Govt plans to raise APM gas price by 17%

The government may hike the price of natural gas produced by ONGC and Oil India Ltd by over 17 per cent and index it to inflation rate to help the two firms cut losses on selling fuel below cost. The Petroleum Ministry has prepared a draft Cabinet note for raising prices of natural gas produced by ONGC from fields given to it on nomination basis to Rs 3,765 per thousand cubic meters (or $1.98 per million British thermal unit) from current Rs 3,200 per thousand cubic meter ($1.68 per mmBtu). For OIL, the gas price has been proposed at Rs 4,205 per thousand cubic meters, a senior ministry official said. ONGC currently loses about Rs 3,000 crore in revenues annually on selling gas from fields like Bassein and Mumbai High at Government capped price. "The Cabinet note is ready and will be circulated once Petroleum Minister Murli Deora approves it. In all likelihood, the proposal may go to Cabinet sometime next month," he said. The price would change by Rs 55 per thousand cubic meter for every 10 points change in Wholesale Price Index (WPI). Price of gas produced by ONGC and OIL from fields given to them on nomination basis, called the Administered or APM rate, were last revised in June 2005. APM price would be raised to $4.20 per mmBtu in stages over the next three years, the official said adding this would bring rates at par the sale price of gas produced by Reliance Industries from its giant KG-D6 fields. The official said the Cabinet at the last gas price revision in 2005 had asked the Tariff Commission to recommend producer price for ONGC and OIL. The Tariff Commission had recommended a producer price of Rs 3,600 per thousand cubic metre for ONGC and Rs 4,040 per thousand cubic metre for OIL. It also recommended a Rs 55 per thousand cubic metre rise in producer price for every 10 points change in WPI over 189.40 of March 2005. The monthly WPI current is at 232.7, which translates to a price increase of Rs 165 per thousand cubic metres over the normative producer price recommended by the Tariff Commission. Though the Tariff Commission was asked to determine the producer price effective from July 1, 2005, the price increase would be brought into effect prospectively, he added. The official said consumer price for power and fertilizer units outside North-East may be fixed at 10 per cent above the producer price i.e. Rs 4,141.5 per thousand cubic metre while for the plants in NE it would be 60 per cent of the price i.e. Rs 2,259 per thousand cubic metre. Consumer price for transport and small consumers outside NE may be fixed at 20 per cent above the price for power and fertiliser sectors i.e. Rs 4,969.8 per thousand cubic metre

RNRL files caveat in SC on K-G gas deal

RIL may move apex court next week; Deora says govt’s active involvement is a must. Anil Ambani-promoted Reliance Natural Resources Limited (RNRL) has filed a caveat before the Supreme Court to preclude the chances of an ex parte order (one issued without hearing the other side) on the gas-sharing deal it had signed with Reliance Industries (RIL). Our Mumbai reporter adds: The move comes amidst reports that RIL is planning to move the apex court next week. There was also a buzz in Mumbai throughout the day that the RIL board met today to take a decision on the issue, though an official spokesperson of the company denied it. RNRL filed the caveat after the Bombay High Court upheld on June 15 RNRL’s position on the gas price in its dispute with RIL and ordered that the Anil Ambani-led firm’s dispute with RIL over gas supply should be resolved within a month through a fresh “suitable arrangement”. RNRL submitted that it should be given an opportunity to defend the matter before the apex court. After the Bombay High Court’s judgment on June 15, RIL lawyer Milind Sathe said filing an appeal in the Supreme Court is an option. Meanwhile, Petroleum Minister Murli Deora told reporters here that the warring Ambani brothers had met him after the Bombay High Court’s June 15 ruling on the row. The government wants an early solution to the gas dispute as it cannot afford to lose revenues, Deora told reporters here. “I am in touch with them (Ambanis). The brothers are ‘not very friendly, unfortunately’,” he added. Asserting that nothing could be done on the Krishna-Godavari (K-G) gas dispute without the active involvement of the government, Deora said: “We are trying our best to find a solution to the gas dispute. In no way can the government afford to lose the money. We need the revenues from K-G gas for development of the country.” He, however, declined to divulge details of his meetings with the Ambanis. On Monday, the Bombay High Court had asked RIL to sell gas at $2.34 per mBtu (million British thermal unit) to RNRL. The price was 44.2 per cent lower than the land-fall price of $4.20 per mBtu derived by a government-approved formula. RIL has signed agreements with power and fertiliser firms to sell its D-6 gas (in the K-G basin) at this price excluding transportation charge. RIL wanted the court to uphold the government-approved price, but the court sanctified the lower price of $2.34 per mBtu, which is stipulated in an agreement signed between Mukesh and Anil Ambani at the time of their separation in 2005-06.

SBI to merge State Bank of Indore

Buoyed by the success of the merger of State Bank of Saurashtra with itself, State Bank of India (SBI), the country’s largest bank, on Friday said that it would acquire another subsidiary, State Bank of Indore. The proposal was approved by the SBI board on Friday, the bank said in a filing with stock exchanges. SBI holds a 98.05 per cent stake in State Bank of Indore, the smallest among its six associate banks. SBI’s latest move comes within a fortnight of Finance Minister Pranab Mukherjee’s green light to consolidation in the public sector banking space. While a lot of public sector banks have discussed such proposals informally, only SBI has been able to push ahead with mergers. “There are a lot of talks happening. We are talking to the boards (of associate banks). It (the speed of the merger) also depends on the managements of associate banks,” SBI Chairman O P Bhatt said on the sidelines of the bank’s annual general meeting here on Friday. Last year, SBI had appointed its former Deputy Managing Director Bharati Rao as the advisor for associate banks’ merger. The advisor has conducted talks with the boards of four associate banks, Bhatt said. In August 2008, SBI had merged State Bank of Saurashtra with itself and the bank has said that the merger — which was seen as a test case — has happened without any glitch. Apart from its six associate banks, SBI has 100 per cent stake in State Bank of Hyderabad and State Bank of Patiala. It is expected to take up the merger of its listed subsidiaries — State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore — later. The merger of all associates of SBI will take the total assets of the combined entity to Rs 8,00,000 crore, making the lender a global financial powerhouse. No plans to raise additional capital, says O P Bhatt Pointing to comfortable capital adequacy, SBI Chairman O P Bhatt on Friday said that the country’s largest lender did not plan to raise additional capital through equity offering in the near future. The bank has no plans for either rights issue in the domestic market or issue of American depository receipts (ADRs) /global depository receipts (GDRs) for international investors, Bhatt said, addressing shareholders at the bank’s annual general meeting on Friday. The bank expected its capital adequacy to reach 14.5 per cent by June-end, he added. Referring to the bank’s net interest margin (NIM), he said that this year (2009-10) the NIM was expected to be below 2.7 per cent. Its margin slipped to 2.93 per cent in 2008-09 from 3.07 per cent in 2007-08.

India May Extend Duty-Free Imports of Raw Sugar

India, the world’s biggest sugar consumer, may extend duty-free imports of raw sugar by eight months to March, bolstering local supplies and global prices, an industry official said. The cabinet may approve a proposal from the food ministry in the next 15 to 20 days, said the official, who asked to remain unidentified as the information is confidential. The government may also include private traders in its plan to allow state-run companies to import as much as 1 million tons of white sugar by the end of this year, the official said. Increased purchases by India may sustain a rally that’s made raw sugar the second-best performing commodity in the UBS Bloomberg CMCI Index in the past year. Raw sugar has advanced 34 percent this year on forecasts of a global deficit, driven mainly by the drop in India’s production.

FIIs pull out Rs 1,700 cr from Indian markets

Foreign institutional investors (FIIs) on Friday pulled out a net Rs 29 crore from the Indian stock markets, taking their total outflow during the week to nearly Rs 1,700 crore. In today's trade, FIIs were gross purchasers of shares worth Rs 1,848.44 crore, while they sold equities valued at Rs 1,877.52 crore resulting in a net sell of Rs 29.08 crore, according to the provisional data available with the Bombay Stock Exchange. During the week, the overseas investors have pulled out nearly Rs 1,700 crore from the Indian stock markets, as per the latest data available with the market regulator Securities and Exchange Board of India (SEBI). However, domestic institutional investors continued their investment in the stocks of Indian companies and in today's trade pumped in a net Rs 413.20 crore. Besides, proprietors and non-resident Indians (NRIs) were also enthusiastic about the equity market and purchased shares worth Rs 89.65 crore and Rs 0.10 crore respectively, the BSE data shows. Meanwhile, brokers, on behalf of their clients, followed FIIs trend and sold shares worth Rs 182.47 crore. The BSE's benchmark index Sensex, composed of 30 bluechip stocks, today gained 256 points or 1.8 per cent to close at 14,521.89 points.

RBI to buy back bonds worth Rs 6,000 cr

Government bonds traded range bound ahead of RBI’s move to buy back securities worth Rs 6,000 crores from traders today. On Friday, RBI will sell bonds worth Rs 15,000 crore. Dealers expect action to remain range bound in the coming days till the budget, when they expect some clarity to emerge on the government’s borrowing programme. The most commonly traded bond - the 5 year bond - however traded lower unaffected by the buy back news. Its yield traded at 6.64% at 12 45pm, 3 basis points higher than its previous close. When yields rise, prices fall. The benchmark 6.05% paper only had trades worth Rs 20 crore. "The concern with OMO is that RBI has not been buying the whole amount that it says it will pick up from traders," saya RVS Shridhar, head of markets at Axis Bank. "This is giving only mixed signal to the market. We will have to wait for the auction results. As for higher borrowings, market has been preparing for greater front loading of bond auctions," he added. The rupee rose marginally on Thursday from one-month lows on Wednesday, although downswing in shares affected sentiment. At 12 45pm, the rupee was at 48.09 against the dollar, just above Wednesday's close of 48.13. The dollar was steady against the euro on Thursday, trading lower after US inflation data further made in unlikely that Federal Reserve would raise interest rates by year end.

Buy at least 5% renewable energy: CERC orders state utilities

The Central Electricity Regulatory Commission (CERC) today said that all power state utilities in the country will have to purchase at minimum five per cent of their grid purchase from renewable energy sources from 2009-10 onwards and 15 per cent by 2020. In his special address at Green Power 2009, an international conference and exposition on renewable energy, organised by Confederation of Indian Industry at Chennai today Pramod Deo, chairperson and chief executive, CERC said that the regulator in carrying out of an internal action plan on global climate change. The Cerc will determine the active minimal buy standard for renewal energy which will help bring down emission from the electrical energy sector. “While the minimum purchase standard will be fixed, from 2009-10 onwards all electrical energy utilities in the country will have to buy renewable energy. There will be one per cent increase in the purchase of renewable energy for every year for the next 10 years,” he said. He added, currently 20 state electrical energy regulative commissions (SERCs) have already determined the percentage of energy that has to be bought from renewable sources. “While Karnataka and Tamil Nadu are currently buying 10 per cent of their grid purchase from renewable sources, Maharashtra has reached four percent target,” he said. “A minimal renewable energy purchase obligation also has to be fixed,” he said. Deo further revealed that the ministry of new and renewable energy is also carrying on a feasibility study for introducing renewable energy certificates. “One certificate will be equal to 1 Mw of renewable energy generated. The certificates can be traded to meet the mandatory targets of renewable energy purchase,” he said. He added, though the certificate to all forms of renewable energy the government is thinking of introducing separate certificate for solar energy. The certificate will be valid for one year and it can be traded through the power exchanges. “Whether trading companies will be allowed to do trading, we are currently thinking about it, he said. The new system is likely come into place from April 2010, said Deo and it will be bought by those states which are facing deficit currently. A registry from National [i] Load Despatch Centre would handle.