‘States await Rs 24,000 cr bounty from excise on oil products’
Indian states await a big boost to their finances this year as they are on course to get an additional Rs 24,000 crore bounty or more from the Centre by way of the excise duty share on oil products this fiscal year, which is set to jump by around Rs 60,000 crore. As per the 14th Finance Commission wards, the Centre has to part 42 per cent of the incremental excise mop up on oil products with the states from 2015 through 2020 fiscals. Since the government has been increasing the excise duty on oil products since mid 2014 after the crash in crude prices, excise on oil products has been biggest contributor this form of tax kitty. While it contributed as much as 63 per cent of the total excise mop-up last year, up from 46 per cent in the previous year, it is going to jump by around Rs 60,000 crore this year to Rs 1,78,600 crore. The government has jacked up the basic excise duty on diesel and petrol by Rs 6.5/litre and Rs 7.75/litre, respectively, in four tranches between November 2014 and January 2015. “Excise collections on oil products may expand by an incremental Rs 55,000-60,000 crore in the current fiscal year and 42 per cent of these incremental collections would devolve to the states. “This is equivalent to Rs 22,000-24,000 crore, which is sizeable in relation to the estimated devolution of excise on fuels of Rs 36,400 crore in 2015-16, and a positive factor for the states’ fiscal health this fiscal,” Icra’s chief economist Aditi Nayar said in a report. She adds this estimate is contingent on the facts that the basic excise duty on petrol and diesel continues unchanged in the remainder of this year and consumption of these items grows by an average of 5 per cent. The contribution of oil products to the overall excise duty levied by the Centre has increased significantly from 46 per cent in 2013-14 to around 63 per cent in 2015-16, following a high growth rate of excise on fuels in the recent years, the report notes. While the Centre mopped up Rs 79,400 crore from oil products in 2014-15, 23 per cent of it or Rs 17,900 crore were devolved to the states in that year. Deion Sanders Jersey
Government engaged in phase 2 of building strategic oil reserves
With global crude oil prices having dropped to under $50 barrel levels amid a supply glut, the Indian government has been giving attention to developing the country’s strategic petroleum reserves for enhanced energy security. Earlier this week, Petroleum Secretary K.D. Tripathi, along with senior officials of state-run Indian Strategic Petroleum Reserves Ltd (ISPRL) and Engineers India Ltd (EIL), visited the proposed petroleum storage site at Chandikhol in Odisha, a Petroleum Ministry statement here said. “The underground storage facilities at Chandikhol will be created within the available government-owned land parcel, and would involve a significant development in the region with the greater objective of Odisha becoming the energy gateway of the Eastern and Northeastern region of India,” the statement said. “The estimated capital cost of the Chandikhol project is approximately Rs 5,000 crore,” it added. The first phase of implementing India’s strategic oil reserves would be completed by end of this fiscal with over 5 million tonnes (MT) of crude reserves in place in three separate storage facilities. The facilities entail storage of crude oil in underground rock caverns. “Under Phase I storage program, three facilities have been created at Vishakhapatnam, Mangalore and Padur, with a total storage capacity of 5.33 MT,” the ministry said. Petroleum Minister Dharmendra Pradhan had told reporters earlier this year that preparations had started for the second phase of construction where it is planned to build reserves of 12.5 MT, so that by the end of the second phase India has strategic reserves of around 17.8 MT. “Government is considering the proposal for establishment of Phase II storage program for a total storage capacity of 10.0 MT, which includes 4.4 MT storage capacity at Chandikhol and 5.6 MT storage capacity at Bikaner (Rajasthan),” the ministry said in a statement on Saturday. India imports nearly 80 percent of its oil requirements, and the government had decided to set up strategic crude oil storages as a cushion against external supply disruptions. These storages would be in addition to the existing ones of the oil companies. The construction of the storage caverns is being managed by ISPRL, which is a special purpose vehicle created by the Oil Industry Development Board (OIDB). Seth Roberts Authentic Jersey
Oil pipeline protest turns violent in southern North Dakota
A protest of a four-state, USD 3.8 billion oil pipeline turned violent after tribal officials say construction crews destroyed American Indian burial and cultural sites on private land in southern North Dakota. Morton County Sheriff’s Office spokeswoman Donnell Preskey said four private security guards and two guard dogs were injured after several hundred protesters confronted construction crews Saturday afternoon at the Dakota Access pipeline construction site just outside the Standing Rock Sioux reservation. One of the security officers was taken to a Bismarck hospital for undisclosed injuries. The two guard dogs were taken to a Bismarck veterinary clinic, Preskey said. Tribe spokesman Steve Sitting Bear said protesters reported that six people had been bitten by security dogs, including a young child. At least 30 people were pepper-sprayed, he said. Preskey said law enforcement authorities had no reports of protesters being injured. There were no law enforcement personnel at the site when the incident occurred, Preskey said. The crowd dispersed when officers arrived and no one was arrested, she said. Vicki Granado, a spokeswoman for Dallas-based Energy Transfer Partners, which is developing the pipeline, said the protesters broke through a fence and “attacked” the workers. The incident occurred within half a mile of an encampment where hundreds of people have gathered to join the tribe’s protest of the oil pipeline, which is slated to cross the Dakotas and Iowa to Illinois. The Standing Rock Sioux have gone to court to challenge the Army Corps of Engineers’ decision to grant permits for the project, and a federal judge will rule before Sept. 9 on whether construction can be halted. The tribe fears the pipeline will disturb sacred sites and impact drinking water for thousands of tribal members on the reservation and millions farther downstream. The protest Saturday came one day after the tribe filed court papers saying it found several sites of “significant cultural and historic value” along the pipeline’s path. Tribal preservation officer Tim Mentz said in court documents that the tribe was only recently allowed to survey private land, where researchers found burials, rock piles called cairns and other sites of historic significance to Native Americans. Standing Rock Sioux Chairman David Archambault II said in a statement that construction crews removed topsoil across an area about 150 feet wide stretching for 2 miles. Tre’Davious White Womens Jersey
Odisha not cooperating in Ujjwala implementation: Oil secy
Odisha not cooperating in Ujjwala implementation: Oil secy Bhubaneswar: For the second time in a fortnight, the Centre has complained that the state government is extending due cooperation in implementing the Pradhan Mantri Ujjwala Yojana (PMUY), touted Narendra Modi government’s largest political initiative, in which subsidized cooking gas cylinders are given to poor families. This has resulted in cold war of sorts between the BJP and the BJD. In a letter dated August 31 (copy with TOI) to chief secretary AP Padhi, petroleum and natural gas secretary K D Tripathi said government premises as venues for MPUY programmes were being cancelled even after confirmation of allotment just before the functions. Earlier on August 13, Tripathi in another letter to the chief secretary had said that disturbances were being created by ruling party men, including an MLA at Nimapara in Puri district. He had given instances of law and order situation at Nimapara, Athagarh and Nabarangpur. Stating that the scheme is meant for the benefit of the poor women, Tripathi in his latest latter requested the state to extend all cooperation for the scheme. Terming Tripathi’s letter politically motivated, BJD spokesperson S N Patro said the letter has no meaning. “BJP is using the government events like party forums. Instead of inviting the local MLAs and MPs to PMUY programmes, the saffron party is inviting its ow leaders. That is the reason why people are protesting,” Patro said. Countering the BJD, BJP spokesperson Sameer Mohanty said the regional party fears LPG to the poor women will increase BJP’s popularity. The BJD is reacting violently because it is scared. It should however understand that the cooking gas is for benefit of the poor,” he said. Odisha is one of the identified priority state for implementation of PMUY. The Centre aims to provide LPG connections to five crore BPL women in the country in three years. The BPL families get connection by paying Rs 990 for the burner and market price of the gas while seeking a new connection while the subsidy amount is credited in their bank accounts. Wes Horton Jersey
Loans for power projects? Banks tight-fisted
Banking consortia are delaying lending decisions for stranded power projects that are close to completion, pushing investment of nearly `2 lakh crore towards becoming non-performing assets (NPAs), industry executives say. At stake are plants with total capacity of 25,000 MW, with nearly complete coal-based projects being the most vulnerable.Gas-fired plants stranded by fuel scarcity have gained from government’s auction of imported gas, the latest beneficiaries being nine fir ms including Ratnagiri, GVK Power and Lanco Infratech, which emerged winners in the fourth phase of auction on Saturday . Bankers say normal lending cannot resume unless various issues are resolved in the sector, which first saw a rush of investment, but was hit by fuel scarcity, policy drift in the previous regime, absence of power purchase pacts and cancellation of coal mines by the Supreme Court. Banks are reluctant to fund infrastructure, particularly the heavily-indebted power sector, as bad loans have eaten into their profits. Power companies complain that many projects that can become profitable are suffering because banks are ambivalent in their response, causing costly delays. “They neither say `yes’ nor `no’. They merely delay,” said an industry insider. He said that at times individual banks block decisions are taken by majority lenders in a consortium. Power producers have taken up the matter with RBI. “It is observed that in many cases, certain banksdo not implement decisions taken by majority of the lenders in the consortium and put additional conditions. This often leads to long delays, which impacts the infrastructure project … Once a decision has been taken in JLFconsortium meeting, all lenders and other nonbank institutions should be made to comply with majority decision,” power producers said in a letter to the RBI. Association of Power Producers, which recently took up the matter, has sought the intervention of RBI in improving the financial condition of stressed power sector projects. “These issues are beyond the control of the developer and are driving the affected projects towards being classified as NPAs. With support from RBI, these can be turned around into profitable assets,” the industry body told RBI. Bankers say they have many concerns. “The power sector has faced peculiar issues with regards to purchase agreements, coal linkages and environmental clearances.Lending to this sector or projects in the sector cannot be resumed unless these issues are resolved,” said KVS Manian, head-corporate, investment banking at Kotak Mahindra Bank. “If developers can resolve these issues then banks will be more than happy to lend more money to these projects,” he said. Industry executives say that on paper, mechanisms for debt restructuring via consortium lending exist, but there are fatal delays inherent in the process. “The message from the government to banks is that you cannot unduly delay these things. If it is not timely, it doesn’t matter if they sanction it or not. They do it after 6-8 months by that time the damage is already done,” a power sector executive said. “Once the lead lender has taken a decision and the Joint Lenders’ Forum has agreed and the lead lender has given his sanction, the rest of the banks have to be time bound,” he said.”There are projects which might need about one and a half years to complete but due to these delays, for six months you are sitting and doing nothing.” Sushil Maroo, executive vice-chairman of Essar Power, spoke of regulatory and policy deficiencies. “Banks and FIs are reluctant to finance power projects, which have been affected by coal block de-allocations and delay in statutory approvals.” Star Lotulelei Authentic Jersey
NHAI awards contract for 4/6 Laning of Kharar-Ludhiana Section of NH-95 (new NH-5) in the state of Punjab
The National Highways Authority of India (NHAI) has issued Letter of Award (LOA) for development of following National Highway section in the state of Punjab under NHDP Phase-V: NH No. Section Length Total Capital Cost (Crore) Concessionaire’s Name 95 (new NH-5) 4/6 laning of Kharar-Ludhiana section 76 km Rs. 2,070 crore M/s Ashoka Concessions Ltd. Development of 76 km long Kharar-Ludhiana section involves 6-laning of 54 km and 4-laning of 22 km of National Highways. The project National Highway-5 starts at Kharar town, passes through Morinda bypass, Khamanno town, proposed Samrala bypass and terminates at Ludhiana. It will improve connectivity and faster movement of traffic from Industrial hub of Ludhiana to Chandigarh and other parts of North India. The project shall also provide alternate connectivity of Chandigarh to NHAI-1, as well as for the traffic from South-West Punjab to the Chandigarh city. The project will have 2 Major Bridges, 6 Minor Bridges, 8 Flyovers, 6 Vehicular Underpasses, 10 Pedestrian Underpasses, 126 Culverts, 46 km long Service Lane, 9 Major Junctions, 253 Minor Junctions and 8 km long bypass at Samrala. Roquan Smith Jersey
Brokerages eye govt’s next move after AP Shah committee report to guage impact on RIL
Amid the excitement and analysis of Reliance Industries’ rollout of Jio broadband services, analysts are also closely watching the government’s next move after the AP Shah Committee said the company made “unjust” gains by pumping natural gas that flowed from ONGC’s adjoining block in the Krishna-Godavari basin. On August 31, the AP Shah Committee report accepted the consultant’s report on the dispute over migration of gas from ONGC’s blocks to RILs block in the eastern coast. The one-man committee headed by former Chief Justice of Delhi High Court Ajit Prakash Shah states the compensation for the gas that migrated should go to the national exchequer and also made recommendations to avoid such disputes in future. The government’s action is awaited. “This is unprecedented in India so we will have to wait and watch how government reacts to it. Prima facie, it looks like RIL may have to compensate the government for the gas that came from ONGC’s block. But whether the migration of gas was an unforeseen act of nature or whether the two companies allowed it to happen with knowledge of it is yet to be determined,” an energy expert tracking the development closely said. Between April 1, 2009 and March 31, 2015, as much as 11.122 billion cubic meters of gas migrated from ONGC’s Godavari-PML and KGDWN-98/2 blocks to adjoining KG-D6 that are in RIL’s control. At current prices, this gas would be worth around Rs 11,000 crore. The government then set up the AP Shah committee to study the findings of the independent expert DeGolyer & MacNaughton (D&M) that established reservoir continuity between the KGD6 and contiguous ONGC operated blocks. “In our view, quantifying any impact on RIL as of now is difficult and so is trying to freeze a timeframe for final resolution. Broadly, we do not see this entire issue (AP Shah Committee recommendations on gas migration) as having any material impact on RIL,” JP Morgan said in a report. The brokerage said it will watch out for the government’s decision pertaining to monetary claims from RIL and whether it includes any penalty and does it take into account any operating expenses and capital expenses. While RIL head Mukesh Ambani refrained from commenting on the issue at the company’s Annual General Meet, sector experts expect the company to opt for legal route to challenge monetary claims. RIL has invested about Rs 40,000 crore in developing wells in the Krishna-Godaveri basin, where it had expected reserves of 10 trillion cubic feet but it witnessed a steep fall in output. Billy Turner Jersey
Road building in slow lane: Not even one project awarded by NHAI via hybrid annuity route achieves financial closure
With bankers somewhat wary of lending to the roads sector, after a clutch of projects was derailed, not a single project awarded by NHAI (National Highways Authority of India) via the hybrid annuity model route appears to have achieved financial closure. The NHAI is understood to have awarded eleven road projects till March 31, 2016 via the hybrid annuity route, a mechansim where the NHAI assumes the responsibilities of acquiring the land, estimating the traffic and collecting the toll and the concessionaire takes on virtually no risk. NHAI rules stipulate financial closure needs to be achieved within 150 days of signing the concession agreement. However, given their mixed experience with the BOT model, banks and financial institutions are evaluating the applications cautiously, sources said. The concerns of lenders stem from the small equity risk that the concessionaire is taking. Given that 40% of the project cost comes as a grant from NHAI, the concenssionaire’s equity contribution is reduced to just 15% of the remaining 60% of the project cost or effectively 9%. Lenders feel this is too small pointing out the promoter has virtually no skin in the game. A senior public sector bank executive told FE, several large banks have indicated their reluctance to lend to hybrid projects if the promoters’ equity is effectively just 9%. “This is too small a commitment on the part of the promoter and none of the proposals from developers has been closed yet,” the executive added. Indian Infrastructure Finance Company Limited (IIFCL) is among the institutions evaluating the new projects under the hybrid model. “While the requirment for equity from the concessionaire has been diluted, we are satisfied if the funds from either NHAI or the developer are released in keeping with the physical progress of the project. The ministry has agreed to this so we should be able to close out a couple of projects soon,” Sanjeev Kaushik, deputy managing director, (IIFCL) said. “The money is needed in the early stages of construction, ” Kaushik explained. Banks also believe the compensation or termination charges, in the event of the concessionaire’s inability to complete a project, should be 90% of the debt due, as it is in the case of a BOT project. Currently, the rules for hydrid annuity projects stipulate a far lower level of compensation to the lenders which is worrying them. Lenders are also concerned that the interest payable by NHAI, on loans taken by the developers, is too low. The rules stipulate the interest be fixed based on the bank rate plus a spread of 3%. Both IIFCL and bankers have suggested to MORTH, the interest be benchmarked to the the base rate of State Bank of India (SBI) or the average base rate of five banks plus a 3% spread. The ministry, is however, unlikely to agree to this demand. Among the developers who are willing to construct roads via the hybrid route is MEP Infrastructure which successfully bid for three projects. The firm is a first-time developer of roads and Jayant Mhaiskar, VC & MD, MEP Infrastructure, said the company is on track to achieve financial closure for two projects by October. However, Mhaiskar added some lenders were requesting changes to the terms and conditions. “This is taking time and delaying closure,” he said. The hybrid annuity model was introduced by Nitin Gadkari, minister for road transport, highways and shipping, in early 2015 to revive private sector investment in the roads sector by re-allocating risks. Under this model, the governemnt collects the toll and pays the developer a biannual annuity for recovering investment and interest costs and fee for operations and maintenance. In the build-operate-transfer (BOT) model, the developer absorbs most of the risks—financial, operations and maintenance and revenue.The ministry of road transport and highways (MORTH) failed to get any bids for at least 21 projects worth Rs 27,000 crore between fiscal years 2013 and 2014. Lenders were expected to be comfortable with the hybrid model since the toll revenue streams, to service the debt, would be inbuilt into the framework. However, lenders remain wary of developers defaulting on the construction of the roads and want more collateral. Since the onus of collecting the toll — a politically sensitive task — is no longer on the developers and they are also not required to estimate the traffic, hybrid projects were expected to take off quickly. Over the last few years the government has come to the aid of developers by reschedulding the premium payable by them to NHAI so as to ease their cash flows. Moreover, it has also permitted them an early exit through the substitution route to free up capital. Further, it has de-linked environment and forest clearances, making it easier for them to start construction. Tress Way Jersey
10 State highways to be upgraded
An appeal by Minister for Higher Education Basavaraj Rayaraddi to Union Minister for Road Transport and Shipping Nitin Gadkari elicited an instant response from the latter who announced that 10 State highways would be upgraded as national highways, here on Saturday. Speaking at a function here, Mr. Rayaraddi said that the proposed roads of historical importance were in the backward Hyderabad-Karnataka region. They are Adoni to Yelburga-Sudi (200 km), Koppal to Nippani (300 km), Ranebennur to NH 50 (250 km), Lingsugur to Maharashtra border (240 km), Degalur to Mahaboobnagar (250 km), Sindagi to Hyderabad (300 km), Chincholi to Shahpur (170 km), Ilakal to Sirsi (250 km), Torangal to Haveri (250 km), and Afzalpur to Lokapur (170 km). Lerentee McCray Womens Jersey
Stress on aesthetic coastal highway design: NHAI
A coastal highway, around 451-km-long, is proposed to be constructed along the Odisha coastline with an emphasis on designing it in a manner which is “aesthetic and environmentally compatible”, officials said on Sunday. A high-level meeting of the National Highway Authorities of India (NHAI), Odisha region, held under the chairmanship of Development Commissioner and Chief Secretary (in-charge) R Balakrishnan, considered the proposed alignment of the highway on Saturday. Balakrishnan directed the officials concerned to make the road design “aesthetically” and in a way which is “environmentally compatible”, in consultation with the Forest and Coastal Regulation Zone (CRZ) authorities. He also sought steps to plan the alignment in a manner which boosts tourism and port-based industrial activities in the state. The NHAI was also advised to share the plan with the respective departments and collectors for their considered inputs, an official statement said. Dharmanada Sarangi, Chief General Manager (CGM), NHAI, who made a PowerPoint presentation on the proposal, said the proposed highway currently proceeds through Chhatraput-Satapada-Konark-Astaranga-Nuagaon-Paradeep–Ratanpur -Satabhaya-Dhamara-Basudevpur-Talapada-Chandipur-Chandaneswar– Digha. Of the total length of 451 km, around 29 km come under Ganjam district, 153 km under Puri district, 54 km under Jagatsinghpur, 49 km under Kendrapara, 61 km under Bhadrak, 99 km under Balasore district and six km connecting East Midnapore district in West Bengal, he said, adding that over 178 villages would be connected by the highway. It would also have bridges over several rivers including the Rushikulya, Kushabhadra, Mahanadi, Brahmani, Baitarani and Subarnarekha, besides Chilika lake, the statement said. The road, which would boost tourism and industrial activities in the region, would also serve as a highway linkage to all the ports in the state. Available data shows that so far, two expert consultants have been engaged for carrying out the preliminary survey and preparing the Detailed Project Report (DPR). While the preliminary survey has been done and the preliminary alignment of the road suggested, the DPR is expected to be prepared by February, 2017, the statement said. Seattle Seahawks Jersey