Electricity bills of industrial units likely to witness steep jump
Spot market power is set to become costlier as state-owned power distribution companies have proposed a hefty increase in levies imposed on openmarket consumers in their tariff petitions for the coming year. Distribution companies (discoms) have proposed raising multifold cross-subsidy surcharges, network usage charges and imposing additional surcharges that could increase electricity bills of large consumers by upto 40 per cent. Experts say imposing high charges on spot market purchases will hurt growth of industries, rendering them uncompetitive and hurt the government’s Make In India campaign. State power discoms of Odisha have recommended raising network-wheeling charges on commercial consumers in FY18 to Rs 2.26 per unit from Rs 0.63 per unit. The cross-subsidy charges for large industrial consumers are proposped to be raised from Rs 1.91per unit to Rs 3.61per unit. The tariffs for large consumers in the state purchasing electricity from spot market are likely to rise by over 40 per cent. Karnataka power distribution companies propose to increase energy charges, wheeling charges and cross-subsidy charges on open market power consumers by close to 22 per cent. Power utilities of Madhya Pradesh seek to introduce an additional surcharge of Rs 1.2 per unit on the power procured form other sources, making such purchases costlier by about 24 per cent. Delhi discoms have proposed raising cross-subsidy charges but decreasing additional surcharges on open-market electricity deals, leading to a net increase of 30-40 paise per unit. The power distribution companies of Daman and Diu have proposed 36 paise increase in cross-subsidy charges and 11 paise increase in wheeling charges leading to a 12 per cent raise in cost of spot market power purchase by industrial and commercial consumers. Most states including Punjab, Maharashtra, Rajasthan and West Bengal already levy charges called ‘open access charges’ on their industrial and commercial consumers to deter them from buying from spot markets, and protect their power distribution companies. Open access is a reform announced in the Electricity Act 2003 that refers to enabling buyers to choose source of electricity and giving them right on transmission and distribution system for transfer of power. Stateowned power distribution companies fear losing their high-paying industrial consumers to spot markets though such transactions constitute only 1 per cent of the country’s total power consumption. The Economic Survey of 2016 had recommended that Indian industries should be relieved of the burden of subsidising electricity supply for agricultural and domestic consumers and allowed to procure power from the open market. India Energy Exchange director (business development) Rajesh K Mediratta said that in the long run, it is imporant for states to let the industries survive. “At this stage, it is not good to discourage open access if the country wants to encourage domestic manufacturing.” Electricity prices for industries in India are the highest in world as states offer free power to agricultural consumers and subsidised power to residential units. Adrian Clayborn Jersey
India looks to expand energy ties with Myanmar, sell refined crude
India plans to sell refined crude oil products to Myanmar as part of New Delhi’s efforts to deepen ties with its eastern neighbour, which is expected to see strong demand for fuels as it builds new roads, factories, utilities and airports. Indian oil minister Dharmendra Pradhan began a five-day trip to Myanmar on Monday, scouting for opportunities in oil exploration, refining and products retailing. Prime Minister Narendra Modi wants to expand ties with the country’s eastern neighbours including Myanmar to develop its landlocked northeastern states. Pradhan is also expected to discuss laying fuel and gas pipelines linking India’s northeastern states with Myanmar. The Indian oil minister’s trip comes months after Myanmar leader Aung San Suu Kyi visited New Delhi, courting investments in sectors left in disarray under nearly 50 years of a military dictatorship. A sweeping electoral victory for Suu Kyi’s party in 2015 paved the way for the lifting of US sanctions against Myanmar last year. Numaligarh refinery Ltd (NRL), a unit of India’s state-run Bharat Petroleum Corp, is looking at selling gas oil into northwest Myanmar, its managing director said. “Initially, it will be a small quantity. We will look for a long-term contract for diesel exports after expansion of our refinery, ” Padmanabhan told Reuters. NRL plans to treble its refining capacity to 180,000 barrels per day in four to five years. Myanmar’s refined fuels consumption is estimated to rise at an average annual rate of 6 percent over the next 10 years to 2026, BMI Research, a unit of credit ratings agency Fitch Group, said last month. “Demand for automotive fuels (gasoline, diesel) will grow particularly strongly, as rising consumer wealth and car ownership combine to rapidly expand the size of Myanmar’s vehicle fleet at a healthy clip of 18.6 percent per annum over the next five years,” it said. B Ashok, chairman of India’s top refiner Indian Oil Corp, earlier this month said his firm was looking for downstream opportunities and the sale of refined fuels to Myanmar. ONGC Videsh Ltd, a unit of Oil and Natural Gas Corp, last year said the firm was in exploratory talks with Gazprom for the supply of natural gas through a complex swap involving Russia, China and Myanmar. Steven Nelson Authentic Jersey
Platts revamps Brent oil benchmark for first time in a decade
Oil pricing agency S&P Global Platts is making the first major overhaul of its Brent oil price assessment in a decade, to address falling supplies of the crude oil grades underpinning the benchmark that prices most of the world’s oil. A decline in supply from North Sea fields has led to concerns that physical volumes could become too thin and hence at times could be accumulated in the hands of just a few players, making the benchmark vulnerable to manipulation. Platts said on Monday it would add Norway’s Troll to the basket of four British and Norwegian crude grades which it already uses to assess dated Brent from Jan 1. 2018. This will join Brent, Forties, Oseberg and Ekofisk, or BFOE as they are known. “Overall we have had significant support for the addition of a new grade to the basket,” Jonty Rushforth, global editorial director for S&P Platts Global’s oil and shipping price group, said at an industry conference. “Far and away, Troll has received the most support.” Troll will add about 200,000 barrels per day, or 20 percent, to the basket of crude supplies underpinning the benchmark, Platts said. The move was in line with expectations after Platts said in December it was being considered. Brent is used to set the price of billions of dollars of daily oil trade though a forward market for BFOE crude cargoes, swaps markets, physical benchmark dated Brent and Brent crude futures. Troll, a light, sweet crude, is operated by Norwegian state producer Statoil, which also contributes to the Oseberg, Statfjord, Gullfaks, Grane and Asgard streams. Statoil on Monday said it supported the move. “We are pleased that Platts now has announced that Troll will be included,” Statoil spokeswoman Elin Isaksen said in an email. “Troll will produce both oil and gas for a long time yet,” she said in a separate email. OWNERSHIP STRUCTURE Platts announced the decision at its conference held a day before the start of the Energy Institute’s IP Week, an annual gathering of the oil trading industry in London. Some trade sources on Monday noted that Statoil’s share of the production used to set the benchmark will rise — a development Platts acknowledges. “There is of course interest from the market in the ownership structure of the basket,” Rushforth said at a media briefing. “It does mean that Statoil has a larger share than Shell and Total.” Even so, no single company would own more than a quarter of total production in the new basket, he said in a Platts video on the company’s website. Supply of the current four BFOE grades is normally around 1 million bpd, equal to just over 1 percent of world output. The last change to the dated Brent benchmark was in 2007 when Platts added Ekofisk, a light, sweet crude. Oseberg and Forties were added in 2002. In an earlier move to boost liquidity, Platts began to apply quality premiums to two better-quality crudes – Oseberg and Ekofisk – to encourage delivery of these into contracts. There are no plans yet to apply one to Troll, said Platts, which will be sticking with the BFOE name. Chris Hogan Womens Jersey
Debt pain of Indian energy giants eases as fuel reforms pay off
Lower oil prices and the scrapping of fuel subsidies have allowed India’s biggest energy companies to slash borrowings to the lowest in at least eight years. Total debt at Indian Oil Corp., the nation’s largest refiner, stood at 419 billion rupees ($6.2 billion) at the end of September, down from 863 billion rupees in March 2014, according to the most recent data from company filings. Liabilities at Hindustan Petroleum Corp., the third-biggest fuel retailer, shrunk 65 percent in the same period, the data show An improving credit profile is allowing refiners to raise long-term funds at cheaper rates to fund expansion in a nation that is overtaking Japan as the world’s third-largest oil user. Bharat Petroleum Corp.’s $600 million bond sale in January drew bids for three times the amount, helping the fuel retailer price the 10-year debt at the tightest spread over U.S. treasuries by any Indian company in a decade, according to data compiled by Bloomberg. “Any new bond sale by them will be lapped up,” said Raj Kothari, head of trading at Jay Capital Ltd. in London. “With leverage of these quasi-sovereign companies declining, their position to service debt has improved significantly. A lack of issuance by them has created a dearth of good-quality issuers from India.” Jay Capital holds Bharat Petroleum bonds, he said. Brent oil prices have fallen by half in the past three years, providing the government with a window to free up controls. Prime Minister Narendra Modi ended diesel subsidies in October 2014, completing a process started by his predecessor, Manmohan Singh, who got rid of gasoline subsidies in 2010. Refiners no longer have to sell the fuels below cost, which frees up cash to invest in infrastructure for faster growth. “Our debt-equity position and profitability has improved, thereby scaling up the company’s standing in the market,” P. Balasubramanian, finance director at BPCL, said by phone. “We definitely get better deals now.” Hindustan Petroleum plans to spend $8 billion over the next five years to help expand and upgrade its 60-year-old refineries as the International Energy Agency sees energy demand in India doubling by 2040. Indian Oil plans to invest about $6 billion in six years to boost capacity. Shares of the two refiners climbed for a third session at 9:29 a.m. in Mumbai. “The refiners may have an advantage in terms of the quantum of money they have access to today, and incrementally to pursue projects related to domestic refining or inorganic opportunities,” said Ashwini Agarwal, a Mumbai-based portfolio manager at Ashmore Investment Management India LLP. “Their profitability has improved significantly.” Tom Barrasso Womens Jersey
IOC threatens relook at Rs 52K cr Odisha investment
State-owned IOC has threatened to reconsider plans to invest Rs 52,000 crore on expansion of Paradip refinery in Odisha and setting up a petrochem project as the state government is withdrawing tax sops. Indian Oil Corporation (IOC) plans to expand the 15 million tonne a year Paradip refinery by 5 MT as well as set up a Polypropylene Plant and a monoethylene glycol production facility at the site of the one-year old refinery. Following BJD-led state government decision to roll back tax sops because the project was delayed by six years, the company is now threatening to reconsider future investment plans, sources privy to the development said. The project is caught in a political cross-fire as Oil Minister Dharmendra Pradhan, who hails from the Odisha, and the state government are involved in a high pitched political battle. BJP is looking to capture power in state in 2019 assembly elections. Sources said IOC is telling the Odisha government that it is reconsidering its investment plans because of the withdrawal of 11-year deferral of VAT on petroleum products sold in the state. Investment plans also included projects to improve petrol and diesel quality to Euro-VI standards by 2020. If the investment does not take place, IOC will have to look for a market for fuel outside India as no petrol and diesel of lower quality can be sold within the country. Also, the Rs 3,500 crore polypropylene plant is already under construction with September 2017 as the target date for commissioning. It remains to be seen if IOC can stop the project midway. In the December 29, 2016 notice, Odisha government has asked why the fiscal incentives like 11-year deferment of sales tax on petroleum products sold in the state should not be withdrawn considering that the Rs 34,555 crore refinery was delayed by over six years. Sources said the state government had in February 2004 signed an agreement with IOC to give fiscal incentives for setting up a 9 million tonnes a year oil refinery at Paradip by 2009-10. However, the project was delayed and started only in early 2016. The delay is now being cited by Odisha to seek withdrawal of the incentives, sources said, adding that the state government feels the delay has pushed back the payback time of deferred taxes by few years. Also, the state government says that the refinery was originally planned for a 9 million tonnes per annum capacity but the actual size commissioned was 15 million tonnes. Withdrawal of VAT deferment would mean an annual payout of about Rs 2,000 crore on 2 million tonnes of petroleum products sold in the state. Sources said IOC has replied to the showcause notice saying the size of the refinery should not matter as VAT deferment is limited to 2 million tonnes of products sold in the state. On delay in commissioning of the refinery, IOC says the Odisha government made clear its intentions of withdrawing the incentives in 2010 or 2011 itself to enable the company to redraw its plans. More importantly, even if the refinery was commissioned in 2009-10, the VAT deferment would have been in operation till 2020-21 and there is no case for it ending in 2016-17. The company said the state government will not suffer any revenue loss as it will pay back the taxes after 11 years albeit without interest on it. IOC said its board had approved investments only in 2009 and the withdrawal of the VAT concession will reduce by 2 per cent the rate of return it considered for working out the investment. Sources said the state government was of the opinion that the refinery no longer needs incentives as its profitability had increased due to a higher capacity and low global oil prices. IOC said Paradip refinery is yet to achieve profitability on a standalone basis and that its investment in higher capacity and downstream petrochemical plants will only lead to higher economic activity and employment in the state. Higher capacity was needed for setting up two petrochem units at an additional cost of Rs 7,250 crore. Originally, the foundation stone of the Paradip refinery was laid by the then Prime Minister Atal Bihari Vajpayee on May 24, 2000. Bradley McDougald Jersey
Competition led to 30% airfare drop in India: Ashok Gajapathi Raju
The Union Civil Aviation Ministry’s role in ensuring competition between commercial airline companies, along with fall in oil prices globally, led to a drop in air fares by as much as 30 per cent, a minister said on Saturday. “If we are looking at the country as a whole, then average airfares have actually fallen by 30 per cent,” Union Minister for Civil Aviation Ashok Gajapathi Raju said on Saturday. “Now, a large part of that is due to fall in oil prices, but the significant part of that is also due to increase of competition and that is where the Ministry comes,” Raju said at a press conference at a resort in South Goa’s Benaulim village, about 50 kms from here. “But the Ministry has a lot of role in ensuring competition and as all of us know, wherever there is good competition, the benefit will then pass on to the flying public and I am happy to tell you 30 per cent reduction in average air fares in the last two years,” Raju also said. A.J. Green Jersey
43 unused airports to be operationalised soon: Aviation Secy
In a move aimed at boosting the regional connectivity across the country, the Union Civil Aviation ministry today said that 43 unused airports would be operationalised within a year. “The main idea behind operationalising these 43 unused airports is to improve the connectivity to the hinterland. Proposals have already been received from 11 bidders who will put these airports into commercial operations,” Union Civil Aviation Secretary R N Choubey told reporters in South Goa. He was briefing media in presence of Union Civil Aviation Minister Ashok Gajapathi Raju after inaugurating the three-day workshop on indigenously developed software aiding to manage revenue in the sky. Choubey said at present their are 72 airports and addition of these 43 will change the scenario in the Indian skies. “It will take another 15-20 days to award the routes for the airlines, who will take somewhere between one to six months to start the operations at these newly inducted facilities,” he added. Fixing a rate cap for the fares at these newly inducted airports, the ministry has decided that flying to these facilities would not cost more than Rs 2,500 for an hour long flight. “These unused airports which are taken up for revival are evenly distributed across the country,” Choubey said adding, of these ten are in the Southern region. Choubey said that various initiatives taken up by the Ministry coupled with dip in the international oil prices has resulted in reduction of airfare by almost 30 per cent. Brooks Laich Jersey
Dabolim facility will not be shut down: Ashok Gajapathi Raju
The Union Civil Aviation Minister Ashok Gajapathi Raju today made it clear that the Dabolim facility would not be shut down after the commissioning of new greenfield airport at Mopa as it was required to handle the increasing number of passengers flying to the coastal state. “The national growth rate in the number of fliers is 20-odd per cent per year. The rate for Goa is above the national average at 30 per cent. If you interact with the passengers at Dabolim airport, you will know that the existing airport is congested,” Raju told reporters in South Goa here. The minister, who faced a volley of questions on possibility of closure of Dabolim airport after commissioning of Mopa facility, shot back stating “If this trend of 30 per cent growth continues, then Goa airport will be choked.” “Do you want Goa to choke or you want Goa to grow? I think that Goa should grow. If you are getting an opportunity to grow, then why not. Nobody is shutting down any airport,” said the minister. Raju said the new Mopa airport would be functional in three years, by May 2020. “Goa deserves another airport. The new airport is feasible, if it was not feasible why would the private party invest money?” he added. The minister further informed that the facilities at the existing Dabolim airport are being upgraded. “The existing Dabolim airport is owned by military but airport authority has civil enclave, airport authority is making investment close to Rs 300 crore including Rs 90 crore for taxi bay, which will decongest the runway. Nobody thought of ever shutting it down,” said the minister. Ishmaa’ily Kitchen Authentic Jersey
Domestic air traffic in Jan up 25% at 95.8 lakh passengers
The domestic airlines flew 95.79 lakh passengers in January this year, registering a growth of 25.13 per cent over the 76.55 lakh passengers flown during the same period previously. The latest data released by the Directorate-General of Civil Aviation shows that IndiGo carried the maximum number of passengers during the month at 38.09 lakh, followed by Jet Airways (14.84 lakh), with Air India in the number three spot with 13.5 lakh passengers. SpiceJet flew 12.29 lakh, while GoAir carried (7.88 lakh), Vistara (3.03 lakh) and AirAsia 2 .86 lakh passengers during January this year. SpiceJet, however, reported the highest Passenger Load Factor of 93.6 per cent, followed by GoAir (90.8 per cent) and IndiGo (90 per cent). The passenger load factor shows how many of the total seats on offer by each airline were getting filled SpiceJet also reported the highest On Time Performance at 71.6 per cent, followed by IndiGo 71.2 per cent and GoAir (60.6 per cent) at the four metro airports of Bengaluru, Delhi, Hyderabad and Mumbai. Stacy McGee Jersey
Airports body clears parallel taxiway second phase at Mangaluru airport
Airports Authority of India (AAI) has approved the construction of the second phase of the part-parallel taxiway at Mangaluru International Airport. The AAI has placed the work order, amounting to ?98 crore, to PBI Construction Company. JT Radhakrishna, Airport Director, Mangaluru International Airport, said that the works on the second phase of the parallel taxiway are likely to be completed in 30 months. The first phase of 1,200-metre stretch of the taxiway has already been completed. On starting operation on that taxiway, he said they are waiting for the clearance from DGCA (Directorate General of Civil Aviation) for this. In the second phase, the taxiway will be extended by another 1,200 metres. He said that the additional taxiway helps in the long run when the number of flights increases in the airport. It is very important for the movement of flights on the ground, he said. Taxiway is the stretch or the track that connects the runway with the apron (parking lot for aircraft) in the terminal building. With the construction of the parallel taxiway, aircraft could move from the parking stand, wait in the additional taxiway and enter the runway for take-off immediately after the plane that has landed exits the runway. Andrej Sekera Jersey