OIL and ONGC pay differential royalty to State of Assam
Public Sector Upstream Oil Companies- Oil India Limited and ONGC Limited today made a payment to the Government of Assam, towards differential royalty on pre-discount price for the period from 1st February, 14 to 31st March, 16. The amount paid by OIL is Rs. 11.4924 billion and the amount paid by ONGC is Rs. 3.0064 billion. The cheques were handed over by the CMDs of ONGC and OIL to the Chief Minister of Assam, Sarbananda Sonowal at New Delhi, in the presence of Petroleum Minister, Dharmendra Pradhan and other dignitaries. Speaking on the occasion, the Petroleum & Natural Gas Minister Dharmendra Pradhan said that injustice was being done to Assam due to political reasons in the payment of royalty. He said the differential royalty being paid today was Assams right. The Minister said that the natural resources of a place belong to the people living there and, hence, it was proper that full royalty should be paid to Assam for the oil explored there. He said that this gesture will provide the feel-good factor and improve cooperation between the oil companies and Assam. Assam Chief Minister, Sarbananda Sonowal thanked the Petroleum & Natural Gas Minister for releasing the amount due to it in a single installment. He said that Assam is suffering from a natural disaster and is in acute need of funds. He also thanked the Oil PSUs for contributing Rs. 150 million towards the CM Relief Fund from their CSR initiative. As per statutory provisions, royalty on production of crude oil in the state of Assam is paid by ONGC and OIL to Assam Government. Effective from 2008-09, the royalty to all State Governments including Assam was being paid on post-discount price of crude oil realized by ONGC and OIL from the Public Sector Oil Marketing Companies (OMCs). In view of the litigation arising out of the loss of royalty to State Governments due the discounts being provided by the ONGC and OIL to public sector OMCs and interim decision of the Supreme Court dated 13th February, 14, MoP&NG vide letter dated 15th July, 16 has decided that ONGC and OIL will pay royalty to all crude oil producing states at pre-discount prices effective 01.02.14, pending the outcome of the SLA (Civil) No. 1596/2014 filed by ONGC Ltd. before the Honble Supreme Court. Lee Smith Womens Jersey
Govt could save Rs 20 billion on LPG subsidy through sustained LPG price hikes
The government could save petroleum under-recoveries to the tune of Rs 9.10 billion in the current financial year if the price of subsidized cooking gas or Liquefied Petroleum Gas (LPG) is raised by Rs 1.95 per cylinder per month till March 2017. The savings would stand at a whopping Rs 20 billion for the next financial year in case the price rise is sustained at the current level of volumes. The Oil Marketing Companies (OMCs) – Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) – had on Monday raised the price of domestic cooking gas by Rs 1.93 per cylinder. Post the hike, a subsidized LPG cylinder now costs Rs 423.09 in Delhi as against RS 421.16 previously. This was the second straight monthly increase in subsidized LPG prices. “The OMCs may continue to increase retail prices of subsidised domestic LPG by Rs 2 per cylinder every month, similar to subsidised kerosene retail price hike by Rs 0.25per liter per month. If price hike continues, the move would be an important step in the right direction. Besides, a small quantum of price hike could lighten the burden on the consumers considering the politically sensitive nature of the product,” said K Ravichandran, Senior Vice President at research and ratings agency ICRA. According to the current under-recovery sharing formula, the centre bears domestic LPG subsidy upto Rs 18 per Kilogram (around Rs 255 per cylinder) under the Direct Benefit Transfer for LPG (DBTL) scheme. For the month of August 2016, the subsidy on domestic LPG stands at Rs 64 per cylinder. This provides comfort to the state-owned oil firms. “As the domestic LPG under-recoveries of upto Rs 255 per cylinder are to be borne by the centre, the major benefit from fall in Under-Recoveries on domestic LPG would accrue to the government. Also, the benefit of lower under-recoveries would increase with rise in subsidised LPG consumption volumes,” Ravichandran said. The move to increase price follows various steps taken by the government to reduce subsidy including DBTL, cancellation of fake connections and the GiveItUp campaign. The steps have led to total subsidy savings of Rs 212 billion in the past two financial years according to government estimates. A gradual increase in subsidised LPG prices would also be positive for OMCs as they gain from marginal savings on interest burden due to lower under-recoveries. Domestic LPG subsidy was earlier expected to reach Rs 255 per cylinder at an Indian Basket crude oil price of $60 per barrel. Beyond that level of crude oil prices, either the consumers or oil companies would have to bear under-recovery on LPG. According to ICRA, following the total increase of Rs 17.55 per cylinder in subsidised LPG prices, the government may continue to bear threshold LPG subsidy upto crude oil prices of $63-65 per barrel. This would be positive for PSU oil companies over the long term in case crude oil prices increase beyond $65per barrel. Andrew MacDonald Womens Jersey
Barring five, all petroleum items under GST regime
Clarity on the applicability of goods and service tax (GST) on petroleum products may be absent but analysts say a dual tax regime for the oil and gas industry will make compliance difficult. Products like kerosene, naphtha and LPG will be under the ambit of GST, while five items in the basket — crude oil, natural gas, aviation fuel, diesel and petrol — have been excluded during the initial years. Abhishek Jain, tax partner, EY India, said the oil and gas industry would largely be negatively impacted by the introduction of GST. “Because of the peculiarity, this industry would be pained to comply with both the current tax regime as well as the GST regime,” he said. While compliance is one reason, taking tax credit would be another issue. Besides, there would be non-creditable tax costs. Jain cited the example of a refinery producing diesel and petrol that would pay GST on the procurement of plant, machinery and services; GST would not be creditable against the out-excise duty and VAT levied on petrol and diesel. “The said tax costs would have an inflationary impact on the overall economy,” he said. Under the proposed GST regime and the current VAT structure, tax on inputs are deducted from the tax payable on the final product. Besides plant and machinery, crude oil and natural gas, which are processed to get various petroleum products, do not attract GST. For instance, LPG is produced both from natural gas and crude oil. While LPG would be part of GST, crude oil and natural gas would not be. The constitutional amendment Bill cleared by the Rajya Sabha is an enabling legislation. It is expected that clarity on what happens to the rates on petroleum products covered under the GST ambit will come only after the central GST Bill is passed by the Union government and after the states pass their respective GST Bills. The Constitutional Amendment Bill passed by the Upper House on Wednesday said petroleum” would be under the purview of GST. It is not clear which products are covered under the generic terms. Oscar Lindberg Authentic Jersey
GST roll out may improve ease of doing business: Govt
The government has set April 1, 2017 as the target date for introducing the goods and services tax, even as it said there are challenges to meet it. GST may improve ease of doing business and bring down prices in the long run though much of it would also depend on the rates that are yet to be decided, it said. Addressing a press conference a day after the Rajya Sabhha passes the much-awaited Constitution amendment Bill, Finance Minister Arun Jaitley said the government has given notice to table the changes to the Bill in the Lok Sabha, which has already cleared the earlier version of the Bill. The Bill will go to 29 state assemblies whose monsoon sessions are on currently. The states where the session is not on can call special session, he said. In a presentation, Revenue Secretary Hasmukh Adhia said the target date for GST roll out is April 1, 2017. To a query over this, Jaitley said, “We are going to try to make it as reasonably quick. Which is a date is yet to be seen,” he said. However, he also added that setting target is better than having none. Adhia spelt out seven challenges that the government has to address to meet the deadline. These include calculation of revenue base of Centre and States, along with compensation requirements of Centre, GST rates structure, list of exemptions, forming of consensus on model GST Bill, threshold limits, compounding limits and avoiding dual control over scruity and assessment. The finance minister said once GST is rolled out, ease of doing business would improve in the country and in long run the tax rate would also come down. “It is obvious that many items may see reduction in prices,” he added. However, to a query that the countries who have introduced GST saw rise in inflation initially, he said,”there is no settled model in this regard.” He said all this would also depend on the GST rates and slabs, a decision which is yet to be taken by the GST council. When asked about the 18% tax rate which the Congress demanded based on the chief economic adviser Arvind Subramanian report, he said CEA had suggested rates in the range of 16.9-18.9%, which when rounded off becomes 17-19%. “This 18% has been thrust on CEA,” he said. The finance minister said 60-70% of items attract 27% tax, including Central and states. If cesses, surcharges and local taxes are also included it goes up to at least 30%. Now, Empowered Committee of state finance ministers, he said had resolved to bring down GST rate from this level. However, the rate should also meet the states development goals. This balance will be decided by the proposed GST council, he said. Chris Carson Womens Jersey
NHAI to roll out scheme for highway patrolling and quick response system
National Highways Authority of India (NHAI) will soon roll out a highway incident and allied services scheme to aid road users. The scheme will include highway patrol and quick response mechanism for commuters facing problems. While the focus will be on helping accident victims and ensuring smooth traffic, the increased patrolling is also likely to deter criminals who target commuters. “We are preparing standard operating procedures for the scheme. NHAI will set the norms for people to be engaged in this service,” NHAI chairman Raghav Chandra told TOI. He said those engaged in such schemes, to be outsourced to private players, will have no policing powers. “They will call up local police for action,” Chandra said. The scheme is being designed under public-private partnership model. The need for a specialised patrolling system has been underlined after a string of crimes, including the recent gang rape of a woman and her daughter on NH-91 in Bulandshahr, UP. Cory Littleton Womens Jersey
Toll tax on national highways may be here for next 30 years
Minister of Road Transport and Highways has proposed that a bulk of the money required for construction, especially the Bharatmala project, be raised through monetisation of public funded national highways projects, according to a report in The Indian Express. The proposal, which is likely to be approved by the union cabinet is about putting 75 projects, constructed by NHAI using public money on auction for bidding by private firms. Private operators would be offered the toll collection rights for next 25-30 years in lieu of a lump sum payment to the government. The proposal, if implemented is expected mop up of about Rs 80,000 crore, the report said. The projects identified for this purpose under the model called Toll-Operate-Transfer (TOT) have been in operation for at least two years and currently generate toll of Rs 2,700 crore per year. The idea behind this is to generate immediate resources while ensuring that operation and maintenance of constructed highways is more efficient. The private sector is also better in terms of toll collection, the report said quoting a government source. Last month, the government had announced that about Rs 7 lakh crore would be spent to develop around 50,000 kilometres of national highways over the next five years. Sebastian Aho Authentic Jersey
Modi govt nod to auctioning stretches of national highways
The Modi government on Wednesday cleared a plan to auction completed stretches of national highways built from public funds and give investors such as sovereign funds the right to collect toll. The money raised from the auction would be used to build new highways. The road transport and highways ministry has identified 75 highway stretches that would go under the hammer to begin with, an official statement said. “We plan to auction completed projects in bundles of five-six. The length of the first such bundle of highway projects is around 6,000 km,” a ministry official said. The highest bidder would have to pay the money upfront and will get the toll collection rights on the auctioned stretch for 30 years. The bidder would also have to operate and maintain the highway stretch. Union minister of road transport and highways Nitin Gadkari hopes to generate between Rs 80,000 crore to Rs 1 lakh crore from the first tranche of auctioned projects. Gadkari has set a target to build 30km of highway per day. If he has to deliver on this promise, the government needs to invest Rs 5 lakh crore over the next five years. The funds generated from these auctions could be used to meet its requirements for expansion of highways and their maintenance. “This could address development/strengthening of highways in unviable geographies,” the statement said. A government official told HT that international sovereign funds and pension funds looking at long-term investment for assured returns were expected to bid for these projects. “The completed highway projects fit their bill as they are risk free. There are no construction-linked risks like land acquisition issues or regulatory hurdles,” the official said. The government said the existing model of inviting companies to operate and maintain highways for six-nine years had only attracted smaller investors, largely contractors and developers. Jim Dray Authentic Jersey
National Highways Authority of India gets nod to monetise projects
The government on Wednesday opened up brownfield investments in the highway sector to institutional investors. The Cabinet has allowed the National Highways Authority of India (NHAI) to monetise public-funded national highway projects, which are operational and are generating toll revenues for at least two years after the commercial operations date, under a toll operate transfer model. The monetisation will be subject to approval of the Ministry of Road Transport and Highways or NHAI on a case-to-case basis, an official statement said. Around 75 operational highway projects completed under public funding have been identified for potential monetisation using the toll operate transfer model. The government is of the view that monetisation of public-funded national highways could create a framework for attracting long-term institutional investment on the strength of future toll receivables. Market feedback indicates that certain institutional investors from outside the country have a long-term investment appetite and are keen to participate in operational highway projects with stable toll revenue outlook. The proposal also means operation and maintenance (O&M) framework requiring reduced involvement of NHAI in projects after construction and completion. The corpus generated from the proceeds could be utilised by the government to meet its fund requirements regarding future development and O&M of highways. It would also create new business opportunities for a new vertical of developers who specialise in O&M of highways, institutional investors including pension and insurance funds, and sovereign funds which are otherwise averse to taking construction risks but are adequately equipped for making long-term investments in road infrastructure. The proposal is also aimed at ensuring better O&M of public-funded highway stretches resulting in enhanced quality of service for highway users. At present, the selected concessionaire for operate, maintain and transfer contracts, which are completed and operational, is required to take care of the project for a period of around six to nine years. Evan Engram Womens Jersey
Cheyyur UMPP electricity to be unaffordable, say analysts
The 4000 megawatt coal-fired Cheyyur Ultra Mega Power Project is likely to be a non-starter at best, or a financial disaster for consumers, Tamil Nadu Generation and Distribution Company (TANGEDCO) and the state government if it actually gets built, according to a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA). The report assessed tariff rates and risks associated with the Cheyyur project after the government proposed revised bidding guidelines to make the project more attractive in response to the withdrawal of prospective bidders who said the project was too risky. “Even with revised guidelines, the risks of the project remained daunting enough to deter investors and lenders,” IEEFA said. “In the unlikely event of the project being awarded by end 2016, the report estimates that electricity from the power plant will have a levelised cost of Rs. 5.93 per unit – far higher than average cost of coal-based electricity. That is bad news for electricity consumers and tax-payers in Tamil Nadu,” it said. S. Gandhi, former TNEB engineer and president of Power Engineers Society of Tamilnadu said in the report: “Seen together with Tamil Nadu’s indebtedness, TANGEDCO’s hopeless financial situation and the political culture of extending freebies and heavily subsidised electricity, Cheyyur project’s expensive electricity will worsen the state’s financial situation,” IEEFA said following last year’s Cheyyur bidding fiasco, the ministry of power revised the bidding guidelines to allow promoters to pass on fuel cost and foreign exchange volatility to electricity consumers and own the project after the contract period. The guidelines also guaranteed that acquisition of “critical” land will be completed by the time of the bidding. However, there is little clarity on what is critical land and what is not critical. According to IEEFA at Cheyyur, land acquisition for the coal conveyor corridor, road and rail access and the ash pipeline have not even commenced. The potential land-losers, however, have indicated that they will not part with their farms. Regardless of whether or not these lands are seen as critical, the project cannot take off without roads or a means to bring coal from the port to the power plant. IEEFA’s report points out that the revisions help neither the consumers nor the investors. “The fuel-cost pass-through will expose consumers and the state electricity board to tariff volatility. Any future increase in coal cess would add on to this volatility. Moreover, the uncertainty over land acquisition would deter investors” said Jai Sharda, a financial analyst at IEEFA and one of the authors of the report. “The Cheyyur project is particularly irrelevant considering that Tamil Nadu is set to become power surplus, and has no need for such a massive baseload capacity enhancement,” he said. According to the report, “The real issue with the Tamil Nadu electricity sector is not the availability of power generating capacity, but the high indebtedness and grid transmission and distribution losses. The state’s power distribution company, TANGEDCO had accumulated losses of Rs. 650 billion over the decade to March 2015. One of the key drivers of this indebtedness is the loss incurred in transmission and distribution of electricity in the state. Aggregate Technical and Commercial (AT&C) losses in 2014-15 were at an exceptionally high 24.4% against an global grid average of 6-8% and best practice is Germany at 4-5%. The high debt and losses incurred by TANGEDCO prompted rating agencies to downgrade its rating to ‘C+’ in the annual integrated ratings of state distribution companies.” Greg Olsen Womens Jersey
5,200 MW solar capacity to be added in 2016-17: CARE
The country is set to add 5,200 MW solar capacity this fiscal with various states coming out with policies for the sector, CARE Ratings said. According to a study conducted by the ratings agency, out of total installed renewable energy capacity of 42,750 MW as on March 31, the share of solar energy increased to 15.82 per cent, as against 13.8 per cent in 2014-15. Various states such as Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana and Uttar Pradesh have come out with policies for awarding solar power projects. Also, government entities like NTPC and SECI have come out with tenders of large capacities in GW size, including those in solar parks. “After witnessing record capacity addition of around 3 GW in FY16, 1,000 MW in the first quarter of this fiscal, and bids of around 6,000 MW awarded over the last six months or so, the solar sector is on a strong growth path. “Nearly 5,200 MW is likely to be added this fiscal and 8,000 MW in FY2016-17,” it said. Further, the Modi government’s ambitious target of 100,000 MW solar capacity by 2022 has attracted serious interest from various players, domestic as well as overseas. The sector is witnessing increased participation from large overseas investors and developers, such as ADIA, CLP, EDF, ENEL, Engie, Fortum, First Solar and Goldman Sachs, while large domestic business houses have also laid down ambitious plans for solar capacity addition. “According to various estimates, India is set to become the fourth largest solar market globally in 2016 behind only to China, USA and Japan, primarily on account of government’s thrust on significantly enhancing the installed solar capacity to 100,000 MW by 2022,” the report said, adding that the recent M&A activity is also reflective of the growing confidence of bigger players in the sector. CARE Ratings further noted that solar PV project costs have witnessed a sharp decline over the years which has led to shift from preferential feed-in-tariffs to competitive bidding. “Apart from decline in solar PV project costs, entry of various players has led to significant increase in competition which has led to significant decline in solar tariffs as visible from the trends in the completed bids over the last 9-12 months,” it said. The ability to manage cost efficiently, secure longer tenure and cheaper debt are the key factors which will have bearing on the bids, returns and viability of the projects, CARE said. It further noted that the capital cost for setting up a solar PV project has been coming down over the years. CERC’s benchmark project solar PV cost has come down from Rs 6.1 crore per MW for 2015-16 to Rs 5.3 crore per MW for this fiscal, with cost of modules declining marginally while civil and other costs have witnessed a steeper fall. Julius Nattinen Womens Jersey