Petroleum minister M Veerappa Moily has categorically stated that there is no rethinking on raising gas prices starting April 1, 2014. "There is no thinking on part of the government for any review or reconsideration of the decision of the CCEA. Let me make it very clear. There is no confusion, there is no vagueness. And I don't think there is scope for any interpretation whatsoever," he said. Based on a formula suggested by the C. Rangararajan Committee, the cabinet panel approved pricing of domestically produced gas at an average of cost of imported LNG into India and international hub rates. Moily pointed out that the current price of gas based on that formula is $6.83 per mmbtu (million metric British thermal units). Consumers are currently paying $4.2 per mmbtu. The price in April 2014 will depend on what the market dictates then. As things stand, there is no price at $8.4 per mmbtu. “The price could be higher or lower than $6.83, depending on the market,” says a petroleum ministry official. The prices will be reviewed every quarter, based on the Rangarajan Committee formula for five years. The petroleum minister also clarified that there will be uniform pricing. What that means is that there would be no distinction between companies as far as gas pricing is concerned. Earlier it was reported that Finance Ministry has been pushing oil ministry for capping the gas price hike and maintaining old rates for some of the gas of Reliance Industries which it has failed to deliver during past three years at the current price of $4.2. Read Also: FinMin Asks Oil Min If Gas Price Should Be CappedRead Also: RBI Asks Oil Cos To Buy Dollars From Single BankRead Also: India's New Gas Price FormulaRead Also: Gas Price Hike Will Benefit Govt: Veerappa MoilyEver since the government decision was announced on June 27, there has been criticism that it was made to benefit Mukesh Ambani-led RIL. Finance Ministry on July 4 wrote to Oil Ministry asking it to take appropriate action on suggestions made in two media reports for putting a cap up to which rates can be raised, and RIL being forced to sell the quantity it had committed but failed to deliver in past three years at old rate of $4.2."The Office Memorandum dated July 4 from the Department of Expenditure, Ministry of Finance... has enclosed two editorials of the newspapers and illustrated some of the issues in these editorials. That cannot be taken as objective opinion of Ministry of Finance. It cannot (also) be considered as query raised by Ministry of Finance," Moily said. The Cabinet Committee on Economic Affairs (CCEA) had on June 27 approved pricing of domestic gas at an average of cost of imported LNG into India and international hub rates. The price of gas when this formula comes into effect on April 1 could come to about $8.4 per million British thermal unit. Moily said his ministry had taken opinion of Finance Ministry twice and it was incorporated in the CCEA note. "I don't think there is another interpretation open to it. It (the CCEA decision) has been done after due deliberation and I think it has taken lot of time and deliberations and once considered view has been taken, we will stick to that," Moily said. "The CCEA approved domestic natural gas pricing guidelines 2013 based on the methodology suggested by the Rangarajan Committee which will be applicable to all natural gas produced domestically and to all the consuming sectors uniformly," Moily said. Asked if RIL may be asked to sell some part of its KG-D6 gas at old rate of $4.2 per mmBtu, Moily said the CCEA decision will "apply on all natural gas produced domestically and all the consuming sectors uniformly". The Ministry of Finance in its July 4 note asked if RIL, which will be a big beneficiary of rates increase, be made to sell the quantity it has failed to deliver as per its own targets during past 3 years at current price of $4.2. "Once Reliance overcomes the 'technical difficulty' of producing gas at the KG-D6 field, the government must ensure the company delivers the shortfall it still owes at the old price of $4.2 rather than getting the benefit of the new price," it wrote. But for the first year of production, KG-D6 output was short of target since 2010-11 fiscal. Against the target of 62.1 million standard cubic metres per day in 2010-11, RIL produced 55.89 mmscmd. In the following year, it produced 42.65 mmscmd as opposed to a target of 70.38 mmscmd. Last fiscal, gas production of 27 mmscmd was way short of target of 86.73 mmscmd. Currently, it is producing 14.01 mmscmd as opposed to a target of over 86 mmscmd. (With input from agencies)
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The Centre on 10 July faced the ire of the Supreme Court for not aiding the CBI with documents in its probe in Coalgate and was directed to file a comprehensive affidavit "justifying" allocation of 164 coal blocks.The apex court, which perused the latest status report filed by the CBI in a sealed cover, said that the agency was "struggling" in its probe in the absence of documents not being supplied to it relating to the allocation of 204 coal blocks out of which 40 have been de-allocated.A bench headed by Justice R.M. Lodha said there was "lack of transparency" in the coal blocks allocation and "there was no system in place to verify the application of the companies and working of the screening committee appears to be sketchy"."Regarding everything there is nothing on record. CBI is struggling as there are no documents in its possession," Justice Lodha said, adding, "I am sorry to say that the Union of India does not have basic documents." "Had it been with you (Centre), it would have helped the CBI in its investigation," the judge said. The probe report indicated "a lot of deficiencies and infirmities" in the coal blocks allocation," he added.The bench asked Attorney General G E Vahanvati to respond to its two queries "why sanction of government is necessary in respect of court-monitored or court-directed investigation." "This query is put to Attorney General in view of a categorical stand taken by the CBI before the Delhi High Court in a matter in which CBI counsel submitted that as the investigation was directed by the court, grant of sanction for prosecution is not necessary under section 6 of the Delhi Special Police Establishment (DSPE) Act," the bench said.The bench also wanted to know from the Attorney General "why clarification should not be made that sanction for investigation of offences alleged to have been committed under the Prevention of Corruption Act is necessary from the government when the government's stand is that the power of supervision for investigation has already been shifted from government to CVC pursuant to direction issued by this court in Vineet Narain case." The hearing in the matter was not free from controversy as Additional Solicitor General Siddharth Luthra, who replaced senior advocate U U Lalit, withdrew from appearing for CBI after the Attorney General opined that no law officer should be involved with the agency in this case.Vahanvati said he was not in the favour of law officers being engaged by the CBI in view of the controversy of sharing of probe report which forced the then ASG Haren Raval to resign. He said CBI should independently choose its lawyer to represent it in the matter.(PTI)
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India is expected to grant an iron ore exploration licence to Posco for its planned $12 billion steel plant in the country, two government officials told Reuters, in a step that should speed up the project stuck for eight years.The Supreme Court in May handed a decision on a licence to the government, raising the South Korean firm's chances of getting access to iron ore for the project billed as India's largest foreign direct investment."Posco India should get the license in a month or so," said a senior government official involved with the decision-making. "The government is looking at it positively."Another official directly involved in the matter said the government was speeding up the process given that the Supreme Court has already ruled against a lower court order declining a prospecting licence for Posco .Prospecting licences are generally valid for three years, after which a prospector has to apply for a mining lease.Access to iron ore, the main raw material in making steel, is the most important factor in Posco deciding to set up the plant in India, experts have said."We are hopeful that the central government will give its approval soon," Posco -India spokesman IG Lee told Reuters.The government is currently looking at the legal aspect of the process of granting a licence, another source said.Posco first signed an agreement with Odisha in June 2005 to set up the steel plant on 4,004 acres of land. It is seeking 2,700 acres to begin the project's first stage, which involves setting up two 4-million-tonne plants in two phases.The company is expected to get the land for the first project later this month, two government official said.Posco has said that if it gets the required land this year, the first-phase of the plant may be commissioned sometime in 2018. At full production of 12 million tonnes, the project would have accounted for 16 percent of India's total current annual steel output of 76.7 million tonnes.(Reuters)
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After setting out a formula that could double natural gas prices from next April and agressively pushing for it, the Finance Ministry has written to Oil Ministry seeking "appropriate action" on suggestions for putting a cap to which rates can be raised. FinMin had suggested a price of around $8.40 per million British thermal units (mmBtu), bringing the price nearer to globally traded prices, in a bid to lift imports of liquefied natural gas (LNG) and spur investment in local output. Betting on policy of hiking gas prices to boost supply and help fix the country's chronic power shortages can go awry unless the debt-laden industry can pass on higher energy costs to consumers or get government subsidies.The Department of Expenditure in the Ministry of Finance on July 4 sent an office memorandum to the Oil Ministry enclosing two media reports regarding the June 27 decision of the Cabinet Committee on Economic Affairs (CCEA) to double rates to $8.4 from April 1, 2014, asking it to examine the issues raised for appropriate action.It flagged if a ceiling or limit to which gas prices can be hiked as per the CCEA approved formula of using imported LNG and international hub rates to price domestic gas, be imposed, an official in finance ministry said.Also, it was flagged that should Reliance Industries, which will be a big beneficiary of rates rising to $8.40 per million British thermal unit, be asked to sell the quantity it has failed to deliver as per its own targets during past three years at current price of $4.2."Once Reliance overcomes the 'technical difficulty' of producing gas at the KG-D6 field, the government must ensure the company delivers the shortfall it still owes at the old price of $4.2 rather than getting the benefit of the new price," it wrote.Read Also: RBI Asks Oil Cos To Buy Dollars From Single BankRead Also: India's New Gas Price FormulaRead Also: Gas Price Hike Will Benefit Govt: Veerappa MoilyThe official said the Department had forwarded concerns raised by stakeholders to the oil ministry as suggestions.The Cabinet Committee on Economic Affairs on June 27 approved pricing of all domestically produced natural gas from April 1, 2014 at an average of the prices of imported liquefied natural gas (LNG) into India and the weighted average of gas prices in North America, Europe and Japan.The price effective from April 1, 2014 is estimated at around $8.40 per mmBtu, double the price of $4.20 for current gas sales from RIL's KG-D6 block.This rate is to change every quarter and there were concerns that leaving the formula open-ended may result in prices rising to $10-12 in the near future.RIL, which had hit a peak output of 69.43 million standard cubic metres per day from KG-D6 block in March 2010, is currently producing just over 14 mmscmd. This output is way short of 80 mmscmd target for this time of the year.The output in previous two fiscal years was way behind the target.The new pricing formula, which is based on suggestion made by a panel headed by Prime Minister's economic advisor C Rangarajan, will be effective for five years.The price for each quarter will be calculated based on the 12-month trailing average price with a lag of one quarter (i.e. price for April to June 2014 will be calculated based on the averages for the 12 months ended December 31, 2013). Better supplies should help power companies. Gas fuels only about 7 per cent of power stations, but many plants lie idle or operate at low capacity because there is not enough fuel available to keep their turbines running.Finance Minister P. Chidambaram has already conceded that the government might need to cushion utilities from the gas price increase, which would effectively mean subsidising them. That is a practice India, which is trying to narrow a bloated fiscal deficit, can ill-afford and it leaves power sector reform still at the starting gates. (Agencies)
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Renewables account for 13 per cent of the 236 GW installed power capacity in India... and their share is only growingClick here to view graphicCompiled by MoynaGraphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 01-07-2013)
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Malaysia's Petronas is in talks to sell 10 per cent of its Canadian shale gas assets to Indian Oil Corp, sources with direct knowledge of the matter said, mirroring a deal it signed earlier this year with a Japanese company.State-run Petronas last year bought Canada's Progress Energy Resources Corp in a C$5.2 billion deal that gave it shale gas properties in northeastern British Columbia.In March it sold a 10 per cent stake in the integrated shale gas development and liquefied natural gas project to Japan Petroleum Exploration (Japex). Financial details of that deal have yet to be revealed publicly.Terms of a potential deal between Petronas and state-run Indian Oil have not yet been worked out, the sources said.Indian Oil did not have immediate comment and officials at Petronas could not immediately be reached for comment."Petronas has not opened this to anyone else, it prefers to directly approach one company at a time," said a source with direct knowledge of Petronas' commercial strategy.The source ruled out the sale of a stake to Chinese companies if a deal with India does not materialise.China's CNOOC Ltd completed a contentious takeover of Canada's Nexen Inc in February. Ottawa approved that deal only after making clear it would not allow foreign state-owned firms to build up dominant positions in the Alberta tar sands."One thing is for sure, Petronas will not go to Chinese companies if the India deal falls through as Chinese companies are pretty active in the sector," the person said.Kazakhstan earlier this month blocked India's plan to buy ConocoPhillips' stake in giant Kashagan oilfield for $5 billion, and sources said China could win the same stake for $5.3-5.4 billion.Indian Oil, the country's biggest refiner, wants to expand its portfolio of exploration and producing assets while Petronas wants to share some of the costs of getting into the Canadian shale sector and bringing in cheaper LNG supplies from North America to energy-hungry Asia.Indian Oil is likely to choose an investment bank advisor soon, two banking sources said.One banking source competing to represent Indian Oil on the transaction said a deal was likely to include a "long-term attractive offtake" agreement for gas.The Canadian unit of Petronas earlier this month sought approval for LNG exports from Canada's Pacific Coast.India last month decided to link prices of locally produced gas with global benchmark, paving way for a rise in prices from April 2014 and making LNG imports attractive.Indian companies, like their Asian peers, have been scouting for oil and gas assets abroad to meet rising local demand.A consortium of state-run Oil and Natural Gas Corp, Oil India Ltd and IOC is among three bidders shortlisted to buy stakes in Canadian oil sands owned by ConocoPhillips in a deal that could be worth up to $5 billion.(Reuters)
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The Reserve Bank of India (RBI) has asked state-run oil companies to buy dollars from a single bank, said a source privy to the advice from central bank, as the government struggles to stem the declining rupee.The rupee fell to a record low of 61.21 against the dollar on 8 July, exacerbating fears about the funding of the current account deficit and sending policy makers scrambling to find quick-fix solutions beyond sporadic interventions.State-run Indian Oil, Hindustan Petroleum and Bharat Petroleum buy dollars for crude purchases through banks."We have been asked to buy dollars from a single bank. This order is for all IOC, HPCL and BPCL," said a source at one of the three companies.The Reserve Bank of India met oil retailers on Monday to discuss options, including accessing dollars at market rates from a special window and routing dollar sales through a single bank, to ease pressure on the rupee.(Reuters)
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The Petroleum and Explosives Safety Organisation (PESO) has directed Coal India Limited (CIL), other explosives users, sellers and manufacturers to use police escort each time they move explosives. Coal India — the largest consumer of explosives in the country — uses explosives to blast the mines during coal extraction. CIL is the largest user of explosives in the country, shipping over Rs 3 crore worth of explosives to mines. It buys around 4 lakh tonnes of explosives worth Rs 800 crore every year.PESO officials say the directive was issued under pressure from the home ministry which, perhaps, fears hijacking of such explosives.The directive has put Coal India in a spot since it requires an army of personnel to manage the logistics of transporting explosives besides the nightmare of coordinating with the police administration of the districts in which they operate. The circular sent out in April was to be mandatory from the date of receipt but CIL and others have objected to the direction citing manpower shortage — both within CIL and the district administration.It said the directive will eventually constrain its coal production. Meanwhile, the ministry of coal has written to the union home ministry to allow more time to CIL to make the provision of armed personnel.The Petroleum and Explosives Safety Organisation’s circular directs all manufacturers, sellers and users of explosives to have police personnel present and accompany any explosives being transported. The transporter is also required to inform the district administration, through which the explosives are being transported, in advance. If they fail to do so, suppliers lose licence under the Explosive Rules, 2008. CIL says a number of its suppliers have already stopped sending them explosives fearing licence cancelation.The Joint Chief Controller of Explosives P.C. Srivastava says the circular was sent out at the instance of the union home ministry. Unwilling to comment on the need for this mandatory police presence or the responses from explosive users, Srivastava hinted that the circular is a response to the ongoing Maoist threat in the mineral rich areas but refused comment on complaints regarding any thefts of the unguarded explosives being transported till date.Senior officials in the Nagpur-based PESO feel that the directive is impractical. “Shortage of police personnel is only one aspect of the larger problems that we are receiving, following the circulation of this order... The biggest hurdle at present is the limited jurisdiction of district police personnel,” says a PESO official. He explained that a number explosive users are sending them submissions requesting a revision of this order so that it takes into account the ground reality of no manpower, limited jurisdiction and resources of the explosive users. The official added that the order may not come into force as different stake holders are already in talks with the home minister to revisit the decision making police protection of explosives mandatory.mmatbworld(at)gmail(dot)com
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