports have started the process of setting up renewable energy projects from profits,” the official said. The wind energy projects will be executed at three major ports – Kandla, VO Chidambaranar Port and Kamarajar Port. The total capacity of the wind energy projects is estimated to be 70 mw. “These projects will also help reduce cost of power purchased by utilisation of renewable energy for power generations,” the official said. A total of 7 mw of solar projects has already been commissioned at Vishakhapatnam Port, Kolkata Port, New Mangalore Port, VO Chidambaranar Port and Mumbai Port. The remaining solar power projects will be commissioned in phases and are expected to be completed by 2019. These projects are part of the green port initiative launched by the shipping ministry. Separately, Indian Railways has sharpened its focus on undertaking renewable power projects. The national transporter plans to install 1,000 mw of solar plants, which will be installed on signalling panels and rooftops of rail stations. There’s another plan to install 200 mw of wind energy in the next five years. Jerry Rice Womens Jersey
GST impact on thermal power sector to be marginally positive: ICRA
Reduction in tax rate on domestic coal will provide a relief in the cost of power generation even after accounting for an increase in capital cost due to higher tax rates in boiler, turbine, generator segment, research and ratings agency ICRA said today. The GST Council earlier this month placed domestic coal under the 5 per cent tax slab under the Goods and Services Tax (GST) while imported coal will continue to attract basic customs duty (BCD). “It is estimated to provide relief in variable cost of generation by about 3-4 paise per unit in case of domestic coal. However, the variable cost of generation for imported coal generators would increase by 7 paise per unit,” the report said. Given that the tax slab for coal varied from 11 to 12 per cent, it will lead to a positive impact for domestic coal users and a negative for imported coal users according to ICRA. On the other hand, for the wind energy sector, the impact of GST is marginally negative due to increase in capital cost — higher tax rates in wind turbine generator—as the wind energy sector has been availing various concessional rates and tax exemptions, the report added. According to ICRA, there will be a marginally negative impact on Boiler, turbine and generator equipment for thermal power projects for which GST would be applicable at the rate of 18 per cent. “Overall impact including for balance of plant equipment and GST on service component is estimated to increase the capital cost for imported BTG based projects by 2 per cent,” the report said. As per the government’s notification, BCD would also continue for imported components. ICRA report stated its impact would vary depending on the Value Added Tax (VAT) rate applicable in a state and the mix of imported equipment. Tomas Plekanec Womens Jersey