The Inter Ministerial Group (IMG) on coal block allocation has been asked to conclude its work without delay and give its recommendations at the earliest. A direction is this regard was given yesterday after Finance Minister P. Chidambaram and Coal Minister Sriprakash Jaiswal met in the presence of the secretaries of the Department of Economic Affairs and Coal Ministry.Rejecting reports of differences between the two ministries in the media on the basis of letter written by a Joint Secretary in the Finance Ministry to Coal Ministry, a Finance Ministry statement said the letter was only a routine administrative matter.The letter had asked the Chairman of the IMG that all the documents and facts relating to each case be provided to all the members of IMG without which it will not not be in a position to take any view or make any recommendation."Letter issued by Ministry of Finance(MOF) is only a routine administrative matter which asked the Chairman of IMG that all the documents and facts relating to each case be provided to all the members of IMG without which IMG will not be in a position to take any view or make any recommendation," the Finance Ministry had said in its response.It said subsequent to this letter, the Coal ministry has provided complete information to all its members. "Representative of MOF has participated in every meeting of IMG and there is no difference of opinion between the two Ministries. The Union Finance minister and the Coal Minister met yesterday in which the secretaries from both Department of Economic Affairs and the Coal Ministry were also present.There is clear direction from both the Ministers that IMG must conclude its work without delay and give its recommendation's to the Government at the earliest," the Finance Ministry response had said.The IMG, under the Chairmanship of Zohra Chatterji, Additional Coal Secretary, has been mandated to review the progress of development of 58 coal blocks allocated to both public and private sector companies between 2005 and 2009. It has been asked to give its recommendations by Sept 15 including whether allocations to firms can be cancelled.The IMG had examined the responses to its notices to 29 coal blocks.Indications are that the IMG may not not be in a position to give its final recommendations by the deadline of September 15 as it could have at least a couple of more sittings.(PTI)
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Alstom T&D, the Indian arm of Alstom Grid, will invest 80 million euros in the country despite the dismal state of the country’s power sector.“It is certainly a difficult period for the power sector due to a lack of visibility. It does sometime slow down the pace of investments, but we are confident India will resolve these issues soon. We are in this for the long term and a little bit of instability doesn’t affect our plans,” said Grégoire Poux-Guillaume, President-Alstom Grid. The company recently won a Rs 2,800-crore high voltage direct current contract from the PowerGrid Corporation of India (PGCIL).Alstom had pumped in nearly 160 million euros to upgrade its manufacturing facilities and to set up five brand new factories in three locations 2008-09 – in Hosur, Padappi and Vadodara; the product lines were gas-insulated switchgears, disconnectors, circuit breakers, instrument transformers and power transformers. Alstom Grid's total sales for year 2011-12 was 4 billion euros. The Indian arm, Alstom T&D, had a sales revenue of Rs 671 crore in the first quarter of 2012.Of course, i'st not that Alstom remains unscathed given the imbroglio in power sector. The financial losses of the distribution sector have spilt over to the power equipment manufacturing industry. Alstom admits dues to it have increased by 50 per cent in a span of less than a year. “Our overdues have gone up by more than 50 per cent in the last one year. It is an indication of the prevailing tension in the power market. We have a few on-going projects which have either been stopped or delayed by our customers who are in no position to pay for the equipments,” says Poux-Guillaume. The accumulated dues of the state electricity boards (SEBs) is pegged at Rs 41,473 crore; it consists of a principal amount of Rs 25,727 crore and Rs 15,746 crore by way of interest and surcharge. It has bled distribution utilities and has the potential to push the entire power industry into a black hole. The situation is so dire that plans are afoot to restructure SEBs’ losses. Alstom T&D confessed to a 17-month delay in one of its recent projects (which project is this?) due to land acquisition issues faced by Powergrid. Poor cash flows in another. “Cash in the power sector seemed to have been sucked up. SEBs are at the centre of the problem and the recommendations by the Shunglu Committee needs to be implemented quickly in order to revive investment in generation, distribution and transmission projects,” said Rathin Basu, Country President and Managing Director Alstom T&D.
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Reliance Industries plans to drill one gas well and convert two sick oil wells into gas wells on the MA oil field in the predominately gas-rich KG-D6 block as part of its attempts to boost gas production. RIL has so far drilled six wells on the MA oilfield, the only oil discovery among the 19 oil and gas finds the company had made in the eastern offshore KG-DWN-98/3 or KG-D6 block. Besides producing oil, the field also produces natural gas. But the closure of two out of the six wells due to high water and sand ingress has led to drop in output from over 8 million standard cubic meters per day (mmscmd) three years ago to 5.53 mmscmd this month. To address the problem, RIL and its partner BP Plc of UK submitted a Revised Field Development Plan for MA oilfield in February this year, sources privy to the development said. The revised plan envisages drilling of a new gas well and conversion of two sick (or closed) oil wells to gas wells in order to maximise the gas production from the field, they said. Together with 21.93 mmscmd of output from Dhirubhai-1 and 3 or D1&D3 gas field, the KG-D6 block currently a little less than 27.5 mmscmd of gas. Sources said in the revised field development plan, RIL has scaled down the investment required for developing the MA oilfield by $ 276 million to $ 1.96 billion. RIL had in 2006 proposed to invest $ 2.234 billion in developing the Dhirubhai-26 or MA discovery, the only oil find in KG-D6 block in Krishna Godavari basin off the east coast. Besides gas, the field has also lagged behind targets in oil production. The field, which started production in September 2008, is producing less than half of the estimated peak output of 20,000 barrels of oil per day due to water and sand ingress in wells. Sources said in the Revised Field Development Plan, submitted to the government for approval, capital expenditure at MA field has been estimated at $ 1.96 billion as against a capex of $ 2.234 billion approved in 2006. The RFDP is based on reduction in volumes -- oil goes down from 159 million barrels to 122 million barrel and gas from 941 billion cubic feet (bcf) to 924 bcf. The lower capex includes allocation of $ 111 million for drilling of seventh well on the field and work-overs or maintenance of two existing ones, including the ones currently shut, at the cost of $ 164 million. Sources said RIL-BP would submit a revised development plan for D1&D3 gas fields, the main producing area in KG-D6, by October. RIL had in the original field development plan for D1&D3 proposed a capital expenditure of $ 8.836 billion. Of this, about 60 per cent has been spent so far. (PTI)
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Privately owned Essar Oil has offered a rare diesel cargo for export, its first in nearly two years, as domestic demand slows due to monsoon rains, industry sources said on Wednesday.Essar Oil supplies diesel mainly to public sector refiners and the last time it is known to have exported diesel was in October 2010 when the company shipped out four cargoes of high sulphur and medium sulphur gasoil from India, traders said.It has now offered 65,000-70,000 tonnes of diesel with 500 parts-per-million (ppm) sulphur for September 22-October 6 loading from Vadinar through a tender which closes on 12 September.A company official declined to comment on why Essar was offering the diesel, but traders said it could possibly be due to a dip in domestic demand from a late revival of the monsoon last week.Below-average rains had last month curbed hydropower generation, boosting agricultural demand for diesel to power irrigation systems, and prompting imports into the country."We recently had a good few weeks of monsoon showers across the nation, so it's helping push demand down... if they have surplus, there's no point keeping it," an India-based industry source said.Essar Oil usually produces about 700,000 tonnes of diesel every month. Most is sold to Indian state-owned refiners and the rest to Essar's retail network of 1,400 fuel pumps in India, the source added.Recent upgrades to its refinery had also boosted diesel supply, traders said.The company upgraded its refinery to process 405,000 barrels of oil a day, or about 9 percent of India's refining capacity, and raised complexity to handle cheaper heavy grades in June.It is unclear if Essar plans to export diesel regularly, but with the company able to produce Euro V-compliant fuel, which includes 10 ppm sulphur diesel which market participants were expecting it to export to Europe and Australia.(Reuters)
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Shares in DLF slumped on 10 October, a day after anti-graft activist Arvind Kejriwal alleged that the company received undue favours from the government in Haryana.DLF, valued by investors at about $6.82 billion at the day's close, ended down 4.95 per cent, after losing 7.3 per cent since Monday. Investors, worried about the allegations, have dumped the stock, wiping out more than $1 billion of its market value over the last three days.India Against Corruption (IAC) activist Kejriwal said the Haryana government allotted DLF 30 acres of land marked for public use, and it got another 350 acres as a result of a bidding process that favoured the developer.On Friday, Kejriwal, who is setting up an anti-corruption political party, accused DLF of arranging favourable loans and real estate transactions for Robert Vadra, a businessman who is married to the daughter of the ruling Congress party chief, Sonia Gandhi.Vadra and DLF have denied the accusations.In a statement issued to the Bombay Stock Exchange on Wednesday, DLF said: "DLF has neither sought nor enjoyed any special favours from the government of Haryana and all developments of DLF undertaken over the last four decades are strictly in compliance with all applicable laws, rules and regulations with an adherence to the highest ethical standards."(Reuters)
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India will have to raise the price of heavily subsidised fuels such as diesel, petroleum minister Jaipal Reddy said on 11 September, indicating that hikes could be announced within a week. The finance and oil ministries have been lobbying hard for an increase in prices of fuel, warning the cabinet that time was running out to avert a fiscal disaster and a sovereign credit downgrade to junk by global rating agencies. "However painful and difficult an increase in the prices of oil products may be, an increase is unavoidable," Reddy told reporters after meeting the finance minister. "To what extent can the consumers take it is another matter." Reddy said the issue was unlikely to be decided on at a cabinet committee meeting later in the day, but the increase could come on Tuesday "or week from now."Besides the Prime Minister and Chidambaram, the CCPA includes home minister Sushilkumar Shinde, defence minister A K Antony, NCP leader and aAgriculture minister Sharad Pawar, telecom minister Kabil Sibal and railway minister Mukul Roy. Lowering the government's subsidy burden is key to improving India's fiscal outlook, while state-owned companies, which also help subsidise fuel prices, could see profit margins improve. Analysts say state-run oil marketing companies sell diesel at a loss of Rs 17 a litre, kerosene at Rs 32 a litre and domestic LPG at Rs 347 per cylinder. The government, struggling with graft charges over allocation of coal blocks, has delayed the hike in fuel prices, fearing a strong backlash from its allies and opposition parties ahead of state elections later this year. Ratings agencies Fitch and Standard & Poor's have warned that a widening deficit has put India at risk of becoming the first in the BRICs group to lose its investment grade. The others in the group are Brazil, Russia, China and South Africa. Economic Affairs Secretary Arvind Mayaram said the government planned to take corrective steps to rein in the deficit, which private economists warn will reach 6 per cent of gross domestic product this fiscal year. "Pain will be felt by everyone," he said. Reddy said on 10 September he had circulated an updated version of a note detailing the crisis created by the rise in crude oil prices and fall in value of rupee against the US dollar to members of the CCPA."We had circulated a note to all members of CCPA about the problem of increasing under-recoveries (revenue loss on fuel sales)... the under-recoveries will exceed Rs 1.88 lakh crore (this fiscal)," he said. "And prices (are) going up further at the global level; rupee is not softening."On his meeting with Chidambaram, Reddy said he had "routine interactions" on various proposals but declined to elaborate."We discussed the figures relating to under-recoveries," he added.PSU oil firms are losing a record Rs 560 crore per day on the sale of regulated diesel and cooking fuels, and another Rs 16 crore a day on petrol.They are losing about Rs 6 per litre on sale of petrol, a commodity which was freed from government control in June 2010 but whose rates haven't moved in tandem with the cost.They sell diesel at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 per litre and domestic LPG at Rs 347 per 14.2-kg cylinder."I can't take decision (on raising prices) only on the basis of economic facts. We are operating in a political economy. We will have to take a balanced view," he said. Agencies)
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The government on 9 October' 2012 ruled out any further increase in diesel and cooking fuel prices even though the current retail rates are lower than their cost of production. "I am not so courageous," Oil Minister S Jaipal Reddy said when asked if the Government will consider raising prices considering the humongous Rs 167,000 crore revenue loss on diesel, cooking gas (LPG) and kerosene sale expected this fiscal. The government had last month hiked diesel price by a steep Rs 5.62 per litre and restricted the supply of subsidised LPG to 6 cylinders per household in a year. Oil PSUs currently lose Rs 11.65 per litre on diesel, Rs 33.93 on kerosene sold through PDS and Rs 468.50 per 14.2-kg domestic cooking gas cylinder. "Even after these recent increases, the under-recoveries (or revenue loss) this financial year will be higher than it was last year," Reddy said, adding oil firms are projected to lose Rs 167,415 crore this fiscal as compared to Rs 138,541 crore revenue loss in 2011-12. "There is a need to raise prices but not courage," he said. Even on petrol, a commodity which the government had freed from its control in June 2010, the oil firms have lost Rs 2,600 crore during the first six months as they could not raise rates in line with the cost. Oil firms have cut petrol price by 56 paisa from today and the Oil Minister said it was totally up to them to decide on the next reduction whenever it is possible. Reddy said the nation has faced the double whammy of rising price of oil in the international market, on which India is 79 per cent dependent to meet its needs, and depreciation in the rupee against the US dollar that made imports costlier. The price of basket of crude oil that India imports has risen from USD 85.09 per barrel in 2010-11 to USD 111.89 in 2011-12, Reddy said. Rupee value against the US dollar dipped from Rs 44.42 to a US dollar in July 2011 to Rs 57.22 in June this year. "Between July 2011 and October this year, the Indian currency has devalued against the US dollar by 16.34 per cent," he said, adding depreciation of rupee by one against the US dollar results in a burden of Rs 9,000 crore annually. Reddy said the oil firms lost Rs 90,011 crore on sale of diesel, LPG and kerosene in April-September this year. Of this, Rs 47,811 crore was lost in first quarter. Upstream firms like ONGC made good Rs 15,061 crore by way of discount on crude oil they sell to refiners. The remaining is the amount that remains to be compensated by the Finance Ministry. In Q2, Rs 42,200 crore was the revenue loss and upstream firms are likely to chip in Rs 14,000-15,000 crore. The rest would have to come from the Finance Ministry. Reddy said the Finance Ministry, before releasing the subsidy for the two quarters wants to scrutinise the numbers as they had done in past years. "We welcome them to do it," he said, adding in 2007-08 the oil companies calculated Rs 77,000 crore as the subsidy requirement using the principle of import parity pricing. The Finance Ministry used cost-plus formula to arrive at Rs 70,000 crore figure. In the subsequent year, oil firms calculated Rs 103,000 crore by their formula and Finance Ministry arrived at Rs 105,000 crore. "The difference between the two is not very significant. However, Finance Ministry always has the right to scrutinise it and we have always welcomed it," he added. (PTI)
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A Reliance Industries-led consortium may have to shut key gas producing fields in the KG D6 block in 2015/16, Oil Secretary GC Chaturvedi said on 9 October' 2012. Canadian company Niko Resources has a 10 per cent stake in the D6 block in the Krishna Godavari basin, while Reliance and BP, the operators, have 60 per cent and 30 per cent respectively. Currently, the block is producing 26 million standard cubic metres a day of gas from the D1 and D3 fields. In response to a question on whether the consortium might have to shut the fields in 2015/16, Chaturvedi said: "That is a fear." The consortium has said it will not be able to produce as much gas as anticipated due to geological complexities, the oil ministry says. The gas block off the country's east coast has had an unforeseen decline in output that has left India more reliant on expensive liquefied natural gas imports. Analysts Morgan Stanley said on Monday the field could be exhausted in five years.(Reuters)
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