BUSINESSGovernment to unlock $37 billion oil and gas reserves
TNN | Mar 11, 2016, 04.33 AM IST
The pricing formula for these fields is attractive even with a cap linked to alternative fuels - fuel oil, nap... Read More
NEW DELHI: The government on Thursday announced big-bang policy measures to help explorers unlock hydrocarbon treasure worth $36.6 billion (Rs 2.33 lakh crore or more than 50% of the crude import bill estimated for 2015-16), retain and expand jobs amid low oil and gas prices as well as make it easier for them to do business.
The decisions by the Cabinet's panel on economic affairs are expected to kickstart investment in the country's E&P (exploration and production) sector by cutting red tape and removing government discretion, and creating a fair marketplace with a transparent policy regime.
The underpinnings of investment and employment come with the overlay of raising government's earnings. The exchequer is expected to get richer by Rs 2,890 crore in additional revenue from a uniform 10-year extension of 28 oilfield contracts up for renewal.
The measures come within less than a fortnight of finance minister Arun Jaitley announcing the intent of some of them in the budget. "The Prime Minister felt that instead of working through the time available to us till the next budget, we should get going on the proposals right away," Jaitley said.
Oil minister Dharmendra Pradhan described the new policies as "global models". "I believe the world will follow us and investors will be back," he said.
The biggest boost to the industry will come from the marketing and pricing freedom for gas from deepwater, ultra-deepwater and high pressure, high temperature blocks. The pricing formula for these fields is attractive even with a cap linked to alternative fuels - fuel oil, naphtha, imported coal and liquid gas. At current rates, theoretically, this formula will offer a price of $7 per unit, nearly double that of the going rate for gas from other fields. The cap will be revised every six months. The policy will apply to all 28 such discoveries idling at present and 10 others where reserves are being estimated, irrespective of when they were announced.
The policy for extension of contracts for small and medium-sized discovered fields such as Panna-Mukta and Tapti of the BG Group removes grounds for legal tangle with a uniform 10-year extension. The government's profit share will go up by 10 percentage points and companies will lose concessions on royalty and cess, which they will have to pay at current higher rates.
But the biggest change will come from HELP (Hydrocarbon Exploration Licensing Policy), which replaces New Exploration Licensing Policy introduced by the NDA under Atal Bihari Vajpayee.
Modi government is transforming India at an amazing pace. When you part of a change, most of the time you dont feel the change around you. But under this government chan... Read More
Companies will now be able to produce conventional oil and gas as well as coalbed methane and shale gas under a single licence, unlike separate ones for each - except for shale. Explorers will also be free to bid for an area of their choice instead of waiting for the government to carve out blocks and auction them. Contracts for all these acreages will follow revenue-share model instead of profit share which has been criticised by the federal auditor for promoting gold-plating of investments by companies.
The decisions by the Cabinet's panel on economic affairs are expected to kickstart investment in the country's E&P (exploration and production) sector by cutting red tape and removing government discretion, and creating a fair marketplace with a transparent policy regime.
The underpinnings of investment and employment come with the overlay of raising government's earnings. The exchequer is expected to get richer by Rs 2,890 crore in additional revenue from a uniform 10-year extension of 28 oilfield contracts up for renewal.
The measures come within less than a fortnight of finance minister Arun Jaitley announcing the intent of some of them in the budget. "The Prime Minister felt that instead of working through the time available to us till the next budget, we should get going on the proposals right away," Jaitley said.
Oil minister Dharmendra Pradhan described the new policies as "global models". "I believe the world will follow us and investors will be back," he said.
The biggest boost to the industry will come from the marketing and pricing freedom for gas from deepwater, ultra-deepwater and high pressure, high temperature blocks. The pricing formula for these fields is attractive even with a cap linked to alternative fuels - fuel oil, naphtha, imported coal and liquid gas. At current rates, theoretically, this formula will offer a price of $7 per unit, nearly double that of the going rate for gas from other fields. The cap will be revised every six months. The policy will apply to all 28 such discoveries idling at present and 10 others where reserves are being estimated, irrespective of when they were announced.
The policy for extension of contracts for small and medium-sized discovered fields such as Panna-Mukta and Tapti of the BG Group removes grounds for legal tangle with a uniform 10-year extension. The government's profit share will go up by 10 percentage points and companies will lose concessions on royalty and cess, which they will have to pay at current higher rates.
But the biggest change will come from HELP (Hydrocarbon Exploration Licensing Policy), which replaces New Exploration Licensing Policy introduced by the NDA under Atal Bihari Vajpayee.
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Wow, this is BRILLIANT!!!Modi government is transforming India at an amazing pace. When you part of a change, most of the time you dont feel the change around you. But under this government chan... Read More
Companies will now be able to produce conventional oil and gas as well as coalbed methane and shale gas under a single licence, unlike separate ones for each - except for shale. Explorers will also be free to bid for an area of their choice instead of waiting for the government to carve out blocks and auction them. Contracts for all these acreages will follow revenue-share model instead of profit share which has been criticised by the federal auditor for promoting gold-plating of investments by companies.
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IMF assistance centre to be set up in India
PTI | Mar 11, 2016, 03.11 AM IST
NEW DELHI: The Cabinet has given approval to signing of an MoU with International Monetary Fund (IMF) for setting up of South Asia Regional Training and Technical Assistance Center (SARTTAC) in the country by the global body.
"It also authorised the Finance Minister to approve related decisions in respect of India's contribution for setting up of the centre, including Letter of Understanding for financial contribution by India, site of the SARTTAC, representative of India on the Steering Committee on SARTTAC, etc," an official statement said.
The SARTTAC will be a collaborative venture among IMF, the member countries, that include Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka, and development partners.
Additional member countries could join SARTTAC at a later stage, the statement said.
"SARTTAC will also selectively cater to the capacity building needs at the state level, especially in India," the statement said.
It noted that MoU will help in capacity building of government officials, including state level in macro, fiscal, monetary policies by the IMF and greater coordination between the six member countries of South Asia.
In a separate release, the government said the Cabinet has given its ex-post facto approval to the proposal for extension of the value date to March 8, 2016 of the Existing Currency Swap facility of USD 1.1 billion availed by Central Bank of Sri Lanka (CBSL) from Reserve Bank of India.
The existing currency swap facility availed by CBSL from RBI was due to be paid by March 3, 2016.
"Approval of this proposal will provide a temporary relief to Sri Lanka till alternative arrangement is in place," the statement said.
The Cabinet also gave its approval for providing a special swap of USD 700 million to Sri Lanka for a period of 3 months or till the time Sri Lanka avails the IMF facility whichever is earlier, the statement added.
Approval of this proposal shall help Sri Lanka in strengthening its economic stability and official reserves which have witnessed downward trend in 2015 owing to the adverse impact of the expected interest rate hikes in the United States.
"This will further foster India's bilateral relations and economic ties with Sri Lanka, which is India's important partner in SAARC and South Asia," it said.
"It also authorised the Finance Minister to approve related decisions in respect of India's contribution for setting up of the centre, including Letter of Understanding for financial contribution by India, site of the SARTTAC, representative of India on the Steering Committee on SARTTAC, etc," an official statement said.
The SARTTAC will be a collaborative venture among IMF, the member countries, that include Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka, and development partners.
Additional member countries could join SARTTAC at a later stage, the statement said.
"SARTTAC will also selectively cater to the capacity building needs at the state level, especially in India," the statement said.
It noted that MoU will help in capacity building of government officials, including state level in macro, fiscal, monetary policies by the IMF and greater coordination between the six member countries of South Asia.
In a separate release, the government said the Cabinet has given its ex-post facto approval to the proposal for extension of the value date to March 8, 2016 of the Existing Currency Swap facility of USD 1.1 billion availed by Central Bank of Sri Lanka (CBSL) from Reserve Bank of India.
The existing currency swap facility availed by CBSL from RBI was due to be paid by March 3, 2016.
"Approval of this proposal will provide a temporary relief to Sri Lanka till alternative arrangement is in place," the statement said.
The Cabinet also gave its approval for providing a special swap of USD 700 million to Sri Lanka for a period of 3 months or till the time Sri Lanka avails the IMF facility whichever is earlier, the statement added.
Approval of this proposal shall help Sri Lanka in strengthening its economic stability and official reserves which have witnessed downward trend in 2015 owing to the adverse impact of the expected interest rate hikes in the United States.
"This will further foster India's bilateral relations and economic ties with Sri Lanka, which is India's important partner in SAARC and South Asia," it said.
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Keeping a watch on Mallya crisis: Heineken
TNN | Mar 11, 2016, 03.08 AM IST
MUMBAI: Dutch beer giant Heineken said it was "following developments" its Indian partner Vijay Mallya is embroiled in but will not comment right now. Speculation has been gaining ground that Heineken might hasten the move to take full control of United Breweries, makers of Kingfisher beer, of which Mallya remains chairman.
Heineken owns 42% while Mallya holds 32.8% in UBL. But mostof Mallya's shares in the company are pledged to banks and some offered as security to Diageo as part of loan guarantees extended to F-1 team Force India. The foreign partner has been mopping up pledged shares offloaded by the lenders in the past. As banks take aggressive steps to recover unserviced loans of Kingfisher Airlines, more shares owned by Mallya may come into the market, giving Heineken a chance to hike its shareholding.
"We have been following developments in the Indian press recently. But we would not comment at this stage," a Heineken spokesperson said over the phone from Amsterdam while responding to TOI's queries regarding the latest development. Unlike in the case of Diageo, Mallya has had stable ties with the family-run Heineken, whichhasbeen a patient partner till date.
But Mallya'songoing personalcrisis may havedashed allhishopesof negotiating a sale to Heineken at a premium, sources said. "Any settlement with the banks will involve his UBL shares and the current scenario does not provide Mallya much room to negotiate," an industry sourcesaid. Mallya'sholdings in the company is worth around Rs 7,000 crore at current market value.
Heineken entered UBL through an acquisition of Scottish & Newcastle (S&N), the original foreign partner of Mallya. In fact, S&N representatives on UBL board had expressed concerns about Mallya's decision to use Kingfisher brand for the civil aviation foray a decade ago.
Heineken owns 42% while Mallya holds 32.8% in UBL. But mostof Mallya's shares in the company are pledged to banks and some offered as security to Diageo as part of loan guarantees extended to F-1 team Force India. The foreign partner has been mopping up pledged shares offloaded by the lenders in the past. As banks take aggressive steps to recover unserviced loans of Kingfisher Airlines, more shares owned by Mallya may come into the market, giving Heineken a chance to hike its shareholding.
"We have been following developments in the Indian press recently. But we would not comment at this stage," a Heineken spokesperson said over the phone from Amsterdam while responding to TOI's queries regarding the latest development. Unlike in the case of Diageo, Mallya has had stable ties with the family-run Heineken, whichhasbeen a patient partner till date.
But Mallya'songoing personalcrisis may havedashed allhishopesof negotiating a sale to Heineken at a premium, sources said. "Any settlement with the banks will involve his UBL shares and the current scenario does not provide Mallya much room to negotiate," an industry sourcesaid. Mallya'sholdings in the company is worth around Rs 7,000 crore at current market value.
Heineken entered UBL through an acquisition of Scottish & Newcastle (S&N), the original foreign partner of Mallya. In fact, S&N representatives on UBL board had expressed concerns about Mallya's decision to use Kingfisher brand for the civil aviation foray a decade ago.
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Rs 900cr loan: ED to grill 2 IDBI execs today
Mar 11, 2016, 03.06 AM IST
Vijay Singh
MUMBAI: The Enforcement Directorate (ED) has summoned on Friday two senior Mumbai-based executives of IDBI Bank in a money laundering case allegedly involving liquor baron Vijay Mallya and his now-defunct Kingfisher Airlines. ED claims Mallya fraudulently obtained a Rs 900-crore loan from the bank and laundered the money.
ED officials collected loan-related documents from the bank on Wednesday. After initial examination, they decided to question the two bank executives. TheEDhas registeredthe case under the Prevention of Money Laundering Act(PMLA) against Mallya, A Raghunathan (then CFO of Kingfisher Airlines), the airline itself and four unnamed senior bankexecutives. ED officials said while obtaining the loan from IDBIBank,Mallya mortgaged his 'brand goodwill' and Kingfisher House, besides giving a personal guarantee. Probing the trail of the Rs 900 crore disbursed by IDBI Bank, the ED is collecting related details from various banks where the money was deposited. It may also initiate attachment process of related properties and bank accounts.
The ED's action stems from the case that CBI registered against a Kingfisher Airlines director, then CFO and unknown officials of IDBI Bank. It is alleged that IDBI officials colluded with the promoters/directors and CFO of the airline and sanctioned creditlimitsof aroundRs 900 crore in violation of banking norms, causing a loss to the bank.
MUMBAI: The Enforcement Directorate (ED) has summoned on Friday two senior Mumbai-based executives of IDBI Bank in a money laundering case allegedly involving liquor baron Vijay Mallya and his now-defunct Kingfisher Airlines. ED claims Mallya fraudulently obtained a Rs 900-crore loan from the bank and laundered the money.
ED officials collected loan-related documents from the bank on Wednesday. After initial examination, they decided to question the two bank executives. TheEDhas registeredthe case under the Prevention of Money Laundering Act(PMLA) against Mallya, A Raghunathan (then CFO of Kingfisher Airlines), the airline itself and four unnamed senior bankexecutives. ED officials said while obtaining the loan from IDBIBank,Mallya mortgaged his 'brand goodwill' and Kingfisher House, besides giving a personal guarantee. Probing the trail of the Rs 900 crore disbursed by IDBI Bank, the ED is collecting related details from various banks where the money was deposited. It may also initiate attachment process of related properties and bank accounts.
The ED's action stems from the case that CBI registered against a Kingfisher Airlines director, then CFO and unknown officials of IDBI Bank. It is alleged that IDBI officials colluded with the promoters/directors and CFO of the airline and sanctioned creditlimitsof aroundRs 900 crore in violation of banking norms, causing a loss to the bank.
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Modi government is transforming India at an amazing pace. When you part of a change, most of the time you dont feel the change around you. But under this government change is easily being felt in the country which means that work is happening at a rapid pace.
Jai Hind!!!