2013 was a tough year for Indian real estate, marked by rising costs and poor offtake. A look at how housing, office and mall spaces fared across the country’s four top citiesClick here to view graphicCompiled by Ankita Ramgopal; Graphic by Prashant Chaudhary (This story was published in BW | Businessworld Issue Dated 27-01-2014)
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Tata Power on Wednesday (1 January 2014) welcomed Delhi Government's announcement of providing 50 per cent subsidy on power consumption up to 400 units, saying it was a "good move" which will provide relief to majority of the consumers in the city."It is a good move from the point of view of consumers.It will provide them relief. I welcome the decision by the government," Tata Power Delhi Distribution Ltd (TPDDL) CEO Pravir Sinha told PTI.Delivering on yet another poll promise, the Aam Aadmi government Tuesday announced a 50 per cent subsidy on power consumption upto 400 units in Delhi, which will benefit around 28 lakh of the total 35 lakh consumers in the city.When asked about Government's move to order Comptroller and Auditor General scrutiny of the finances of the three private power distribution companies, Sinha chose not to comment but said TPDDL will comply with the law.He, however, said TPDDL was responding to government's directive of making their stand clear on the CAG scrutiny of the companies."If the law of the land demands that (the CAG audit), we will definitely comply with the directive. We will comply with all the statutory and administrative laws and regulations," Sinha said.TPDDL supplies power to 13 lakh consumers in North and North West parts of Delhi. The other two companies -- BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd -- supply power in rest of the areas in the city except areas under jurisdiction of New Delhi Municipal Corporation.Asked whether Delhi Electricity Regulatory Commission (DERC) will be under pressure not to hike electricity rates even if power purchase cost by distribution companies goes up due to rise in cost of fuel such as coal and gas, Sinha said the regulatory commission is "very independent" and it will take correct decisions.The DERC is likely to begin this month the tariff revision process for the year 2014-15.(PTI)
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Ending months of uncertainty, the Cabinet on Wednesday night (19 December) decided to allow Reliance Industries to double the price of natural gas from April provided the firm furnishes a bank guarantee to cover its liability if gas hoarding charges against it are proved.The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11.The Cabinet Committee on Economic Affairs (CCEA) decided that the "contractor (RIL) will be allowed to sell natural gas from D1&D3 at revised price from April 1, 2014. The sale will be permitted on the basis of a bank guarantee to be furnished by RIL in favour of the Government for the incremental gas rate," Oil Minister M Veerappa Moily told reporters here.The CCEA headed by Prime Minister Manmohan Singh decided there will be no change in the Rangarajan formula of pricing domestically produced gas - both conventional and non-conventional fuels such as coal-bed methane and shale gas - at an average of international gas hub rates and the cost of liquefied natural gas (LNG) imported into India."There will be no cap or floor for the price," Oil Secretary Vivek Rae said.According to the formula, the gas price on April 1, 2014, for all producers including state-owned Oil & Natural Gas Corp (ONGC) and private firms such as RIL will be about USD 8.4 per million British thermal units against USD 4.2 currently.Gas is a crucial input for the power and fertiliser sectors and every dollar increase will raise the cost of production.Rae said the format of the bank guarantee will be vetted by the Law Ministry and a supplementary agreement will be signed with RIL by next month for furnishing and execution of the guarantees. Prodded by the Finance Ministry, the Oil Ministry had initially proposed to deny the new gas price until RIL either made up for the shortfall in output during past three financial years or it was proved that the company was not responsible for failing to meet production targets.The issue had held up notification of the new gas pricing formula.As a way out, it was proposed that RIL and its partners BP plc of UK and Canada's Niko Resources be asked to give bank guarantees for the incremental revenue they would get until the issue is resolved through arbitration and validation by independent international experts.The government approved the Rangarajan formula in June.The Finance Ministry wanted to change the approved formula by excluding the price of spot LNG purchases, which it said was highly volatile. This would have reduced the gas price to USD 8.1.Moily said the CCEA today decided that "no change needs to be made in the early decision of CCEA on including spot prices in computation of gas price. Also, no cap or floor on gas price is required to be stipulated."In the run-up to the Cabinet decision, the Finance Ministry had sought to know if the government's position on the reasons for the fall in gas output at KG-D6 would be diluted by accepting the bank guarantees.Also, it felt the bank guarantees would run into USD 9 billion during the duration of the arbitration, but Rae said the oil ministry believes the bank guarantee, which is to be given on a quarterly basis, would not accumulate to such an amount.(Agencies)
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Draft guidelines issued by the Central Electricity Regulatory Commission (CERC) on December 6, 2013, resulted in the fall in exchange rates of power generations companies. But utilities are confident that the regulations can be negotiated.Power companies are up in arms against the Central Electricity Regulatory Commission (CERC)’s draft regulations which will decide power tariffs for five years from 1 April 2014. Analysts placed the impact of these guidelines anything between 3-7 per cent decline in profits for companies like NTPC and NHPC. This led to panic in the stock market and shares of power generation and distribution firms declined following the announcement - NTPC (down 10.33 per cent), Adani Power (down 2.96 per cent), Power Grid Corporation of India (down 2.27 per cent), GVK Power & Infrastructure (down 2.77 per cent), Tata Power Company (down 2.08 per cent), Torrent Power (down 2.2 per cent),The draft seeks to tighten operating norms for generators, including parameters governing heat and oil consumption and links incentives to the plant load factor (PLF). Generators will be incentivised for higher generation reflected in PLF. There is also a disincentive to be levied if plants are available for less than 85 per cent of the time. The stricter guidelines imply “profitability squeeze”, explains Kameswar Rao, Leader Energy Utilities and Mining, PwC India.But the largest power producer says there is no need to panic as “These are just draft guidelines and there are many positive aspects as well that are not being counted.” The negatives we will be further discussed with the regulatory authority explained NTPC Chairman Arup Roy Choudhary, who is confident that in return the company will receive some relief.According to NTPC, the fact that Return on Equity (ROE) of 15.5 per cent remains unchanged, additional ROE of 0.5 per cent on early completion of project remains unchanged, special allowance for operating station after useful life has been enhanced to 7.5 lakh /mw/year from 5 lakh /mw/year in 2009-10, water charges to be excluded from O&M expenses and will be pass through separately, annual escalation on O&M expenses to 6.35 per cent from 5.72 per cent. Compensation allowance (Rs lakh /mw/year) has been enhanced, during R and M of units O&M expenses and interest on loan will be pass-through, rate of late payment surcharge increased from 1.25 per cent to 1.5 per cent per month, debt equity ratio remains the same, pay revision recognised as pass through.These guidelines are only applicable to power generators not granted under competitive bidding process and who supply electricity to more than one state therefore will have little impact on the private power developers immediately explains Kameswar Rao. But he cautions against the long term impact of these norms as they could mean a reduction in surplus and equity therefore impacting growth. According to him, “Large companies like NTPC use surplus to set up new plants and with stricter norms there will be less surplus and little equity to expand... it is not like the government will put in money to set up new plants.”mmatbworld@gmail.com
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State-run gas utility GAIL India is in talks to buy a stake in the Tanzanian assets of British oil explorer Ophir Energy Plc, the Indian company's marketing head said.Ophir had offered to sell a 40 per cent stake in the Tanzania gas field, half of which has already been sold, said Prabhat Singh."There are various options. We are negotiating with them," Singh told reporters, without elaborating how much stake GAIL plans to buy.(Reuters)
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Reliance Industries may be allowed to hike rates for its gas from April after it offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output, the petroleum minister said.In June, India approved a move to higher, market-related rates for locally-produced gas from April 2014, but the finance ministry later said prices for Reliance should be capped because the company's gas production from the offshore D6 block was far below its supply commitment.Reliance, which operates the D6 block off India's eastern coast, has reported a sharp decline in gas output since 2010. Reliance and partner BP have cited geological complexities for the fall in output, but the oil regulator believes they failed to drill enough wells.Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue."They have come forward with the proposal for bank guarantees. There are some arbitration proceedings pending. Till that is settled, they will submit bank guarantees," Petroleum Minister Veerappa Moily told reporters at an industry event on Tuesday in Mumbai.Gas from D6 was earmarked for strategic domestic industries including fertiliser production, cooking gas and power, but has fallen so much that only some fertiliser plants now get supplies from the offshore block."We will put up a cabinet note in 10-15 days. Our ministry is concerned because we are keen to close the issue," he added.A spokesman for Reliance, controlled by India's richest man, Mukesh Ambani, declined to comment on the matter.The minister did not disclose the amount of guarantees, although media reports have earlier estimated them at $135 million per quarter.India, which imports nearly 80 per cent of its oil and a quarter of its gas requirement, hopes to launch a new round of auctions for oil and gas blocks by mid-January, Moily said.(Reuters)
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Reliance Industries may be allowed to hike rates for its gas from April after it offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output, the petroleum minister said.In June, India approved a move to higher, market-related rates for locally-produced gas from April 2014, but the finance ministry later said prices for Reliance should be capped because the company's gas production from the offshore D6 block was far below its supply commitment.Reliance, which operates the D6 block off India's eastern coast, has reported a sharp decline in gas output since 2010. Reliance and partner BP have cited geological complexities for the fall in output, but the oil regulator believes they failed to drill enough wells.Falling output had already prompted the government to disallow proportionate cost recovery to Reliance, leading to arbitration proceedings over the issue."They have come forward with the proposal for bank guarantees. There are some arbitration proceedings pending. Till that is settled, they will submit bank guarantees," Petroleum Minister Veerappa Moily told reporters at an industry event on Tuesday in Mumbai.Gas from D6 was earmarked for strategic domestic industries including fertiliser production, cooking gas and power, but has fallen so much that only some fertiliser plants now get supplies from the offshore block."We will put up a cabinet note in 10-15 days. Our ministry is concerned because we are keen to close the issue," he added.A spokesman for Reliance, controlled by India's richest man, Mukesh Ambani, declined to comment on the matter.The minister did not disclose the amount of guarantees, although media reports have earlier estimated them at $135 million per quarter.India, which imports nearly 80 per cent of its oil and a quarter of its gas requirement, hopes to launch a new round of auctions for oil and gas blocks by mid-January, Moily said.(Reuters)
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Oil prices stabilised on 26 November after the previous session's slide as traders questioned how quickly the Iranian nuclear accord could translate into higher supplies, while Asian shares got off to a cautious start.The yen regained some poise following Monday's steep decline to a six-month low against the dollar and a four-year trough versus the euro.US crude prices added 0.2 per cent to above $94 a barrel, pausing after the previous session's 0.8 per cent decline following a weekend deal between the West and Tehran to halt Iran's most sensitive nuclear activities in exchange for some relief from crippling sanctions."The interim six-month 'freeze' agreement just reached on Iran's nuclear programme should not have any impact on oil prices, aside from short-term sentiment, because core sanctions on oil and banking have not been touched," Societe Generale said in a note."We see a greater than 50 per cent chance that a comprehensive agreement will be successfully reached within six months....If and when that happens, it could take Iran three to nine months to recover the one million barrels per day in production lost since 2011."MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent, adding to a 0.3 per cent rise in the previous session on the back of the Iranian deal.Thai assets looked set to come under further pressure on heightened political uncertainty as anti-government protesters forced their way inside the country's Finance Ministry and burst through the gates of the Foreign Ministry compound, in a bid to oust Prime Minister Yingluck Shinawatra.On Monday, the Thai SET index fell for a fifth straight session to an 11-week closing low and the baht tumbled to a two-week low versus the dollar.Citigroup said the Iranian nuclear deal could be a "get-out-of-jail-free card" for current account deficit countries, such as India, Indonesia and Turkey, which face a liquidity drain when the Federal Reserve eventually tapers in the coming months.Tokyo's Nikkei share average was likely to take a breather, with futures pointing to a weaker open after it climbed 1.5 per cent on Monday to within sight of a 5-1/2 year peak reached in May.The Japanese currency, which typically falls when share price rise, was up 0.2 per cent at 101.52 yen to the dollar and up 0.1 per cent at 137.27 to the euro.The euro was little changed at $1.35195, having fallen 0.3 per cent overnight."We remain bullish on the dollar heading into 2014 but remain tactically cautious on establishing longs, with a number of U.S. dollar pairs already trading at the high end of their ranges and data unlikely to be consistent enough to support expectations for an early tapering," analysts at BNP Paribas wrote in a note.Data showed on Monday that contracts to buy previously owned U.S. homes fell for a fifth straight month in October, hitting a 10-month low and adding to signs of cooling in the housing market.US stocks ended mixed overnight, with the Dow Jones industrial average posting a slim gain to end at another record high, while the S&P 500 eased 0.1 per cent.(Reuters)
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