GST to be simple with 1 pc additional tax removal, say experts
With the government dropping the contentious 1 per cent additional inter-state tax, the proposed national sales tax or the GST stands simplified with aberrations removed, said tax experts. Ahead of Rajya Sabha considering the biggest indirect tax reform measure since independence, the government has met a key opposition demand of scrapping 1 per cent additional tax on inter-state movement of goods. It has also agreed to compensate states for any revenue losses for five years. “The tax process/system under GST would stand simplified with the government’s decision to do away with 1 per cent additional tax on interstate supplies. “…tax would have resulted in a cascading tax on interstate supplies, resulting in an otherwise not so pure GST and would have also driven companies to consider the same while making warehousing/logistics decisions,” said Mahesh Jaising, Partner, BMR & Associates LLP. The Goods and Services Tax (GST) seeks to replace a slew of Centre taxes and levies in 29 states, transforming the nation into a customs union. Analysts believe the GST could boost India’s economic growth by up to 2 percentage points. Sachin Menon Partner and Head, Indirect Tax at KPMG, said the changes made in the GST Bill shows the commitment of the government to introduce GST. “Hope our representatives put the nation first, behave responsibly to pass the GST bill,” he said. The Bill is listed for consideration in the Upper House this week. PwC Partner (Indirect Tax) Anita Rastogi said the proposed 1 per cent tax was not in line with the key concepts of GST, as the levy would have been a cost in the entire supply chain at various supply incidences. “Hence its removal is a welcome decision”. Nitish Sharma, partner, Nangia & Co said the doing away with additional tax is favourable step towards removing impediment in the credit chain and would certainly simplify the tax process. Tre Flowers Jersey
Post Qatar success, India tries to rework Australia LNG maths
Emboldened by its successful renegotiation of LNG deal with Qatar, India is trying to do an encore and looking at lowering the price of liquefied natural gas it plans to buy from Australia’s Gorgon project. Petronet LNG, a private firm whose chairman is the oil secretary, had in August 2009 signed a 20-year deal to buy 1.44 million tons per annum of liquefied natural gas (LNG) at a price equivalent of 14.5 per cent of the prevailing oil rates. The indexation agreed was one of the highest in the world, feels the Oil Ministry and the current company management. “When LNG deals are being done at 12 per cent or 12.5 per cent indexation, the Gorgon deal is certainly on the higher side,” a top source said. At the ministry’s instance and that of its promoters, Petronet has written to Exxon Mobil, the seller of Gorgon LNG, for reworking the price. “Oil prices have fallen from over USD 100 per barrel that translated into a price of USD 14.5 per million British thermal unit for Gorgon LNG. But even through rates are less than half of that, still as a matter of principle, the indexation should be lowered,” the source said. LNG in spot or current market is available at USD 5-6 per mmBtu where as Gorgon LNG at current formula will cost USD 6.5 per mmBtu at on oil price of USD 45 per barrel. After adding 5 per cent Customs duty, shipping cost and that of converting liquid gas back into its gaseous state, the landed price of the Australian gas will be close to USD 9 at the Kochi port where it is supposed to be delivered. State-owned gas utility GAIL India, one of the four PSU promoters of Petronet, had way back in 2013 sought review of the Gorgon LNG price formula. Its then Director (marketing) Prabhat Singh, who now is the Managing Director and CEO of Petronet LNG, had in June 2013 written a letter seeking reduction in price of Gorgon LNG. Sources said the case of renegotiating the Gorgon deal has strengthened after Petronet last year successfully got RasGas of Qatar to lower the rate for 7.5 mt per annum LNG it supplies under a 25-year long term contract since 2004. The price of imported LNG under this agreement had been linked to crude oil (Japanese Customs Cleared Crude or JCC) and had a concept of floor and ceiling indexed to last 5-year average. The rate thus arrived was higher than spot LNG. Petronet sought renegotiation of the deal and RasGas agreed to modify the pricing formula to link it with last 3-month average rate of Brent crude oil, they said, adding that at the revised formula, the country will save Rs 80 billion over the remainder of the contract, that is up to 2028. GAIL, Indian Oil, Bharat Petroleum and Oil and Natural Gas Corp (ONGC) hold 12.5 per cent each in Petronet. Petronet was to get Gorgon LNG by the end of 2015, but supplies have been deferred by a year. Frank Clark Jersey
Bundelkhand sitting on natural gas deposits? Methane, helium gases leaking from tube-wells in four districts
Backward region of Bundelkhand seems to be sitting on huge deposits of natural gases, as methane and helium gases have been leaking from tube-wells at a stretch of 150 km spread over four districts. After recharging of tube-wells following good rainfall, the villagers have laid down pipelines and are using the gas as fuel for cooking. Though it could prove disastrous, janpad panchayat representatives said they have informed the administration. But, Sagar district collector Vikesh Narwal is clueless about it. “I joined six months ago .I will find out about it,” he told TOI. However, Arun Kumar Shandilya, a professor of applied geology in Dr Hari Singh Gaur University, Sagar, has been raising the issue for past over two decades. “It is happening in more than 50 tube-wells over a stretch of 150 km in Vidisha, Sagar, Damoh and Panna districts. I have already intimated the Union ministry of petroleum and natural gas, Oil And Natural Gas Corporation (ONGC), director general, hydrocarbons, and Geological Survey of India (GSI) about it,” he told TOI. Shandilya first got the samples of gases tested with ONGC and later at National Geophysical Research Institute (NGRI), Hyderabad. Clayton Keller Authentic Jersey
Oilex Ltd reaffirms commitment to Cambay Block project
Oilex Ltd reaffirmed its commitment to unlocking the multi TCF in-place tight gas potential at its onshore Cambay Block project in India. In its quarterly results highlights for the June, the resources exploration group said it was close to executing a detailed strategy to take the Cambay project forward. It said the results to date supported a vertical well with the dual objective of targeting recovery of core from the Eocene siltstone and developing the un-depleted OS-II reservoir zone. Gas sales from Cambay-77H continued with an average gas production rate for the quarter of 26 boepd (net 12 boepd) and with an average associated condensate & oil rate of 6 bpd (net 3 bpd). Negotiations continued with the group’s joint venture partner to address payment of outstanding cash calls, contributions to programmed activities and approval of the annual budget resulting in delays to planned activities. The joint venture and Indian authorities approved the work programme & budget for the Bhandut Field for the Indian financial year starting April 2016. Test Gas Production at the group’s Bhandut-3 well, which commenced in April, 87 boepd (the 35 boepd) and with an average associated condensate rate of 18 bpd (net 7 bpd). During the quarter, the joint venture partner released US$302,000 towards payment of outstanding cash calls for the Indian financial year. During the quarter Oilex reached a settlement with Zeta Resources Limited that ended legal proceedings between the parties. The cash balance stood at US$5.2mln. Rob Gronkowski Authentic Jersey
Government open to deliberating on merger of oil firms: Dharmendra Pradhan
Government is open to deliberating on the issue of mega merger of state-owned oil firms for creating a behemoth, Union Minister Dharmendra Pradhan said. “The government plans to deliberate on the issue of merging the E&P companies and oil marketing firms in the public sector,” the Minister for Petroleum and Natural Gas told PTI. The state-owned oil companies are IOC,BPCL, HPCL, ONGC and OIL. He said with crude oil prices falling, the profits and margins of state-owned E&P (exploration and production) firms ONGC and Oil India were getting eroded. “Both ONGC and OIL are taking a hit on profits. The issue had been recently flagged by a director of one of the PSUs that it was in interest of the E&P firms to get merged with the oil marketing companies. “There is nothing wrong in discussing the issue within the ministry,” he said. Regarding the mega refinery on the west coast, he said the process of land acquisition is yet to begin. The proposed west coast mega refinery would come up in Maharashtra with a capacity of 60 million tons (in two phases). Pradhan said an SPV involving IOC, BPCL and HPCL has been formed for the project. “The exact equity pattern, quantum of land required and the total investment required is to be decided by the promoters,” Pradhan said. To a query, the minister said he did not foresee any problem regarding land acquisition for the project. Asked about the government’s response to private sector Reliance seeking subsidy for LPG distribution, Pradhan said, “We are giving subsidised LPG through PSUs only because they are assigned to do that. Subsidy is involved in the issue”. Pradhan said he would be going to the UK for a roadshow in September as the Indian PSUs had bid for small fields (oil and gas) in that country. Brent Burns Authentic Jersey
Indian Oil Corp to introduce pre-booking of slots at petrol pumps to avoid congestion
You may soon be able to avoid queues at petrol pumps by pre-booking your slot, or pay for the fuel without reaching for your wallet or card. Indian Oil Corporation, which accounts for nearly half of all filling stations in the country, is planning to offer customers these conveniences shortly. The state-run company is building a technology platform that will help ease congestion at filling stations, cut waiting time and raise service level for customers, BS Canth, director (marketing) said. This comes at a time when Indian OilBSE 2.01 % Corporation, the nation’s largest refiner and fuel retailer, is in the midst of defending its market share as private players such as Reliance Industries and Essar Oil and other public sector rivals expand. As per the plan, customers will be able to book a slot on their way to a filling station so that they don’t have to wait in a long queue. The filling stations will display slot vacancies, guiding customers to the right nozzle. Vehicles will be given radio frequency identification (RFID) tags for automatic identification and payment, Canth said. The company plans to run a pilot on these initiatives in six-eight months, he said. Like some other fuel retailers, IOC has already tied up with mobile wallet providers, making payments easier. “This is going to be a second revolution in retail,” said Canth, referring to the ever-increasing role of technology in raising the service level and standardising operation. These services are being planned because the “customers have come to expect these things now”, he said. The first revolution in fuel retailing happened at the beginning of the last decade following a deregulation of petrol and diesel sales, Canth said. Then the private players, led by Reliance, stormed the fuel retailing market, raising the level of service and grabbing a large market share from state firms. A spike in oil prices forced the government to bring back fuel sales regulation just a few years later, but by then the public sector had learnt its lessons. They expanded heavily, raised the level of service and invested in branding. “I can’t ignore the competition. I need to continue to innovate to stay the market leader…Soon we should be reengineering our offerings,” Canth said. The company is working on a plan to tailor its services based on “location and demographics”, he said. To drive home his point, Canth said customers in smaller towns and rural areas may not value fast filling as much as people in big cities do. “But if we were to provide all services at all locations, it would raise our cost. Therefore, we have to distinguish between what people appreciate at different places and accordingly plan our offering,” he said. Another area that the company is focused on is strengthening its presence on highways, more of which are being constructed or widened these days. It has begun building highway pumps with multiple facilities for travellers such as eateries, entertainment, bathing and resting facilities. Chris Harris Jr Womens Jersey
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
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