With energy efficiency and conservation being the new buzzwords, there has been an increasing focus on bringing down energy costs as well as being environment-friendly. Customers - whether residential, industrial or commercial - are increasingly looking at the return on investment on a project and reducing energy consumption.Real estate is responsible for about 30 per cent of the total electricity consumed in India. According to a report by Jones Lang LaSalle, real estate in India is expected to grow at about 30 per cent every year, to touch $90 billion by 2015. This points towards an immediate need to undertake energy conservation tactics to sustain in the long run. The need of the hour is to reduce expenditure related to energy and scale down its consumption. Green buildings, a fast emerging concept in the country, are seen as a solution to this problem.Green Buildings: The Answer For Energy ConservationThe Indian Green Building Council (IGBC) defines a green building as one which ‘uses less water, optimises energy efficiency, conserves natural resources, generates less waste, and provides healthier spaces for occupants as compared to a conventional building’. According to the handbook on green practices published by the Indian Society of Heating Refrigeration and Air Conditioning Engineers (ISHRAE), every one million square feet of commercial green buildings can save about 15 million kWh per year and reduce carbon emissions by about 1,200 tonnes per year. This represents the huge underlying potential of green buildings in conserving energy in the coming years. Efficient lighting, an important aspect of green buildings, plays a very critical role in addressing the need for energy efficiency and certifying buildings green.Efficient Technologies Will Play An Important RoleEnergy conservation, in terms of lighting, means reduced usage of halogen and incandescent lamps, since they consume a lot of electricity, while dissipating more heat, making them a very inefficient choice of lighting. Besides, the lack of a safe method of disposing these lamps also makes them an environmental concern. Green buildings are required to adopt efficient lighting, and thus use newer and eco-friendly technologies like LED technologies. The Government of India has recognised this factor and brought out safety and quality standards for LED lighting, as part of the phase out of inefficient lighting.Similarly, HVAC (heating, ventilation, and air conditioning) systems in green buildings cannot use refrigerants and ozone depleting gases, which have a negative impact on the environment. Thus, end users have to install CFC-free HVAC systems / unitary air-conditioners. Since air-conditioning is an integral part of running costs, this leads to a large cut in the operating costs of the user as well. Green Boulevard, a 900,000 sq. ft. commercial complex in Noida, has seen a 33% reduction in HVAC running costs ever since it was certified a green building in 2009.The potential for adoption of eco-friendly technology in green buildings is huge. By 2020, IGBC expects that green buildings will account for 16 billion square feet in the real estate space; and by 2030 it will make up about 20 per cent of all the construction in the country. But there are a few deterrents which might lead to a bumpy ride.The Challenges Of Adopting Green TechnologyIn order to be certified as a green building, there are various upfront costs involved while switching to eco-friendly technologies. LED, for instance, is at least five to six times more expensive than conventional lighting such as incandescent lamps. In the long run, the return on investment is definitely higher since there are virtually no replacement costs and power consumption is lower.However, cost is still not the biggest challenge for the propagation of the ‘green building’ concept. Stakeholders in the industry in India reveal that awareness about green building design, and how various choices including lighting and HVAC can impact it, is sketchy at best. Incorrect perceptions are compounded by the fact that there are very few experts or consultants who can create awareness. Spreading knowledge and creating awareness about green buildings is the quickest way of getting this concept adopted and will be a key determinant of how quickly this market picks up in the next 5-7 years.The Road Ahead…In an effort to go green, manufacturers and consultants are realising the importance of spreading the knowledge, and manufacturers are doing their bit to make end-users aware. Philips Lighting University, for example, has joined hands with GRIHA (Green Rating for Integrated Habitat Assessment), the national rating system for green buildings in India, to offer a course on the lighting tools required for green building assessment in India.End-users especially depend on EPCs and project consultants to make their energy choices for them, and the latter have to be enablers in this process. This is particularly important in the case of residential and commercial spaces since these will see the largest addition in terms of square feet. With 16 billion sq. ft. worth of green buildings to be added by 2020, green buildings are the way to go. For increased energy conservation, end-users will have to give eco friendly technologies the 'green' light.(Namita Adavi is a research analyst at ValueNotes (www.valuenotes.biz), a provider of market intelligence, research and consulting. She has been involved in market assessment studies and formulating India-entry strategies for companies in the lighting industry).
Read More
DLF Ltd said on 31 January' 2013 it would sell part of its wind power assets with a capacity of 150 megawatts to Bharat Light and Power Pvt Ltd for Rs 282 crore as part of its plans to reduce debt. DLF signed an agreement with BLP for the transfer of the assets, located in Kutch in Gujarat, the statement said. DLF has a total of 227 MW capacity wind turbines across four Indian states, it said. DLF, which builds homes and offices mainly in its key market of northern India, said in November last year that it intended to sell non-core assets to reduce its Rs 23,200 crore worth of debt.(Reauters)
Read More
The base price for state-run Oil India Ltd's share sale, to take place on 1 February' 2013, has been set at a 5.6 per cent discount to its share price, the company said, in a deal that will raise about $575 million. The government will sell a 10 per cent stake in Oil India through the auction, as part of its drive to raise 300 billion rupees by selling shares in some state enterprises in the 2012/13 fiscal year to March. The floor price for the Oil India auction will be 510 rupees a share, as compared to its Thursday closing price of Rs 540. At the floor price, the government could raise about $575 million through the stake sale.(Reuters)
Read More
The government will offload its 10 per cent equity in Oil India Ltd (OIL) on 1 February, 2013 which may fetch the exchequer up to Rs 3,000 crore.The decision was taken at a meeting of the Empowered Group of Ministers, headed by Finance Minister P Chidambaram, on 30 January."Proposal has been cleared. Disinvestment will take place on February 1 through OFS route. Roughly we will raise Rs 2,500-3,000 crore," Petroleum Secretary G C Chaturvedi said.According to sources, shares will be offered at a discounted price."Price has been determined. It has been communicated to stock exchanges," Petroleum Minister Veerappa Moily told reporters after the EGoM meeting.The Government has proposed to sell 10 per cent stake or 6.01 crore shares in the petroleum exploring company OIL through offer for sale (OFS) route. OIL's paid-up capital as on March 2012, was Rs 601 crore.Shares of OIL were trading at Rs 528 apiece, down 2.14 per cent from its previous close on BSE in later afternoon trade. At current prices, 10 stake can fetch around Rs 3,000 crore to the exchequer.The government holds 78.43 per cent stake in the company and would come down to 68.43 per cent, after disinvestment.OIL issue would help the Centre inch towards the Rs 30,000-crore disinvestment target set for the current fiscal. The government has so far raised Rs 6,900 crore through disinvestment.As per the disinvestment roadmap of the government, OIL issue was initially slated to happen in the last week of January, to be followed by one PSU stake sale every fortnight.The stock has been on fire ever since the government started considering partial decontrol of heavily subsidised diesel prices. A partial deregulation would mean OIL having to pitch in lesser subsidy.(PTI)
Read More
The Prime Minister-appointed Rangarajan Committee, which went into oil and gas contracts, said CAG's authority to audit expenses was unquestionable."Audit is prerogative of CAG and so the power of audit remains with CAG," C Rangarajan said after the report of the panel, headed by him, was made public.The comments come in the backdrop of intense bickering over the scope of CAG audit of Reliance Industries' spending on the flagging eastern offshore KG-D6 gas fields.RIL has argued that while it is open to CAG doing a financial scrutiny as provided, the Production Sharing Contract does not provide a performance audit by the official auditor.Rangarajan said blocks with low value can be audited by panel of auditors formed by CAG and for high value blocks, the official auditor should audit directly.The CAG have the power to decide the value of the block that will be audited by it directly, he said.In its report, the Rangarajan Committee has suggested shunning the present cost recovery model that allows operators like RIL to first recover all their investment before sharing profits with the government.This model had come in for criticism from CAG which said it encouraged companies to keep raising cost to defer higher profit for the government."We want to move from the present format of contracts," he said adding the present system has run into lot of dispute.These disputes has led to delay of implementation of contract, he said adding under the new system both govt and contractor will have revenue share from day one of production.For the future, the panel suggested bidding out the blocks based on the highest production share offered. On pricing of natural gas, the panel suggested a new model, Rangarajan said.The average of three international gas hub price and the cost of imported LNG will the well head price in India, he said adding the panel was not interfering in gas utilisation or allocation policy that will be decided by the government.Rangarajan said the committee has recommended that the new gas price formula will be reviewed every five years."There are existing contracts. Only after expiry of existing contracts new formula will be applied," he said.RIL's USD 4.2 per million British thermal unit price for KG-D6 gas is valid for the first five years of production ending March 31, 2014."I will not go into individual names," Rangarajan said when asked pricing of KG-D6.Asked about the impact of new gas price on subsidies, he said it all depends on if the fuel cost is passed on to consumers."If are really going to have situation when you will not allow the power prices to increase or fertiliser prices to increase and you will always bear the subsidies then your subsidies bill will go up," he said without getting into specifics."I am saying impact on user industry will depend on what you will do with price. It is impossible for us to say that we will contain the fiscal deficit at 5.3 per cent ... we will have to take fresh look at pricing of end product," he added.
Read More
Reliance Industries has finalised its 2013 term contracts to supply gasoil and jet fuel to several buyers and is negotiating with a few more, all at levels higher than those of most other refiners, industry sources said.It has completed a 500 ppm sulphur gasoil contact with at least one buyer at premiums close to $2.70 a barrel to the new benchmark Middle East quotes and a 10 ppm sulphur diesel contract at premiums of about $4.30 to $4.50 a barrel, the sources said on Wednesday.The gasoil cargoes will be priced off the 500 ppm sulphur gasoil quotes instead of the current 5,000 ppm, in line with a shift in benchmark by pricing agency Platts, which comes into effect in January.For jet fuel, the Indian refiner has concluded its 2013 term contracts at premiums of about $2.40 to $2.50 a barrel, the sources said.Details on exact volumes and buyers were not immediately available.The refiner is likely to continue negotiations with several other companies, especially for the 500 ppm sulphur gasoil, traders said.
Read More
Reliance Industries posted its first profit increase after four quarters of declining returns, buoyed by stronger oil refining margins.Reliance Industries (RIL), led by Mukesh Ambani reported a 24 per cent jump in its third quarter net profit to Rs 5,502 crore against Rs 4,440 crore in the same period a year ago and Rs 5,409 crore in the previous quarter. Net sales soared over 10 per cent to Rs 95,626 crore against Rs 86,520 crore in the same period.The company posted an average gross refining margin of $9.6 per barrel for the quarter, compared to $6.8 in the same period last year.Reliance, which operates the world's biggest refining complex in Jamnagar, was expected to post a net profit of Rs 5120 crore, according to Thomson Reuters data. The profit rise came despite falling production at the company's key natural gas field off India's east coast and a cut in its estimated reserves by about two-thirds.The government is expected to increase natural gas prices by 2014, a move that would help Reliance and its partner, BP Plc, justify higher expenditure on the block.Reliance said it held $14.7 billion in cash at the end of December and had debts of $13.1 billion.Reliance has looked to widen beyond its core energy business in recent years, and has outlined a big drive into consumer-focused sectors such as telecoms, retail, and financial services.The company said in a filing to the stock exchanges said: "The Scheme of amalgamation of Reliance Jamnagar Infrastructure Limited (RJIL), with the company from the appointed date of April 01, 2011, has been sanctioned by the Hon’ble High Court of Gujarat at Ahmedabad. The Scheme became effective on October 22, 2012. The figures for trailing quarters have been reworked and re-stated giving effect to the amalgamation. On account of above the figures for the quarter and 9 months of the previous year are strictly not comparable."After becoming the most influential stocks in the BSE Sensex on 17 January, Reliance Industries surged over 1 per cent on 18 January to hit a fresh 19-month high on expectations of healthy improvement in refining margins in its quarterly result."Refining is doing sufficiently well but ... clarity is still required on where the next round of revenue growth will come from," said Rikesh Parikh, vice president for equities at Mumbai brokerage Motilal Oswal Securities Ltd.Reliance, India's biggest company by market value, has been under pressure from investors on account of its slowing energy business and a drive into consumer-focused sectors such as telecoms, retail and financial services, in which it is yet to turn a profit.The results were released after the close of trade in India. Shares in the Mumbai-based conglomerate, valued at $52.6 billion, closed up 1.2 percent ahead of the results.The stock rose by a fifth in 2012, but lagged a 26 percent increase in the main stock indexDe-notification of 40% of RIL's Gujarat SEZ ApprovedReliance Industries also won government approval to de-notify over 40 per cent of its Special Economic Zone in Gujarat as it plans Rs 45,000 crore projects in that area to cater to domestic market.An official said RIL's proposal was approved at the meeting of Board of Approvals (BoA) SEZ subject to the company obtaining a no-objection certificate (NoC) from the state government for the denotification."The BoA today approved the proposal but they have to take an NoC from the state government and the company also have to refund the tax benefits it may have availed for operating units in the only-for-export zone," he said.The decision was taken by the Board of Approval for SEZ, which is headed by commerce secretary S R Rao.RIL's multi-product SEZ is spread over 1,764.14 hectares.The company wants partial de-notification of an area of 728.43 hectares, leaving 1,035.72 hectares of plan for the multi-product SEZ.Sources said that in the de-notified area RIL plans to invest Rs 45,000 crore in new projects that will cater to domestic demand.The developer had applied for partial de-notification so as to implement a number of new projects in the domestic tariff area (DTA) in Jamnagar near the SEZ. The proposed projects will mainly cater to the significant existing domestic demand.RIL had stated in the proposal that it plans to invest Rs 45,000 crore in projects in the de-notified area.SEZ houses 580,000 barrels per day or 29 million tons a year oil refinery that exports fuel to far off countries like Venezuela and Mexico, besides the US and Europe. An adjacent 33 million tons older unit cater to the domestic market.Billionaire Mukesh Ambani-led firm is investing over $12 billion in its core refining and petrochemical industries as output from its eastern offshore KG-D6 fields dips to an all-time low of around 22 million standard cubic meters a day.RIL is investing $8 billion, the most since it completed a second oil refinery in 2008, in expansion of its petrochemical business to meet rising demand of plastics and polyester.Also, it is setting up a $4 billion petroleum coke gasification project that will produce synthetic natural gas that will replace expensive LNG as fuel.
Read More
India's move to raise the price of subsidised diesel should help with its plans to sell shares in state companies including Oil India Ltd to help bridge the government's fiscal deficit and gives a boost to private oil refiners looking to enter the market for bulk diesel sales. New Delhi, which owns about 78 per cent of Oil India, is likely to raise more than $500 million by selling 10 per cent in the explorer and producer early next month, said sources with direct knowledge of the plan, declining to be named because details are still being worked out. Raising the diesel price may also help revive a 10 per cent stake sale in retailer Indian Oil, which hired six banks in 2010 to prepare for the sale only to shelve the issue as its earnings worsened because of the subsidies, although people familiar with the matter said such a sale was unlikely to happen soon. Selling shares in state companies is a central plank of the government's plan to bring the deficit down to 5.3 per cent of gross domestic product for the financial year ending March and avoid a credit downgrade from global ratings agencies. The subsidy burden of India's state oil producers and retailers has also been a worry for overseas investors, who are usually the biggest buyers of large share deals in Asia's third-largest economy. "The element of cynicism around the public-sector oil firms will reduce a great deal after this decision," said Jagannadham Thunuguntla, equity head at SMC Global Securities. "It augurs well for the divestment programme." The government, which fixes the retail price of diesel, on Thursday told retailers to raise prices in small amounts every month, a move that should also improve revenues in the sector. At the same time, it removed price controls for bulk sales, which account for about 18 per cent of total demand. Indian stocks, bonds and the rupee all rallied on the government's decision with the rupee at its highest level in nearly two-and-half months on Friday. "In aggregate the decision would help attract more investment in the oil and other sectors from foreign investors," said a senior finance ministry official, who declined to be named because of a restriction on speaking to the media in the run-up to the Indian budget release. Refiners See BenefitsWhile shares in India's state-run oil refiners rallied, the decision to sweep away subsidies for bulk sales could create an opportunity for private rivals Reliance Industries and Essar Oil, which may look to broaden their market share. Large-scale diesel sales account for about 18 per cent of the total demand of some 522 million barrels a year. State-run IOC, India's biggest refiner, owns about 80 per cent of the market. "If there is a level playing field, we will be in the market and we will be competitive. We are looking at being in the market in this segment," said L.K. Gupta, chief executive of Essar Oil, India's second-largest private refiner. Reliance, owner of the world's largest refining complex, with 1.2 million barrels per day (bpd) capacity on India's west coast, could also look to sell more in its backyard. "There will definitely be an impact on volumes," said IOC's director of marketing, M. Nene. "Earlier there were three players, now there will be three more," he added. Private refiners might offer better credit terms, discounts and service to bulk customers, Nene added. Along with IOC, state-run HPCL and Bharat Petroleum Corp sell to bulk customers, which include railways and defence industries in the state sector and cement companies, miners and power plants among private clients. Serious competition in bulk sales is still seen some way off, with private refiners lacking the marketing infrastructure, and many big state-owned clients having annual contracts. While a difference remains between bulk and retail prices, large-scale customers may be tempted to buy as much as they can in the market where subsidies continue. "We have to be very vigilant at the retail level as we should not be permitting supply of diesel from the retail outlets to consumers who are not entitled to get such supplies," said Nene of IOC. Nomura analysts said in a Friday note that "higher prices for bulk sales should reduce the bulk market size," as private companies would have lots of incentives to resort to retail purchases to cut costs. State-Owned Sell-DownNew Delhi wants to raise $5.5 billion by selling stakes in state-owned companies in the current fiscal year that ends in March. While the plan is far behind schedule, it got a boost from a $1.1 billion offering in miner NMDC Ltd last month. Before the NMDC sell-down, the government had raised just $148 million in the current fiscal year. Besides Oil India, the government plans to raise more than $2 billion from a stake sale in power producer NTPC Ltd next month. Most foreign buyers stayed away from a $2.6 billion stock auction in Oil and Natural Gas Corp Ltd in March last year. Uncertainty about its subsidy burden was one of the reasons for the poor response to the issue that was bailed out by state financial investors. State-run upstream oil companies Oil India, ONGC and GAIL (India) Ltd, sell refined products and crude oil to state retailers at a discount, which hurts earnings and dims investor appetite. "The biggest challenge in an offering by a public sector oil company is to answer all the investor queries around the subsidy mechanism and its impact on the earnings outlook," said a source involved in the Oil India share sale process. "The government's diesel price move is surely a good step and brings clarity about their financials, which will boost demand for shares," said the source, who declined to be named as he was not authorised to speak to the media. Analysts said producers such as Oil India would benefit most from the diesel price hike, given they have been selling crude oil and associate products at a discount and could be allowed to charge higher prices. Shares in Oil India rose as much as 20 per cent on Friday, adding $1.1 billion to its market value, while the main Mumbai market index was up 0.6 per cent. The stock gave up some of its gains later and was trading up about 10.2 per cent. At the current market price, 10 per cent of Oil India is valued at about $630 million. New Delhi usually auctions shares to investors at a discount to the market price to ensure demand.(Reuters)
Read More
