Indian state-run insurers have agreed to give limited cover to local ships for carrying Iranian oil, helping the energy-hungry country import reduced volumes from sanctions-hit Tehran from July, a Shipping Corp of India director said on Tuesday."We have in writing from General Insurance Corp that it and four other insurers will provide a cover of $50 million to Indian flag carriers per Iranian voyage," Sunil Thapar of Shipping Corp of India, the country's largest shipping firm with a fleet of 29 crude carriers, told Reuters.Tough new European Union sanctions aimed at stopping Iran's oil trade also ban EU insurers and re-insurers from indemnifying ships carrying Iranian crude from July.China, another key oil client of Iran, is considering sovereign guarantees for its ships to continue importing oil.The amount of protection and indemnity (P&I) cover on offer from Indian firms is just a fraction of any liability that may arise needing third-party P&I cover, but still higher than Japan's offer of just $8 million cover.Thapar said with the new insurance facility the Indian fleet should be able to meet demand from the oil industry. India has reduced Iranian oil imports by about a quarter in 2012-13 (April-March).Iran, OPEC's second-largest producer, exports most of its 2.2 million barrels of oil per day to top Asian buyers China, India, Japan and South Korea.In fiscal year 2011-12, New Delhi imported less than 340,000 bpd oil from Tehran against a contracted 362,000 bpd, and is now buying 280,000 bpd. Thapar said General Insurance Corp of India will be the re-insurer and the cover will be extended by any of the four firms - United India Insurance, New India Assurance Co. Ltd., National Insurance Co. Ltd. and The Oriental Insurance Co. Ltd.Shipping Corp, Great Eastern Shipping Co Ltd, India Steamship and Mercator Lines are among the companies that stand to benefit if they take the cover. He said it would take some time for the new facility to be available because the insurance regulator's approval was needed. "This will be an exposure to their balance sheets."Indian shipping firms will continue to transport Iranian crude even if limited insurance coverage due to tightening Western sanctions leaves them financially exposed to a spill or accident, a top executive and industry sources said last month.(Reuters)
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Petrol price was cut today by Rs 2.46 per litre, the second reduction this month.Petrol in Delhi will cost Rs 67.78 a litre with effect from midnight as against Rs 70.24 a litre, three oil marketing companies announced on Thursday.State-owned oil firms, which had last month hiked petrol price by a massive Rs 7.54 a litre, had on June 3 cut rates by Rs 2.02 per litre.(PTI)
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Canadian oil and gas producer Niko Resources Ltd reported a fourth-quarter loss and forecast a 23 per cent decline in production for the next fiscal year as output from its D6 block off India's east coast fell.Niko, which explores for oil and gas in southeast Asia and the Caribbean, has been grappling with lower natural gas reserves at the block and other negative news from its Indian operations.The company expects to produce 175,000 thousand cubic feet equivalent per day (Mcfe/d) in fiscal 2013, down from 227,539 Mcfe/d it produced this fiscal.Niko said production at the D6 block is likely to continue declining unless volumes are added from the development of contingent resources.Niko co-owns the KG D6 block with India's Reliance Industries Inc and BP Plc. It has a 10 per cent stake in the block.There were renewed concerns about gas output at the D6 block after Niko last week slashed the reserve estimate for the block. It estimated that total proved plus probable reserves at the block had decreased to 1.93 trillion cubic feet (tcf) as of March 31.The block had earlier been estimated to hold more than 9 tcf of gas.Niko late on Wednesday posted quarterly net loss of $183.3 million, or $3.55 per share, compared with net profit of $6.2 million, or 12 cents per share, a year earlier.Oil and natural gas revenue fell 24 per cent to $71.4 million.Niko shares, which have lost more than two-thirds of their value in the past three months, closed at C$11.85 on Wednesday on the Toronto Stock Exchange.(Reuters)
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Seychelles, an African country located in the mid-western part of the Indian Ocean, has sought greater business cooperation with India, especially in the field of energy and technology.In these times of unsustainable energy prices, it is clear that India and Seychelles have a lot to offer each other -- both in developing renewable energy and also "exploring all the possibilities of a potential oil find in our waters", said Seychelles Finance, Investment and Trade Minister Pierre Laporte.Speaking at a meeting of India-Seychelles Business Forum last night, he said that in a few months, the strategically located island republic will be connected to a new state-of- the-art undersea fibre optic cable that will open up a host of opportunities in the services and online sectors."Our new connection will in fact make Seychelles one of the countries with the highest bandwidth per capita in the world", Laporte said at the meeting which was also addressed by Indian President Pratibha Patil.The President is on a two-day visit to the country and will leave for South Africa tour starting on Tuesday.Laporte said, "We look forward to being able to work with partners from India in exploring numerous options to make best use of this technological breakthrough."This includes the possibility for numerous improvement in financial services, secretarial and back office support services, digital warehousing and many others", he said.Laporte thanked India for its "invaluable" support to Seychelles in the fight against piracy."Excellency, trade also depends on creating a safe space for trade. The support of India in the fight against piracy has been invaluable and I reiterate once again thanks of our government for India' unwavering support on this matter", he said.Against the backdrop of the menace posed by Somali pirates in the Indian Ocean, India had said yesterday that it was determined to work with Seychelles to ensure a secure environment for the benefit of the two countries.Noting that the strategically located Island Republic of Seychelles falls in the seaways of the global trade route, Patil had said, "We are determined to work with the Government of Seychelles to ensure a secure environment for the mutual benefit of our peoples".The Republic of Seychelles is an African country located in the mid-western part of the Indian Ocean. With a population of just 90,000 plus, it has a group of 116 islands of which about 15 are inhabited.(PTI)
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Builders are not a community that is known to hold mass protests. But on 3 May, realty developers will hit the streets to protest the government's ‘over-regulation'. The one-day token strike announced by the Maharashtra Chamber of Housing Industry (MCHI) will be marked by a freeze of all commercial activity by the construction industry in MMR (Mumbai Metropolitan Region) and a mass rally by 50,000, including builders, their supporters and employees, at Azad Maidan in south Mumbai. The Mumbai action will find an echo in Delhi too with Credai (Confederation of Real Estate Developers' Association of India) threatening to hold protests outside Parliament.Dharmesh Jain, vice-president of MCHI, says that the construction industry is hit by the "deliberate holding back of clearances for new projects". He says that 10 years ago, a file used to take 30 days to clear; now it takes two years. "It is a systemic problem building up over many years," says Jain, who heads the construction group, Nirmal Lifestyle. MCHI president Paras Gundecha claims that last year Mumbai's municipal corporation only cleared 10 per cent of the total number of building proposals.Jain says ‘over-regulation' was having an adverse impact on costs and the price of housing stock. "Every year of delay raises the project cost by 50 per cent; if we can't increase the sales volume, there can be no price correction," says the builder. HOMING IN # Developers are hitting the streets in Mumbai and Delhi on 3 May # Builders say affordable housing is also awaiting sanction On being told that volumes are low not because of over-regulation but consumer resistance to high prices, Jain says there is hardly any inventory of under-construction homes in Mumbai. "Mumbai was ahead of the National Capital Region (NCR) in sales a few years ago; today Mumbai's volume is half that of NCR."Data, however, shows that high prices are a deterrent to sales. According to property tracking agency Liases Foras, the average cost of residential apartments in Mumbai is Rs 10,000 per sq. ft, compared to Rs 3,234 in the NCR, Rs 3,806 in Chennai and Rs 3,935 in Pune. In the January-March 2012 quarter, Mumbai's residential sales bucked the trend and improved 20 per cent over the previous quarter, mainly on the back of 150 new projects launched last year. Liases Foras's managing director Pankaj Kapoor says that with prices going up 17 per cent, it will take 40 months to clear the inventory.According to MCHI figures, sales in Mumbai fell from 20 million sq. ft in the April-June 2009 quarter to 8 million sq. ft in the last quarter. In contrast, supply in Noida, which was 23 million sq. ft between 2008 and 2010, rose to 135 million sq. ft in the pipeline between 2011 and 2013. The MCHI has signed an MoU with the state government to build 500,000 units of affordable homes. Jain says most of the projects for affordable homes are pending for want of clearances.What has triggered this latest protest by builders? Market insiders point to a spat the representatives of developers recently had with Mumbai's municipal commissioner Subodh Kumar. The latter reportedly refused to tone down his strict regime for building proposals. With Kumar slated to retire by end-April, the construction lobby is hoping that things will ease up.(This story was published in Businessworld Issue Dated 07-05-2012)
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India's power exchange market is set for a shakeup with two more power bourses getting launched this financial year. With this, India will have four operating power exchanges. The new entrants are Ahmedabad-based Marquis Energy Exchange and Delhi-based National Power Exchange (NPEX). Marquis is in the process of completing the required licensing process, while NPEX is set to hit the market by the end of this financial year. NPEX's promoters include Tata Consultancy Services, National Thermal Power Corporation, National Hydro Power Corporation, and Power Finance Corporation. The existing power exchanges were established in 2008. After the Central Electricity Regulatory Authority came out with ‘guidelines for setting up power exchanges' in February 2007, Financial Technologies (India)-promoted Indian Energy Exchange (IEX) announced operations in June 2008 and the National Stock Exchange and National Commodity & Derivatives Exchange-promoted Power Exchange India (PXIL) started in October the same year. NPEX was also planned in 2008 but its commissioning date kept getting postponed due to various reasons. "We have been treading very cautiously and waiting to see how the power market takes to the exchanges. It is a very shallow market with hardly 2 per cent of the overall electricity produced in the country being traded on the exchanges," says M.G. Raoot, MD & CEO, NPEX. Even four years after the introduction of power exchanges, the development in the product portfolio has been slow. The two functional exchanges only trade in the day-ahead market and the term-ahead market, and the recently introduced Renewable Energy Certificate trading. The bourses are yet to introduce mid-term and long-term products, which have been held up due to regulatory hurdles. This has also been a reason for the low share of exchanges vis-à-vis bilateral and long-term power purchase agreements.Analysts, however, say that more than two exchanges will spoil the broth. "The need is for a maximum of two exchanges; more exchanges are going to be superfluous and will not have any significance. When the National Stock Exchange can handle high volumes, two power exchanges should easily be able to handle 10-15 times of the present volume of their trade. It will be great if a third exchange can offer something new, otherwise consolidation is the only way," says Seshan Balakrishnan, director, transaction advisory services, E&Y. An important power market regulation that can impact the dynamics of the Indian power exchange market is that any exchange with less than 20 per cent market share for two consecutive years will either cease to exist or take the option of merging with any of the other exchanges. While IEX has always maintained a lead with more than 90 per cent share, PXIL has been perennially struggling to maintain its share.Sources say that given the list of promoters backing NPEX, both the present exchanges are in talks for merging with the new player. All the parties involved preferred to reserve their comments on the development, but a clear picture might emerge in the next few weeks.(This story was published in Businessworld Issue Dated 07-05-2012)
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India's Infrastructure Development and Finance Co is in the early stages of raising $1 billion-$1.5 billion for a new fund to invest in infrastructure in the country, two sources with direct knowledge of the matter told Reuters.The funds will be raised for IDFC Project Equity, in which Citigroup and India Infrastructure Finance Co., a state-owned infrastructure finance firm, are key investors, the sources said.The company already has a project equity fund, which manages about $930 million in roads, ports, airports and power projects.The new fund, which is set to be launched in the second half of this year, will also invest in such projects, said the sources."We have invested nearly 80 per cent of our first fund and exited a couple of investments. Now, we are looking to launch the second fund," said one of the sources.An IDFC spokeswoman declined to comment.The previous fund drew investors from India, the United States, Canada, Europe, Japan and the Middle East, and the new fund will target investors in the same places, one of the sources said.The existing IDFC Project Equity fund is part of the $5 billion India Infrastructure Financing Initiative announced in early 2007 by IDFC, Citigroup, Blackstone Group and India Infrastructure Finance Company (IIFCL). The initiative was to have a $2 billion equity component and $3 billion debt portion.However, Blackstone later pulled out of the venture.Several private equity groups, including the 3i Group PLC and a fund jointly managed by India's State Bank of India and Australia's Macquarie Group, are on the road to raise India infrastructure funds worth a combined $4.5 billion, sources have said.Others raising India infrastructure funds include the private equity arms of no.2 Indian lender ICICI Bank and Kotak Mahindra Bank.Private equity investments in Indian infrastructure fell 60 percent to $183 million in 10 transactions during January-March quarter compared with $459 million in 16 transactions a year ago, according to industry tracker VCCircle.com, as policy concerns and slowing growth dampened sentiment.Poor infrastructure acts as a bottleneck to India's economic growth, which slowed to 6.1 per cent in the December last quarter, the weakest annual pace in almost three years.India wants the private sector to invest hundreds of billions of dollars in infrastructure over the next five years.But bureaucratic red tape, a lack of domestic long-term debt and battles between farmers and industry over land have hit construction and funding targets, hurting industrial growth.(Reuters)
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The government is likely to raise diesel prices after presidential polls on July 19, an oil ministry source said on 12 July, as the government attempts to cut the amount of money it pays out to keep prices lower."This has been the thinking for quite some time," that a price rise could come after presidential polls, the source said, requesting anonymity."It is inevitable. By how much I can't say," he added. Government heavily subsidises diesel prices as the fuel powers much of the economy, especially in farming and transportation.The source added that gasoline prices — ostensibly already freed from government controls — were currently not causing any losses for India."It is under control, there is volatility both on the rupee front and oil prices (global) at the moment we are not incurring any loss," the source said. (Reuters)
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