Madhya Pradesh, Tamil Nadu among 4 states to join UDAY soon
Four states, including Madhya Pradesh, Telangana and Tamil Nadu, may soon join the Centre’s UDAY scheme meant for revival of debt-stressed power distribution companies. “Power Ministry talks with Madhya Pradesh, Telangana, Tamil Nadu and Puducherry on UDAY scheme are at advance stages. These states are likely to join the scheme very soon,” a source said. Madhya Pradesh can formally ink the agreement in a few weeks, the source said. Madhya Pradesh discoms have an accumulated debt of Rs. 35,000 crore. The state is estimated to get benefit to the extent of Rs. 11,500 crore during next three years of the turnaround. Following the reforms, it could go up to Rs. 14,500 crore annually. In the case of Tamil Nadu, the source said the total debt is Rs. 67,000 crore, including around Rs. 46,000 crore in the distribution segment. It is estimated that during three years of the turnaround, the state will get cumulative benefit of Rs. 18,600 crore. After three years, the annual benefits are estimated at Rs. 22,420 crore. Power Minister Piyush Goyal has recently met Tamil Nadu Chief Minister J Jayalalithaa in an effort to get the state on board on UDAY. Similarly, Telangana discoms’ debt stands at around Rs. 6,700 crore. For the three years of reforms, the cumulative benefit is estimated at Rs. 6,000 crore, following which the state will see it go up to Rs. 6,100 crore annually. Puducherry has a debt load of Rs. 423 crore and will get benefits of Rs. 440 crore annually after implementation of UDAY scheme in three years. Earlier this week on Tuesday, Manipur became the 14th state to join the UDAY scheme, for which the gains translate into around Rs. 263 crore. It is also the first North Eastern state to opt for UDAY for improving efficiency of its discoms. The UDAY scheme was launched by the Centre in November last year to revive debt-laden power distribution companies. Bryan Anger Womens Jersey
No final decision on scrapping SPVs for four UMPPs: Govt
No final decision has been taken to scrap special purpose vehicles set up for four ultra mega power projects in Maharashtra, Odisha, Karnataka and Chhattisgarh. “No final decision has been taken to wind up the four special purpose vehicles (SPVs),” Power Minister Piyush Goyal said in a reply to the Lok Sabha today. Activities in the ultra mega power projects (UMPPs) — Maharashtra, Odisha (second additional UMPP), Karnataka and Surguja in Chhattisgarh — are stuck due to various reasons, including agitation by local people and non-identification of a suitable site. Goyal added that around Rs 96.82 crore has been spent by SPVs set up for these UMPPs. According to the minister, the Chhattisgarh government has said it in not keen on setting up of 4,000-mw UMPP in the state. Four UMPPs, namely Sasan in Madhya Pradesh, Mundra in Gujarat, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand, have already been transferred to the developers, he said. “Out of the four awarded UMPPs, two namely Mundra and Sasan are in operation,” the minister said. The minister said 6×660 mw Sasan UMPP in Madhya Pradesh, which was awarded and transferred to Reliance Power in 2007, is fully commissioned. The 5×800 mw Mundra UMPP in Gujarat, which was awarded and transferred to Tata Power in 2007, also stands fully commissioned, he added.
Drop in the ocean: India’s strategic oil reserves unlikely to stir market
India’s initial plan to build-up its strategic petroleum reserves (SPR) is not shaping out to be the dramatic event that some in the market had hoped could help reignite global oil demand. While New Delhi has not shown its full hand in revealing its intentions, the first reports that SPRs might provide 90 days of net import coverage had stoked industry hopes of an important new pillar of oil demand. Indications now, however, are for much far less than this: shipping brokers say it’s possible the entire initial SPR build-up in the world’s third-biggest oil consumer could be handled by just a handful of Very Large Crude Carrier (VLCC) tankers. Indeed, India’s initial SPR plan pales in comparison to a programme that is ten-fold bigger in China and is a further sign that Asia’s demand outlook may not be as strong as expected. “I don’t see the Indian SPR having much movement on crude prices, mainly being that there is so much crude available,” said Matt Stanley of brokerage Freight Investor Services (FIS) in Dubai. India initially plans to build up oil reserves of 5 million tons (almost 40 million barrels) at three locations – Visakhapatnam, Padur and Mangalore – equivalent to almost 10 days of its average daily imports of 4 million bpd. About 1 million tons of crude has been filled at the Visakhapatnam site, according to Indian Strategic Petroleum Reserves Limited, a special purpose company managing construction of the reserve facilities. Construction and commissioning at the other two sites is in the process of being completed. Building up India’s initial crude storage requirements equates to 220,000 barrels a day (bpd) of tanker demand, according to a report by Braemar ACM Shipbroking. This amount “could theoretically be covered by two or three VLCCs if all came from the Middle East,” said Lars Spangberg, a tanker broker at Switzerland’s Ifchor Tankers. There are also doubts about whether India’s SPR purchases will be met by existing supplies. Instead, they might come from new production, meaning that they would not tighten the global oil market. “The new storage facilities could stimulate an increase in crude oil production from countries like Iran which are ready to add new oil to an already over supplied market,” said Luigi Bruzzone of shipping brokerage Banchero Costa (Bancosta). DWARFED BY CHINA’S PROGRAMME With the global oil market suffering from two years of oversupply, India has been touted as having the potential to pick up any slack from China and help rebalance the market. Even though India’s oil demand growth is strong, its SPR programme is dwarfed by an estimated 400 million barrels of crude China has imported over the past few years to build its own SPRs, which are equivalent to some 60 days of its 7.4 million bpd imports. It is also tiny when compared to the United States, where reserves stand at almost 400 days of its daily imports of over 8 million bpd. Shipping industry hopes that India’s SPR programme could lift tanker charter rates are also set to be disappointed. “Unfortunately, India is too close to the Middle East for this to make a big impression on the tanker market,” Spangberg said, although he said that some of the crude could be chartered from West Africa. Both India’s and China’s SPRs remain smaller than those of International Energy Agency (IEA) members, where import-dependent countries are required to hold reserves equivalent to at least 90 days of net import demand. In the longer term, however, the impact may be bigger. Both of Asia’s biggest oil importers want to mirror the IEA policy to have 90 days worth of import requirements in reserves. Patrick Wiercioch Womens Jersey
Shell net profit tumbles on low oil prices
Royal Dutch Shell’s net profit collapsed in the second quarter on low oil prices, weak refining margins and production outages, the British energy giant said Thursday. Net profits sank 71 percent to $1.175 billion in the three months to June, compared with $3.986 billion in the same part of 2015, Shell announced in a results statement. Profit on a current cost-of-supplies (CCS) basis — which strips out changes to the value of its oil and gas inventories — slid 72 percent to $1.045 billion in the reporting period. That was almost half of market expectations for CCS profit of $2.16 billion, according to Bloomberg News. A 25-percent rebound in Brent oil prices last quarter provided some relief, but the market hit three-month lows on Thursday as rising US inventories sparked resurgent supply glut fears. “Downstream and integrated gas businesses contributed strongly to the results, alongside Shell’s self-help programme,” said chief executive Ben van Beurden. “However, lower oil prices continue to be a significant challenge across the business, particularly in the upstream.” The downstream business includes refining, marketing and distribution, while upstream comprises exploration and production. Second-quarter production stood at 3.51 million barrels of oil equivalent a day, which missed forecasts of 3.63 million as output was hit by shutdowns in Canada and Nigeria. The recent slump in oil prices has pushed energy groups worldwide to slash spending and jobs, and sell off assets. “We are managing the company through the down-cycle by reducing costs, by delivering on lower and more predictable investment levels, executing our asset sales plans and starting up profitable new projects,” added van Beurden. “At the same time, integration of Shell and BG is making strong progress, and our operating performance continues to further improve.” The company completed in February a £47-billion takeover of BG Group, in a deal aimed at strengthening Shell’s position in the liquefied natural gas (LNG) market. “Our investment plans and portfolio actions are focused firmly on reshaping Shell into a world-class investment case through stronger, sustained and growing free cash flow per share,” said van Beurden. In late morning deals, Shell’s ‘B’ shares sank 3.73 percent to 2,026.50 pence on London’s FTSE 100 index, which fell 0.12 percent to 6,742 points. “Shell followed BP’s lead from earlier in the week to post a wince-worthy 72-percent slide in profits thanks to the continued weakness of oil and gas prices,” said Spreadex analyst Connor Campbell. “This not only sent Shell (shares) 4.0 percent lower but pushed the rest of its sector into the red as well.” Bob Lilly Jersey
Swiber to wind up, biggest Singapore casualty of oil slump
Singapore oilfield services firm Swiber Holdings Ltd filed for liquidation facing hundreds of million of dollars in debt and a decline in orders, becoming the biggest local name to fall victim to the slump in oil prices. Shares in other oil and gas-related companies dropped on the news, with the sector hard hit by a combination of weak oil prices, tumbling charter rates and clients either delaying or cancelling projects. Swiber’s shares have slumped by nearly 90 percent since mid-2014, taking its market value to just S$50 million ($37 million), while the company has flagged delays in orders, raising concerns and sparking demands for cash. Smaller firm, Technics Oil & Gas Ltd was placed under judicial management this month, and analysts said other firms could face difficulties. “If highly leveraged offshore and marine companies are unable to raise capital from equity markets, then they will be left with very little other options other than to file for liquidation or for judicial management,” said Joel Ng, an analyst at KGI Fraser Securities. Energy and offshore marine companies in Singapore have bonds totaling nearly S$1.2 billion ($881 million) due to mature over the next year-and-a-half, with S$615 million due over the next five months, according to IFR, a Thomson Reuters publication. Swiber said in a statement filed early Thursday that a Singapore court had appointed provisional liquidators and a hearing to wind-up the company has been set for Aug. 19.bit.ly/2avDQ62 Trading in Swiber’s stock was suspended, while shares in other oil and gas related companies such as Ezion Holdings (EZHL.SI), Marco Polo Marine (MAPM.SI) and Ezra Holdings (EZRA.SI) fell between 4 and 10 percent. Shares in Vallianz Holdings (VHLD.SI), 25 percent-owned by Swiber, tumbled 44 percent. Womens Jersey
Power Ministry sets green energy target for state discoms
State discoms will have to mandatorily draw at least 2.75% of their total power consumption from solar plants in the current fiscal, according to the renewable purchase obligation (RPO) norms laid down by the power ministry. States will have to increase the share of solar power to 4.75% in 2017-18 and 6.75% in 2018-19, the guidelines said. While the Ministry of Power has issued guidelines, the final targets will be set by each individual state’s electricity regulatory commission (SERC). The RPO has been divided into energy from solar sources and non-solar. The ministry has set the quota of power to be drawn from non-solar renewable energy sources at 8.75% in 2016-17, 9.50% in 2017-18 and 10.25% in 2018-19. This adds up to a total renewable energy share of 11.50% this year, 14.25% in 2017-18 and 17% in 2018-19. India had earlier announced a goal of achieving 8% intake of solar power by March 2022. The new guidelines amount to a significant increase in the targets set, in keeping with the government’s ambition of having 175,000 MW of renewable energy capacity by 2022, including 100,000 MW of solar energy capacity. Track record of state discoms is not very encouraging though. In the last three years, solar RPOs set by different SERCs varied between 0.25% and 1%, and yet they were rarely fulfilled, with penal action rarely being taken against defaulting discoms. Also, discoms, many of them badly cash-strapped, are hardly in a position to encourage renewable energy growth. Though renewable energy tariffs have been falling of late, thermal power remains more attractive for them. More so because solar and wind power, by their very nature, erratic or infirm with output varying considerably depending upon the sun’s intensity or the wind’s speed. Houston Texans Jersey
ONGC, Cairn India demand halving of cess on crude oil
State-owned ONGC and private sector Cairn India have demanded halving of cess on domestic crude oil production saying their burden has actually gone up after Finance Minister Arun Jaitley’s Budget exercise aimed at reducing the levy. Oil and Natural Gas Corp (ONGC) paid Rs 4,500 per tonne cess on crude oil it produced from almost all its fields including prime Mumbai High, till February 2016. In Budget for 2016-17, Jaitley changed the cess from specific levy to an ad valorem rate of 20 per cent of crude oil price. However, at the current oil prices, ONGC and other oil firms like Cairn are paying more than Rs 4,500 per tonne cess. Sources privy to the development said the two firms have made representation to the government saying the Rs 4,500 per tonne equals to 20 per cent ad valorem duty when oil price crosses USD 44 per barrel. And with oil prices ruling higher, the net impact of an exercise which was aimed at giving relief to domestic oil producers, is that they have to pay more now, they said. Historically, the Oil Industry Development (OID) cess was first levied in 1970s at the rate of Rs 60 per tonne. Over the next decades it was hiked few times. It was Rs 900 per tonne, when India opened up its economy in 1991 and was doubled to Rs 1,800 in 2002. In 2006, it was hiked to Rs 2,500 per ton when international oil price was USD 60 per barrel. It was further hiked to Rs 4,500 per ton in 2012 when oil pries were over USD 100 per barrel. Sources said the levy translated into no more than 10 per cent of the oil prices even when oil prices were at their peak. But when international oil prices slumped to decade low, putting question mark over fresh investments in exploration, Jaitley proposed to move to ad valorem rate of 20 per cent. The move was to give relief to upstream firms but has turned out to be reverse, they said. ONGC and other upstream players have sought reduction in cess to 8 to 10 per cent as the purpose of Budget exercise to rationalise the cess has been defeated even at current moderate crude prices. In a low crude oil price regime, cess imposes a significant economic burden on producers, they said. In addition to cess, other statutory levies like royalty (10-20 per cent), VAT (5 per cent) and Octroi (4.5 per cent) are also payable on production/sale of crude oil. At prevailing crude oil prices, with the revised rate of 20 per cent fro cess, ONGC would end up paying almost half of crude prices towards statutory levies, source said. Moreover, since both royalty and OID cess are production levies and not pass through to buyers, it adds up in cost of production of crude oil. Dennis Rasmussen Authentic Jersey
Private LPG bottlers may shine as govt plans to add 10 crore consumers
The government’s ambitious plan to enroll 10 crore new cooking gas consumers in three years is set to throw open big opportunities for private liquefied petroleum gas (LPG) bottlers. The oil ministry recently asked state oil firms to prepare a model for participation of private players in setting up cooking gas bottling plants as the public sector’s planned bottling expansion may not be enough to meet the entire projected demand in the coming years, an official said. If the idea takes off, private bottlers, which have just a minor presence now, could help meet a large part of the new refill demand from state LPG distributors such as Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum . Fixing logistics is the biggest challenge in the government’s plan to enhance LPG consumer base by 60% in three years. This means appointment of thousands of LPG distributors across the country, especially in the interiors where the new consumers are likely to mostly come from, and setting up scores of bottling plants to churn out refills in time for new consumers. The state oil firms currently have 188 LPG bottling plants with a bottling capacity of around 15.2 million metric tonne per annum. State firms sold nearly 17.2 million tonne in 2015-16, mainly helped by more than 100% capacity utilization at several plants and some help from private players. But with the projected demand of 20.7 million tonne in 2016-17 and 24 million tonne in 2018-19, as per industry executives, the state firms would need rapid expansion of their bottling facility. The state firms plan to erect 14 new bottling plants by March 2019, adding 1 million tonne annual capacity, state oil companies’ executives said, adding that another nearly 3 million tonne capacity will be enhanced by adding carousals and shifts at existing plants. This would still leave a projected demand-supply gap, which is what the government wants the private players to fill. In some locations today, state firms source LPG refills from a handful of private bottling plants currently operating. Some of the private players run bottling plants and distribute non-subsidized LPG cylinders under what is called parallel marketing. Reliance Industries has recently sought the government permission to distribute subsidized cylinders to households as subsidy is now transferred directly to cooking gas consumers’ respective bank accounts. Once a model for private participation is prepared, it would pave way for private bottlers who would have a reliable clientele in state oil firms. Mason Foster Authentic Jersey
Air India to recruit 500 pilots, 1,500 cabin crew in next 2-3 years
Air India may recruit about 500 pilots and over 1,500 cabin crew in next two to three years to meet the requirement as the fleet size is expected to increase considerably, a senior official has said. “We are planning to have 700 more pilots in the next two to three years keeping in view the fleet expansion. From last August till now, we have already recruited 250 pilots. So about 500 more pilots we are going to recruit. Advertisement for 400 pilots has already been floated,” AI’s General Manager (Operations) N Sivaramakirshnan said. Last year, Air India had sought to recruit 200 trainee pilots (senior trainee pilot license holders who come with A320 endorsement). However, it could select only 78. Now all those pilots are flying on various routes, he said. Nearly 150 pilots are expected to complete their training by December this year. According to him, the present strength of pilots is 858 and the beleaguered airlines lost about 100 pilots during the last two years. “We have plans to have cabin crew of 3,000 personnel. Besides the existing number, we are planning to take 1,500 more in the next two to three years,” he said. The official said Air India envisaged fleet expansion of another 100 aircraft in the next four years’ time. On training facilities for pilots, the official said currently they have three simulators in Hyderabad and four in Mumbai. The simulators in Hyderabad belong to A320 while the four in Mumbai belong to Boeing family. “We are planning to order one more simulator for training on ATR aircraft in Hyderabad. RFI (Request for Information) has already been floated. By January next year we hope that it would be operational,” he said, adding that the cost of the simulator would be about Rs 65 crore and an additional Rs 6 crore is needed for construction of building and other facilities for the ATR simulator. Though Air India does not have any ATRs in its fleet, services will be provided to its wholly-owned subsidiary ‘Alliance Air’. Malcolm Smith Jersey
AERA exempts small aircrafts from landing fee, will boost regional connectivity
The Airports Economic Regulatory Authority (AERA) has corrected the anomaly in its earlier tariff orders and has exempted aircraft with 80 seats or less from being charged a landing fee, a move that’s going to give a fillip to the regional connectivity plan. According to an earlier tariff order, which is still in force, AERA had allowed airport operators of Delhi and Mumbai to charge landing fee to aircraft with seating capacity of 80 or less. Norms exempt smaller aircraft from landing charges at all airports and no other operator charges them. The order will help boost the regional connectivity plan that pegs on making operations by smaller aircraft cost effective. The order is likely to benefit airlines that operate 70-seater aircraft and includes SpiceJetBSE 5.32 %, Air India and Jet AirwaysBSE 2.63 %. Airlines such as Air India and SpiceJet had made several representation to AERA on the issue. “In the new tariff order for Delhi, we have ordered that these smaller aircraft will be exempted from paying landing charges. We have also informed Mumbai airport about the same,” said a top AERA official, who did not wish to be named. The official said the matter would have been addressed in the first tariff period itself if proper representation would have been made by these airlines. “We received a lot of representations from airlines later and the exemption was put in place,” said the official. AERA’s order will not be implemented immediately because tariff order for Delhi airport is in the courts. Delhi International Airport Ltd (DIAL) in an email response to a query said the charge is on the basis of directions given by AERA under the AERA Act 2008. “Exemption from landing charges for aircraft with maximum 80 seats capacity was given by Airports Authority of India …dated February 11, 2004, which was applicable to only AAI airports at that point of time. The AERA Act 2008, came into force on January 1, 2009, according to which tariff for major airports has to be determined by AERA,” the airport company said in an email response. Airlines, however, complain that the exemption helps in running viable operations with smaller aircraft in the country and should not have been removed. “Since their aircraft are used for shorthaul flights, the cost of operations are very high. It is also becoming increasingly difficult to continue operations with such high landing charges,” said an Air India official, who did not want to be identified. He said the airline already had to pay a lot of money as landing charges in the past. “The government plans to provide regional connectivity but at the same time smaller aircraft are being charged landing fee. How can it implement its plan when such charges are only going to make operations by smaller aircraft unviable?” asked the official. Justin Braun Womens Jersey