NEW DELHI: GAIL (India) may take equity participation in the consortium mandated to construct the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline project, which will transport gas fromTurkmenistan.
Sources privy to the development said the Government-to-Government agreement allowsIndiato become a partner in the consortium, if so desired. The road-show to invite players to participate in the project is expected to kick off in September.
In the TAPI project, which has US backing, big American companies such as Chevron and ExxonMobil, and Russian company Gazprom, are said to be interested in becoming part of the consortium.
The decision with regard to the consortium will be made jointly by member-countries in consultation with the Asian Development Bank (ADB), which will render technical advice with regard to the terms and conditions for potential consortium partners. ADB will also be involved in the final selection process.
On May 23, GAIL signed the Gas Supply Purchase Agreement (GSPA) withTurkmenGaz,Turkmenistan’s national oil company, for the $7.6-billion project.
The envisaged 1,080 km pipeline (144 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan) will have a capacity to transport 90 mscmd of gas — 38 mscmd each for India and Pakistan and the remaining 14 mscmd for Afghanistan.
The pipeline is expected to be operational in 2018 and supply gas over a 30-year period. The GSPA contains all the contractual terms and conditions and will be signed bilaterally between the members.
Member-countries of the TAPI project have agreed to a uniform transit fee of 49.5 cent. The transit fee paid is also for the security of the network from where the pipeline is passing.
Transit fee is a crucial issue in such projects as invariably the country at the tail-end of the project ends up paying the most. The transportation charges will be finalised when the project gets implemented by the consortium nominated and all costs are known.Indiawould like the delivered price (landed cost) ofTurkmenistangas to be in the same range for all buyer countries —Afghanistan,PakistanandIndia.
Indiaalso wanted theTurkmenistangas price to be more attractive than the current long-term contract price. Rough estimates show that theTurkmenistangas may cost around $13/mBtu.
The source of the gas is the South Yoiotan Osman field, recently renamed Galkynysh, which has been certified by an international consultant as holding proven recoverable gas reserves of 16 trillion cubic metres.
CBI SHADOW ON OIL, COAL MINISTRIES
NEW DELHI: The Central Bureau of Investigation (CBI) has launched a wide-ranging probe into the energy sector, with daily visits to the coal ministry to scrutinise files on coal blocks, and has issued notices to two former oil ministry officials on procedural issues.
The CBI is studying the allotment of coal blocks, eligibility of companies that were awarded the mines, and whether the coal is being used for captive purposes, or being illegally sold in the open market, government officials said.
“While studying the files, if the CBI finds any other matter that looks irregular or suspicious, it can investigate further in that direction also,” said a government official, who did not want to be identified as the matter is sensitive.
Coal ministry officials said regular visits of CBI officials had affected routine work of their junior staff, which is assisting the agency in the lengthy and time-consuming process of obtaining various records. However, decision-making has not been affected as officials in key positions are not directly interacting with the agency.
One official said most officials currently in the ministry were not involved in the allocation of blocks, which were given to companies by the previous government.
In the oil ministry, however, there is a deeper sense of discomfort as the CBI has issued notices to at least four bureaucrats, including two IAS officers who have served in the ministry in the past. The notices are for violation of certain rules in matters that officials say are relatively small.
The issues involve sharing policymaking matters with a state firm, allowing a gas customer to shift his plant to a new location, and retail gas supply.
An IAS officer, who has been issued a show-cause notice, said: “We have taken decisions involving billions of dollars, but it is sad that we are being probed for matters like a small error in the file for shifting of an office.”
Government officials said the decision was taken in good faith. The matter pertains to a temporary shifting of the DGH office from KG Marg to Noida, when VK Sibal was the director-general of hydrocarbons, officials said. Sibal is already facing a CBI investigation.
Officials said there was a growing fear about the CBI among government servants, particularly in the oil ministry. Officials often advise colleagues to raise objections on files to avoid controversial decisions. “CBI and CVC are haunting all of us. We could be arrested for even innocent mistakes. The PM says no one will be harassed for bonafide errors. But who will come forward to protect us,” said an official at Shastri Bhawan, where several ministries are located.
The prime minister had reassured bureaucrats on Civil Services Day on April 22 saying: “It is our government’s commitment to put in place a system and create an environment in which our civil servants are encouraged to be decisive, and no one is harassed for bonafide mistakes of errors of judgment. We stand committed to protecting honest and well-meaning civil servants …”
OIL MINISTRY FAVOURS ADDITIONAL DUTY ON DIESEL VEHICLES
NEW DELHI: The Petroleum Ministry has pitched for additional excise duty on diesel vehicles.
The Petroleum Minister, Mr S. Jaipal Reddy, while dismissing any talks about immediate revision of diesel retail prices told mediapersons here that “Our Ministry has recommended it to the Finance Ministry. It is for the Finance Ministry to consider it.”
Early this week Finance Ministry officials had met auto sector representatives. The auto sector has been opposing this proposal.
“We will again press for not levying the taxes. We will be submitting a report to the Finance Ministry on Monday to oppose the additional levy on diesel vehicles,” Joint Secretary in the Department of Heavy Industries, Mr Ambuj Sharma, said at an auto industry event here.
The Finance Ministry has been considering levying additional levy on diesel vehicles. Diesel, which is sold at a controlled price leads to misuse.
The automobile industry is opposed to such a proposal saying such a move will hurt the industry, which is already reeling under a slump and future investments could also be hurt. At present, excise duties on passenger cars range between 12 per cent and 27 per cent.
Mr Michael Boneham, President and Managing Director, FordIndia, said “Long-term investment decisions are predicated on and require stable government policies. Short-term, reactionary decisions are not conducive to growth in any industry, especially the automotive industry which generates significant employment and economic impact.”
“If an additional tax on diesel cars is imposed it will make it harder for all automakers to justify future investments and, thus, employment generation…policies like the diesel tax do not make it easy for us to remain optimistic about the overall business environment in India,” he said.
Former Petroleum Minister and BJP leader, Mr Ram Naik, said it was possible for the UPA Government to reduce the petrol prices by reducing the import and excise duties.
OIL MINISTRY RECEIVES AG’S VIEW ON D6 GAS PRICE
NEW DELHI: The oil ministry has received Attorney General Goolam E Vahanvati’s opinion on Reliance Industries’ plea for an upward revision of the KG-D6 gas price and would now take this to the empowered group of ministers (EGoM).
“We have received the opinion of Attorney General on the price of Reliance gas. It’s under consideration in the ministry … until we consult ourselves and take it to the EgoM, I cannot officially disclose the opinion of AG. EgoM is competent enough to take a decision on pricing of gas,” S Jaipal Reddy, petroleum and natural gas minister said on Friday.
In 2009, an EGoM fixed $4.2/mmbtu as the price of gas produced from the fields where production is faltering. The price was fixed for a period of five years and was supposed to come up for revision only in 2014.
Reliance Industries had written a letter to the oil ministry and to the Prime Ministers office a few months ago demanding a early revision of price stating that global gas prices have moved up sharply.
The company is demanding a revision in price at a time when the output from it’s most prolific KG D6 field is constantly declining. At present, the current output stands at 34 mmscmd and is likely to fall further to 20 mmscmd by 2014. Any revision in the prices of gas has to be taken by EGoM which is headed by the finance minister.
On diesel pricing Speaking on the sidelines of Petrofed conference here, oil minister Jaipal Reddy on Friday discounted chances of any immediate de-regulation/hike in the prices of regulated petroleum products such as diesel, LPG and PDS kerosene. “No date of EGoM yet is fixed. We are not thinking about it as of now,” oil minister said. But the oil ministry has proposed a duty hike on diesel passenger vehicles to the finance ministry in a bid to squeeze the demand for this fuel which has risen sharply due to the widened price differential with petrol.
DECISION ON D6 PRICING ONLY BY EGOM: JAIPAL REDDY
NEW DELHI: The Petroleum Minister, Mr S. Jaipal Reddy, said that any decision on revision of Reliance Industries-operated D6 block gas price will be taken only by the Empowered Group of Ministers (EGoM).
The Minister was speaking at the sidelines of an industry event here.
The Ministry had sought views of the legal authorities on whether gas price can be revised midway through the five-year period or the contractor can be allowed to undertake fresh price discovery on a new formula.
The Attorney-General, Mr Goolam E Vahanvati, had opined that this would depend on whether market prices are ascertainable and, if they are, whether such prices are dependable and authentic, according to reports.
“If such prices are available, an appropriate formula may be worked out accordingly,” he had reportedly advised.
However, the Attorney-General said the PSC in the context of the New Exploration Licensing Policy, did not mandate any fixed period during which the approved prices would remain valid, but this has been agreed upon.
Further, on whether a regulatory board can decide on the gas price, the Attorney General had opined that EGoM should take a call on the issue.
The Prime Minister’s Office had directed the Petroleum Ministry to seek legal opinion on whether the Government can allow Reliance to increase the price from the current $4.2 per million British thermal unit.
ONGC STARTS DRILLING OIL ALONG ASSAM-NAGALAND BORDER AREA
ASSAM: Public sector energy giant ONGC has started drilling oil along the inter-state border betweenAssamand Nagaland in both Jorhat and Golaghat districts.
“We are thankful to the ONGC for carrying out their activities along the border areas. This has also helped in a big way in the economic development of these backward border areas,”Upper AssamCommissioner Syed Iftikar Hussain said after inaugurating drilling activities in a new well of the ONGC at Phuloni village in Golaghat district.
The site is located on the disputed “B” sector along the Assam-Nagaland border.
He said the Navaratna company would be paying royalty toAssamfor its work along the border.
The oil major has 42 oil wells in both Jorhat and Golaghat district which fall under the Jorhat sector of the company.
These 42 oil wells of the ONGC produce 2 lakh metric tonnes of oil every year and most of these producing wells fall in the disputed sector along the Assam-Nagaland border.
Hussain requested ONGC to involve local villagers in protecting its installations and said this would make them feel that they are stakeholders in the venture.
ONGC Basin Manager of Assam and Assam-Arakan Basin Sudhir Kumar Jain said the company has already spent Rs 15 lakh in the Uriamghat area under its corporate social responsibility schemes and more development activities would be carried out in these areas in the coming days.
He said the company was optimistic about its activities in both the districts and the new well was showing positive signs of producing oil.
Jain said ONGC had also been alloted a block to carry out exploration in the disputed “A” sector along the Assam- Nagaland border but it has not been able to carry out any activity.
IOC SETS FRESH DEADLINE FOR PARADIP REFINERY PROJECT
NEW DELHI: The Indian Oil Corporation (IOC) plans to commission its R30,000-crore Paradip refinery project by mid-2013. The refinery was slated to get commissioned by March 2012, but labour issues and other hurdles put a spanner. The plant will have a refining capacity of around 15 million tonne.
“We had set an ambitious target for the project and due to some hurdles like labour issues and laying of pipelines, we have missed the deadline. We will be able to commission the refinery by mid-2013,” said a senior IOC official, on condition of anonymity. The tax holiday that the company was enjoying came to an end on March 31,2012. The petroleum ministry and the company sought an extension of two years, but it was declined by the finance ministry.
Refineries commissioned after March 31, 2012, will not be eligible for exemption from payment of income tax on revenues earned in the first seven years of operations. The lack of tax benefit will impact IOC by R300 crore annually. IOC also plans to set up another refinery at West coast, with a capacity of 15 million tonne. The total cost of the project will be R30,000 crore. The company owns and operates 10 refineries out ofIndia’s 20 with a combined capacity of 65.7 million metric tonne per annum, according to the company’s website.
ESSAR ENERGY GETS FINAL GREEN NOD TO DEVELOP COAL MINE
MUMBAI: Essar Energy said it has received the final forest approval for its Aries coal mine inIndonesia. This is the final approval required before commencing mine development. Essar Energy acquired 100 per cent interest in the Aries mine in April 2010 for $118 million. A Joint Ore Reserves Committee (JORC) compliant resource assessment has estimated mine reserves at about 64 million tonnes with an annual potential production of four million tonnes of average gross calorific value of 5,400- 5,500 Kcal/kg. Essar said this was sufficient to provide dedicated supply to its 1,200 MW Salaya I plant inGujarat. The company has commenced construction of support roads and port infrastructure and expects ‘first coal’ to be available in 9-12 months. Currently, fuel for the Salaya I is being got under a fixed price coal contract with Essar Shipping andLogistics,Cyprus. Unit 1 of Salaya I (600 MW), has begun commercial operations and unit 2 (also 600 MW) is nearing completion.
SURGING PETROL PRICE BOOSTS SALES OF CNG-FUELLED VEHICLES
NEW DELHI: Just as diesel transformed the automobile industry inIndiaover the past year, thanks to its considerable price differential with petrol, compressed natural gas (CNG) is now enjoying its day in the sun. The six sharp spurts in petrol prices have doubled the demand for vehicles run on CNG in the year.
Maruti Suzuki, the only manufacturer offering factory-fitted CNG variants across its portfolio of small cars, sedans and utility vehicles, has seen volumes from CNG vehicles shoot up from a monthly average of 1,700 units to over 4,000 units over 18 months.
“Despite the limited number of dispensing stations, sales of CNG cars have been on a rise. The running cost of a CNG car is a third of that for a petrol car, which is making an increasing number of customers opt for the fuel variant,” said Shashank Srivastava, chief general manager (marketing), Maruti Suzuki India Ltd (MSIL). The company has CNG variants of the Alto, WagonR and Estilo small cars, the multi-utility Eeco and the Swift sedan.
CNG cars are priced 15-18 per cent higher than the petrol variants. For a car in the premium hatchback category, a diesel variant would come at a premium of Rs 1,10,000 and the cost of a CNG variant would be higher by Rs 45,000 over the petrol variants. The running costs of a CNG vehicle is the lowest, at Rs 1.61 per km, a a third cheaper than the Rs 4.45 for operating a petrol-powered car for a km, and a little over a fifth cheaper than running a diesel vehicle. This has led to increasing acceptability of CNG vehicles in places such as Gujarat, Maharashtra andDelhi, where the fuel is available.
InDelhi, 40 per cent of WagonR sales have started filtering in from the CNG variant, up from the 10 per cent in 2010. At General Motors, CNG variants account for a little over two-thirds of sales of the Chevrolet Aveo sedan.
Taking the cue, Korean auto major Hyundai has introduced CNG variants of its small cars, the Santro and the i10, and the entry-level Accent sedan. The company has seen CNG models pick up by 81 per cent in 2011. Hyundai sold 5,242 CNG cars in 2011 as compared to 2,904 units in the previous year. Sales of CNG cars till May this calendar year has remained as firm, at a little over 3,000 units.
P Balendran, vice-president, corporate affairs, General Motors India, said, “There has been an improvement in sales of the CNG variants due to the increase in price of petrol. Demand, however, has remained subdued because of infrastructural botlenecks.” CNG is currently available in 650 stations across 52 cities, covering about 35 per cent of the automobile market inIndia.
Abdul Majeed, partner and leader, automotive practice, PricewaterhouseCoopers, said, “There is increased consciousness today about fuel-efficient and eco-friendly cars. Customers are concerned about the cost of ownership of vehicles. Oil prices will only rise. If infrastructure is put in place, CNG-driven cars would be a viable option.”
Though there is no official estimate on the exact volume of CNG cars, industry sources indicate eight per cent of vehicles in the market run on this fuel. While a fifth of these sales come from factory-fitted CNG cars, the rest comprise models retro-fitted with CNG kits.