Petrol prices may go up this week; Diesel, LPG rates may follow
Tuesday, 10 May 2011
10 May 2011;economictimes.indiatimes.com:NEW DELHI: The government may hike diesel and domestic LPG rates next week while an increase in petrol prices may happen later this week. "The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee (on fuel price hike) was to meet tomorrow evening. It has been put off," Oil Minister S Jaipal Reddy told reporters here. EGoM was to meet tomorrow to consider raising the diesel price by Rs 3-4 a litre and domestic LPG rates by Rs 20-25 per cylinder. "It has been postponed to accommodate some ministers... It could be anytime on (May) 17 or 18," he said. State-owned oil firms, however, are likely to get the go-ahead to raise the price of petrol, which they have not revised since January on informal 'advice' from the government in view of Assembly elections in five states. "Petrol prices may be raised as early as Thursday-Friday night," an official said, adding a steep hike of up to Rs 3 per litre of petrol is on the cards. The government had freed petrol prices from its control last June, but state oil firms continue to be guided by informal advice from the government. The hike needed to take petrol prices to international parity is about Rs 8.50 per litre, but the entire burden will not be passed on to consumers in one go. "Oil companies will be asked to stagger the hike over a couple of months," the official said. Reddy said the day EGoM meets on fuel prices, a separate Group of Ministers (GoM) that is vetting London-listed Vedanta Resources' USD 9.6 billion acquisition of Cairn India , may also meet. "I think when the next date is fixed on that day itself we will deal with both questions - the question of under-recoveries of oil companies and the question of government approval to Cairn-Vedanta deal," he said. State-owned Indian Oil, Bharat Petroleum and Hindustan Petroleum currently lose Rs 16.17 a litre on diesel and after adding local sales tax or VAT, the desired increase to make rates at par with international prices is Rs 18.19 a litre. Besides petrol and diesel, the three state oil firms lose Rs 29.69 a litre on kerosene and Rs 329.73 per 14.2-kg domestic LPG cylinder. Officially on the EGoM's agenda was ways of mitigating the over Rs 180,000 crore revenue loss state-owned oil firms have projected in 2011-12 on selling diesel, domestic LPG and kerosene at current rates. The three firms will "at current international crude oil prices lose Rs 180,208 crore in revenues on selling diesel, domestic LPG and kerosene below their imported cost in the 2011-12 fiscal," the official said.
Luxury cars to become costlier as major carmakers will soon raise prices of cars assembled in India
Monday, 09 May 2011
09 May 2011;economictimes.indiatimes.com:Chanchal Pal Chauhan:NEW DELHI: Car lovers in India, looking for a touch of luxury, will soon have to shell out more to drive home their cherished premium four-wheelers. Foreign luxury cars will turn more expensive in India as global auto majors plan to raise prices following an increase in tax on locally assembled cars. Mercedes, BMW, Audi, Land Rover and Renault will soon raise prices of cars assembled in India by up to Rs 10 lakh to pass on the cost increase due to higher tax to customers. The Indian government recently raised customs duty on foreign luxury cars that are assembled in local facilities to 30% from 10%. "We are looking at increasing prices for one of our major models in the next few weeks. We would be paying high tax on one of our cars with a high proportion of pre-assembled components. The new policy regulation has forced us to bring in new prices soon," said Peter Honegg, chief executive officer and managing director, Mercedes Benz India . The company plans to raise prices of its top-end S class sedan by up to Rs Rs 8 lakh. The S class sedan falls in the price range of Rs 84.3 lakh to more than 1 crore. The new lot of S class sedans produced in April will reach the showrooms in 4-6 weeks and will carry a revised price tag, he said. The company is assessing the quantum of price increase keeping in mind the higher duty. Audi, BMW, and Land Rover, will also increase prices of its luxury cars assembled in India, company executives said. These cars are in the price range of Rs 30-90 lakh. The increase in tax will hit premium car sales in India, industry experts said. Luxury car sales doubled to 15,000 in fiscal 2010-11 from a year earlier driven by rising incomes and easy financing. The nominal customs duty on luxury cars enabled competitive pricing. "We are studying the government policy and will take appropriate decisions to amend our production strategy suitably," said Michael Pershke, chief executive officer, Audi India . The German luxury carmaker's A4 and A6 sedans and sports utility vehicle Q5 may incur 30% tax. French carmaker Renault is likely to increase prices of its sedan Fluence by up to Rs 2 lakh, a company executive said. Fluence will be launched in India later this month from its Chennai facility. "We are also in line with the auto industry in the higher tax bracket of 30% that will be reflected in our price line," said a company spokesperson. Land Rover's sports utility vehicle Freelander 2, recently launched in India and expected to compete with BMW X1 on pricing, will also come under the revised tax structure. The Freelander, assembled at parent company Tata Motors's facility in Pune, will cost Rs 3-5 lakh more than the originally envisaged price tag.
09 May 2011;business-standard.com:New Delhi: Reliance Industries (RIL) has debunked charges that KG-D6 gas field output fell due to non-drilling of an adequate number of wells, saying the phenomenon was a result of reservoir complexity and indiscriminate drilling would have lead to infructous capital expenditure. The drop in production from over 61 million cubic metres per day (mcmd) achieved in March 2010, to under 50 mcmd was a result of the main reservoir channels not behaving in the manner predicted in 2006, it said. “Reliance has told us that pressure in wells has fallen rapidly and some wells haven shown early water ingress,” an oil ministry official said. “They made a detailed presentation on the problems being faced at the field on May 2 and by the look of it, we feel there are some genuine reservoir issues.” More wells on the main channel area of the Dhirubhai-1 and 3 fields, the largest of the 18 gas finds in the block that were put into production in 2009, is unlikely to either raise production rate or recovery, as they will drain the same resource, he said. Reliance will identify disconnected gas volumes and drill wells on them, an exercise that will take three-four years. It has drilled 20 out of the 22 wells committed in the field development plan (FDP), as it now feels drilling of additional wells unmindful of the reservoir behaviour would have resulted in huge capital expenditure, which would have been difficult to justify later. The Directorate General of Hydrocarbons is pushing for drilling of 11 committed wells by April 1, 2012, to raise output. Reliance wants UK’s BP Plc, the world’s best deep water production and reservoir management firm, to come on board first. BP is buying 30 per cent interest in KG-D6 and 22 other blocks for $7.2 billion. Once the government approves the stake buy, Reliance plans to sit with BP to come up with most optimal solution to the reservoir problem, including drilling of additional wells. Reliance is allowed to recover every penny spent on the field from sale of gas before profits are split with the government. Investment in injudicious additional wells would have led to reduction in government’s petroleum profit. Sitting in water depths of up to 1.2 kilometres, the KG-D6 is the first deepsea field in South Asia to go on production and there are no deepwater analogs available for reference on how the reservoir will behave. As a result, Reliance had to depend on its own resources and some global industry consultants for the characterisation, modelling and development of this complex deep water reservoir system. Current wells have no contribution from the areas outside the main channel area, contrary to what was predicted at the time of FDP in 2006.
09 May 2011;business-standard.com:New York: When oil prices fell below $120 a barrel in early New York trade last Thursday, a few big companies that are major oil consumers started buying around $117. It looked like a bargain. Brent crude had been trading above $120 for a month. But the buying proved ill-timed. Crude kept on falling. "They were down millions by the end of the day, trying to catch a falling piano," an executive at a major New York investment bank said. Never before had crude oil plummeted so deeply during the course of a day. At one point, prices were off by nearly $13 a barrel, dipping below $110 a barrel for the first time since March. Oil's descent followed the biggest one-day price drop in silver since 1980 on Wednesday, after hedge fund titan George Soros was reported to be selling. Exchange operators raised silver's margin requirements, making it more costly to trade the metal and sending investors out of the market. Silver plunged by 20%, more by week's end. The rout unnerved some commodity investors. Oil just doesn't fall by 10% in the course of a normal day, though. In commodities markets, oil is king, and its daily contract turnover, typically around $200 billion, is usually able to absorb even large inflows or outflows of investment. The rare moves of $10 a barrel usually are set off by dramatic events -- the outbreak of the first Gulf War in 1991, or the collapse in 2008 of Lehman Bros bank, which both led to recessions. Of course, there was major news last week. But the daring Pakistan raid that killed Osama Bin Laden had done little to shift the balance of oil markets on Monday. In interviews with more than 2 dozen fund managers, bankers and traders, no clear cause emerged for the plunge in price. Market players were unable to identify any single bank or fund orchestrating a massive sale to liquidate positions, not even an errant trade that triggered panic selling, as seen in the equities flash crash last May. Rather, the picture pieced together from interviews on Thursday and Friday is one of a richly priced commodities market -- raw goods have been on a five-month winning tear over all other major investment classes -- hit by a flurry of negative factors that individually could be absorbed but cumulatively triggered a maelstrom. Computerised trading kicked in when key price levels were reached, accelerating the fall. "It was a domino effect," said Dominic Cagliotti, a New York-based oil options broker. The negative factors -- prominent cheerleaders turning bearish, some weak economic data, cheap money from the US Federal Reserve ending by July, a lessening of political risk -- merely provide a backdrop for the waves of selling. What stands out is the way computers turned readjustment of positions in a huge and deep market into a rout.
07 May 2011;business-standard.com:Jyoti Mukul:New Delhi: With Reliance Industries (RIL) set to cut gas supply to steel, petrochemical and refining sectors from Monday, three companies — Welspun Maxsteel, Ispat Industries and Essar Steel — have moved courts for a stay. As gas production from RIL’s block in the Krishna Godavari (KG) basin has fallen to 50 million standard cubic metres a day (mscmd) from 62 mscmd in March 2010, the government has asked RIL to give priority to users in fertiliser, LPG, power and city gas distribution sectors. This means cutting supply to users in steel, petrochemical and refining sectors. The three companies will be hit by the RIL action. Essar has filed the case in the Delhi High Court, which will take up the matter on Tuesday. The other two have approached the Mumbai High Court. The hearing has been fixed for Monday. While a senior Welspun Maxsteel executive did not respond to phone calls, an RIL spokesperson did not answer phone calls or email queries. The Essar Steel spokesperson also did not comment. Essar has been allocated 3.2 mscmd, while Welspun Maxsteel and Ispat Industries have together been allotted 1 mscmd on a firm basis. A firm allocation, as against fallback, is considered more definite as the user company has a right on the gas produced. The government has also been made a party to the case. A senior government official confirmed the development. The court is likely to hear the case on Monday. The Ministry of Petroleum and Natural Gas has written to RIL twice since March-end to meet supply commitments to consumers in fertiliser, LPG, power and city gas sectors. RIL has been allowed to use a small part of the gas to maintain pressure in its east-west pipeline. “In view of the reduction in KG-D6 production, if there is a shortfall in meeting the firm demand of the remaining sectors, pro rata (proportional) cuts should be imposed,” said the ministry. RIL has been resisting implementation of the directive for fear of contractual disputes. The gas sale and purchase agreements signed between RIL and consumers do not make any distinction between sectors. Besides steel and sponge producers, petrochemicals and petroleum refiners will also face a cut. RIL will have to cut supply to its own refinery and petrochemical plants, besides to Indian Oil Corporation and Hindustan Petroleum Corporation. RIL has a firm allocation of 1.9 mscmd for Gandhar and Nagothane petrochemical plants in Gujarat, while its Jamnagar refinery has been allocated about 2.34 mscmd.
All that glitters is not gold coin for Nano buyers
Friday, 06 May 2011
07 May 2011;dailypioneer.com:Deepak Kumar Jha:New Delhi: This Akshay Tritya, the auspicious day to buy gold, auto major Tata Motors seems to have gone ‘goldrupt’, at least this is what the buyers of the ‘small wonder car’ Nano believe. To increase sales of Nano in the run-up to the closure of fiscal 2010-11, Tatas had announced several incentives for the buyers, including a gold coin, from its jewellery chain Tanishq. In addition to the gold coin, the woman buyers were promised an additional gift voucher of Rs 5,000 from the jewellery chain. But the international auto major has failed to deliver on both. The rising price of gold is being blamed for the company going back on its promise. First they delayed on the pretext of year closing, then it was promised before Akshay Tritya, which fell on Friday. When contacted on Thursday, Him Motors, a leading distributor of Tata cars in the national Capital said, “Nano customers till February 2011 are being given the gold coins and names of the customers of March onwards have been dispatched to Tata Motors for clearance, which may take another month.” However, the spokesperson of another prominent Tata outlet, Shrinathji Motors in Sahibabad said, “We are offering cheques in lieu of gold coin of the value of gold on the day of purchase. Regarding vouchers, Tata Motors has to explain as they had to deliver.” With the price of gold moving north since March, the customers are feeling cheated. The price of 22 karat gold has gone up by 10 per cent in the last 60 days from Rs 1,922 to Rs 2,108 per gram. “Even though we possess a high-end SUV and another small car, my husband bought a Nano for me to celebrate International Women’s Day. There were also attractive offers, including that of a gold coin and a gift voucher from Tanishq for Nano customers. The dealer promised us that these will be delivered to us within a week, or maximum time it will take will be a fortnight. It is almost one-and-a-half month I have neither received any confirmation call from the dealer or the car manufacturer. It is me who keeps following everyday and now on Akshay Tritya on Friday I had to invest in some gold to celebrate the auspicious day. I feel very irritated also the way they are handling the issue. I will never advise anyone to go in for a Tata vehicle since their small car after-sale service and customer relationship as bad as compared to other leading car manufacturer,” said Dipti Mishra, who purchased a Nano (LX Model) from Shrinathji Motors, Ghaziabad on March 24, 2011. While Tata Group Chairman Ratan Tata promised to fulfill the dreams of giving a Lakhtakiya Khushiyon Ki Chabhi to the middle class families, the company has failed to keep its word. Worst is following up the matter with the higher authorities of the company which is another round of harassment. Tata Motors witnessed astounding hike in sales of the small car after the company made announcements of a four-year warranty for its current and new customers and other lucrative offers for its customers in December last year. Mishra made futile efforts by emailing her grievances last week to the higher authorities of Tatas, its customer care and also the dealer. “We were provided the number of the company’s GM Sales. After calling on that number, it turned out to be number of GM Services. When we called the landline number, GM Sales refused to take the call. The person on phone said she can instead provide a cheque if the customer is in a hurry or cannot wait for some time,” added Mishra. Another Nano customer who bought the car as a gift on their daughter’s birthday too had a similar experience with their dealer and Tata Customer Centre at Gurgaon. “My daughter liked the advertisement punchline of Nano - Khushyion Ki Chhabi - so we decided to own one. The dealer, Him Motors, promised us a gold coin but is almost two months and we are yet to receive the gold coin. It is not a matter of gold coin which may be worth between Rs 2500- Rs 2800 but a gift promise made by a leading brand not being delivered. What is the use if the customer has to follow-up several times,” said Aradhana, a resident of Delhi’s Mukherjee Nagar. On the other hand, Tata Motors had a different tune to sing on such malpractices. “This should not happen. It needs to be investigated by us. The dealers have to hand over the gold coin, gift voucher or any other kind of offer announced by the manufacturer from time to time within a stipulated period. If the dealer has promised the gold coin and gift voucher within a month then they must do that. We will definitely look into the matter so that our valued customers do not face such a problem at the hands of our car dealers,” said Debashish Roy, Head Corporate Communications, Tata Motors. Talking over the issue over phone from Mumbai, Roy suggested that the customers should lodge a complaint at the customer care centres of Tata Motors.
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