Petrol prices should have been cut by Rs 2.20-2.30 a litre as global rates have fallen to 18- month low but oil companies will not reduce prices as they watch the volatile rupee that is making imports costlier.Rupee depreciating to an all-time low of Rs 57.30 to a US dollar has wiped away most of gains arising from oil dropping below USD 90 a barrel for the first time since December 2010."The oil companies are fully cognisant of facts. They are watching the volatility (in rupee and global oil prices). Very soon they will take a decision," Oil Minister S Jaipal Reddy told reporters here.State-owned oil firms, who as per practice revise rates of petrol on 1st and 16th of every month based on average imported cost and forex rates of the previous fortnight, have skipped changing rates on June 16."There is lot of volatility in prices of crude oil and value of rupee. There is double volatility," Reddy said. "We are relieved at the fact that price of crude oil have eased.But this has been upset by decrease in value of rupee."We are watching the situation with keen interest and we are watching it on a day to day basis," he said, adding that for a nation that is 76 per cent dependent on imports to meet its requirements, value of rupee becomes very important.Officials in his ministry said the gasoline cracks or the difference between cost of raw material (crude oil) and the price of product (petrol) had narrowed to just USD 3 per barrel. In comparison, cracks for diesel were as high as USD 12-13 a barrel.With such narrow spread, any upward movement in crude oil price or devaluation of rupee would force an increase in price in near future, if the rates were to be cut now. Sources said Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) will hold petrol price for a few more days and watch the developing situation."There is no revision in petrol rates in the next couple of days. We will watch the situation for next couple of days before taking any decision," a source said.Oil firms had last cut petrol rats by Rs 2.02 a litre with effect from June 3 in a partial rollback of the steep Rs 7.54 per litre hike effected last month.Petrol at present costs Rs 70.24 a litre at IOC petrol pumps in Delhi.Sources said the last revision was done keeping in mind an average of USD 115.77 per barrel rate of gasoline, against which domestic petrol prices are benchmarked.Gasoline rates have since fallen to USD 106.93 per barrel. But the rupee has devalued to Rs 55.69 to a US dollar from Rs 54.96 to a US dollar (average of first fortnight of June).There was a scope to reduce petrol price by up to Rs 2.20-2.30 per litre but with rupee falling further, the cost of imports has again risen."Today, rupee dropped to Rs 57 to a US dollar. There is excessive volatility," the source added.(PTI)
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Reliance Power, India's second-largest private electricity producer by market value, posted a 23 per cent rise in first-quarter net profit, in line with expectations, as generation capacity doubled compared to the previous period.Net profit rose to Rs 240 crore in April-June from Rs 196 crore. Sales doubled to Rs 1136 crore, the company said in a statement. Analysts had expected a profit of Rs 240 crore on sales of Rs 992 crore, according to Thomson Reuters I/B/E/S.Reliance Power, controlled by billionaire Anil Ambani, operates 1,540 MW capacity and is set to more than triple that to 5,000 MW by December 2012.However, on two other giant projects totalling 6,400 MW, the company has run into roadblocks. These projects have been stalled due to scarcity of cheap fuel. Reliance Power did not specifically talk about the two projects in the statement. It is holding a news conference later on Tuesday.A shortage of cheap local fuel has forced many power plants to run below capacity in India, where about 15,000 MW capacity lies idle and which suffered one of the world's worst power blackouts a fortnight ago, affecting about half of the country's 1.2 billion population.An unwillingness on the part of cash-strapped state-owned distributors to buy more expensive power has curtailed prospects for raising fuel imports instead.Delayed environmental clearances, land acquisition difficulties and failure to invest enough in new mines and technology has slowed production growth at near-monopoly state-run Coal India, while domestic gas output has declined.Legal WrangleReliance Power is caught in a legal wrangle with four state governments over a $3.2 billion (Rs 17,760 cr) plant in the southern state of Andhra Pradesh.It faces the risk of losing its 4,000 MW Krishnapatnam project as well as bank guarantee of Rs 300 crore after a court rejected its plea to raise tariffs. An appeal by Reliance Power is pending in another court.At another plant in Andhra Pradesh, the $1.8 billion (Rs 9,990 cr) 2,400 MW Samalkot plant, a gas shortage means the first phase of the project is ready but can't operate.Reliance Power has been lobbying the government to import gas to meet the shortfall in local supply and charge an average price from all buyers.Falling output at the KG-D6 block off the eastern Indian coast and opposition from plant owners with assured cheap local supply have kept the proposal grounded.Reliance Power said construction at the 4,000 MW Sasan project in the central state of Madhya Pradesh was progressing and the project had secured a $1.1 billion (Rs 6,105 cr)loan from Chinese banks and $800 million (Rs 4,440 cr) from US-Exim Bank and Standard Chartered Bank, the company said in a statement.At 0700 GMT, the company's shares, valued at $4.7 billion (Rs 26,085 cr), were trading 1.8 per cent higher at 93.90 rupees in a Mumbai market that was up 0.53 per cent.
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Reliance Industries shares extended falls on Thursday after Canada's Niko Resources sharply cut the reserves estimate at the KG D6 gas blocks, off India's east coast, where the two companies are partners.By 10:56 a.m. IST, Reliance shares fell 3.2 per cent to 714.15 rupees.The Canadian oil and gas producer late Wednesday estimated that total proved plus probable reserves at the KG D6 block, as of March 31, had decreased to 1.93 trillion cubic feet.The block had been estimated to hold more than 9 trillion cubic feet (tcf) of gas.Niko holds a 10 per cent stake in the D6 block. Reliance holds 60 per cent, while BP Plc has a 30 per cent stake.(Reuters)
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Coal India, the world's largest coal miner, met market expectations with an 8 per cent increase in quarterly profit, helped by strong sales and a pricing change this year that boosted margins.The state-run miner reported April-to-June net profit rose to Rs 4469 crore from Rs 4,144 crore a year earlier. Net sales gained 13.8 per cent to Rs 16,500 crore.Analysts on average had forecast net profit of Rs 4,440 crore on net sales of Rs 16,650 crore, according to a Reuters poll of brokerages.Shares in Coal India, valued at about nearly $40 billion, closed 0.3 per cent lower in a firm Mumbai market. The stock has gained nearly 16 per cent so far this year.(Reuters)
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Shares in state-run producer Oil & Natural Gas Corp rose as much as 4.1 per cent in early trade on 13 August' 2012, after the company reported a higher-than-expected jump in quarterly profit over the weekend.The company benefited from higher crude oil prices and foreign exchange fluctuations and reported net profit of Rs 60.8 billion for its fiscal first quarter ended June, up from Rs 41.0 billion a year earlier.ONGC Chairman Sudhir Vasudeva also said the producer has made a fresh discovery at the D1 offshore field off India's western coast, which could boost in-place reserves at the field to an estimated 140 million tonnes of oil-equivalent from 82 million tonnes now.Shares last gained 2.7 per cent to Rs 287.45.(Reuters)
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Private equity funds jointly managed by India's top lender, State Bank of India, and Australia's Macquarie Group, have agreed to invest $150 million (Rs 829.50 cr) in a unit of infrastructure firm Ashoka Buildcon, sending the road builder's shares up by as much as 11.3 per cent in early trade.Poor infrastructure acts as a brake on India's economic growth, which slowed to 5.3 per cent in the March quarter, the weakest annual pace in nine years. The government has set an ambitious target to attract $1 trillion in infrastructure investments in the next five years.Macquarie SBI Infrastructure Fund and SBI Macquarie Infrastructure Trust will jointly invest in Ashoka Concessions Ltd, which is currently working on seven highway projects with a cost of $1.6 billion (Rs 8,848 cr), Ashoka said in a statement. Ernst & Young acted as an advisor to Ashoka Buildcon on the deal.Private equity investments in Indian infrastructure slumped 60 per cent to $183 million (Rs 1,011.99 cr) in 10 transactions during the quarter ended March from $459 million (Rs 2,538.27 cr) in 16 transactions a year earlier, according to industry tracker VCCircle.com.Shares in Ashoka Buildcon, valued by the market at $243 million (Rs 1,343.79 cr), have gained 40 per cent in 2012 so far. At 0514 GMT, the stock was up 6.7 per cent to 271.25 rupees in a little-changed Mumbai market.
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Lodha Developers said it has agreed to buy DLF's 17-acre plot of land in Mumbai for Rs 2,700 crore. The Mumbai-based developer is planning to build about 5 million square feet of homes and offices on the site in central Mumbai for which it has secured planning approval, it said on 13 August. DLF, India's biggest property developer, bought the plot for about Rs 700 crore in 2005 from state-run National Textile Corporation. It plans to use part of the sale proceeds to pare its debt of about Rs 22,700 crore. Shares in DLF, valued by the market at about $6.5 billion, ended up 3.5 per cent at Rs 217.70 in a stable Mumbai market ahead of the news. (Reuters)
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After resisting for months, Coal India Ltd (CIL) has agreed to higher penalty levels for fuel supply agreements (FSA), which are to be signed with power units commissioned after March 2009. CIL will pay a penalty of 1.5 per cent if it supplies only 65-80 per cent of the annual contracted value. The penalty will rise to 5 per cent if CIL supplies only 60-65 per cent, 10 per cent if it’s 55-60 per cent, 20 per cent if the supply is 50-55 per cent and 40 per cent when the supply falls below 50 per cent. This is a huge jump from the earlier 0.01 per cent penalty. Citing bankability concerns, power producers such as NTPC had strongly opposed CIL’s weak penalty terms. CIL’s concern was to protect its finances since production and supplies were bound to fall short. The mining goliath has also agreed to import coal, if necessary. Would the new terms damage CIL’s profits? Rupesh Sanke, analyst at Karvy Stock Broking, says there will be no material impact on them. Assuming CIL supplies 90 per cent of committed quantity to old FSAs and 80 per cent to new ones, it might need to import 18 million tonnes of high grade foreign coal in 2013. In this scenario, CIL’s earnings could take a hit of 0.4 per cent. If it supplies less than 50 per cent, the impact could be 11 per cent. That is unlikely if the company maintains the 6 per cent production growth it achieved this year. (This story was published in Businessworld Issue Dated 20-08-2012)
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