Spot power may get costly as CERC proposes hiked transmission charges
The Central Electricity Regulatory Commission (CERC) has proposed a hike in transmission charges by 1.35 times, which could hurt the growing market for spot or short-term transaction of power. States and open access industrial consumers are increasingly shifting to short-term power purchase due to uncertainty in power demand. If approved, they might have to face increased charges, which would be similar to long-term power rates. Lately, the central government has also been promoting the spot market, as increased competition reduces cost of power. While the tariff quoted in the long-term power purchase agreement has touched Rs 3.9-5.5 per unit in the past three years, the spot price has gone down to Rs 2.16 per unit during the same period. While private players and some states have been active in the spot market, NTPC has also started selling un-requisitioned surplus power at the exchanges. The commission is of the view that increasing short-term transaction of power is leading to congestion in the grid and also affecting the transmission planning, which is typically for long-term transactions. It has come to this conclusion after submissions from the Central Transmission Utility (CTU), also known as Power Grid Corporation of India. The volume of short-term transactions has increased to 63.96 billion units (BUs) in 2014-15, from 24.69 BUs in 2008-09. However, the prices of electricity of short-term transactions has come down to Rs 2.5 per unit, from about Rs 7.29 per unit during 2008-09. CERC has expressed its concerns that generators may not apply for long-term agreement (LTA) and evacuate power under short-term open access (STOA) and/or medium-term open access (MTOA). “It is likely that there are less long-term power purchase agreements, leading to lack of LTAs and inefficient transmission planning,” said CERC in its draft regulations, dated October 28, 2016. The regulations were open for comments till November 25. “There are a number of petitions and applications before the commission, wherein the generators are relinquishing their LTA quantum but at the same time evacuating power under STOA/MTOA markets. This causes burden of higher transmission charges on other long-term customers. This scenario is likely to lead to under-building of transmission capacity thereby leading to instances of congestions,” CERC observed in its detailed regulations. The power sector, which has been hailing the shift to short-term or day-ahead power market, is opposing this sudden change. The industry is of the view that in the current scenario when discoms are trying to reduce power tariff in a bid to reduce losses, the short-term market creates competition and helps in decreasing power rates. Kwon Alexander Authentic Jersey
Team from Airports Authority of India visits advance landing grounds
A team of officials from Airports Authority of India, Indian Air Force, Director General of Civil Aviation and Bureau of Aviation Security, led by Arunachal Pradesh civil aviation director Repo Ronya, visited the advance landing grounds (ALG) at Aalo and Pasighat. Darius Philon Authentic Jersey
New model to forecast fog over airports
To get a better grip on forecasting fog, a series of organisations has partnered with the airport authorities here to develop a system that can warn of fog at least 6-24 hours in advance, calculate its severity, and estimate when it is likely to lift enough for flights to take off and land safely. Predicting a fog is a daunting challenge the world over, primarily because a range of meteorological conditions contribute to it, and it can play out differently even within a city. While the immediate utility would be for aviation, officials associated with the exercise said if the underlying science of the fog-prediction system was perfected, it would be able to warn of extreme pollution events such as the severe smog that enveloped Delhi this year after Diwali. About 30 instruments have been installed abutting one of the runways in Delhi’s Indira Gandhi International Airport, said Madhavan Rajeevan, Secretary, Ministry of Earth Sciences, and the first forecasts would be available in January. Authentic Jersey
Warning Issued To Private Jets Over Being Misused To Fly Banned Notes
India has threatened to punish private jet operators that fly to small and remote airports without police clearance as Prime Minister Narendra Modi tries to plug loopholes in his campaign against unaccounted money. A group of private jet operators, which counts tycoon Anand Mahindra’s Mahindra & Mahindra Ltd. and the billionaire Poonawalla family’s aviation firm as members, said the move came after an “isolated case” of not following procedure, and aircraft owned by its members follow standard rules for security checks. Modi stunned the nation on Nov. 8 by invalidating 500 rupee ($7.3) and 1,000 rupee notes in an effort to force unaccounted cash into the formal economy, setting a Dec. 30 deadline for the money to be deposited with banks. Two weeks later, India Today reported that a private jet was used to transport banned currency to the country’s northeast, where residents enjoy certain tax benefits. The Huffington Post reported that at least four private jets stuffed with cash flew to a small town in the northeastern state of Nagaland. Patrick Omameh Authentic Jersey
UDAN scheme Rs 8500 levy: Indigo, GoAir, SpiceJet, Jet, others take Centre to Delhi High Court
The Central government’s plan to create a fund under the UDAN (Ude Desh ka Aam Nagrik) scheme by levying Rs 7500 to Rs 8500 per flight operated by Indian airlines; to develop airports in smaller towns and cities, was challenged in the Delhi High Court today when the Federation of Indian Airlines (FIA) filed a petition so as to know the government’s stand on the matter. A notice was issued to Ministry of Civil Aviation, Airports Authority of India (AAI) and Director General of Civil Aviation (DGCA) by a bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal who sought their replies by December 21; as the levy will be chargable from December 1. Meanwhile, the Federation of Indian Airlines (FIA) explains that the scheme allows them to pass on the levy to the passengers, which they regret imposing as it is not a fee for which their airlines are rendering services to the passengers. The FIA represents air carriers like Indigo, GoAir, SpiceJet and Jet Airways, have sought suppressing of the October 21 notification and the November 9 orders that declared the rates of levy and the categories of the scheduled flights on which they would be imposed. Brandon Williams Authentic Jersey
India’s Light Combat Aircraft Advances with New Order
India’s Ministry of Defense has cleared an order for 83 Light Combat Aircraft (LCA), designated Mk1A, from government-owned defense manufacturer Hindustan Aeronautics Ltd (HAL) for the Indian Air Force (IAF). HAL currently has in hand an order for 40 GE F404-engined LCAs for the IAF. Of the 20 to be produced with an initial operational clearance, three have been delivered and the fourth is scheduled to be handed over by early next year. Twenty more will be supplied once they receive the final operational clearance (FOC) by end of 2017. HAL says it will increase production from eight to 16 a year “once a formal order is received for the 83 Mk1As.” IAF Air Chief Marshall Arup Raha said last year: “We want the LCA Mk1A with an improved radar [Elta’s ELM-2052 AESA or active electronically scanned array], electronic warfare, in-flight refueling and better missiles.” But a privately owned OEM said: “While there is to be joint work between HAL and Elta, we don’t know how much of the Elta AESA will be indigenous.” Other OEMs are interested. For instance, Saab confirmed recently to AIN that it is offering its Gallium Nitride technology, developed in Gothenberg, Sweden, for the LCA, rather than part of its Gripen proposal to India. The LCA Mk2 version, expected to be re-engined from the GE F404 to the F414, is planned for production by 2025. The Indian Navy has expressed its firm requirement for 46 LCA Mk2s that will require a weight reduction of one ton over the Mk1A. Delays to the naval LCA have been attributed in the past to technical complexities; non-availability of infrastructure and critical components and technology denial regimes; extended user trials; and the failure of some of the components during testing.
OPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firms
The latest decision by the Organization of Petroleum Exporting Countries (OPEC) to cut crude oil output to rein in oversupply and prop up prices may have a significant impact for India, experts say. The announcement to slash output by 1.2 million barrel per day may force the government to cut excise duty on fuel, provide relief to upstream firms and also influence the petroleum subsidy budget for the next fiscal. For consumers, the development translates into higher retail prices for petrol and diesel. “The government may continue with fortnightly adjustment in fuel prices until crude reaches $60 a barrel. Beyond that they may want to use the cushion of excise duty and keep the retail prices at a level that will not hurt consumers and fuel inflation,” said Debasish Mishra, Partner at accounting and consultancy firm Deloitte Touche Tohmatsu India. The 14-member global crude oil cartel on Wednesday agreed for the first output cut since 2008 after a mega global glut pulled down benchmark prices to less than $35 per barrel from a peak of $110 per barrel in mid-June, 2014. During the slump, the Modi government had hiked excise duty on petrol and diesel nine times to mop up additional revenue. In all, it raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47. OPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firmsOPEC output cut could force government to slash excise duty on fuel, bring relief for upstream firms – Image Experts also say the production cut from OPEC and the subsequent hike in crude oil prices will come as a relief for the upstream companies including Oil and Natural Gas Corporation (ONGC) and Oil India (OIL). “The upstream segment was taking a major hit in their margins due to historically low crude oil prices,” said Salil Garg, Director-Corporates at research firm India ratings. He added the development may not translate into good news for the downstream refining and marketing companies. “An upward movement in crude will also impact natural gas prices which will increase the cost of production for the downstream segment as many of the crude derivates are used for their own industrial use,” Garg said. Experts also said in the event of a sharp and sustained increase in crude oil prices, the options before the government to cushion the consumers could include asking upstream firms to bear the burden of Oil Marketing Companies’under-recoveries or relieve the refiners through budgetary support. The three OMCs – Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) — suffered Gross Under-Recoveries (GURs) of Rs 7,826 crore on subsidized sales of LPG and Kerosene in the first half of current fiscal alone. The government had budgeted for a petroleum subsidy outgo of Rs 26,900 crore for the current financial year. According to the oil ministry, every $1 increase in crude oil price leads to additional under-recovery burden to the tune of Rs 1,180 crore for the OMCs. While the production cut will impact the government’s calculation of petroleum subsidy outgo for the next year’s budget, analysts stated the impact may be limited. “There will definitely be a slight increase in subsidy requirement for 2017-18 but it is uncertain whether prices will remain increased for a long time,” said K Ravichandran, Senior Vice President at ratings agency ICRA. He cited two reasons for doubting sustained higher levels of crude prices. The OPEC members’ ability to stick to committed production cuts is still to be tested and US shale producers may jack up output in response to increased crude prices. Dominic Moore Jersey
Greece to decide on gas grid sale next week after talks with SOCAR fail
Greece will decide next week how to proceed with the sale of its natural gas grid operator, a key term of its international bailout, after talks with Azerbaijan’s SOCAR collapsed, a source close to the matter said on Thursday. SOCAR agreed to buy a 66 percent stake in DESFA from Greece and its biggest oil refiner Hellenic Petroleum in 2013. But the 400 million euro deal hit a snag when the European Union, on competition grounds, asked it to reduce the stake. The sale ran into further complications last summer when Athens passed legislation raising DESFA’s gas tariffs by a lower amount than SOCAR had expected, eating into its future profit. Since then, Greece and SOCAR have been struggling to salvage the deal. The energy ministry said on Wednesday that talks were inconclusive. Read More: New LNG buyer Pakistan sees strong interest in giant tender for 240 shipments It said SOCAR’s request for a lower price was not legally feasible and would lead to the cancellation of the tender, while other proposals did not comply with European Union rules. “The decisions will be made next week,” the source told Reuters on condition of anonymity adding that there would be consultations with the country’s official creditors, which will help determine whether Athens will relaunch the sale or change the terms of the current tender. The issue is expected to be discussed at a meeting of euro zone finance ministers on Monday in Brussels, which will take stock of Greece’s bailout progress. Speeding up privatisations, which have reaped only 3.4 billion euros since 2010 due to red tape, union and political resistance has been a key demand. SOCAR confirmed on Thursday that the talks had failed. “The parties could not agree on a mutually acceptable commercial mechanism to address the investors’ and the sellers’ concerns,” it said in a statement. Italian gas grid operator Snam was interested in buying a 17 percent DESFA stake which SOCAR planned to sell, in order to comply with the EU competition rules. Snam declined to comment on the failed talks on Thursday. Greece is set to miss its 2.5 billion euro bailout target for proceeds from state asset divestments this year. It is expected to raise only 500 million euros, according to a budget draft which is being debated in parliament. It expects revenue of 2.6 billion euros from the scheme next year, including 188 million euros from the DESFA sale. Matthew Ioannidis Authentic Jersey
Greece to decide on gas grid sale next week after talks with SOCAR fail
Greece will decide next week how to proceed with the sale of its natural gas grid operator, a key term of its international bailout, after talks with Azerbaijan’s SOCAR collapsed, a source close to the matter said on Thursday. SOCAR agreed to buy a 66 percent stake in DESFA from Greece and its biggest oil refiner Hellenic Petroleum in 2013. But the 400 million euro deal hit a snag when the European Union, on competition grounds, asked it to reduce the stake. The sale ran into further complications last summer when Athens passed legislation raising DESFA’s gas tariffs by a lower amount than SOCAR had expected, eating into its future profit. Since then, Greece and SOCAR have been struggling to salvage the deal. The energy ministry said on Wednesday that talks were inconclusive. Read More: New LNG buyer Pakistan sees strong interest in giant tender for 240 shipments It said SOCAR’s request for a lower price was not legally feasible and would lead to the cancellation of the tender, while other proposals did not comply with European Union rules. “The decisions will be made next week,” the source told Reuters on condition of anonymity adding that there would be consultations with the country’s official creditors, which will help determine whether Athens will relaunch the sale or change the terms of the current tender. The issue is expected to be discussed at a meeting of euro zone finance ministers on Monday in Brussels, which will take stock of Greece’s bailout progress. Speeding up privatisations, which have reaped only 3.4 billion euros since 2010 due to red tape, union and political resistance has been a key demand. SOCAR confirmed on Thursday that the talks had failed. “The parties could not agree on a mutually acceptable commercial mechanism to address the investors’ and the sellers’ concerns,” it said in a statement. Italian gas grid operator Snam was interested in buying a 17 percent DESFA stake which SOCAR planned to sell, in order to comply with the EU competition rules. Snam declined to comment on the failed talks on Thursday. Greece is set to miss its 2.5 billion euro bailout target for proceeds from state asset divestments this year. It is expected to raise only 500 million euros, according to a budget draft which is being debated in parliament. It expects revenue of 2.6 billion euros from the scheme next year, including 188 million euros from the DESFA sale. Brent Suter Jersey
Oil companies profitability to remain weak in 2017: Fitch
Fitch Ratings today said natural gas prices in India remain unattractive towards drawing large investments despite liberal exploration terms and higher rates for difficult discoveries. In a report ‘2017 Outlook: Indian Oil & Gas’, Fitch said India’s petroleum product consumption will remain strong at around 5-6 per cent in 2017 but the profitability in the oil and gas exploration and production segment will remain weak. “We believe gas prices remain unattractive towards drawing large investments despite a new hydrocarbon exploration licensing policy that eases regulations, and the government allowing higher gas prices for deep and ultra-deep water and difficult fields,” it said. Fitch expected the operating environment to remain challenging for Indian upstream companies in 2017 at its oil- price assumption of USD 45 per barrel, and low natural-gas prices. Stating that it did not expect any major improvement in profitability at Oil India Ltd and upstream operations of Reliance Industries Ltd, it said that most domestic gas fields are likely to make losses in 2017. “Without a change to the pricing mechanism, Fitch does not expect a significant improvement in gas prices. At the current gas price of USD 2.50 per million British thermal unit in India, OIL can only recover the cash costs of bringing the gas to the surface, but not the production levies, taxes, and sunk costs,” the report said. Fitch, however, said it expects upstream oil companies to continue investing in their current portfolio to maintain production and improve efficiency. On fuel consumption, it said India will see a strong growth of around 5-6 per cent in 2017. “Consumption increased by 8 per cent during the first half of 2016-17 fiscal (six months ended September 30, 2016), compared with 10.9 per cent in FY16,” Fitch said. Fitch also expects gross refining margins of all Indian oil refiners to narrow in 2017, while remaining stronger than the historical levels prior to FY16. “This, together with higher volumes, is likely to support strong operating cash flows in 2017. Therefore, we expect these entities’ credit metrics to stay in line with their current standalone profiles despite their large capex in the medium term.” It expected no discounts and under-recoveries (the difference between market prices and state-controlled selling prices) on kerosene and liquefied petroleum gas (LPG) to be borne by state-owned upstream oil companies or the three state-owned oil marketing companies (OMCs), in FY17 and FY18. “Fitch believes the gross refining margins (GRM) of all Indian oil refiners will shrink in 2017, from the strong levels in 1H16. However, Fitch expects GRMs to remain stronger than the historical average; investments to expand refining capacity and complexity is enhancing GRMs for most of the rated issuers,” the report said. This, together with higher volumes, is likely to support strong operating cash flows in 2017. Dennis Cholowski Womens Jersey