Refiner Essar Oil Ltd on Monday said its board had approved delisting of shares from the BSE Ltd and National Stock Exchange of India Ltd.Essar Oil, a unit of the diversified Essar Group, said its board met on Sunday to decide on the proposal.The move is part of Essar Oil's plans to take the energy business of Essar Energy Plc private to provide increased financial flexibility to support its business needs.On Friday, the company said the delisting would take place after its founders buy the 27.5 per cent of Essar Oil that is owned by public shareholders.(Reuters)
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Power Minister Piyush Goyal, seeking to boost electricity generation, on Friday (20 June) asked Coal India to ramp up production from existing mines, increase supplies to utilities by reducing the quantity offered in e-auctions and address the issue of fuel quality."We need to enhance the supply of coal. We have requested the Ministry of Environment and Forests to allow additional mining from coal mines which are already operational.Reduction in quantity of coal at the time of e-auction will enable additional supplies to power sector," Goyal told reporters here.Goyal, who is also the Coal Minister, met top private power honchos, including Anil Ambani, Chairman of Reliance Power, Gautam Adani, Chairman of Adani Group, Vineet Mittal, Managing Director of Welspun Energy, and Naveen Jindal, Chairman of Jindal Power, to look for solutions to address the country's electricity shortage, which was as much as 7,000 MW in May."We have asked Coal India to expand coal production to the tune of 50-60 per cent for all power companies in the state sector or private sector. We need to enhance power availability in the country," he said.Goyal added that the issue of quality of coal was also discussed during the four-hour meeting with the private power producers and other stakeholders.Power generation has suffered as Coal India has been unable to meet production targets for reasons including delayed approvals for new mines. Importing coal to make up for the shortfall is expensive and utilities are not always able to pass on the higher costs to consumers.Coal India, the world's largest coal producer, sells about 7 per cent of its production through e-auctions, where smaller, non-power users walk away with most supplies as electricity generation companies do not bid aggressively in view of tariff caps.About 60 per cent of India's installed generation capacity uses coal. The minister asked Coal India to increase supplies of the fuel to power stations and said projects where construction is complete should get preference in allocation."We discussed the quality of coal supply and asked Coal India to allow third-party inspection before loading of coal to all buyers of coal across the country. The third-party inspection of supplies of coal from the mines...is aimed at reducing complaints," Goyal said."We are also going to do this on the unloading station (power plant), on an experimental basis for three months for the state-owned generating stations to see if the process works well," he added.Reacting to the reduction of e-auction coal, a Coal India official said, "The priority is national interest. Our purpose is to supply coal for national interest and if the power producers need coal then it will be surely given to them."The official declined to comment on third-party sampling of coal quality.The minister discussed issues including generation, transmission, distribution and fuel supply during the meeting.The private power producers also met Finance Minister Arun Jaitley and said both ministers agreed to consider the issues they raised."We have explained our problems to them. They have assured us that they will seriously consider our issues and do whatever is possible to help growth of the sector," Jindal told reporters after his meeting with Jaitley.He said specific issues such as non-availability of coal and gas, environmental clearances and bank financing were also discussed.(PTI)
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India plans to clear some pending oil payments to Iran through the United Arab Emirates central bank, three sources with knowledge of the matter said, under an interim nuclear deal that has allowed Tehran access to $4.2 billion in blocked funds globally.The mechanism reflects a U.S. insistence that the transfers can be closely tracked. Payments would reward Tehran for cooperating in nuclear talks that, if successful, would return Iran to the international fold after decades of isolation.Despite some signs of improving relations between Washington and Tehran, a full deal over Iran's nuclear activity remains elusive.Iran and six world powers re-launched talks on Tuesday to try to salvage a deal on Tehran's nuclear activity by a July 20 deadline.Iran's earlier request to repatriate $1.65 billion in Omani Rials through Bank Muscat proved not to be workable. It was not known why that channel was not utilized.Under the proposed new arrangement, the Reserve Bank of India would buy the dollars from authorised currency dealers, instead of the Indian oil buyers tapping the currency market, the sources said. The UAE central bank would then remit the funds to Iran in dirhams, the sources said.The UAE central bank and the U.S. Treasury department's Office of Foreign Assets Control did not immediately respond to requests for comment. No comment was available from the RBI.The sanctions slapped on Iran in 2012 closed banking channels for the transfer of oil payments to the OPEC member country, choking off its revenues, crippling the economy and ultimately bringing it to the negotiating table.TransparencyThe Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury has informed India that Iran would like to receive $1.65 billion in three equal installments through the UAE central bank, the sources said."It is indeed a complex mechanism but it has been devised to bring in transparency in the money transfer to Iran," said one of the sources, all of which declined to be identified as they were not authorised to speak to media.In a first step, India's petroleum ministry would instruct oil refiners to remit funds in rupees to the account of an Iranian bank with India's state-run UCO Bank.UCO would then transfer the sum to the RBI for crediting to a new rupee account held by the UAE central bank.Once this step is completed, the UAE central bank would make a payment in dhirams to the Iranian central bank. On receipt of payment confirmation, the RBI would credit the UAE account with an equivalent sum in dollars.The RBI would then settle its dollar purchases with the funds on the UAE rupee account.Indian refiners Essar Oil, Mangalore Refinery and Petrochemicals Ltd, Hindustan Petroleum Corp and HPCL-Mittal Energy Ltd. together owe about $4 billion to National Iranian Oil Co, an MRPL executive said last month.In the first two installments, Mangalore Refinery and Petrochemicals would pay about $238 million, Essar Oil $232 million, Indian Oil Corp $57 million, Hindustan Petroleum about $8 and HPCL Mittal about $15 million."The respective payments by the four refiners will be same for the first two installments. Numbers for the third installment are yet to be worked out," said one of the sources.India has been settling 45 percent of Iranian oil payments by transferring rupees into Iran's account with UCO Bank, while the refiners hold the remainder. Tehran is using the funds in UCO Bank to import goods from India.India, which imports a total of 4 million barrels per day of oil, has been steadily reducing its dependence on Iran, whose share in its overall oil imports has fallen by two-thirds over the last five years to 5.7 percent in 2013-14.(Reuters)
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After 116 years of operations, Tata Steel plans to start a second steel plant at Kalinganagar, Orissa, by March 2015. A dream project for the company, the six-million-tonne-per-annum (MTPA) integrated steel plant has, however, had a rather difficult start. Soon after construction began in 2004, the project sparked off a tribal agitation; as many as 13 people died in police firing. Thereafter, it has been mired in red tape. So, it wasn’t easy for Tata Steel to find financiers for the project — the cost of which has escalated from Rs 15,400 crore to Rs 43,149 crore on account of delays. Besides, the economy was in the dumps and the company’s European operations (formerly Corus) was also headed south. But State Bank of India (SBI) believed in the project and stepped forward to help. It, along with 20 other banks, including ICICI Bank, HDFC Bank, Axis Bank and Punjab National Bank, arranged a total of Rs 22,800 crore, making it the largest syndicated loan facility in India and earning it BW | Businessworld’s Deal of the Year award in the ‘INR Loans and Bonds’ category.Says Rajnish Kumar, chief general manager (project finance), SBI: “This was one of the largest projects handled by us in the non-infra sector. The team was excited about the deal. It has been a great learning opportunity for everyone involved.”Koushik Chatterjee, group executive director (finance and corporate), Tata Steel, says half of the first module of the Kalinganagar plant, which is to be rolled out in two modules of 3 MTPA each, has been completed with the company’s equity contribution of around Rs 10,000 crore. It has not drawn on the loan yet. “But you can’t build a steel plant without external funding. We will look at how much will be required for completing the project,” he adds.Macroeconomic conditions have been challenging over the past year. Additionally, the Indian market has been impacted by a sharp depreciation of the rupee. Despite these and the external challenges posed by the tightening of liquidity, increasing non-performing assets in the steel sector and mining restrictions, the Orissa project’s debt issue was oversubscribed. Tata Steel Odisha (TSOL), a special purpose vehicle (SPV) to facilitate the implementation of the Kalinganagar project, was created to derive the benefits of an SPV structure and reduce stress on the parent company’s balance sheet. It will procure the plant and machinery and lease them out to Tata Steel under an asset-lease structure — of a non-financial operating kind.At a time when demand for steel is falling, the plant has drawn considerable flak from various quarters. Answering questions from concerned investors at the 2013 annual general meeting, Cyrus Mistry, chairman of Tata group, said: “You can’t have growth without taking risks… The company has followed prudent financial discipline to mitigate the risks.”— (This story was published in BW | Businessworld Issue Dated 24-03-2014)
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Given the general despondency in the power sector in India over the past couple of years and the multiple attempts by Jaiprakash Associates to raise money, the Rs 950-crore qualified institutional placement (QIP) of shares by its subsidiary, Jaiprakash Power Ventures, was no mean feat. Facilitated by Credit Suisse, the QIP, a sub-category under the head ‘institutional equity placement’, is the largest in the power sector in four years. It opened on 19 February 2013 and closed on 22 February, with a minimum impact on the company’s scrip. Suren Jain, MD and CFO, says the company chose the QIP route over a public issue or any other mode of raising funds, due to the interest shown by institutions and also because a public issue is a long-drawn process and tends to impact the stock. According to Jain, the money raised from the QIP was used as equity in the Nigrie thermal power project (2 x 660 MW) in Madhya Pradesh and the Bara thermal project (3 x 660 MW) in Uttar Pradesh. Jain believes the deal reinforces faith in the power sector and demonstrates that “companies that deliver can raise money even in difficult times”. While admitting that fuel security and policy limbo issues were impacting Jaiprakash Power’s project execution capabilities, Jain expressed confidence that the company would grow exponentially, given that the country remains power deficient. Prior to the QIP, Jaiprakash Power had raised funds in 2010 and 2011, using a mix of options — offer for sale, convertible bonds and an initial public offer. This time around, before settling on Credit Suisse, the power company was in talks with a number of banks. Fund estimates promised by most banks ranged between $100 and $135 million. Once the Swiss financiers were brought in, they chose to go to the market with a larger deal size, using it as a form of assurance to investors that Jaiprakash Power would not return to the market anytime soon to either liquidate assets or raise more money. Jaiprakash Power’s QIP fared better than its peers in the power sector largely on account of its existing hydropower capacity — 1,800 MW at the time, says Credit Suisse. Another point working in its favour were the captive mines for its Madhya Pradesh project. Credit Suisse turned the three main challenges of the power sector — fuel security, long gestation period and the funding gap/strained cash flow — to Jaiprakash Power’s advantage. “These (challenges) were our main focus areas when working out the QIP,” explains Sumit Jalan, head of the Indian equity capital market business at Credit Suisse. The company’s hydropower projects and captive mines helped the bank increase the deal size and set investors’ doubts at rest. On recent reports of Jaiprakash Power selling two hydropower plants in Himachal Pradesh, Jain, while rubbishing them, says the company is in the process of creating assets.(This story was published in BW | Businessworld Issue Dated 24-03-2014)
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Income Tax department has recovered Rs 60 crore of undisclosed income from three business houses following a raid at 35 places in the state, sources said.The three business houses, two of them engaged in real estate, have surrendered Rs 60 crore of undisclosed income after a search and seizure operation by IT department.The IT department has also seized Rs one crore in cash and gold and diamond jewellery worth 1.5 crore in the operation launched on Wednesday on 35 premises of the businesses houses.One of the two real estate business group is engaged in low cost housing projects promoted by state government in six districts, sources said.Several lockers have also been detected and would be opened, they said, adding that the raids were conducted in Jaipur city and Bagru area on the outskirts.(PTI)
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Oil minister M. Veerappa Moily has ordered that increases in gas prices, put on hold by the election authorities, be backdated to April 1, in a directive that has drawn criticism from a rival politician.A price increase was to come into effect just days before India started voting in the polls that got underway on April 7 and run to May 12. But the Election Commission in March unexpectedly requested a deferral.The cabinet last year approved a formula linking prices of locally produced gas to global benchmarks, that could have nearly doubled prices from the current $4.20 per million British thermal unit. A rise would benefit top producers Reliance Industries and Oil and Natural Gas Corp."When the proposal came to me, I rightly ordered that after the model code of conduct is lifted, (the) price may be announced for the quarter July–September and also for the quarter April–June, as per the approved guidelines by the cabinet," Moily said in a statement on Thursday.The model code of conduct is a set of election rules that restricts government decisions that might unduly influence the country's 815 million voters.Rival politician Gurudas Dasgupta, an opposition communist, wrote to the commission urging it to ask the oil secretary to refrain from any retroactive price hike.Leaders such as Dasgupta and Arvind Kejriwal, the head of anti-corruption Aam Aadmi Party, say that the new prices are intended to unduly benefit Reliance, controlled by the country's richest man, Mukesh Ambani.Moily and Reliance deny the allegations.Demand for gas in India far outstrips domestic supply, but the government has kept prices below global market levels for producers of fertilizer and electricity, deterring investment in domestic exploration and production.India's main opposition Bharatiya Janata Party (BJP), widely expected to win the most seats in the election and oust Moily's Congress party-led government, has said it would review the gas pricing formula if elected.(Reuters)
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Rejecting Oil Minister M Veerappa Moily's proposal to give Sudhir Vasudeva a post-retirement extension, Dinesh K Sarraf was appointed the new head of Oil and Natural Gas Corp on Wednesday (26 February), the nation's most profitable firm. The Appointments Committee of the Cabinet (ACC) approved appointment of Sarraf, who at present is Managing Director of ONGC's overseas arm, ONGC Videsh Ltd. Sarraf replaces Vasudeva, who turned 60 on Tuesday (25 February) and is due to superannuate on Friday (28 February). Sources in the Oil Ministry said the ACC, whose members include the Prime Minister, Home Minister and the minister of the concerned ministry, approved the appointment of Sarraf based on August 30 recommendation of the Government headhunter Public Enterprises Selection Board (PESB). The appointment of Sarraf, 56, comes even as Moily was keen on getting Vasudeva one-year post-retirement extension on the plea that his appointment was delayed by eight months due to false complaints. Also, ONGC needed his presence to complete ongoing strategic initiatives. The Ministry, they said, had forwarded to ACC a proposal containing two sets of options -- give Vasudeva an extension or appoint Sarraf as the next Chairman and Managing Director of Oil and Natural Gas Corp (ONGC). While Sarraf had all clearances, Vasudeva did not have approval of anti-corruption watchdog CVC which on February 10 had told the Ministry that there were "a total number of six complaints/cases against Vasudeva which are pending in the ministry and are yet to be taken to their logical conclusion". The ministry, which in the proposal to the ACC, stated that CVC approval for Vasudeva might be taken post-facto, in a statement said the extension of Vasudeva was recommended by Moily "purely on merit and in the interest of the organisation i.e. ONGC." Sarraf, 56, was Director (Finance) in ONGC before moving to ONGC Videsh Ltd (OVL) in September, 2011. He transformed OVL into an aggressive overseas firm, stitching 4 deals worth over USD 11 billion since taking charge of the company. Vasudeva took over as Chairman of ONGC on October 3, 2011. "On advice of the Department of Personnel and Training (DoPT) the proposal was submitted in the prescribed format for consideration of the ACC. "DoPT also advised to obtain comments from the CVC and the matter was accordingly forwarded to CVC. Certain observations/ queries were raised by CVC regarding the pending complaints against Vasudeva. "Considering that only few days were left for his retirement, the Minister of Petroleum and Natural Gas on recommendation of the Secretary, Petroleum, referred the matter back to the DoPT with complete vigilance profile of Shri Sudhir Vasudeva with a request to place the matter before the ACC for decision, as deemed appropriate," the statement said. Earlier in the day, opposition BJP and the Left parties slammed Moily for seeking an extension for Vasudeva without CVC clearance saying this is the second instance of the UPA government ignoring CVC in appointment to key positions. Earlier this month, Archana Ramasundaram, a 1980-batch IPS officer from Tamil Nadu, was appointed by the government as Additional Director in CBI apparently ignoring the anti-corruption watchdog's recommendation. On November 4, 2013, Moily wrote to Prime Minister Manmohan Singh seeking one-year post-retirement extension for Vasudeva. Sources said while the Prime Minister's Office (PMO) asked the Oil Ministry to submit a proper proposal, government headhunter PESB selected Sarraf to succeed Vasudeva on February 28. Sarraf, who was previously Director (Finance) in ONGC, got CVC clearance, but the same for Vasudeva could not be obtained. (PTI)
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