NTPC to float global offer to acquire equity stakes in coal assets
Monday, 23 August 2010
24 August 2010;economictimes.indiatimes.com:Subhash Narayan:NEW DELHI: Instead of going out and hunting for coal assets, the country’s largest power producer, NTPC, has decided to invite offers from foreign miners that may be on the lookout for strategic investors. The change in strategy comes after NTPC’s efforts to acquire strategic coal assets overseas through negotiated equity and acquisition deals have not seen much success. The company will soon float a global offer to acquire equity stakes in coal assets through an expression of interest (EoI). “The EoI route is expected to bring many more players to the table who otherwise are difficult to locate,” NTPC chairman and managing director R S Sharma told ET, adding that it will continue to look at assets through merchant bankers. NTPC’s coal imports are expected to increase from about 14 million tonne per annum (mtpa) now to 30 mtpa by 2017, and it needs secure supplies to keep costs under check. Imported coal is priced about 40% higher than that available through Coal India and could be a big cost head for the company by 2032 when the state-owned power major will have generation capacity of about 1,28,000 MW, against 32,000 MW currently. The proposal is expected to be taken up by the company’s board in the next few weeks and could seek a wide mandate including acquisitions of entire operations with a coal offtake clause. NTPC has been looking at overseas acquisition of coal assets in countries such as Mozambique, Indonesia, Australia and South Africa for few years now without much success. India’s biggest power producer is currently evaluating two projects in Queensland and New South Wales in Australia and is also in advanced stages of discussion to pick up equity stake in two coal fields in Indonesia. It has also evinced interest in two coal blocks on offer in Mozambique and one South Africa. “The EoI route will help to get response from several properties in coal rich countries, which otherwise fail to get attention from the merchant bankers,” said another official of the power ministry asking not to be named. NTPC requires about 160 million tonne of coal currently to fuel its over 32,000 MW of power generation capacity, 80% of which is based on coal. Its requirement is expected to increase by 20 million tonne every year with 4000 MW expected to be added now every year. In view of the large and rising coal needs of the company, the government has allowed the PSU to go in for direct imports of coal bypassing state-owned trading firms such as MMTC and State Trading Corporation of India. The company has already issued an international tender for the direct procurement of 14.5 million tonnes of coal for the first time. Apart from coal offtake deals and acquisitions in overseas market, NTPC is also developing its eight captive coal blocks with peak production capacity of 83 million tonne per annum. In addition, another special purpose vehicle of PSUs — International Coal Ventures Ltd (ICVL) — is also scouting for coal properties abroad and is studying a thermal coal mine in Indonesia and coking and thermal coal mine in Australia and three greenfield properties in South Africa. Mr Sharma had told ET earlier that NTPC is also exploring the possibility of setting up two coal-based power plants in Kazakhstan. “Our aim is also to source coal from the country that has large reserves of about 32-34 billion tonne of coal,” he had said.
24 August 2010;timesofindia.indiatimes.com:NEW DELHI: The battle for Cairn India is turning into an all-out corporate war. On Monday, London-based billionaire Anil Agarwal dashed to Delhi in a bid to advance his Vedanta group's ambitious acquisition effort, even as reports did the rounds of state-owned ONGC, OIL and GAIL coming together to launch a counter-offer. Agarwal is learnt to have called up petroleum minister Murli Deora, following reports that the ministry is reluctant to allow the Vedanta deal to go through. Sources said Deora told Agarwal the ministry has still not received any formal notification from the UK-based Cairn Energy that it wishes to sell its stake in its Indian arm, even though chairman Bill Gammell has been present in Delhi. Sources revealed that in the course of the phone conversation, Agarwal told Deora that Vedanta's offer for Cairn India -- at Rs 405 a share -- was "so fabulous" that it would be difficult for anyone, including a consortium of PSUs, to match. Oil ministry sources conceded that Agarwal might just have a point. Last week, Vedanta had announced an offer worth $9.6 billion for up to 60% in Cairn India, whose most important asset is the oil-rich Mangala field in Rajasthan. The deal, if it comes through, would be the third largest acquisition by an Indian corporate and mark Vedanta's first foray into the energy sector. It could also help make Anil Agarwal the richest Indian in the world, overtaking Mukesh Ambani -- whose Reliance Industries Ltd is also a gigantic presence in India's oil and petroleum sector. However, Agarwal may have to wait a while before kicking off celebrations. ONGC, OIL and GAIL have reportedly already held informal talks and lined up loan commitments of $10 billion from international banks. "Deutsche Bank, Credit Suisse and UBS, the only three leading bankers who are not in conflict with the Vedanta- Cairn Energy deal, may be advising ONGC on the counter-bid," a source said. ONGC will be the leader of the consortium with at least a 50% share. OIL and GAIL will each hold 20-25%. ONGC already has a 30% holding in Cairn India's Rajasthan oil block. Vedanta's deal needs government approval because Cairn India has production-sharing contracts with it for oil and gas exploration.
23 August 2010;timesofindia.indiatimes.com:Nitin Sethi:NEW DELHI: After almost three years, consumers can finally look forward to fuel mileage standards for their cars. The breakthrough came after Prime Minister Manmohan Singh's intervened to end the long-running feud between the road transport ministry and the power ministry over who would set the standards. The standards, expected to be in place by the year-end, will force car manufacturers to phase out fuel guzzling models and give buyers a better deal. The Bureau of Energy Efficiency, which falls under the power ministry, had initiated the process almost three years ago but it got mired in bureaucratic delays with the automobile industry opposing it tooth and nail and the road transport ministry muddying the waters by claiming that only it could run such a programme. The latter also moved to set up mileage standards based on carbon-dioxide emissions, countering the BEE's proposal to have standards on simple fuel mileage that consumers would understand and require. Even after principal secretary to the PM, T K A Nair, intervened to sort out the turf war between the two ministries, the programme could not take off with road transport minister Kamal Nath stepping in to block progress for almost a year. Sources said the PMO had to intervene yet again and the PM recently took the final decision in BEE's favour. The PMO has now passed an order that BEE will set up the standards for regulating fuel efficiency in automobiles under the Energy Conservation Act, 2001, and would be implemented by the road transport ministry. While BEE has been asked to consult Nath's ministry, it will now not be held back if the road transport ministry raises objections yet again. In what seems to be countering the move, auto industry sources said the sector was planning to come up with a revised `voluntary labelling' programme by the end of August. The standards programme, on the other hand, is expected to not only come up with a better labelling scheme but also set up mandatory standards that would force the industry over time to produce cars that give better mileage, sources in the power ministry explained. The BEE programme, in its first phase, proposes to turn the current average mileage of industry into an upper limit ensuring that in a couple of years, all models faring worse than that limit are not sold to consumers. In successive phases, the upper limit for acceptable mileage for each weight class of the car will be further tightened, pushing manufacturers to introduce better engines and phase out older and dirtier technologies that also weigh heavy on the owner's pocket. The labelling scheme the BEE proposes, unlike the one by the industry, would tell buyers how each model fares when compared to others in the same weight category and help them make an informed choice.
US officials saw drilling ban costing jobs: report
Saturday, 21 August 2010
21 August 2010;business-standard.com:Washington:Senior US officials expected the deepwater drilling ban to cost about 23,000 jobs and hold up $10.2 billion in investments, The Wall Street Journal reported on Friday, citing federal documents. The Obama administration issued the initial moratorium in late May after the huge BP oil spill in the Gulf of Mexico. The ban spurred opposition from oil companies and local lawmakers who said it would exact a heavy toll in jobs and hurt crude production in coming years. After a federal judge threw out the original ban partly on grounds it was economically unjustified, the Interior Department issued a new moratorium on July 12, barring new oil drilling in the Gulf of Mexico through Nov 30. The Journal said new documents shed light on the Obama administration's deliberations on the economic impact of its drilling moratorium. According to the documents, the top offshore drilling regulator, Michael Bromwich, told Interior Secretary Ken Salazar the halt on new drilling "will have a significant economic impact on direct and indirect employment in the oil and gas industry, as well as other secondary economic consequences," the newspaper said. A federal regulatory agency memo predicted the moratorium would affect about 9,450 workers in "lost direct employment" and 13,797 more in jobs lost through indirect effects, according to the newspaper. US officials signaled previously they expected serious economic ramifications from the moratorium. In July, federal forecasters predicted a cut in oil production in 2011 by 82,000 barrels per day, or almost 30 million barrels, due to delayed or canceled drilling caused by the moratorium. The Journal said the Justice Department filed the disclosed documents in the latest round of litigation over the federal drilling ban in a New Orleans federal court. The latest lawsuit was filed on Tuesday by Ensco challenging the new moratorium as mostly the same as the first ban the US court put on hold. The Obama administration has defended the need for suspending deepwater drilling, saying it gives officials more time to investigate the cause of the BP disaster, issue new safety regulations and improve oversight.
21 August 2010;business-standard.com:London/seoul: State-run Korea National Oil Corp (KNOC) made a hostile cash bid worth $2.9 billion for Britain’s Dana Petroleum Plc on Friday, highlighting a strengthening in South Korea’s resolve to secure energy assets overseas. Seoul gave KNOC a $6.5 billion warchest this year to compete with energy-hungry Asian state firms aiming to secure future supplies for their growing economies. Chinese and other firms have so far outgunned KNOC in bigger M&A battles. The biggest hostile bid by a South Korean firm comes after Dana’s management earlier this month rejected KNOC’s 1,800 pence per share proposal. The London-based explorer urged investors to take no action but investors doubted another bidder was in the wings after two months of on-off bid talks yielded no other interested party.
20 August 2010;business-standard.com:London/mumbai: Lower gains on the value of its fuel inventories and weaker refining profits led London Stock Exchange-listed Essar Energy Plc to post a 28 per cent drop in its half-yearly profits. Essar, which raised $1.85 billion through its LSE listing this May, said the profit fell to Rs 519.7 crore from Rs 722.2 crore during the first half of 2009-10. “Inventory gains led to lower profits. However, revenues were up for the six-month period due to increase in volume and higher prices in the refinery business,” CEO Naresh Nayyar told reporters in London. The company reported an increase of 65.8 per cent in its revenues, at Rs 476.4 crore against Rs 287.2 crore during the first half of 2010-11. In the next four years, Essar plans to increase its power generation capacity to 11,500 Mw from the present 1,220 Mw. Vice chairman Prashant Ruia said with an exception of one power project, Mahan 1, all its oil and power projects were on track in terms of time and cost. Mahan 1, is facing minor delays in the transmission lines, but it will be sorted without any financial damage he said. Within a four-year time frame, the company is implementing 16 power and oil projects in the country, with a total capital outlay of around $10 billion, with an estimated $8 billion going into power sector and the balance $2 billion in fresh oil refining capacities. Of the projects, seven are new ones and the others are expansion of existing capacities in both sectors. Expanded capacities will stand at 11,470 Mw of power by 2014 and 18 million tonnes of refining capacity by 2012, against 1220 Mw of power and 14 mt of refining capacity today. Ruia said that though no definite plans exist for ‘green energy’, the company hopes to get into the sector by setting up wind energy farms, as well as setting up hydel projects in the country. It will also continue to scout for coal, oil and gas assets within and outside the country. “Talks with Royal Dutch Shell Plc to buy refineries in Europe are ongoing,” Ruia said. Essar has been in talks with Royal Dutch Shell to buy three refineries, two in Germany and one in the UK, for almost a year. The company will also look for retail oil assets (network of gas stations) outside India, he said. “By next year, we will start exporting oil,” he said. By the end of this financial year, the company hopes to have 1,700 retail outlets and 3,000 by end-March 2012. The company said that P Sampath, will be joining the company as its new chief financial officer, replacing Gerry Bacon from September this year. Bacon had joined Essar Energy in January this year and said he was leaving the company to pursue academic interests.
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