State-run Indian Oil Corp said petrol prices need to be raised as revenue losses from selling the fuel at government controlled rates have widened more than seven-fold this month, head of finance P.K. Goyal said on Tuesday.Revenue losses on petrol sales now stand at about three rupees (6 U.S. cents) compared to about 0.41 rupees a litre in the fortnight ending Aug. 31 due to an increase in Singapore spot prices of the fuel, he said."There is scope to raise petrol prices," Goyal told Reuters in an interview on the sidelines of the Asia Pacific Petroleum Conference (APPEC). "In the last fortnight (ending Aug. 31), our revenue loss was 41 paise a litre. It has now risen to about three rupees."State-run firms last raised petrol prices in mid-May by a record. The increase of 5 rupees a litre made the fuel costlier than in the world's biggest oil consumer United States, hurting local consumption. Slowing car sales in Asia's third-biggest economy has also curbed sales.The government last year gave state-run firms permission to fix gasoline prices on their own, while retaining control over diesel, kerosene and cooking gas to protect the poor and tame stubbornly high inflation. Still, these companies need a nod from the government to increase gasoline prices.State-run retailers get cash subsidy from the government and discount on crude and products purchased from state-run upstream firms to partly offset the losses.Refinery ExpansionIndian Oil is the nation's biggest refiner controlling about a third of the 4.17 million barrels per day capacity. It is building a 300,000 bpd refinery in Paradip in Orissa.The company aims to spend 120-130 billion rupees next fiscal year on new projects, a large part of which will go toward the completion of the Paradip plant. It is expected to spend 148 billion rupees this fiscal year.Pardip would start by June 2013 and will operate at full capacity in 2014, Goyal said. The plant will help the company meet the total demand for fuel from its own refineries. Currently, the volume of fuel it sells is higher than its refining capacity, forcing the company to buy some products from private firms such as Essar Oil and Reliance Industries Ltd."Presently, we are taking 5 million tonnes (annually) of fuel from private refiners," Goyal said. "After commissioning of Pardip we will stop that....we will be exporting some gasoline."For Pardip, IOC may look at buying crude from Venezuela, Mexico and Colombia, he said.Indian Oil processes 46-47 per cent of heavy crude, while the remaining is light. The company meets 75 per cent of its requirement through term deals, he said.Last year, IOC exported about 4.5 million tonnes of fuel, and shipments could fall to 3.5-4 million tonnes this fiscal year as naphtha consumption at its Panipat cracker may rise.Fuel Exports"In 2012-13, exports would be about 3 million tonnes as our naphtha cracker would stabilise and operate at full capacity," he said, adding local demand for the fuel is also increasing as the economy expands.IOC's total borrowings are at about 710 billion rupees and this could rise to about 900 billion rupees by December if it did not get cash compensation from the government.The company's board has approved raising the borrowing limit to 1.1 trillion rupees from 800 billion rupees and hopes to get shareholder approval on this by October, Goyal said.It may also raise debt, which may be a mix of local and foreign loans, in quarter ending March. (Reuters)
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Unfinished car shells rusting in a deserted factory in West Bengal lie testimony to flaws in a century-old land-acquisition law the government now wants to replace.Tata Motors was forced to abandon its Nano plant in 2008 after violent protests by villagers, who claimed they were forced off the land by the local government and paid inadequate compensation.But companies say an overhaul of the old law envisaged to bring clarity to an often murky part of doing business in India goes too far in favour of rural landowners and will slow development, capacity expansion and economic growth.The proposed new land bill means cost increases and project delays for developers, thanks to rules that will raise land values and compel them to provide new homes, jobs, monthly stipends and a cut of future profits to former landowners."This just isn't going to work for buyers," said Rupen P. Patel, managing director of Patel Engineering, an infrastructure firm specialising in power and road projects."It is going to make a lot of projects unfeasible both in the short and long term, and growth will be hurt."Billion-dollar projects stalled or abandoned due to protests or legal battles with angry former landowners have exposed the dicey world of corporate land acquisition in Asia's third-largest economy, sparking calls for a legislative fix.The proposed bill, which could become law in December, will ramp up the cost of land for developers and infrastructure firms by 20 per cent for small plots and as much as 350 per cent for parcels of more than 100 acres, companies and analysts say.That could push up total project costs by around 40 per cent, deterring investment in infrastructure needed to remove bottlenecks and sustain India's continued economic rise.The National Land Acquisition and Rehabilitation and Resettlement Bill has been championed by Rahul Gandhi, the scion of the left-leaning ruling Congress party, and is seen as helping an embattled government keep its strong rural vote base ahead of a 2014 general election.The bill was first proposed in 2007 and is set to replace legislation written in 1894 by the British.Despite criticism from companies, including the country's largest real-estate developer DLF, it is likely to be passed by both of houses of parliament.Big Projects, Bigger RisksBuilders of roads, power plants and other big projects are already burdened with rising costs and more expensive credit after 12 interest-rate hikes in 18 months."In practical terms, there can be a rub-off effect leading to a general rise in land prices leading to problems in acquiring land for project purposes leading to delay in project awarding," said a spokesman for Reliance Infrastructure, one of India's largest infrastructure developers.Infrastructure firms such as Hindustan Construction Co and Jaiprakash Associates, whose highway from New Delhi to the Taj Mahal city of Agra has been delayed over land-ownership hassles, are likely to be hit by the law."This bill is going to have a large negative impact on the big-ticket infrastructure projects," said Gaurav Pathak, analyst at Standard Chartered in Mumbai.The bill will be debated during the upcoming parliamentary session that begins mid-November.Millions of people move from rural India to its rapidly growing cities every year, exposing a chronic lack of affordable housing. Fast economic growth puts a huge strain on creaking highways, rail networks and power plants.But securing land for development has become increasingly thorny.A $12 billion steel mill being developed by South Korea's POSCO in Orissa was supposed to produce 4 million tonnes of steel this year, but protests by farmers has meant only half the land needed for the project has been bought so far.Companies, some of which have submitted their reservations on the bill to the government, want a more robust land-purchasing law to protect their investments, but say the government should stay out of business between private companies and willing sellers."If a private-sector purchase requires no help from the government, it should not be subject to the provisions of the bill," Rajeev Talwar, executive director of DLF, told Reuters.'Political-Corporate Nexus'Farmers, who make up the bulk of India's 1.2 billion population, worry that a political-corporate nexus works to cheat them of their land's true value."Land acquisition must be a just process, an equitable process, must afford adequate compensation to land owners, to livelihood losers," Jairam Ramesh, who wrote the bill as minister for rural development, recently told a news channel."There are severe infirmities in the manner in which land has been acquired. We are trying to correct a grave historical wrong."Thousands of farmers protested this May after claiming they had been paid 800 rupees ($16) per sq. metre by authorities in Uttar Pradesh for land that was resold to developers for 3,200 rupees per sq. metre.Gandhi joined the protest, bringing it nationwide attention and thrusting him at the forefront of efforts by the ruling party to pass the bill.The new legislation would see firms, which are currently not obliged to rehouse or employ landowners, avoid relief and rehabilitation fees for urban plots smaller than 50 acres and rural plots below 100 acres. The fees will apply to all sizes of government land acquisitions.With state and central governments typically acquiring large swathes of land for distribution to private developers for projects such as highways, housing and power plants, end-user costs and execution delays are likely to soar.Landowners who sell, on top of receiving up to twice the current value of their land, would be entitled to $42 a month for 20 years, new jobs and housing, and a share of 20 percent of any capital gains made in reselling the land within ten years."If this is adopted the way it is right now, it will make things harder for developers and slow down the process further, that's for sure," said Anshuman Magazine, South Asia chairman and managing director of CB Richard Ellis."We need a land acquisition act so there is clarity and a process is followed, but it must be balanced... it appears as it has been drawn up only from the farmers' point of view."Executives cite the example of business-friendly land-purchasing laws that have transformed Gujarat into a manufacturing and industrial hub, attracting billions of dollars of investment to its modernising cities.Japanese carmaker Suzuki Motor plans a $1.3 billion factory in Gujarat, Kyodo news agency reported last week.Ford Motor Co and PSA Peugeot Citroen also plan factories in the state where Tata found a home for its Nano production line after fleeing West Bengal."Government and business need to work together for the benefit of landowners," Kumari Selja, minister for housing and urban poverty alleviation, told a real-estate conference this week."This bill will give the industry a human face."(Reuters)
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On 17 August, Coal India (CIL) de-throned Reliance Industries (RIL) as India's most valuable company by market capitalisation. Though the reign at the top was to last only a few days — on 24 August, CIL has slipped to number three, behind RIL and ONGC — it was a pointer to how bullish investors had become about the black mineral.Actually, the interest in coal has been rising for the past few years. Some of corporate India's biggest names have been on a shopping spree for coal assets around the world. Last year, Adani Enterprises spent a whopping $2.7 billion to pick up coal blocks in Australia's Linc Energy. Tata Power, Reliance Power, Lanco Infratech, the Jindal siblings Sajjan and Naveen, Essar and others picked up coal mines in Indonesia, Australia, South Africa and Mozambique. Collectively, they have spent about $8 billion over the past four years.Meanwhile, around the world, coal prices — both thermal as well as coking coal — have been fluctuating. After peaking in 2008 during the great commodity bubble, coal prices slumped, along with those of most commodities. But after a steep drop in early 2009, prices started hardening again in 2010 and by early this year, coal prices were touching or coming close to their 2008 highs. Thermal coal prices almost doubled while coking coal prices went up even faster.Meanwhile, stockmarket investors in India have also taken note of coal. Till CIL listed last year, avenues for investing in coal were limited for equity investors in India. But in 2010, when the company went for its initial public offering (IPO), it raised about Rs 15,000 crore and its offer was over-subscribed 15 times, showing the pent-up demand. CIL, being an averagely efficient public sector company, had nothing much to recommend but for one thing — it had the virtual monopoly for coal mining for commercial purposes in India. It had been allocated coal mines with estimated reserves of 65 billion tonnes of thermal coal. More importantly, the government of India allows only CIL to mine and sell coal — all other companies with coal mines allocated to them have to use the mineral for captive purposes only.According to most analysts, coal demand and, hence, coal prices are only going to rise because the existing demand-supply mismatch is only going to get worse. According to the BP Statistical Review of World Energy 2011, global coal production grew 6.3 per cent between 2009 and 2010, while consumption rose by 7.6 per cent. In India too, the rapidly rising demand is seeing an increasing dependence on imports. Coal imports this year are estimated to be a whopping 84 million tonnes, a figure likely to double within two years. According to data available with the commerce ministry, as much as $8,183.38 million was shelled out in 2009-10 for importing coal. In 2011, it has already reached $6,993.69 million.Even analysts are exhorting investors to put money in coal, expecting the next great bull-run to happen in this commodity. The US-based investment research firm Money Morning recently brought out a report The Commodity Boom of 2011: Coal is the New Gold. It was not the only one. (In 2010, shortly after CIL's IPO, the Indian minister in charge of the coal ministry made a statement asking investors to stay with CIL despite its soaring stock prices, because "Coal India is Gold India".)But coal is one of the more abundant minerals in the world — proven reserves are estimated to be 860 billion tonnes. So why is there so much of a rush to secure supplies suddenly?The answer lies in three factors — the soaring power demand in India and China, the growing worldwide steel production, and finally, the increasingly stringent environment regulations. Between them, they are ensuring that demand for coal rapidly outstrips supplies.The Great Power GameAs China and India set scorching growth rates, the demand for electricity in these two countries is also rising dramatically. In turn, that is fuelling the massive appetite for thermal coal — the kind that is required for power plants. break-page-breakDespite an increase in interest to find viable alternative fuels for electricity generation — solar, nuclear, wind, wave or even the relatively clean fossil fuel gas — there is no substitute to coal as yet, says James O'Connell, managing editor at global energy information company Platts. He says that for years, China was building one medium-sized coal fired power plant every week for several years as it almost doubled its national grid to 1,000 GW (1 million MW). India's is 177 GW.The World Coal Association says coal-fired plants generate 41 per cent of all the electricity produced in the world. Coal is the primary fuel for 49 per cent of the power generating capacity in the US (79 per cent), China (79 per cent) and India (69 per cent).Till 2006, the global coal market saw some sort of equilibrium between demand and supply because China used to actually export coal. From 2007 onwards, its own rising demand for coal in its power plants saw the Middle Kingdom enter the global markets as a buyer aggressively. In 2009, China became a bigger consumer of electricity than the US, according to the International Energy Association (IEA). It also became one of the biggest importers of coal.India, though far behind the two leaders, is also seeing an exponential rise in its power generation capacity. Over the next four years, power generation in India is projected to rise from the current 177 GW to 300 GW. Of this, roughly 70 per cent of the new generating capacity will come from coal-fired plants. A policy brief by Teri (The Energy and Research Institute) on coal says each 2,000 MW of power generated through coal needs 10 million tonnes of that fuel annually. Add it up and you get an additional demand for 424 million tonnes of coal annually.Tata Power, Reliance Power, Lanco Infratech and the Adanis are setting up mega power plants. And most of these depend on coal as fuel, which explains why these companies are also moving to snap up assets overseas.Doesn't India have big reserves of thermal coal? And shouldn't domestic production be able to ramp up to meet the power plants being set up? Theoretically, yes. Practically, the answer is no. India's estimated coal reserves are 267 billion tonnes (as on 1 April 2009), of which proven reserves are 105.82 billion. Various other studies, however, peg the extractable reserves in India at about 70 billion tonnes.Much of the Indian coal reserves are inferior grade thermal coal, which can be used by power plants but not by the steel industry, which requires a higher grade coking coal.Indian power plants get their coal supplies mainly from two sources. The first is CIL, which is mandated to sign a Letter of Assurance (LOA) when a power project is cleared. If the power project actually meets its milestones, the LOA gets converted to a fuel supply agreement.According to Coal India chairman and managing director N.C. Jha, since 2007, CIL has signed LOAs of 600 million tonnes with entrepreneurs planning to set up power plants. While signing the agreements, CIL had made two assumptions. Its coal production, which was 295 million tonnes in 2007, would ramp up. And two, many of the LOAs would not fructify into supply agreements because plants would not be able to meet milestones.Unfortunately for Jha, both assumptions have been proved wrong. First, almost all the plants have met their milestones. More importantly, CIL has not been able to ramp up supply. In FY2011, it produced 431.32 million tonnes of coal — a negligible increase over the previous fiscal's 431.26 million tonnes. This is largely because it failed to get environment clearances in time for many of the areas it was allocated coal mines. And as he explains, CIL has not been able to ship even all that it managed to produce due to logistic problems. To move coal to buyers, CIL needs rakes from Indian Railways. The supply of rakes has been lower than CIL's requirement. In essence, a triple whammy for CIL and its buyers.For private power plants, the other big source of coal is often the captive mines allocated to them under government policy. But again, many companies that have received captive mine licences find that it is easier to get these licences from the coal ministry than to get the environment clearances. There is worse to follow. If the company with a captive mine licence fails to start mining within a set period of time because it fails to get clearances, the mine is taken back by the coal ministry.Coal minister Sriprakash Jaiswal says things will get resolved quicker now that there is a new minister for environment and because a group of ministers has been set up to sort out the captive coal mining problem.However, power producers realise that imported coal is a hugely expensive option. Domestic thermal coal, which is inferior in quality, costs $30 a tonne. Importing it means paying $130 a tonne, says Ravi Sharma, CEO of Adani Power. That would also increase the cost of power being generated — and the inevitable domino effect on a whole host of industries. Still Adani is better off when it comes to importing coal. Its coal assets are in Queensland, Australia, which is close to the port and can be shipped easily. Moreover, Adani has its own ships which can bring in the coal, and most importantly, it has its own port in Mundra, where it can be downloaded. And its power plants are close to its own port anyway.But that is not an option available to most other power producers, Sharma points out.break-page-breakThe Steel StoryWhile power plants can still utilise coal of Indian origin, most steel plants find they need to import coal because coking coal is simply not available in India. According to E&Y, of the total proven reserves in India, barely 13 per cent are coking coal reserves.On the other hand, demand is going up as Indian steel production ramps up rapidly. Between 2010 and 2014, Indian steel production is estimated to rise by 40 million tonnes. Coal demand by the Indian steel industry has gone up by a similar percentage.As one Tata Steel senior executive says wryly: There is no shortage of iron ore assets around the world. But every steel producer is fighting today for coal assets. The problem, says V.R. Sharma, deputy managing director and CEO (steel business) at Jindal Steel and Power (JSPL), is while demand is going up, there are only a few suppliers in the world, and hardly any assets that can be bought easily. JSPL's current coking coal utilisation is 0.8 million tonnes per annum, which will soon go up to 2 million tonnes per annum, he says. JSPL is putting up a 3.5-million tonne steel plant in Jharkhand, expanding its Chhattisgarh plant from 3 million tonnes to 5 million tonnes, and planning a plant in two phases in Orissa, each phase being 3 million tonnes. As these plants come on-stream, they will require coal — and Sharma is worried because coal prices are rising all the time.JSPL has coking coal blocks in Mozambique and South Africa, but will also need imports to reach its 10-million tonne production mark by 2015. "But coking coal prices have already hit $320 per tonne — we do not know what will happen in the future," says JSPL's Sharma."The coking coal business has largely gone to four or five companies — Rio Tinto, BHP, Xstrata, etc." he says. "The mines that are not owned by them are in remote areas from where it is very difficult to transport them."Sajjan Jindal's JSW is also facing similar problems, though they have managed to acquire mines in West Virginia and South Africa which are fine for their immediate coking coal requirements. Seshagiri Rao, joint managing director and group CFO, JSW, says: "Coal prices — both thermal and coking — have gone up sharply over the past two years. Coking coal used to be $128 per tonne two years ago; we are paying $310 per tonne currently." Since steel is a cyclical business, coking coal demand goes up and down according to steel production. Globally, steel production had fallen in late 2008 and all of 2009 as the global economy went into a slowdown. That resulted in a fall in coal prices too. By 2010, steel production had started climbing again, causing prices of coking coal to rise sharply.The Hunt For AssetsGiven their ever-spiralling requirements, China and India have emerged as the biggest players in the global coal assets business, though they face stiff competition from global mining majors such as Rio Tinto and BHP Billiton.Rio Tinto, for instance, operates seven large coal mines in Australia and one in the US. This year, it acquired Riversdale in Mozambique. The company is also looking for more opportunities globally. "We expect strong demand growth in China and India to continue and as our growth projects come online, our geographic sales profile will be further expanded," says a Rio Tinto Energy spokesperson.According to Mudit Parashar, partner, Ernst & Young, Chinese companies have spent close to $5.1 billion ($4.7 billion in 2009 and $367 million in 2010) in the past two years on the overseas coal sector. Yanzhou Coal Mining Co.'s merger with Felix Resources in Australia for about $2.5 billion is one of the top global deals made so far. But unlike India, their investments have usually been driven by state-owned companies. The Asian giant is already generating 1,000 GW, and it is building even more power plants. N.C. JHA, CMD, COAL INDIA "Acquisition by private players will not hit our revenues in the long run." (BW pic by Ritesh Sharma) Not that Indian companies are far behind. Tata Power acquired Kati Prima Coal and PT Abutment (Indonesia), while Lanco Infratech acquired Griffin Coal in Australia. Monnet Group acquired PT Sarwa Sembada Karya Bumi for $24 million. Commenting on the deal, Sandeep Jajodia, executive vice-president and managing director, Monnet Group, said: "We plan to mine more coal than required for our captive needs, for selling in the open market which will be a long term source of revenue, as there seems to be good potential for the reserves to go up substantially."There are, however, only a few countries where buying coal assets makes sense. Australia is the best because of its big mines, high quality coking coal, and its ‘deal friendly' government. Martin Ferguson, minister for resources and energy, Australia, says, "Australia welcomes foreign investment, including from India." He goes on: "According to the most current annual figures, the Foreign Review Investment Board (of Australia) had approved $1.6 billion worth of investment from India across all industry sectors. The majority of this was in mineral exploration and development." He also says that Australia has no plans to restrict export of coals.Indonesia used to be a favoured destination for Indian companies till recently, primarily because of its proximity and good quality coal. The Indonesian government has recently put in restrictions on the export of coal, which is worrying several companies that have bought into coal assets in the country. Without being able to import coal from Indonesia to India would mean sitting on expensive assets which cannot be easily utilised. Mozambique and South Africa also have decent quality coal mines. But take away these countries and there are problems galore. In the developed nations, getting environment clearance for new coal mines is almost impossible, say analysts. In less developed countries, coal assets are often in remote areas which make it impossible to bring it to India easily.break-page-breakIt is not just the private players, which are looking at buying assets abroad. CIL is looking to acquire both brownfield (existing mines) as well as greenfield (virgin mining contracts). "This year, we have a budget of almost Rs 6,000 crore to buy assets abroad," says Jha.It has not had much luck with brownfield projects yet. Asking prices are too high in most cases, says Jha. CIL's board does not want it to buy assets which will give less than a 12 per cent rate of return. Meanwhile, CIL has snapped up two greenfield projects in Mozambique where it is planning to start exploring soon. While it is shopping for assets on its own, it is also one of the partners in International Coal Ventures (ICVL), floated by a consortium of coal buyers to hunt primarily for global coking coal assets. Other partners in ICVL include NTPC, SAIL, NMDC and RTNL. ICVL has a war chest of Rs 10,000 crore, but has not managed any buys so far. It is hoping to get some deals soon. TYPES OF COAL THERMAL COAL: Also known as steam coal, it is used predominantly by the power sector and by industries requiring electricityCOKING COAL: Also called metallurgical coal, it is used by the steel industry both as fuel and a reducing agent in blast furnace Environmental HurdlesThe big problem that all companies face is not the sheer shortage of coal under the ground, the problems associated with mining it. Coal mining is either surface (open cast) or underground (deep mining).Open cast mining can only be practised where the coal deposits are close to the surface. It is considered the more efficient because it allows for better exploitation of the mines and evacuation of the coal.In India, the US and Australia, open cast mining forms the bulk of coal mining. In India and Australia, 80 per cent of the coal is mined through the open-cast method, while in the US it is 67 per cent. Open cast also means wide scale destruction of forests.In India, the environment ministry has imposed strict conditions such as paying compensation for deforestation. But even that does not satisfy many environmentalists who point out that afforestation in other areas cannot bring back lost biodiversity.The bigger problem is that in many cases, the environment ministry has simply marked vast tracts with possible deposits as ‘No Go' areas — in other words, areas where mining cannot be conducted. That, in turn, has led to a running battle with the coal ministry. As of December 2010, almost 203 blocks with 660 million tonnes of annual coal reserves (estimated) were classified as No Go areas.Yet, the Indian environment ministry is not the only one taking a hard stance against the effects of mining on the environment. Even its biggest supporters agree that coal is essentially a "dirty" fuel. Its mining causes environmental damage — and so does its use. Coal-fired power plants in general are more polluting than power plants that use gas as fuel.Which is why, despite all the coal reserves across the globe, barely a fraction can be actually exploited.Yet nobody seriously believes that there will be any substitutes to coal in the short run. And until India and China start moving away from coal as their primary fuel — and there is little evidence that they even want to — as O'Connell of Platt says: Coal is King. INTERVIEW"Importing Coal Will Be Quite Expensive" SRIPRAKASH JAISWAL, Minister of Coal (BW pic by Ritesh Sharma) What is being done to mitigate India's coal shortage?Coal production could have increased as fast as demand if we did not have so many problems. The biggest problem relates to land acquisition. Then there are law and order issues and Naxalism. Of late, forest and environment clearances have become a huge issue. As a result, we were unable to increase coal production. We sustained and maintained production, which in itself is a big achievement. Ever since the group of ministers (GoM) was set up and the leadership in the environment ministry changed, it seems that we will find solutions to these problems. We hope that this year there will be 5-6 per cent growth in coal output. Are there any problems with linkages?There is a problem with the railways. We are not getting as many rakes as we need. We get 172 rakes, but need about 190 rakes. There has been an improvement since last year and we hope things will improve further. Indian companies are increasingly moving abroad to meet coal needs. Is that a good thing?Our coal production is not enough to fulfil the needs of private companies. The shortfall keeps increasing every year as more players are setting up power plants. If we cannot meet current requirements, how can we meet requirements a year from now? This is why companies have been asked to go abroad for coal properties. They need to do it at a faster pace. Any impending threat to energy security?The non-availability of coal can pose a problem for energy security in the country. The imported coal for power production will be expensive, but we will have to bear it. Our first attempt is to exploit coal properties to the hilt. What I requested the GoM is that it will not be an intelligent move to let crores of tonnes of coal remain untouched so as not to destroy forests and hence, increase our dependence on imports. It would be a smarter step to cut down forests for mining with the condition that four times as much afforestation must be carried out to replace the loss. yashodhara(dot)dasgupta(at)abp(dot)in(This story was published in Businessworld Issue Dated 05-09-2011)
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In a landmark judgement on 16 August, the Competition Commission of India (CCI) imposed a penalty of Rs 630 crore on India's largest real estate builder, DLF, for abuse of its dominance and for imposing "arbitrary, unfair and unreasonable conditions" on apartment allotees of one of its properties located in Gurgaon, NCR. It is a wake-up call for the entire real estate sector. Builders — both reputed and dubious — use every legitimate and illegitimate trick in the trade, while their profit margins have been known to climb to 36-42 per cent in the past, higher than that of information technology.At one time, buying a house was a truly gratifying process. But as the pressure to provide housing began to rise, two things happened. One, seeing the burgeoning demand and the opportunity to cash in, many new and often inexperienced companies entered the business. Two, people started buying apartments, mostly in suburbs, and satellite towns sprang up. Some were planned, while others were pushed by builder lobbies. Delhi got Gurgaon and Noida, Mumbai got Navi Mumbai and Vasai Virar, Bangalore got Whitefield, Sarjapur and Yelahanka, Kolkata saw Salt Lake and Chennai saw development on the Old Mahabalipuram Road.Some of the lesser-known or dubious developers that came up during this period were in a hurry to scale up and cash in on the boom. Land being a state subject helped them exploit the system as did corrupt politicians, lax municipal bodies and ignorant customers. JAMES ABRAHAM, Gurgaon, Abraham leads World Spa Action Group, which is seeking compensation for buyers through legal means (BW Pic By Bivash Banerjee) Real estate, like other sectors, goes through booms and busts. In a boom, complaints from home buyers are fewer since most investments are growing. It is during a bust that most buyers notice some of the malpractices that many developers indulge in.But today the extent of malpractices has grown to the extent that many buyers are up in arms. Blogs, websites and consumer forums filled with buyer grievances have sprung up. Complaints have multiplied at a faster pace than the demand for housing. Late, Late, LatePerhaps the biggest complaint against almost all developers is the extent of delays and the abysmal penalties paid to compensate for these. Developers cite various reasons for the delays: scarcity of funds (tight lending norms), labour problems and high input costs.While these may be true, buyers are in no mood to listen. What irks them the most is the meagre penalty amount associated with delays. The standard penalty in a buyer's agreement is Rs 5 per sq. ft per month, which brokers and buyers say is "peanuts". In some cases, developers have doubled the penalty to Rs 10 per sq. ft per month, but this, too, is very little. "These penalties are meant to deal with reasonable delays of a few months or at most a year. When the delays extend to five years, this is just an excuse to raise very low-cost capital with no RBI or regulatory body providing oversight," says James Abraham, who leads World Spa Action Group, which has been formed to pursue compensation by legal means. Brokers feel penalties should cover the interest costs borne by buyers to some extent and should be at least 10 per cent. They point to projects such as MGF Vilas in Gurgaon (it was launched in 2004 but is still incomplete).Take Rakesh Seth's case. He bought a flat in 2005 from Unitech in Unitech Cascades, Greater Noida. The contract drafted by the company says any delayed payment by the buyer would attract an interest rate of 18 per cent per annum. But if Unitech delays construction, the penalty is only Rs 5 per sq. ft on a price of Rs 2,475, or less than 2.5 per cent per annum. "This is grossly unfair to start with," says Seth. But his story does not end there. After over a three-year delay, Seth was informed by the developer that the flat was ready and that he should make the full and final payment. He did this in April 2011 and got legal possession. Physical possession was to be given in early June 2011. The company took two years' maintenance charges upfront starting June 2011 without which, they insisted, they would not accept the final payment and give possession. SANJAY BHASIN, Gurgaon (BW Pic By Tribhuwan Sharma) Now, at the end of August, Unitech executives have told Seth that physical possession will not take place before November or December 2011. Says Seth: "That's six months instead of six weeks! I wrote to them and called, but they are unwilling to give in writing as to how they will compensate me for the delays."On being contacted by BW, Unitech replied: "We have already offered possession in four towers in Unitech Cascades. Also, the penalty being paid is more than the prevailing market-rental in the vicinity."Some developers announce many new projects at a go in an attempt to ‘launch' their way out of a cash crunch. Says Abraham: "There should be a simple regulation that no developer (or related company) can launch a new project if any of their previous projects are delayed by more than 18 months." What You See Is Not What You GetThe entire marketing of a project, right from its soft launch, is misleading. Says Ajayya Gulati of Future Gold Properties, a Gurgaon-based real estate agent: "Advertisements misrepresent the facts. The developers typically show a massive green area covered with trees and make you feel you will spend the rest of your life lying in a hammock. The reality is you are surrounded by skyscrapers and slums."A sample flat, for instance, uses the best materials, but not so for the real flats. Unitech's World Spa is an example. Recently, the roof of a 14th floor apartment crumbled and the tenant had a narrow escape. Says Jyoti Pande Lavakare, a Delhi-based columnist and owner of the flat: "The quality of construction is abysmal." But Unitech denies allegations of poor quality. Ray Of Hope The biggest angst for buyers in the past has been that in the absence of any regulator, they have simply had no recourse and are at the builder's mercy. Real estate remains a state subject and out of the Centre's control. In most states, builders' lobbies are in cahoots with local politicians and bureaucrats.But of late, the wind has been blowing increasingly in the direction of consumers. Says Vinod Sampat, a Mumbai-based advocate: "More and more decisions in consumer courts are going in favour of buyers. In fact, almost 70-75 per cent of the cases in consumer courts are being settled in their favour." Sampat says Maharashtra has started a ‘housing darbar' on the first day of every month, where senior government officials resolve disputes there and then. Some states have started expediting hearings for senior citizens. And since last week, the biggest ray of hope is the CCI which has been flooded with complaints ever since the DLF-Belaire judgement was announced. Sanjay Bhasin, president of Belaire Owners Association, says his phone has not stopped ringing since the judgement came out with pleas for help. If the CCIs and the Bhasins of the world come together, the unscrupulous elements of the real estate sector will have to answer. break-page-breakIn Bangalore, the residents of a condominium being built by L&T ECC's construction division and Dinesh Ranka found that the area of the proposed site had shrunk — from 34 acres to 22 acres. The 12 acres were relinquished to the Bangalore Development Authority (BDA) without informing the buyers and the residents. "We were blissfully unaware of this when we bought the property," says R. Raja Gopalan, president of Sugruha, the residents welfare association. He says this was not mentioned in the fine print and the company did not state this upfront when buyers were paying for the entire 34 acres.The builders have also failed to build an approach road to the apartment complex, as was promised in the marketing document. The 2,000-odd members of Sugruha took to the streets in April and have filed criminal complaints in the magistrate court and a writ petition in the High Court (to stop the BDA from building a commercial complex on the disputed 12 acres). There are five more cases pending against L&T in the civil court. Recently, the residents have taken the matter to CCI. "We have no way of telling whether even our title deeds are real," says Gopalan. R. RAJA GOPALAN, Bangalore, Gopalan is president of Sugruha, which has filed criminal complaints against the complex developers (BW Pic By Sanjay Sakaria) Another common complaint one hears from home buyers is ‘hey, where did that come up from?' The original master plan is often altered the moment a project starts to do well. In some cases, residents have found that they suddenly have a hotel within their complex or face the back of a mall. Towers and floors, too, spring up. So, if buyers were initially told there will be, say, 20 towers, suddenly they learn there are in fact going to be 25 towers within the same area. This was one of the major complaints in the DLF-Belaire case with CCI. In its original advertisement, DLF had claimed that each of the five multi-storeyed buildings would have 19 floors, a total of 368 apartments, and the construction would be completed within 36 months.However, in place of 19 floors with 368 apartments (the basis on which bookings were made), now 29 floors have been constructed. Says a CCI official who worked on the case: "Consequently, not only are the areas and facilities originally earmarked for the apartment owners substantially compressed, the project has also been abnormally delayed."Flexi-spaceA common problem buyers face is that the flat they buy "feels much smaller" than the square footage they have paid for. In some cases, the actual size of the flat is difficult to determine once the apartment has been handed over.Second, builders charge the flat owner for the super area as opposed to the carpet area. Also, the same amount is charged per sq. ft even though the super area does not have the same specifications and fittings as the carpet area. "The super area typically includes the lift area, and all common areas in the building, whereas the carpet area is really what is available to the owner. So if the ratio of super area to carpet area is very high, then the flat feels much smaller than was originally claimed," explains Gulati.Another blatant violation is the claim on common areas. While state regulations on this vary, in many states the common areas within a complex belong to the residents. But builders often retain the common areas and try to make a profit by selling the area commercially.In Haryana, for instance, the Haryana Apartment Owners' Act says common areas in a housing complex belong to the owners in an undivided manner. However, in most cases, the developers have retained the ownership rights and not passed it on to the residents' associations. This allows the builders to build more towers and apartments, claiming it as part of the same floor-area-ratio (FAR). In some cases, developers retain ownership of the common areas in the hope that FAR limits will be increased and then they can build more in the same colonies. "This is the logic they used recently to convert some of World Spa's green area into commercial shops and to claim ownership over the surface parking areas," says Abraham. He says the company is selling shops in areas which should actually belong to the residents. Many buyers have now got together to take legal action. "We are finalising legal advice. We are after various claims: stays, reparations, compensation," he says. Unitech, however, says it is not violating any conditions, and has, in fact, provided more amenities than it was required to.Dictating SalesIn a project, Amrit Shakti (Powai) by the Nahar Group, flat owners have been unable to sell their flats due to "exorbitant" transfer charges levied by the builder. The project was recommended by HDFC to several NRIs with the highest ratings. When some of the owners wanted to exit the project, the builder — since he wanted to control the price of the apartments — did not initially permit any brokers or prospective buyers to view the apartments. When this was allowed and a sale was agreed to, the builder "held the buyer and seller to ransom by demanding transfer fees that was 30-60 times the legally permitted fees", says one flat owner, who cannot be quoted as he has taken the company to court and the matter is sub judice. RAKESH SETH, Gr. Noida, Even after a three-year delay, Seth has not got physical possession of his apartment (BW Pic By Ritesh Sharma) Brokers say transfer charges is an area where builders extract their pound of flesh. There are no norms on how much ‘transfer fee' should be. There have been cases where the seller has paid Rs 10-15 lakh in transfer charges when the transfer is nothing more than a change in the books of the builder. "This should at most be Rs 10,000 towards administrative costs. There is no justification in the transfer charges being a percentage of the final sale price," says Gulati.Ray Of HopeThe biggest angst for buyers in the past has been that in the absence of any regulator, they have simply had no recourse and are at the builder's mercy. Real estate remains a state subject and out of the Centre's control. In most states, builders' lobbies are in cahoots with local politicians and bureaucrats.But of late, the wind has been blowing increasingly in the direction of consumers. Says Vinod Sampat, a Mumbai-based advocate: "More and more decisions in consumer courts are going in favour of buyers. In fact, almost 70-75 per cent of the cases in consumer courts are being settled in their favour." Sampat says Maharashtra has started a ‘housing darbar' on the first day of every month, where senior government officials resolve disputes there and then. Some states have started expediting hearings for senior citizens. And since last week, the biggest ray of hope is the CCI which has been flooded with complaints ever since the DLF-Belaire judgement was announced. Sanjay Bhasin, president of Belaire Owners Association, says his phone has not stopped ringing since the judgement came out with pleas for help. If the CCIs and the Bhasins of the world come together, the unscrupulous elements of the real estate sector will have to answer.With inputs from Gurbir Singh and Vishal Krishnaanjulibhargava(at)gmail(dot)com(This story was published in Businessworld Issue Dated 05-09-2011)
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UK's Cairn Energy or its successor Vedanta Resources may have to bulldose Cairn India board if they were to accept conditions set by the government to clear their USD 9-billion deal.The board of Cairn India (CIL) has on two occasions rejected oil ministry conditions that royalties paid by ONGC on its all important Rajasthan oilfields, be cost recoverable from oil sales saying this was against contractual provisions and not in the interest of the company and its shareholders.Also, CIL is against Rs 2,500 per tonne cess being imposed on it saying contractually ONGC, like in case of royalty, is responsible for payment of the levy. Cost recovery of royalty and payment of cess are preconditions Cabinet set last week for approving Cairn Energy selling sake in CIL to Vedanta.But now if the its parent (Cairn Energy) or Vedanta were to accept these condition, a serious corporate governance issue will arise for CIL, analysts tracking the deal said."Can CIL compromise other shareholders' interest just because one shareholder (Cairn Energy) is selling its stake to other (Vedanta)," one of them asked."I think there is a larger corporate governance issue involved. It is true that it is a corporate transaction involving share transfer between two entities. But can someone sell a majority stake in a company without taking that company into confidence," another person asked.Accepting the royalty condition alone would mean about USD 900 million dent in revenues of Cairn India annually, they said, adding either Cairn Energy will have to convince CIL board into accepting the conditions or Vedanta when it takesover the company overrule the board.Cairn Energy had publicly voiced concern over both the preconditions and Vedanta opposed them in a January 28 letter to the then Oil Secretary S Sundareshan.Stating that acceptance of the conditions could be challenged by CIL's minority shareholders under provisions of the Companies Act, Vedanta CEO M S Mehta wrote Vedanta would become just a shareholder of CIL after completion of the deal."CIL and its subsidiaries are the signatories to and counterparties to the various Production Sharing Contracts (PSCs) entered into the Government of India. As Vedanta would not be a party to any of these contracts, and would be merely a shareholdes of CIL, it would be neither possible nor appropriate for Vedanta to agree to any conditions which directly impacs their terms - particularly as this impacts the rights of minority shareholders," he wrote. Emphasing that CIL was an independently run listed entity with an independent board that was duty bound to act in the interests of all shareholders, he said the riders "would involve a significant departure from the terms of the existing contracts entered into by CIL and government.""We also understand that these (conditions) would have a material adverse impact on CIL's value and thus negatively impact the interests of all shareholders, including the minority shareholders. Acceptance of any of these proposals is likely to be challenged by CIL's minority shareholders under the provisions of the Companies Act. As such, you will kindly appreciate that we are not in a position to accept these," Vedanta Resources CEO M S Mehta wrote in the two-page letter. Analysts said if Vedanta accepts the government preconditions, then it will have to overrule the board of Cairn India and make it do a U-turn into accepting them. While an e-mail sent to Vedanta remained unanswered, Cairn India spokesperson was unavailable for comments.Cairn Energy has always maintained that it is just a shareholder in CIL and the expertise, skills and management vests in Cairn India. So can the UK firm or its successor impose conditions which are detrimental to Cairn India's interest, an analyst asked.Another analyst said minority shareholders can take the board of directors of Cairn India to court for jeopardising their interest by compromising on their interest.Of the four independent directors on Cairn India, two of them have conflict of interest (they are also on the board of Vedanta Resources). It is now the job of the independent directors to protect minority shareholders' interest. The Cabinet Committee on Economic Affairs (CCEA) had last week decided to give approval to the USD 9-billion deal subject to Cairn/Vedanta allowing royalties from Cairn India's prize Rajasthan oil fields to be added to project costs and recovered from sales. Also, it has to end arbitration proceedings against the government disputing its liability to pay cess, or tax, on its 70 per cent share of oil from the fields.Third, the deal has to be approved by state Oil and Natural Gas Corp (ONGC), which has a stake in all three of Cairn India's producing assets and five of its seven exploration assets, waiving its pre-emption rights. And finally, the acquisition needs security clearance. Cairn Enegy is selling 40 per cent stake in Cairn India to Vedanta. Sources said while Cairn India will not have to pay any royalty and state-owned ONGC will continue to pay royalty on its behalf to the state government but the levy will be added to project costs that is first deducted from oil sale revenues before profits are split between partners and the government.Acceptance of this condition by Edinburgh-based Cairn Energy or its successor London-listed miner Vedanta will lower Cairn India's profit over the approved life of the life lasting 2020 from $7.43 billion to $5.75 billion.Sources said the lower profits have been calculated at approved peak output of 175,000 barrels a day and considering a crude oil price of $70 per barrel. Cairn also has to agree to ending arbitration proceedings against the government disputing its liability to pay cess, or tax, on its 70 per cent share of oil from the Rajasthan fields. Cairn India currently pays Rs 2,626.5 per tonne cess under protest but unlike royalty, treats it as a cost recoverable item.The government take from the RJ-ON-90/1 block will come down to $3.6 billion from $5.188 billion as a result of royalty being made cost recoverable, sources said.Also, the deal has to be approved by state Oil and Natural Gas Corp (ONGC), which has a stake in all three of Cairn India's producing assets and five of its seven exploration assets, waiving its pre-emption rights. And finally, the acquisition will need security clearance.ONGC pays royalty on its 30 per cent share of oil from Rajasthan fields as well as on operator Cairn India's 70 per cent take. It will contractually continue to pay royalty on all the oil produced from Rajasthan but this will be added to project cost, which is first deducted from revenues earned from sale of oil before profits are split between partners.Cairn last week cut the price it was demanding from Vedanta and removed a noncompete condition. Vedanta will now pay USD 6.02 billion for a 40 per cent stake in Cairn India at a reduced price of Rs 355 per share, down from the original USD 6.84 billion.Last August, London-listed, India-focused miner Vedanta proposed to buy 51 to 60 per cent of oil and gas explorer Cairn India for up to $9.6 billion in cash, but the deal has been delayed due to a lack of government and regulatory approvals.Even before Vedanta made its move, ONGC had demanded that royalties be added to costs and recouped through sales, citing provisions in its contract. After the deal was announced, it maintained it had pre-emption rights and that the acquisition could not go ahead without its agreement.The CCEA last week overruled objections to ONGC's demand by Cairn/Vedanta and held these will have to be met before the approval is granted.Both Cairn and Vedanta disputed royalty being made cost recoverable as it would dent Cairn India profits. They also opposed the need for partner consent for the transaction.Vedanta has steadily built a position in Cairn Energy this year by acquiring a 10.4 per cent stake from Malaysia's Petroliam Nasional Berhad, or Petronas for $1.47 billion (Rs 331 a share). It also bought 8.1 per cent stake through Sesa Goa's open offer to shareholders, which closed on April 30, for $1.2 billion. The open offer was made at Rs 355 per share (original acquisition price of Rs 405 minus Rs 50 per share non-compete fee).(PTI)
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The Organization of the Petroleum Exporting Countries, in a monthly report on Tuesday, also said the group's own production has surged to more than 30 million barrels per day, an increase that comes just as the economic outlook is weakening."Dark clouds over the economy are already impacting the market's direction," OPEC said in the report. "The potential for a consequent deterioration in market stability requires higher vigilance and close monitoring of developments over the coming months."World oil demand will increase by 1.21 million barrels per day (bpd) in 2011, OPEC said in the report, 150,000 bpd less than expected last month. Growth next year was lowered only marginally, by 20,000 bpd to 1.30 million bpd.Brent crude slumped to the lowest in six months on Tuesday, dipping below the $100-mark briefly after a U.S. credit downgrade intensified concern about a global slowdown in demand for energy."Economic worries along with high oil prices have affected OECD oil demand," OPEC said. A revised report received minutes before its embargoed release time of 1130 GMT removed the words "high oil prices" from the sentence."Oil demand in the OECD is expected to continue its contraction after a temporary rebound last year."OPEC, which pumps more than a third of the world's oil, is the first of the three most closely watched oil forecasters to update its supply and demand estimates this month.The 2011 demand growth forecast from OPEC is already lower than that of the U.S. government's Energy Information Administration, which predicts a rise of 1.43 million bpd. The EIA releases its August report later on Tuesday.OPEC's latest 2011 demand growth forecast is similar to that of the International Energy Agency, adviser to the United States and 27 other industrialised countries, which issues its next report on Wednesday. (Reuters)
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State-run explorer Oil and Natural Gas Corp's follow-on share sale, valued at around $2.5 billion and delayed by more than six months, is likely to launch on Sept 20 and will close on Sept 23, sources said on Monday.The share sale, first scheduled for March, has been postponed several times this year due to turmoil in global markets and lingering concerns over government fuel subsidies, part of which are borne by ONGC.At the current stock price, the sale of a 5-per cent stake by the government would fetch nearly $2.5 billion but the shares are widely expected to be issued at a slight discount as the government looks to attract investors in a volatile market.ONGC is likely to file the prospectus for the public offer with the markets regulator later on Monday, the sources said, declining to be identified as the matter was not public yet.Bank of America Merrill Lynch, Citi, HSBC, JM Financial, Morgan Stanley and Nomura are the managers on the issue.The offer is part of a broader plan to raise about $9 billion from share sales this fiscal year, an effort aimed at plugging India's fiscal gap and generating funds for schemes for the poor.Last year, the government raised $3.4 billion from a blockbuster initial public offer of Coal India, the world's largest coal miner.In May, India raised more money in a $1 billion share sale in Power Finance Corporation, the only divestment so far this fiscal year. The government received heavy interest from foreign investors for both those offers.Indian companies raised $7.1 billion in equity in the first half of 2011, down 42 per cent from the year-ago period, Thomson Reuters data showed.The BSE Sensex is down nearly 19 per cent so far this year, making it one of the world's worst-performing markets.ONGC, the third-largest listed firm in India by market value, has declined more than 20 per cent so far in 2011.The company posted a 12-per cent rise in first quarter profit, helped by higher crude oil and gas prices, but has seen its profit growth slow in recent quarters due to state-set fuel prices, which are lower than market rates.(Reuters)
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Modern airport designs often incorporate extremely large areas of glass facades; probably partly due to the overall trend in construction industry driving ever more glass on building façades, and in part due to the architect's desire to afford passengers unobstructed views on the surroundings, as well as on planes landing and taking off.One of the first considerations that typically comes to mind when designing the glazed façade of an airport is that spaces tend to be very large and are thus difficult to heat up in winter and cool down in summer. The façades should be designed in such a way as to minimise heat flow, thus reducing the heating or cooling needs. This can be done in a variety of ways, depending on climatic conditions.In areas where there are large seasonal variations, with cold winters and hot summers, thermal conduction through the façade represents an important factor to be controlled. This is measured by a performance parameter called U-value which represents how much heat enters (or exits) the building by unit of façade, based on the temperature difference between the inside and the outside of the building. There are several ways of controlling the U-value of the building. The first step is to reduce the wind-to-wall ratio. Spandrel panels are typically insulated and thus offer very low U-values. This particular technique may not be compatible with the architectural design, though. The second technique consists of adopting double-glazed units (DGUs) for vision areas. DGUs have a much lower U-value than monolithic glazing (less than half, typically). When this is not sufficient, a third technique involves filling DGUs with a rare gas such as argon, which further lowers the U-value for even greater efficiency.Another aspect of heat losses through the façade is related to radiant heat (infra-reds). To minimise this type of heat loss, glazed panels can receive a layer of ceramic frit (a type of permanent paint) that helps reduce heat flow through the façade. The colour and density of the frit needs to be selected judiciously so as to not hamper outward view through the glass. One alternative that can be used in combination or independently from the one above is to use low-emissivity glass. This type of coated glass helps reduce infra-red transmission, while allowing natural visible light to enter the building. Low-emissivity coatings incidentally also help reduce the U-value discussed above, which represents a double benefit of this approach. Glass colour also plays an important role in this respect. Green and blue glass generally perform best (more light than heat flows through), while grey glass is the worst overall (more heat comes in than visible light). As a last resort, or if mandated by aesthetics, external shading devices can also be used on the façades. While it is important to control heat and visible light, reflectivity can make or break the façade of an airport. If the façade material is too reflective (glossy metal cladding, reflective glass, etc.), it may affect pilots landing and taking off, as well as controllers in the control tower. This represents a potential danger, thus needs attention. It may not be very easy to control with complex, articulated façades, since reflectivity varies with the angle at which the surface is viewed.One other important consideration when designing the façade of an airport is acoustic control. Planes can generate very high noise levels. Sound transmission through the façade should be controlled to reduce this noise to acceptable levels within the airport. Fortunately, airports are typically fairly noisy places, given the high density of people and the level of activity inside, thus the noise criteria is not extremely stringent. Typically, laminated glass or DGUs are sufficient to achieve acceptable noise levels internally. If higher levels of noise cut-off are required, then it is possible to consider laminated DGUs, which offer outstanding noise-reduction performance. The actual solution varies from airport to airport, depending on local regulations, as well as the expected size of aircrafts that will be using the airport. (From left) Kolkata Airport and Delhi Airport This last point also ties in with "wind loads" on the façade. Reactors of large aircrafts can generate tremendous draft, which can affect the façade of the terminal. Airports are often designed with "blast barriers" to divert these air jets away from the façade, but in cases where the façade will be subjected to heavy gusts from aircraft engines, designers should ensure that glass or cladding panels are secured and won't be blown away. While on the topic of blasts, airports are valuable infrastructure assets for a country, and as such are often the target of terrorists. In cases where local security forces envisage a potential threat, airports façades need to be design with blast mitigation measures. This can range from simply extending the stand-off distance, thus reducing potential damage, to hardening measures preventing a blast from having a large impact on the structure and its users. Designing and building the façade of an airport presents some key challenges. This brief overview provides a glimpse into some of the technical issues that designers are faced with, as well as some solutions that can be implemented to address those issues. However, the actual implementation of these measures requires a large amount of knowledge and experience in the particular requirements of airports.The author is Managing Director of Meinhardt Facade Technology(S) Pte Ltd
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