Cooking gas (LPG) price was hiked by Rs 11.42 per cylinder on 6 October following government decision to raise commission paid to the dealers.Petrol and diesel prices too may go up marginally as the oil ministry considers raising dealers commission by at least 23 paisa and 10 paisa a litre respectively.The ministry on 5 October issued orders raising commission paid to LPG dealers from Rs 25.83 per 14.2-kg cylinder to Rs 37.25, government officials said.The 44 per cent or Rs 11.42 per cylinder increase in the commission on the subsidised cooking fuel is being passed on to consumers, they said.For the consumer, subsidised LPG in Delhi will now cost Rs 410.42 per cylinder, up from Rs 399.The hike comes within weeks of the government deciding to restrict supply of subsidised cooking gas to 6 cylinders of 14.2-kg size per household in a year. The remaining supplies would have to be sourced at market rates.Officials said the commission paid on market price or non-subsidised LPG too has been raised by Rs 12.17 to Rs 38 per cylinder. Accordingly, a non-subsidised LPG cylinder price will go up from Rs 883.5 to Rs 921.5.A similar exercise is on to raise commission paid to petrol pump dealers on sale of petrol and diesel. The Ministry is proposing to raise commission paid on petrol by 23 paisa to 1.72 and that on diesel by 10 paisa to Rs 1.01 a litre.The hike being considered for petrol and diesel is less than 67 paisa and 42 paisa respectively being demanded by petrol pump dealers in view of their working capital cost going up substantially due to frequent price changes and sharp rise in overheads like electricity charges. The government has also raised commission paid on 5-kg cylinders by Rs 5.33 to Rs 18.63.Currently, petrol pump dealers get Rs 1.49 a litre commission on sale of petrol and Rs 0.91 a litre on diesel.Pump operators have demanded that this be raised to Rs 2.10 a litre on petrol and Rs 1.33 per litre on diesel reasoning that unlike LPG agencies, petrol pumps open 365 days a year on 24 hours basis thereby incurring higher operating cost.LPG agencies are closed on national holidays as well as once a week.Besides, petrol pumps provide free facilities such as toilets, water and air-pressure for tyres, while LPG dealers do not provide any such service, Federation of All India Petroleum Traders (FAIPT) general secretary Ajay Bansal said.Also, LPG rates haven't increased in over a year but petrol and diesel prices have seen frequent changes."Increase in prices mean our working capital (money used to buy fuel from oil companies) goes up. Also, our losses increase because of evaporation of fuel," he said questioning the Oil Ministry's rationale of hiking LPG dealers commission by almost 50 per cent and offering only 10 per cent to petrol pumps.Officials said the hike in LPG rates comes within days of oil firms raising price of non-subsidised cooking gas (LPG) by Rs 127 per cylinder to Rs 883.5 on account of increase in international oil prices.The government has granted exemption from customs and excise duty on non-subsidised LPG cylinders only for domestic consumption to reduce the price burden on the common man.The price of commercial 14.2-kg LPG cylinder in Delhi will be Rs 1,062, while that of a 19-kg bottle would be Rs 1,536.5.(PTI)
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I am going to sort out all fuel-related issues. Be it coal, gas, nuclear or even hydroelectric,” says Veerappa Moily. The new Union power minister is a brave man. He has inherited a mess from his predecessors, and it is going to take more than good intentions to solve all the problems. R. Trivedi, chief financial officer, Konaseema Gas Power, may well be the first to say “more power to Moily”. Konaseema planned a 445-MW gas-based power plant, hitching its fortunes to the huge gas discoveries in the Krishna-Godavari (KG) Basin. It sunk Rs 2,050 crore to set up the combined-cycle power plant, which was ready by 2006. For the first three years of its life, the plant idled for lack of gas — the Gas Authority of India (GAIL) could not give it any; and the Oil and Natural Gas Corporation slipped up on its production commitments.“We did not get fuel even for testing (the plant). In fact, there was no gas supply to IPPs (independent power producers) during this period in the state,” laments Trivedi. In 2009, Konaseema went “live” after Reliance Industries (RIL) commenced supply from its KG-D6 field. But a year and a half later, RIL’s gas production from the field, which hit a peak 60 million metric standard cubic metres per day (mmscmd) in mid-2010, has dropped to 28 mmscmd. Konaseema is again getting a fraction of the gas it needs to run the plant efficiently. It is not the only one affected by RIL’s falling production; mired in the basin’s quicksand are power projects with a total capacity of 2,529 MW. LAND ISSUESARUP ROY CHOUDHURY CMD, NTPCProjects: Gajmara and Darlipali power plants (3,200 MW) in Orissa and Nabinagar plant (1,320 MW) in BiharProblem: Both state governments have been going slow on land acquisitionEffect: 4,520 MW of capacity addition is stuck (BW pic by Biwash Banerjee)Konaseema was to sell 20 per cent of the power on a merchant basis, but the Andhra Pradesh Electricity Regulatory Commission got it all for its discoms and promised to compensate it. Two years on, Trivedi says it has got nothing. It has approached the Appellate Tribunal to up the tariff by 40-50 paise from Rs 3.10 per unit. “It keeps on changing its stance, while we lose money,” says Trivedi. He adds that the firm makes just enough to pay wages and service a part of its debt.Grid-lockedKonaseema is an example of the mess the Indian private sector power players find themselves in. Between 2004 and 2005, almost every big corporate house announced plans to set up power plants with thousands of megawatts capacity. Now, most of them are trying desperately to hold on to their dreams in the face of myriad problems they failed to foresee.In some cases, inability to get land easily has ruined many an ambitious dream. In other cases, the issue of coal linkages or environmental clearances have ensured the projects are running way behind schedule. Then there are financing problems, and those of power purchase agreements (PPA) that need revising. These apart, there are many other issues.The great ‘power dream’ was premised on a billion-plus people and an economy that would grow at least at 8 per cent for decades. To propel it, the Planning Commission, in the 11th Plan estimates, said it would need $164 billion in investments in power; roughly $78 billion in generation and the rest on transmission and distribution. The government rolled out the red carpet for private players by changing the Electricity Act, and it caught the fancy of big business houses. Today, it is hard for many of those who rushed in to feel optimistic.“We have not seen a crisis of this magnitude. There are issues over land acquisition, delays in project clearances, lack of fuel, skilled manpower, adequate transmission capacity, worsening financials of SEBs (state electricity boards) and funding problems,” says Anil Sardana, MD of Tata Power. You cannot but recall Benjamin Franklin: “A little neglect may breed great mischief. For want of nail, the shoe was lost; for want of shoe, the horse was lost; for want of horse, the rider was lost; and for want of rider, the war was lost.”What was the neglect? “The belief that the buyer (discoms) were ‘sovereign’, and would pay for the power was a big mistake.” That’s Premal Doshi, director-equity capital markets at Ambit Corporate Finance. “You assumed the problems would take care of themselves as one went along. It was a great business opportunity, not to be missed. Again, we say all this in hindsight.”Konaseema is not alone. “The declining gas supply from KG-D6 has impacted us badly. Our 220 MW barge-mounted plant at Kakinada and the 388 MW unit in Vemagiri currently operate at sub-optimal plant load factors (PLF). The situation is managed to some extent through gas rostering among IPPs. Another plant, the 768-MW Rajahmundry power station is awaiting gas for commissioning,” says a GMR statement. Lanco Infratech hoped to install 20 GW by 2020. Of this, the 4,800 MW is expected to go on stream by 2015. Its 1,200 MW Anpara unit in Uttar Pradesh runs at a PLF of 45-50 per cent. Says K. Raja Gopal, CEO, Lanco: “The fuel supply agreement with NCL (Northern Coalfields, an arm of Coal India or CIL) got delayed. It took effect only after the presidential direction to CIL in June-August. There was also a shortage due to a breakdown at NCL’s loading points.”Tata Power’s second block of 800 MW at its Mundra ultra mega power project (UMPP) hums, but the company itself is in a bind. It quoted a tariff of Rs 2.26 per unit to win the bid; it wants it revised to Rs 3 per unit. Sardana will only tell you that “the PPA has been signed with five states. The matter is sub judice with the Central Electricity Regulatory Commission (CERC).” In March, Sardana told BW he would try to persuade the government to revise the tariff. He feared Tata Power’s subsidiary, Coastal Gujarat Power, would go bankrupt. “Mundra is a national asset and we will stick to our commitment. I do not know how or when this crisis will be resolved, but we will continue production till our shareholders say enough is enough,” he said. NTPC is ‘land-locked’ in Orissa (3,200 MW in Gajmara and Darlipali) and Bihar (1,320 MW in Nabinagar). Arup Roy Choudhury, CMD of NTPC, puts it pithily. “These (land issues) were bound to come up. Farmers are more aware and demanding.”Banks are worried, too. They lent Rs 3,30,000 crore by end-March 2012. Some doled out more than their equity; others kissed the caps on individual and group exposure set by RBI. Even if a bank wants to lend to a project, it may end up on the default side of group exposure. The RBI has raised a red flag in its Financial Stability Report, on SEB losses (at Rs 70,000 crore before subsidies), debt and fuel shortage. “There is evidence (anecdotal) of lenders being cautious... the high concentration of bank credit in power generation and distribution is a matter of concern”. FUEL FIASCO L. MADHUSUDHAN RAO CHAIRMAN, LANCO INFRATECHProject: 1,200 MW at Anpara in Uttar PradeshProblem: Delay in fuel supply agreement execution by Coal IndiaEffect: Plant load factor down to 45-50 per cent (BW pic by Tribhuwan Sharma)It’s A MirageIndia added 54,965 MW during the 11th Plan; in its terminal year, 19,469 MW was put up. It is just a tad lower than what was added in the 10th Plan (21,080 MW), but more than in the 9th Plan (19,015 MW). You can brag: the score is close to what we huffed and puffed our way to in the previous three innings combined (the 10th, 9th and 8th Plans) at 56,518 MW. “With that kind of speed, there can be no question of under-achieving. There are certain issues, but we already have 82,000 MW under implementation. Of this, fuel linkages for 60,000 MW are already in place and, for the rest, we are sorting it out with the coal ministry,” says Moily. But he is only partially right. The new capacity has not really added to electricity being generated.All of 8.05 per cent of the power that flows into the sockets to light up our homes, cities and factories is from newly installed plants in 2011-12. That means, even though capacity has gone up by 60.1 per cent, just over 10 per cent of that is actually flowing into the grid. You can admire the silhouette of power plants, but that’s about it; there’s not enough to fuel them at full tilt.The mess can get bigger. India plans to add 65 GW by 2014-15 to up its generation capacity to 239 GW. Nearly 90 per cent this is based on coal, gas or lignite; it will push up the share of thermal to over 70 per cent from 65 per cent. Says Ramraj Pai, president-ratings at Crisil: “Most promoters have experience in setting up capacities, but projects announced or under implementation are four times the operational capacity.” He gives you a sense of the complexity: the largest sub-critical boiler-turbine-generator package was 600 MW a few years ago; it can now be 800 MW. “It leads to increased challenges in terms of tying up financing.” India Ratings & Research (a Fitch group firm) senior director S. Nandakumar points to the irony: “They have to contend with the usual delays... debt availability would have been acute had all of the announced projects simultaneously scanned the market for bank debt.” SHOW US THE MONEYFinancing is a concern for the power sector with banks being of little helpBanks had loaned Rs 3,30,000 crore by end March 2012A few banks are near the sectoral cap on power, and group exposuresRBI raised a red flag in its Financial Stability Report; loan to discoms a concernProject size makes it tougher for promoters to secure fundsIt is hard to secure cross-border loans; cash flows are poorPrivate equity interest on the wane break-page-breakRunning On Empty “The Centre’s efforts led to huge capacity additions. But the fuel sector was caught unawares,” says Satnam Singh, CMD of Power Finance Corporation. It is a telling statement — the power food chain is not a cohesive one. Just how will you power the power plants? Worse, nobody even thought of it. Compared to the increase in newly installed capacity in 2011-12 at 60.1 per cent, coal production stood in singular splendour — it grew by a mere per cent to 540 tonne; gas saw a 17 per cent fall in output to 120 mmscmd. It is no surprise when Singh admits: “Konaseema is a non-performing asset on our books as they have no access to gas.”Essar Energy’s CEO, Naresh Nayyar, is candid: “Billions of dollars have been invested and we are not able to operate our plants because of fuel and (delays in) regulatory approvals to start work on (coal) mines”. Essar had plans to set up 10,000 MW by 2014; it is stuck at 2,800 MW. Three projects of 3,600 MW are stalled. It is classic over-reach. “Our strategy was based on the fact that power plants will be linked with a mine so that we do not have any risk in terms of supply (of fuel). But unfortunately, after we started construction (of the plants), we faced issues on regulatory approvals.” GREEN HURDLE: SHASHI RUIA CHAIRMAN, ESSAR GROUPProject: 1,200 MW plant at Mahan in Madhya PradeshProblem: Delays in environment clearance to mine coal from the Mahan blockEffect: The project is idling (BW pic by Tribhuwan Sharma)Were the likes of Nayyar dealt a bad hand? Or did they play wild? Vikram Limaye, deputy managing director of IDFC, is sympathetic. He says of the 54,965 MW set up in the 11th Plan, private sector’s share was 23,013 MW (41.9 per cent), states had 16,732 MW (30.4 per cent) and the central sector had 15,220 MW (27.7 per cent). And 84 per cent of private sector projects were coal-fired, followed by gas (10 per cent) and hydro (6 per cent). If you tripped on coal, you blacked out. “These projects were in response to ‘foreseen’ power shortages, favourable push for generating capacity addition and policy initiatives such as competitive bidding,” says Limaye. None of that went as per plan.Few are willing to concede that promoters did not have a Plan B in place. A senior banker gives it a spin. “In the second half of UPA-1, they wagered the government on the nuclear deal with the US. Power for India Inc. was the chorus. It led everybody to believe no stone would be left unturned to get the power sector going.” It was, in hindsight, a weak cornerstone to build a power project.Crisil says CIL will commit to providing fuel only to the extent of 50 per cent of the annual contracted quantity for plants commissioned in the 12th Plan. It believes more than 80 per cent of the projects from 2011-12 onwards will have fuel linkages only in the form of memorandum of understanding or tapering linkage. “These projects will have to increasingly rely on higher imports. Imported fuel is nearly 2.5-3 times costlier than domestic coal,” explains Pai. You have soot all over; it keeps lawyers busy.R-Power’s 4,000 MW Krishnapatnam UMPP is caught in a tariff wrangle. It has to stop discoms from encashing a bank guarantee of Rs 400 crore; it has filed a suit against 11 discoms in four states at the Indian Council of Arbitration seeking “open” PPAs. The cause is the change in mining regulations in Indonesia. R-Power puts it down to force majeure. But P. Shiva Rao, legal advisor to discoms, differs: “This is irrelevant as Section 17 and 58 of the Electricity Act (2003) does not allow for private arbitration. Only CERC can decide on this.”India Ratings & Research’s Nandakumar and his colleague Venkatraman Rajaraman point to the lack of “wiggle room” in PPAs. Before ‘Factor Indonesia’ cropped up, financial closure of the new projects assumed coal at $40-55 per tonne with an annual (nominal) escalation of about 5-10 per cent. The merchant tariff was seen between Rs 3.25 and Rs 3.75/kWh. But coal prices have more than doubled. As fuel supply contracts were neither hedged nor did the tariff have a cost pass-through provision, the analysts point out that the current cost of generation has rendered projects uncompetitive. It is no consolation that attorney general Goolam Vahanvati has said the CERC can revise tariffs even if parties are bound by a PPA. Given the standoff between producers and discoms, it will be a long wait. “We will only know how to proceed once decisions that have been agreed upon are implemented. Till then, there is a big question mark on the private sector’s participation (in power)”, says Ashok Khurana, director general, Association of Power Producers. OUT OF GAS: M.V.V.S. MURTHI PROMOTER, KONASEEMA GAS POWERProject: 445 MW plant in Konaseema, Andhra PradeshProblem: Short supply from KG-D6 gas fieldEffect: Company forced to operate the plant on a staggered basis (3 days a week) at a plant load factor of 30 per cent Can’t Pay, Won’t Pay And Some MoreIf there is an apparent sliver of hope, it’s over discoms — the Cabinet Committee on Economic Affairs’ nod to recast their debt of Rs 1,20,000 crore. Matters had come to head. In the absence of cost-reflective tariffs (a political hot potato), discoms financed the interest on loans through more of the same. The RBI asked banks to apply the brakes on loans to discoms. “We have decided to stop generation, but we cannot afford to take a deferred payment as 80 per cent of our cost (of power) is for buying coal. We pay CIL through a letter of credit and cannot afford this. We can’t compromise,” says NTPC’s Choudhury.It is again a band-aid. “It (restructuring) will definitely help in the short run, but unless there are some long-term measures, I don’t think it will be sustainable. And, we could find ourselves in a similar situation again in 7-8 years,” says Seshan Balakrishnan, director-infrastructure at Ernst & Young. According to Crisil, nine states — Tamil Nadu, Andhra Pradesh, Rajasthan, Punjab, Haryana, Bihar, Uttar Pradesh, Madhya Pradesh and Jharkhand — account for 85 per cent of discoms’ losses; their combined debt accounts for 80 per cent of all such debt. And these nine states can swing fortunes at the hustings; they send 292 MPs to Parliament, 53.77 per cent of the total.Just how bad conditions are can be gauged from what GVK Power has done. It will use imported re-gassified liquefied natural gas (RLNG). “GAIL has offered to supply RLNG at spot market prices. We can supply this power with the fuel costs transferred to discoms. We will recover only the capacity charges from discoms in this arrangement,” says GVK Power.It frustrates Nayyar. “We do not want to commit capital unless we have more clarity on regulatory approvals.” A senior banker admits to a “moderation in investment plans”. State Bank of India has turned selective — major sanctions in 2011-12 were to Neyveli Lignite Corporation (Rs 2,500 crore) for 1,000 MW and to Meja Urja Nigam (Rs 2,000 crore) for 1,320 MW.Limaye skips the posers — given the RBI ceiling on individual and group lending, how much more debt can banks supply to power projects? “Once the uncertainties relating to fuel and reforms at discoms are sorted out, there will be renewed interest in thermal power.” What are the alternatives — is it non-banks like IDFC and private equity (PE)? Balakrishnan says there was good interest from PEs for two years (2009-11). “They have invested around $2-3 billion with another commitment going up to $5 billion. But PE funds have also gone shy (of the sector).”Kameswara Rao, executive director, PricewaterhouseCoopers, paints a grim picture. “The balance sheets of all the big cap companies are in deep distress, a significant capacity is lying idle for lack of viable tariffs.” Is the power sector still worth a punt? MOILYSPEAK Union power minister Veerappa Moily spoke to BW recently on issues dogging the power sector. Excerpts:CAG FEAR: Even if blocks are de-allocated, it will not impact their current production targets. We might see its effect in the 13th Five-Year PlanFUEL LINKAGES FOR 12TH PLAN: Linkages for 60,000 MW out of 82,000 MW are in place. For the rest, we are in discussions with the coal ministryRAIL INFRASTRUCTURE: Rail linkages have been a challenge. The Prime Minister’s Office has constituted a committee under the Railway Board to ensure that the power sector gets adequate railway connectivity. I have to put pressure on the committee as it has not met even once since its formation.COAL INDIA: Why are they sitting on such large reserves? Coal was nationalised as we wanted to protect the natural resource. But if they are unable to meet the demands, we will have to revisit the entire thing.EXPECTATIONS FROM PRIVATE SECTOR: In the 11th Plan, the private sector contributed 50 per cent to the capacity addition. This is expected to go up to 60-65 per cent in the current Plan.DISTRIBUTION LOSSES: The idea is to reduce these losses to 7.5 per cent from the current average of 27 per cent, and this is possible.DISCOMS DEBT RESTRUCTURING: It is not a mere bailout plan. It is a performance-based programme and will ensure that utilities will not come back to a similar situation 10 years down the line.bweditor(at)abp(dot)in(This story was published in Businessworld Issue Dated 15-10-2012)
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With the power sector in India beset with never-ending problems, some of the leading domestic players have started exploring growth opportunities in overseas markets. “We are evaluating various opportunities to grow globally both in conventional and non-conventional energy space,” says Tata Power in a statement. For its international play, the company is eyeing South Africa and other sub-Saharan African countries, Indonesia, Vietnam, Turkey and West Asia. It has begun deploying resources in these geographies with a view to understand the market dynamics as well as scout for opportunities. Already, the company has projects in Indonesia, Singapore, Bhutan, South Africa, Australia and Nepal. Tata Power plans to generate 26,000 MW by 2020. Recently, Tata Power managing director Anil Sardana said that the company would add about 4,000 MW by FY2015. Lanco Infratech, too, is looking beyond the shores. It already has an EPC (engineering, procurement and construction) project in Iraq, which entails the development of two 125-MW gas-based projects. The company, however, will not be involved in power generation in this project. Lanco has a small presence in solar generation in Europe and the US. Company sources say that it has recently signed an LoA (letter of assurance) for a project in Bangladesh.While these companies have always had plans of expanding overseas, the domestic policy environment has forced them to fast-track their plans.“Although the government has initiated action on some fronts, a few players are not convinced that the current fuel situation is going to change anytime soon,” says Arvind Mahajan, head of energy and natural resources, KPMG Advisory Services. “This has acted as a driver for Indian companies to look for opportunities outside India. However, there is no great rush at present, and only those companies that are financially less constrained are looking at these opportunities,” says Mahajan.Other major power companies such as Essar Energy and GVK say that they have no immediate plans of investing outside India.“Today, our focus is on starting generation from the plants which have already been commissioned, although there are risks in terms of securing raw material and power purchase agreements. Our focus in the immediate future is to start generating cash flows from our current projects. We are not developing any further power plants,” says Naresh Nayyar, CEO, Essar Energy.“Another factor that is pushing investments abroad is that countries such as South Africa and Indonesia, which are power deficient, are not happy with Indian firms taking away their coal and want them to look at producing power as well,” says Mahajan.While the government is still struggling to find solutions to the multi-fold crisis facing the domestic power industry, Indian power producers have no option but to look for opportunities abroad to keep their growth engines humming.(This story was published in Businessworld Issue Dated 10-09-2012)
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Even before the renewable energy certificate (REC) scheme could make a splash, it seems to be fizzling. It was introduced to give renewable energy in India a push, “the REC market is heading for a dead end” already, rues Jayant Deo, MD and CEO of the Indian Energy Exchange (IEX), which holds 92.1 per cent of the REC market. The latest trading session, on 26 September, saw record sale offers of 664,641 RECs in the non-solar segment, while purchase bids were only about a third of that. This worrying trend of supply exceeding demand began in June. The REC mechanism allows players to set up renewable energy projects and trade the power generated as certificates where 1 REC is equal to 1 megwatt-hour. It also helps distribution licensees, captive power consumers and open-access users purchase a minimum of 5 per cent power from renewable sources to meet their Renewable Purchase Obligations (RPOs), triggered by guidelines from the National Action Plan on Climate Change. Initially, the scheme got a positive response since it gave renewable energy generators an added revenue source and freedom from long-term power purchase agreements. Sale offers grew from 150, when it was first traded in March 2011, to 664,641 now. However, the market, which once saw demand exceeding supply, is now experiencing the reverse.Deo says, these entities are getting away with non-compliance because of poor enforcement of regulations and the lack of any penalties. With state discoms being allowed to renege on obligations, many expect private players to follow suit. State units, of course, justify their non-compliance by claiming that they’re struggling under financial mess. The period of compliance is also an issue. For the scheme to succeed, it should be quarterly as opposed to being the last quarter of a fiscal. The fact that 58 per cent of the total trades happened during January–March 2012 proves the skewed activity. Those in the industry also suggest allowing financers of the projects to purchase RECs, or allow projects owners seek buyers outside the IEX.The main reason for this, as per IEX’s analysis, is because only a few states have shown real intent in meeting RPO targets. The worst truants are the state distribution companies (discoms), which make for a minuscule percentage of the REC demand. “70–80 per cent of the demand comes from the private discoms. The remaining come from captive and open-access consumers,” says Vibhav Nuwal, director at REConnect Energy, the largest trader in this market. Although, Nuwal says, the solar REC market, which began trading in May 2012, is too small and volatile to draw inferences from; he acknowledges the widening demand-supply gap in the non-solar segment. All said and done, the scheme definitely has its merits. It spreads the cost of developing renewable power to everybody, and taxes conventional energy users. It also allows states with poor renewable sources to meet their RPO targets. Its success is reflected in the fact that REC projects constitute 12.6 per cent of India’s total renewable energy capacity of 24,998.46 MW.(This story was published in Businessworld Issue Dated 15-10-2012)
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India's infrastructure sector output grew 1.8 per cent in July from a year earlier, slower than an upwardly revised annual growth of 3.9 per cent in the previous month, government data showed on 31 August' 2012.The infrastructure output for eight sectors - coal, crude oil, oil refinery, natural gas, steel, cement, electricity and fertilisers - grew at 3.2 per cent in the April-July period from 6 per cent a year earlier. The infrastructure sector accounts for 37.9 per cent of India's industrial output. (Reuters)
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Unfazed by Opposition protests in the wake of the CAG report, the government on 31 august' 2012 ruled out cancellation of allocation of coal blocks maintaining that no wrong has been done. "There is no question of cancellation. I personally would be opposed to it because it would mean you are accepting your guilt... No wrong has been done anywhere," Parliamentary Affairs Minister Pawan Kumar Bansal told reporters. Seeking to pick holes in the CAG report that has spoken of undue benefits of Rs 1.86 lakh crore to private players, Bansal suggested that the methodology adopted by the government auditor was faulty and so were his assumptions. The CAG has come out with the figure by extrapolating the cost and the selling price of coal by state-owned Coal India Ltd without going into the issues that may arise in developing the mines, Bansal said. Besides, he said that those who have been allocated the captive blocks for purposes like setting up steel and cement plant and thermal power units would need an investment to the tune of Rs 15 lakh crore. Seeking to debunk the CAG findings of undue benefits to private players, he said that the monthly interest on such a huge investment would be to the tune of Rs 15,000 crore. He said benefits to private players would be negligible in the backdrop of the cost of investment. "In such a scenario, can we ever concede the demand of the BJP for the resignation of the Prime Minister," he asked. The process of deallocation of blocks is an ongoing one, he said adding that the CBI has already started a probe and whoever has done wrong, will face music, he said.(PTI)
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American companies have assured Reserve Bank Governor D Subbarao of their strong support to India's efforts to attract foreign capital for the country's infrastructure development through a sectoral debt fund and other initiatives.In a meeting hosted by US India Business Council (USIBC) on 30 Ausgust' 2012, the American industry leaders also discussed with Subbarao the need for maintaining 100 per cent foreign ownership of wholly-owned subsidiaries, and transparent priority sector lending norms. Overseas companies are allowed to set up 100 per cent foreign owned subsidiaries in India, except for in sectors that attract foreign equity cap. The American industry leaders also discussed with RBI Governor the importance of a 'bank oversight framework' in India involving mobilisation of the capital and expertise of global financial institutions. Subbarao, who is on a visit to the US, told the industry representatives about the challenges faced by RBI in managing inflation while promoting the growth to keep "the engine of India's economy thriving" in the midst of factors beyond its control, USIBC said in a press release. USIBC reaffirmed the US companies' commitment to India's growth and focused on positive examples of successful cross-border investments. They also expressed "their strong support for the recently implemented Infrastructure Debt Fund structures as well as moves to further deepen India's debt capital markets toward long-term infrastructure development." Top executives from global financial, manufacturing, and other corporations attended the private meeting chaired by USIBC Chairman Ajay Banga, President and CEO of global payment services major MasterCard Worldwide. The USIBC members also welcomed the RBI Governor's insight on opportunities for meaningful collaboration in the financial sector between the two countries. The USIBC said one such example is Genworth, a US-based Fortune 500 company with operations in 25 countries, which has made an investment in India's financial inclusion and housing opportunity vis-a-vis a joint venture toward India's first ever mortgage guarantee company, India Mortgage Guarantee Corporation Pvt Ltd. The USIBC was formed by the US and Indian governments in 1975 with a purpose to deepen two-way trade and strengthen commercial ties between the two countries. Currently, it has 350 top US and Indian companies as members.(PTI)
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The Vedanta Group on 1 November said it wanted the eastern Indian state Odisha government to pay Rs 700 crore towards cost of power drawn from the company's thermal unit at Jharsuguda. "We want the Odisha government to pay us Rs 700 crore soon towards the power bill... I believe the payment will be made to us," Vedanta Group chairman Anil Agarwal told reporters after meeting state Chief Minister Naveen Patnaik. Stating that Sterlite, the company's sister concern, set up a thermal power plant at Jharsuguda by investing Rs 10,000 crore, Agarwal said the state government was being supplied 25 per cent of the total generation of electricity. The capacity of Vedanta's power plant at Jharsuguda is 2,400 MW. Read: A Graveyard Of Dreams by Gurbir Singh "Power cut in Odisha could be avoided due to supply of power from Jharsuguda plant," Agarwal said. Gridco Corporation of Odisha, state's bulk power supplier, and Sterlite had entered into power purchase agreement on condition that the state government would purchase electricty at the rate of Rs 2.50 per unit. "The arrear over the power purchase is now some hundred crore ... It is Rs 700 crore," Agarwal said. (PTI)
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