GAIL's mega gas highway plan

The Indian economy is slowly moving towards gas-based economy and that is where pipelines become one of the first priorities for the government. To address the issue the first names comes in mind is the government-owned gas transporter GAIL, which has proposed to set up a gas highway but that may also translate into another cess for the common man. With availability of 80 million cubic meters of gas from Reliance Industries' D-6 block in the Krishna Godavari basin, India's gas supplies will be doubled and to carry about 220 million square centimetre of gas per day, the government has already proposed the concept of a gas highway. Well, it seems that state owned gas transporter GAIL wants to implement it. GAIL has already sent the proposal for setting up a 6000 km gas highway that will attract an investment of about Rs 30,000 crore and to arrange the funds for the gas highway, GAIL has asked for budgetary allocation or putting a cess of 35 paise tp per square metre of gas. Presently 43 per cent of the capacity of about 9000 km of gas pipeline caters to western India and eastern and southern parts together account for 26 per cent of the total capacity that too is confined majorly to power and fertiliser sector. But GAIL has proposed to end the regional and sectoral discrepancy with the gas highway and analysts believe it’s a good move. Meanwhile, with a cess of 35 paise only Rs 1600 crore can be collected. But what is important here is that GAIL is already expanding its 7000 km pipeline by another 7000-8000 km and if the government nominates GAIL for another 6000 km gas highway, the gas utility will become one of the biggest players, as far as gas transporting is concerned.

Budget on 31st Nifty to touch 5000

New government plans to present budget by July 31 market will hold entire June ahead of budget Nifty may touch 5000 before budget

Tata Tele to invest about Rs 10,000 cr for GSM operations

With plans to invest about Rs 10,000 crore this year to expand its network in the country, Tata Docomo, the GSM brand of Tata Teleservices, today announced commercial launch of its operations in Orissa. "We plan to invest two billion dollars (about Rs 10,000 crore) for our GSM pan-Indian services, while about Rs 350 crore investment is planned for Orissa this year," managing director of Tata Teleservices Anil Sardana said at the launch of the GSM service here. Promising one paisa per second for all calls - locals and STD, he said the company's next gen GSM service with an aggressive back to back roll out plan started its GSM service in Tamil Nadu, Kerala and Orissa covering a total a total of 20847 towns and villages. Tata Docomo's pan-Indian service rollout would be completed this year, with south Indian circles going live first followed by circles in east, west and northern region, Sardana said adding "subscribers will now be able to enjoy the benefits of 'pay as you use'. The company also announced the introduction of the 'pay as you use' advantage for many of its value added services, including all its voice portals, 24-hour music, cricket commentary and voice chat.

Reliance Inds stares at a flood of gas

Reliance Industries (RIL) will request the government to expedite the process of finding buyers for the natural gas produced from its D-6 block in the Krishna Godavari basin. On Thursday, PMS Prasad, CEO of the firm, was in the capital to put across his firm's views to oil ministry officials. "The production capacity has already reached 37 mmscmd (million cubic metre per day), but consumption is only around 25 mmscmd," pointed out a company source. "We sent draft purchase agreements last week to the three steel companies approved by the government, but the contract is yet to be inked," he added. RIL's inability to fully utilise its full production capacity stems partly from the highly regulated nature of the selling process. During the last three years, the government has interpreted its rights under the production sharing contracts it signs with oil and gas exploration companies to include 'guidelines' governing the sale of the hydrocarbons produced. Under these guidelines, the government reserves the right to determine the recipients of the natural gas produced by the contractors and companies such as RIL cannot sell gas to anyone else. Under the policy thrashed out by an empowered group of ministers in 2007, the first 40 mmscmd of gas produced by RIL was supposed to have been parcelled out between power plants, fertiliser plants and CNG, LPG and piped gas projects. RIL is expected to reach a production capacity of 40 mmscmd by end of July. Yet, RIL has run into oversupply issues even as its production has hit just 35 million cubic metres, despite being given the go-ahead to sell gas to 3 steel makers. It is currently gearing up its production capacity uniformly every month to reach a total of 80 million cubic metres per day by the end of 2009. "We have signed agreements for around 29 mmscmd, but RGCPL (Ratnagiri Gas and Power, formerly Dabhol Power) is unlikely to need its 2.7 mmscmd till september due to their pre-existing contracts. On top of this, some of the fertiliser companies are not fully utilising their allotments," the source added. "The negotiations with steel companies are on," he added. As a way out, RIL is likely to push for larger supplies to existing power companies and a further diversification of the customer profiles to captive power plants within factories as well as makers of ceramics, glass etc.. Against an anticipated demand of 18 million cubic metres from power companies, RIL has so far signed agreements only for around 11.1 mmscmd. "We have been told to supply gas to run the power projects at 60% load. Increasing the load factor can help us sell more," the official said. Another factor for the glut has been the absence of the National Thermal Power Corp (NTPC), which has a total consumption capacity upwards of 13 mmscmd. The company is engaged in a legal dispute with RIL after the latter pulled out of a bid to supply 12 mmscmd of gas at $2.34 per unit for 17 years in 2005, objecting to indemnity clauses contained in the draft supply agreement supplied by NTPC. While RIL has been pushing for NTPC to buy gas at higher rate of $4.2 per unit, the latter has been resisting, pointing to the ongoing court case.

IFCI may not get strategic investor

The finance ministry may abandon the move to rope in strategic investor in the development of financial institution IFCI, as its financial condition has improved and it does not require capital infusion in the near future. The management of the financial institution, it is learnt, is also not keen to bring in a strategic investor in the finance company. The capital adequacy ratio of the institution has gone up to 18% and its non-performing assets (bad loan) has declined to nil. After a long time, the institution could expand its loan portfolio by around Rs 3,000 crore in 2008-09. In the current financial year also, the institution is planning to expand its asset base by around 20% from the present level of Rs 15,000 crore. The institution has been making profit for last three years consecutively. However, the government had initiated a process to divest 25% stake in the institution to a strategic investor in 2007-08. But the process failed because of uncertainty in the equity structure of the institution. During the crisis time of late nineties, the institution had taken loans from the government and other banks with a condition to convert them into equity shares. The central government had lent Rs 52 crore to the institution. With the financial condition of the institution improving and decision of the government to rope in strategic investor, the share price of IFCI jumped from Rs 15 to over Rs 140 within one month. This prompted the banks and the government to consider the conversion of the loan amount into equity shares. But, this could have enlarged the equity base of the institution substantially affecting its earning per share. This had made the various contenders jittery and they pulled out. However, since then the performance of the institution has improved. Since the investments from the strategic investors failed, the share prices of the institution had fallen in tandem with the collapse in the stock markets. In November, its share price had gone down to Rs 15.25. But, on Friday it closed on Rs 55.55. As the company has a capital adequacy ratio of 18% against the statutory requirements of 12%, a further infusion of capital will only lead to reduction on its return on capital.

DLF to cut Rs 14,000 cr debt by half this fiscal

Realty giant DLF today said it will reduce its huge debt of Rs 14,000 crore to half by the end of this fiscal by raising funds through sales of non-core assets/businesses, and internal accruals. "Our debt will be half by the end of this fiscal. Currently, it is Rs 14,000 crore," DLF Group Executive Director Rajiv Talwar told reporters here on the sidelines of a TERI event on green infrastructure. Asked how the company plans to reduce its debt, Talwar said the funds would be raised through internal accruals, and sales of assets and non-core businesses like wind power. "We will do away with those non-core assets and businesses which have a gestation period of 7-10 years," he said. Talwar noted that the market for the residential sector is firming. "Last year, we sold 8,000 flats. In this fiscal, we have already sold 4,000, of which 1,400 alone were in Delhi," he said On fund raising, Talwar said: "No more raising of funds this year." The DLF promoters have recently raised about Rs 4,000 crore by selling nearly 10 per cent of their stake in the company. Asked about the hospitality venture, Talwar said the company has over 40 hotel plots and it is currently developing 21 hotels.

Inflation remains in negative zone

Inflation based on the wholesale price index remained in the negative zone for the second week in a row. Inflation based on the wholesale price index declined 1.14% in the year through 13 June 2009. The decline was, however, smaller than a 1.61% fall in the year through 6 June 2009. Inflation had dipped to negative in early June 2009 for the first time since 1977-78.