Regional power utility CLP Holdings Ltd said on Monday that it will consider listing its India business to raise funds for further expansion there."Our Indian business may at some stage make demands on CLP Holdings' capital on a scale beyond what we are prepared to fund ourselves," CLP said in its 2011 annual report. "In due course, we will consider a local listing."The company added that it was too early to provide an estimate on the timing or size of the possible listing.The company also said it might bring in partners on future projects in India to ease capital commitments.CLP, currently planning a listing of Australian unit TRUenergy, said operating earnings from India in 2011 totalled HK$154 million, compared to HK$141 million in 2010.CLP entered the Indian market in 2002 with the acquisition of a majority stake in Gujarat Paguthan Energy Corp Pvt Ltd (GPEC), and assumed full ownership of the business in 2003.Operating through wholly-owned CLP India Pvt Ltd, CLP Holdings' investments in India have totalled about 2,614 megawatts covering renewable energy, coal-fired and gas-fired generation.GPEC's earnings rose to HK$391 million in 2011 from HK$247 million in 2010, CLP said, adding, however, that GPEC's short-term earnings outlook was clouded by uncertainty over supplies of natural gas.CLP Holdings' net profit for 2011 fell 10 per cent year on year to HK$9.29 billion on an impairment loss for a coal-fired plant in Australia as a result of a new Australian carbon tax law.(Reuters)
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Meeting a key demand of the cash-strapped airline industry, the government on Wednesday issued the notification allowing private airlines to import jet fuel or ATF directly.Air carriers interested in importing the aviation turbine fuel (ATF), instead of buying from local refiners, would have to apply to the Directorate General of Foreign Trade (DGFT) for an import licence, an official press statement said here.A Group of Ministers headed by Finance Minister Pranab Mukherjee on February 7 decided that the Commerce Ministry would permit direct import of ATF.Beleaguered Kingfisher Airline has been demanding permission to get fuel supplies from overseas so that they do not have to pay sales tax that are as high as 30 per cent in some states.Jet fuel, which makes up for about 40 per cent of an airline's operating expenses, costs the most in the region.The notification said ATF imports have been allowed by or on behalf of Indian carriers on actual use basis.(PTI)
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Highways in India are clogging up almost as fast as they are being built. The cause? Lumbering giants on the road. The number of freight carrying trucks is increasing at one of the fastest rates in post-reform India. Freight traffic on the road grew by 30 per cent last year.While some would welcome it as sign of increasing economic activity, this is actually a symbol of deep a flaw in India's transportation policy. Freight and goods are best carried over long distance on the railway network. This is the least costly way of shipping goods. Shorter distances and last mile delivery is offered by trucks. But in India, while road freight is ballooning — adding several tonnes of fuel fumes to the atmosphere — railway freight traffic increased only by 4 per cent last year. Former Railways Minister, Mamata Banerjee had acknowledged this issue in her Vision 2020 document announced in December 2009. She also accepted that Indian Railways suffers from a big shortage of rolling stock and engines. The solution would seem obvious: increase the production of wagons and locomotives. But here is the surprising and indeed worrying truth. The process of setting up manufacturing units for new locomotives has not moved since October 2010. In February 2010, the Cabinet approved the railways plan to set up units to produce diesel and electric locomotive in partnership with private corporations. The railways promised to execute the tender and start work on the factories within six months. But inexplicably, the process came to a halt later the same year just before price bids were to be planned. Since then the ministry has postponed the resumption of the bidding process more than six times. Project Deferred And DerailedThe ministry accepts that it needs 4000 electronic locomotives and 5000 diesel locomotives over a decade. After much deliberation the government agreed on the public private partnership model. Global tenders were invited. Railways would hold up to 26 per cent while the rest would be help by the private partner/consortium. This model would ensure that latest technology would be deployed on ground in India. The electric locomotive plant would be in Madhepura and the diesel plant would be in Marhowra. Not surprisingly, both are in Bihar, given the dominance of Bihar in the ministry. Indian Railways would have procured 800 electric and 100 diesel locomotives from these plants. The rest would be made by the railways owned Diesel Locomotive Works, Varanasi and Chittaranjan Locomotive Works. The investment in the new plants would be over $1 billion. It would create thousands of jobs and create a thriving vendor base that would create an economic ecosystem of its own. But despite the obvious advantages this process has been held up for months. For a government keen to boost investment, create jobs and boost growth, such lethargy is inexcusable. There is the green aspect too which the ministry recognises. "By carrying more people and goods than other modes of transport, railways can help protect the environment…Indian Railways can be India's principal and foremost response to the challenge of climate change," thus spake Mamata Banerjee in her 2009 Vision document. She also has promised new generation fuel efficient locomotives.The politics of policy here seems befuddling. There could be an understandable worry about mismanagement of the tender process. But if the government could move to decide the $11 Billion dollar fighter plane bid there is little reason for pushing the locomotive manufacturing project off track. If mismanagement of bids is the fear, then all the Cabinet and the railways godmother, Mamata Banerjee need to do is put some more safeguards in the process. So far the journey of the project from request for bids to announcement of qualified bidders has been fairly smooth. It's the last step that is now holding up the process. The Sam Pitroda Committee on modernising railways is expected to push the issue in its report to be submitted soon. But this process for setting up these plants has been on for over two years. It does not need another report to endorse it. Can the PMO step in here and put the process back on track? While private investors are running out of patience, Indian highways are running out of space.Pranjal Sharma is a senior business writer
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India's decision to continue importing Iranian oil is a slap on the face of the United States, which is galvanising the international community to isolate Tehran, according to a former US diplomat who was Bush Administration's pointman on Indo-US civilian nuclear deal."This is bitterly disappointing news for those of us who have championed a close relationship with India. And, it represents a real setback in the attempt by the last three American Presidents to establish a close and strategic partnership with successive Indian governments," former Under Secretary of State for Political Affairs Nicholas Burns wrote in an op-ed in current-affairs magazine 'The Diplomat' Monday."India's decision to walk out of step with the international community on Iran isn't just a slap in the face for the US, it raises questions about its ability to lead," said Burns.India, which relies on Iran for 12 per cent of its oil imports, has refused to scale it down.Only recently, Burns had written an op-ed in The Boston Globe arguing that the US should commit to an ambitious, long-term strategic partnership with India. "I remain convinced of its value to both countries and to the new global balance of power being created in this century," he wrote."With its unhelpfulness on Iran and stonewalling on implementation of the landmark US-India Civil Nuclear Agreement, however, the Indian government is now actively impeding the construction of the strategic relationship it says it wants with the United States," Burns said.Presidents Barack Obama and George W Bush have met India more than halfway in offering concrete and highly visible commitments on issues India cares about, he said, adding unfortunately India has made no corresponding gesture in return for the big vision that Obama and Bush have offered.(PTI)
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Asia's top steel mills could report weaker profits for the quarter that ended in December as demand and prices ease and as eurozone debt worries and slowing growth in China and India cast a pall over the outlook for coming quarters.Steelmakers in China and India have seen declining orders as key consumer sectors such as construction and automobiles feel the pressure of tightening monetary policy. Steelmakers in Japan have been hurt by a strong yen and downward pressure on prices.Global crude steel production hit a record 1.527 billion tonnes in 2011, but the pace of growth fell sharply as the sovereign debt crisis in Europe and slowing economic growth in top consumer China dented demand. Output grew 6.8 per cent in 2011, down from 15 per cent in 2010, according to the World Steel Association."China's overall macro-economy environment in 2012 will not be optimistic, and this continues to weigh down on its steel sector," said Liu Jianmin, an analyst with Huachuang Securities in Beijing."Without strong bargaining power in both upstream raw materials purchases and downstream steel products sales, we remain cautious on China's steel market outlook," he added.Chinese steel mills have seen orders slow and some have scaled back production in recent months to stem losses. Daily crude steel output slipped to an 11-month low in November, before recovering 1.2 per cent in December.World No.2 Baoshan Iron & Steel said it expects 2011 net profit to fall 43.4 per cent to 7.3 billion yuan.Japanese steelmakers Nippon Steel Corp, the world's No.4 steelmaker, and JFE Steel Corp, the No.5, are also forecast to slash their full-year earnings outlooks once again as exports tumbled in the wake of the strong yen.The two Japanese companies cut their outlooks by about 20 per cent only three months ago on a sudden fall-off in demand in Asia's steel market following China's tightening on lending.Japan's exports of carbon steel fell 17 per cent in November to a 29-month low, as steelmakers curtailed volumes in the wake of the strong yen.Devastating floods in Thailand, an Asian hub for car production, hit Japanese automakers hard as parts-supply disruptions have forced them to cut output.The strong yen has opened the door for cheaper imports from Asian rivals. A plunge in the cost of major inputs iron ore and coal is also leading to vocal calls from Japanese carmakers to cut steel prices.Impact On MarginsSouth Korea's POSCO, the world's third-biggest steelmaker, last week said it expected to post weaker operating profit for the quarter as a slowing global economy dented demand and weighed on prices.The outlook is also dim with demand forecast to remain fragile in China, while an inventory of more expensive raw materials will be used in the current quarter, analysts said.The company generates around a third of its sales overseas.POSCO estimated a 4.2 trillion Korean won operating profit in 2011, down 12 per cent from a year ago. The annual results suggest POSCO earned 692 billion won in fourth-quarter operating profit, according to Reuters calculation, below analysts' average forecast of 839.3 billion won."We do not anticipate a quick and/or drastic expansion in steel making margins in the near term considering weak demand outlook under continuing over-capacity," Credit Suisse said last week in a report on POSCO.But POSCO, backed by billionaire investor Warren Buffett, is riding out the storm better than its peers, running its plants at full capacity while its other Asian and European peers cut production to cope with a slump in demand.POSCO said last week it will pay $1.6 billion to expand its stake in an Australian iron ore mining firm, its biggest investment in resources to date. The overseas investments could pressure its financial profile, analysts said.Margins at India's top steelmakers have been under pressure during the quarter because of slowing investments by end-user industries, higher interest costs and foreign exchange losses on import of raw materials."Outlook for Indian steel prices remains negative due to weakening demand and global economic slowdown," brokerage Motilal Oswal Securities said in an earnings report, adding that a correction in raw material prices could push prices down further.State-run Steel Authority of India is likely to post a 25 per cent decline in quarterly profit, while world No.7 Tata Steel, could report a two-thirds fall in profit because of higher costs and lower prices in Europe, where it operates most of its global capacity.(Reuters)
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The government has told refiners to reduce Iranian oil imports and find alternatives as New Delhi may not seek a waiver that would protect buyers of Tehran's oil from a fresh round of U.S. sanctions, two industry sources said on Wednesday.India is Iran's second largest crude buyer after China, importing 350,000-400,000 barrels per day (bpd) of oil worth Rs 62,040 crore annually.New Delhi has struggled to pay for the crude due to existing sanctions for more than a year, and fresh measures from the United States aimed at isolating Iran over its nuclear programme will make payment even harder.(Reuters)
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Top oil exporter Saudi Arabia is nearing its comfortable operational production limits and may struggle to do much to make up for shortages that arise from new sanctions imposed on Iran by the West, Gulf-based sources said.The kingdom, now pumping just under record rates of 10 million barrels per day, has poured billions of dollars into its vast oil fields, which on paper should ensure it has the ability to ramp up to 12.5 million bpd.Long-standing oil policy by Riyadh, the heavyweight in the Organization of the Petroleum Exporting Countries (OPEC), sets aside some 1.5 million bpd as protective spare capacity.But industry sources said pumping anywhere near the declared production capacity might involve extracting heavy crudes the market might not want. It would also be difficult to sustain higher rates for lengthy periods."There is very little unused capacity in the Gulf," said an oil official in the region. "Saudi Arabia could comfortably manage an extra 500,000 barrels a day or so and, if pushed, could go up to 11 million (barrels a day)."A steady rate beyond 10 million bpd would offer immediate relief to world oil markets, but it would take the kingdom's production to untested levels.Saudi officials are confident, however, of achieving higher flows."Saudi Arabia can easily make 1 million to 1.5 million (barrels per day) available," a Saudi source said about output beyond current volumes.Since June of last year, Saudi Arabia and its Gulf allies Kuwait and the United Arab Emirates have been cranking oil out after failing to convince Iran and other OPEC members to agree a coordinated increase to cover the supply disruption from Libya's civil war.The trio has kept up the higher pace, despite the return of Libyan crude, to supply rising demand from Asia and in effort to bring oil prices below $100 a barrel to help nurture global economic growth. Increased deliveries have left Kuwait and the United Arab Emirates producing nearly flat out.That will make it a stretch to fill a sizeable gap left by any punitive cuts in Iran's oil exports of about 2.5 million bpd.After spending huge amounts on fortifying their production, the Gulf countries are now reluctant to push output to the very brink and leave them bereft of a supply cushion.China Looking AroundThe United States and its allies in Europe and elsewhere are trying to put pressure on Iran to curb its nuclear programme, worried that Tehran is attempting to develop its own atom bomb.Iranian oil officials said shipments from the Islamic Republic are continuing as normal. There are, however, reports that some traditional buyers of Iranian crude, such as China, may be looking elsewhere. This may be part of a negotiating ploy over contract renewals.The European Union has brought forward a ministerial meeting that is likely to match new U.S. measures to tighten the financial screws on Tehran. At stake are roughly 500,000 bpd of Iranian exports to EU members.The U.S. has long embargoed Iranian crude, but the new sanctions target institutions that deal with Iran's central bank.Asia's big consumers of Iran's oil - Japan, China and India - are already taking precautions. Tokyo has asked Saudi Arabia and the UAE to help it to plug any gap.And China's Premier Wen Jiabao is set to visit Saudi, the UAE and Qatar amid signs that Beijing wants to expand its options as the U.S. ratchets up measures against Iran.Despite the diplomatic efforts, there have been no hard requests from buyers."So far, there are no extra orders (from buyers) that would require Saudi to increase production," a Gulf industry source told Reuters. He repeated Riyadh's vow to meet any extra demand. (Reuters)
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China's Premier Wen Jiabao will visit three key Middle Eastern oil and gas suppliers - Saudi Arabia, the United Arab Emirates and Qatar - from the weekend, amid signs that Beijing wants to expand its options in the face of U.S. sanctions aimed at Iran.An announcement on Tuesday from the Chinese Foreign Ministry said Wen would meet host leaders to "thoroughly exchange views on developing bilateral relations and on international and regional issues of common concern".Wen's trip, starting in Saudi Arabia, comes while Iran faces tightening Western sanctions over its nuclear programme. Beijing faces pressure to go along with the U.S. sanctions by cutting what it pays for Iranian oil, if not the volume it buys.China already cut oil imports from Iran in January and February in a dispute over contract terms, and has been looking for alternative supplies.Wen's talks are sure to cover, at least in general terms, energy cooperation with his Middle Eastern hosts, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University in east China."On any visit to the Middle East, these issues will be discussed," Lin told Reuters by telephone."Generally, there will be something that comes out of a visit like this, because a visit by a premier is not your average visit," he said of discussion on oil and gas.China bought a combined 1.15 million barrels per day (bud) from these three nations in the first 11 months of 2011, customs data showed, nearly a quarter of its total crude imports.Banking SanctionsU.S. President Barack Obama recently authorised a law imposing sanctions on financial institutions that deal with Iran's central bank, its main clearinghouse for oil exports.Treasury Secretary Timothy Geithner was due to arrive in Beijing late on Tuesday for talks that were likely to cover the banking sanctions against Iran.That U.S. sanctions threat could be a worry for China, the biggest buyer of Iranian oil, followed by India and Japan. Only Saudi Arabia and Angola sell more crude than Iran to China."Correctly speaking, it's not a matter of China necessarily reducing imports (from Iran), but of looking to increase imports from elsewhere," said Lin from Xiamen University."China, as well as Japan and other big oil consumers, is already turning its attention elsewhere," he said.China has backed a series of U.N. Security Council resolutions calling on Iran to halt uranium enrichment activities, while working to ensure its energy ties are not threatened.But China, which as a permanent member wields a Security Council veto, has also criticised the United States and European Union for imposing separate sanctions on Iran and said they should take no steps reaching beyond the U.N. resolutions.Aramco DealThe Chinese announcement of Wen's trip did not mention any possible energy or investment deals during Wen's six-day Middle East trip.But on Sunday, Saudi Arabia's state oil giant, Saudi Aramco, said it will sign a final deal next week to build a 400,000 barrel-per-day (bud) oil refinery in Yanbu with China's Sinopec Group.Wen's trip was planned long before the recent ructions over Iran, but will also give Beijing an opportunity to consolidate ties with major Arab energy partners, said Lid Gutful, the director of the Center for Middle East Studies at the China Institute of International Studies, a think tank in Beijing."Definitely these three countries are major suppliers of oil and gas to China, and how to increase this kind of cooperation would be a major a topic whenever they meet," said Lid.Armco said the formal signing of its deal with the Sinopec Group would take place on Jan. 14 in Dharma, the site of the state company's headquarters.Under the initial agreement, Aramco will hold a 62.5 per cent stake in the joint venture formed to develop the project, and Sinopec will own the rest. Sinopec is the parent of top Asian refiner Sinopec Corp.Saudi Arabia is already China's top international source of crude oil. In the first 11 months of 2011, it supplied China with 45.5 tonnes of crude, a rise of 12.9 per cent over the same period in 2010. Angola and Iran were the second and third biggest suppliers.Qatar is a major supplier of liquefied natural gas (LNG) to China, and in the first 11 months of 2011 it shipped 1.8 million tonnes of LNG to China, a rise of 75.9 per cent over the same period in 2010.But Lin, the professor from Xiamen University, said China would not be turning solely to other Middle Eastern countries, which might also be vulnerable to regional tensions, to bolster any downturn in crude orders from Iran."We certainly can't simply rely on other Middle Eastern countries," he said. "To cope with the Iran problem, we'll probably have to draw more on orders from countries around China, and not just the Middle East."(Reuters)
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