Government exploring ways to bring petro products under DBT: Dharmendra Pradhan
Government is exploring ways to bring the petroleum products under the ambit of the proposed GST with the consent of states, Petroleum Minister Dharmendra Pradhan said today, announcing plans to implement DBT scheme in kerosene. Pradhan said in Lok Sabha that so far the petroleum products have been kept out of the purview of the proposed Goods and Services Tax but an in-principle decision has been taken to bring petroleum products under it. “The petroleum products will be brought under the GST but I don’t know when. Since we have a federal structure, we have to get the consent of the states. We are exploring various ways,” he said during Question Hour. The Minister said many states are against bringing the petroleum products under the ambit of GST as it was a huge revenue generating source for them. Pradhan said except Tamil Nadu, Mizoram and a few Union Territories, most of the states have increased taxes on petroleum products and it was difficult to bring a uniform tax rate across the country. The Minister said government was planning to implement the Direct Benefit Transfer scheme in kerosene after its successful implementation in LPG. “75 per cent profits to be incurred through the DBT in kerosene would be distributed among the states,” he said. Pradhan said plans are afoot to make Haryana a kerosene- free state after making Delhi and a few other UTs kerosene-free. Replying to a supplementary, the Minister refuted allegations that despite a fall in the international crude prices, retail prices in the country have not reduced saying petrol prices were slashed 27 times and diesel prices 21 times in last two years. Pradhan said despite international crude prices going down, cost of refining, transportation and other costs have not gone down. He said India being a welfare state, the benefits are being passed on to the people by way of better roads, good hospitals and other facilities. Chuck Foreman Authentic Jersey
Infrastructure projects may be insured to reduce risks over delays
Promoters of infrastructure projects may soon get to buy an insurance to cover interest payments should the project run into delays due to extraneous reasons, a measure government thinks will reduce risks, lower interest rates and step up lending to the sector. The government is working with state-run financial institutions to launch a product on these lines by the end of this year, said a government official aware of the deliberations. According to the latest data from the Reserve Bank of India credit to infrastructure sector contracted to 3.9% during March-May 2016 compared to the 0.3% increase a year ago. “The idea is to set up a fund which will provide protection to promoters at a reasonable fee. The insurance part will kick in if the project gets stuck for extraneous reason, and which are beyond the control of the promoter,” the official said, requesting not to be identified. Asian Development Bank has evinced interest in setting up such a mechanism, he said. The fund will bear the cost of interest payment during such period, thereby ensuring that the account remains standard in the books of lenders. The latest finance ministry data shows that public sector banks had gross non-performing assets amounting to Rs 4.76 lakh crore in 2015-16, mostly in the infrastructure segment. “Various mechanisms are being deliberated, which include lead bank to participate in the project specific fund. The idea is to tackle the issue before it becomes a nonperforming asset,” the official said. He said the newly formed National Investment and Infrastructure Fund (NIIF) can also play a major role in the initiative. The government has set up NIIF with an initial corpus of Rs 20,000 crore with the aim of attracting investment from both domestic and international sources for in frastructure development in commercially viable projects. According to experts, this insurance fund can help promoters especially in cases where there is a delay in execution and it can work like a revolving fund which may eventually become self-sustainable. “In most cases it so happens that the bank asks the promoter to bring in more equity, which is a huge challenge,” said Jaijit Bhattacharya, partner, infrastructure at KPMG India. “The insurance fund can step in during such eventuality and provide relief. A portion of the revenue, once the project takes off, can be used to service the interest component of such cover provided,” he said. Another official, associated with a state-run financial institution, said that the product will be on the lines of a mortgage guarantee, which protects lenders in case a home owner defaults on a mortgage loan. “Already, we have similar nature of products in the country and they are doing well,” he said. India Mortgage Guarantee Corporation offers a product on these lines to both borrowers and lenders in retail housing sector wherein the firm covers a portion of both interest and principal amount if the borrower defaults. Bankers are of view that given the uncertainty in infrastructure lending, a product on these lines will give comfort to the lenders. “There is a need to push investment in infrastructure sector. Any financial product that helps to assuage the concerns of both borrowers and lenders is a good move,” said RK Gupta, general manager at Bank of Baroda. Bennie Logan Authentic Jersey
States have to use 10% of central fund to repair National Highways’ black spots
Now 10% of the Central Road Fund (CRF) allocated to each state will be utilised for works relating to road safety. The Centre has modified the CRF rules to include this provision, particularly for repair of black spots based on road crashes and fatality data or works CRF is formed by collection of cess levied on petrol and diesel every year. The Central government allocates the share to the states based on a formula that gives 30% weightage for fuel consumption and 70% for its geographical area. According to the modified guidelines, “road safety works” will get priority in road-building projects or any scheme that state governments will undertake using CRF. The other major focus area will be using this fund for building over bridges or underpasses. Sources said the changes were made considering the increasing number of crashes on both state and national highways. The fund will be primarily used for the network comprising selected state highways and major district roads in states, which have the potential to be upgraded as National Highways. According to government’s latest road accident data, nearly 97,000 of the 1.46 lakh deaths on roads took place on state highways and other roads. Rural areas were more prone to road crashes, accounting for 53.8% of total road accidents during 2015. The percentage of road fatalities was higher at 61% (89,155) in rural areas in comparison to nearly 57,000 in urban areas. T. J. Logan Authentic Jersey
Focussing on getting stuck projects operationalised: Essar Power
Debt-laden private utility Essar Power today said its focus is on getting stuck projects operationalised and profitable. The company is burdened with Rs 20,369 crore debt and is evaluating possibilities of reducing it. “Our focus and priority is to get our plants operational and profitable. We have no plans now to monetize any assets for now,” a company spokesperson said. Earlier, a company’s senior executive had said that to reduce debt Essar Power was mulling monetization of some units plants, including some of its gas-based plants in the country. Esaar Power has said it is planning to fully operationalise its 1,200 mw Mahan project in Madhya Pradesh as well as its two captive gas-based plants in Gujarat. It has two captive gas-based plants in Hariza in Gujarat with a capacity of 500 mw and 515 mw each, which are currently shut for want of fuel. The 500-mw Bhander plant in Hazira was commissioned in 2006 and commenced full commercial operations in 2008, but due to high fuel price, the firm shut the plant three years ago. The 515-mw Essar Power Hazira plant had signed power purchase agreements (PPAs) with Essar Steel and Gujarat Urja Vikas Nigam and was commissioned in October 1997. “Both these plants are ready and can go operational once we have fuel supply. We are hopeful of commencing operations on the Bhander project this quarter,” the spokesperson added. The company is also in the process of tying up for coal linkages for its 1,200 mw coal-based Tori project in Jharkhand in the next fiscal. Meanwhile, the firm has sought easier terms of repayment for some of its power plants so it matches the life-cycle of the project. Banks have given a go-ahead to that under 5:25 refinancing scheme. It extends loan repayment for infrastructure companies by up to 25 years, which can be refinanced every five years. Essar Power has already restructured Rs 10,000-crore under the scheme and hopes to complete up to Rs 18,000 crore this calendar year. Blake Wheeler USA Authentic Jersey
Government set to start talks on merging 13 state oil companies to create behemoth
The government is set to start consultations for an ambitious plan to merge 13 state oil firms to create a giant corporation whose revenue dwarfs global energy major Chevron which competes with US conglomerate General Electric in the Fortune-500 ranking. The Cabinet Secretariat has referred the idea of the integrated giant, which would also absorb various institutions related to safety, development and analysis, to the oil ministry, sources familiar with the development told ET. Following this, the oil ministry has begun the process of evaluating the prospects of creating the conglomerate, which will have a bigger market value than Russian state oil giant Rosneft and India’s Reliance Industries Ltd, sources said. It plans to consult all stakeholders including the state firms that may be combined to create the mega corporation that will be the country’s No. 1 in turnover, net profit, capital expenditure and market capitalisation, they said. The oil ministry declined comment for the story. A similar proposal was considered more than a decade ago. But the government in July 2005 said that the official committee that studied the matter felt that a merger or formation of the holding company “may not be advisable for the present”. Oil and Natural Gas Corporation (ONGC), the top oil producer and one of the largest companies in the country, leads the pack of 13 state oil companies that are being considered for the merger. Other companies include Indian Oil Corporation, the nation’s largest refiner and fuel retailer, Bharat Petroleum CorporationBSE 2.19 %, Hindustan Petroleum, GAIL, Mangalore Refinery and Petrochemicals (MRPL), Chennai Petroleum, Numaligarh Refinery and Oil India. A consolidated entity could rival the likes of Russia’s Rosneft ($55 billion in market cap) and UK’s BP Plc ($112 billion) in market value and financial power. The top six listed Indian state oil firms have a market value of $77 billion. In 2015-16, all state oil firms together reported a profit of Rs 45,500 crore on a revenue of Rs 9,32,000 crore. In the current fiscal year, they have planned a capital expenditure of Rs 87,600 crore. The government is also evaluating if the consolidated entity can include all non-corporate government bodies in the oil sector such as Oil Industry Development Board (OIDB), Petroleum Planning and Analysis Cell (PPAC) and Petroleum Conservation Research Association. A powerful integrated company would have the muscle to consider proposals like a significant stake in Rosneft. Oil minister Dharmendra Pradhan recently said Indian state firms were considering a stake in the company that pumps more oil than Exxon. The NDA government under AB Vajpayee and the UPA government in its first term had seriously explored the possibility of merging state oil companies or reorganising them in fewer units to give them heft and efficiency that would help them compete globally. In 2005, the government had also appointed a panel led by V Krishnamurthy, which advised against merging the state oil firms, arguing the dominance of a mega entity may not be good for competition in an energy-starved economy and that there were several examples of smaller specialist firms doing better. It also argued that globally, less than a third mergers succeeded in enhancing shareholder value mainly due to their inability to manage employees. The option of cutting jobs to slash costs mostly undertaken by private players after mergers is not easily available to state firms where lay offs have big political fallouts. And it requires greater political will and smart manoeuvring to offset that. Moreover, the competing interests and ambitions of top leaders and diverse cultures at companies also obstruct a smooth merger. In the last decade since the merger talks were buried, state oil firms have also changed in character, growing in size and pushing for vertical integration. Refiners like Indian Oil, HPCL and BPCL have acquired several exploration and production assets in India and overseas while ONGC has enhanced presence in refinery and petrochemicals. Kyle Wilber Womens Jersey
Air India Jul 2016
Twenty-nine Air India employees, including six airhostesses, will soon join the national carrier in the cockpit as pilots. These employees, currently working as cabin crew, aircraft engineers and dispatchers have got the rare opportunity to fly aircraft thanks to Air India chairman Ashwini Lohani’s idea of grooming in-house talent. These 29 who will soon receive their letters of intent (LOI) and join as trainee pilots on a five-year contract, qualified the technical knowledge test held on July 2. In a letter informing them of their successful selection, Vikas Gupta, senior manager (personnel), said that the candidates would now undergo an endorsement course before joining the cockpit. Of the 29, eight are deputy chief cabin crew members, 14 are senior cabin crew members, one is a senior aircraft engineer and two are from flight dispatch. An assistant manager in the commercial department will also be joining the national carrier as a trainee pilot. Air India officials informed that a similar practice of grooming employees like loaders, baggage handlers, and cabin crew to become pilots was initiated by Malaysiabased budget airline, AirAsia’s Tony Fernandes. Sam Bradford Authentic Jersey
Government is attempting to take the fuss out of flying – but airlines won’t let the plan take off
India might be the fastest developing economy in the world but 98% of the country’s citizens have never been inside an aircraft. The Narendra Modi government is trying to change that. Apart from connecting remote locations with aircrafts, the air travel regulator has been ushering new policies that will make it more attractive for travellers to fly. These policies range from faster redressal of complaints to lower charges levied on excess baggage or cancellation. The Directorate General of Civil Aviation which acts as a regulator for the aviation sector in India recently introduced a new civil aviation policy and has mandated that airlines follow its new passenger-centric rules. Behind these rules is the philosophy that airline operators shouldn’t harass or extort money from travellers in the name of extra charges – something that even the so-called budget airlines have resorted to do. DGCA has taken a stand and mandated that airlines will be charged harsher penalty than before on cancellation or delays of flights. For instance, about 1% of all domestic flights in the country are cancelled each year, causing great inconvenience to customers and a financial drain for the operator. In 2015, Jet Airways paid Rs 3 crore in compensation to passengers while Air India ended up paying a hefty Rs 13 crore. Now, this amount will go up substantially. Starting August 1, airlines will have to shell out upto Rs 10,000 per passenger on cancellation or delay in a flight beyond two hours. Moreover, carriers that deny boarding permission to passengers will have to pay Rs 20,000 in damages to the passenger. These measures are not only aimed at providing customers with fair compensation but could also end up enforcing discipline amongst the carriers. Over the three month period between March to May, almost one in five domestic flights was delayed. The ratio was even higher for state-owned operator Air India which saw 25% of its flights failing to reach on-time, according to data collected at the four metro airports of Delhi, Mumbai, Chennai and Kolkata. Jordan Jenkins Jersey
Airport devpt: Collector seeks legal opinion on FRA certificate
The district collector has sought the opinion of legal experts on whether a Forest Rights Act certificate (FRA) is necessary to acquire land for the airport’s expansion. The project office of the integrated tribal development agency had said that the FRA certification is not necessary for the pending airport proposal. The airport needs some 10 hectares of forest land from Gadmudshingi village. Before its acquisition, a certificate is necessary to ascertain that no violations have been committed under the act. The agency had said that as there have been no such cases, the FRA certificate is not necessary. District collector Amit Saini, who also heads the district aviation committee set up to clearing the pending issues of the airport, however has sought legal opinion to clarify the issue. “I need legal opinion because it is a tricky issue and I need to check all sides before going ahead for commencement of the airport. Generally, the state commissioner for tribal development issues a certificate regarding Forest Rights Act violations. In Kolhapur’s case, I need to check whether the certificate from the agency would be sufficient. If yes, then we can go ahead and speed up the procedure of land acquisition. If I need to obtain a certificate from the tribal commissioner, I will have to initiate communication accordingly,” Saini said. Patrick Mahomes II Jersey
Aviation on cusp of vertical take-off
When real estate tycoon Niranjan Hiranandani of the Hiranandani Group was asked during a seminar organied by Indian Merchants’ Chamber (IMC) four years back to talk on “what needs to be done to bailout the Indian aviation industry”, the businessman was quick to reminisce his early days when he had to call someone in the Prime Minister Office (PMO) for cancelling and rescheduling of his air ticket. “It used to be a huge task then for even trivial things like booking or cancelling an air ticket,” Niranandani said. “The industry has certainly come a long way since the pre-liberalisation days. I can recollect during those days people would literally beg for getting plane seats, especially during emergency situations,” said Devesh Agarwal, a Bengaluru-based aviation expert and blogger. Speaking to dna, Agarwal, a frequent flier, recounts as how when his grandfather took seriously ill during early 1990s, his father drove all the way to Chennai during the night (roughly about six hours) to catch flight next morning from Chennai. “There were hardly three flights from Bangalore then.” he said. “Also, these fares then used to cost a bomb as a result of which it was away from reach of common man.” Experts say the industry has since then come a long way with flights lined up every few hours on most major and non-major routes. With India’s GDP forecast to grow at around 7.5% in FY2017, aviation industry consultant CAPA expects double-digit traffic growth of around 8-10% for international and close to 15% for domestic sectors. This would result in international traffic increasing to 54-55 million passengers and domestic traffic to around 80 million. Domestic traffic could rise higher if airlines engage in extended periods of aggressive pricing. The number of fliers was about 7.27 million passengers in 1994-95. Eric Weddle Authentic Jersey
PFC, REC will drop interest rates to double lending in three years
State-run power financiers Power Finance Corp (PFC) and Rural Electrification Corp (REC) will slash rates to single digits when lending to renewable energy projects following the government’s order setting tough targets for the two companies to double their exposure in the next three years. In order to achieve the targets, PFC will have to sanction Rs 1.5 lakh crore loans and REC Rs 1 lakh crore by 2019. Both the companies are likely to make formal announcements very soon. In a three-hour long review meeting with Piyush Goyal, minister for power, coal, renewable energy and mines, the two companies on last Thursday were asked to grow their businesses by 100 per cent by 2019, with specific focus on renewable energy projects. The meeting with industry and the two PSUs had lot of surprise elements with REC and PFC unaware of the presence of industry while the private firms were not informed about Goyal’s presence. In early July, Goyal had asked PFC and REC for presentations on special focus on renewable energy. After industry complaints, the minister prodded the companies to take up smaller renewable projects and asked the two firms to reduce cycle time for loan evaluation to disbursal to 60-90 days for renewable energy projects that take about a year to get commissioned. The companies take about 170 days for the same which has been constantly reducing.The time has significantly dropped from 292 days in 2015-16. The ministry has also asked the two companies to form external committee consisting of sectoral experts for an independent evaluation of lending to renewable energy projects. REC sanctioned Rs 2,966 crore in 2015-16 to renewable energy projects, up four times from Rs 548 crore in 2014-15 The two companies have recently reduced their interest rates to renewable projects. REC lends to renewable energy projects at between 10.5 per cent and 11.5 per cent depending on factors like project viability and promoter’s strength. Whereas interest rates on loans to conventional and hydropower projects are higher at 11.75 per cent to 13.40 per cent. The move is aimed to boost renewable sector as well as utilise cash that the two financiers will receive in lieu of loans lent to state-run power distribution companies post implementation of Ujwal Discom Assurance Yojana (UDAY). Under the debt recast scheme, REC and PFC will recover their debt exposure to state discoms in cash. The two companies have an exposure of over $20 billion to state discoms. The non-banking Finance companies plan to utilise the cash to finance energy projects, mainly green energy plants such as solar, wind and biomass power plants. Lack of new conventional coal and gas projects by private companies has prompted the two companies to shift focus to renewable sector. Presently, renewable energy projects constitute nearly 10 per cent of the loan portfolio of REC and PFC. Brendan Gallagher Womens Jersey