Last week, National Thermal Power Corporation (NTPC) – India’s largest power producer - cancelled a contract with one of Australia’s largest builders – Leighton Holdings. The company’s Indian subsidy Thiess Minecs was awarded the contract to develop the Pakri Barwadih coal mine in Jharkhand for NTPC. But according to NTPC, the developers failed to do so in a timely manner. The Australians have announced that they will take legal recourse as this is an untimely termination of a contract and NTPC has already claimed $18.5 million worth of bank guarantees issued by Thiess Minecs. It is a familiar tale by now in India, where illegal mining has cost crores to the exchequer, severely hampering production and growth rate with court bans and litigation. Miners are unable to meet deadlines due to unwillingness on their part, protests by locals over land acquisition or environmental clearances, official action on violation of laws etc. The cycle seems never ending. Whether the authorities are to blame for lax policies, improper implementation of laws or private players for their violations – is a debate for another time. In this particular case there are allegations and counter allegations which will have a far reaching impact, especially on efforts to revive the sector. The termination of this contract seems to be heavily influenced by the union government’s decision to permit mine development by the owners who have been allocated mines on the end-user basis. This, along with the ongoing discussions on allowing private players to sell extra coal in the market, suggests that many project proponents would rather not share the bounty. Unfortunately this spells doom for the already ailing coal mining sector. In an attempt to revive investor interest, the ministry of coal last year announced various amendments and rules. One of the important moves was to introduce sub-contracts on models like MDO (mine developer cum operator) and JVs (joint ventures) etc of coal mines. This was aimed at increasing private sector involvement and bringing in the much needed investments. Thiess Minec CEO ArrestedThe stars do not seem to be favouring the Australian developers. Within a day of the contract cancellation, the CEO of Thiess Minec was arrested in Hyderabad. The company has claimed it is not on a related matter and the arrest is in connection by a civil suit filed in Singapore by another developer – Roshni Developers. But court documents suggest that Thiesss had discussed sub contracting the removal of soil from the Pakri Barwadih coal mine site with Roshni Developers. When contacted, the company refused to comment on the possible connection of the arrest and coal mine in question. But the current cancellation is going to lead to hesitation from international firms wanting to invest in India. NTPC had sub contracted the development of this project estimated to be worth $267 million, a statement from Leighton says. But NTPC is confident of its actions and a spokesperson informed BW that, “The contract ended in 2012 and we extended it twice,” and the task was still not complete. Countering NTPC claims, the Australian builders have claimed that India’s biggest power producer is seeking to develop its own mines while violent protests go on at Pakri Barwadih – estimated to have 300 MT of coal. Illegal mining by villagers demanding more compensation for their land has also delayed the mine’s opening. BOX: The stars do not seem to be favouring the Australian developers. Within a day of the contract cancellation, the CEO of Thiess Minec was arrested in Hyderabad. The company has claimed it is not on a related matter and the arrest is in connection by a civil suit filed in Singapore by another developer – Roshni Developers. But court documents suggest that Thiesss had discussed sub contracting the removal of soil from the Pakri Barwadih coal mine site with Roshni Developers. When contacted, the company refused to comment on the possible connection of the arrest and coal mine in question. moyna@businessworld.in; mmatbworld@gmail.com
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The Directorate General of Central Excise Intelligence (DGCEI) has issued a show cause-cum-demand notice of over Rs 4.6 crore to the nation's largest oil firm Indian Oil Corporation for not paying service tax under the head of a 'goods transport agency'. "We had issued a notice to IOC last month for tax liability of Rs 4.64 crore and the oil major has to reply by May 24," said a DGCEI source. IOC will have to reply why the amount of Rs 4.64 crore along with interest, penalty and additional penalty for suppressing the value of toll charges paid to the transporters should not be charged, said the notice issued by Additional Director-General of DGCEI Samanjasa Das. Das said IOC has not been paying their tax properly as a goods transport agency by not including toll charges paid to its transporters as actual expenses in the taxable value between October 2008 and September 2013. Das also said the transporters involved are plying their trucks on various routes for transporting the goods of IOC and that there are certain roads where toll charges are collected from these vehicles. "Without payment of the impugned toll charges, the goods carriage cannot use the said road and hence, the transporter cannot provide the impugned services of a goods transport agency without paying toll charges," the notice added. Hence, the notice said, the expenditure incurred by the transporter becomes an intrinsic part of the cost of transportation, as without incurring the expenditure on toll charges, the provision of service of a goods transport agency is not possible. Therefore, the toll charges cannot be disintegrated from the value of taxable services of a goods transport agency as they are inextricably connected with the service provided, the notice said. When contacted, IOC spokesperson refused to comment. (PTI)
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Reliance Industries Ltd and its partners in a gas block, BP Plc and Niko Resources, said on Saturday (10 May) they were taking the government to arbitration seeking implementation of higher gas prices.The government in June last year approved a formula, linking prices of locally produced gas with global benchmarks, that could have nearly doubled gas prices from the current $4.20 per mmBtu from April 1.The Election Commission, however, in March asked New Delhi to defer an increase until the completion of the five-week general election, results of which will be declared on May 16.Reliance's five-year gas sale pacts with sectors including fertiliser makers and power expired on March 31, requiring buyers to sign new contracts for supplies from its D6 block in the Krishna Godavari basin off the east coast.Read Also: Election Commission Defers Gas Price Hike Till Poll EndsReliance, India's second most valuable company controlled by its richest man Mukesh Ambani, and its partners issued the notice of arbitration to the government on May 9, the three companies said in a joint statement."The continuing delay on part of the Government of India in notifying the price in accordance with the approved formula for the Gas to be sold has left the Parties with no other option but to pursue this course of action," the statement said.BP has a 30-percent stake and Canada's Niko owns 10 percent in the gas block.A spokesman for the oil ministry could not immediately comment on the development.Gas output from the D6 block has fallen sharply since 2010. Reliance says the decline is due to the geological complexity of the block, while the government believes contractors have failed to drill the promised number of wells.Reliance, which operates the world's biggest refining complex in Gujarat, and its partners said without any clarity on gas prices they were unable to sanction planned investments of close to $4 billion this year.Overall, the companies said, they were planning to invest $8 billion to $10 billion in the next few years to "significantly increase production" from the D6 block."In addition, this will also delay the ability of the Parties to appraise and develop other significant discoveries made last year," the companies said.The Election Commission in March gave no reason for its move to ask the government to delay the price hike, but it can order any new decision to be put on hold if it's seen influencing voters or benefitting any particular political party.Also, two petitions have been filed in the Supreme Court to strike down the gas price increase decision on grounds that it favoured a corporate house and was against the interests of the nation. The hearing in the case is continuing.Demand for gas in India far outstrips consumption and domestic supply, but the government has kept prices below global market levels for producers of fertilizer and electricity, which has deterred investment in domestic exploration and production.(Agencies)
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The Delhi High Court on Friday (9 May) restrained the city government's Anti Corruption Branch (ACB) from taking any coercive action against Oil Minister M Veerappa Moily, Reliance Industries chairman Mukesh Ambani and others named in an FIR over alleged irregularities in raising gas prices. Justice Manmohan, while issuing a notice to Delhi Government to respond in a week's time on Centre's plea seeking quashing of the FIR lodged in February on the direction of the previous Arvind Kejriwal government, said the ACB can continue with its investigation into the matter. However, it will not take any coercive action against those named in the FIR, including officials and the private parties, the court said. The court direction came as an oral submission was also made by senior advocate Abhishek Manu Singhvi who appeared for private parties and requested that there be no further investigation in the case. "Issue notice. She (counsel for Delhi Government) is permitted to file counter reply within a week. You (Delhi Government's Anti Corruption Branch) carry on your investigation but no coercive action shall be taken against Union of India and against any of its officials related to it," the court said. Kejriwal had directed the Anti Corruption branch to register an FIR on the basis of a complaint by four prominent people, including former Cabinet Secretary TSR Subramanian. The complaint alleged that Moily, former Oil Minister Murli Deora and others had colluded with Ambani to raise the price of natural gas at the cost of the common man. All of them have denied the allegations. The Kejriwal-led Delhi government had lodged the FIR naming Moily, Mukesh Ambani and others on gas pricing issue and had alleged the Congress-led UPA government "favoured" RIL with an eye on 2014 general elections and BJP maintained "silence" hoping to gain corporate funding for the polls. Appearing for Centre, Solicitor General Mohan Parasaran sought quashing of the FIR saying Anti-Corruption branch of the Delhi Government has "no powers or jurisdiction to investigate" complaints against the Union Government's decision to fix prices of natural gas. He said that Delhi government should have approached CBI, as it is an appropriate agency for investigation of such cases. "How can they (Delhi's Anti Corruption Branch) go before the wrong authority. Let them go before proper forum. Why were they in such a hurry to register the case," he argued. During the hearing, Singhvi said, "This probe is to humiliate and score a political point. It is a way of saying that look I have brought the high and mighty down. If the investigation is not stopped, it will completely undermine the federal structure in which we will have states filing cross complaints against other states and the Centre." During the proceedings, the court, which observed that the case was registered on some senior person's direction, said "can the police register the case on anyone's direction". "Is it that if any politician will ask the police to register the case, they will accordingly file? They (police) need to apply their own mind," the court said. After Delhi Government's counsel Zubeda Begum sought time to reply on the plea, the judge said, "I cannot make the writ petition infructuous as it has a serious law issue." The court also said how will a sub-inspector understand gas pricing. During the hearing, the Solicitor General argued that Anti Corruption Branch investigates the role of people only if they are concerned with the Delhi administration. It has lack of jurisdiction, especially with the fixing of the gas pricing as it falls under the central government, he said, adding that if it happens, then tomorrow any state government can register such cases. Moily and Ambani have vehemently denied the allegations. Reliance Industries Ltd (RIL) last week had moved the Delhi High Court for quashing of the FIR. In its petition seeking quashing of the FIR, the Centre argued that by registering the FIR the Delhi government was "seeking to investigate decisions in regard to gas price fixation which falls in the exclusive domain of the central government". The petition said that public order and police have been specifically excluded from the domain of the legislative assembly of the Delhi Government. "The Delhi Government lacks any powers of its own in the area of police powers and matters relating to law and order," it said, adding any agency (like the anti-corruption branch) created by the state government cannot have higher powers or purport to seek exercise of any higher powers. All aspects relating to natural gas are within the exclusive legislative powers of Parliament and consequently executive powers of the Government of India. It also stated that at the time the complaint was filed, a writ petition filed by CPI leader Gurudas Dasgupta on the said issue was pending before the Supreme Court. .
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Vedanta Resources Plc said on Friday (9 May) it will not mine bauxite from the Niyamgiri hills in Odisha until it has the consent of local communities.The announcement marks a victory for the local communities, which have long opposed the company's plans to mine bauxite in an area they consider sacred.Vedanta said it was working with Odisha government and pursuing other options to source bauxite for its alumina refinery in the state.The proposed bauxite mining project near the Lanjigarh refinery in Kalahandi district, about 450 km from capital, Bhubaneswar, had drawn the anger of rights groups globally.(Reuters)
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The Supreme Court on Monday (05 May) agreed to hear real estate giant Supertech's plea challenging Allahabad High Court order for demolition of its two 40-floor towers in Noida. Meanwhile, the apex court directed maintenance of status quo and restrained Supertech from selling or transferring any flat.Realty firm Supertech on April 30 had filed a petition in the Supreme Court challenging the Allahabad High Court order to demolish the company's two 40-storey towers in a Noida housing project.The two towers, Apex and Ceyane, together have 857 apartments. Of these, about 600 flats have already been sold.The towers are a part of Supertech's Emerald Court project."We have filed an SLP (Special Leave Petition) in the Supreme Court," Supertech Chairman and Managing Director R K Arora told PTI.In the petition, he said, the company has contested that the two towers were constructed as per approved building plans and there was no violation.He said the company was not able to put forward its points in Allahabad High Court appropriately and will argue its case "strongly" in the apex court.The affected apartment buyers have been protesting against the demolition and some of them have formed a group and approached the Supreme Court independently.On April 11, the Allahabad High Court ordered the demolition of the two buildings and the refund of money to apartment buyers.The high court judgement was passed while allowing a writ petition of the Emerald Court Owners Resident Welfare Association, which alleged that the approval and construction of the two towers was "in complete violation of the UP Apartment Acts".A division bench comprising Justice V K Shukla and Justice Suneet Kumar had ordered the demolition of the two towers erected in Sector 93-A of Noida as part of the Supertech Emerald Court Complex "within a period of four months." The complex comprises residential premises and shopping establishments.The court also ordered that money be refunded to all those who had invested in the two towers "with 14 per cent interest compounded annually".The petitioner had claimed the Noida Authority had given permission to raise the height of the two towers, which were earlier supposed to have only 24 floors, "without maintaining the mandatory distance of 16 metres) from an adjoining building block, making it "unsafe, apart from blocking air and light." (PTI)
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Escalating Ukraine tensions and a strong US jobs report boosted oil prices on Saturday (3 April), traders said, pushing aside concerns about the mounting US crude stockpile.New York's benchmark, West Texas Intermediate for delivery in June, climbed 34 cents to $99.76 a barrel.In London, Brent North Sea crude for June added 83 cents to close at $108.59 a barrel.Moscow's warning to Kiev over its attack on pro-Russia secessionists in Ukraine's east raised more worries over a Russian intervention, which could further strain relations with the West.Ukraine today launched a military assault on the flashpoint town of Slavyansk, but insurgents shot down two army helicopters, killing two servicemen, including a pilot.The crisis also spread to the southern city of Odessa, where 38 people died in an arson attack against a trade union building after a day of violent clashes between pro-Russian and pro-Ukrainian militants."The escalating conflict in east Ukraine is allowing oil prices to recover after finding themselves under pressure," said Commerzbank analyst Carsten Fritsch.Ukraine, a major conduit for Russian natural gas exports to Western Europe, is monitored closely by investors who are concerned that a full-scale armed conflict will disrupt supplies and send energy prices soaring.A robust US job report for April, with the jobless rate sharply falling to 6.3 per cent, signaled a stronger economy, also helping to boost crude prices."Some support to the market is coming from the better- than-expected job report this morning, showing a significant number of jobs that will translate into demand for petroleum products," said Andy Lipow of Lipow Oil Associates. (Agencies)
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Faridabad began as a pure industrial town, with the majority of employment opportunities emerging from the industrial sector. There is now a gradual shift in trend, and the service sector is now picking up in the area. Faridabad's improved connectivity with key cities in NCR, primarily Delhi and Noida, has been favourable for its realty market. Lots of new residential developments have come up; importantly, there has been a spurt in new group housing society projects. Here, Omaxe, BPTP, Puri Construction, Eros Group and Ansals are some of the major developers with noticeable presence.The average ticket size for apartments in Faridabad is around Rs. 3000-4000/sq. ft. In most of the group housing projects, appreciation has been sluggish of late. The annualised appreciation over the last couple of years for housing projects in this region stands at around 8-10 per cent. This is consistent with the overall trend seen in the NCR market, which has been significantly affected by negative economic sentiments, political uncertainty, high inflation and cost of borrowing and the liquidity crisis. The region mainly has affordable housing in low ticket-size projects, with a few luxury projects.Faridabad is currently an end-user/buyer market. Still among the most affordable markets in the NCR belt, unit prices and apartment sizes available in Faridabad suit the requirements of average households. Going forward, this region's real estate market is going to witness additional impetus on account of the improved connectivity brought by the KMP Expressway, FNG flyover and the Badarpur flyover.It can be said that developers have been somewhat over-enthusiastic when it comes to launching projects in Faridabad. In fact, demand for housing in Faridabad has been on the slower side because of the absence of an inherent 'pull' factor. Faridabad has, for the longest time, been a small industrial town. Unlike Noida and Gurgaon, it could never create appeal for corporates, so there was little demand for office spaces. Modes of employment other than industries were limited. Also, it is only in recent times that Faridabad's connectivity with other key areas such as Delhi, Gurgaon and Noida improved.All these factors resulted in average traction of residential projects launched in the region. Besides this, Faridabad has always been an end-user driven market, and therefore off the radars of investors. This has resulted in limited activity in the real estate market of the region. Many builders operating in Faridabad tend to have limited bandwidth, experience and resources to execute large-scale developments. This has resulted in delays in some of the projects; but then, we have also seen projects by Mahindra and BPTP approaching completion.The quality of construction in Faridabad's residential projects has so far been largely mid-grade. Since a majority of the projects are primarily aimed at mid-income consumers, maintaining affordability has been a priority for most developers with projects in this belt. Delays in approval, increased interest rates and construction cost take a further toll. That said, the construction quality of most of the projects launched by BPTP and other leading developers is definitely average to above average.The high incidence of consumer complaints emanating from the region is primarily due to the fact that Faridabad is end-user driven. In such a market, timely delivery of project, allotment of the right units, construction quality and other such issues become critical. There have been delays in delivery of projects by leading developers in Noida and Gurgaon as well. However, these have not drawn much press since the investor interest in those projects was substantial, and investors are usually not very perturbed by such issues.In an instance that has caused some negativity in the Faridabad market, BPTP - the largest real estate developer in the Faridabad region, with a land-bank of around 1500 acres - has started selling constructed units as well as plots. There have been reported cases of consumers being allotted plots different from the ones they were originally shown. This has impacted the credibility of the project, despite the fact that there are no concerns when it comes to quality of construction and completion timelines for the projects.
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