India’s Air Passenger Volumes To Reach 310 Million By FY18
Domestic air passenger volumes (pax) have been consistently increasing and are likely to reach 310 million by financial year 2017-18, says India Ratings and Research (Ind-Ra). This will be driven by the aspirations of the middle class to travel in flights and a reduction in price differential between air travel and rail journey, including the recently increased cancellation fees for train tickets. The slowdown in economic growth during the first half of the current decade had minimal impact on pax growth. However, the 2008 global economic crisis and fuel and currency crises in fiscal 2012-13 had a pronounced impact on air traffic growth. The gradual increase in private final consumption expenditure has been buttressing India’s pax growth since early fiscal 2013-14. Ind-Ra’s sensitivity on economic growth also underlines the strong underlying fundamentals and continued growth in pax volumes. Matt Schaub Authentic Jersey
Reduce taxes to support aviation industry
Budget 2017 is expected to be one of the most difficult and watershed budgets in the history of India. There are too many variables, like demonetisation, the mid-year introduction of GST (Goods & Services Tax) and its uncertainty in tax revenues; and most importantly, the expectations of the poll going public and the rest of the country who are expecting the next benefits after enduring the pains of demonetisation. Of course, there’s the advancement of the budget date and the merger with the rail budget. Aviation and travel are enablers of the economy and no longer a rich man’s indulgences. Governments across the world have realised this and are spurring demand in travel. Governments in India have been continuously raising taxes on these sectors and are dampening demand due to rising travel expenditure. The recent six fold increase in service tax on hotels and doubling of service tax on packages is an example of this and we need to move in the opposite direction, especially as travel was affected slightly post demonetization. Alex Delvecchio Authentic Jersey
Kavali airport project hits a road block
In the final stages of commencement of work on the airport being developed at Dagadarthi near Kavali in Nellore district, the project has hit a roadblock. This is because of the government’s preference to go in for a centrally located and commercially viable project, rather than one fraught with viability risks. The priority has now changed to developing an airport nearer the special economic zones (SEZs) and industrial hubs located in the Krishnapatnam and Gudur areas. These places are also easily accessible to industries in Nayudupeta and Tada. Accordingly, Chief Minister N. Chandrababu Naidu has already instructed the departments concerned and also the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) to take a fresh look at the airport project. Seth Joyner Authentic Jersey
HPCL, GAIL Sign Pact With Andhra Pradesh For Rs 400 billion Petrochemicals Project
Hindustan Petroleum Corp Ltd. (HPCL) and gas utility GAIL India Ltd. signed a pact with Andhra Government for setting up a Rs 400 billion petrochemical plant in the state. The 50:50 joint venture will set up a 1.5 million tons Ethylene Derivatives plant, which will produce a wide range of petrochemical raw materials for the manufacture of detergents, paints and coatings, cosmetics, textiles and adhesives. “What we have signed is an MoU expressing intent for setting up the petrochemical plant,” GAIL Chairman and Managing Director B C Tripathi told PTI. Andhra Pradesh government will support the project by providing infrastructure, power, roads and other clearances. The plant will be set up at the Petroleum, Chemical and Petrochemicals Investment Region (PCPIR) sites identified by the state government at Kakinada. The MoU was signed by Tripathi, HPCL Chairman and Managing Director Mukesh K Surana and Kartikeya Misra, Director, Industries in Government of Andhra Pradesh. GAIL-HPCL combine may divest half of the project stake in favour of a strategic partner at a later date. Some global petrochem companies have shown interest in the project but talks are at preliminary stages currently, Tripathi said without disclosing details. The project is a truncated version of the earlier proposed refinery-cum-petrochemicals complex in Andhra Pradesh. HPCL has for the time being shelved plans to build a new refinery and is only pursuing petrochemical project. HPCL and GAIL decided to do the petrochem plan together after their plans to team up with France’s Total, Lakshmi N Mittal Group and Oil India Ltd. (OIL) for a 15 million tonnes a year refinery-cum-petrochemical plant at Visakhapatnam in Andhra Pradesh fell through. Tripathi said currently detailed feasibility report (DFR) is being prepared and details will work out following that. HPCL had in 2007-08 planned an only—for—exports refinery to target demand in South East Asia and the Middle East. The five-way alliance of HPCL, explorer OIL, gas utility GAIL India, Mittal Investment Sarl and Total had in October 2007 signed a memorandum of understanding to look at the feasibility of setting up the Vizag project. In 2009, the Rs 500 billion project was put on hold as petrochemical demand then was seen as too weak to justify the investment. Total did pre-feasibility for the refinery project and demand studies, while GAIL was in charge of the study of the petrochemical unit. But the project was in 2010 put on back burner before equity structure could be decided Oil slides as strong U.S. drilling activity weakens deal to cut output Oil prices fell on Monday as news of another increase in U.S. drilling activity spread concern over rising oil output just as many of the world’s oil producers are trying to comply with a deal to pump less in an attempt to prop up prices. The number of active U.S. oil rigs rose to the highest since November 2015 last week, according to Baker Hughes data, showing that drillers are taking advantage of oil prices above $50 a barrel. Global benchmark Brent crude oil prices were down 25 cents at $55.26 a barrel at 1010 GMT, while U.S. crude futures slipped 8 cents to $53.09. “Oil prices are down because of the rise in the U.S. rig count,” said Tamas Varga, analyst at PVM Oil Associates in London. He also added that Petro-Logistics’ report that OPEC members had cut production by 900,000 barrels per day (bpd) in January was “not very encouraging” because it implied that only 75 percent of the OPEC production cut target was being met. The Organization of the Petroleum Exporting Countries and other producers including Russia agreed to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017 to relieve a two-year supply overhang. Oil prices have remained above $50 a barrel since producers agreed the deal in December, incentivising drillers in low-cost U.S. shale producing regions to ramp up activity. “In our view the strong rise in U.S. shale oil rigs is a good thing because it will be needed over the next three years as non-OPEC, non-U.S. crude production continues to be hurt by the deep capex cuts both past and present in that segment,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo. He estimates the U.S. rig count will continue rising at a rate of seven rigs per week over the first half of the year. Golden Tate III Authentic Jersey
Bottlers refuse to import LPG
Gas bottlers have been refusing to import liquefied petroleum gas (LPG) even though the government has agreed to their longstanding demand to be allowed to operate their own tankers because now they have another complaint. They say that a clause in the recently amended LP Gas Transport Bylaw 2017 is impractical because it requires them to sell their products in areas fixed by Nepal Oil Corporation (NOC). Diwan Chand, general secretary of the Nepal LP Gas Industry Association, said they would not take purchase delivery orders (PDOs) from NOC until it revised the offending provision in the bylaw. “Most importers have their own bottling plants, so how can they sell the imported gas to others instead of distributing it from their own plants?” he said. The government has allowed 46 gas plants to import 775 bullet tankers. The use of own tankers is expected to save the country Rs2 billion annually in freight charges being paid to Indian transporters. NOC issues PDOs to gas importers who buy LPG from depots of Indian Oil Corporation (IOC) in India. Currently, Nepal’s imports of LPG are being shipped in Indian gas bullets. A month ago, Everest Gas Industry of Kathmandu acquired two gas bullet tankers, but it has not yet taken PDOs from NOC. According to the association, gas importers have placed orders for 300 gas bullets. “NOC’s provision has put their investment at risk of loss,” Chand said. Meanwhile, NOC claimed that the bylaw was not meant to discourage importers from bringing LPG in Nepali-owned bullet tankers. NOC Spokesperson Bhanubhakta Khanal said that the corporation would not enforce the provision when there is normal supply. “NOC has been authorised to intervene and invoke the provision only when there is a short supply of cooking gas in the market,” said Khanal, adding that the provision had been inserted in the bylaw to ensure regular supply of the essential cooking fuel. Khanal blamed the delay in importing cooking gas on bullet tanker owners who had not completed the official procedure necessary to transport the fuel. “The newly imported bullet tankers have not been certified by NOC technicians, and their owners have not obtained an explosives licence and road permit from Indian authorities.” Khanal said NOC was always open to holding talks with gas bottlers about the provisions in the bylaw. Charles Woodson Authentic Jersey
IEA does not foresee crude oil demand peaking soon, says Director Birol
The International Energy Agency (IEA) does not expect oil demand to peak any time soon due to rising consumption in developing economies, Director Fatih Birol said on Monday. Birol also warned that oil markets could enter a period of high volatility unless companies develop new projects after two years of sharp drops in investments sparked by low oil prices. “We do not see in the near and medium terms oil products can be substituted by other fuels. More than one third of growth comes from trucks in developing Asia… We do not subscribe to oil demand peaking anytime soon,” Birol said at the GE Oil and Gas annual meeting in Florence, Italy. “If there are no major new major projects this year, it will be very difficult to see how we do not have turbulent times in the market in the years to come because of the growing supply gap.” Nick Perry Authentic Jersey
UP dithering on 24X7 power supply document: Piyush Goyal
Union Power Minister Piyush Goyal has charged the Akhilesh Yadav government in Uttar Pradesh with dithering on the central plan to provide 24-hour electricity to all households. Talking to Business Standard in Lucknow, Goyal claimed all the state governments and Union Territories had signed the 24X7 power document mooted by the Centre except for UP. “We had proposed that the Centre and states could work together as a team to provide 24-hour power supply to all households,” he said and lamented while all the state governments and Union Territories had agreed with the proposal and came on board, the UP government has still not signed it. Goyal had accompanied Bharatiya Janata Party (BJP) President Amit Shah on Saturday to release the party’s 2017 election document, which included the promise to provide 24-hour power supply if it comes to power in the state. He claimed about 15 million rural and 3 million urban households in UP or roughly 40 per cent of the state’s population was deprived of power connection. He castigated the successive Samajwadi Party (SP) and Bahujan Samaj Party (BSP) governments in UP, which have been ruling the state for the last 15 years for the sorry state of affairs, especially in power sector. “Why despite the Centre providing thousands of crores (funds), highest power allocation in the country, still the UP government over the last 15 years has not been able to provide power to poor households,” he underlined and mentioned free power scheme was largely being centrally funded. Replying to a question, Goyal said the biggest pitfall with regards to the UP power sector was the lack of political will to implement the central schemes and take power to every household. He also alleged largely scale corruption in the sector, which manifested in power theft and illegal connections. “We have found 60,000 faults with regards to quality in rural electrification programme in UP, which has been notified to the state government but no action has been taken,” he claimed. He further said energy exchanges could only provide power during emergencies and does not ordinarily took care of base load, for which purchase agreements (PPA) were needed. “However, the important thing is if PPAs are signed in a transparent and honest manner through bidding or surreptitiously. The important thing to see is if the state was buying power under PPAs to serve people or whether despite having adequate power and power capacity, the state government is signing new PPAs,” he added. He maintained there was sufficient power availability in the country, even if UP doubled its power consumption. Sam Martin Jersey
Are Modi government’s power promises being fulfilled?
One of the big promises of the Modi government was that of ensuring electricity for all, and particularly in rural India. In fact, the promise was for reliable power access for all, which formed a major part of Modi’s campaign pledges in 2014.This received specific emphasis in last year’s Budget Speech, when it was promised that the rural goal would be achieved by March 2017. On the face of it, this promise seems to be achieved — according to the central government, as of now, 591,685 out of 597,464 census villages (or 99 per cent) have been electrified. This is not as remarkable an achievement as might be thought, because in fact much of this had been done before the tenure of the present government, as Chart 1 indicates. RGGVY and after The big push to rural electrification came in 2005 with the launch of the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and then accelerated further in 2010-11, when there was a significant increase in budgetary outlay for this. True to form, the Modi government has basically renamed the scheme, to Deendayal Upadhyaya Gram Jyoti Yojana, and then sought to take credit for all of it. Since taking power, the Modi government has added another 19,219 villages (or 3.2 per cent of the electrified villages) to this total, thereby bringing it close to the total number of villages. But even this does not reflect the actual position of access to electricity. Since 2005, a village has been deemed to be electrified if: Basic infrastructure such as distribution transformer and distribution lines are provided in the inhabited locality as well as the dalit basti/hamlet where it exists. Electricity is provided to public places such as schools, panchayat office, health centres, dispensaries, community centres, etc. The number of households electrified is at least 10 per cent of the total number of households in the village. Note that this requires only the provision of the electricity line to that point, not actual continuous access. It does not account for the regularity or consistency of the power received. So even if a few houses in a village receives only a couple hours of electricity a day for a few days in the year, the village is still deemed to be electrified. After electrification, therefore, there is the further process that is described as “intensification” by the government, in which individual households are electrified until all households are provided access. As it happens, this process is ongoing in all States and in all villages including those that have been deemed to be electrified for many years, such as in Punjab, Haryana and Maharashtra. The proportion of households with access to electricity differs significantly from the proportion of villages electrified. The chart below provides evidence on the proportion of households with access to electricity across States. Gaps in the process It turns out that only around 71 per cent of all households in the country have electricity (and even this need not be regular or reliable) — but this covers both urban and rural areas. Clearly, rural access would be lower than for urban households, and some have estimated that for India as a whole, only around 60 per cent of rural households have some access to electricity — which means that still two-fifths of rural households do not. Obviously, there are significant regional variations to this. The latest data from the National Family Health Survey (NFHS-4) carried out in 2015-16 provide some indication of this, even though the data are still not available for some States including populous Uttar Pradesh. It is evident that, while some States have achieved near-universal electricity access, several still show very large gaps, such as Bihar and Assam. But is it really the case that even in the apparently more successful States, most households have access to reliable electricity? One way of checking this is by examining the data revealed by satellite imaging technology that captures how much of an area is actually illuminated when it should be at night. A study of 20 years of such data by researchers at the University of Michigan reveals that the official estimates of this are probably over-optimistic. Consider Andhra Pradesh and Gujarat, which had reportedly achieved 100 per cent electrification of all rural households by 2007. The satellite imagery of lights at night in December 2013 tell a somewhat different story. The image refers to December 2013. In Andhra Pradesh, while rural areas of Telengana and northern Coastal Andhra do appear bright enough to suggest that electricity coverage is widespread if not universal, the areas of Rayalaseema and southern Coastal Andhra are mostly dark. Similarly, in Gujarat, the districts of Rajkot and Surendranagar appear really dark compared to the brighter lights to the east, even as the easternmost districts of Dohad and Narmada are also much darker than the western coastal areas. Why is this the case? One likely answer is that having access to electricity or an electricity connection are not enough — both affordability and reliability of the electricity supply are critical, and these are often what is lacking for many rural households. A 2015 study by the Council for Energy Environment and Water (Access to Clean Cooking Energy and Water; Survey of States, 2015), surveyed access to electricity in rural areas of six States: Madhya Pradesh, Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha. Dark spots The survey revealed that in these six States, whatever be the official statistics on electricity access, on the ground the situation is quite shocking. On a scale of 0 to 100, the electricity index across the six States ranged from as low as 8.1 for Bihar to 41.8 for West Bengal. One particularly startling finding was that, among the households with the lowest level of access (or no access to electricity) around half actually had electricity connections, and therefore were officially classified as households with electricity. The important issues here were the quality of the connection, the reliability of the power and
Power ministry working on mega push for village electrification next fiscal
The power ministry has worked out a mega expansion plan for village electrification in the coming financial year that is likely to require spending upwards of Rs 16,500 crore through a slew of central schemes including the flagship Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY). The blueprint of the plan has been worked out as part of the efforts to fulfil Prime Minister Narendra Modi’s announcement of 100 per cent village electrification and round-the-clock power for all by 2019. The idea is to cover 2,984 villages under DDUGJY apart from extending electricity connections to 4 million Below Poverty Line (BPL) households in the coming year. Apart from Rs 16,500 crore needed for village electrification schemes, the ministry has projected separate fund requirement under other central schemes – Rs 5,700 crore for Integrated Power Development Scheme (IPDS); Rs 1,548 crore for power system improvement in the North-East excluding Arunachal Pradesh and Sikkim; Rs 1,500 crore for transmission system strengthening in the two states and Rs 312 crore for setting up a 220 Kilovolt transmission line from Srinagar to Leh. The discussions on the fund requirement roadmap for 2017-18 have also involved the government’s think-tank NITI Aayog. The plan includes funding of Rs 790 crore required for the Power System Development Fund (PSDF) and utilization of gas-based generation capacity. Of the 47 projects approved under PSDF by November 2016, five are expected to be commissioned in 2017-18, according to a senior official. The ministry is also planning to spend Rs 180 crore for the smart grid programme under which 6-10 new projects will be launched along with the ongoing ones. The rest of the fund requirement includes Rs 70 crore for Bureau of Energy Efficiency (BEE), Rs 250 crore for Central Power Research Institute (CPRI) at Bengaluru and Rs 40 crore for National Power Training Institute (NPTI). Oren Burks Jersey
Nepal to increase power import from India to plug demand-supply gap
Hydropower rich, Himalayan country Nepal is going to increase its power import from India to plug up own winter time demand-supply gap. In addition to its existing 350MW import, Nepal will take additional 25MW from India as per a power purchase agreement signed between Nepal Electricity Authority(NEA) and NTPC Vidyut Vyapar Nigam Ltd. of India. As Nepal Electricity Authority (NEA) Deputy Managing Director Rajeev Sharma puts it, “This 25 MW is quite significant for the small power system of Nepal.” The additional intake will take place through a cross country transmission line between Dhalkebar in Nepal and –Muzaffarpur in Indian state Bihar. At existing tariff of INR 3.6 per unit, the increased import is likely to continue till arrival of rainfall in the Himalayan terrain in May – informed a NEA official. Against total theoretically gigantic hydropower potential of over 83,000 MW, Nepal’s Economically feasible potential is 43,000 MW. But its existing capacity is less than 1000MW. Against peak demand of around 950MW, the countries production during dry winter goes as low as 450MW due to lack of water flow along the streams forcing the country to import power from India. Eventually, the transmission lines used to import this power always remain in Nepal policy maker’s priority list. Nepal’s imports total 350MW from India through four cross country lines. Kataiya-Kushhawa line carries 120MW, 30MW goes through Tanakpur-Mahendranagar and 25MW goes through Ramnagar-Gandak transmission lines. Remaining 120MW is received by Nepal through Dhalkebar-Muzaffarpur. This route is under capacity augmentation process to have a handling capacity of 280 MW. Nepal has a set plan to establish 2200 MW fresh generation capacity and 3000km transmission lines by 2020. In addition, there are plans for other projects of total 2300MW to be developed by Indian Companies. Once established, these new projects will make Nepal a major power exporting country in South Asian region. At the same time, India, being the major contributor to these projects and next door neighbor of Nepal, will be one of the largest beneficiaries of the augmented volume of produced power. Chris Doleman Authentic Jersey