Textile industry worried as Govt scraps export sops

Source: The Hindu Business Line, Jan 23, 2019

Mumbai: The textile industry has expressed shock and anguish over the withdrawal of four per cent incentive given under the Merchandise Export Incentive Scheme on made-ups and garments, with retrospective effect from March 7, 2019.

Further, it was said that all incentives under MEIS that was granted to the exporters of made-ups and garments on exports till July 31, 2019 will be recovered.

Expressing deep concern over the announcement, KV Srinivasan, Chairman of the Cotton Textiles Export Promotion Council, said withdrawal of MEIS with retrospective effect has caused deep crisis for exporters and has indeed come as a big shock.

Exporters of cotton made-ups are already facing a tough situation financially due to the non-implementation of the Scheme to Rebate State and Central Taxes and Levies (RoSCTL). Nine months after it was first announced, the scheme to refund taxes announced to boost export of made-ups and garments is yet to be operationalised, he said.

Further, MEIS of 4 per cent was also freezed for made-ups and garments from last August. Moreover, there are some pending claims under the erstwhile ROSL scheme which was discontinued from March 7, 2019.

“Exporters are already facing serious working capital problems affecting their day-to-day operations,” said Srinivasan.

While negotiating with the importers, Indian textile companies have factored in the 4 per cent MEIS incentive and RoSCTL scheme which together account for 8.2 per cent of export prices. Export orders have to be executed in the next nine months. With the removal of MEIS benefits, exports at the prices agreed upon will become uneconomical and exporters have to bear huge losses and start defaulting on their bank loans.

Many of the exporters have also paid advance tax on their receivables as required under the Income Tax Act, which has further aggravated the problem.

Scrapping export benefits with retrospective effect will make the new Textile Policy unrealistic. Any changes or modification of existing benefits should be with prospective effect, he said.

Urging the government to restore the benefits, Srinivasan said exporters are already working against tough competition from Bangladesh, Sri Lanka, Vietnam and Pakistan notwithstanding the high import duties levied by the US, EU and China on shipments from India.

Al-Kharafi to invest Rs 49,000 cr to set up petroleum refinery in TN

Source: Business Standard, Jan 23, 2019

Chennai: Kuwait-based Al-Kharafi is likely to invest around Rs 49,000 crore to set up a petroleum refinery and petrochemical products facility at Thoothukudi in Tamil Nadu. The investment is one of the several pouring into the state.

Chief Minister Edappadi K Palaniswami said that Al-Kharafi is expected to set up a petroleum refinery in compliance with BS-VI emission norms adhering to the environmental standard to manufacture petrochemical products.

“This will bring in economic growth in the southern part of the state similar to that which took place in Jurong Island in Singapore and Dahej and Jamnagar in Gujarat,” the chief minister said after laying the foundation stone for DLF Down Town Chennai. “I assure the captains of industries present here that we will continue to fully support all your investments in Tamil Nadu.”

The state has seen 59 projects begin commercial operations in a year after the second Global Investors Meet held in Chennai last January, while another 213 are in various stages of development. Besides, the electric vehicle manufacturer BYD and major mobile phone designing and manufacturing firm Wintech have also started taking steps to set up their manufacturing facilities in Tamil Nadu, he added.

After the global meet, the state has signed 63 agreements to attract investments around Rs 19,000 crore. After setting up a high-level committee headed by the chief minister, 36 industrial projects worth Rs 14,728 crore have been awarded various approvals to start operations. This will create 22,763 employments.

Foreign Direct Investment into the state has seen an increase of around Rs 47,000 crore in the last three years, pegging it at around Rs 1,80,000 crore now, he added. The state has been constantly attracting new investments across sectors including Information Technology. The recent investments by TCS and Infosys alone, are expected to create 31,000 direct IT sector jobs in the State, he said.

Power generation, demand continue to slide for fourth straight quarter

Source: The Hindu Business Line, Jan 19, 2019

Power demand and generation declined across the country for the fourth quarter in a row because of the slowdown in the economy.

The trend was seen across both conventional and renewable energy (RE). According to a Motilal Oswal report, conventional electricity generation in December declined 2 per cent from the same period last year.

This was similar to the November data when total conventional power generation, which is mainly powered by coal, was down 6 per cent on a year-on-year basis.

Further, on a year-to-date basis, generation was down slightly by 0.1 per cent. Overall power generation was also down by 2 per cent year-on-year for the month of December, according to the report. RE generation increased a mere 3 per cent on a yearly basis, even as capacity addition continues to increase.

Solar power

On a year-to-date basis, solar capacity addition went up by 5.5 GW. In the month of December, the capacity addition was 1.2 GW. This decline in power demand was particularly pronounced in the northern and eastern regions. In both regions, power demand was down 4 per cent on a yearly basis. Coal-based generation declined 4 per cent on a yearly basis.

Thermal power was down 4.3 per cent in December 2019 over the previous year. However, hydro and nuclear generation increased 14 per cent and 16 per cent, respectively, on a yearly basis, on the back of the decline in coal-based generation.

Coal stocks

Coal stocks, which were hit by heavy rains last year, is now seeing signs of revival. Coal production by Coal India in December went up 1.6 per cent but continues to be down 5.8 per cent on a year-to-date basis.

“The pickup in production should improve demand slightly going ahead,” said Rupesh Sankhe, Vice-President, Elara Capital.

But this increase in production resulted in higher stocks, as demand was not proportional to the increase. Coal stocks at power plants increased to 18 days in December over December 2018.

With the availability of coal improving, Plant Load Factor (PLF) for NTPC plants is showing signs of improvement after the heavy monsoon. Some plants of NTPC saw a decline in PLF of 10 percentage points to 66 per cent on a yearly basis. PLF is one of the key metrics that determine power output. Thermal PLF in December was 51 per cent, a 3.5 per cent reduction on a year-to-date basis. All this will impact discom dues, which has already touched Rs 80,000 crore at a time when India’s GDP has gone down to 4.2 per cent.

Adani in early talks to acquire Reliance Power's troubled unit

Source:  Economictimes.indiatimes.com, Jan 13, 2020.

Mumbai: Adani Group is exploring acquisition of Vidarbha Industries Power (VIPL), a subsidiary of Reliance Power which supplies electricity to Adani Electricity Mumbai, two people aware of the development said. The talks between billionaire Gautam Adani-led group and Anil Ambani-led Reliance Power are at an early stage, the persons cited earlier told ET. Both groups declined to comment on the matter.

VIPL operates two 300 megawatt (MW) units at Butibori in Maharashtra, but it has not been generating any power since mid-January after Coal India stopped supplying coal over an ongoing litigation which is in the Delhi High Court and issues relating to payment. VIPL had shut its first unit of 300 MW before that. The spat has forced Adani Electricity to buy power from the open market to meet its obligation to its 3 million customers in the city.

“The acquisition cannot happen with the current power purchase agreement because the tariff is very high. Adani Electricity can easily source electricity from open market at Rs 4/unit or lower. So then why should it pay Rs 5.50/unit to VIPL,” a senior executive told ET. According to the executive, Adani has been procuring power from the market at Rs 3.50-4/unit. In comparison, VIPL was charging it Rs 4.38/unit, which could go up to Rs 5.50 if it is allowed to pass on the entire cost of coal procurement.

The executive said that any potential acquisition will be guided by Adani Electricity’s internal target of reducing the average cost of power to about Rs 4/unit. VIPL has been under financial stress. It has defaulted in repayment of dues to lenders and delayed payment of its statutory dues to various authorities. Subsequently, in July, the six lenders to the company signed an inter-creditor agreement that gave them 180 days to resolve debt payment issues in line with RBI’s circular dated June 7, Gautam Adani’s business group and Anil Ambani’s Reliance Group have struck two deals in the last two years. Adani Group acquired the Mumbai electricity distribution business from Reliance Infrastructure in a deal valued at Rs 13,251 crore in 2017. Prior to this, Adani Transmission had bought two transmission projects from Reliance Infrastructure in a deal valued at Rs 1,000 crore.

Coal India will remain dominant player: Pralhad Joshi, Union Coal Minister

Source: Economic times, Jan 11, 2020

Coal India will continue to be India’s biggest coal supplier even after the government’s decision to throw open the sector to private players through an ordinance, Union Coal and Mines Minister Pralhad Joshi said. The coal ministry will also back the private sector, which along with Coal India will help bring down coal imports to zero in four to five years, he said.

In an interview with ET, Joshi also said his ministry would request the Railways to invest in infrastructure to transport coal from private mines that are not connected. The minister said he wants a balance between the public and private sectors in coal mining, with Coal India contributing about 60% of India’s expanded output in the years ahead. Edited excerpts:

How are you allaying fears of Coal India unions on opening the coal sector to private players?

Whenever I have got opportunity to interact, I have duly conveyed to Coal India (CIL) that it has so much of work for another 50 years, if they work on the blocks allocated to them. We are expecting that the country will need a minimum 1300-1400 million tonnes coal by 2025-26. CIL this year targets producing around 660 million tonnes. I have told in no ambiguous term that CIL will be not protected, it will be strengthened. With fourth largest resources in the world, we import 235 million tonnes which costs Rs 1,71,000 crore.

So do you call it a failure of CIL?

I don’t call it a failure of CIL, but dependency only on CIL was wrong. CIL has done its best and will do that in future also. But asking one company to meet all of the coal requirement is not correct. I have told CIL also to be more practical and understanding.

CIL is a people-oriented company and its employee costs are its major costs. There are fears it may get outpriced by competition.

CIL is one of the most economical players in the entire world as far as coal mining is concerned. There is no room for such apprehension. And it cannot happen as we have a huge coal requirement. Whatever is needed for the environment we will do, but we have to depend on coal for atleast 30-40 years. In that case we cannot depend wholly on the private sector. The government does not want that only private companies should be there in coal mining.

How much of the country’s output do you expect the private sector to provide?

We need to do the balancing. I think Coal India will be 60%-65% and private will be 30%-35%. If we were able to meet out requirement through one company, we wouldn’t have taken all these efforts.

But Coal India output had declined and it has started recovering only in December?

Read the rest of this entry »

Centre approves Rs 5,600-cr for 1,656 km-long North East Gas Grid

Source: Business Standard, Jan 08, 2019

The Cabinet Committee on Economic Affairs approved Rs 5,559 crore in viability gap funding for a 1,656 km gas grid in the Northeast region.

This is around 60 per cent of the project cost of Rs 9,256 crore for the pipeline in the region’s eight states, by Indradhanush Gas Grid (set up by state-run Indian Oil Corporation, Oil and Natural Gas Corporation, GAIL, Oil India, and Numaligarh Refinery), is to supply industries, homes and transport vehicles.

“At present, of the 75 million standard cubic metres a day (mscmd) of natural gas produced in India, around 15 mscmd or 20 per cent is from this region, from Assam, Arunachal Pradesh and Tripura; we also have potential in Nagaland and Manipur. The current decision is going to open up the possibility to explore this potential,” said Dharmendra Pradhan, Union minister of petroleum and natural gas.The eight states are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The government expects availability of gas to boost industrial growth without spoiling the environment.

Oil hits $70 as Iran exits nuclear deal, tensions intensify

Source: LiveMint.com, Jan 06, 2020

Oil extended its dramatic price surge from Friday as the fallout between the U.S. and Iran escalated after the assassination of one of the Islamic Republic’s most powerful generals.

Futures are up about 6% since Friday, trading above $70 a barrel in London, as the U.S. State Department said there’s “heightened risk” of missile attacks near military bases and energy facilities in Saudi Arabia. Iran said on Sunday it no longer considers itself bound by the 2015 nuclear deal negotiated with the U.S. and other world powers in the fallout from the killing of General Qassem Soleimani.

Oil’s rising after a more than 20% gain in 2019, as the warning followed a weekend of bellicose rhetoric. President Donald Trump said he was prepared to strike “in a disproportionate manner” and attack more than 50 Iranian sites if Tehran retaliates against the killing of Soleimani, while the Middle East nation said it has to “settle a score with the U.S.” Read the rest of this entry »