14 Sept 2009;business-standard.com:Mumbai: Anil Ambani’s Reliance Natural Resources (RNRL) today said Mukesh Ambani’s Reliance Industries (RIL) is charging an illegal and unauthorised marketing margin of 13.5 cents (Rs 6.6) per mBtu on the sale of gas from its KG basin D-6 fields. RIL declined to comment on this or related allegations, saying the entire issue was in court. Seeking government’s intervention in the matter, J P Chalasani, Chief Executive Officer of Reliance Power, said, “RIL’s charge of unauthorized marketing margin accounts for over 3 per cent of the price at which the KG gas is being sold and the marketing margin levied till date should either be refunded immediately or adjusted against future sale of gas.” “RIL’s decision to levy the marketing margin does not have approval of the Empowered Group of Ministers (EGoM) and has not been subjected to any official scrutiny. On the contrary, the petroleum ministry has categorically denied giving permission to RIL to charge any such marketing margin. This strengthens the apprehensions about the biased and partisan approach of the petroleum ministry,” Chalasani added. In Delhi, senior ministry officials sharply denied the charges, stating that government approval is only for landfall price of the gas and its utilisation. “It is between the two contracting parties to decide on the marketing margins. In case of a dispute, a buyer can always go to the Competition Commission, (the sector) regulator or the administrative machinery with its complaint,” said an official, reacting to the charges. The power and fertiliser sectors, RNRL said, will have to bear an additional burden of over Rs 10,000 crore towards this illegitimate and unjustified charge claimed by RIL. The major burden will be borne by Government of India in the form of fertiliser subsidies and by the governments of Andhra Pradesh, Maharashtra and Gujarat in the form of power subsidies. “RIL is selling the gas produced by itself, and there is no intermediate marketing agency involved. Above all, the gas is being supplied to customers identified by the government, and there is no element of marketing involved – there can be no question of the levy of a marketing margin,” Chalasani said. Drawing comparisons with state-run GAIL, Chalasani said the latter is not permitted to charge any marketing margin on the supply to government’s identified customers under the administered price mechanism (APM), whereas RIL is doing so. Officials, however, said the comparison with APM gas was not fair. Besides, GAIL charges a Rs 8.40 marketing margin on all non-APM gas. This includes gas produced from privately-operated Panna-Mukta-Tapti and also D6 gas, whenever the government-owwned company gets to market the gas. GAIL said it charges around 12 cents for its gas from the Panna-Mukta-Tapti fields, which is sells at around $5.7 per mBtu. It charges 17 cents for its gas from the Dahej terminal. The price of the gas in August stood at around $6.3 per mBtu, approximately.
BPCL talks to PE investors for stake sale in Bina refinery
14 Sept 2009;business-standard.com:Kalpana Pathak:Mumbai: State-run Bharat Petroleum Corporation (BPCL) is in talks with private equity investors for a possible stake sale in its Bharat Oman Refinery at Bina in Madhya Pradesh. BPCL and Oman government-owned Oman Oil Company (OOC) jointly promoted the six-million-tonne per annum refinery. “The market knows the project is good and so there is a lot of interest from investors in the project. We are doing the due diligence at present,” said a source. BPCL is also in talks with OOC, which had expressed interest in picking up a 26 per cent stake in the refinery for around $250 million (Rs 1,200 crore) but has so far not increased its investment from the initial capital. “We want to increase our equity (in the project) to 25-26 per cent. We are in discussions with BPCL,” Oman Oil Minister Mohammed bin Hamad Al-Rumhy had said this May. Oman Oil at present holds only 2 per cent stake in the refinery. BPCL’s chairman Ashok Sinha had, after the company’s annual general meeting, said: “Along with Oman Oil, there are many other people who have shown interest in the venture. But we have not decided on that yet.” BPCL and OOC have so far been equal partners in BORL, with an investment of Rs 75 crore each. The project is to be funded by Rs 4,000 crore equity and Rs 6,400 crore debt. BPCL will source around 80,000 tonnes of crude oil for the refinery from Saudi Arabia in November. The refinery is 94.5 per cent complete and in November, will begin testing its units—a crude storage terminal at Vadinar in Jamnagar district of Gujarat and a 935 km pipeline from Vadinar to Bina. The refinery will be fully operational in March 2010.
07 Sept 2009;business-standard.com:TE Narasimhan:Chennai: Following the volatility in crude oil prices and the global economic slowdown, the petrochemical sector has recorded 6.5 per cent growth rate in the Eleventh Five-Year Plan so far, compared with the government’s growth target of 12 per cent during the Plan period (2007-12). Bijoy Chatterjee, secretary of the Department of Chemicals and Petrochemicals, said the sector had been witnessing decent growth across the world, starting with upstream petrochemicals, naphtha and gas-based crackers to downstream petrochemicals plastics, though India was yet to gather momentum. “There are signs of recovery and we are hopeful that by the end of the Eleventh Five-Year Plan, we will be back on track,” he said on the sidelines of the International Plastics Exposition 2009, in Chennai. Chatterjee noted while the global production of petrochemicals is almost 40 per cent of the total production of chemicals, in India, the share of the petrochemical industry is only 20 per cent. Similarly, while the global polymer consumption is about 200 million tonnes (mt), the consumption level in India is only 6.2 mt, around 3 per cent of the global consumption. The official also noted that while the per capita consumption of polymers in India is 5.2 kg, the figure is 30 kg in China, and the world average is 25 kg. “Thus, although the centre for growth and development of petrochemicals has shifted to Asia, we (in India) still have to catch up with the rest of the world in polymer production and consumption,” Chatterjee added. To boost the industry, the government has taken two major initiatives, including the announcement of a National Policy on Petrochemicals, and Petroleum, Chemicals and Petrochemical Investment Regions (PCPIRs). The Policy aims to increase investment in the sector, both upstream and downstream, by creating quality infrastructure, increasing the domestic demand and per capita consumption of polymers and plastics, adding value to the domestic downstream plastic processing industry through modernisation, research and development, and achieving environmentally sustainable growth. The PCPIR is an initiative to promote petroleum, chemicals and petrochemicals sectors in an integrated and environment-friendly manner on a large scale. It envisages provision of external, physical infrastructure linkages including rail, roads, airports, and co-siting of common facilities in a specific investment region.
04 Sept 2009;economictimes.indiatimes.com:Sushmi Dey:NEW DELHI: Indian Oil Corp (IOC) plans to introduce in 2010 hydrogen-mixed CNG that will improve energy efficiency of vehicles by 15% and reduce emissions by 30%, a company official said. The country’s largest auto fuel retailer is in talks with the Delhi government for a fuel-dispensing network for the new fuel mix, called Hythane, in the national Capital, Anand Kumar, director for research and development at IOC, told ET. The blended fuel will have a hydrogen content of 17-18% and cost 30% more than CNG in Delhi. IOC is in talks with automakers such as Tata Motors, Ashok Leyland, Mahindra & Mahindra and Eicher Motors for Hythane-compatible vehicles to facilitate launch of the fuel in Delhi during the Commonwealth Games next year, he added. The company’s research department has tested the fuel on three-wheelers, which could be used to ferry passengers during the Games. “With 17-18% hydrogen content, there will be no need for a change in the compressed cylinders that store fuel in CNG-run vehicles,” he said. However, existing engines cannot be modified to run on Hythane. Hydrogen-mixed fuel requires new engines that will lead to a long adoption curve. CNG, on the other hand, found many early converters as existing petrol and diesel engines could be modified to run alternately on the gas-based fuel. “Hydrogen is a freedom fuel that holds the promise to provide clean, reliable and sustainable energy supply for meeting the growing energy needs of transportation. However, we have to make it cost-competitive and this is where research has to play a role,” said IOC chairman Sarthak Behuria. In all new energy resources, hydrogen is considered to have the best prospects of application. Japan is one of the first countries to see potential in hydrogen energy and take up studies on its usage as a fuel. According to estimates, the industrialised world has increased investment in developing hydrogen energy by at least 20.5% every year in the last five years. On its part, IOC has spent over Rs 35 crore on research to ascertain the use of hydrogen as an alternative fuel. The company will spend Rs 200 crore annually to optimise the use of hydrogen blended with other fuels, he said. IOC already has fuel pumps dispensing Hythane in the Capital’s Dwarka sub-city and Faridabad, and plans to build another fuel station near Asiad Village in Delhi. While hydrogen is a zero-carbon fuel, it is important to understand the energy balance while using it, said Vivek Chattopadhyay, senior researcher at the Centre for Science and Environment.
Fiat to source components worth $1 billion from India
04 Sept 2009;business-standard.com:New Delhi: The Fiat Group based in India plans to source auto components worth $1 billion (around Rs 4,900 crore) from domestic auto ancillaries in 2010. About 70 per cent of the outsourced parts will be solely for the Fiat Group’s multiple operations in India. “By next year, our purchasing office here will increase the quantum of outsourcing from India by 70 per cent to around $1 billion,” Gianni Coda, CEO of the Italy-based Fiat Group Purchasing, said. Coda made the announcement during the 49th national conference of the Automotive Component Manufacturers Association of India, or ACMA, held in the capital today. In India, the Fiat Group sources components for its passenger cars, farm equipment, construction equipment and truck businesses. The amount indicated for next year does not include auto parts for the Chrysler brand, which Fiat took over this year. The quantum of components sourced from India constitute around 5 per cent of Fiat’s global business requirements. The Fiat Group has primarily three layers of operations in India. First, its 50:50 joint venture with Tata Motors manufactures Fiat-badged cars like the Punto and Linea. As an OEM (original equipment manufacturer) in the farm machinery segment, it manufactures tractors under the Case New Holland brand in Greater Noida. Two, through 15 joint ventures (JVs) with local auto parts manufacturers, the group produces vehicle components both for the domestic and export markets. Prominent tie-ups include those with Tata Motors (transmission & engines) and Maruti Suzuki (power train ECUs). Three, it sources auto parts through independent auto component vendors. Fiat executives say the 70 per cent surge in outsourcing for next year comes as a result of the strong vehicle demand posted by the domestic market. “Since our Fiat models, like the Linea and Punto, will incorporate greater levels of localisation, we will increase outsourcing of car parts from the domestic market. Also, over the last three months, the domestic infrastructure segment has revived, leading to an increase in demand for construction equipment. Next, some global markets are witnessing a pick-up in demand for automobiles. All these factors compel us to increase outsourcing from India, which is a good destination on quality cost parameters,” a FIAT executive said. The executive further added that the IVECO branded trucks would be launched in the domestic market too. Coda said contracts worth $210 million (over Rs 1,000 crore) have been finalised, while another $300 million (nearly Rs 1,500 crore) worth of auto component contracts are under evaluation. The company said it will invest further in its domestic operations and will source an increasing quantity of auto components from the domestic market over the coming years.
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