New power tariff structure in works, large domestic consumers to be charged more
The burden of subsidising the power bills of agricultural and low-income families is set to move from industrial consumers to large domestic and commercial consumers of electricity. The government plans to introduce a new tariff structure to charge more from large domestic power consumers rather than industrial units that currently share the cross subsidy burden. Most states categorise households consuming more than 800 units of power a month as large domestic consumers. The government is also working on simplifying tariff patterns by classifying consumers in two to three categories and sub-categories to bring transparency in power billing. An expert committee has been set for this. It comprises senior officials from various states and the power ministry to work on the new tariff structure that encourages energy conservation by residential consumers and reduces the power bill of industrial consumers. The committee is also studying the possibility of increasing fixed charges on connected load of domestic consumers to encourage them to surrender unutilised load. Most states continue with electricity tariff structures created since their formation and are often criticised for political interventions and biases against industrial units that, despite being regular payees, are levied cross-subsidy and other charges.Domestic power consumption, on the other hand, is subsidised, though tariffs increase with consumption. Nowhere in the world except India are power consumers charged for regular payments and bulk consumption. These patterns have never been altered though tariffs have changed over the years. In fact, most countries give sops to industrial consumers onhigher power consumption, a top government official said, not wanting to be identified. Encouraging industrial units to increase power usage is the need of the hour since India has moved away from being a power-deficit country to a power-surplus country, said a senior official in the power ministry, who too did want to be named.Industrial units can absorb the excess generation capacity of power plants operating at about 60% of capacity due to lack of demand from distribution utilities and an ongoing economic slowdown. The utilisation of thermal power plants may fall to 48% by 2022 as the government plans to add 175 GW of renewable energy capacity and 50 GW of new power projects in the pipeline. The Electricity Act, 2003, enabled industrial consumers to choose their sources of power through open access. States initially implemented the reform with enthusiasm but later started imposing financial and nonfinancial barriers on industries to discourage them from purchasing electricity from sources other than their distribution utilities. The Economic Survey 2015-16 highlighted the need for progressive tariff schedules for domestic consumers through which charges for the poor could be reduced and burden on industrial units eased. It said high-cost and low-quality power supply is rendering the units uncompetitive affecting the government’s aim to make India a global manufacturing hub. The report said compared to other developing countries, India’s domestic power tariff schedules have greater scope for progressivity. Increase in tariffs for rich households can be achieved while maintaining or reducing tariffs for the poor. It said regulators should undertake broad welfare analysis while deciding on tariff schedules and cross subsidisation rate for different categories. Artturi Lehkonen Authentic Jersey
Price hikes give oil companies’ investors reason to expect a better third quarter
The stocks of state-owned oil marketing companies (OMCs) are likely to end their sideways movement following expectations of good third-quarter results. OMCs have been able to increase fuel prices in higher steps in tandem with rising global crude oil prices during the quarter. This reassures investors that OMCs have sustained pricing power. The international price of crude oil rose by $6 per barrel in the period considered for a price hike on November 29, which necessitated a steep rise in petrol and diesel prices in India. Market trackers were closely watching whether OMCs were in a position to implement such a high increase in prices. The fact that such a steep rise was passed on to consumers shows the pricing power of OMCs and their ability to protect marketing margins. After the re cent price increase, marketing margins in December 2016 quarter averaged at Rs 2.1 per li tre on diesel compared with Rs 1.9 per litre in the previous quarter. For petrol, the margin was more or less stable at Rs 1.8 per litre. Every Rs 1 change in petrol margin expands projected EPS by 6-15% for OMCs, while every 5% growth in petrol volume expands EPS by as much as 2%. In addition, India’s fuel consumption growth remained robust at 7% and 12% in the first two months of the December quarter.This augurs well for OMCs. On the refining side, OMCs are likely to benefit from inventory gains due to rising oil prices during the December quarter and $1.8 per barrel improvement in the Singapore gross refining margin (GRM). Crude oil has surged nearly $8barrel in the December quarter so far. In the June quarter, when crude had inched up $10barrel, Indian Oil had reported $6.4barrel of inventory gain, while HPCL and BPCL recorded $2barrel gain each. IOC is likely to be the key beneficiary since it has higher inventory days due to more number of inland refineries compared with other OMCs which have refineries closer to coastal areas. OMCs trade between 9.3x and 9.5x the FY18E earnings -less than 10% premium to their long-term average multiple. The expansion of valuations hinges on their ability to control prices. Also, the extent of earnings upgrades will depend on who will bear the burden of 0.75% cash discount offered by the government on digital payments at petrol pumps. Marcell Dareus Womens Jersey
Pipeline uncertainty illustrates broader concerns for tribes
For hundreds of protesters, it was cause to cheer when the Obama administration this month declined to issue an easement for the Dakota Access pipeline’s final segment. But that elation was dampened by the uncertainty of what comes next: a Donald Trump-led White House that might be far less attuned to issues affecting Native Americans. “With Trump coming into office, you just can’t celebrate,” said Laundi Germaine Keepseagle, who is 28 and from the Standing Rock Sioux Reservation, where the demonstrators have been camped out near the North Dakota-South Dakota border. Anxiety over the 1,200-mile pipeline illustrates a broader uncertainty over how tribes will fare under Trump following what many in Indian Country consider a landmark eight years. President Barack Obama has won accolades among Native Americans for breaking through a gridlock of inaction on tribal issues and for putting a spotlight on their concerns with yearly meetings with tribal leaders. Under his administration, lawmakers cemented a tribal health care law that includes more preventive care and mental health resources and addresses recruiting and retaining physicians throughout Indian Country. The Interior Department restored tribal homelands by placing more than 500,000 acres under tribes’ control – more than any other recent administration – while the Justice Department charted a process approved by Congress for tribes to prosecute and sentence more cases involving non-Native Americans who assault Native American women. Before Obama, a gin the laws allowed for such crimes to go unpunished. In addition, the federal government settled decades-old lawsuits involving Native Americans, including class-action cases over the government’s mismanagement of royalties for oil, gas, timber and grazing leases and its discrimination against tribal members seeking farm loans. “In my opinion, President Obama has been the greatest president in dealing with Native Americans,” said Brian Cladoosby, chairman of the Swinomish Tribe north of Seattle and president of the nonpartisan National Congress of American Indians, based in Washington, D.C. “The last eight years give us hope going forward with the relationships we have on both sides of the aisle.” Trump, meanwhile, rarely acknowledged Native Americans during his campaign and hasn’t publicly outlined how he would improve or manage the United States’ longstanding relationships with tribes. His Interior secretary pick, Republican Rep. Ryan Zinke of Montana, sponsored legislation that he says would have given tribes more control over coal and other fossil fuel development on their lands. But some of Trump’s biggest campaign pledges – including repealing health care legislation and building a wall along the U.S.-Mexico border – would collide with tribal interests. In Arizona, Tohono O’odham Nation leaders have vowed to oppose any plans for a wall along the 75-mile portion of the border that runs parallel to their reservation. And the nonprofit National Indian Health Board in Washington says it’s aiming to work with lawmakers to ensure the Indian Health Care Improvement Act remains intact. The law, which guarantees funding for care through the federal Indian Health Services agency, was embedded in Obama’s health care overhaul after consultation with tribes. The government’s role figures prominently in Native Americans’ daily lives because treaties and other binding agreements often require the U.S. to manage tribal health care, law enforcement and education. Some tribal members say they’re unsure how much Trump understands or cares about their unique relationship with the federal government. “I think there was a great hope that we had here in Indian Country with the direct dialogue that President Obama had established with tribal nations,” said Duane “Chili” Yazzie, president of the Navajo Nation’s Shiprock Chapter. “If a similar effort to communicate with us were carried on by the Trump administration, I would be surprised.” Though most reservations lean Democratic in presidential elections, Trump does have some supporters in Indian Country. They hope the businessman can turn around lagging economies in rural reservations, such as the 27,000-square-mile Navajo Nation, which covers parts of Utah, New Mexico and Arizona. “Trump is pro-job growth, and tribes need a healthy dose of business creation,” said Deswood Tome, a former spokesman for the tribe from Window Rock, Arizona. “To do that, a lot of federal barriers must be removed. We’re the only ethnic group who have so much federal control in our lives.” The Dakota Access pipeline illustrates another chasm between Obama and Trump. This fall, the pipeline dispute led Obama’s administration to begin tackling a final piece of its Indian Country agenda: guidelines for how cabinet departments should consult with tribes on major infrastructure projects. A top complaint from the Standing Rock Sioux was that the U.S. Army Corps of Engineers failed to properly consult with them before initially approving a pipeline route that ran beneath Lake Oahe, the tribe’s primary source of drinking water. After the administration halted construction on the project in September to review the complaint, it held seven meetings with tribal leaders and began drafting a report on how federal officials should consult with tribes. U.S. Interior Secretary Sally Jewell said the report will be completed before Obama leaves office, and she expects it to have a lasting impact, even with an incoming administration that promises to undo some of the president’s policies. What’s unclear is whether Trump, who once owned stock in the pipeline builder, will seek to reverse the Army’s decision this month to explore alternate routes. A spokesman said only that the president-elect plans to review the move after he takes office. However, Trump’s transition team said in a recent memo to campaign supporters and congressional staff that he supports the pipeline’s completion. In the meantime, Standing Rock Sioux Chairman David Archambault has begun lobbying for a meeting with Trump to make a case for his tribe’s opposition to the project, which the chairman says threatens not just water but sacred cultural sites. “You have to respect Mother Earth; she’s precious,” Archambault said. “You can still believe in capitalism, and you can still invest in infrastructure projects, but these infrastructure projects should be focused toward renewable energy rather than fossil fuel development.” Orlando Scandrick Womens Jersey
Bhatinda Refinery eyes Rs 50 billion for expansion
The Guru Gobind Singh refinery at Bhatinda in Punjab will increase its refining capacity to 18 million metric tonnes per annum (mmtpa) and set up a petrochemical complex, people aware of the development said. The unit, also known as Bhatinda Refinery, is run by HPCL-Mittal Energy Ltd (HMEL), a joint venture between Hindustan Petroleum Corp. Ltd and Mittal Energy Investments Pvt. Ltd, Singapore. HPCL and Mittal Energy Investments hold 49% stake each in the venture, with financial investors owning the rest. “Expansion plan for the refinery is in the process and we would be setting up a petrochemical complex as part of the refinery expansion. We are working on the plan and would be shortly finalising details,” said a senior official at one of the partner companies, requesting anonymity. A banker aware of the development said on condition of anonymity that the company would be funding expansion through a combination of equity and debt syndication by banks to the tune of Rs 50-60 billion. In an emailed response, HMEL said, “We continue to evaluate various opportunities to enhance and expand our business; however, as a matter of policy we do not comment on future plans.” The petrochemical unit is part of the expansion that the refinery would undertake. HMEL is currently expanding the capacity of the refinery from 9 mmtpa to 11.5 mmtpa, raising refinery throughput by about 25%. The expansion could cost over Rs 50 billion. After the target is reached, the capacity would be eventually raised to 18 mmtpa. The expansion could cost the company Rs 200-300 billion, added the banker. “The petrochemical complex would include a new naphtha cracker,” said the second official aware of the development, also on condition of anonymity. Engineers India Ltd, an engineering consultancy and engineering, procurement and construction (EPC) service provider, is working on a feasibility report on the refinery’s expansion and the petrochemical unit, the first official cited above said. Ryan Johansen Authentic Jersey
ONGC’s stake buy in GSPC: Some call it a rescue act, others a sweet deal
The decision by government-run Oil and Natural Gas Corporation (ONGC) to buy stake in Gujarat State Petroleum Corporation’s (GSPC’s) Krishna-Godavari basin block has raised eyebrows, with some seeing it a bail-out for the latter entity. Late last week, the latter’s board of directors had approved the plan to acquire 80 per cent participating interest of GSPC in KG-OSN-2001/3 for $995.26 million. However, there are those who contend the sweetening of the deal would make it an exciting buy for ONGC. “The contract between the two public sector undertakings is good for the industry, as it would create a synergy. As far as ONGC is concerned, they have negotiated the prices well and it is much better placed to develop the resource than GSPC. More, ONGC will be able to use the vast infrastructure that GSPC has built, including the pipelines,” said R S Sharma, chairman of business chamber Ficci’s hydrocarbon wing and a former chairman of ONGC. The deal size was initially expected to be $2-2.5 billion. ONGC was successful in bringing it down to $995 million, with another $200 million towards future consideration for six discoveries other than the Deen Dayal West Field. Consultancy firm Gaffiney, Cline and Associates had estimated the potential of the block to be higher but ONGC did not think so. The Centre’s exploration giant contended the deep-water block’s recoverable reserves were much less than the estimate of 7.6 trillion cubic feet (tcf) to somewhere in the range of 3 tcf. “This will help us in developing nearby discoveries on a faster track in the Yanam and Godavari PML areas, and the KG-DWN-98/2 Block and adjacent nomination blocks,” said an official. NGC officials remained formally tight-lipped about the development. Regarding the deal, petroleum minister Dharmendra Pradhan had recently told the media, “If two exploration companies competing against each other can work together in the Gulf of Mexico and cut their cost of production, why can’t it happen in India? At least, the cost of the product will come down. Are they India and Pakistan?” The deal came to the limelight after the preliminary agreement, when the two companies opted for a dispute resolution mechanism, that differences over issues like valuation of natural gas reserves would be referred to a three-member committee of outside experts. Okay or not? Many believe the advantage for ONGC will be that GSPC has already built production facilities like wellhead platforms, process-cum-living quarter platforms, onshore gas terminal and export pipeline for transporting treated well-fluid to the onshore terminal in the area. “One needs more clarity on the debt component and how much gets transferred to ONGC’s books. If ONGC has a viable commercial plan in place for both the block and also utilisation of the existing GSPC infrastructure for its own block, it might be a reasonable deal,” said an analyst with a domestic brokerage, who did not wish to be identified. A GSPC-led consortium has spent close to Rs 200 billion on the project, including borrowing costs of nearly Rs 60 billion. “This is nothing other than a bailout for GSPC. There would have been no other takers. This is like getting some money back rather than having nothing. In addition, GSPC has also exhausted their borrowing limits, a hindrance in developing the block further,” said an industry source, who does not want to be named. To develop the Deen Dayal West field further, ONGC might need another $1-1.5 bn. “It is a bailout for GSPC but whether it is a good pricing will depend on the commercial aspects. It is difficult to have a benchmark price for upstream assets,” said an official from a consultancy firm, who did not wish to be identified. Joey Rickard Authentic Jersey
Congress demands ONGC move to buy stake in Gujarat PSU be put on hold
Congress in Gujarat has demanded a judicial inquiry into ONGC’s decision to acquire 80 per cent stake in Gujarat State Petrochemicals Corporation’s KG basin gas block and that the company’s move be put on hold. The state-run Oil and Natural Gas Corporation (ONGC) yesterday announced that it will acquire 80 per cent stake in debt-laden GSPC’s KG basin gas block for $995.26 billion. Under the deal, ONGC will also acquire operatorship of the block KG-OSN-2001/3 in Krishna Godavari (KG) Basin offshore. Addressing a press conference, state unit Congress president Bharatsinh Solanki alleged the ONGC-GSPC deal is “an attempt to paper over corruption”. Solanki also claimed that a CAG report, tabled in the Assembly in April this year, had questioned the state PSU GSPC’s investment of Rs 19,576 crore in its KG block project, stating that “future prospects” of the block remain shrouded in “uncertainty.” Rodney Hudson Jersey
Indigo added most number of flights during 2016
IndiGo, the largest carrier in terms of market share and capacity, added the most number of flights during the first eleven months of 2016 and will continue to add higher capacity than its peers, ICICI Securities said in a report. “This is best illustrated with the Available Seat per Kilometre (ASK) trends for IndiGo/SpiceJet and Jet. So, while total ASK for IndiGo has increased by 30% between Jan-Nov’16, the same has been only 13% for SpiceJet and 3% for Jet. Capacity addition by IndiGo will only increase during 2HFY17 as induction of neos gather more pace,” merchant banking and advisory firm ICICI Securities said in a report on aviation. IndiGo is the largest domestic carrier in the country both in terms of capacity as well as market share. During the month of November, the airline carried 42.1% passengers, according to the Directorate General of Civil Aviation data. The firm also said that IndiGo’s expansion has been higher than projected. “IndiGo reported Available Seat Kilometre (ASK) growth of 25% Y-Y in Q1FY17 compared to a guidance of 23%. Similarly, the ASK growth in Q2FY17 has been 27% for IndiGo compared to guidance of 25%. During October-November, IndiGo recorded an ASK growth of with 34% Y-Y compared to a guidance of 30% for Q3/Q4FY17,” said the firm. The firm, however, raised concerns over a sharp decline in on-Time Performance (OTP) of IndiGo. “There has been a sharp decline in OTP for IndiGo to 72.4%, lowest in more than last two years. While this could be due to fog related disruptions in the winter, with even higher capacity addition planned during the remainder of FY17, the OTP performance could remain under pressure for IndiGo and will be keenly watched,” it said. Cornellius Carradine Jersey
Civil Aviation Ministry extends validity of regular AEPs till March 2017
In a relief to airlines and airport operators, Civil Aviation Ministry has extended the validity of the regular Aerodrome Entry Passes (AEP) by three months to March next year, amid the process of rolling out of biometric access control system (BACS)at 48 airports in the country. As part of the regulations, airline and airport executives, and others working there have to get their AEPs renewed annually. “Validity of all regular aerodrome entry passes (AEP) except for temporary AEPs and AEPs issued to the ground handling agents, which are expiring on December 31, 2016, has been extended up to March 31, 2017 without any endorsement in the existing AEPs,” the Ministry said in its communication to all regional directors at BCAS. Bureau of Civil Aviation Security (BCAS), which is the apex aviation security body, has the mandate to issue all categories of AEPs to the airlines and airports employees. BCAS has regional offices at eight locations-Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Guwahati, Amritsar and Hyderabad. Temporary AEPs and AEPs issued to the bonafide employees of all ground handling agencies shall be dealt with the existing guidelines and instructions issued by the BCAS headquarters from time to time, it said. As part of efforts to strengthen the overall security framework at airports amid rising threat perception for the aviation sector, AAI is putting in such access control systems at the airports. It has recently awarded more than Rs 110 crore worth contract to the public sector firm Broadcasting Engineering Consultants India Ltd (BECIL) for providing biometric-based access control systems at 43 airports. AAI manages 125 airports, including 11 international and 81 domestic aerodromes. Five airports — at Mumbai, Delhi, Hyderabad, Bangalore and Nagpur — are run by joint ventures. All the JV airports are also in the final phase of awarding contracts for BACS. Once the BACS is in place, then the employees would also be provide. ArDarius Stewart Jersey
Coal year-end review: Consumers to gain Rs 69,310 crore from reduced power tariff
Power consumers are likely to gain to the extent of Rs 69,310 crore from the reduction in electricity tariff enabled by the auction of nine coal blocks to power sector firms so far, power ministry said in a statement today. The auction proceeds from 83 coal mines allocated so far are estimated at over Rs 3.95 lakh crore over the life of the mines, which will be available to the coal bearing states. The actual revenue generated from these coal mines up to October 2016 is Rs 2,779 crore excluding royalty, cess and taxes, the ministry said. “The benefit to consumers in terms of reduction of electricity tariff from auction of 9 coal blocks to ‘Power’ Sector is likely to be about Rs 69,310.97 crore,” the ministry said in the statement. As a step towards commercial mining, the government had put 16 coal mines on offer for allotment to state PSUs for sale of coal. Of these, eight coal mines were earmarked for state PSUs of host states while the rest 8 coal mines were earmarked for state PSUs of non-host States. Also, 5 coal mines have been allocated to state PSUs of coal bearing host states and 2 coal mines have been allocated to state PSUs of non-host states for sale of coal. The ministry also informed the production of raw coal in the country during April-November 2016-17 was 391 million tonne as compared to 385 MT during the corresponding period of previous year, an overall growth of 1.6 per cent. “The coal ministry has given special focus to decrease coal imports. Government has saved about Rs 20,000 crore in the year 2015-16 and about Rs 4,844 crore in the first four months of the current year. The efforts on this front would lead to a further replacement of 15.37 MT of imported coal by March 2017,” the statement said. The coal sector’s performance was impacted due to poor lifting of coal by a few power utilities and less demand of higher grade coal at South Eastern Coalfields. Thanks to high growth in production, power plants were flush with coal stock of 27 days in April 2016. CIL started the current fiscal with an opening stock of 57.7 MT,resulting into accumulation of coal stocks at the pitheads. The ministry said special measures such as spot e-auction and linkage rationalization were undertaken to clear the accumulated stock of coal. “Thus, during April-November 2016, as against the production of 323.64 MT, 340.03 MT was dispatched by CIL. Sporadic Law and Order problems at MCL and CCL have also affected production and offtake,” the statement said. Other issues that impacted dispatch included heavy rainfall in mining areas, cement plants switching over to pet coke and logistical bottlenecks. While the ministry highlighted the progress made by the coal sector over the past year, the industry expressed displeasure on various counts. “The government is curtailing CIL Production due to falling demand but is still continuing with coal imports. This is only due to bloated-up coal prices and abnormally high taxes,” Rajiv Agarwal, Secretary at Indian Captive Power Producers Association (ICPPA) told ETEnergyWorld. He also said, assuming the government agreed to forego entire tax on coal, the cost of coal will reduce by 50 per cent and the corresponding electricity cost by 40 per cent. This will turn all the discoms profitable. “Prices can be reduced by further 50 per cent if CIL is able to bring its manpower costs to International norms. Power cost will further reduce if costly NTPC purchase pacts are rationalized,” he said. The government had earlier this week allowed public and private power producers to swap their coal supplies with a view to reducing the cost of electricity by ensuring more efficient fuel usage. It may eventually extend the facility to other coal-consuming industries. Christian Covington Jersey
Haryana to have direct access to international airport
The Air Force authorities have agreed to the Haryana’s demand for direct connectivity of the state to the international airport. Haryana will now have an access to the airport through an underpass on the National Highway-21. The development is significant as travelling time to reach the international airport from Panchkula side will be reduced by nearly 20 minutes. Currently, the passengers from Haryana side have to go to Mohali side for reaching the airport. The information was provided to a Division Bench of the High Court. The Bench was told that a consensus on an underpass was reached in a joint meeting of the Indian Air Force, the Airport Authority of India and the state governments of Punjab and Haryana. Haryana was demanding direct connectivity with the airport through an underpass from NH-21. For the purpose, it had sent a proposal to the Defence Ministry. But following objections from the Air Force authorities on the directions of an underpass, it could not be matured. Taylor Lewan Jersey