The boards of oil company Cairn India and its parent, Vedanta Ltd, will meet on Sunday to discuss a potential merger, both companies said. Vedanta Ltd. is the operating unit of London-listed mining and energy group Vedanta Resources Plc. Vedanta this week signalled it was considering merging the two Indian units, as it tries to resolve a mismatch between its debt, held at the top of the group, and its cash, largely generated by subsidiaries, including Cairn. In separate notices to the Bombay Stock Exchange on Saturday, the companies said their boards would meet to "consider and evaluate" a merger. On Friday, Oil Minister Dharmendra Pradhan told Reuters he had met Cairn executives this week to discuss the potential merger and a source familiar with the matter had said the deal could be announced as early as Sunday. (Reuters)
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India is trying to use its position as one of the world's biggest energy consumers to strike better bargains for its companies with oil exporting nations, in a marked change of approach under Prime Minister Narendra Modi. The oil ministry is moving beyond seeking additional barrels for import in talks with exporters. Now, the energy-deficient country wants to use its thirst for oil as a weapon to broker deals to help strengthen its economy and create jobs, Oil Minister Dharmendra Pradhan told Reuters in an interview. "We are a market. The quantum that we buy is our weapon," 45-year-old Pradhan said. India, the world's fourth biggest oil consumer and third biggest importer, ships in about 80 percent of the crude oil it consumes and fuel demand is rising with rapid economic growth. After clocking faster growth than China in the December quarter, India's economy grew 7.5 percent in the quarter through March, outstripping its larger neighbour's 7 percent in the same period. Last year, India's economy grew at 7.3 percent. Consumption of petroleum products is estimated to be 166.9 million tonnes this fiscal year, and local oil output has remained almost stagnant for years. Since taking office in May last year, Modi and his ministers have actively tried to showcase India's growing role in international trade. The prime minister has visited 18 countries including Japan, the United States and China, over the past year, promoting India as an ideal destination for investments. Pradhan said India's new oil diplomacy aims to further its interests on four fronts: to buy oil and gas acreage; source imports on better terms; increase investment in sectors such as pipelines and refining; and get business for engineering and construction companies with jobs for skilled Indian labour. "South Korea lifts slightly more oil that we buy from the Middle East but its participation in engineering and construction business there is double than ours," said Pradhan, who spoke in Hindi during the interview. The Middle East is India's biggest oil supplier, although the emergence of new trade routes following a decline in global crude prices and supply glut has led to an increase in supplies from central Asia to Latin America.Limited WindowIndia's push comes at a time when it has become a rare bright spot for demand in the global oil market. A senior Saudi Aramco official said on Thursday Indian oil demand is set to rise, while Chinese oil demand is likely to stabilise in the second half of this year. India has a "limited window" of opportunity to get deals for its companies as a glut of oil is allowing buyers to call the shots, said Ehsan Ul Haq, senior consultant at UK-based consultant KBC Energy Economics. "It is probably the best time," Haq said. Pradhan sees India's fuel demand rising due to a push by the government to create a manufacturing hub and jobs. He recently visited Colombia and Mexico, and met OPEC members in Vienna to help Indian companies grow their footprint. ONGC Videsh Managing Director N.K. Verma, who travelled with Pradhan, said the visit helped the state-owned oil company forge new relationships and increase its visibility. "We are getting a boost in our effort to capture equity oil and gas for the nations," Verma said. Pradhan said easing global oil prices have provided an opportunity to India to raise spot purchases and diversify its crude basket. But he added that New Delhi is also mindful of its long-term relationship with oil-rich nations. "We cannot make knee-jerk decision following short-term volatility," he said. When asked whether India will boost imports from Iran if sanctions are lifted against the Persian Gulf nation at the end of the month, he said: "There is sufficient indication to Iran that if anything positive comes out on June 30, India is ready to go ahead." (Reuters)
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The Oil Minister met the leadership of oil company Cairn India this week to discuss its potential merger with parent Vedanta Ltd, the operating unit of London-listed mining and energy group Vedanta Resources Plc. Vedanta earlier this week signalled it was considering a merger, a move that would it to repay a hefty group burden with the help of cash-generating Cairn. Asked if he had met the companies to discuss the deal, minister Dharmendra Pradhan said: "They met me, but my ministry's concern is that capital expenditure should grow. My ministry's expectation is oil and gas production should increase." "Cairn's leadership assured me in future they are very focused on how to increase oil and gas production, and for that, they will invest money," he added. (Reuters)
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The gas-based power plants that the NDA government is trying to revive by providing subsidy may not turn profitable in the long term. An analysis of the balance sheet of these power firms done by India Ratings suggests that is unlikely that the gas based power plants will come out of the woods on the back of government subsidy in the form of cheaper liquefied Natural gas. “The gas plants benefitting from the government subsidy could not fully meet debt servicing and bank loans towards these assets would remain stressed in the short to medium term. The stranded Gas plants for the full year can generate an EBITDA of RS 1,420 crore under this scheme as against their annual debt servicing requirement of Rs 7,000 crore, thus leading to a debt service coverage ratio of 0.2x,” the report read. The subsidy scheme has been envisaged for 32 stranded gas power plants with an estimated investment of Rs 60,000 crore. These assets have an estimated project debt of Rs 42,000 crore, which would balloon further on account of unpaid interest. “The costs incurred by the government in subsidy pay out are likely to be higher than the benefit derived from operating these plants. EBITDA earned by stranded power plants and domestic gas based power plants from the imported spot regasified liquefied natural gas scheme might be lower than the subsidy pay out by the government and far lower than the aggregate contribution/additional cost incurred by other stakeholders,” says the India Ratings report. The current bidding is valid from June to September 2015. Operations under this scheme are supported by benign spot gas prices and subsidy support from the government. The complete operationalisation and long-term operational success of the scheme would depend upon tying of other loose ends including contracting of gas supplies, discoms‟ appetite for this power, exchange rate movement and consent of all stakeholders including pipeline companies, re-gasification facilities and state governments. The government has kept the rate of power at Rs 4.7 per unit and Rs 3.39 per unit for Stranded and domestic gas based plants, respectively. The scheme will in the first phase benefit 10 out of 32 SGPs and five out of 23 DGPs during June-September 2015. The scheme is expected to generate 5.7 billion/kWh of electricity over June-September 2015 period and this could further increase to 21billion /kWh during June 2015-March 2016. According to India Ratings, the sustained ability and willingness of discoms to buy power at Rs 4.7 per unit from SGPs and Rs 3.39 per unit from DGPs remains to be seen, given that currently power can be purchased from exchanges at Rs 3- 3.5 per unit. Additionally, the government could increase the tariffs payable by discoms if LNG prices were to harden, provided the subsidy per unit from PSDF is not increased. India Rating says that this situation could result in unwillingness on the part of discoms to sign power purchase agreements.
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The International Energy Agency had predicted that the US would be toppling Saudi Arabia as the number one crude oil producer in the world as early as 2012. And by 2014, it was true. The US achieved this on the back of the shale oil revolution which is a result of enhanced technology. The US produced 15.9 per cent more oil in 2014 at 11.6 million barrels of oil per day to topple Saudi Arabia's 11.5 million bpd production, according to BP Plc's Statistical Review of World Energy. At present, this looks like good news only for the US economy as they are likely to become self sufficient in energy needs. The world has no reason to cheer as US crude oil exports were effectively banned under laws that were enacted in the 1970s in response to the OPEC oil embargo. However, there is a hue and cry from social groups and intellectuals urging US to start exports of crude oil to the developing countries as production of crude oil in the US has increased close to 100 per cent since 2008. Moreover, there is a huge mismatch between the types of oil that US fields produce and the types that US refiners need, the products that US consumers want, and the infrastructure in place to transport the oil. Due to less demand by the domestic refiners, the oil producing companies are forced to either leave the oil in the field or pumping it at depressed prices. There for, the lobby of the oil producers has also been demanding the lifting on ban on exports of crude oil from the US. The lobby’s voice will get louder now. Impact on India and the world…In case the US decides to bring its crude oil in international market for exports, it can further create a glut in the oil market leading to fall in the crude oil prices. The crude price has recovered by over 30% Since January 2015 when the price in the international market went below $50 per barell. At Present, the price of WTI crude and Brent Crude is $61.43 per barel and $65.70 respectively. India that as been pressurizing US to sell its crude oil to it in lieu of its decision to reduce oil imports from Iran after the US put embargo on the country in 2012. India’s oil minister, Dhramendra Pradhan has announced in the past that his department was in talks with the US government to get crude oil at cheaper price in from the country. In case Asia’s second largest energy guzzler starts importing oil from the US, in all likelihood the OPEC countries will be hard-pressed to give higher discounts to India for long term contracts. Already India has reduced its imports from Saudi Arabia and its crude oil imports during January 2015,dropped 8.85 per cent to 3.19 million metric tonnes from 3.5 million mt imported during the same period last year.India spends above around $145 billion on purchasing crude from the international market. The Indian refiners are asking for a better price from the oil producing nations. US becoming the largest oil producer may just prove to be a shot in the arm.
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The much awaited broadband services from Mukesh Ambani backed Reliance Jio will be launched in December this year, five years after it first bought spectrum. Outlining the roadmap, Mukesh Ambani, Chairman, Reliance Industries,said the comapny plans to complete projects worth over Rs 2 lakh crore in the core oil and petrochemical businesses over the next 12-18 months. With Reliance's entry, the mobile data price war is going to get tougher for existing telecom operators as well, since the RIL enterprise aims to bring mobile data prices to a new low for greater penetration. Ambani said that the company sees 4G-enabled smartphones under its own brand name "Jio" will be priced under Rs 4,000. "We are currently in the pre-launch testing and stabilization phase of this large and complex network. Over the next few months, we will initiate an extensive beta launch involving millions of friendly customers across all our markets," Ambani told shareholders here. Reliance Jio service will cover all 29 states of India, and reach 80 per cent of the populace at the time of launch. It will cover 100 per cent of the population in the next 3 years, Ambani said. The RIL chairman said he is confident that Reliance Jio will play a significant role in boosting India's global internet penetration rank from 149 to among the top 10. Ambani added that the company is committed to net neutrality, a hot topic in India, and has the largest swathe of liberalized spectrum among all telecom operators. He also said that Reliance Jio investments are in line with NDA government's Digital India vision. Looking to reap full benefits of these investments from the financial year 2016-17 onwards, Ambani said RIL would have a unique portfolio of globally competitive petrochemical and refining business with a new age India-centric consumer business with very high growth potential. "This will place Reliance in a select group of most valuable companies in the world," he said, addressing shareholders at the annual general meeting of Reliance Industries Ltd (RIL), which also operates the world's largest crude oil refining. Here are five key takeaways from Reliance Industries AGM Reliance Jio Ambani says that we are expanding RIL Jio's footprint to cover nearly 80 per cent of India's population by the end of this year. Our roadmap is to have 100 per cent national coverage within the next 3 years. Jio is the first 4G broadband wireless operator to achieve wireless coverage far in excess of the rollout obligation as per its license conditions. Jio has also deployed a network of nearly 250,000 route kilometres of fibre optics, thereby creating a future-proof digital backbone across India. He further highlighted that Jio's broadband assets will be the bedrock for the digital India. The financial year 2016-17 will be the first full year of commercial operations for Jio. "The combination of Jio's strong initiatives and a supportive global environment, gives me the confidence that we will see 4G LTE smartphones in India at prices below Rs 4,000 by December of this year," he adds. Retail Reliance Retail operates across various product categories and formats has attained revenues of over Rs 17,000 crore in the last year. RIL achieved a record profits of Rs 784 crore at an EBITDA level. Despite the challenges faced in a tough consumer environment, this business achieved a compounded annual revenue growth of 31 per cent in the last 5 years, highlights Ambani. The company plans to accelerate their pace of growth by adding 930 new stores last year which effectively translates to introducing 5 new stores every two days - setting a new global benchmark in terms of the largest number of store openings in a year. They currently have a network of over 2600 stores and presence in 200 cities 20 states. Reliance Retail offers employment opportunities for growth to over 50,000 associates across the country. Petrochem Reliance Industries petrochemical business consists of polyesters, fibre intermediates, polymers, synthetic elastomers and a variety of chemicals and solvents. Ambani says that we continue to strengthen our global polyester leadership position by increasing capacity and continued focus on operational excellence. Last year RIL commissioned a fully automated polyester plant at Silvassa with a capacity of around 400,000 tons. They have brought on-stream 1.15 million tons per annum of PTA capacity. We will be ready for start-up of another 1.15 million tons per annum of PTA capacity at Dahej by October this year. With this, RIL total PTA capacity will be 4.5 million tons per annum, making it the fifth largest PTA producer in the world. Oil and gas exploration RIL discovered India's largest gas reserves in the deep waters of Bay of Bengal, under NELP. Within a short span of just two and a half years of D26 discovery and six and a half years f D1-D3 discoveries, RIL had brought two challenging deep-water fields in the KG-D6 block into production. The block has already produced nearly 2.5 TCF of natural gas and about 27 MMBBL of crude oil, which have so far substituted over US$ 34 billion of energy imports, says Mukesh Ambani. He went on to add that we are aware that future investments hinge upon the continuing confidence of our shareowners in this high risk business. In spite of falling oil and gas prices which created a tough operating environment, RIL's Shale Gas business in the US generated revenues close to $ 1 billion during the year. Refining Refining and marketing continues to be a significant contributor to Reliance's profitability, delivering a strong financial performance during the year 2014-15. "Amidst such an environment, Reliance posted a GRM of $8.6/bbl, outperforming Singapore benchmark yet again, with a premium of $2.3/bbl," Mukesh Ambani said. He further added that RIL plans to re-commission the entire network of petroleum retail outlets by the end of FY 2015-16. Currently, close to 400 outlets are operational. RIL is also implementing a Coke gasification facility at Jamnagar, which is also one of the largest clean coal initiatives in the world. Click Here To Read Mukesh Ambani's Full Speach
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India is planning to convert into equity a 50 billion rupee loan extended by state-run Oil and Natural Gas Corp (ONGC) to its overseas investment arm, sources said, to improve the unit's finances ahead of a possible public offering. Prime Minister Narendra Modi's cabinet will soon consider the deal which would also require raising the authorised capital of the subsidiary ONGC Videsh (OVL) by half to 150 billion rupees, said three sources aware of the matter. With an improved debt-to-equity ratio, OVL would be able to independently raise funds on the strength of its balance sheet instead of relying on ONGC's financial status. ONGC's total loans to OVL stand at about 66.14 billion rupees. The 50 billion loan was given by ONGC to help OVL acquire a stake in a Mozambique gas field. Jagannadham Thunuguntla, head of fundamental research at Karvy Group, noted company restructurings often happen before flotations, adding: "It will give more legroom for additional fundraising by OVL to finance future acquisitions." ONGC did a similar loan-to-equity conversion for OVL in 2013, which has invested about $23.8 billion on its exploration and production assets in 17 countries. OVL Managing Director N.K. Verma declined comment on the latest cabinet proposal but said: "In the past we had contemplated converting part of the debt into equity to improve our balance sheet and provide flexibility for financing new acquisitions". The oil ministry has asked ONGC to consider a stock market listing of OVL, though a company executive said in May it would favour delaying such a move given low oil prices. Any listing would help ONGC raise funds from the market and increase payouts to the government, which is looking for 695 billion rupees through stake sales in state companies to help narrow the fiscal deficit to 3.9 percent of gross domestic product from last year's 4 percent. (Reuters)
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The centrally-located ITO station made its debut in the expanding network of Delhi Metro on Monday as the first Badarpur-bound train left its swanky premises at 6 pm. The formal opening of the station was long overdue for tens of thousands of people who work in the area housing several prominent government and private establishments. Union Urban Development Minister Venkaiah Naidu flagged off the first train in the presence of Delhi's Chief Minister Arvind Kejriwal. Kejriwal, who is at loggerheads with the Centre over a number of issues, used the occasion to make a political point on federal relations. "Delhi Metro is a unique experiment of the collaboration between the state and the centre. I feel if all the governments work together in this manner only then development would be possible," he said. Naidu laid stress on the importance of a robust public transport system and termed Delhi Metro as the "pride of the nation". "Public transport is the only answer to growing air pollution." Heavy TrafficAccording to the initial time table, trains will be available at ITO at a frequency of seven and a half minutes during peak hours. The station in the Violet Line, is expected to take traffic load off the busy ITO intersection, used by over 1.75 lakh vehicles everyday. "All these years I had to take the bus from Saket to INA and then bus to get to office. It used to be so troublesome especially during times of inclement weather. I look forward to relief now," said Maninder Singh, a UGC employee. The single-line extension from Mandi House till ITO is a first in the history of Delhi Metro, which was also behind the delay, as it was not permitted as per Metro Railway General Rules. Construction work was completed by January itself. Later, the Urban Development Ministry amended and notified changes to the Metro Railway General Rules, 2013, to allow operations on single-line sections, paving the way for CMRS inspection and its eventual launch. After the formal launch, people started trooping in as early as 5 pm and the queue only got longer as many of the nearby establishments downed shutters. The station has come as a boon for outsiders like Brajesh Kumar who visited the area to get their official work done. Kumar, a resident of Rajasthan, had come to the Passport office. "I had to take the auto to reach Passport office from Mandi house station in the morning. The distance may not have been that much but it was more because of the heat. Next time I will be able to come straight here," he said. Train services on this 971-metre section is estimated to benefit 22,000 passengers daily to begin with and is expected to rise to 31,000 by 2021, enhancing DMRC's annual revenue by Rs 8 crore, officials said. Circular RailwayElaborating on his plans to decongest Delhi, Naidu said that he would be discussing the possibility of reviving the BRT corridor with the state government. He also spoke about the need to have a Circular Railway in the capital. "There are 90 lakh vehicles in Delhi. We have to create more and more public transport systems. We are also interacting with the railways to come up with a circular railway system. I already had a meeting with the railway minister in this regard. Would be sharing the recommendations with the Delhi government also," he said. The eponymous station, which was decked up on the occasion, would also showcase the multi-layered history of the ITO area stretching from the Supreme Court to the ruins of Firoz Shah Kotla, with a permanent exhibition. The ITO area houses prominent establishments like the Delhi Police headquarters, Delhi Secretariat, Income Tax Office, PWD headquarters and the intersection in its vicinity is a nightmare for regular commuters owing to heavy traffic. ITO is the last station to be launched individually before the entire Mandi House-Kashmere Gate, 9.37 km "heritage corridor", is commissioned by the end of 2016. Other stations in the corridor include Delhi Gate, Jama Masjid, Red Fort and Kashmere Gate. Passengers from ITO would be able to access the Blue Line (Dwarka Sector 21-Noida City Centre/Vaishali) by taking a ride to Mandi House or Yellow Line (Huda City Centre to Jahangirpuri) from the Central Secretariat station, thus bringing the area closer to residents of South and East Delhi. The event was also attended by Union Minister Harsh Vardhan, Delhi Transport Minister Gopal Rai, New Delhi MP Meenakshi Lekhi and DMRC Chief Mangu Singh.
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