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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India plans to provide affordable electricity to all households in the next five years, Indian Prime Minister Manmohan Singh said on 9 October' 2012. "The Government of India aims to provide 24x7 electricity to all households in the country and affordable access to electricity in the next 5 years," he said inaugurating an International Seminar on Energy Access organised by the Ministry of New and Renewable Energy and CII here. Singh also said the government was taking steps to offer cooking gas to all rural households. At present, around 12 per cent of around 190 million rural households today use LPG to meet their cooking energy needs. "Giving all the 240 million households in the country an entitlement of six LPG cylinders per year will require only around 25 million tonnes of LPG," Singh said. "This should be manageable for our country. But, extending distribution network to all villages may take time," he said. The Prime Minister said the government was working on a mechanism to provide subsidy to targeted individuals so that they can afford to have electricity and LPG. Singh said that the government is looking to put in place a mechanism where subsidy would be directly transferred to bank accounts of the beneficiary. He said in one pilot scheme in Mysore district of Karnataka, 27,000 deliveries of subsidised cylinders have been made after successful biometric authentication of any family member present at home. "In the next phase it is planned to transfer the subsidy amount directly to the bank accounts of bona fide beneficiaries," he said. Highlighting plans for alternate sources of energy, the Prime Minister said India aimed to light up 20 million rural household by 2022 using solar power. He said at present renewable power represented about 12 per cent of the total installed generating capacity in India. The Jawaharlal Nehru National Solar Mission, launched under the aegis of India's National Action Plan on Climate Change, aims to install 20 Gigawatt of grid connected solar power by 2022. "We hope to light up around 20 million rural households with solar home lighting by 2022," he said, adding that the government looked forward to accelerate the overall deployment of renewable energy in India to achieve around 55 Gigawatt of renewable power by the year 2017. He said both the government and the industry need to engage in international cooperation on a large scale in the area of energy access. Additionally, Singh said fuel wood plantations could also be set up within a kilometer of all inhabitations to reduce the burden on women who have to walk long distances to collect fire wood for household use. Making a strong pitch for universalising access to energy, Singh said favoured innovative institutions, national and local enabling mechanisms, and targeted policies, including appropriate subsidies and financing arrangements. "The necessary technologies to mitigate the problem are fortunately available. These technologies need to be viewed as global public goods," he said. Singh said Intellectual Property Regimes applied to energy access technologies should balance rewards for innovators with the need to promote the common good of humankind.(PTI)
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Reliance Industries' key gas producing fields off the Andhra coast could be exhausted in five years, Morgan Stanley analysts said in a report.The researchers' findings are based on estimates by block D6 partner Niko Resources that total proved plus probable reserves at the block had decreased to 1.93 trillion cubic feet as of March 31.Canadian Niko 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 share, respectively.The block was expected to contribute up to a quarter of the gas supply for Asia's third-largest economy, but its unforeseen decline in output has left India more dependent on expensive liquefied natural gas (LNG) imports.The gas output from the D6 block was projected to decline to 20 million standard cubic metres a day (mscmd) in 2014/15, less than half the 60 mscmd it produced in 2010 and well below planned peak capacity of 80 mscmd.Reliance has 10 other discoveries in the block that are yet to be developedIt has won approvals for the pre-development work and needs further regulatory approvals for development activities, the note said."We currently assume that D6 production will increase to 40 mscmd of gas in 2015/16 once these discoveries are developed," Morgan Stanley said.The CAG had last year criticised the government as well as Reliance over development of the KG gas field, which has been beset by arguments over spending and strategy for its complex geology.No immediate comment was available from Reliance.(Reuters)
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Giving a push to aviation infrastructure development, Indian government is planning to build 10-15 greenfield airports and modernising 50 others in the non-metro cities over the next few years."About 50 non-metro airports are being modernised within the next two years and overall 10-15 new greenfield airports are being planned," Indian civil aviation minister Ajit Singh told reporters on the sidelines of the 49th Conference of Directors General of Civil Aviation of Asia-Pacific region in New Delhi on 8 October.Maintaining that the civil aviation sector in India was witnessing an annual growth of nine per cent, he said, "We expect a double digit growth in air traffic in the next few years."Asked about the basis of his assessment, Singh said, "The huge middle class is growing, trade is growing and India should achieve at least six per cent GDP growth now. There may have been a temporary setback as we see a decline now, but air traffic is expected to grow substantially."This week India is set to dismantle a complex web of regulatory requirements that throttle its infrastructure growth, with plans to set up a special body to speed up projects in a sector seen as vital to reviving economic momentum. The move is the latest in a slew of big-ticket reforms by Prime Minister Manmohan Singh's government, from raising diesel prices to opening supermarkets to foreign competition, to spur growth which is at its slowest pace in nearly three years. Read: India Moves To Dismantle Stifling Infra ControlsFinance Minister P. Chidambaram said the Cabinet was expected to establish a National Investment Board (NIB) this week, to speed up clearances for projects that are now bounced from one ministry to another in a process that can stretch for years and frustrates investors. Government officials say regulatory delays have held up projects worth nearly Rs 2 trillion in the road, power, coal and mining sectors alone. However, this latest reform initiative may not be the panacea for a sector hobbled by layers of bureaucracy because, despite the single-window in New Delhi, approvals could still be held up by mandarins in the states where projects are proposed.In what is seen as a hangover from the days of the "Licence Raj" economy of quotas and permits - which Singh helped abolish as finance minister more than two decades ago - a typical infrastructure project requires clearances from 19 central ministries ranging from environment to defence. "The idea is nothing should be held up beyond a reasonable timeframe," a senior Finance Ministry official said, when asked about the board. "You cannot just sit over it. You cannot just sit over a file."The government's investment reforms of recent weeks are expected to help turn around bearish investor sentiment but they may not perk up growth without a rapid upgrade to the nation's pot-holed roads and stretched power networks.Airports ModernisationEarlier Indian civil aviation minister Ajit Singh said the government had initiated a major process of modernising existing airports and developing greenfield ones "through a mixed strategy of public sector, private sector, joint ventures and public- private partnership" to accommodate the growing air traffic.While airports at Delhi, Mumbai, Bangalore and Hyderabad had been built with private sector participation, "new airports are ready for commissioning in Chennai and Kolkata very soon," he said, adding that the government now permits up to 100 per cent FDI in greenfield airports. Referring to the controversial carbon tax being imposed by the European Union (EU) which is being opposed by India and a large number of countries, the Minister said, "We would request the delegates to oppose any unilateral environment measures imposed by a State or group of States like the EU-ETS (Emission Trading Scheme)."He appealed to the delegates to "work with International Civil Aviation Organisation to evolve global environment protection on the basis of equity and consensus following the broad consensus obtained" in the United Nations fora.Observing that India was a "major corridor" between the East and the West, Singh said the final operational phase and certification GAGAN (GPS Aided Geo- Augmented Navigation) system, developed jointly by Airports Authority of India and Indian Space Research Organisation, was expected to be completed in June 2013."GAGAN has a footprint overlapping with European Satellite Based Augmentation System (SBAS) on the West and Japanese SBAS on the East," he said.Asked whether the proposed venture of the Kerala government, Air Kerala, would be allowed to fly abroad, the Minister said like all start-up airlines, it would need to fulfil all criteria for various government approvals. "We will give sympathetic consideration (to Air Kerala) but rules and regulations have to be followed."The three-day conference is being attended by top global aviation officials, including ICAO Secretary General Raymond Benjamin, apart from aviation regulatory bodies of over 45 countries and six professional bodies.The theme of the conference is 'Managing Air Transport Growth in the Asia Pacific Region through a Collaborative Approach to Safety, Security and Sustainability', which would also review and exchange information, enhance co-ordination of civil aviation activities and harmonise and coordinate implementation of standards and procedures in the region. India's investment rate has fallen to 32 per cent from 38 per cent in 2007-08. Analysts say investment needs to pick up before the economy returns to the 9 per cent growth it was clocking before the 2008 global financial crisis. Poor infrastructure is a blight on the economy. Frequent power cuts, poor roads and an antiquated railway network sap the competitiveness of Indian businesses and leave hundreds of millions of people without basic utilities. In July, a collapse in three of India's five transmission grids cut power to 670 million people.(Agencies)
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What’s common between Thane and Tennessee or between Dombivli and Delaware? Apparently, there’s a lot. Proud suburbanites across Goregaon and Gurgaon may not be aware of this but many of them are living the quintessential American suburban dream. The ‘suburbanisation’ of America, of course, started way back in the mid-1940s and continues unabated till date. For the uninitiated, American suburbanisation – triggered by the end of World War-II, and coupled with lifting of spending curbs in the US and a whole host of financial sops by the US Federal government – saw millions of Americans setting up homes in the suburbs – away from the hustle and bustle of the city centers or from distant rural areas – for want of a better quality of life. Kenneth T. Jackson, the famous American social historian, wrote that 18 of America’s top 25 cities suffered a net loss of population between 1950 and 1970 with US suburban population doubling from 37 to 74 million people during the same time period. India too is witnessing a mass movement to the suburbs. In Mumbai, for example, the share of population between island and suburbs has completely reversed with time. In the early 1960s (Source: Urban Environmental Evolution: The Case of Mumbai by Dr. Sudhakar Yedla), the island city (then Bombay) used to house 68 per cent of the population, while the remaining 32 per cent lived in the suburbs. The 1990s and 2000s saw suburban population completely overtaking their city counterparts. Currently, it is estimated that more than 80 per cent of Mumbai’s population lives in the suburbs. The numbers include Mumbaikars, who have moved from Girgaon to Goregaon (central districts to the suburbs), and migrant households from other parts of Maharashtra and/or from other states. There is a clear trend where the existing population of central Mumbai is spreading out to satellite towns of Mumbai Metropolitan Region (MMR) such as Kharghar, Sanpada, Vasai, Mira Road, Thane, Kalyan-Dombivli, and all the way to Vasind and Boisar that offer a far better quality of life than the congested by-lanes of central Mumbai. Mumbai is reflecting the pan-Indian trend. More and more people from Delhi’s Chandni Chowk-Connaught Place or from Kolkata’s Burrabazar area (Central Delhi and Kolkata for people who are unfamiliar) are feeling claustrophobic in the ever-growing commercial humdrum in the neighborhood and the absence of open spaces. The two-bedroom residential premises – which were once perfect for the Indian urban nuclear ‘Hum Do, Humara Do’ family – have now turned grossly inadequate to house the second and the third generations. With 6-8 family members constantly jostling for space and privacy or for that vantage position in front of the living room television, moving into a more spacious home in the suburbs has emerged as a solution for many erstwhile city-dwellers. City properties across India have become frightfully expensive and are now virtually out of bounds for the Indian middle-class, while suburban residential complexes continue to be available at comparatively reasonable rates. The twin attractions of comfortable living and affordable rates are hard to ignore and more and more Indian middle-class households are succumbing to the lure of the suburbs – similar to what their American counterparts. If the US government – between 1944 and 1956 – successfully constructed 41,000 miles of interstate highways to facilitate Amercian suburbanisation, the Indian government is also doing its bit by constructing modern railway networks across metros and surrounding suburbs. The Delhi and Kolkata metro networks are already a huge success, while work for the Mumbai and Bengaluru railway networks are underway. Construction of modern roads is also a big priority. Commonwealth Games in Delhi saw the construction of a sizable number of roads, overbridges and underpasses to facilitate travel in Delhi and the National Capital Region (notably Ghaziabad, Noida, Faridabad and Gurgaon). Mumbai civic authorities, meanwhile, have finalised a blue-print to connect Nariman Point (south Mumbai) to Borivali in the western suburbs through a series of overbridges, underground passes and brand new roads. Reclaiming the sea seems to be high on the agenda. The Indian government is undertaking all of these projects to enable suburbanisation across cities. What’s really important is that a majority of the new Indian suburbanites belong to the affluent and therefore, dominant section of Indian economics. Affluents – traditional and professional – are defined as a distinct group of households with an annual income of US$ 18,500 (approx. Rs 9.25 lakh) and above. This affluent class, according to a February 2012 report put together by BCG and CII, numbers around 13 million households in India. While traditional affluents account for 9 million households, the professional affluents – all of them college graduates and working as executives, managers, journalists, etc., or are self-employed professionals such as chartered accountants, lawyers, or physicians -- number around four million households or just about 2 per cent of total Indian households. Tata Housing’s own statistics suggests that close to 60 per cent of the households who have recently set up homes in the suburbs belong to the professional affluents. Inside the Tata group, we call them the ‘New Affluents’. If the US, between 1946 and 1964, witnessed the ‘baby boom’ (each year the US averaged 4.6 million babies during this period), Indian suburbia is not to be left behind. A casual stroll in the play-areas of the suburban residential complexes will reveal enough perambulators, while the swings and the see-saws will be invariably full of screaming children. Welcome to modern Indian suburbia, American-style.Brotin Banerjee is the MD & CEO of Tata Housing
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Delhi's premier discom Tata Power Delhi Distribution Ltd has bid for three power distribution companies in Nigeria by forming two separate consortiums with two leading companies of the African nation. If TPDDL, a subsidiary of Tata Power, wins the contract, then it will be the first Indian discom to get involved in power distribution in a foreign country. The total investment required in three discoms has been estimated at $900 million (approx. Rs 1,560 crore).The Nigerian government had decided to privatise 11 state-owned distribution companies as part of reforming the power sector and a total of 54 companies had bid for them out of which 21 firms including TPDDL have cleared the technical evaluation process. Senior General Manager of TPDDL Vivek Singla said the company had bid for Eko and Ikeja discoms as a member of Oando consortium and for Benin discom, the company has formed a consortium with Viego Holding Ltd. "Both the consortiums have qualified for all three discoms. The total investment in three discoms has been estimated at around USD 900 million," Singla told PTI. He said as per the understanding, TPDDL has the option of acquiring up to 51 per cent stake in the consortiums over a period of time.Asked how the TPDDL will arrange the funds if it wins the bid as it has been facing financial difficulties, Singla said Tata Power will arrange the funding by providing equity. "If our consortiums win the bid, then TPDDL will be the first Indian discom to operate in a foreign country," he said, adding, the winner of the bid will be declared on 16 October.The companies which cleared the technical qualification round in the bidding process include Honeywell, Integrated Energy, West Power and Gas, Rensmart Power and Rockson Engineering, most of which operate in various countries. Nigeria embarked on the power sector privatisation process in 2010 and received huge response from both national and international private sector participants. Nigeria's Bureau of Public Enterprise (BPE), which has been tasked to carry out the reform process, has adopted the 'Delhi model' to privatise its power distribution sector, TPDDL's Corporate Communications chief Ajay Maharaj said. The Delhi government had privatised power distribution in 2002 and handed over electricity distribution to three private entities.(PTI)
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