You could soon be paying a different price every day for your petrol and diesel. Read how
Prices at petrol pumps may change every day, similar to what happens in many advanced markets, as state oil companies plan to review rates daily to align them with international prices, replacing the current practice of fortnightly revision. Indian Oil Corp, Bharat PetroleumBSE 3.52 % and Hindustan PetroleumBSE 1.16 %, which control nearly 95% of the country’s fuel retail market, are considering ways to roll out the plan to review petrol and diesel prices daily, top executives at state oil firms told ET. Executives of state oil firms met Oil Minister Dharmendra Pradhan and the ministry officials on Wednesday to discuss the idea of daily fuel pricing. “The idea of daily fuel pricing has been there for sometime. But now we have the technology to implement it. So we will do it,” a top executive said, without giving a timeline for the launch. The automation at most filling stations, which allows companies to centrally change prices, as well as the availability of digital technologies and social networks have made it much easier for companies to convey price changes to their 53,000 filling station across the country. Price transmission used to be a cumbersome exercise in the past with dealers waiting for phone calls and fax messages from companies for new prices and then rushing to lowering or raising their supply orders, causing inconvenience to suppliers. Daily changes mean prices wouldn’t rise or drop sharply, as they did last week. On March 31, state oil companies cut prices of petrol by Rs 3.77 per litre and diesel by Rs 2.91per litre. Prices would change just by a few paise every day, bringing no shock to customers. This means companies can easily take price hikes without worrying about political backlash. A price hike is often held back during election season as it is seen as detrimental to the interest of the ruling party. To compensate oil companies for that, the government allows them to keep prices higher even when an alignment with international rates may warrant a decrease. State firms skipped price revision for two and a half months before announcing cuts last week although international rates went up and down sharply during the period. India lifted price control on diesel in 2014 and on petrol in 2010, which allowed state companies to charge market prices, and encouraged private companies to reenter the fuel retailing business. At present, state companies review prices at the end of every fortnight and raise or reduce them depending on the prevailing international prices. Brian Orakpo Womens Jersey
Indian Oil to expand LPG facilities in Kerala and Tamil Nadu
Indian Oil Corporation Ltd (IOCL) will augment its LPG production facilities in Kerala and Tamil Nadu to meet the increased demand for the gas that is growing at 11% annually with the completion of construction of LPG import terminal and the pipeline connecting it to Salem. Both the projects which are in the process of construction together involve an investment of close to Rs 3000 crore. IOCL’s 6 lakh tonne per annum facility at Puthuvypin in Kochi is linked to the 498 km pipeline jointly implemented by IOC and Bharat Petroleum Corporation Ltd. (BPCL). IOCL general manager and Kerala head P S Mony said the pipeline will connect the import terminal with BPCL Kochi Refinery, IOCL’s Kochi bottling plant and BPCL’s upcoming bulk LPG terminal at Palakkad before terminating at Salem. It will feed IOCL’s LPG bottling plants at Coimbatore and Erode. The project to be completed by February 2018 is expected to earn Kerala government an additional revenue of Rs 300 crore per annum. “With the commissioning of the import facility and pipeline we expect the inter-state bullet truck movement to come down to 20-30 per day from the present 70-80 trucks traversing daily from Mangalore to Kerala LPG plants through the narrow and difficult terrain of Kerala, thereby reducing the road traffic and accidents,” Mony said. The present storage capacity of Kochi plant is sufficient only for 1.5 days of production. With the augmentation of capacity the storage facility will be increased to 8 days. This will help to tide over any emergency strikes/supply shortage issues and help in improving the LPG supply situation in Kerala, he added. Alexander Nylander Jersey
ONGC drills record 501 wells in FY17
Oil and Natural Gas Corp (ONGC) has set a new record of drilling over 500 wells in 2016-17 at an expenditure of Rs 15,747 crore as the major state-owned explorer steps up efforts to boost domestic output. ONGC drilled 501 wells in the financial year ended March 31, 2017 as compared to 386 wells in 2015-16. This is the first time in 23 years that ONGC has crossed the 500-well mark. Oil and gas exploration is a risky business and only drilling of wells can guarantee a discovery and confirmation of reserves. The company exceeded the government mandated target of 490 wells. Of the 501 wells drilled, 334 wells were in onshore and the remaining 167 in offshore, ONGC Chairman and Managing Director Dinesh K Sarraf said here. “While many explorers worldwide decided to slow down due to the prevailing low price scenario, ONGC had taken the conscious decision to step up the exploration efforts. Despite this challenging environment, the ONGC drilling and well services has put in a commendable performance,” he said. Sarraf said several steps were taken during the last financial year to cut down rig deployment time, increase operational efficiencies and cost control. ONGC operates some 105 drilling and 74 work over rigs. It is among the few companies in the world to have drilled 127 deepwater wells in diverse and challenging areas. The company’s Director (T&S) Shashi Shanker said: “Setting a new benchmark of 501 wells in a year is a phenomenal achievement, especially considering the challenges the oil and gas industry has faced globally during the past two years. “There is a continuous emphasis in ONGC on induction of state-of-the-art technology, optimum utilisation of resources and minimisation of non-productive time of rigs to increase operational efficiency.” Offshore, which contributes to 80 per cent of ONGC’s 24 million tonne a year crude oil production, exceeded all its drilling targets. Targets were also surpassed in drilling onland where majority of ONGC’s owned rig fleet is deployed. He said as drilling activities account for ONGC’s major expenditure, an increase in drilling efficiency would translate to additional savings. In order to have a more focused approach towards onshore, offshore (shallow waters) and offshore (deep waters) operations a new concept ‘Company within Company’ was rolled out in Mumbai High Asset to bring about operational efficiency in offshore drilling operations. Drilling of record number of wells has not just led to establishing newer resources but also augment production from the old and depleting fields. But for these drilling oil output would have dropped to 22 MT. Patric Hornqvist Authentic Jersey
Iran said to cut benefits on crude oil sales to Indian state-run refiners
Iran will cut some benefits to Indian state-run refiners on crude purchases after the South Asian country decided to reduce the amount of oil it buys from the Persian Gulf nation, people with knowledge of the matter said. National Iranian Oil Co. will cut the credit period on crude oil sales to 60 days from 90 days for refiners such as Mangalore Refinery & Petrochemicals Ltd. and Indian Oil Corp., the people said, asking not be identified as the matter isn’t public yet. Iran will also reduce the discounts it offers on the shipping of crude to 60 percent from 80 percent, they added. The lower incentives will make Iranian purchases costlier and less competitive in a world awash with crude oil where rivals such as Saudi Arabia and Iraq are seeking to expand their market share. Iran’s crude sales to India more than doubled in 2016 after the lifting of sanctions over its nuclear program. India is Iran’s second biggest customer and the emerging center of global oil demand. India in turn, is using the supply glut to put pressure on Tehran for securing development rights to the Farzad-B gas field in the Persian Gulf, which was discovered by an Indian consortium led by ONGC Videsh Ltd. about a decade ago. Iran and India were aiming to conclude an agreement on developing the field by February. The South Asian nation, which stood by Iran during the sanctions, is seeking to invest as much as $20 billion in Iran’s energy industry and ports. Cutting Purchases Indian state-run refiners told Iran last month that they would cut oil purchases by 3 million tons during the financial year that started April 1, the people said. MRPL and Indian Oil will reduce imports by 1 million tons each, while Hindustan Petroleum Corp. and Bharat Petroleum Corp. will cut purchases by about half a million tons each, according to the people. India’s overall oil imports from the Persian Gulf nation touched 19.8 million tons during April-December last year, compared with 12.7 million tons in the 2015-16 financial year, according to oil ministry data. Iran’s Oil Minister Bijan Namdar Zanganeh said “there are many other customers” if India decides to cut imports, the state-run Islamic Republic News Agency reported on April 5. Reuters earlier reported Indian state refiners will cut oil imports from Iran by a fifth. India’s Oil Minister Dharmendra Pradhan said April 6 that it’s up to the state refiners to decide on Iran crude volumes. MRPL spokesman Prashanth Baliga couldn’t comment immediately, while an Indian Oil spokesman declined to comment. National Iranian Oil Co.’s public relations office in Tehran didn’t respond to an email and two calls seeking comment. Paul Carey Authentic Jersey
Fresh tax demand of Rs 10,200 crore from Cairn Energy
Indian tax authorities have made a fresh demand of Rs.10,200 crore in taxes from Cairn Energy Plc in the old case of retrospective tax on alleged capital gains made in 2006 but dropped the demand for heavy interest, the company has said in a notice to shareholders. Cairn Energy has all along contested the government demand of tax on a transaction, which it considers mere reorganisation of assets before listing its local unit Cairn India on the exchange. An arbitration in underway to decide on the validity of the tax demand. “The final assessment order was appealed to the Income Tax Appellate Tribunal, Delhi (“ITAT”) which ruled on March 9, 2017 that tax in the amount of Rs.10,200 crore remained payable but that Cairn Energy could not be required to pay interest under the relevant sections of the Indian Income Tax Act, 1961 on the basis that the legislation introduced in 2012 was a retrospective amendment and Cairn could not have anticipated that payment of tax would be required,” the company said. The Income Tax Department had earlier raised a tax demand of Rs.10,247 crore and another Rs.18,800 crore as interest for 10 years. “Following the ruling of the ITAT, an amended tax demand, received on March 31, 2017 noted that late payment interest would now be charged from February 2016, i.e. from 30 days following the date of the original 2016 final assessment order,” the company said. The decision of the ITAT is potentially subject to appeal, the company added. In 2011, Cairn Energy sold its stake in Cairn India to Vedanta but retained just about 10 per cent. In 2014, Cairn Energy received an order from tax authorities restricting it from selling its residual 10 per cent shares in locally-listed Cairn India, valued at $1billion then, pending a review of an internal group reorganisation carried out in 2006, the company said. Jonathan Huberdeau Authentic Jersey
R-Power to seal Bangla project today
Anil Ambani’s Reliance Power (R-Power) will on Monday seal the power purchase agreement (PPA) with Bangladesh Power Development Board (BPDB) to get the $1-billion first phase of its proposed power project and liquid gas import terminal in Bangladesh off the ground in less than two years of signing the MoU. The PPA marks a major power stroke by the Indian private sector on the sidelines of Bangladeshi Prime Minister Sheikh Hasina’s visit, indicating that bilateral ties have come of age under her commitment and PM Narendra Modi’s stewardship of India’s relationship with its neighbours. Indeed, it was during Modi’s June 2015 visit to Bangladesh that R-Power and BPDB had signed the MoU for the three-phase project, altogether worth $3 billion. The $1-billion investment in the first phase of 750MW alone will be the largest by an Indian private sector company. For Bangladesh, it will mark the single-largest FDI. The power plant will be set up in Narayanganj district’s Meghnaghat area, around 40km southeast of Dhaka, and the floating gas import terminal at Kutubdia island in Chittagong. BPDB has provided land for the power station. A parallel deal is in the works, wherein R-Power will source gas but PetroBangla will use the full capacity of the import terminal and sell fuel to the power plant and other industries. Bangladesh has a demand of nearly 8,000-9,000MW but produces about 7,000MW. A major chunk of power stations run on fuel oil or diesel, resulting in a tariff of 15-16 cents a unit. Industry analysts said given the current economics of liquid gas price, power from R-Power’s project could be 15-20% cheaper. Reliance Power plans to move equipment it had imported from US gear-maker GE for a 2,400 mw plant proposed at Samalkot in Andhra Pradesh. Sources said these equipment still remain unpacked and carry guarantee from suppliers. The project was built around the promise of gas from Reliance Industries Ltd’s KG-D6 discovery off the Andhra coast but scrapped after output fell to a tenth of the target. By 2021, demand for electricity in Bangladesh is expected to touch 24,000 mw and 40,000 mw by 2030. The Bangladesh Vision 2010 document envisages developing 10,000 mw generation capacity. The Tata group had proposed $3 billion investment to build a coal-fired power station in Bangladesh some 7-8 years ago but scrapped the project citing inordinate delays by the government. Since then, government-to-government deals have dominated power ties between India and Bangladesh. India supplies some 600 mw through West Bengal and Tripura and is examining the possibility of ramping up wheeling capacity to 1,000 mw. Besides, NTPC and BPDB are jointly building a $1.2 billion coal-fired power plant. William Karlsson Authentic Jersey
Surplus power generation capacity, enough coal likely to beat summer heat
The summer of 2017 may not prove as uncomfortable for electricity consumers across India as the season in previous years, thanks to surplus power generation capacity, adequate coal stocks and improved purchasing ability of distribution companies. Barring pockets in certain states such as Uttar Pradesh, Punjab and Jammu & Kashmir which lack inter-state transmission connectivity, consumers in most other regions are likely to have sufficient electricity access. Generators are looking forward to better utilisation of power plants, resulting in better revenues, as the Meteorological Department has predicted a warmer summer this year. Power prices in the spot market touched Rs 3 per unit in the last week of March, following a sudden spurt in temperatures due to heat wave conditions in most parts of the country. The prices have now been settled at about Rs 2.85 per unit with increased supply from underutilised projects, but rates for southern states have risen to Rs 3.65 per unit. A senior official in the Central Electricity Authority said states such as Bihar, Telangana, Chhattisgarh and Punjab have made affordable short-term power arrangements for the summer season at an average tariff of Rs 3.5 per unit. Haryana, Arunachal Pradesh, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Telangana and Tamil Nadu are among the states that often buy electricity from power exchanges. After many years, Uttar Pradesh has tied up short-term power for April and May, and has for the first time begun buying electricity from the spot markets, said the official, speaking on condition of anonymity. ICRA Ratings’ sector head Girishkumar Kadam said, “The debt refinancing under Uday scheme is resulting in an improvement in the liquidity profile of the discoms in these states and is likely to improve the ability of the discoms to buy power and pay power generators in a timely manner.” Power producers expect better utilisation or plant load factors this summer, said Ashok Khurana, director general of the Association of Power Producers. CEA data shows that plant load factor at thermal plants was 67% in April 2016, 62% in May and 54% in June. “The demand is likely to pick up substantially this summer. A 10-15% growth in peak demand led by air cooling based on weather predictions is expected,” said a Mumbai-based analyst, who did not wish to be identified. There is adequate power to meet demand and enough coal to produce power, Khurana said, while pointing out that much depends on the financial condition of the states and their intention to buy power. The last mile transmission connectivity in some states may, however, prove a constraint in some states such as Bihar and Uttar Pradesh. Twenty seven states and a union territory, representing 97% of discom debt have joined the Centre’s Ujwal Discom Assurance Yojana (Uday) launched in November 2015. Rural Electrification Corporation CEO Ritu Maheshwari said the states have derived benefits of Rs 11,900 crore in the nine months since joining the scheme while revenue gap of the discoms in 16 early states has fallen 49 paise from 61 paise and the power technical losses have reduced to 22.5% from 24%. Owing to the forecast of above normal temperatures, the power ministry expects power demand in northern region to peak to 56 GW between April and September. Electricity demand in the southern region has already peaked to 42 GW while in the western region it has touched 50 GW. The peak demand across the country during the summer is expected to be 165 GW compared to 140 GW at present. Michael Frolik Womens Jersey
M&As in road sector pick up over easier exit norms: Icra
The country relaxed the exit policy for road projects under public-private partnership (PPP) model in May 2015. The move is showing results, with a higher amount of deals seen in the road sector in the last two years, according to rating agency ICRA Ltd. The rise in deals, however, may not have brought cheer to a good number of road projects’ sponsors as the ICRA data suggest 31 per cent of the deals in the last two years were made at a loss to the investor. “In about 31 per cent of the transactions, the return to the developers is negative, indicating loss on investment. Developers with a weak credit profile are the ones who disposed of their assets at a loss as liquidity took precedence over profit-making for them,” said K Ravichandran, senior vice-president and group head, corporate ratings, ICRA. On Wednesday, the rating agency said, “Sponsors in around 20 road assets involving a total cost of Rs 12,327 crore have monetised their assets as opposed to around Rs 7,000 crore in the preceding 50 months.” The report attributed the rise to relaxation seen in the exit policy for road projects. In May 2015, the Cabinet Committee on Economic Affairs (CCEA) relaxed the exit policy for projects awarded before 2009, allowing 100 per cent equity divestment by the developers as against 74 per cent earlier. Of the 20 road assets sold, three were state road projects and the remaining are national highway projects. “Of 17 national highway projects, 16 were awarded before 2009 and are the direct beneficiaries of the policy decision on relaxation of the exit policy for projects awarded before 2009 in May 2015,” ICRA said in its note. ICRA added the relaxation in the policy not only attracted private equity players that are more comfortable when they own 100 per cent stake in the projects, but also enabled the unlocking of additional 26 per cent of the developers’ equity invested in about 5,600 km of national highway projects, awarded under PPP. “This could result in freeing up of around Rs 4,500 crore of equity, which could support equity contribution towards the construction of 1,500 km of national highways in PPP mode,” according to ICRA. The report named Brookfield Asset Management (Canada), Canadian Pension Funds, Macquarie (Australia), I Squared capital (USA, Cube Highways), Abertis Infraestructuras (Spain) and IDFC Alternatives as the major investors currently looking for assets in the sector. There is a strong case for these funds to look at road assets as Ravichandran in the ICRA note added,”The ones with highest returns were secondary sale transactions wherein the sponsors are private equity investors. With the increase in WPI and the continued healthy growth in traffic, the toll collections are expected to grow by 10-11% over the next two years.” ICRA expects the asset sale transactions to gather further momentum as the valuations have improved following a favourable outlook on toll collections and decline in interest rates. Shubham Jain, Vice President and Sector Head, Corporate Ratings, points out those who might gain from this improved momentum for asset sale are projects with at least five to seven years of operational track record. “Projects awarded before 2009 are ideal candidates for the asset sale. The M&A opportunities in the road sector are the highest among various infrastructure sub-sectors with around 88 operational National Highways projects totalling 7,192 km with a total project cost of Rs.69,327 crore and median operational track record of four years,” Jain said. Paul Kariya Authentic Jersey
Shell India to expand natural gas marketing business
Royal Dutch Shell, is planning to expand its gas marketing business in India, said Shaleen Sharma, the company’s head of upstream development in India. Sharma, who spoke on the sidelines of an energy conference in Mumbai, said the downstream segment is the most attractive one currently in the gas market and the company plans to supply natural gas directly to buyers including power plants, fertilizer and petrochemical units and city gas distributors. “Indian LNG market is in good shape. That is the future. There are some new initiatives going on to see how we can access new downstream markets,” said Sharma, adding that Shell has set up a team in Singapore to boost the India gas market. Shell operates Hazira LNG Ltd, a five million tonnes per annum liquefied natural gas (LNG) import facility at Hazira, Gujarat. The company plans to double the capacity to 10 million tonnes a year, Reuters had reported on 31 March. Shell Gas B.V., a Royal Dutch Shell Plc unit, owns a 74% stake in the terminal while Total Gaz Electricite France, a unit of Total SA, holds the balance. Sharma also said that the company has dissolved the joint venture for an LNG terminal that it was planning with its consortium partners at Kakinada, Andhra Pradesh. “That was a joint venture with a number of companies including Gail. But we very recently expressed that we cannot carry on with that. This is due to lack of a secure market. We need some surety on the off-take. The joint venture agreement is no longer there,” added Sharma. The A.P Gas Distribution Corporation Limited (APGDC), Gas Authority of India Limited (GAIL) and Shell and Engie Global LNG had in September 2015 signed two joint venture agreements for the establishment of an LNG Floating Storage and Re-gasification Unit (FSRU) at Kakinada deepwater port. Kareem Hunt Womens Jersey
Delay in laying gas pipelines prompts PLL, BPCL to move LNG by road
The inordinate delay in completion of gas pipelines in Kerala might have prompted Petronet LNG Ltd (PLL) to depend on trucks to move gas to its customers. BPCL has also adopted a similar initiative to deliver LNG to an industrial customer in Chennai from the PLL facility in Kochi. A senior official in BPCL told BusinessLine that the company dispatched its first truck-load of LNG supplies from the PLL terminal in the second week of March, to Turbo Energy located at Payyannur near Kanchipuram. The agreement with the Chennai-based company to deliver gas at its premises was signed on September 28, 2016, after undertaking several studies like HAZOP (hazard and operability study), a robust LNG distribution, etc. The company has also set up a storage and re-gasification system after incorporating standard operating procedure and high-degree of safety features, the official said, adding that Gujarat-based Inox India has bagged the contract for gas distribution to customers. BPCL, according to the official, has a success story of ‘LNG by Road Initiative’ from its Dahej plant, wherein the company has already completed delivery of more than 5,000 truck-loads of gas. “The initiative in Kerala will be a new beginning of BPCL in the Southern region, and another 3-4 companies have already approached us for gas supply in a similar way,” he said. Industry sources here pointed out that BPCL has brought around 400 MMbTU of LNG sourced from Australia by spot purchase and unloaded the consignment at the storage facility offered by PLL in Kochi. A part of the gas will be used by BPCL for its own use and the remaining will be for sale to various industrial customers. The spot purchase of the gas will benefit the public-sector petroleum company from avoiding various tax payments like VAT. Following the success of delivering gas to HLL in Thiruvananthapuram by road, PLL has been receiving good customer enquiries both from Kerala and outside. More companies have evinced interest in taking gas by trucks, and discussions are already on to finalise the tendering process with these companies, including a State-owned public sector, PLL officials said. The laying of pipelines by GAIL in the Kochi-Mengaluru stretch is fast progressing, and officials expressed hope that the pipelines will be ready by December 2018. Marshall Faulk Womens Jersey