Fuel price decision to make country efficient: Experts
25 June 2010;hindustantimes.com:New Delhi: Sound economic reason and political sense have dictated the government's decision Friday to decontrol petrol price and hike that of other fuels, say experts. In a long overdue policy reform in the energy sector, the government freed petrol from administrative control and hiked the prices of diesel, kerosene and cooking gas to help oil exploring and marketing companies which are losing revenues by selling fuels at discounted rates. The government has taken advantage of the lower international crude prices. Currently, retail prices of auto fuels are pegged at crude price of $65-70 per barrel. Experts say oil prices are not expected to rise for the time being due to high crude oil inventories. It will also take the pressure off the government's subsidy burden and cut its fiscal deficit, bringing it closer to the target of achieving a deficit of 5.5 percent for 2010-11 and 4 percent in the next fiscal. Also, money spent on oil subsidies can now be diverted to other social sector programmes. The government's chief economic advisor, Kaushik Basu, said the move will help the country become an efficient user of energy and help bring down prices in the long-run. "It will rationalize the way we spend money, the kinds and amount of energy we use, and the cars we manufacture. It is an important step in making India a more efficient, global player," Basu said. Energy experts said that by decontrolling petrol, the government has sent the right signal to the consumers to use the scarce resource carefully. The immediate impact of the decision is likely to stoke inflation. But Basu said it will help in lowering prices. "Though the immediate impact of this policy will be to increase inflation, in six to nine months we will have lower prices than what would have happened in the absence of this much-needed reform." India's annual inflation touched double digits at 10.16 percent in May, rising from 9.59 percent in April. He said the policy change was a much needed reform and would help in reducing the fiscal and revenue deficit of the government. "To describe the government's decision to deregulate petroleum and diesel as an act of raising prices is to get it completely wrong. It is one of the most major reforms of recent times and should have beneficial effects on the entire economy," said Basu. Industry experts said the government move is also a "game changer" in the oil sector as it is expected to help private companies like Reliance Industries and Essar, who had shut down their oil retailing outlets given the price difference between their selling price and that of state-run oil marketing companies. Politically, the government has chosen an opportune time in undertaking the reform as only one state election in Bihar is due in this fiscal year. Reforms would be difficult to implement later as there would be at least five state elections after fiscal 2011, including that of West Bengal and Tamil Nadu where the Trinamool Congress and the Dravida Munethra Kazhagam, respectively, have vital stakes.
25 June 2010;economictimes.indiatimes.com:NEW DELHI: In a clean-up act, oil minister Murli Deora has cleared a proposal to select distributors for cooking gas cylinders through public draw of lots instead of shortlisting through interviews. The move is aimed at removing any scope of influencing the selection committees. Under the present system, eligible applicants are selected through documents and interviews by officers of staterun oil marketing companies. But this process often draws allegations of favouritism and has led to numerous litigations . A number of distributorships remain pending as the large number of unsuccessful candidates question the candidature of successful applicants. Deora has now ordered that oil companies will shortlist applicants who fulfil the minimum eligibility criteria that are advertised properly. The dealer or distributor in an area will be selected through a draw of lots of the shortlisted candidates. ‘‘ The draw of lots would be held in the presence of the representatives of public authorities and video-graphed ,’’ an oil ministry statement said on Thursday. The new selection methodology is the same as the procedure followed under the Rajiv Gandhi Gramin LPG Vitrak scheme to appoint distributors for selling cooking gas in rural areas. While approving the proposal , Deora observed that the change would take care of allegations of malafide activity in selection. The change in the procedure would help achieve faster progress in the government’s endeavour to expand the reach of cooking gas to more areas. It may be recalled that Deora had last year approved the Vision 2015 for augmenting marketing infrastructure for petroleum products, under which cooking gas networks are targeted to cover 75% of the population by 2015.
25 June 2010;economictimes.indiatimes.com:NEW DELHI: The Central Electricity Authority and NTPC appear to be taking different stands on having a common price for gas from different sources, called pool pricing. CEA is open to considering separate price pools for power and fertilizer sectors with certain conditions, NTPC has outrightly rejected the idea. Commenting on a report by Spain’s Mercados Energy prepared for gas utility GAIL, CEA said the pooling option excluding spot LNG (gas imported in ships) suits the power sector. Supporting separate pools for power plants, it said ‘‘ electricity generated by burning gas is distributed in a competitive environment and tariff is decided by regulators ... The nodal agency and the pool can be achieved with a few necessary operational regulations... and may be considered.’’ But NTPC has told the power ministry it is opposed to any kind of pooling as the resultant price will be higher than the present average cost of fuel sourced variously by power producers. With a common price, both power producers and gas importers will lose incentive to source LNG at competitive rates. NTPC said the pool term of 4-5 years will create uncertainty as power plants are planned on long term of 25 years or more and fuel supplies are also tied up as such on term contracts. Price pooling will put old plants at a disadvantage because of their lower efficiency. Power producers will also have no incentive to schedule their production plan efficiently and higher pool price could also affect viability of many projects that were financially planned with lower fuel costs.
Auto industry stalwart Rajiv Dube drives to Birlas
25 June 2010;economictimes.indiatimes.com:Lijee Philip & MV Ramsurya:MUMBAI: Rajiv Dube, widely credited with building Tata Motor’s $4-billion passenger car business from scratch, is moving to the Aditya Birla GroupIndia Inc's most powerful CEOs as a director tasked with devising manufacturing and marketing strategies for the metals-to-telecom conglomerate. The 48-year-old resigned from Tata Motors on May 17 as head of its passenger car division, ending his 27-year stint, after a series of high-level new appointments at the carmaker that sparked speculation that the existing Tata Motors management was feeling left out. Mr Dube could not be reached for comments. He is scheduled to join the Aditya Birla Management Corp from July 1. Aditya Birla HR head Santrupt Mishra said the group recently created a position for an experienced professional who had spent time in manufacturing and was well-versed with world-class manufacturing practices. “We had been looking for the right incumbent to fill it. Mr Dube has the required width of experience in such areas,” he told ET. This is the second time that a high-profile auto industry expert is joining the Birlas. In 2009, Ford Motors veteran Phil Martens moved into the Mumbai-headquartered group as the chief operating officer of Novelis, the Atlanta-based specialty aluminum maker the Birlas had acquired in 2007. Mahantesh Sabarad, analyst at Fortune Finance, said Mr Dube’s exit would be a loss for the Tatas. “His exit is viewed as a resource loss for Tata Motors considering the heavy competition in the passenger car business. Mr Dube was part of the formative years of the company’s passenger car business,” he said. A Tata colleague of Mr Dube said that having run one of the largest businesses within the Tata Group for more than five years (the passenger car business alone is worth Rs 10,000 crore), it was only natural for him to look for a bigger canvas. Tata Motors’ annual revenues crossed Rs 25,000 crore in March. Of the 20 years that Mr Dube spent with Tata Group’s auto operations, the first eight years were with the truck division. He joined the group in 1983 and began his career in auto manufacturing at Jamshedpur. He later moved to Tata Administrative Services in 1990 and was assigned to Tata Industries in 1991. Mr Dube was reassigned to Tata Motors in 1998 as general manager of the newly-created passenger car division. In 2005, he was appointed senior vice-president of the passenger car business and a year later became the president and head of the division. Mr Dube’s achievements included major car launches like Indica, Indigo, Manza and Nano. He was also part of the team that was responsible for building the Tata-Fiat joint venture and the acquisition of marque brands Jaguar and Land Rover. Mr Dube’s role at the Aditya Birla Group would include devising strategies for developing vendors for the conglomerate’s diversified businesses, especially as, according to a Birla Group executive, almost half of the revenue comes from outside India. The Birlas have a presence in a wide range of sectors, including commodities such as aluminium, copper and cement, and in garments and retail and in financial services.
24 June 2010;business-standard.com:New Delhi: Korean car-maker Hyundai is likely to unveil a small car that will compete with Maruti Suzuki’s Alto, the biggest selling car model in India, at the next Auto Expo to be held in New Delhi in 2012. According to a senior official of Hyundai Motor India Ltd, the subsidiary of the Korean auto major, development of the small car is currently underway at its parent company’s R&D centre in Korea. “Considering the fact that the car has been designed and developed keeping in mind the Indian market, the next Auto Expo in 2012 will be the ideal platform to unveil the car,” the official, who asked not to be identified, said. The car will be positioned below the company’s existing flagship model, Santro, and operate in the segment that the Alto from Maruti Suzuki is in, the official added. Alto is currently the highest selling car model in India, with average sales of over 20,000 units per month, and is priced between Rs 2,28,000 and Rs 2,80,000 (ex-showroom, Delhi). In the past, HMIL had indicated its small car could be priced at around $3,500 (around Rs 1.60 lakh), which would have meant that it would compete with the likes of Maruti Suzuki’s M800 (at a Delhi ex-showroom price of Rs 2,05,000 to Rs 2,14,000) and even the Tata Nano (with a Delhi ex-showroom price of Rs 1,23,000 to Rs 1,72,000). However, rising input costs have put the auto makers under pressure. Even Tata Motors is understood to be planning a price hike of up to Rs 15,000 on the Nano once it has delivered the first one lakh units to customers who booked the car when it was launched in 2009. “There is minimal contribution in terms of engineering from India, but there has been a lot of input like component development, market research and customer feedback from here,” the HMIL official said.
24 June 2010;dailypioneer.com:Sanghita Roychoudhury:Mumbai: As a strategic initiative to curb the misuse of heavily subsidised 14.2 kg domestic cylinder for commercial purposes, Indian Oil has decided to launch a 5 kg commercial LPG cylinder in and around Chennai. As confirmed to The Pioneer by an IOC official, the launch of 5 kg commercial cylinders will take place within a month’s time. Small commercial establishments like tea stalls, dhabas and roadside eateries, currently use the subsidised 14.2 kg domestic cylinder for commercial purposes as they found the 19 kg commercial cylinder prices exorbitant. Currently market prices for the 19 kg commercial cylinder works out to around Rs 60 per kg. In order to maintain parity in pricing across all SKUs, cost of 5 kg commercial LPG cylinder is expected to be approximately Rs 300 each, thereby lowering the ticket size for these users. In contrast LPG Cylinders for domestic usage are heavily subsidized and are normally pegged at Rs 22 per kg vis-a vis Rs 60 per kg per for commercial cylinder. The huge price difference between the two categories of cylinders, at times, leads to the misuse of domestic cylinders by the small commercial establishments. Post Chennai launch, Indian Oil plans to roll out the 5 kg commercial LPG cylinder across India in 9 other cities.
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