05 Jan 2009;economictimes.indiatimes.com:Rajeev Jayaswal:NEW DELHI: The government is working on a bailout package to prevent its three blue chip oil companies ”Indian Oil, Bharat Petroleum and Hindustan Petroleum" from closing 2008-09 in the red. The package, which is currently being worked out between the finance and petroleum ministries, proposes to provide additional oil bonds of Rs 30,000 crore to the oilcos to compensate them for losses incurred on fuel sales at government-controlled prices, a government official in the know said. According to the proposal, the government may issue bonds worth Rs 30,000-31,000 crore in the current fiscal that will absorb the OMCs entire loss including their earlier contribution of Rs 21,957 crore in the first half (H1) towards fuel subsidy. Upstream companies Oil & Natural Gas Corporation (ONGC) and Oil India (OIL) share may also be restricted to Rs 30,000 crore, most of which was already paid in H1. The total subsidy for 2008-09 is estimated at around Rs 1,06,000 crore. A proposal of the oil ministry to absolve the three public sector oil marketing companies (OMCs) from sharing underrecoveries is under consideration, an official in the finance ministry, on conditions of anonymity said, It is unjustified to ask loss-making OMCs to share underrecoveries. The three OMCs have, for the first time, reported a combined loss of Rs 14,431 crore in the first half of 2008-09.¯ Underecoveries are losses suffered by oil companies for selling fuel at government controlled prices that do not cover costs. If the proposal is accepted, the government may have to issue additional oil bonds of worth Rs 30,000 in 2008-09. It has already sanctioned about Rs 45,000-crore oil bonds in H1. The government gives oil bonds to the state-run OMCs to partly compensate their losses for keeping retail prices of four fuels below market rates. The compensation was based on a burden sharing formula approved by the Cabinet on October 11, 2007 while extending fuel subsidy schemes up to April 1, 2010. According to the formula, 42.7% of OMCs total underrecoveries was to be borne by the government in the form of oil bonds and one-third of the total underrecoveries was to be shared by upstream companies. Due to an unprecedented jump in crude oil prices, the formula was later abandoned. The crude oil prices had peaked at $147 a barrel in mid-July 2008. Currently, global crude oil prices are hovering between $40 and $45 a barrel. The average price of the country crude oil imports (the Indian basket) has been $40.82 a barrel in December which was about $10 a barrel lower than the November average. The average crude oil import price in the first three quarters was $96.51 a barrel compared to $79.25 a barrel in the same period the previous year.
05 Jan 2009;timesofindia.indiatimes.com:Sanjay Dutta:NEW DELHI: Here's a bit of sunshine amid the forecast of economic recession continuing in 2009. You can expect fuel prices to become cheaper by Rs
10 a litre or so of petrol and remain that way through the year if the peak winter trend in the international oil market is anything to go by. Polltime political compulsions of brushing up a people-friendly image will make sure the government utilises the window of opportunity provided by oil's continued low run.
Broadly, present petrol and diesel prices are in tune with $55-60 a barrel crude level. By all indications, crude is unlikely to sustain that level this year. The forecasts range between $30 a barrel by Goldman Sachs to $43 by JP Morgan, at least in the first three months. The outlook is unlikely to change drastically in the remaining months as demand forecasts, such as the one by Deutsche Bank, too project more than a 1% decline.
The short $2 surge in the last few days, on the back of the flare-up in West Asia and Russia stoking gas shortage fears after it shut supplies to Ukraine, is temporary.
That leaves the government plenty of room to lower pump prices of at least motor fuels. Kerosene and cooking gas, however, are another story. Despite the low international crude and petro products prices, the lopsided subsidy mechanism still leaves state-run oilmarketers with a loss on these two products. The oilmarketers are earning a profit of roughly Rs 15 a litre on petrol and Rs 3 on diesel but lose Rs 17 on a litre of kerosene and Rs 148 per cooking gas refill.
No wonder, the government is reworking its arithmetic and working out another round of price cut for motor fuels -- and possibly cooking gas -- without hurting the oilmarketers too much. Last week, oil minister Murli Deora told TOI the cut could be expected later this month. Though the jury is still out, that cut could be of the order of Rs 5 a litre of petrol, Rs 1-2 of diesel and maybe Rs 20 per cylinder of cooking gas.
There may be further reductions down the road as it now looks certain that oil's heady days are over -- at least in the near future. Oil has stumped Opec's sharpest-ever production cut and failed to get excited by geopolitical events. If taken as a full-year average, crude prices have dropped 54% in 2008 from $96 a barrel to a tad above $44 on December 31. In between, of course, it created history by spiking to a little over $147 on July 11.
If anything, crude will stabilise at a level that will make a reduction in pump prices comfortable for all stakeholders. Many industry watchers say a floor will take time in coming until the market sees demand getting destroyed in a sustained fashion. At that point, prices could first level off in the upper $20-30 a barrel range before beginning to push back toward $50 in the third quarter or so.
04 Jan 2009;economictimes.indiatimes.com:KIEV, UKRAINE: A top Ukrainian official warned on Saturday that European customers could see serious natural gas disruptions in about two weeks if
the energy dispute between Russia and Ukraine is not resolved, and the Russian gas monopoly Gazprom accused Ukraine of boycotting contract negotiations. As Russia and Ukraine traded accusations in their bitter dispute over energy prices, four European nations, Romania, Hungary, Poland and Bulgaria, all reported some supply drops in natural gas on Saturday.
Gazprom cut off gas shipments to Ukraine on Thursday. Then Gazprom and Ukraine embarked on dueling charm offensives, both trying to assure western European nations that they were reliable energy partners and the fault lay with their rival.
04 Jan 2009;economictimes.indiatimes.com:BEIJING: China imported 13.1 per cent more cars in 2008 or 2.26 million vehicles, the central government said on its website (www.gov.cn) on Sunday. China's auto market, the world's second largest and one of the fastest growing, is a rare bright spot for the global automotive industry that is facing factory closures, layoffs and huge losses due to the global recession.
The statement did not provide any breakdown of the imports, saying only that the number of imported motorcycles dropped 38 percent last year to 511,740 units.
03 Jan 2009;timesofindia.indiatimes.com:NEW YORK: Oil prices ended higher on the first day of 2009 trading as investors focused on commodities amid tensions over Israel's onslaught on
Gaza, and a Russia-Ukraine gas row. New York's main contract, light sweet crude for February, rose $1.74 from its closing price on Wednesday to end at $46.34 on Friday on the New York Mercantile Exchange.
In London, Brent North Sea crude for delivery in February advanced $1.32 to settle at $46.91 a barrel on the InterContinental Exchange.
Traders said prices were extremely volatile in a reflection of thin market turnover as many investors remained in a New Year holiday mood ahead of the weekend.
"The volatility is amazing," said independent analyst Ellis Eckland, noting that investors were refocusing on commodities after experiencing their "worst quarter."
"Some people are putting money into the commodities. Some institutions look and say, 'Wow, commodities have had the worst quarter they've ever had,'" Eckland said.
The market experienced a tumultuous 2008, soaring to record highs above $147 a barrel in July before a sharp global economic downturn slashed demand for energy and pulled prices sharply lower, dropping below $35 in December.
"Prices have performed so poorly that people believe it won't get much worse," said Adam Siemisnki of Deutsche Bank.
"So I would say a combination of the stock market, some news on OPEC compliance, the gas issue, and the troubles in Israel," he said, summing up the market volatility Friday.
02 Jan 2009:business-standard.com:New Delhi: Two-wheeler maker Yamaha today reported a nearly three-fold increase in its domestic sales during December last year at 16,000 units, compared to 5,524 units in the same month in 2007.
The company witnessed a growth of 13.32 per cent in 2008, at 1,36,468 units as against 1,20,428 units in the previous year, the company said in a statement.
"The year 2008 has been a turnaround year for Yamaha. We have made efforts to replicate Yamaha's global brand image by launching two new models — YZF-R15 and FZ16," Yamaha Motor (India) Managing Director CEO Yukimine Tsuji said.
These two models received good response from experts and helped the company to achieve higher sales as against last year, he added.
"We are aware that these are challenging times for the industry as the economy passes through a slowdown," Tsuji said, adding the company was confident to do well with its current range of products.
The losers
December sales for Hero Honda Motors, India’s biggest motorcycle maker, fell 10 per cent. Hero Honda sold 215,931 motorcycles and scooters last month, compared to 240,532 a year earlier, the company said in a statement today.
Other two-wheeler maker Bajaj Auto also reported 33 per cent decline in two-wheeler sales during December last year at 119,215 units against 177,249 units in the same month previous year. The company said its motorcycle sales also declined by 33 per cent at 118,510 units against 176,441 units in December 2007.
Three-wheeler sales during the month grew by three per cent at 22,948 units against 22,221 units in the same month of the previous year.
The sharp reduction in two-wheeler primary sales reflects the continuing effort to reduce dealer inventories, Bajaj Auto Managing Director Rajiv Bajaj said in a statement.
"In keeping with its objective to stimulate demand through a major product offensive, Bajaj will, in January 2009, launch an all-new motorcycle," he added.
The first of several models to be introduced in 2009, the new bike will target 'Sport Commuter' segment and is intended to further Bajaj's leadership in the 125 cc+ segment, he said.
For the April-December 2008 period, total motorcycle sales were down eight per cent at 1,534,149 units against 1,660,182 units in the corresponding period previous year.
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