MUMBAI: As states governments add layers of taxes on fuel, disparity in petrol and diesel prices across the country has reached as high as 35%, spawning a new mafia that profits by sourcing cheap and selling high
Ever wondered why you have to shell more if you refill at a petrol pump in Thane, just a few kilometers away from your regular fuel station in Navi Mumbai. Or why the fuel costs less outside city limits.
Well, if you thought differential of a few bucks across suburbs was too high, here’s a shocker: it is way too high, as much as almost 35%, when compared among states, and is widening with every price increase.
This is because some state governments are adding multitude of taxes and levies on oil.
This difference has also led the rise of unscrupulous elements who are making a killing by selling fuel in some states by sourcing it cheap from nearby states where they cost less.
Consumers in Pune, for instance, are paying Rs 81.07 per a litre for petrol (highest in the country) as compared with Rs 59.96 per litre (lowest in the country) in Goa-Panjim, mainly due to multiple layers of taxes like sales tax, value added tax (VAT), cess, state-specific charges (SSC), local body tax (LBT), entry tax and cess.
In case of diesel, consumers in Maharashtra are shelling out the highest — Rs 67.99/litre in Thane, at Rs 66.51 per litre in Mumbai, Rs 66.49 in Pune as compared with Rs 56.72 in Haryana-Ambala and Rs 56.75 in Punjab-Jalandhar.
In Navi Mumbai and Thane, dealers pay three different kind of taxes over and above normal sales tax and VAT, which include, LBT, export LBT and additional VAT.
This maze of taxes has led to petroleum dealers across the country fighting for uniform tax structures and inclusion of petrol and diesel under Goods and Services Tax (GST).
According to Ashok Badhwar, president of Federation of All India Petroleum dealers (FAIPT), Karnataka has the highest sales tax in the country on petrol and diesel, followed by Maharashtra and Tamil Nadu.
“Mafia is making all the money in such states as they procure fuel from states like Goa for a cheaper price and sell these states. Dealers are losing money big time. The investments are also high for a dealer if the fuel is expensive in a state,” he said (see table for effective tax rate on diesel, petrol). Effective rates of sales tax and VAT on petrol are quite high in Punjab, Karnataka, Andhra Pradesh, Madhya Pradesh and Maharashtra,” says Badhwar.
“We made a representation with the previous government but nothing really happened. We plan to meet the current minister after August 14,” he said.
Several states have, however, opposed inclusion of these fuels under GST.
“Finance ministers of all states want liberty of charging VAT on petrol and diesel as per their wish. States are opposing GST mainly because they know this tax would directly go to central government’s kitty rather than their accounts,” Uday Lodh, president of Federation of All Maharashtra Petrol Dealers Association (FAMPEDA), told dna.
FAMPEDA has, in fact, announced that petroleum dealers across Maharashtra except Mumbai would go on one-day strike on August 11 to press for a “One Maharashtra One Tax” regime. Lodh said the disparity in taxes between states, cities and outside the city limits was making their trade economically unviable.
“Around 1,000 petrol pumps on the state boarder are not able to sell anything. If tax rates are brought at par, shifted sale would come back to the state,” Lodh added.
Higher fuel cost is also impacting truck operator margins.
“Diesel price constitute around 60% of the overall operational cost for a transporter. Hence, transporters are currently facing financial challenges owing to increasing volatility on diesel, while freight rates have remained unchanged due to slow demand in the market,” said Amritlal Madan, vice-president, All India Motor Transport Congress. He said truckers generally prefer refuelling in states like Madhya Pradesh or Gujarat instead of a state like Maharashtra where diesel costs are the highest.
FAMPEDA has also appealed to the state government to abolish State Specific Charge (SSC) or reduce VAT by 3% to bring prices at par with neighbouring states.
The government introduced the SSC scheme in July 2012 to allow the public sector oil marketing companies to recover the extra amount they incurred as entry tax, octroi and input tax restrictions on VAT in certain states.
These local taxes came in addition to the sales tax and excise duty imposed by the state governments. The levies incurred by oil marketing companies are irrecoverable without the help of SSC scheme.
“Mumbai Municipality charges 3% octroi on crude, making raw material costlier for city refineries in comparison to other states. However, other states do not want to bear this additional burden, and hence this cost is recovered from Maharashtra itself. OMC are not even able to completely recover this cost as it can be applied on only specific kind of fuels,” B K Namdeo, refinery director of HPCL, said.
In Mumbai, Brihanmumbai Municipal Corporation (BMC) collects around Rs 2,500 crore as octroi on crude. Besides, twenty five municipal corporations are levying LBT at the rate of 2% to 5%, making auto fuels even more costlier within cities, Lodh said. In July, the Ministry of Petroleum and Natural Gas declared that the upward revision in Retail Selling Price (RSP) of domestic LPG and kerosene distributed through Public Distribution System (PDS) would be put on hold until the government holds a discussion on State Specific Costs (SSC).
Namdeo believes that the government may not look at removing SSC in case of petrol and diesel as these are not as high as sales tax and VAT rates in different states.
Most experts dna spoke to agreed that either abolition of tax levies by states or uniform tax structure for fuels can bring price parity in auto fuels across the country. However, crude petroleum, natural gas, some petroleum products, and electricity have been kept electricity outside the purview of GST as per the suggestions of the Empowered Committee of State Finance Ministers, 2009.
According to National Institute of Public Finance and Policy, if crude petroleum, natural gas, petrol, diesel, aviation turbine fuel and electricity are kept out of GST, it would lead to cascading effect in prices of other essential commodities.
“Since petroleum products play an important role in India’s energy use, and are used directly and/or indirectly as inputs in most sectors, the proposed design would result in cascading in sectors of the economy,” the institute said in a report authored by Sacchidananda Mukherjee and R Kavita Rao.
GST reforms implemented alongside decontrolling product prices will erase worries about a potential price rise, said the report.
(Source: DNA, August 8, 2014)
OIL MINISTRY PUTS RIL’S ODISHA GAS BLOCK PLANS ON HOLD
New Delhi: In yet another setback to Mukesh Ambani-led Reliance Industries Ltd (RIL), the petroleum ministry has put on hold the company’s $3.5-billion ( Rs. 21,350-crore) plan for integrated development of the gas discoveries in the NEC-25 block, off the Odisha coast.
The decision has been taken pending clarity on the policy, and the need for prescribed tests to confirm the discoveries of hydrocarbons in deep water exploration, as is the global practice.
Sources in the oil ministry said a new policy is being put in place to deal with the controversy over “confirmatory and technical” tests (also called as the drill stem tests or DSTs) required under the contract, for confirming a discovery by the operator of oil and gas fields.
A host of discoveries by RIL in the NEC-25 block together hold substantial gas reserves and according to the company’s integrated field development plan, at least 10 million standard cubic metres per day of gas can be produced from the four discoveries in the block by 2019.
However, RIL needs the approval of the oil ministry before starting work on its plan for NEC-25. The Directorate General of Hydrocarbons (DGH) — the nodal technical arm of the oil ministry — had earlier refused to approve RIL’s $3.5-billion plan for developing gas discoveries on the grounds that the company had not done the prescribed tests to confirm the finds.
“Since the matter is contingent upon the decision on the Cabinet note on DST, we may await the decision… Therefore, at this point, the petroleum mining license application of RIL for integrated block development plan cannot be considered,” an oil ministry official said.
Sources said RIL has argued that sustainable field production levels could be established through an integrated approach without carrying out individual DSTs.
The company further argued that as the NEC block is located in simple sandstone reservoir and is dry in nature, there was no need for DSTs to establish sustainable production levels.
The NEC-25 block will be the second major block of RIL to start production after the D6 block in the Krishna-Godavari basin. RIL holds 60% interest in the block, while British energy major BP and Canada’s Niko Resources hold 30% and 10%, respectively.
RIL has also been engaged in a tussle with the oil ministry over the diminishing gas output from KG-D6 and over the government purchase price for natural gas.
(Source: Hindustan Times August 8, 2014)
GOVERNMENT LAWYERS WARY OF FOREIGNER AS 3RD ARBITER IN RIL GAS DISPUTE
Government lawyers for the Reliance Industries Ltd’s (RIL) arbitration proceedings have told the oil ministry that appointment of a foreigner as the presiding arbiter would be “undesirable” in the absence of any such contractual provision and difficulty in ascertaining the person’s “independence and impartiality” in the face of “global presence” of RIL’s 30% partner British energy major BP Plc. RIL had on November 23, 2011 initiated the arbitration proceeding against the oil ministry’s decision to slap a penalty — which has now increased to $2.3 billion — for failing to meet gas supply target for the KG-D6 block, off the Andhra coast.
Top government sources said the advocates for the government, Swarup & Associates, have given a brief to the ministry, saying the Article 33.6 of the state’s contract did “not provide for appointment of a foreign national as a third national as a third arbitrator”. The brief questioned the logic of a foreigner as the third arbiter by pointing out that the “contract was executed in India, the subject matter (KG-D6 field) is situated in India and performed in India; and the contract, including the arbitration contained therein is subject to the laws of India…” and the third arbiter is “not required to be foreign national”. But, the real reason for reservations against a foreigner seems to be apprehensions over BP’s global presence and reach. “BP admittedly has worldwide (including Australia) presence.
Therefore, foreign national as an arbitrator would be undesirable and the whole concept of a foreign national as an arbitrator is to ensure independence, impartiality and neutrality. Further, such foreign arbitrator’s antecedents may not be fully known and would be difficult, or impossible, to unravel as an arbitrator. The brief referred to developments after the Supreme Court appointed former Australian judge Michael McHugh as the presiding arbiter. The judge declined the appointment on two occasions — May 21 and May 29. But on May 29 itself, after communicating his decision to decline for the second time, he changed his mind and accepted the job. But last month, he withdrew from the case after the government asked him not to start proceedings till it cross-checked all the submitted documents and communication.
(Source: Economic Times August 8, 2014)
BPCL PLANS OVER RS16K CR ASSAM REFINERY EXPANSION
New Delhi: State-run oil refiner-marketer Bharat Petroleum Corporation Ltd has drawn up plans to ramp up the capacity of its refinery at Numaligarh in Assam’s Golaghat district from three million tonnes per annum to nine million tonnes at an investment of Rs 16,600 crore.
The project includes laying a 1,350-km pipeline to bring in crude from a port on the east coast. While the refinery expansion would cost about Rs 8,800 crore, the remaining investment is expected to go into laying the pipeline and other assorted facilities.
Company sources said the project would mark the singlelargest investment in Assam and boost economic activities in the north-east as well as unlock potential for exporting fuels to India’s eastern neighbourhood. Government consultancy firm Engineers India Ltd is preparing the feasibility report for the project and the pipeline. The BPCL board has discussed the plan but a final call would be taken after the project report and other paperworks are completed.
But, Bharat Petroleum wants 53% of capital subsidy on the Rs 8,800 crore to be spent on the refinery expansion and extension of excise duty concession on the expanded capacity as a cushion against geographical, infrastructure and political difficulties in execution of the project.
The company has approached the oil ministry for the relief measures. It has cited the example of Brahmaputra Cracker and Polymer Ltd, a joint venture with gas utility GAIL, which has been granted similar subsidy . The polymer project was drawn up as part of UPA government’s initiative for the north-east.
It has further argued that all refineries built during the last decade were granted financial relief by the Centre and the respective state governments. Besides, the construction and operation of the expanded capacity and the pipeline would create infrastructure and sources of livelihood for local population.
The present capacity of three million tonnes per annum of the Numaligarh refinery is considered too small to ensure efficient operations.
Though the refinery is capable of running at 3.3 million tonnes per annum, it operates at only 2.5 million tonnes due to short supply of crude from Oil India Ltd.
A capacity of nine million tonnes would ensure inclusion of facilities, with latest technology , to produce more products and better quality of fuels required for meeting more stringent vehicle emission norms.
(Source: Times of India August 8, 2014)
IOC’S CAPEX INVESTMENT TO SEE A 28% DROP THIS YEAR
Mumbai: State-run Indian Oil Corporation (IOC) will invest Rs 12,000 crore in capex for FY15, a drop of 28 per cent compared with FY14, when the company had a planned capital investment of Rs 16,700 crore.
“Despite the severe financial crunch in the past few years, the Corporation continued with its investments in value-addition projects that would contribute to future growth and expansion of business in the coming years,” said Ashok Balasubramanian, chairman of IndianOil Corporation, in the company’s annual report.
“For Indian Oil, 2013-14 was a year of subdued optimism as the turnover touched a new high of Rs 4,57,553 crore, a jump of 10.3 per cent over the previous year, and net profit surged to Rs 7,019 crore, a leap of 40.2 per cent compared to 2012-13,” he added. Indian Oil, which has been maintaining its leadership in the downstream petroleum sector for the past many years and currently holds a market share of 47.1 per cent, has an expenditure target of Rs 56,200 crore for various projects in the 12th Plan period, which is substantially higher than the Rs 48,655 crore spent in the 11th Plan period.
The pipelines division of IndianOil is currently implementing 13 projects at a cost of Rs 6,800 crore to expand its network of crude oil and product pipelines during the 12th Plan period. “This would result in an additional throughput capacity of 15.5 million tonnes per annum and a pipeline length of 3,200 km. Several LPG (liquefied petroleum gas) pipeline projects are also being planned to leverage the multiple advantages of pipeline transport,” the report noted.
However, the prevailing dual-pricing policy in diesel has resulted in a sharp decline of bulk sales for the company. Even though Indian Oil maintained its position as the market leader with product sales of 75.53 million tonnes (including petroleum products, gas, petrochemicals and exports) for FY14, the overall volumes in domestic sale of petroleum products registered a drop of 1.5 million tonnes, compared to the previous year.
“Even though dual-pricing threatened to erode the Corporation’s market share as well as profits in diesel, we could still maintain our coveted status as the lead supplier to the railways, defence services and several major consumers,” the report noted. The other factors that contributed to the dip in diesel consumption include a decline in sale of commercial and passenger vehicles, improved power situation in the country, and shift of industrial users to alternative fuels.
During the year, IndianOil expanded its overseas portfolio with the acquisition of 10 per cent interest in new integrated upstream and liquefied natural gas (LNG) project Pacific Northwest LNG – based on unconventional gas – in British Columbia (Canada).
This interest was acquired through a wholly-owned subsidiary of the company incorporated in the Netherlands, which in turn incorporated a wholly-owned subsidiary in Canada. “This is a producing asset with total gross 2P (proven and probable) reserves of 8.35 tcfe (trillion cubic feet of gas equivalent) and has generated a gross revenue of CAD 1.56 million during the year. The Corporation will have access to assured LNG supply of 1.2 million tonnes per annum from this project for a minimum period of 20 years,” said Indian Oil.
(Source: Business Standard August 8, 2014)
50% DIESEL, SEED SUBSIDY FOR FARMERS OF RAIN-DEFICIT AREAS
New Delhi: With an aim to save standing kharif crops from weak monsoon, the Centre on Thursday announced 50 per cent diesel subsidy to farmers in places where rainfall deficiency was more than 50 per cent as on 15 July.
The 50 per cent subsidy will also be applicable to places as and when states declare them as drought-hit.
The government also raised the subsidy ceiling to 50 per cent on seeds in order to partially compensate the cost of resowing. It also decided to give a special package of Rs 35,000 per hectare for rejuvenation of horticultural crops in areas declared drought-hit.
Intervening during a discussion on natural calamities in the Rajya Sabha, Agriculture Minister Radha Mohan Singh said: ‘No state has declared drought yet. However, there are reports that in many places rainfall deficit is more. A day before Wednesday, a decision was taken to provide diesel subsidy to farmers.’
The Centre has issued a directive to states that diesel subsidy be given to farmers to supplement irrigation to protect standing kharif crops in areas where rainfall deficit is more than 50 per cent as on July 15, he said.
The 50 per cent diesel subsidy, to be borne equally by the Centre and state governments, will be given to a maximum of two hectares per farmer between 15 July and 30 September, as per the directive.
Noting that monsoon deficit has come down since June, the minister said that the overall deficit stood at 18 per cent as on 8 August compared to 40 per cent in June.
‘Weather reports do not give clear picture as there are places having 50 per cent rain deficit, he said, adding that his ministry has drawn up contingency plans for 520 districts.
During the drought years in 2009 and 2012, the previous Manmohan Singh-led government had announced a 50 per cent diesel subsidy for farmers in rainfall deficit areas.
(Source: Millennium Post August 8, 2014)
GAS LEAK AT KERALA METALS PLANT AFFECTS SCHOOL KIDS
Kochi: Following gas leak from its plant hitting several children in the nearby school, the public-sector Kerala Minerals and Metals Ltd at Chavara in Kollam district has been asked to close temporarily.
Two dozen students of the Chavara Government Higher Secondary School, who felt physical distress after they breathed in the gas leaked from the plant on Thursday morning, were taken to hospital.
This was the second day running that gas leaked from the KMML plant. On Wednesday, 58 children at the nearby Sankaramangalm school had felt distress and sought medical help.
The company authorities had said there was a minor leak of ‘burning gas’ that had caused the distress and that steps had been taken to plug the leak.
However, gas leaked again on Thursday morning, causing panic in the neighbourhood, police said.
The gas leak triggered a blockade of the national highway by local residents. The police had to use force to disperse the protesters and two persons were injured.
The police have launched an inquiry. Labour Minister Shibu Baby John expressed suspicion of sabotage.
Factories and Boilers Department has asked the plant to close temporarily.
KMML is a State Government-owned facility that produces titanium dioxide pigment which is used mainly in cosmetic products.
It is used in textiles, facial creams, emulsions, wood paints, enamels, plastics and newsprints. The main raw material is the rare earths found in the beach sands.
(Source: Business Line August 8, 2014)
ANDHRA PIPELINE TRAGEDY: GAIL EXPECTED TO RESTART OPS IN PHASED MANNER
HYDERABAD: After the recent pipeline tragedy at Nagaram village in East Godavari district, GAIL (India) is expected to restart its operations in the area in a phased manner. The pipeline tragedy had badly affected natural gas supply to several fertiliser companies, such as Nagarjuna Fertilizers and Coramandel Fertilizers, and several other power plants as well. But the good news is that partial gas supply may even resume by month end, much to the relief of these firms.
“The natural gas pipeline network in Andhra Pradesh runs through 870 km. The capacity of the network is 15.9 mmscmd of natural gas while only about 5 mmscmd was being supplied in the region due to unavailability of gas from the sources. Currently, GAIL has reduced the supplies to 0.2 mmscmd of natural gas considering abundant precautionary measures so that all the lines are repaired and corrective measures taken,” sources told FE.
Nagarajuna Fertilisers and Chemicals (NFCL) and gas-based power plants of GVK, REL, Spectrum Power, GMR, APGPDC and Lanco are prominent beneficiaries of the pipeline.
“GAIL is working on a three-pronged plan to restore supply of natural gas to different customers. In the short term, supply to NFCL will be restored by middle of August and the supply to Andhra Pradesh Gas Power Corporation (APGPCL) will commence by end of August while that of GVK will start by the middle of September. The full and final restoration of the pipeline will take another 6-8 months,” sources added.
Production at NFCL has come to a complete halt, in the meanwhile, thanks to the disruption. “Production at two plants in Kakinada, having a capacity of about 4,500 tonnes of urea per day, is completely stopped,” NFCL officials said. Similarly, Coromandel Fertilisers is also feeling the pinch of the pipeline closure. According to agriculture experts, this situation may lead to urea shortage in the country as the sowing season has just begun.
(Source: The Financial Express, August 8, 2014)
OIL COMPANIES AWAIT SUBSIDY GRANT
NEW DELHI: The Modi government is expected to decide next week on the fuel subsidy to be given to the oil marketing companies for their losses in the first quarter for selling petroleum products at subsidised rates.According to sources, oil companies have demanded a subsidy of around `13,000 crore from the finance ministry for the first quarter of 2014-15.
The total under-recovery claimed by the oil marketing companies— IOC, HPCL and BPCL — for the first quarter is around `28,500 crore on the sale of diesel, kerosene and liquified petroleum gas (LPG). Oil and Natural Gas Corporation Limited, GAIL and Oil India will bear RS15,500 crore of the under-recovery.
Oil marketing companies have demanded that a decision on the subsidy payments be taken soon as their first quarter results have to be declared.Going forward the subsidy burden of the government is expected to come down as diesel is likely to get de-regulated within next couple of months.
Infact, Fitch Ratings had in a report estimated that under-recovery on fuel could fall by over 25 per cent in 2014-15 (FY15).This will be led largely by the sharp drop in diesel under-recoveries, which was down to an average of `4.1 per litre for the first three months of financial year 2014-15 against `8.5 in financial year 2013-14, it had said.
(Source: The Asian Age, August 8, 2014)
RIDING ON PSU ETF SUCCESS, GOVT TO LAUNCH SECOND SUCH FUND IN FY15
NEW DELHI: Buoyed by the good response from investors to the public sector units’ exchange traded fund (PSU ETF) launched in FY14, the government is looking to come out with a similar ETF this fiscal.
The finance ministry has roped in ICICI Securities to prepare a report on the feasibility, size and the basket composition of the ETF, government officials told FE, adding the new fund could include PSUs which were not part of the previous one.
“ICICI Securities is advising the disinvestment department on the matter. As of now, the size and the basket composition has not been decided. ICICI is expected to submit a report soon. Once we take that into consideration, we will prepare a note to send to Cabinet on a second PSU ETF,” a senior finance ministry official said.
As part of its disinvestment programme last fiscal, the government launched a R3,000-crore PSU ETF on March 18. The ETF comprised scrips of 10 state-owned companies — ONGC, Coal India, GAIL, REC, Oil India, Container Corp, Power Finance, Indian Oil, Engineers India and Bharat Electronics. Upon its launch, it proved a hit amongst investors, who oversubscribed in the fund by R1,000 crore.
In fact, the PSU ETF was a much-needed breather for the disinvestment department in FY14 when the budgeted disinvestment target of R54,000 crore was drastically revised down to R19,027 crore for a number of reasons, which showed a glaring lack of planning on part of the Centre.
For FY15, the Centre excepts to garner R58,425 crore from stake sales in PSUs and residual stake-sale in Hindustan Zinc and Balco. Its disinvestment roadmap has 11 PSUs, including Coal India, ONGC, NHPC, SAIL, and Rural Electrification, among others.
Sources said that the new PSU ETF is likely to be used to divest stake in additional companies which are not yet part of the roadmap, but may be added later during the year.
Disinvestment secretary Ravi Mathur told FE in an interview last month that more companies will be divested this fiscal to meet Sebi’s shareholding norm for PSUs, under which the minimum public shareholding in state-owned companies should not be less than 25%.
Officials also added that the new PSU ETF will be listed on the National Stock Exchange, like its predecessor.
The official also said that the disinvestment department may seek approval to sell a 10% stake in Coal India for R23,700 crore in the next Cabinet meeting.
(Source: The Financial Express, August 8, 2014)
RELIANCE INDUSTRIES LTD MARKED ALL CORRESPONDENCE WITH OIL MINISTRY, DGH
NEW DELHI: Reliance Industries had marked all copies of its correspondence with the Supreme Court-appointed Tribunal on KG-D6 cost recovery issue to the Oil Ministry and its technical arm DGH.
Contrary to the impression being created, RIL had subsequent to Supreme Court on April 29 appointing former Australian judge Michael Hudsom McHugh as third arbitrator to decide if the government was right in denying cost recovery of up to USD 2.3 billion for gas output from KG-D6 lagging targets, marked all correspondence with the Tribunal to the ministry and the DGH, sources said.
McHugh had on May 20 declined to be part of the Tribunal saying his consent was not taken, but subsequently agreed after lawyers for RIL and its partners BP plc of UK and Canada’s Niko Resources contacted him on May 29.
Sources said RIL’s advocates in an email on May 29 requested McHugh to accept his appointment as the third/ presiding arbitrator of the Tribunal. A copy of RIL’s lawyer Tom Sprange’s email was marked to the Director General of Hydrocarbons (DGH) and the Oil Ministry.
Government lawyers Swarup & Associates, who have now told the ministry that appointment of a foreigner as the presiding arbiter would be “undesirable” in the absence of any such contractual provision and difficulty in ascertaining the person’s “independence and impartiality”, was not marked on the email as it was not known at that time who would act for the government of India, they said.
Thereafter emails and correspondence were exchanged between the RIL and the Tribunal with respect to the fixing of fee for the arbitrators. By this time, government lawyers were intimated and they were marked on those emails but they chose not to reply, sources said.
On June 18, RIL’s lawyers sent a letter to government’s advocate stating copies of all the correspondence between the arbitrators and the parties will be provided to them.
McHugh on June 26 send an emial to all the parties on behalf of all arbitrators enclosing a working draft procedural timetable but a week later on July 2 government advocates sent emails asking the Tribunal not to proceed with the matter till a detailed response is issued by them and asked the Tribunal to send copies of all the documents correspondence exchanged.
Sources said the government felt McHugh appointment stood terminated the moment he declined to accept the appointment and thereafter he cannot reappoint himself.
McHugh withdrew from the Tribunal and RIL has field a fresh plea before the Supreme Court for appointment of a third arbitrator to decide on the case.
(Source: The Economic Times, August 8, 2014)
NAVEEN JINDAL TO EXIT OIL & GAS BUSINESS, SELL STAKES TO CUT DEBT
NEW DELHI: Naveen Jindal plans to exit from the oil and gas business and his listed entity Jindal Steel and Power (JSPL) will sell stakes in some projects to reduce the group’s debt burden. JSPL had debt of Rs 37,500 crore as of June against Rs 36,500 crore in the year earlier. However, the company plans to continue its investment drive to expand in mining besides its steel and power plants.
“We will exit from some of the projects to reduce our debt burden by end of this financial year. We will continue to focus on mine, minerals, steel, cement and power businesses.
JSPL will invest Rs 6,000 crore during the fiscal and it will be largely funded from internal cash generation,” said JSPL managing director and CEO Ravi Uppal. He added that the group has already hired advisors to look for buyers for Jindal’s investments in oil and gas blocks while JSPL is evaluating its options.
JSPL group CFO and director Rajgopal K said the company will exit from non-core activities and also core business that may not be generating adequate cash.
In a bid to diversify in 2008, the group established Jindal Petroleum that acquired seven oil and gas blocks, including five in Georgia and one each in Bolivia and India. According to Jindal Petroleum’s website, the company has so far committed an investment of $200 million and is currently producing about 550 barrels a day. Last year, it announced the discovery of crude oil in one of its blocks in Georgia and a $100 million development plan for the blocks.
(Source: The Economic Times, August 8, 2014)
ESSAR OIL TO SHUT 40,000 BARREL-PER-DAY CRUDE UNIT FOR SEVEN DAYS IN AUGUST SECOND HALF
NEW DELHI: Essar Oil will shut a 40,000-barrel-per-day unit at its Vadinar refinery for a week for maintenance in the second half of this month, a company spokesman said on Thursday.
Essar operates a 400,000-barrel-per-day refinery at Vadinar in Gujarat.
“Our smaller CDU will go under maintenance shutdown in the fourth or the fifth week this month for about seven days. Our crude throughput during the maintenance period will be reduced by 350,000 to 400,000 barrels,” the spokesman said.
However, industry and trade sources said the shutdown could last for about 10 days.
Essar has scheduled the shutdown to the later part of the month to take advantage of a planned cut in supplies of locally produced Mangala crude for about 10 days, industry sources said.
Cairn India Ltd , which operates an onland crude producing block at Barmer in Rajasthan, will shut its Mangala processing terminal for 10 days from Aug. 21 to add new units, they said.
No immediate comment was available from Cairn India.
(Source: The Economic Times, August 8, 2014)
HARDY OIL & GAS ISSUES INTERIM MANAGEMENT STATEMENT – QUICK FACTS
Hardy Oil & Gas Plc (HDY.L) Thursday said the Government of India’s decision to review the Country’s gas pricing policy for domestically produced natural gas has created some uncertainty for the sector. In an interim management statement for the period from April 1, 2014 to date, the company noted that its working capital position remains strong and that it is well funded to meet its planned work programmes. The company’s exploration and production assets are based in India and are held through its wholly owned subsidiary Hardy Exploration & Production (India) Inc. The firm noted that energy demand in India is growing at an exceptional rate and the countries structural supply shortfall should promote a geopolitical environment to complement its efforts. The stock fell 5.56 percent to trade at 102.00 pence.
(Source: RTT August 8, 2014)
GLOBAL CRUDE OIL PRICE OF INDIAN BASKET WAS US$ 103.27 PER BBL ON 6TH AUGUST, 2014
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 103.27 per barrel (bbl) on 6th August, 2014.
In rupee terms, the price of Indian Basket was Rs 6334.58 per bbl on 6th August, 2014. Rupee closed weaker at Rs 61.34 per US$ on 6th August, 2014 as against Rs 60.87 per US$ on 5th August, 2014.
(Source: Indian Oil & Gas August 8, 2014)