Central Bureau of Investigation has registered two fresh cases against two companies for alleged forgery and cheating in connection with its probe in the coal block allocation scam in India and carried out searches in 16 locations, including Delhi and southern city of Hyderabad. The agency has booked an infrastructure and a steel company on charges of forgery and cheating while applying for captive coal blocks, CBI sources said.The agency, after registration of cases, launched search operations spread across 16 locations in Hyderabad, Satna, Secunderabad, Vishakhapatnam, Jaipur, Rourkela and Delhi at the premises of these companies, they said. They said the companies allegedly misrepresented their net-worth to claim eligibility for getting coal blocks. The new cases pertain to coal block allocation during 2006-09 in which the CBI had earlier registered seven FIRs in connection with the probe.(PTI)
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India's HMEL, part-owned by steel tycoon Lakshmi Mittal, has emerged as a new oil client of sanctions-hit Iran, potentially complicating New Delhi's bid for a renewal of its waiver from US sanctions for buying crude from Tehran. HPCL-Mittal Energy Ltd (HMEL) has taken two shipments of Iranian oil since the start of September to maximise margins at its 180,000 barrels per day (bpd) Bathinda refinery in northern India, two sources with knowledge of the deals told Reuters. The purchases came to a total 2 million barrels.In June Washington granted India a waiver on sanctions that would have cut it off from the US financial system because it had reduced its purchases of the OPEC nation's oil. India's waiver from the sanctions, which are designed to dissuade Tehran from pursuing its nuclear programme, will only be renewed in December if imports have been cut further. Mark Dubowitz, a US lobbyist for tougher sanctions on Iran and head of the Foundation for Defence of Democracies, said HMEL was taking a significant risk in buying this oil. "The US government in December will be looking to see whether India has indeed significantly reduced its purchases of Iranian oil and the addition of one more customer - especially with significant exposure to the US and Europe - will raise eyebrows in Washington," Dubowitz said.HMEL is part-owned by Indian tycoon Mittal, who heads ArcelorMittal, the world's largest steelmaker. ArcelorMittal produces 35 per cent of its steel in the Americas and 47 per cent in Europe, according to the company's website. State-run refiner Hindustan Petroleum Corp and Mittal own 49 per cent each in the joint venture HMEL. A spokesman for Mittal said he could not confirm or deny the purchase, but said that being a minority shareholder, Mittal himself would not be involved in such decisions.While India's state-run refiners are adhering to the government's verbal order to cut imports from Iran by at least 15 per cent, their efforts could be undermined by private refiner Essar and now HMEL. "We are cutting imports from Iran at the cost of our bottom line and private refiners are increasing volumes at our cost," said an official at a state-run refiner, who did not wish to be identified. "This may hit the plan to get the waiver renewed and shows discord between private and public companies. We are the only ones helping the country." Essar sources, however, said their Iranian crude purchases would average 85,000 bpd in financial 2012/13 (April-March), a decline of 15 per cent from an originally contracted 100,000 bpd. From April-August Essar has bought an average 102,000 bpd.Iran Crude To Ramp RunThe US wants allies to reduce oil imports from Iran substantially as it tries to pressure Tehran over its nuclear programme, which the West thinks is aimed at building atomic weapons. Iran denies this. As Tehran's second-biggest crude customer, India is crucial to US efforts to squeeze Iran, but New Delhi needs to satisfy the growing energy demands of its economy, Asia's third-largest.HMEL's oil purchases came on Iran's suezmax vessel Magnolia in September and Lantana in October, said the sources, who declined to be named due to the sensitivity of the issue. Suezmaxes can carry up to 1 mln barrels of crude. "They are buying heavy grades from Iran because they are ramping runs at the refinery," said one of the sources. An HMEL spokeswoman said that, as a policy, the company does not provide details of its crude oil sourcing.The Bathinda refinery has also processed oil grades from Iraq, Saudi Arabia and the United Arab Emirates, the sources said. In September HMEL bought a million barrels each of Arab Medium and Khafji, while for October it is scheduled to lift 2 million barrels of Arab Medium from the kingdom."I am sure they can get good discounts (on Iranian oil). The problem is banking. If they can resolve it, they get cheap crude and not illegally," said one Asian oil trader. None of the sources were aware of the payment mechanism that HMEL would use for oil imports from Iran.Indian refiner Bharat Petroleum Corp (BPCL) has not received Iranian oil since February as it could not open an account with Turkey's Halkbank, which is used by other Indian refiners to pay for oil from Tehran in euros."How HMEL will make its payment is yet to be seen," said one of the sources. The rial has plunged in the open market against the US dollar and has boosted inflation in Iran.(Reuters)
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In the wake of the recent power grid collapse, government proposes to give more powers to the state regulators through an amendment in the Electricity Act likely to be introduced during the next Parliament session.“There is a need to provide more power, more teeth to the State Electricity Regulatory Commissions (SERCs). They should be given more liberty so that grid discipline is enforced by them,” power minister Veerappa Moily told reporters in New Delhi.The ministry has already appointed a Task Force, headed by chairman CEA (Central Electricity Authority) which is consulting various stakeholders in this regard.“Within two months the Task Force should give the report and in the meantime I have asked all the state regulators to work on the proposed amendment, and evolve them with a holistic approach.“We want the new (amended) Act to be more reforms based, more principle based and I also propose to introduce that in the Winter session of the Parliament,” he said.At the end of 11th plan period (2007-12), the share of private power companies rose from 21 per cent to 55 per cent, he said, adding if emphasis is not given on distribution, they will have no incentive.“The proposal now is that the orders of the state regulators should be treated as ‘civil decree’ or which can be enforced by law,” Moily said.“Put some governance and reforms for the greater functioning of the state electricity boards and enforcement of rules and regulations by SERCs,” he said.“There should be performance appraisal of the state regulators, we are looking at that,” he added.As against the total installed capacity in India of over 2,00,000 MW, the energy demand is expected to reach 4,00,000 MW by 2022.(PTI)
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Petrol price may be cut by about Rs 1.60 per litre later this month as appreciation of rupee against the US dollar has helped state firms make profit on the fuel. Indian rupee appreciated to five-month high since the government announced allowing foreign direct investment (FDI) in multi-brand retailing. This has eased the cost of imports for oil firms, helping them make profit on sale of petrol. "Yes, there is about Rs 1.60 per litre profit on petrol since October 1. But we want this trend to stabilise before we think of cutting retail prices," a senior executive at one of the three state-owned fuel retailers said. Petrol price was last revised on July 24 when it was raised by 70 paise to Rs 68.48 per litre in Delhi. It was last cut on June 3 when rates were reduced by Rs 2.02 per litre. The current profit is mainly on account of strengthening of rupee -- from Rs 55.58 to a US dollar average in the second half of August to Rs 54.12 last fortnight. Also, the price of international gasoline, against which the domestic retail prices are benchmarked, have eased from USD 126.11 per barrel to USD 122.31. Together, these have helped oil firms, which lost about Rs 6,000 crore in revenue on selling petrol below cost this fiscal, make profits. Rupee has further appreciated to Rs 52.28, which would further give then scope for a price cut. "We are committed to passing on any gains that we make but all we are wanting to ensure is that this is not a temporary trend which can reverse in near future," the executive said.(PTI)
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The Rs 1.9 lakh crore in losses racked up by state power utilities has necessitated a bailout, the second in 11 years. Which are the worst- and best-performing states, and how will they be impacted? BW brings you the expert take on the power play.Source: Ministry of Power, Power Finance Corporation, Crisil ResearchCompiled by Chhavi TyagiGraphic: Sajeev KumarapuramClick here To Download Infographic(This story was published in Businessworld Issue Dated 08-10-2012)
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The race to get things done has been on an overdrive after the Comptroller and Auditor General’s (CAG’s) August report on coal block allocations. The inter-ministerial group (IMG) — formed in June to review the development of coal blocks — has, in two weeks, already deallocated 13 blocks awarded to 29 companies. The earliest of these was allocated in September 1999, when BJD’s Dilip Ray was minister of state, coal (independent charge). Two were allocated during BJP’s Karia Munda’s tenure. Three were given when JMM’s Shibu Soren was in charge of the coal ministry, six when Manmohan Singh held the coal portfolio and one by Congress’ Sriprakash Jaiswal. (See who allocated what in BW’s article published in issue dated 22 September 2012.) They’ve also finally decided to deduct bank guarantees (BGs) for tardy developers. So far, they’ve recommended BGs from 15 blocks. The IMG met companies on 6-8 September to assess 31 coal blocks. The first recommendation came as early as 13 September. This begs the questions — are they taking steps in haste? And, was the IMG really needed? From 1993 to 2011, the coal ministry had already deallocated 24 blocks. A senior coal ministry official, who did not want to be named, said, “Back-to-back meetings don’t mean we’re trying to hurry anything.” He stressed the current process will be more transparent, and having officials from almost all allied ministries is a way of doing so.Coal blocks have been deallocated by the IMG in two weeks The recommendations include well-known and obscure names but the case of Monnet Ispat and Energy may indicate that the IMG is being very cautious by naming even those with some progress. Monnet was asked to submit a BG for their Utkal B2 block (in Angul, Orissa), even though there was no provision for a BG when they were allocated the block. And the ministry’s note acknowledges substantial has been progress made. In essence, it is a retrospective measure. If implemented, the firm would have to submit a BG of Rs 81 crore with a condition to start production by March. They seem to have all the clearances in place. However, it is stuck at the state level. “Since the last one year Orissa has refused to sign any grant order (for the mining lease),” said its chairman Sandeep Jajodia. He is prepared to submit the BG. “We’ve made so much investment. We can’t afford to lose the block.” It’s still uncertain what the ministry will do with the deallocated mines. It was initially suggested that the blocks be given to Coal India, which is looking for more assets. But the coal ministry official quoted earlier said they are unsure on the final course of action. “We may bring those blocks into competitive bidding,” he said. If that happens, it could take even longer to exploit the mines. Crisil, an analytical firm, is still working on the norms for auction. The process, however, will weed out non-serious players who’ve been squatting on the assets. The IMG will sit on 9-10 October to review the coal blocks owned by public sector companies.(This story was published in Businessworld Issue Dated 08-10-2012)
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The government said on September 28 it has not banned issue of fresh cooking gas (LPG) connections and there was only a temporary three-week hiatus in new allotments pending elimination of duplicate connections.State-owned oil firms are carrying out a massive nationwide exercise to eliminate users having multiple connections at the same addresses. Pending this, new allotments are on hold, an official said."When a customer applies for a new LPG connection, the gas distribution agency after scrutiny sends an intimation letter informing of the allotment being made. In all cases where such intimation letter has already been sent, new connections will be issued. That is a commitment," he said.While new applications will continue to be accepted, the intimation or allotment letters would not be issued just yet."We are updating software at company end as well as at the gas agency end to take into account the recent decision of the government to restrict supply of subsidised LPG cylinders to six per household in a year. This will take minimum of three weeks," he said.Also, there are four different prices of LPG now - one rate for the subsidised cylinder, one for extra bottles that a household may buy after exhausting the entitlement of six subsidised cylinders, one rate for charitable and other institution and fourth a commercial price for LPG used in establishments like hotels.Besides, the oil firms are also eliminating duplicate connections -- only one LPG connection on one address is allowed and the rest are being disconnected."All this is taking some time and in the meanwhile oil companies will not issue allotment letters to new consumers," he said adding the entire process would take 20-25 days.The Oil Ministry also issued a press statement saying "there is no ban on release of new LPG connections"."To ensure that subsidised domestic cylinders are available to genuine customers, new connection requests will be accepted by all LPG distributors...," it said.The connections will be released on completion of KYC (Know Your Customer) formalities and de-duplication of the applicant across all the three oil companies to ensure that multiple connections are not released, the statement said.Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) serve around 14 crore customers and deliver over 100 crore cylinders every year."These cylinders are subsidised by the Government up to a limit of 6 domestic cylinders per annum with effect from September 14, 2012," it said.(Reuters)
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As global mining giants scale back their ambitions in Australia's coal sector, billionaire Gautam Adani is showing no such caution and plans to push full-steam ahead with a $4.5 billion project in a bet on rising Indian demand.Adani expressed confidence in being able to secure funding for the Carmichael coal mine in Queensland, Australia, by the end of the year. The group aims to start production in 2014 and build up to annual output of 60 million tonnes by 2020.However, he also said his Adani Group could reduce its debt-to-equity ratio to below one by 2015 if its power firm, Adani Power Ltd, is allowed by Indian authorities to pass on more of the increasing cost of imported fuel to end users.Concerns about the group's debt, currently 2.3 times equity, have contributed to a near 18 per cent fall in Adani Power shares this year."Our Australia plan is completely on the dot, as per schedule," Adani told Reuters in an interview."We have our ready market, our own consumption, our own trading, country's need, country's need will improve, as well our aspiration of also entering the global trading market," he said.Global miners, including BHP Billiton, Rio Tinto and Xstrata, have put investments on hold and cut workers in Australia, after a sharp fall in iron ore and coal prices as China's demand growth cools.A $246 billion pipeline of planned mining investments in Australia is on increasingly shaky ground as a fall in prices tightens operating margins and puts a spotlight on cost cutting.Adani acquired the Carmichael tenement in Galilee basin and the Abbott Point coal terminal at the top of the Australian resources boom in the past two years.The Adani Group imports most of India's coal, operates power stations in India and the country's biggest private-sector port, an integrated structure that Adani said will help offset risks in developing the Carmichael coal mine.He said a fall of as much as 20 percent in labour and equipment costs in Australia's mining sector since the sector slowdown began was also offsetting some of the risks."Our focus is not on short term. We are not looking at today's price and deciding," said the soft-spoken 50-year old in his modest-looking office in Ahmedabad.His India-centric business made him different from global miners, he said."The project will last for generations. For that $100 million of pain here and there doesn't make any difference," he said.The group is in talks with export credit agencies, including the US Export-Import Bank, Australian lenders, as well as State Bank of India and Standard Chartered, and expects to tie up funds for the project by the end of 2012.He said there is "no negativity" in the talks with lenders to suggest financing may be a problem.Adani said the group could sell a stake in the Abbott Point Port in one to two years' time. He had no plan to sell a stake in the mine, but would consider listing it on a stock market at a later date.Shares of Adani group companies have plunged over the past year, partly due to uncertainties in India's power sector, including unreliable coal supplies from domestic producers.Adani is locked into long-term power purchase agreements with some state electricity boards that do not allow him to pass on increases in the cost of imported fuel and is in adjudication proceedings to change the tariff agreements.If the adjudication is in favour of the company, Adani said he was confident of reducing the current group level debt-equity ratio to less than one by 2015.However, if the tariff issue is not settled, Indian power projects risked becoming financially unviable, he said.India approved a plan on Monday for a $35 billion debt restructuring of cash-strapped power distributors to improve their financial health.Adani said he is also keen to build on the success of the group's Mundra port, India's biggest private-sector port, which is located on the west coast.He is eyeing opportunities to expand his operations into Odisha and Chennai on the east coast. He said he was very interested in buying a majority stake in Dhamra port in Odisha, whose current owners -- Larsen & Toubro Ltd and Tata Steel Ltd are keen to sell.(Reuters)
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