India's largest Iranian oil buyer plans to almost halve daily imports, industry sources said on Monday, becoming the latest Asian refiner to cut as Western sanctions make trade with OPEC's second-largest producer difficult.India, China and Japan buy almost half of Iran's estimated 2.6 million barrels per day of oil exports, but a raft of US. and European sanctions aimed at choking off funding for Iran's controversial nuclear programme are squeezing Tehran's oil supply lines.State-run Mangalore Refinery and Petrochemicals Ltd, or MRPL, could reduce imports to as little as 80,000 barrels per day (bpd) for the fiscal year starting April 1, the sources said. That would be down around 44 per cent on the average annual purchase of 150,000 bpd.MRPL officials could not immediately be reached for comment.Like other Asian nations, India appears to be trying to wean itself off Iranian crude before the sanctions take effect on June 28. MRPL is the third Indian refiner planning import cuts."There will be a drastic reduction in volumes from Iran," said one source. "For the next fiscal year, MRPL plans to restrict its term deal to 80,000-100,000 bpd."Another source said the refiner planned to only import 80,000 bpd, with the option to buy more.Iran is the biggest crude supplier to India after Saudi Arabia.If refiners go ahead with plans to cut Iranian imports, they would cut crude purchases from the Islamic Republic by more than 20 percent in the 2012-13 fiscal year, according to Reuters' calculations. That would be more than the at least 10 percent cut the government has unofficially requested refiners should make, sources have told Reuters.The governments in New Delhi and Beijing have publicly criticised US sanctions demanding punishment for the US operations of companies that fail to reduce Iranian oil imports.In public, New Delhi says it will not comply with the sanctions. But behind the scenes, sources at state-run refineries say the government has instructed them to cut imports. It is unclear whether that is to avoid the political damage of keeping the flow unchanged or simply to avoid the headache and expense of trying to find ways to pay for the oil.Even with cuts of more than 20 per cent, India will remain among the top buyers of Iranian crude and so still has to maintain the $11 billion annual trade with Iran. The two sides have held meetings over the past month to discuss how to bypass the sanctions to ensure both can pay for bilateral trade.China has used Iran's growing political isolation to get better terms than Tehran wanted to give on annual oil contract negotiations.To force Iran to cut the deal it wanted, China reduced imports from Iran during the first quarter so deeply that even if it returns to the same daily flow as in 2011, the average reduction for the year would be 14 percent.Japan, a U.S. ally, is in final talks with Washington on an agreement on cuts in Iranian crude oil imports that could amount to a higher-than-expected 20 per cent or more a year, a newspaper reported last month, as Tokyo seeks to win waivers from US sanctions.Japanese refiners are waiting for word from their government on how much they need to cut imports for Tokyo to garner a waiver from the United States to sanctions.Refiners are negotiating annual contract deals due to take effect from April, so want to ensure those deals are compliant with government direction.The US can exempt countries from the sanctions if they have made substantial reductions in imports.Payment HeadachePayment problems have already reduced the amount of oil MRPL bought from Iran this year: the refiner had a contract to buy 142,000 bpd of oil in 2011-12, but its only imported between 120,000 and 122,000 bpd, the sources said."As was the case in 2010/11, MRPL was hoping to take 150,000 bpd against a term deal of 7.1 million tonnes, but supplies were hit due to payment problems," a source said.One of the sources said MRPL, currently in talks with the state-run National Iran Oil Co., was waiting to see how the new payments mechanism would work before deciding on its crude purchases.Indian companies are currently paying for Iranian oil in euros via a bank in Turkey, after a clearing mechanism was scrapped under pressure from Washington in December 2010.As an alternative, India and Iran have agreed to use the Indian currency, the rupee, to pay for 45 percent of oil imports.Iran has already started paying Indian exporters in rupees, but refiners are waiting to hear from the government on whether they will have to pay hefty taxes before using rupees to pay for oil.More Arab CrudeIndia's state-run Hindustan Petroleum Corp has said it would cut its annual imports of Iranian crude by about 15 percent to 60,000 bpd.State-run refiner Bharat Petroleum is also planning to cut imports from Iran, according to industry sources. Private refiner Essar Oil is keeping imports unchanged at 100,000 bpd.Like other Indian refiners trying to make up for the loss of Iranian crude, MRPL has been seeking additional crude from Saudi Arabia, the world's top oil exporter, as well as Kuwait and the United Arab Emirates.The refiner is also planning its first-ever import deal from Iraq, although the amount is likely to be small. India is seeking up to 80,000 bpd oil from Iraq.(Reuters)
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Four financial institutions — Bank of Baroda (BoB), ICICI Bank, LIC and Citi Financial — on Monday agreed to form the country's first $2 billion (about Rs 10,000 crore) Infrastructure Development Fund (IDF) to finance infrastructure projects in the country."This is the first IDF and will have an equity capital of Rs 300 crore. It will start operations in the next fiscal (beginning April 1, 2012) ... Total fund size would be USD 2 billion", Bank of Baroda (BoB) Chairman M D Mallya told reporters here.An MoU to set up the fund was signed by the representatives of the banks and financial institutions including Bank of Baroda (BoB) chief Mallya and ICICI Bank CEO and managing director Chanda Kochhar in presence of Finance Minister Pranab Mukherjee.ICICI Bank, the sponsor of the joint venture, will hold 31 per cent equity in the IDF followed by Bank of Baroda (30 per cent), Citi Financial (29 per cent) and LIC (10 per cent).The ICICI Bank has already received the Reserve Bank's in-principle nod to set up the IDF through the NBFC (non-banking financial company) route last month.According to RBI guidelines, IDFs to be set up as NBFCs should have a minimum net-owned fund of Rs 300 crore and a capital adequacy ratio of 15 per cent.In his last Budget speech, Finance Minister Pranab Mukherjee had mooted the idea of IDFs to accelerate the flow of long term debt in infrastructure projects.Besides, ICICI Bank, many other lenders including IIFCL, IDBI Bank are also planning to set up IDFs.(PTI)
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India will continue to import oil from Iran without violating any international law and has requested the United States and the European Union to take into account the country's oil needs, Oil Minister Jaipal Reddy said on Friday."We have a systematic plan for receiving oil from Iran," Reddy told reporters at the Asia Gas Partnership Summit, but did not elaborate.The United States gave exemptions on Tuesday from its crippling financial sanctions to Japan and 10 EU nations it said had cut purchases of Iranian crude, but left Asian economic giants India and China exposed to the risk of such steps."We continue to receive representations from the US and other countries. With respect to their sentiments, we have requested to appreciate our needs," Reddy said.India is Iran's second-biggest oil client after China and Tehran used to supply about 12 per cent of the south Asian country's needs, worth about $11 billion a year.Reddy also said there would be no supply shortage.India, publicly disdainful of sanctions to pressure Iran, is privately pushing its refiners for substantial cuts in imports from the Middle Eastern country.Indian state refiners planning to cut the size of their term deals with Iran have sought additional supplies from the world's top oil exporter, Saudi Arabia, and fellow OPEC member Iraq.(Reuters)
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Soon after removing restrictions on import of goods from India, Pakistan has sought immediate supplies of petrol from the country to meet widening deficit."I discussed importing petrol from India during talks with Petroleum Secretary G C Chaturvedi here," Pakistan Secretary for Petroleum and Natural Resources Muhammad Ejaz Chaudhry said on the sidelines of the 7th Asia Gas Partnership Summit in India's capital New Delhi.Pakistan, which has shortage of fuel, is looking at starting petrol imports from India using tankers as early as next month but issues of quality and specification need to be sorted out before that.New Delhi has agreed, in-principle, to supply fuel to Pakistan from Bhatinda, where Hindustan Petroleum Corp Ltd is about to commission a refinery. Also, Indian Oil Corp (IOC) has a fuel depot at Bhatinda which can supply petrol and other products to Pakistan.Pakistan, Chaudhry said, was keen on importing other fuels as well but for the time being it has requirement of only petrol.Officials of the two countries will meet next month to finalise modalities. The biggest hurdle is the fuel specification ? while Pakistan sells Euro-II grade fuel, Indian refineries produce petrol and diesel meeting Euro-III & IV standards.Chaudhry said Pakistan will call on India if it needs diesel and jet fuel in future. "When we need jet fuel or diesel, our first port of call will be India."While the fuel exports, to begin with, will be through tankers, a dedicated pipeline may be built in future.Recently, Pakistan liberalised imports, lifting restrictions on all but 1,200 products. It is also expected to give India the Most-Favoured Nation (MFN) trade status that would help normalise trade by ending huge restriction. India gave MFN status to Pakistan in 1996. Chaudhry also discussed the transit fee to be paid for the proposed Turkmenistan-Afghanistan-Pakistan-India gas pipeline.Officials said India has to pay transit fee to Pakistan and Afghanistan for allowing passage of gas that it wants to buy from Turkmenistan. Similarly, Pakistan has to pay transit fee to Afghanistan."We have agreed to have a uniform fee. Pakistan has agreed that it will accept the same fee that India agrees to pay Afghanistan," an official said.Turkmenistan has already finalised the gas sale purchase agreement with all the participating countries for the USD 7.6 billion pipeline project, which will supply 3.2 billion cubic feet of gas daily.Chaudhry said Pakistan was also keen to import gas from India as well. State-owned GAIL's newly-commissioned gas pipeline from India?s west coast to Bhatinda in Punjab is barely 45 km from the Pakistan border and it can be extended to Lahore.Gas in its liquid form, Liquefied Natural Gas or LNG, can be imported at Dahej or Hazira import terminals in the western Indian state of Gujarat and then moved to Pakistan border using the recently commissioned Dahej-Vijaipur-Dadri-Bawana-Nangal-Bhatinda pipeline.India's Prime Minister Manmohan Singh too mentioned such a possibility in his inaugural address at the 7th Asia Gas Partnership Summit here."The 2,000-km long Dahej-Vijaipur-Bawana-Nangla/Bhatinda pipeline of GAIL has been completed recently. I understand that it has the potential to be extended up to the border with Pakistan," he said.(PTI)
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Ansal Institute of Technology and Management, located in Lucknow's Sushant Golf City, looks like any other campus. The institute, which began its academic session in July 2011, has 43 rooms including 11 classrooms, nine labs, seminar hall, library, computer rooms, workshop areas and facilities for administration, cafeteria and rest rooms. Yet, it is not just another campus. The 60,000 sq. ft institute was built in just 90 days — one-third the time taken for conventional construction — using "smart" steel and pre-engineered building technology.The single-storey institute was built in three modules using steel frames for erecting the structure and various types of prefabricated wall, cladding and roofing solutions. "It was a challenge to think of an operational building for an institute in 3 months," says Vinod Tiku, executive director (projects), Ansal API, a Delhi-based developer with a presence across residential, commercial, retail, hospitality and entertainment space development across north India and a sales turnover of Rs 7,807 crore for the first 11 months of FY 2012. Using a steel structure and pre-engineered solutions was the only way to get work done without compromising on aesthetics, quality or cost, he adds. While the cost of construction rose by Rs 200 per sq ft — from Rs 1,300 to Rs 1,500, with the total at Rs 12 crore — Tiku says shaving 6 months off the construction time offset the additional cost.The Case For PrefabricationPrefabrication is the process of putting up an entire building with components that have been cast in a factory before they're assembled on site. Concrete walls and slabs are made at a manufacturing facility, transported to the construction site and then installed. This technology is gaining popularity as it has the aesthetic appeal of modern construction but is cost-effective. A building using smart steel has a steel frame for the main structure, tied together using nuts and bolts; the walls are erected using gypsum and cement boards, while the roof trusses give cover to the structure. Integrated engineering design and detailing make it possible for pre-engineered buildings to be erected in a fraction of the time it takes for a conventional building to be built.On-time completion of projects has become not just a matter of commitment for a property developer but helps him sustain business growth. It helps reduce much of the uncertainty around market sentiments and raw material prices, while making cash flows smooth. Says Anshuman Magazine, MD of real estate services firm CB Richard Ellis South Asia: "The fact is as competition increases and inflation goes up, you have to innovate and bring new technology to compete. Since prefab technology helps cut time, it reduces cost while also improving the quality of construction." ROLE MODEL: Ansal Institute of Technology and Management in Lucknow is the group's experiment with prefab technology Use of smart steel technology and prefabricated building components are fast becoming favoured methods of construction. "As the cost of borrowing is steep and developers face a liquidity crunch, time means money and modular construction is faster, adding to the revenue stream of builders," says Sachin Sandhir, MD, Royal Institute of Chartered Surveyors (RICS) South Asia, a regulatory body of real estate professionals. Sandhir adds that pre-engineered buildings have a better performance record as factory or assembly line-produced homes are manufactured to stricter norms. "Fast, on-site assembly of manufactured components which are durable, environmentally friendly and reusable also helps develop sustainable building systems, which provide such structures with a lifespan of approximately 30 years," he says.Amit Gupta, managing director of Orris Infrastructure, an NCR-based infrastructure firm with a sales turnover of Rs 500 crore in FY 2011, agrees. "Given the mood of the market, we cannot afford to delay our projects," he says and adds that increased speed of construction and maximum and optimal utilisation of material makes prefabricated technology much more cost-effective in the long run.Hitting A WallGiven all these benefits, why aren't homes being built using prefab technology? A lack of awareness is the primary hurdle to the adoption of prefabricated technology. Sandhir attributes the resistance to the construction industry itself as it is assumed that the technology will pose a threat to the employment of semi-skilled and unskilled manual labour. Another hurdle is the inflexibility of developers to adopt innovative construction materials, while high taxes and duties imposed on prefabricated components are also a deterrent. break-page-break"The Delhi Metro incident where prefab structures developed cracks leading to an accident has further dented the image of such materials in the mind of the buyer," says Gupta of Orris Infrastructure. Prefab structures require trained labour and the lack of resources close to building sites is a major reason for developers not taking to this mode of construction, he adds.Home buyers' lack of experience of advances in construction technology makes it hard to convince them about the benefits of prefabricated homes. "Home buyers demand brick-and-mortar homes. They say ‘how will I fix a nail in a concrete wall if I wish to put up a painting or family photos?'," says Tiku. What they are unaware of is that in a prefabricated house, an entire wall can be shifted, he points out.Setting An Example "Home buyers will soon accept Prefab Technology," says Manish Sanghi, Managing Director, Everest Industries With home buyers far from convinced about the new technology, several developers are restricting the use of prefabricated construction techniques to plants and commercial buildings. Tiku says in Ansal's case, the fact that the building was meant for its own institute gave the company the liberty to demonstrate the technology. "It took us some time to convince the All India Council for Technical Education (AICTE) — the statutory body for technical education — that the building had actually been completed in three months," says Tiku, indicating a lack of awareness about building technology.Ansal employed the services of Everest Industries, a company that offers comprehensive pre-engineered building solutions and had a sales turnover of Rs 783 crore in FY 2011. The building designed for the institute comprises steel framing walls, roof trusses, building paper for exterior walls, heavy duty wall boards, false ceiling grid system with cement boards and mineral fibre tiles, a metal roofing system, rockwool wall insulation, aluminum facing foil and glasswool insulation for roofs. On an average, 50 workers were engaged in two teams to get the structure up by working 10 hours a day. "The design of the building was kept simple as speed and time were of the essence," says Manish Sanghi, MD, Everest Industries.Sanghi believes that with the growing acceptance of prefabricated components in commercial buildings, home buyers will soon get comfortable with the technology. Everest has built factories and commercial facilities for big-name firms such as Britannia (in Hajipur, Bihar), Bharti Walmart (in Amritsar, Punjab; Raipur, Chhattisgarh; and Meerut, UP), Whirlpool (in Pondicherry) and Honda Siel (in Bhiwadi, Rajasthan). It has also constructed sample houses for Noida-based developer Sunshine Helios and Lucknow-based Tulsiani Developers and is currently working on nearly 60 sites. Future Perfect "Dearth of 26.5 million houses will make Prefab inevitable," says Sachin Sandhir, Managing Director, RICS Despite the low levels of awareness and acceptance of prefabricated technology, Sandhir believes that "the dearth of 26.5 million affordable housing units in the country, which translates into a potential size of $250 billion at $10,000 a unit, and the inherent project execution challenges and shortages in human resource capabilities" will ensure that " traditional brick-and-mortar construction gives way to modern methods of construction such as prefabricated structures. It is, therefore, safe to assume that even if 20-30 per cent of development is undertaken through prefab techniques, the industry size will be to the tune of $100 billion". New technology would be critical to building homes quickly and more cost-effectively, especially as input costs for traditional construction continue to rise, he adds. "Since customers want quality and timely possession, such technology is inevitable in housing," predicts Magazine.RICS in partnership with asset management firm Sam Circle Venture, Philadelphia-based architecture firm Kieran Timberlake and Mumbai-based consultancy company Project Well is already working on an affordable housing concept called India Concept House that uses prefabricated technology and allows houses to be manufactured and assembled in under two months. Under the plan, these homes — targeted at the affordable housing segment in Tier II and III cities — will help reduce construction time by up to 90 per cent with construction costs pegged at Rs 900-1,200 per sq ft. Ansal is also pushing for the technology. It plans to add another 15,000 sq ft to its institute using smart steel. It is also using the technology in parts of its Sushant Lok City in Lucknow. "We are developing high-end condominiums with the sample flat built using pre-engineered components," says Tiku. Through such samples, the company aims to convince home buyers.While it may be a while before home buyers are convinced, there is no doubt that dream houses of the future will be factory-made. abhinav(dot)sharma(at)abp(dot)in(This story was published in Businessworld Issue Dated 02-04-2012)
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The upstream regulator has cleared Reliance Industries' Rs 8,139.60 crore plan to develop four satellite fields to boost output at its D6 block and sent it for final government approval, an official source said on Wednesday."The management committee has approved the investment plan of Reliance Industries for its D6 gas block," the source at the Directorate General of Hydrocarbons told Reuters.A Reliance Industries spokesman declined immediate comment.Earlier two newspapers had reported the government had approved the investment by Reliance.The investment plan, which will help boost falling output of the gas field in the Krishna Godavari basin, has been pending with the authorities for two years, the Times of India and the Mint said, citing news agency Press Trust of India.The four satellite fields, off India's east coast, can produce 10 million cubic metres of gas per day by 2016, which will help shore up output from the D6 block that has seen output fall a third since 2010.Gas output had declined as Reliance drilled fewer wells than planned and six wells have ceased to produce due to the entry of sand or water, the government said last month.Reliance drilled 22 wells at D1 and D3 gas fields in the block, four of which are yet to go into production, against 31 producing wells approved for drilling up to March 2012 in the field development plan.But the company last year tied up with BP to further develop the D6 block, and the British firm has said production from the field could rise from 2014 with the help of the satellite fields.Reliance's shares fell 35 per cent in 2011, underperforming the broader index, on investor worries about declining output at the key gas field.Talks To Buy El Paso's E&P UnitReliance Industries is among companies in talks to buy the exploration and production (E&P)unit of U.S. pipeline company El Paso Corp, Bloomberg reported, citing unnamed people with knowledge about the matter.Private equity firm Apollo Global Management LLC is among the other companies in talks for the unit, which is estimated to be worth Rs 43,092 crore by analysts at BNP Paribas, it said.U.S. regulators last month made a second request for information about Kinder Morgan Inc's planned Rs 111,720 crore takeover of El Paso, first announced in October, in a deal that will combine the two largest natural gas pipeline companies.As part of the deal, Kinder plans to sell El Paso's E&P assets to help finance the acquisition. The deal is expected to close by the second quarter of 2012.Reliance is yet to decide whether to make a bid for the unit, Bloomberg reported.A Reliance spokesman said the company does not comment on speculation. Officials for Kinder Morgan and El Paso could not be immediately reached.Last month, a senior Reliance executive told Reuters the company is scouting for oil investments in the Americas as it looks to boost the share of its crude production to feed its huge refinery in western India.The company, which the market values at Rs 236,740 crore, already owns stakes in three shale gas ventures in the United States.(Reuters)
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The Union Budget 2012-13 has upped the allocation for the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) by 53.09 per cent to Rs 3,114 crore. The central scheme had been allotted Rs 2,034 crore in 2011-12. There is nothing wrong with that except that the scheme has been rewarded instead of being punished for under-utilisation of funds. The revised estimate for 2011-12 pegged fund use at Rs 1,668 crore, with Rs 366 crore remaining unspent.The R-APDRP, launched in 2000-01 as APDRP and restructured during the 11th Plan, was introduced to improve the financial viability of state distribution utilities through sustained aggregate technical and commercial (AT&C) loss reduction. Under its ‘investment component', the Centre doles out assistance to strengthen and upgrade the sub-transmission and distribution network. North Block dictates that at least 50 per cent of the allotted amount be utilised by September of each financial year; failure to do so results in a cutback of funds. So where did R-APDRP falter? Says G. Swanza Lian, under secretary in the Ministry of Power: "Many utilities failed to finalise their DPRs (detailed project reports). And despite our efforts to expedite the process, it was not possible to release the money."But Power Finance Corporation (PFC), the nodal agency for R-APDRP, has a different story to tell. "We required the entire amount originally allocated under the scheme in 2011-12, but the ministry did not have enough funds," says Satnam Singh, chairman and managing director of PFC. He says he is hopeful of utilising the earmarked funds going ahead. According to Feedback Infrastructure Services, which provides consultancy to 10 states on setting up IT-enabled systems to attain reliable baseline data under Part-A of the programme, the utilities were slow off the block in filing the DPRs to kickstart the programme in their respective states. Vikram Apte, advisor (power) at Feedback Infrastructure Services, points to delays in follow-up measures like preparation of RFP (request for proposal) or tender documents, finalisation and award of contracts to successful bidders, non-availability of project-specific manpower to monitor and execute the projects, and the inability of state utilities to handle high-value contracts.Apte believes the utilities are better prepared this time and there will be swift progress on the ground. "During 2012-13, substantial progress is expected. There are examples of a few utilities in Gujarat, West Bengal, Maharashtra, Madhya Pradesh and Andhra Pradesh where work is on in full swing." But there are laggards as well. "Utilities in Bihar, the North-east, Jammu & Kashmir, Kerala and UP are struggling," he adds.One of the eligibility criteria for the R-APDRP line of assistance is that AT&C losses have to be bought down at the utility level. Those with AT&C loss above 30 per cent have to reduce it by 3 per cent every year; those with losses below 30 per cent have to bring it down by 1.5 per cent every year. The only silver lining is that some states seem to have a firm grip on their specific shortfalls. Seen in this light, the hike under R-APDRP is a welcome one. But it can again become a case of aiming high and firing low.(This story was published in Businessworld Issue Dated 02-04-2012)
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Utility Reliance Power, controlled by billionaire Anil Ambani, is in talks with energy major Royal Dutch Shell to jointly set up a liquefied natural gas terminal to secure supplies for its gas-fired power plant, a person with direct knowledge of the matter said.Earlier on Tuesday, The Economic Times reported the two companies were in talks to jointly set up an LNG terminal."Reliance Power keeps exploring various business opportunities. The company would not like to comment on specific business proposal," the utility said in an e-mail response to Reuters.A Shell India spokeswoman did not respond to phone calls seeking comment.Reliance Power is in talks with Shell to form a joint venture in which the two companies will hold equal stake and Kakinada port in the southern Andhra Pradesh state will own a minority stake, the source with knowledge of the matter said.The proposed venture will likely invest Rs 3,000 crore to set up an LNG terminal at Kakinada on India's east coast and would import and supply gas initially to Reliance Power's 2400-megawatt, gas-fired plant in Andhra Pradesh, slated to come onstream in 2012, the source said.India's gas-based power plants are facing uncertainty over fuel supply as gas output from the D6 block operated by Reliance Industries, off India's east coast, has declined, forcing power producers to look for other substitutes.(Reuters)
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