Cooking gas LPG down Rs 4 per bottle, jet fuel price up 8.7%
Aviation Turbine Fuel (ATF), or jet fuel, price was today hiked by 8.7 per cent but that of non-subsidised cooking gas LPG was cut by Rs 4 per cylinder on global trends. ATF price in Delhi was raised by Rs 3,371.55 per kilolitre (kl), or 8.69 per cent, to Rs 42,157.01 per kl, oil companies said today. The hike comes on the back of a marginal 1.3 per cent or Rs 515.85 cut in rates on March 10. Prior to that, rates were hiked by steep 12 per cent, or Rs 4,174.49, on March 1, almost neutralising a Rs 4,765.5 cut on February 1. The March 1 hike broke the cycle of three consecutive monthly price reductions. Rates vary at different airports because of differential local sales tax or value-added tax (VAT). Jet fuel constitutes over 40 per cent of an airline’s operating cost and the price increase will add to the financial burden on cash-strapped carriers. No immediate comment was available from airlines on the impact of the price increase on passenger fares. Simultaneously, the oil firms cut prices of non-subsidised LPG, which consumers buy after exhausting their quota of 12, by Rs 4 per 14.2-kg bottle. Non-subsidised cooking gas (LPG) now costs Rs 509.50 in Delhi as against Rs 513.50 previously. This is the third reduction in rates in a row. Prices were last cut by Rs 61.50 on March 1. Rates were reduced by Rs 82.5 per 14.2-kg bottle on February 1. Subsidised LPG costs Rs 419.33 per 14.2-kg cylinder in Delhi. The three fuel retailers – Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum – revise jet fuel and non-subsidised LPG prices on the first day of every month, based on the average international price in the preceding month. The ATF price cut on March 10 was on account of change in taxation.
IOC bids for fuel marketing and retail rights in Myanmar
State-run Indian Oil Corp (IOC) has bid for rights to import, store and distribute petroleum products in Myanmar. “We have put in a bid to enter fuel marketing and retail business in Myanmar,” a senior company official said. Myanma Petroleum Products Enterprise (MPPE) last year invited companies to form a joint venture for import, storage, distribution and sale of all petroleum products except liquefied petroleum gas (LPG) and liquefied natural gas (LNG). A separate tender for cooking gas LPG was floated. IOC had bid for that tender too, the official said. MPPE left the fuel distribution business when it was privatized in 2010, but is planning a re-entry into the fast-growing business sector that is marred by widespread dissatisfaction over service standards and fuel quality. In 2010, MPPE transferred 216 filling stations to private companies across the country but it still runs 12 pumps which supply fuel to state-owned vehicles. It also owns four main fuel terminals and 24 sub-fuel terminals. Around 70 private companies run the country’s 1163 petrol stations, but few have storage facilities or an import licence. MPPE now wants to tie up with foreign companies to expand the business and rehabilitate existing facilities. MPPE will hold 51 per cent of equity while the foreign company will hold the rest. The joint venture will be for a maximum of 30 years, extendable two 10-year periods. The official said IOC wants to use its just commissioned Paradip refinery in Odisha to ship fuel a short distance across the Bay of Bengal to get to Myanmar. Being the country’s largest fuel retailer, it also has experience of setting up fuel stations and managing logistics, which would be helpful in the nascent market. IOC is among the 11 to have bid for the separate tender to build a new liquefied petroleum gas (LPG) terminal and supply chain business for the distribution and marketing of the cooking and heating fuel. Winner of this tender will have to upgrade eight storage containers each with a capacity of 5550 metric tonnes of LPG for Ministry of Energy-owned No 1 Refinery (Thanlyin), and build a wharf with the capacity to load and unload 2000 metric tonnes of LPG. This is the first time foreign companies will be allowed to distribute LPG in Myanmar. Besides IOC, Singaporean firms Puma Energy Group and BB Energy (Asia) and a consortium of Japan’s Marubeni Corporation and Tokai Holdings has also bid.
Ban on 2,000 cc diesel vehicles in NCR continues till further order
The December 2015 order of the Supreme Court had imposed a ban that was effective till March 31, 2016. Supreme Court has decided to continue the ban on registration of diesel vehicles with engine capacity of 2,000 cc and above in the national capital region. The December 2015 order of the court had imposed a ban that was effective till March 31, 2016. Companies were hopeful of a favourable decision. The ban, imposed to address rising pollution in Delhi, is a first of its kind and companies like Mahindra & Mahindra, Toyota, Mercedes and Jaguar Land Rover among others took a huge blow on sales. Dealerships of these companies in NCR have also faced hardships. New Delhi’s ban on new diesel cars has unsettled the industry, its salesmen and investors, who warn the uncertainty surrounding it could derail a tentative recovery in auto sales. Chief Justice of India T S Thakur, one of the three judges hearing the case, said the court would consider whether to impose an environmental cess on the sale of diesel cars in New Delhi.
Domestic natural gas prices cut almost 20%
Domestic natural gas prices will be almost 20 per cent cheaper in the April-September 2016 period. The price for the period will be $3.06 per million British thermal unit on a gross calorific value basis. The government also announced the price cap of $ 6.61 per mBtu on a gross calorific value basis for natural gas from deepwater, ultra deepwater and high temperature high pressure areas. Earlier in March, the government approved pricing and marketing freedom for natural gas produced from such difficult areas. However, the pricing freedom is subject to a price cap which is determined by the lowest among landed cost of imported fuel oil, weighted average of imported fuel oil, imported coal and imported LNG or the landed cost of imported LNG. The price ceiling will be applicable from April-September 2016 before it is revised again. The domestic natural gas price is as per a formula approved by the government in September 2014 In the September 2015-March 2016 period the price of domestic natural gas was $3.82 per mBtu on a gross calorific value basis.
GSPC interest payout 10 times the revenues: CAG
Even as the country is infuriated with the big-ticket defaulters pushing the banks to the brink, it is the Gujarat government-run Gujarat State Petroleum Corporation Ltd (GSPC), that has now assumed a dubious distinction of becoming an iconic PSU, burdened with heavy debt and interest payouts being more than ten-times its revenues from oil & gas production. The latest Comptroller and Auditor General of India (CAG) report on GSPC, revealed that the company had failed to address “properly the risks associated with cost, technology and price in development of the Krishna-Godavari (KG) Block. The Field Development Plan for DDW field did not take into account the fact that the project was not viable at the government-approved gas prices prevalent at that time..” This, according to CAG, resulted in uncertainty regarding the future prospects in the block where the company has invested around Rs 195.76 billion. CAG report found that GSPC’s total borrowings rose by 177 per cent during 2011-15 from Rs 71.2667 billion to Rs 197. 1627 billion, mainly due to development activities in KG block. The interest payout increased substantially from Rs 9.8171 billion in 2011-12 to Rs 18.0406 billion in 2014-15. While company’s revenues from production fell from Rs 2.3030 billion in 2011-12 to Rs 1.5251 billion in 2014-15 mainly due to lower oil prices and fall in gas production from 119.24 million cubic metres to 50.21 million cubic metres. Company’s Hazira block has been the main producing block with more than 70 per cent contribution to total gas output. “GSPC has been a centre of corruption. Even after wasting huge money, GSPC has zero commercial production from KG Basin. When Narendra Modi was chief minister in Gujarat, he made tall claims of 20 TCF gas find in KG Basin. In reality, there wasn’t even 2 TCF which was recoverable. People are being misguided. Also, the CAG report has noted that GSPC had surrendered 11 blocks overseas and written off about Rs 17.34 billion. Whose loss is it ultimately?” Congress leader and National Spokesperson, Shaktisinh Gohil told BusinessLine. The apex audit body also noted that GSPC did not exercise its right to conduct audit of its JV accounts, which had outstanding dues of Rs 23.2952 billion. In November 2009, GSPC’s Management Committee had approved the FDP for Deen Dayal West (DDW) area with commercial production estimated in December 2011. But the trial production could be taken up only in August 2014 and the commercial production is yet to be started. While submission of FDP, GSPC had assumed gas price of $5.7 per million British thermal unit (mmBtu), but the Central government-approved formula put the gas price at $4.2 per mmBtu. Wrong estimation has escalated the costs. Against the FDP estimates of $547 million, the tender cost for offshore facilities rose to $810 million. But the actual cost stood at $1,058 million.
IOC to commission all units at Paradip refinery by end-September: Chairman
Indian Oil Corp, the country’s biggest refiner, will commission all units at its 300,000 barrel-per-day (bpd) Paradip refinery by the end of September, the company’s chairman said on Thursday. The company began processing crude at the $5.2 billion refinery in eastern India in April and has been commissioning units in phases. “By the end of September, all units will be in place and we will be producing products regularly,” IOC Chairman B. Ashok told reporters in New Delhi.