A planned meeting by a committee of ministers headed by Finance Minister Pranab Mukherjee to discuss raising diesel, liquified petroleum gas and kerosene prices looks in doubt following widespread protests and political backlash to the massive petrol price hike the day before. In fact, the head of state-run oil company HPCL S.Roy Choudhury, said on Thursday he had not been informed of a possible hike in diesel prices by the government. The Reserve Bank of India (RBI) has an option to sell dollars directly to state oil companies, governor Duvvuri Subbarao said on Thursday, to help ease pressure on the rupee that hit another record low.The Opposition is planning an united onslaught on petrol price hike and price spiral and efforts are on to forge a larger political consensus for Bharat Bandh on the issue on May 31. In fact, a partial rollback in petrol price hike may well be on the cards and the steep increase of over Rs 7.50 per litre could have a built-in rollback factor. However, R.S. Butola, Chairman, Indian Oil Corp , said on Thursday the country's biggest refiner may cut petrol prices if global crude prices drop, but it will not immediately roll back the hike. Butola said the company will review petrol prices again in early June.State oil companies raised the price of petrol on Thursday for the first time in more than six months in a gesture of fiscal discipline that economists said is unlikely to give a significant lift to the embattled rupee.State oil companies together lost roughly $830 million by selling petrol at below market prices since the last price revision in December, P.K. Goel, head of finance at Indian Oil, said on Thursday.India imports 80 per cent of its oil. Taking Political Bull By The HornMeanwhile, the Congress has also distanced itself from the decision to hike petrol price, saying that it was a unilateral step and the party was not consulted. Asking the government to rollback petrol price by at least Rs 3, the party also advised the government not to go ahead with an increase in diesel price, which is politically much more crucial.Congress allies and some of its chief ministers have demanded a rollback, saying that the steep hike was not necessary when the inflation was already spiralling out of control. Key allies like the Trinamool Congress and DMK have said that they were not consulted on the hike while Kerala Chief Minister Oomen Chandy has written to Prime Minister Manmohan Singh to reconsider the decision.India's hefty subsidy bill for diesel, kerosene and liquid petroleum gas (LPG), fuels used in poorer homes, for public transport and for cooking, is a budget-buster that forces heavy government borrowing and weighs on investor sentiment.High global energy prices and a declining rupee, meanwhile, exacerbate the current account deficit in a country that imports 80 percent of its oil."Petrol is a low-hanging fruit, as the challenges will come when the government would be deciding on diesel, liquefied petroleum gas, and kerosene, because this is where the subsidies are larger," said Shubhada Rao, chief economist at Yes Bank told Reuters in Mumbai. "Signal-wise, it is a step in the right direction.""We think the government's ability to implement this price hike could raise market expectations about price hikes in other more critical fuels. While diesel prices in particular would need immediate attention, significant price increases are unlikely, in our view," Goldman Sachs wrote on Thursday.Meanwhile, the NDA has given a Bharat Bandh call for the day, the Left parties have decided to observer an 'All India Protest Day' on May 31 that will include strikes, picketing, demonstrations, rasta roko and rallies against the hike.Sources in the Opposition camp said that efforts are also on in rope in the UPA allies like Trinamool Congress and DMK, who have opposed the fuel price hike yesterday.JD-U President Sharad Yadav has also talked to Left parties and SP supremo Mulayam Singh Yadav in this regard, while attempt is on to take BJD and AIADMK also on board for the May 31 agitations, the sources said. Samajwadi Party is supporting the UPA government from outside.A leader from the Opposition speaking on the condition of anonymity said that the attempt is to re-enact a scenario of July 5, 2010 Bharat Bandh, when opposition parties from north and south with conflicting ideologies like that of BJP and Left had coordinated their agitations to unitedly oppose the fuel price hike.Rejecting government's argument that the hike in petrol prices has been done by petroleum companies as the pricing of petrol stands deregulated, Yadav said, "This is an eyewash...We (NDA) are going to observe a Bharat bandh on May 31."In a press statement, the Left parties, CPI-M, CPI, RSP and All India Forward Bloc said that the Left parties strongly condemn the steep increase in the price of petrol."This is a savage attack on the people, who are already suffering from the effects of continuous price rise of all essential commodities...In order to build a sustained movement to demand a rollback of price hike, Left parties have decided to observe an All India Protest Day on May 31," it said.CPI-M general secretary Prakash Karat said that steep hike in the petrol price was expected."That is why we said yesterday that Government should not increase the prices otherwise we would conduct all India protests. We will continue the protests till we get the government to roll back the prices," Karat told reporters here.He said that the Left has called for a hartal in different states. "We are having different protest actions," Karat said.Opposing the steep hike in petrol prices and spiralling prices of commodities, the JD(U) President said the government has also been a "total failure" in checking prices of essential commodities."Government has washed its hands off the decision on price hike but in reality this happens only when Government wants. The government will also be increasing prices of diesel and LPG after the Presidential elections get over," Yadav said.He asked why the hike in petrol prices was not announced when Parliament was in session and why oil companies did so the very next day after the Budget session got over.The NDA convenor said that while all the partners of his alliance have already been consulted on the issue of bandh, efforts will also be to reach out to other parties for the agitation as the matter is not a political one but that concerns common man.While Congress has so far officially reacted cautiously on the issue saying that it was a decision by the petroleum companies, party leaders speaking on condition of anonymity have expressed discomfiture with the move.In a sudden development, Oil Minister S Jaipal Reddy today cut short his official visit to Turkmenistan by a day to be in the national capital to field questions on the steepest ever increase in the fuel price a day after state-owned oil companies hiked petrol price by a massive Rs 7.54 a litre.
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Defending the move to force Coal India to sign agreements to supply coal to power companies, Coal Minister Sriprakash Jaiswal Monday said the government's priority was to ensure availability of electricity at cheaper rate and it will not be cowed down by threats of legal action by minority shareholder TCI.In face of opposition from the company board, the government had last month issued Presidential Directive to CIL asking it to sign Fuel Supply Agreements (FSAs) with power companies, committing to supply 80 per cent of the quantities for which the contract has been signed.Jaiswal said during Question Hour that India was a socialist country where national priorities have to be balanced with goals of a public sector unit."Profitability of Coal India as well as meeting power requirement of the country by supplying coal at cheaper rates was government's concern," he said.The UK-based Children's Investment Fund (TCI), the biggest foreign investor in CIL, has threatened legal action against the state-run firm for its alleged failure to protect the interest of minority shareholders."Such threats will not affect the government," he said."Our responsibility is also towards the country which needs power at cheaper rates," he said.TCI argues that the directive will reduce CIL profits."Supply of coal at notified prices to power and other major sectors is essential to keep the cost of power generation and manufacturing at reasonable levels," he said.(PTI)
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A mammoth 80,000 MW power generation capacity is under construction during the 12th Five Year Plan period ending March 31, 2017, Power Minister Sushilkumar Shinde told the Rajya Sabha Monday.He said during Question Hour that 21,000 MW of electricity generation capacity was added during 10th Plan period against the target of 42,000 MW.For the 11th Five Year Plan (2007-12), a target of 78,775 MW was set which was revised to 62,000 MW during mid-term appraisal. The actual capacity addition was 55,000 MW."In the 12th Plan, 80,000 MW of generation capacity is under construction," he said adding the nation currently has an installed capacity to generate 194,000 MW of electricity.Replying to another question, Shinde said that in 2011-12 20,400 MW power generation capacity was added, which was much higher than the projection of 17,000 MW.He said re-structured Accelerated Power Development Programme was approved as a Central sector scheme on July 31, 2008 with total outlay of Rs 51,577 crore."The focus of the programme is on actual, demonstrable performance in terms of Aggregate Technical and Commercial (AT&C) loss reduction," he said.Projects under the scheme are taken up in two parts. Part-A is for establishing IT enabled system for energy accounting/auditing and SCADA for big cities whereas Part-B is for upgradation and strengthening of electrical network.He said 43 projects with a total cost of Rs 4495.82 crore were sanctioned for Bihar under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY)."Under RGGVY, funds are not allocated upfront but are disbursed as per the progress of works. So far, subsidy of Rs 3475.39 crore has been disbursed as per the progress," he said.He said free electricity connections have been provided to 194.25 lakh below poverty line households under RGGVY in the last three years.(PTI)
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Goldman Sachs downgrades IRB Infrastructure Developers to "neutral" from "buy" and lowers its sum-of-the-parts target price to 136 rupees from 184 rupees. Stock last down 6 per cent to 120.80 rupees.Goldman says takes action after the company announced three executives have agreed to take a polygraph test, connected to the police investigation of the 2010 murder of a man described as an anti-corruption activist.Among executives investigated is Chairman Virendra Dattatray Mhaiskar, who told Reuters he is innocent and not connected to the murder.The investment bank says the investigation creates uncertainty about value attributable to future projects and creates overhang on the stock.The stock has fallen 23.3 per cent in the previous two sessions.(Reuters)
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An Indian government committee headed by Finance Minister Pranab Mukherjee will meet on Friday to discuss raising diesel, liquified petroleum gas and kerosene prices, a finance ministry official said on Thursday."The meeting is scheduled tomorrow afternoon to discuss raising diesel prices," the official, who declined to be named due to sensitivity of the issue, told Reuters.He said the oil ministry was expected make a proposal on the hikes at the meeting.(Reuters)
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US Secretary of State Hillary Clinton stepped up pressure on ally India on Monday to further reduce its Iranian oil imports, making clear Washington wanted to see further action before granting New Delhi a waiver from U.S. financial sanctions.Iran is the second-largest supplier of crude to the energy-hungry country. Publicly, India has rejected Western sanctions but privately it has pushed local refiners to start cutting imports of oil from Iran by 15-20 per cent.The issue has become an irritant in ties between the two allies. India is unwilling to be seen to be bowing to U.S. pressure and is reluctant to become too reliant on Saudi Arabia for its oil needs, which officials say privately would be strategically unwise.Clinton said Washington wanted to tighten the noose of economic sanctions on Iran to force it to the negotiating table over its nuclear programme, which the United States and other nations fear is a cover to build an atomic bomb."So we think India, as a country that understands the importance of trying to use diplomacy to try to resolve these difficult threats, is certainly working toward lowering their purchase of Iranian oil," Clinton told a townhall-style meeting in the eastern Indian city of Kolkata."We commend the steps they have taken thus far. We hope they will do even more," said Clinton, who is due to meet Indian Prime Minister Manmohan Singh in Delhi later on Monday.She said Saudi Arabia, Iraq and other oil-producing nations were supplying more crude to the markets to offset any loss of supply from Iran."If there were not the ability for India to go into the market and meet its needs we would understand that. But we believe there is adequate supply and there are ways for India to continue to meet their energy requirements," she said.Clinton said the United States would make a decision on whether to exempt India from the U.S. sanctions on Iran in "about two months from now".The United States in March granted exemptions to Japan and 10 European Union nations from the sanctions after they cut Iranian crude imports.An Indian official privy to the Indian talks with Iran and the United States had earlier expressed hope that Clinton might announce a waiver during her three-day visit. The official said the government had done enough to secure the exemption.A senior U.S. official said on Sunday that Carlos Pascual, the U.S. special envoy who has been negotiating with Iranian oil importers to cut their imports, would visit India in mid-May to discuss the issue.(Reuters)
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The rupee hit a fresh low on Thursday as a sharp increase in petrol prices failed to lift sentiment, although expectations grew that New Delhi could take the more politically fraught step of raising diesel prices as soon as Friday.India's hefty subsidy bill for diesel, kerosene and liquid petroleum gas (LPG), fuels used in poorer homes, for public transport and for cooking, is a budget-buster that forces heavy government borrowing and weighs on investor sentiment.High global energy prices and a declining rupee, meanwhile, exacerbate the current account deficit in a country that imports 80 percent of its oil.A government committee headed by Finance Minister Pranab Mukherjee will meet on Friday to discuss raising diesel, LPG and kerosene prices, said a finance ministry official who declined to be identified.Oil companies lose about 14 rupees per litre on diesel, which is much more widely used than petrol, and a weakened government has been unable to push through a price rise or allow full market pricing in the face of political opposition, including from within the ruling coalition."Petrol is a low-hanging fruit, as the challenges will come when the government would be deciding on diesel, liquefied petroleum gas, and kerosene, because this is where the subsidies are larger," said Shubhada Rao, chief economist at Yes Bank in Mumbai. "Signal-wise, it is a step in the right direction."India's three big state oil retailers said late on Wednesday they would raise the price of petrol by about 11.5 per cent. While petrol is not subsidised and prices are officially deregulated, state oil companies that dominate the market had been under government orders in recent months not to raise prices."We think the government's ability to implement this price hike could raise market expectations about price hikes in other more critical fuels. While diesel prices in particular would need immediate attention, significant price increases are unlikely, in our view," Goldman Sachs wrote on Thursday.All-Time LowThe rupee hit an all-time low of 56.40 to the dollar on Thursday, continuing a slide that has seen it lose 13.8 percent from a February peak as global risk aversion hits India especially hard due to its fiscal and current account deficits and the government's sluggish policymaking, all of which has scared off investors.The currency recovered some of its losses and was around 56.17 in early afternoon trade.Indian stocks fared better, with the BSE Sensex up more than 1 percent, outperforming the MSCI Asia ex-Japan index, which was roughly flat, propelled in part by expectations of an increase in diesel prices.While the Reserve Bank of India has taken administrative measures and sold dollars in recent weeks to defend the rupee, it has refrained from taking bolder steps and appears resigned that more aggressive intervention in the market would be futile.The RBI's board was meeting on Thursday in the northern Indian city of Mussoorie."Since the U.S. dollar is gaining strength against the major counterparts like euro, we can see rupee weakening further. We expect a 1-3 months range of 54-57 (to the dollar) with overall weakening bias in rupee," Abhishek Goenka, CEO of India Forex Advisors, wrote in a note on Thursday.Economists have been downgrading growth forecasts for Asia's third-largest economy. Standard Chartered now expects India to report that annual growth in the March quarter slowed to 6 percent, from 6.1 percent in the previous quarter and below earlier expectations of an improvement to 6.5 or 7 per cent.(Reuters)
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In the steepest ever increase, petrol rates were on Wednesday raised by a massive Rs 7.54 per litre, the first hike in rates in six months.Petrol price in Delhi has been hiked by Rs 7.54 per litre to Rs 73.18 a litre with effect from midnight tonight, state-owned oil companies said in separate but identical press announcements.This is the steepest hike in petrol price ever, the previous high being Rs 5 per litre. Oil firms had twice raised rates by Rs 5 per litre - on May 15, 2011 when prices in Delhi were hiked from Rs 58.37 a litre to Rs 63.37 per litre and on May 24, 2008 when rates were raised to Rs 50.56 a litre.Petrol in Mumbai will cost Rs 78.57 per litre as against Rs 70.66 a litre, at present. In Kolkata, the increase will be Rs 7.85 per litre to Rs 77.88 per litre and Chennai saw rates going up by Rs 7.98 to Rs 77.53 per litre.Reacting to the hike, Trinamool Congress chief Mamata Banerjee said that the petrol price hike is a burden on the common man. She feels that a hike in petrol price hike has taken place due to lack of planning and mismanagement. "I am worried about the country's economy," she said. She also added that no one discussed the price hike with her. BJP flayed the steep hike of Rs 7.5 per litre in petrol price terming it as "unreasonable" which will make the life of the common man "miserable". "This whole petrol price hike is clearly unreasonable, arbitrary and is condemned as it will put further inflationary pressure and lead to further rise in prices. Life of the common man will become more difficult and miserable," BJP's chief Spokesperson Ravi Shankar Prasad said. He said the petrol price hike "will have a cascading effect and prices are going to go out of control. It is condemnable." He alleged the government's inept handling of the economic situation was responsible for this. "The gross mismanagement of food and general economy by the UPA regime has led to the decline of the Rupee," he said, adding it has also led to the rise in prices of petroleum products. He wondered why the government was unable to check the decline of the Rupee as compared to other currencies of the world while smaller countries like Thailand, Vietnam, Bangladesh and China were not witnessing such a decline of the value of their currencies. The government had decontrolled petrol price in June 2010 but rates were last increased on November 4 last year. This despite oil price rising by 14.5 per cent and 3.2 per cent fall in value of rupee against the US dollar. On Tuesday, Oil Minister S Jaipal Reddy had stated that the depreciation in rupee had necessitated an immediate increase in fuel prices.But rates of diesel, kerosene and cooking gas have not been revised as a high-power ministerial panel headed by Finance Minister Pranab Mukherjee and having representatives of key UPA allies like TMC and DMK, hasn't met for almost a year now.Price of diesel, kerosene and cooking gas were last raised in June last year. (Agencies)
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