The Union Budget 2015-16 provides clarity and direction to the ambitious renewable energy targets being announced by the Narendra Modi government, since it took charge in May 2014.Today, Arun Jaitley, union Finance Minister reiterated the intention to target 175,000 MW of Renewable Energy capacity by 2022 - 100000 MW solar, 60000 MW wind, 10000 MW biomass and 5000 MW small-hydro. The economic survey on February 27 suggested the country’s renewable energy industry is likely to generate business opportunities worth $160 billion over the next five years so the nascent sector is looking at a revival after two years of slump. With the BJP government’s push for economic growth, it is largely widely believed that the Prime Minister Narendra Modi is banking on renewable energy to fight climate change and off-set the carbon emissions rather than committing to emission reduction. However, concerns remain and analysts like Debasish Mishra, Senior Director, Deloitte believe, “To make these RE investments more attractive, a series of measures on excise duty front is announced by FM that will help wind and solar sectors.” Some initiatives have been announced in the budget like reduction of customs duty Active Energy Controller (AEC) for use in the manufacture of Renewable Power System (RPS) Inverters to 5 per cent, subject to certification by MNRE and for evacuated tubes with three layers of solar selective coating for use in the manufacture of solar water heater and system to Nil. Similarly, some renewable energy specific commodities have also been given excise duty relief through restructuring like solar water heater and system from 12 per cent to Nil without CENVAT (Central Value Added Tax) credit or 12.5 per cent with CENVAT credit. Round copper wire and tin alloys for use in the manufacture of Solar PV ribbon for manufacture of solar PV cells to Nil subject to certification by Department of Electronics and Information Technology (DeitY). Pig iron SG grade and Ferro-silicon-magnesium for use in the manufacture of cast components of wind operated electricity generators to Nil, subject to certification by Ministry of New and Renewable Energy.Estimates place 280 million people living without power in India and renewable energy has come to be the most pragmatic option for these people. However, Renewable Energy projects subsidised by the centre or state authorities have got mired procurement controversies and other non payment issues. Therefore in an attempt to address some of these FM today in the budget included “need for procurement law to contain malfeasance in public procurement and a proposal to introduce a Public Contracts (resolution of disputes) Bill to streamline the institutional arrangements for resolution of such disputes. This bill will help bring cogency to other infrastructure projects as well – mostly to be developed under the PPP models.Additionally the industry experts believe proposals such as the creation of a national infrastructure investment fund and doubling of coal cess will help in solving some of the financial challenges being faced by the market players. Currently India is only at 33000 MW and to achieve 175000 MW the Indian RE market is ripe for investment and promising to grow by leaps and bounds year on year. Cautioning against euphoria, Tobias Engelmeier Founder & Director, BRIDGE TO INDIA – a German company established to help promote renewable energy in India – says, “If India is serious about building a 100 GW (or even a 10 GW) market, it needs to offer solid returns from solar projects. Everything else follows. A “strategic” rationale for investing into the solar industry has some merit, but cannot sustain the market.”
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Property developer DLF Ltd said on Friday it was reviewing an order from the country's market regulator that fined the company and its top management $8.4 million as part of a broader probe into the firm's lack of disclosure during its initial public offering (IPO). "We are presently reviewing the said orders and after taking appropriate legal advice, we will challenge the said orders in appeal," the company said in a statement. It added that it had not acted in contravention of law either during its initial public offer or otherwise. The Securities and Exchange Board of India (Sebi) disclosed the penalty on Thursday, as part of the same case under which it last year banned the company from raising capital for three years, a verdict which DLF is appealing at a securities tribunal. In the biggest-ever penalty in a single case, Sebi slapped fines totalling Rs 86 crore on realty giant DLF, its top executives, their family members and various other related entities for entering into "sham transactions" to mislead IPO investors about eight years ago. Those penalised include chairman K.P. Singh, his son and Vice Chairman Rajiv Singh, daughter Pia Singh, as also three "housewives" married to "key management personnel" of the DLF group for "fraudulent and unfair trade practices". In the same case, Sebi in October last year barred DLF and its six top executives, including Singh and his two children, from markets for three years for suppressing key information at the time of its IPO in 2007, including about certain "sham transactions" involving an associate firm, Sudipti Estates. While DLF and others denied any wrongdoings in its submissions before Sebi, the regulator said they "knowingly suppressed material facts and information" in the IPO papers. Debt-laden DLF is going through tough times with various regulators. Fair trade watchdog CCI, which has earlier imposed Rs 630 crore fine on it, recently ordered two fresh probes against the group for abuse of dominance. The Rs 630 crore penalty was also upheld by the Competition Appellate Tribunal, after which the company approached the Supreme Court. DLF shares have also been under tremendous pressure for several months, while it has been monetising its assets to pay off debt, which stood at over Rs 20,000 crore at end of 2014. While the earlier Sebi order did not involve any monetary penalties and has been challenged before the Securities Appellate Tribunal, the regulator on Thursday passed two fresh orders, for related irregularities, to impose penalties totalling Rs 86 crore on as many as 41 entities. Proceedings against one person has been abated because of his death. As per the first order running into 53 pages, DLF has been fined Rs 26 crore, while a similar amount has to be paid collectively by seven persons - Singh and his two children, T.C. Goyal, Ramesh Sanka, G.S. Talwar and Kameshwar Swarup. This itself is the biggest-ever fine imposed by Sebi in a single case, barring the "disgorgement" or refund orders in which cases Sebi directs return of the money garnered through ill-gotten means or illicit investment schemes. In the second 55-page order, Sudipti has been asked to cough up Rs 1 crore, its two directors have been fined Rs 3 crore, while fines worth Rs 1-5 crore have been imposed on 19 others. The penalties are between Rs 5-15 lakh for the others. All fines need to be paid within 45 days, Sebi said. (Agencies)
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The government has approved setting up of 15,000 MW grid-connected solar power projects through state-run NTPC under the National Solar Mission. The cabinet gave its approval for implementation of the scheme for setting up of 15,000 MW of grid-connected solar photo voltaic power projects, an official statement said. They will be executed by NTPC Vidyut Vyapar Nigam (NVVN), an arm of NTPC, in three tranches. The rapidly falling cost of solar power has ignited interest in its potential in Asia's third-largest economy, which relies on coal for three-fifths of its energy needs while solar supplies less than 1 percent. India aims to become one of the world's largest renewable energy markets, targeting 100,000 MW of output by 2022 from just 3,000 MW currently. The completion of this 15,000 MW capacity projects under the National Solar Mission would accelerate the process of achieving grid tariff parity for solar power and also help reduce consumption of kerosene and diesel, which is presently in use to meet the unmet demand. Some of the solar PV plants are based on bundling of solar power with unallocated thermal power. The bundled power will be allotted to various states that come forward to provide land for setting up the solar power projects and to those which would purchase a major portion of the bundled solar power for consumption within the state and ensure connectivity to the solar power project. The capacity allotted to each such state will be set up through developers, to be selected through international competitive bidding by NTPC/NVVN. Both private and government companies would be free to bid for projects. Some of the projects will be set up on land already identified in Andhra Pradesh. Others will be allotted in other interested states that come forward. Some capacity will be earmarked out of the total procurement under this scheme with provisions of domestically manufactured solar cells as well as modules. The first Phase of the National Solar Mission (2010-2013) had a target of 1,100 MW for grid connected solar power generation capacity, against which 1,685 MW was set up in the country under various schemes. Further capacity addition of 9,000 MW comprising 3,000 MW under central schemes and 6,000 MW under state initiatives and other mechanisms were envisaged in the second phase of the Mission (April 2013-March 2017). (Agencies)
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India's state-run train services stand to receive at least a 25 per cent boost in investment to over $9 billion, funded solely by falling fuel costs, according to officials familiar with a railway budget set to be unveiled on Thursday. There are high hopes that his nine-month-old government will plough money into investment in infrastructure needed to haul the economy out of a rut when it presents its first annual federal budget on Saturday. The separate rail budget - a relic of the country's British colonial past - could show how far Modi's India is prepared to drive investment in a vital transport sector. "The fall in diesel prices and a pick-up in freight earnings have given us a golden chance to raise investments," said one government official. Falling oil prices have saved billions of dollars in subsidy spending across the economy, but Finance Minister Arun Jaitley is under pressure to prevent the fiscal deficit from busting a target of 3.6 per cent of gross domestic product. Railway Minister Suresh Prabhu, according to the officials, has factored in savings from cheaper diesel totalling between 120-150 billion rupees ($1.9 billion-$2.4 billion) in the 2015/16 fiscal year, starting on April 1. But, he has also asked the Finance Ministry for an extra 200 billion rupees ($3.2 billion) to invest in track and rolling stock upgrades for a network used by some 25 million passenger each day. He is unlikely to get that much, though one official with knowledge of the budget discussions expected a significant increase in federal funding for the railways. In 2014/15, 454.5 billion rupees ($7.30 billion) was budgeted for investment in Indian Railways - with the government providing 66 per cent and the rest coming from internal resources. An increase in the budget allocation would go some way to offset disappointment at the lack of private sector interest in investing in Indian Railways, after Modi's government last year suggested public-private partnerships for new routes. Passenger FaresAs usual in India, lawmakers have made populist calls for the windfall from reduced diesel costs to be used to slash already heavily subsidised fares. But Prabhu is unlikely to pay much heed. "There is no plan to cut passenger fares," a senior government official said. Minister of State for Railway Manoj Sinha had earlier ruled out a reduction in fares in the context of lowering of diesel rates but Prabhu is expected to make a tight rope walk as he tries to bridge the huge gap in finances while presenting his maiden budget in the Lok Sabha. For 10 years before 2012-13 there was no increase in rail fares. Then Railway Minister and Trinamool Congress leader Dinesh Trivedi had made an across-the-board hike in 2012-2013 but was made to roll back the hike in second and sleeper class categories. Since then there have been hikes in passenger fares. In the first Railway budget of the Modi government in July last, fares were increased by 14.2 per cent and freight by 6.5 per cent. Though there is a decrease in diesel price, electricity cost has gone up by over four per cent making it a balancing act for the fuel adjustment cost-lnked tariff revision policy adopted by Indian Railways since 2013. At the same time, revenues from freight are expected to increase as the economy improves. Freight heavily subsidises passenger traffic in India, making it more expensive than road transport. Providing jobs for 1.3 million people, the railway is India's largest single employer, and reform is politically sensitive. Successive governments have backed away from modernization, preferring instead to use the system to provide cheap transport and jobs. Years of under-investment, however, means services are slow and plagued by frequent accidents. There are over 350 projects pending that need about 1.8 trillion Indian rupees ($28.91 billion), said the senior official. But burdened by a rising wage bill and pensions, investment fell to less than 8 per cent of an estimated 1.61 trillion rupees revenue in the current financial year, compared to 25 per cent seven years earlier. Considered a reformer, Prabhu may lay the road map for attracting private investment for the public transporter. (Agencies)
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Italian aerospace and defence group Finmeccanica has agreed to sell its rail business to Hitachi Ltd in a deal which will cost the Japanese conglomerate up to 1.9 billion euros ($2.2 billion) and cut Finmeccanica's debt by 15 percent. For Hitachi the acquisition will strengthen its position in Europe, where it competes with the world's top three international train makers - Canada's Bombardier, Germany's Siemens and France's Alstom. The Japanese group had already moved its global rail division to London last year. State-controlled Finmeccanica has been trying to sell loss-making train unit AnsaldoBreda and its controlling stake in rail-signalling company Ansaldo STS for almost four years, deeming the business to be too small to compete on its own in foreign markets. However, corruption scandals and political meddling delayed the process, prompting ratings agencies to downgrade the Italian group's 4.1 billion euros of debt to junk status, increasing its financing costs and damaging its international competitiveness. The Hitachi deal, which will cut Finmeccanica's debt by 600 million euros, is expected to boost investors' confidence in Chief Executive Mauro Moretti's ability to turn the company around but analysts said they do not expect an immediate upgrade to its ratings. Moretti said at a press conference late on Tuesday earnings targets for this year would be revised higher and credit ratings would improve after the sale. Moretti, the Italian rail industry veteran who took over at Finmeccanica eight months ago, wants to cut debt to below 3.5 billion euros by 2017, sell non-core businesses and find a partner for its U.S. defence subsidiary DRS Technologies. "With this deal Finmeccanica becomes a pure aerospace, defence and security company," Chief Financial Officer Gian Piero Cutillo told analysts, adding that the remaining non-core businesses accounted for under 1 percent of the group's sales of 14 billion euros. The Hitachi deal is the latest big merger in the rail sector after Siemens' 2.2 billion-euro takeover of Invensys's rail signalling arm in 2013, as the industry consolidates in the face of increasingly fierce competition. China's CNR and rival CSR Corp plan to merge to create a $26 billion company, the world's largest trainmaker by sales thanks to its domestic market, which is now looking to export markets for its high-speed trains. Banking sources said on Tuesday CNR might yet make a counter-offer for Ansaldo STS, attracted by Ansaldo's ERTMS technology (European Railway Traffic Management System) to help it get into European markets. Last year CNR pulled out of the bidding due to the distractions of its domestic merger, leaving Chinese IT group Insigma to bid alone. "This is a now or never opportunity for CNR," one banker familiar with the industry said. But Moretti and Hitachi said they did not expect there would be a bidding war for control of Ansaldo STS. "I don't think there can be a hostile bid," Moretti said, but added if there was a counter bid "it will be discussed". For Hitachi, the main attraction is also Ansaldo STS, as it would help it sell carriage and signals packages as well as giving it a manufacturing hub in continental Europe. Hitachi is expected to launch its mandatory offer for Ansaldo STS in September, as the regulatory approvals process could take up to five months and involve several jurisdictions, one of the banking sources said. "We negotiated for 40 percent and I am confident we can lift our stake to above a majority," Hitachi Rail Chief Executive Alistair Dormer said. The company behind Japan's first "bullet" trains is already investing in a plant in northeast England in a drive to expand within Europe and beyond while its domestic market shrinks. Ansaldo STS has long made signal systems for North America and Europe - a good fit for Hitachi given that Japanese signal systems are often incompatible with foreign railways. "By acquiring these complementary companies it will give us a bigger global base. We hope to compete better with the so-called big three in volume and size," Hitachi's CEO Hiroaki Nakanishi told a press conference in Tokyo. Bonds Rise Sharply Finmeccanica's shares closed down 1 percent at 10.87 euros, having risen more than 6 percent in the previous session amidst reports of a deal, while the company's bonds were sharply higher. Ansaldo STS's shares closed up 6 percent at 9.37 euros, just below the price offered by Hitachi. Finmeccanica has about 5 billion euros of outstanding bonds, with coupons ranging from 4.375 percent to 8 percent. Hitachi, which was advised by Citi, will pay 773 million euros for Finmeccanica's 40 percent stake in Ansaldo STS. The Japanese company will pay 9.65 euros for each Ansaldo STS share - a 9.2 percent premium to the stock's closing level on Monday - and launch a mandatory offer to buy out other shareholders. If all shareholders tender their shares, the overall price will rise to a little more than 1.9 billion euros. Finmeccanica's financial advisors were Mediobanca and UBS. Hitachi will also pay 36 million euros for AnsaldoBreda, excluding a factory in Sicily, certain residual contracts and other activities that need revamping. (Reuters)
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Piramal Fund Management Ltd, a unit of Piramal Enterprises Ltd, will invest up to 50 billion rupees($803 million) before March 2016 to finance construction projects, its managing director said on Tuesday. "We are looking to expand the construction finance portfolio. This is less risky and this was the missing link in our portfolio," Khushru Jijina, managing director of Piramal Fund Management, told Reuters. The fund manager said on Tuesday it would invest 11 billion rupees to finance nine construction projects across major Indian cities. The projects are a mix of late-stage and mid-market residential developments, including at suburban locations, with a completion timeframe of 3 to 5 years, according to a statement by the company. The projects are in Mumbai, Delhi, Bangalore, Pune and Chennai, Piramal Fund Management said. The company will eventually expand financing to smaller cities such as Jaipur, Ahmedabad, Nagpur and Hyderabad, Jijina said. Piramal Fund Management, which has a real estate finance joint venture with Canada Pension Plan Investment Board, manages $2 billion across various funds. It currently has separate funds for equity and structured finance. (Reuters)
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Crude oil futures fell more than 2 percent on Monday as investors worried about oversupply and a strong dollar, but heating oil futures jumped 5 percent due to operational problems at major U.S. refineries. Crude was down for almost the whole trading session, rising briefly after the Financial Times quoted Nigerian Oil Minister Diezani Alison-Madueke as saying the country might call for an OPEC extraordinary meeting in the next six weeks or so if prices fell further. The market has slid since Friday's data showing a slowdown in the weekly decline in the number of rigs drilling for oil in the United States. The data raised worries that U.S. crude inventories, already at record highs, could swell further. The largest U.S. refinery strike in 35 years has also been a negative for crude prices. Heating oil futures rallied for a second straight day, reaching above $2.24 a gallon, the highest in nearly three months, as some of the biggest U.S. East Coast refineries struggled to restore operations after severe cold weather triggered outages. Sub-zero temperatures were expected to sweep through the region late on Monday, raising concerns about adequate heating supplies. "It's a worry of high supplies with crude and tight supplies with heating oil," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. Benchmark Brent crude settled down $1.32 at $58.90 a barrel. Brent briefly rose, hitting a session high of $60.67, after the comments by the Nigerian minister, Alison-Madueke, who is also OPEC's president. Analysts said the gambit will likely fail without Saudi Arabia's support. U.S. crude futures, also known as West Texas Intermediate, or WTI, settled down $1.36, or 2.7 percent, at $49.45 a barrel. While high supply was pressuring crude prices, the market also was seeing quick "buying on dips," evidence that bulls were in more control than a few months ago, traders said. After losses of between 9 and 18 percent each month from October to December, Brent consolidated in January and is up about 11 percent month-to-date. "There is the notion that a bottom has been set at $55 for Brent and $45 for WTI, and there are enough buyers out there each time the market tests those levels," said John Kilduff, partner at New York energy hedge fund Again Capital. (Reuters)
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It is being touted as a major "corporate espionage" story involving large business houses, but it was an amateurish rushed job by players on the ground that blew the lid off a long-running syndicate leaking official documents from the Oil Ministry. First, an important document was found lying on a photo-copier machine one morning about eight months ago in the ministry, soon after the new government led by Prime Minister Narendra Modi assumed office. The suspicion grew further when the door of a director's room was found to be compromised and a thorough probe was launched to catch those transporting documents out of the ministry, culminating into what is now being talked about as a major crackdown on a suspected "corporate espionage" ring with a dozen arrests already. Worst-Kept SecretIt has been one of the worst-kept secrets in the national capital that key official documents often find their way to the corporates and their lobbyists from the the small rooms and narrow corridors of the famed Shastri Bhawan, which houses many key ministries. What has surprised many is the modus operandi of breaking into the rooms late in night with the help of duplicate keys and ID cards. However, one of the main accused Shantanu Saikia has now claimed that it was a Rs 10,000-crore scam and he was only doing the "cover-up" job. While refusing to identify the specific instance that led to the probe, Oil Minister Dharmendra Pradhan told PTI, "We had discomfort (over a certain incident) and the competent authorities were informed." Duplicate keys were apparently made for seven rooms including that of special secretary, two joint secretaries - and some directors dealing with sensitives issues like exploration policy, petroleum pricing and gas pricing. Locks have been changed for all rooms since then and the Ministry is now also strictly adhering to the standard operating procedure (SOP) of handing critical information. "Any secret file or document has to be hand-delivered or sent in a sealed envelop," Oil Secretary Saurabh Chandra said. Besides, it has been decided that many other standard drills will also be followed in "letter and spirit". "There is an SOP. That has to be strictly adhered to, right from my office to down below," Pradhan said. Sources said that it was sometime in June last year when some critical documents were found on a photocopier machine when room of a joint secretary was opened in the morning. Adding to the seriousness of the matter, the concerned joint secretary was considered very critical of a large corporate house on matters related to a gas pricing issue. Initially, the top officials of the ministry suspected hand of some internal staff. Still they enhanced the vigilance and officials began locking their rooms even while going to washrooms, sources said. However, the situation became much more serious when the door of a director was found compromised about two months ago. Enhanced SurveillanceThis led to the ministry ordering a through investigation and heightened surveillance, including large-scale installation of CCTV cameras across offices. This was followed by days of enhanced vigil and surveillance by sleuths and eventually a trap was laid by the Delhi Police, resulting in the arrest of five persons including two junior staff in the Ministry on Thursday. More arrests have been made since then. Asharam, 58, who was brought in as multi-tasking staff in the petroleum minister's office during S. Jaipal Reddy's time, and his associates Ishwar Singh, 56, allegedly made duplicate keys of the rooms of various key officials. These keys were used to access the rooms in the middle of the night to photocopy the documents, which were later sold to energy consultants and corporates. Sources said that the syndicate normally operated during the night, but about two months back they conducted their operation early in the morning when the door of the director's room was compromised. The cleaning staff apparently found the door compromised and informed senior officials about the same. The ministry is still looking into how the alleged thieves could lay their hands on keys to seven rooms. The sources said the accused allegedly used fake ID cards to enter Shastri Bhawan, which houses the Petroleum Ministry on the second floor, in the middle of the night. They would use duplicate keys to open rooms of senior officials and photocopy the secret official documents. 'Our House Has Been Burguled'Pradhan on Sunday asserted that all those who subverted the system would be punished but made it clear that the government was not targeting any particular corporate. He also said that his ministry is ascertaining whether standard operating procedures (SOPs) for handling confidential information was violated. "Our house has been burguled and we approached the competent authority for investigation," Pradhan said. The arrested executives belong to Reliance Industries, Essar, Cairn and Reliance Group. "Nobody is above law. Nobody will be spared. Law will take its own course," Pradhan has said. "Nobody will be spared... nobody can breach law, howsoever powerful he may be... We will not allow anyone to breach the system," he said. Reliance Denies RaidReliance Group distanced itself from reports of police raids at its offices, saying it was "not aware of the circumstances" leading to the arrest of an employee of the group's power business. "No search or raid has been conducted by police authorities at any office of the Reliance Group anywhere in India," the Anil Ambani-led group, which has interests ranging from telecom to power and infrastructure, said in a statement. Police have arrested officials from five companies and others as part of investigations of an alleged scam to steal documents from the oil ministry to sell to consultants and private companies. "Reliance Power is fully cooperating with the authorities," Reliance Group said in the statement. (Agencies)
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