Government to put a cap on energy usage by companies
Wednesday, 11 January 2012
12 Jan 2012;business-standard.com:Piyali Mandal:New Delhi: Programme will create world’s largest energy saving certificate-trading platform. Big corporations in India, including Tata Steel, Jindal Power and NTPC, will have to keep a tab on power usage at their plants as the government is setting a cap on the energy consumption of large corporations. According to officials, the Bureau of Energy Efficiency (BEE) has drawn a list of about 477 plants belonging to different corporations and has set targets on their energy consumption. The move is aimed at improving the energy efficiency of the Indian industry. Companies overshooting their cap will be penalised while those achieving the target will be rewarded with tradable permits. The programme is expected to create the world’s largest energy saving certificate-trading platform. Once implemented, companies that achieve their target would be given permits. Corporations that fail to achieve their target have to compensate for their failure by buying permits. If they fail to do either of this, they may have to pay penalties. The energy consumption reported by plants will be based on audit by any of the BEE accredited agencies. The programme includes plants across eight sectors, including steel, fertilizer, oil refineries, paper mills, thermal power plants and others. Some of the plants included in the initial list belongs to Tata Steel Ltd, Tata Power, Jindal Steel and Power, Jindal Power, Reliance Energy Ltd, Reliance Industries Ltd, Hindalco Industries Ltd, Birla Corporation Ltd among others. Even PSUs like NTPC, Rashtriya Chemicals and Fertilisers Ltd, etc, are part of the list. The Bureau of Energy Efficiency will be the implementing and regulatory agency for the same. “The programme has been designed after broad industry consultations. Initially, companies were worried about the base period and the methodology followed for arriving at the targets. But the issues have been resolved and the government would soon come out with a gazette notification,” said Prodipto Ghosh, chairman (environment committee) of FICCI. Globally, there are small energy saving certificate-trading platform in Netherlands and Germany. But, this would be the largest such trading platform in the globe, Ghosh added. According to a senior official at the BEE, “The industry consultation is over. We will notify the companies about the energy cap soon. The process would start in March, 2012.” The companies would be given a time-period of three years to achieve their targets. The first tradable certificate is likely to be issued in 2013. The energy permits would be traded monthly. The initiative is a part of the government‘s National Mission on Enhanced Energy Efficiency (NMEEE), which is one out of the eight missions planned under the National Action Plan on Climate Change. The Perform, Achieve and Trade scheme is a market-based mechanism to enhance energy efficiency in large energy-intensive industries and facilities. According to Professor Shreekant Gupta of Delhi School of Economics, “This is a very progressive idea. The perform, achieve, trade scheme focuses on the aggregate target rather than individual quota. It also offers flexibility to the companies. Firms failing to meet their targets can buy certificates from firms which are more energy efficient.” Considering the vast potential of energy savings and benefits of energy efficiency, the Energy Conservation Act 2001, was amended in 2010. One of the key amendments was that the government might issue energy savings certificate to the designated consumer whose energy consumption is less than the prescribed norms and standards.
Oil worry to help squeeze scheme support in Budget
Wednesday, 11 January 2012
12 Jan 2012;business-standard.com:Sanjeeb Mukherjee:New Delhi: This year’s Union budget might see a mere five to 10 per cent rise in gross budgetary support (GBS) — the Centre’s assistance for plans — year-on-year and a possible schedule to cut the huge fuel subsidy bill. Officials say the bloating fuel subsidy bill will be too big to handle by 2013-14 if the trend of administered prices in diesel continues and subsidies on liquefied petroleum gas and kerosene are not rationalised. The government also has to deal with a rising fiscal deficit. Officials say that as the Centre’s fiscal deficit in 2011-2012 is expected to breach the budget target, the finance ministry’s hands will be tied. The deficit is expected to shoot up by Rs 1,00,000 crore over the budget estimates (BE) of Rs 4.13 lakh crore and settle at 5.6-5.7 per cent of GDP against the projection of 4.6 per cent. “As such, GBS might see just a five to 10 per cent rise in Budget 2012-13,” an official said. GBS was pegged at Rs 3.35 lakh crore for 2011-12 in the BE, which was 19.57 per cent over the BE of the 2010-12. However, against the revised estimates (RE), it was 12.36 per cent. GBS rose to Rs 2.99 lakh crore in the RE from Rs 2.81 lakh crore in the BE for 2011-12. A rise in GBS in the range of five to 10 per cent over the budget estimates of this year means the Centre will allocate Rs 3.52 lakh crore to Rs 3.69 lakh crore in the BE of next year. Less growth in GBS means the funds for the Centre’s schemes may not see a huge rise. Schemes such as the MGNREGS, the rural job guarantee, are linked to the inflation index and may get more funding. But some old schemes might not see a huge rise of funding. The B K Chaturvedi panel’s recommendations on pruning central sector schemes (CSS) should come in handy. The panel, whose report was adopted in the last meeting of the National Development Council, has suggested pruning the number of CSS to 51 from 147. On fuel subsidy, the official said, “The government will have to rationalise its kerosene and LPG subsidies and end that on diesel,else the subsidy burden will go bust by 2013-2014.” He said the oil subsidy was projected at Rs 23,640 crore in the current financial year in the Budget. But, “the under-recoveries of oil companies this year is estimated to be over Rs 1,00,000 crore. In such a scenario, the Budget should target this in an effective manner,” the official said. The average price for the Indian basket of crude oil in the international market was $110 a barrel this financial year till January 10, against $85 for 2010-11. Finance minister Pranab Mukherjee had proposed in last year’s Budget speech a task force under Unique Identification Authority of India chairman Nandan Nilekani to suggest ways for direct transfer of the subsidy on kerosene, LPG and fertilisers. The panel has given its report, recommending pilot projects in LPG in selected cities from October. However, these projects are yet to start. The official said the food subsidy bill was not much of a concern for the government, as the rise would be from Rs 60,000 crore to Rs 100,000 crore and in phases, when the Food Security Bill took effect. In the case of fertiliser subsidy, the increase would be from the budgeted Rs 60,000 crore to Rs 90,000 crore in 2011-2012.
India ignores US call for economic freeze, opens up Iran oil strategy
Tuesday, 10 January 2012
11 Jan 2012;business-standard.com:Jyoti Malhotra:New Delhi: India has decided to ignore the US call to freeze its economic relationship with Iran, citing strategic national interest, even as the government is working towards a multi-layered strategy that involves reducing its exposure to Iranian crude, looking at intermediaries with third-country banks, as in Russia, and putting into place a rupee-rial barter trade mechanism allowing India to directly trade with Teheran. As the Turkish bank, Turkiye Halk Bankasi, told Indian oil refiners on Tuesday it would no longer be able to act as an intermediary for their purchases of Iranian crude, India was already putting in place a containment strategy that would not offend the Americans but simultaneously assuage the Iranians about their continuing importance in India's view of the world. The crisis is not upon India immediately, as the US sanctions give a six-month breathing space for countries to act. Second, the US anti-Iran legislation is framed so as to allow a US presidential waiver to countries if they show they have succeeded in reducing their exposure to trading with Iran. In fact, private oil companies like Reliance and Essar have already done so, leaving PSUs like Mangalore Refinery & Petrochemicals Ltd (MRPL), HPCL and Indian Oil now scrambling for cover. With a multi-ministerial delegation headed for Iran on January 16, a rupee-rial counter-trade mechanism is expected to form the backbone of India's medium-to-long-term oil strategy with Iran. Despite a burgeoning romance with Saudi Arabia, in which the Saudis offered Prime Minister Manmohan Singh during his 2010 visit larger amounts of crude, Indian refineries have continued to source a significant 12 per cent of their oil requirements from Iran, amounting to $1 billion annually. Saudi Arabia remains India’s largest source of crude, totalling 30 per cent of requirements. But as the US attempts to force Iran to downsize its nuclear programme, it has opened the gates for a new great game in energy security. China, Korea and Japan have already announced that they will soon initiate their own counter-strategies by trading in their respective currencies, the yuan, the won and the yen. The problem with India's barter system is that the Iranians may not want to buy too much from India, perhaps some tea, gems and jewellery. If companies like L&T hope to sell construction equipment, oil rigs, etc, thereby helping use up the bank of rupees that Iran accumulates for the oil it sells to India, it will run the risk of not being able to do business with the US and Europe. That is why a combination of strategies is being contemplated: MRPL, which has the largest exposure to Iran (about 142,000 barrels a day), is already reducing its purchases from Iran. And if HPCL (about 65,000 barrels a day) and Indian Oil (about 50,000 barrels a day) also do the same, they could qualify for a possible US waiver. Meanwhile, India is in ongoing talks with Russia for third-party banking, with none other than the PM having requested his counterpart during his visit to Moscow in December, to allow the RBI to deal with the Central Bank of Iran through Russia's Vnesheconombank. Meanwhile, India has re-opened channels with the top Iranian leadership, despite the recent tension with Teheran over our negative vote at the International Atomic Energy Agency. None other than Ali Akbar Velayati, an enormously seasoned Iranian diplomat, former foreign minister, as well as the current adviser to Iranian supreme leader Ali Khamenei, visited India late last month. Velayati was in Delhi and Aligarh to participate in a function of Aligarh Muslim University. In Delhi, he met Vice-President Hamid Ansari, an erudite former diplomat and ambassador to Iran, as well as other senior officials. The Indian side is believed to have told Velayati that the anti-Iran vote at the IAEA should be seen as a one-off event, and confirmed India-Iran's civilisational ties and inheritance. As for the Americans, officials say India will largely ignore US unhappiness on this score, pointing out that if both countries are growing allies and partners, the US must also understand India's concerns.
11 Jan 2012;business-standard.com:Ajay Modi:New Delhi: Consumption of petrol slipped into negative territory for the first time in 40 months in November, but that of diesel grew 16 per cent, the highest in two years. According to the Petroleum Products Planning and Analysis Cell (PPAC), a wing of the petroleum ministry, petrol consumption dropped 2.4 per cent in November, while growth in April-November was 4.3 per cent, the least in 16 years. Notably, petrol consumption had been growing annually at double digits in recent years. “Petrol consumption growth has been subdued for the past few months due to regular price increases, following a decontrol in June 2010,” said an industry official. “However, the negative growth is an exception. This can be attributed to the anticipation of price cuts during the month, which prompted dealers to maintain a bare minimum inventory to avoid loss.” Since the price was revised downwards twice during November, inventory management by dealers continued through the month and had a major impact on companies’ sales. While the December data is yet to be compiled, PPAC expects petrol sales to be relatively better in December, as dealers are expected to bring back their inventories to the normal level. Consumption of diesel, which is sold at government-regulated prices and accounts for nearly 60 per cent of the total oil subsidy, grew by 16 per cent in November. As a result, the cumulative growth for April-November shot up to 7.4 per cent, compared to 5.9 per cent during April-October. “Against the backdrop of pessimistic economic scenario and falling gross domestic product growth projections, such high growth in diesel is a matter of concern,” PPAC said in its report. Currently, government-owned oil marketers bear a loss of Rs 11.30 on every litre of diesel. Since the decontrol, petrol prices have risen nearly 37 per cent to Rs 65.64 a litre in Delhi. During the same period, diesel prices rose a marginal 7.4 per cent to Rs 40.91 a litre. The gap between petrol and diesel price, that used to be 25.80 per cent prior to decontrol, has widened to over 60 per cent. The main reason behind the strong diesel demand is the worsening power situation, resulting in significant use of the fuel for captive power generation. Power deficit has been increasing month on month due to coal shortage. Another factor was the robust commercial vehicle sales in November at 35 per cent. In several states, industries are using diesel instead of furnace oil due to the price advantages. Petroleum products saw growth of 11.3 per cent in November, the highest monthly growth rate this year, led by diesel, liquefied petroleum gas, naphtha, aviation turbine fuel and PetCoke.
Car sales expected to grow by 11-13% in FY13: SIAM
Tuesday, 10 January 2012
10 Jan 2012;hindustantimes.com:New Delhi:Domestic passenger car sales grew by 8.5% to 159,325 units in December 2011, as compared to 146,856 units in the same month a year ago. The overall automotive industry grew by 8.5% to 14,13,709 units, with sale of scooters leading the growth at 16%, followed by trucks and buses that grew by 14.5%. Motorcycle sales grew by 7.3% to 807,829 units. For the next fiscal year 2012-13, Society of Indian Automobile Manufacturers (SIAM) has predicted a more bullish 11-13% growth rate for cars. Overall sales in 2011 grew by 14.3% to 1,69,13,355 units. The year saw for the first time, passenger vehicle sales crossing the 25-lakh units with a growth of 6.0%. That took the production of passenger vehicles to over 30- lakh units, another first. The year also saw more than 1.5 crore two-wheelers being produced. SIAM revised its growth estimate for car sales in this financial year to between 0 and 2%, a stark contrast from the 16-18% growth rate projection at the start of the fiscal in April 2011. This is the the third time that SIAM has cut its growth forecast. “If we do well in the next three months, we’ll break even,” said Sugato Sen, senior director, SIAM. “If we do extraordinarily well, it could go up to 2%.” “Next year is going to be another challenging year but the indications are that the Reserve Bank of India will not increase rates further,” said S Sandilya, president, SIAM.
11 Jan 2012;timesofindia.indiatimes.com:NEW DELHI: A major fire broke out on Tuesday at IndianOil Corporation's Guwahati refinery but timely activation of safety drill averted any major damage to the plant or human casualty, top company executives said. The fire started early morning after "slop" - off-spec products that are stored for refining again - leaked from a storage tank. Executives said 2-3 people were hospitalised, "possibly for injuries from smoke", but could not give details of their condition. The fire was doused by evening and operations at the refinery were not affected. The executives also said they could not comment on what caused the fire, saying they were still waiting for details. But agency reports quoting district administration officials blamed electrical sparks and leakage in the slop-carrying pipeline for the fire. Some reports in the local media said separatist group Ulfa claimed responsibility for the incident but this could not be independently verified. The reports also said several houses that were in the vicinity were damaged but again there was no casualty. A senior executive familiar with refining operations said the fire was limited as slop flowed into dykes that are dug around storage tanks to contain spread of inflammable material in case of a spill.
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