A change in the price of petroleum products is expected to come into effect from January 1, 2012.
Under the change, petrol and high speed diesel prices will increase by 50 paisas, while the price of kerosene oil is expected to decrease.
According to petroleum ministry sources the change will take place under the monthly fuel price adjustment.
Sources add that the price hike is being considered due to an increase in the exchange rate of the dollar.
A change in the price of petroleum products is expected to come into effect from January 1, 2012.
The state-owned oil companies will meet on December 31 to decide on a petrol price hike. Petrol rates are expected to go up by Rs 1, if the companies manage to get a nod from the government. Oil companies review the prices every fortnight and necessary corrections are made to match international rates. Following this policy, rates were slashed in mid November and again at the start of December.
Though the crude oil rates in the international market have been stable for some time, Rupee has depreciated against Dollar affecting imports. And even though petrol prices are deregulated, the companies still require a informal nod from the government, which was not granted last week for a proposed hike of 70 paise.
Unions seek better returns on PF loans to govt.
NEW DELHI: Workers unions have demanded higher return from the government on the special deposit scheme where nearly a third of provident fund money of the organised sector workers is parked. Faced with the prospects of a sharp drop in returns on PF from 9.5% last year to 8.25%-8.5% this year, unions have stepped up pressure on the government to increase the rate of return to 9.5% from 8%.
The SDS, money borrowed by the central government, at present yields 8% return for the Employees' Provident Fund Oraganisation (EPFO). The EPFO has suggested a lower 8.25% return for 2011-12 on contributions to adjust for payments outstripping available funds in the previous year when a 9.5% interest rate was declared. Its suggestions will be discussed at the EPFO's finance and investment committee (FIC) meeting on Thursday, which will give its recommendations to the EPFO's highest decision making body, the Central Board of Trustees, that meets the following day.
"We will press for higher returns on SDS which has been at 8% since 2003-04, when it was slashed from 12%. We do not want to accept a lower interest rate on EPF this year, when all other funds are earning higher returns," said BN Rai, secretary general, Bhartiya Mazdoor Sangh.
The government has benchmarked returns on small savings to those on government securities, which in the current high interest rate regime means higher yields for borrowers. Rai said workers will also insist on acceptance of fresh deposits under the scheme, which was discontinued in 2007.
Share of EPF funds channelised into SDS has fallen from 63% in 2003-04 to about 30% now. According to All Indian Trade Union Congress secretary DL Sachdev, there was no logic for keeping the returns on SDS at 8% when the government had increased rate of returns for small saving instruments like the public provident fund to 8.6%.
20 Dec, 2011, 03.21AM IST, Amiti Sen,ET Bureau …ECONOMI TIMES
20 Dec, 2011, 04.51AM IST, ET Bureau…editorial in the ECONOMIC TIMES
Raiding PSU reserves unsustainable way of plugging budget deficits
The fiscal deficit looks like widening by at least one percentage point above the budgeted 4.6% of GDP. Economic growth could slow down next year. Meanwhile the government has ambitious but expensive new schemes in mind, for food security and universal health. So, many analysts want the government to take advantage of tens of thousands of crores lying in the reserves of public sector undertakings (PSUs).
When a private sector owner is in trouble, without a second thought he transfers sums from profitable companies to meet his current spending. Many analysts think the government should do the same. However, such transfers are one-off affairs and cannot be sustained over time. They can be justified in difficult times, but should not become a habit. Spectrum sales have in the past been taken to be current revenue, whereas they should actually be shown in the capital account as a reduction of assets. In the case of manufacturing PSUs, their cash surpluses are not large in relation to their investment plans, and these should not be commandeered by the government.
But many PSUs in mineral extraction have large, rising surpluses well in excess of investment needs. It makes sense to save part of this for future generations by investing abroad (as ONGC, Coal India and OIL have been doing) and spending part of it for current social purposes via the budget. We need a policy on how to apportion that bonanza. There are three ways in which PSU reserves can be transferred to the government. One is the declaration of huge special dividends. The second is a buy-back of shares by the PSU. The third is for PSU to use their surpluses to buy out minor stakes of the government in other PSUs.
A special dividend will benefit all shareholders. A buy-back could in theory be restricted to buying back government stakes and not publicly-held stakes, but that would be unethical and Sebi should say no. The third route also cuts out private shareholders and should be avoided altogether. Better than all these will be quick enactment of a goods and services tax, which can bring in additional revenue and plug the fiscal deficit sustainably.
Subsidised diesel dams furnace oil demand
(Courtesy: Business Standard, New Delhi, December 19, 2011)
The perils of subsidy take different shapes. It is not only subsidised domestic LPG or kerosene oil being diverted for commercial use. With the price of diesel being stable under government control, industrial users of furnace oil in several states are increasingly turning to diesel instead.
This is one reason why the consumption of diesel is now growing at a sharper rate than petrol after several years. It is not just diesel passenger vehicle sales driving this trend. Furnace oil is largely an industrial fuel. It is a key ingredient in generation of electricity and heat in a number of production units.
Being market-linked, the price of furnace oil has been moving up. R S Butola, chairman of IndianOil, the country’s biggest oil marketer and refiner, said furnace oil is selling at $103-104 per barrel in India, compared to diesel’s price of $97 per barrel. This is due to a price cap on diesel, as a result of which the domestic oil companies are retailing it at a loss of a little over Rs 12 per litre.
IndianOil mobilises bonds of over Rs. 1,400 Crore at 9.28%
Indian Oil Corporation Limited (IndianOil) has raised over Rs. 1,400 crore from the Indian Bond Markets after a gap of nearly two and half years.
IndianOil’s issue of Secured Redeemable Non-Convertible Bonds opened for subscription on private placement basis on December 15, 2011. The ‘AAA’ rated bonds have a maturity of 5 years with put and call option at the end of the 18th month. The issue has been placed through book-building route in a coupon range of 9.20% to 9.45% p.a., payable annually. The issue was well received by institutional investors particularly FIIs and banks. The issue, which was launched with an original size of Rs. 500 crore, was oversubscribed by over three times with subscription aggregating to approx. Rs. 1,600 crore. IndianOil has decided a cut-off coupon rate of 9.28%, i.e. the lower of the book-building range. As per market sources, this is one of the finest pricing achieved by any corporate in recent times. The proceeds of bond issue shall be utilised for meeting capex of ongoing domestic projects.
The success of the issue once again acknowledges the strong confidence of investors in IndianOil.
Crude, rupee double whammy hits oil companies
The fear within oil industry circles is that if the status quo persists over the next six months, there will be serious liquidity issues which could affect daily operations.
Mumbai, Dec. 14: Oil companies are wilting under the double whammy of the weakening rupee and high crude prices. It is just not the losses on sale of subsidised fuels which are an area of concern. Combined borrowings of IndianOil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are rapidly inching towards Rs 140,000 crore. At this rate, they could even touch Rs 160,000 crore by the end of this fiscal.
“What is especially worrying is the complete sense of inaction by the Government. With Parliament in a permanent state of disarray, we are expected to fend for ourselves in these difficult times,” an oil sector official told Business Line. Things have come to such a head that the companies are believed to be in no mood to comply with advance tax payments or the mandatory interim dividend to the Government, their owner and majority shareholder. “How can we possibly be expected to cough up money when there are no profits to show?” the official asked.
The fear within oil industry circles is that if the status quo persists over the next six months, there will be serious liquidity issues which could affect daily operations. In the process, bigger and more critical investments relating to infrastructure will be put on hold. This is happening at a time when the estimated spend of IOC, BPCL and HPCL over the next four years is nearly Rs 200,000 crore.
The other concern for the refining trio relates to policymaking, which has literally screeched to a complete halt. Nobody within the Government has a clue on what to do at a time when the oil companies are facing their worst-ever crisis in recent times. “All we can do is to borrow more and more because we have no idea if we will get any compensation for losses incurred. The interest burden is gradually killing us in the process,” an executive said. In contrast, 2008-09 almost seems sedate though this period is better remembered as the worst year for the oil industry when crude touched $147 a barrel. The rupee was not in the best of health either except that this state of affairs did not last too long. During the latter part of the year, crude prices started falling and the rupee settled to a more comfortable mid-40s (to the dollar) level.
However, this time around, crude prices have been constantly over the $100/bbl-mark and there is nothing to suggest that they will fall in the coming months. “Unless the Government comes with a cohesive pricing policy for diesel and cooking gas, our goose is cooked,” the executive said. And while it is the refiners who are taking the heat, observers believe it will not be too long before this malaise spreads to the upstream oil companies too. “If the Government does not do its bit in making good the losses of the refiners, ONGC will be soaked dry instead. It happened last year and will be repeated this time too,” they say. Should this happen, ONGC's Rs 12,000 crore FPO (follow-on public offer) will end up being in cold storage.
...Murali Gopalan ...from the pages of HINUD BUSINESS LINE newspaper.
Natural gas lost in policy smog
(Courtesy: The Economic Times, December 08, 2011, Delhi Edition)
"Whats in a name? That at which we call a rose by any other name would smell as sweet," Juliet Capulet asked Romeo Montague in William Shakespeare's lyrical tale, Romeo and Juliet. A similar question is relevant in India's natural gas industry where the government has designed distinct policies based on names given to natural gas.
The policies framed for various forms of natural gas coal-bed methane (CBM),shale gas, domestic natural gas, liquefied natural gas (LNG) or associated gas- contradict each other, often requiring the same operator to wear a different hat for a different form of natural gas. But herein lies the irony: the learning from one area is not applied to another. Instead, the government, it would appear, is ready to commit the same mistakes all over again as it goes about framing policies on different forms of natural gas.
UTI Capital buys 4% in Indian Oiltanking for Rs 100 Cr
(Courtesy: The Economic Times, New Delhi, December 14, 2011)
UTI’s private equity arm, UTI Capital, has bought 4% stake in Indian Oiltanking, a joint venture between state-run IndianOil and Germany’s Oiltanking GMBH, for Rs 100 crore.
Indian Oiltanking, which builds operating terminals and storage facilities for petroleum products, will use the proceeds to fund its upcoming storage terminal in Paradip and for its overseas EPC projects, said Jayanta Bhuyan, managing director, Indian Oiltanking. “We have been looking at raising funds from private equity players primarily to fund our expansion plans.”
IOC borrowings touch Rs 79,000 cr
(Courtesy: Financial Chronicle, New Delhi, December 14, 2011)
State-owned IndianOil (IOC) said its borrowings have risen to over Rs 79,000 crore, as it lost a record Rs 227 crore per day on selling diesel, domestic LPG and kerosene at controlled rates. “It (borrowings) is more than Rs 79,000 crore at present,” IOC chairman R S Butola said.
The company is hoping to get about Rs 16,000 crore in compensation from the government by early next month to make up for part of the losses it incurred on selling the three fuel in the first half of current financial year. Parliament on Tuesday approved additional spending by the government, including payment of Rs 30,000 crore to state fuel retailers as subsidy. IOC, the market leader, would get about Rs 16,000 crore out of that.
Petrol price set to go up again
Here is what Hindu writes:
With crude prices firming up in international markets, the oil marketing companies are gearing up to revise upwards petrol price by 65 paise a litre, after a review meeting on Thursday. However, this is subject to the government giving the green signal as Parliament is in session.
While the drastic fall of the rupee to an all-time low of Rs. 53.75 against the U.S. dollar has pushed up the cost of oil imports, the international rates of gasoline — against which domestic petrol prices are benchmarked — have also gone up, a senior OMC official said.
Under-recoveries on petrol stand at Re. 0.55-0.56 a litre. After adding the local sales tax, the desired increase in Delhi comes to Re. 0.65-0.66.
The Hindu newspaper
Indian Oil Corp tops Fortune India 500 list; RIL at second spotPress Trust of India, 13 Dec 2011 | 12:04 AM (from NDTV Profit news)
This year's list of the country's 500 largest corporations, compiled by the global business magazine Fortune's Indian edition, features as many as 57 new entities. State-run Indian Oil Corp has emerged as the country's biggest company in terms of annual revenue, followed by Mukesh Ambani-led private sector giant Reliance Industries at the second place, as per an annual list of Fortune 500 companies in India.
This year's list of the country's 500 largest corporations, compiled by the global business magazine Fortune's Indian edition, features as many as 57 new entities. All the 500 firms together recorded a collective turnover of Rs 45,79,911.38 crore in the latest financial year. Indian Oil Corp (IOC) was the biggest with annual revenue of Rs 3,23,113.12 crore, followed by Reliance Industries (RIL) with a full-year revenue of Rs 2,72,923.36 crore. Both IOC and RIL have retained their top-two ranks from the previous year, Fortune India said.
In this year's list, the two are followed by Bharat Petroleum (Rs 1,56,580.12 crore) at the third and State Bank of India (Rs 1,47,843.92 crore) at the fourth place. Other entities in the list are Hindustan Petroleum (5th rank), Tata Motors (6th), Oil & Natural Gas Corp (7th), Tata Steel (8th), Hindalco Industries (9th) and Coal India (10th).There are as many as six state-run companies in the top-ten positions, as against four from the private sector. The magazine said that the total sales of the country's 500 top corporations have grown by 21.5 per cent from the last year, while their median growth has been even higher at about 25 per cent.
"The good news, however, is that many of the Fortune India 500 companies are now beginning to shape the world's opinion of India for the better. And they may just be doing a better job than their Chinese counterparts," it added.
Essar Oil commissions new unit at Vadinar
Essar Oil Ltd, a subsidiary of Essar Energy, on Thursday announced the successful commissioning of a new isomerisation unit at its Vadinar refinery in Jamnagar district of Gujarat. The 0.7-million tonnes per annum (mtpa) unit is a key component of the phase-I expansion of the company's Vadinar refinery that will increase its capacity from the existing 14 mtpa to 18 mtpa (or 300,000 barrels per day to 375,000 bpd), the company said in a release here. Among the largest such units in the world, its commissioning was completed in just 32 days (as against an industry average of 50-55 days), without compromising on safety, said Mr Naresh Nayyar, CEO, Essar Energy.
This unit is the first expansion unit to be fully commissioned. Using naphtha as its primary feed, the Vadinar refinery's isomerisation unit will help produce Euro IV grade gasoline of high octane rating and almost zero sulphur content. The Vadinar refinery's expansion project is nearing completion. Increased refinery throughput of 18 mtpa will commence in the first quarter of 2012.When completed, the phase-I expansion will also increase the Vadinar refinery's complexity from 6.1 to 11.8. An optimisation project is also under execution at the refinery to further increase the capacity to 20 mtpa (405,000 bpd) by September 2012.
The capacity expansion, complexity enhancement and subsequent optimization will give the Vadinar refinery the capability to process nearly 87 per cent ultra-heavy crudes, which are lower cost than light crudes. In terms of product yield, the expanded Vadinar refinery will have the flexibility to produce higher value products, including pet coke.
Ahmedabad, Dec. 8: from the pages of THE HINDU business line
Wood Biofuel could be a competitive Industry by 2020
Corn ethanol is currently blended with gasoline to satisfy government-mandated targets to include renewable content in transportation fuel. Compared to corn, wood-based biofuel is considered more sustainable but is not currently produced in large commercial quantities in Canada and the United States because the costs are too great.
The study, published in the most recent issue of the journal Biofuels Bioproducts & Biorefining, identifies several opportunities for reducing these costs. Researchers in UBC's Faculty of Forestry found that large-scale commercial production of wood-based ethanol, also known as cellulosic ethanol, will reduce capital and operation costs and assist in achieving the improvements necessary for wood-based ethanol to compete, without government support.
IndianOil will employ postmen to spy on fake gas connections
IndianOil will hire postmen to spy on its cooking gas customers to check fake connections. As part of a proposed deal between the company and the Department of Post, the postmen will help the customer care division of IndianOil in verifying the address and identity of registered customers. Elaborating on the deal, a senior IndianOil officer said that the company believes that postmen might prove handy in these verifications.
"As part of IndianOil's deal with the postal department, the company will provide the postmen with soft copies of the customer's documents, which will include identity numbers, address and the number of cylinders issued on a particular connection. It'll be called the physical verification of the customers. Postmen will also note the change of address of the customers. Any anomaly in such verification will render the connection a fake one. The postmen will then finally submit their findings to the company," said the official.
He added that the new method will help the company unearth fake connection rackets. "The company's survey team has found that many fake connection rackets thrive in the capital. Most of these groups make use of fake address proof and identities. I hope the postmen will be identify such groups," the official said.
Alkesh Tyagi, an official in the publicity department of the Department of Post, admitted that a deal was being struck with IndianOil, but it was at the stage of proposal. "It'll be given a final shape once the payment for postmen is fixed," she said. She also said that the postal department has already successfully provided the services of its postmen to verify customer details for some telecom companies. "Given the decrease in actual postal services, such tie-ups with corporate groups will keep post offices relevant and profit-generating," she added.
Sunday Guardian, New Delhi, Dec 2011
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