India is likely to pay an additional around 300 billion rupees ($6.8 billion) than budgeted in 2011-12 to state refiners as compensation towards selling fuel at subsidised rates, a senior government official with direct knowledge of the matter said on Wednesday.Upstream companies and explorers -- Oil and Natural Gas Corp, Oil India Ltd and GAIL -- have to sell crude oil and products at a discount to retailers, which sell diesel, kerosene and LPG at government-capped prices."The oil subsidy given in the budget has already been exhausted. So the government is working on 25,000-30,000 crore (250-300 billion) rupees more on oil subsidies to be given in the monsoon session of parliament," the source said.The monsoon session commences on Aug. 1.In February, the government had budgeted a petroleum subsidy of about 236 billion rupees, assuming oil prices below $100 per barrel. However, high global crude prices are expected to substantially inflate New Delhi's oil subsidy bill.India's decision to raise fuel prices last month is expected to trim revenue losses for state-run oil companies by just 50 billion rupees to about 1.2 trillion rupees in this fiscal year.Analysts say duty cut on crude and petroleum products could widen the government's fiscal deficit to over 5 percent, from the budgeted 4.6 percent of gross domestic product for the 2011-12 fiscal year, and force it to resort to higher market borrowings.Also, a slowdown in Asia's third-largest economy is seen upsetting New Delhi's fiscal calculations.The government source, however, said the fiscal gap target is unlikely to be missed as the government is looking to generate additional resources and trim its expenditure."We are drawing up alternative plans which include better tax revenue and compliance and compression of plan expenditure," the source said."The other thing that is being looked at is how the number of state companies for stake sale can be increased...The entire exercise should yield results and help us meet targets."The government is planning share sales in seven companies, instead of at least four earlier, in this fiscal year, the source said, but declined to name the firms.The source also said the government was in discussion with the planning commission on ways to reduce the planned expenditure.The government had announced its stake sale plan in four state-run firms -- Steel Authority of India Ltd, Bharat Heavy Electricals Ltd, Oil and Natural Gas Corp and Indian Oil Corp -- earlier.The source said the government, which plans to raise 400 billion rupees through its divestment programme in 2011/12, is planning to sell shares in Oil India Ltd now instead of Indian Oil Corp, but did not give reasons for the switch.(Reuters)
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Telecom tower firm Viom Networks has made a 75 billion rupees ($1.69 billion) offer to buy out its competitor GTL Infrastructure, The Economic Times reported on Friday.SBI Capital Markets is advising Global Group, the parent company of GTL Infrastructure, on the possible sell out or stake dilution, the newspaper reported, quoting two executives directly aware of the development.Viom is a joint venture between telecoms carrier Tata Teleservices and tower firm Quippo.Talks are continuing, as there is a valuation mismatch - GTL promoters are learnt to be eyeing valuations of over 105 billion rupees (excluding its debt), the newspaper reported, but did not name the executives.When contacted by Reuters, a GTL Infrastructure spokesman said that the company was in talks with many aspirants, but declined to divulge further details. Reuters could not immediately reach Viom officials.An earlier rounds of talks held during first week of July had not make any headway as Viom was not keen on the merger option being proposed by bankers, the newspaper report said.Shares of GTL Infrastructure rose as much as 12 per cent in early trade after a report said telecom tower firm Viom Networks has made a 75 billion rupees ($1.69 billion) offer to buy it out.Shares opened up 5.45 per cent and at 9.22 a.m., they were up 10.91 per cent at 15.25 rupees per share in a weak Mumbai market. (Reuters)
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Mukesh Ambani is looking to sell Reliance Gas Transportation Infrastructure Ltd, a business that builds pipelines to carry natural gas across the country, the Wall Street Journal reported, citing people familiar with the matter.Ambani, chairman of energy major Reliance Industries, has contacted bankers to help him sell the business and the process is at an early stage, the newspaper said.Two people familiar with the matter said the privately-owned gas pipeline business could be worth around $1 billion, it said."We do not comment on market speculation," a Reliance spokesman told Reuters when asked about the report.In May, India's upstream regulator said Reliance was producing 48 million standard cubic metres per day of gas from the the key D6 block of Krishna-Godavari basin.In February, BP Plc agreed to buy a 30-percent stake in 23 oil and gas blocks owned by Reliance Industries, for $7.2 billion.(Reuters)
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Yash Birla Group said on Thursday group firm Birla Surya Ltd will invest 54 billion rupees over five years to set up an integrated facility for fabrication of multi-crystalline silicon wafers and solar photovoltaic cells.The first phase of the project located in Satara district of Maharashtra will involve an investment of 14.93 billion rupees, funded through a debt of 9.7 billion rupees, the group said in a statement."It is a 10-year tenure loan with average interest rate of 14.5 percent," P.V.R. Murthy, group director, told reporters.State Bank of India, Punjab National Bank and Life Insurance Corp of India are among 11 lenders for the first phase of the project that will begin commercial production by December, Birla Surya's chief executive officer, Mohan Datari, said.Hong Kong-based Asia Pacific Capital will invest $15 million as private equity in the project and has got 15 per cent stake in the firm, Datari said.The firm is eyeing revenue of 8 billion rupees by fiscal 2012/13 and there were no plans for further equity dilution in the current project, Murthy said.It aims to make 60 megawatts (MW) of multi-crystalline solar photovoltaic cells and 125 MW of multi-crystalline silicon wafers in a year, it said in a statement.Yash Birla Group, which has interests in automobile and engineering, textiles and chemicals, education and information technology, wellness and lifestyle is exploring opportunities in the other segments of solar power generation, Chairman Yashovardhan Birla told reporters.(Reuters)
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A high powered ministerial panel is likely to meet on Friday to consider a hike in diesel and domestic LPG prices, as well as a cut in duty rates to combat the high cost of crude oil.The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, may meet at 1300 hours tomorrow, a sources said here.A hike of Rs 2-3 per litre in diesel prices and an increase of at least Rs 25 per domestic LPG cylinder are on the EGoM agenda. It may also consider raising kerosene prices.Besides, the high powered panel may consider lowering customs or import duty on crude oil to nill from current 5 per cent, and on diesel from 7.5 per cent to 2.5 per cent.The oil ministry is pushing for equitable sharing of the burden arising from the rise in crude oil prices among consumers, the government and state-owned companies, the source said.State-owned oil companies now lose Rs 15.44 per litre on sale of diesel.One-third of this will have to be passed on to consumers in stages, while a similar amount will have to be borne by the government by way of either providing a cash subsidy or cutting customs and excise duty. The remaining would be absorbed by upstream firms like ONGC and the fuel retailers.A similar formula would apply to the Rs 27.47 per litre loss on kerosene and Rs 381.14 under-realisation on sale of every 14.2-kg domestic LPG cylinder.The source said the ministry also wants a cut in Rs 4.60 per litre central excise duty levied on diesel to moderate the impact of high crude oil prices.(PTI)
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Tata Steel said on Wednesday it had received about $130 million as part of an arbitration settlement between its subsidiary and certain third parties relating to the Teesside Cast Products business.Earlier this year, the world's No.7 steelmaker said it signed a $469 million agreement to sell some assets of Teesside Cast Products (TCP) to Thailand's SSI.TCP, based in the northeast of England, was mothballed a year ago after a consortium of offtakers withdrew from a 10-year supply agreement.(Reuters)
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State-owned Oil and Natural Gas Corp (ONGC) may have overstated the natural gas reserves in its much-talked about KG basin KG-DWN-98/2 block, which sits next to Reliance Industries' prolific KG-D6 fields.Cairn India, which had made four discoveries in the KG-DWN-98/2 block before selling 90 per cent out of its 100 per cent stake in the block to ONGC in 2005, has written to the oil regulator DGH saying the state-owned firm is grossly overstating the reserves in block, sources said.It believes that "the hitherto discovered oil and gas resources in the block are only marginal to non-commercial, because of their small size and the potential high development costs due to water depth versus the prevailing gas prices."ONGC estimates that the blocks holds an in-place volume of 25.61 million tonnes of oil and 197 billion cubic metres of natural gas. It is proposing an investment of over USD 7.3 billion to produce up to 30 million standard cubic metres per day of gas.The warning by Cairn, which holds a 10 per cent interest in the acreage and is credited with finding oil in an area in Rajasthan where global giant Royal Dutch/Shell exited saying there was no hydrocarbons, is significant in view of the fall in gas output from Reliance's neighbouring KG-D6 block.Reliance had in 2007 estimated that the Dhirubhai-1 and 3 fields in the KG-D6 block would hit 69 mmscmd of output, but production has fallen to 40 mmscmd due to what the Mukesh Ambani-led firm says are reservoir complexities. (PTI)
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Oil and Natural Gas Corp's hunt for foreign expertise to develop its gas-rich block near the huge D6 producer has dropped to two players, BG Group and Eni.ONGC Chairman A.K. Hazarika said talks were continuing with Italian oil major Eni and BG Group only for the sale of up to 30 per cent in the block off India's east coast."We can go up to 30 per cent. We haven't decided yet. It will be discussed by the board," Hazarika told television channel ET NOW. Development of the block is expected to cost $7.7 billion, Hazarika said.Last year, the then head of exploration at ONGC, D. K. Pandey, said Exxon Mobil and BP were also eyeing stakes in the KG-DWN-98/2 block, from which Brazil's Petrobras and Norway's Statoil had already exited.In February, BP decided to team up with Reliance Industries, which operates the D6 field, for exploration in India and agreed to buy a 30-percent stake in 23 of its oil and gas blocks for $7.2 billion."Exxon is no longer interested," said an ONGC company official who did not wish to be identified.Foreign companies are often apprehensive about investment in India's oil and gas sector as bureaucratic delays and disputes can prove costly obstacles. BP and Reliance are still awaiting approval from the government for their deal.ONGC is currently contesting royalty payments with Cairn India, delaying the latter's sale by its parent Cairn Energy to Vedanta Resources.The ONGC official said the company's deepwater block in Krishna Godavari basin has a potential to produce at least 87 billion cubic metres of gas cumulatively.He added gas production from the block is expected to begin four years after the company gets approval from the government for drilling eight additional wells."We do not have clear approvals for drilling these additional wells," the offical said, adding the entry of foreign players is linked to government approval for this additional drilling.ONGC needs the expertise of foreign players to boost its local oil and gas output, as it struggles with declining production from its marginal and aged fields.(Reuters)
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