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POWERGRID PAYS INTERIM DIVIDEND OF RS 370.38 CRORE

Power Grid Corporation of India Ltd. (POWERGRID), the country’s Central Transmission Utility and a Navratna PSU, has declared an interim dividend of 8% of share capital for the financial year 2011-12.

RN Nayak, CMD, POWERGRID handed over electronic payment remittance advice of Rs 249.02 crore to Power Minister Sushilkumar Shinde towards share of Ministry of Power in the interim dividend. The total interim dividend being disbursed is to the tune of Rs 370.38 crore to about 10.13 lakh shareholders.

OPG POWER GETS GO-AHEAD FOR 300-MW GUJARAT PROJECT

The National Green Tribunal has allowed AIM-listed OPG Power Ventures Plc to go ahead with its 300-MW power project at Kutch, Gujarat, subject to the condition that the project developer would “adhere to the terms and conditions laid down in the Environmental Clearance granted by the Gujarat State Level Impact Assessment Authority.”

The company’s Managing Director, Arvind Gupta, told that there was never any doubt that the company would strictly comply with the EC conditions.

The order of the Tribunal basically says that OPG Power could go ahead with the project but after strictly following the EC norms, and in case of any deviation, after obtaining the necessary approvals for the deviation. The order has been interpreted by both the plaintiff—four individuals—as well as the main respondent—OPG Power, as their own victory.

OPG Power has said that the Tribunal’s order is clear in that there is “no impediment in carrying on with the construction and commissioning of the project so long as it adheres to the terms of the EC.” The company has “not been restrained from construction of the project,” he said.
He said that the company had committed to spending Rs 108 crore on various environmental and CSR activities.

Gupta said that the OPG Power was “fully funded” for adding 629 MW of capacity to the existing 113 MW.

Three of the upcoming plants are near Chennai, with a total capacity of 317 MW. Of these, one unit of 77 MW will start generating electricity in May this year. Another one, 80 MW, will go on stream some time towards the end of calendar year 2012. The third, of 160 MW capacity, is expected to be commissioned by mid next year. These 317 MW, plus the 300 MW in Gujarat (that has been the subject of the NGT order) and a 12 MW plant at Bellary, Karnataka, add up to 629 MW.

For the half year ended September 2011, OPG Ventures achieved a turnover of Rs 186 crore.

Replying to a question, Gupta said that the company indeed had ambitions for India listing and was working towards it.

GOVERNMENT MULLS OPTIONS TO ALLOCATE NTPC STAKE IN ICVL

Following NTPC’s exit from ICVL, the government is mulling a couple of options for distributing power major’s 14 per cent stake among the existing shareholders -- SAIL, RINL, NMDC and Coal India. One of the options, which might pave for smooth distribution, is allocating the 14 per cent stake in proportion to the current shareholding pattern.

However, the government is also weighing the option of giving the 14 per cent stake to the PSUs under the steel ministry’s administrative control - SAIL, RINL and NMDC.

“It all depends how they (the government) are going to restructure. They may divide the shareholding of NTPC to other shareholders in the proportion of their existing shareholding pattern,” SAIL chairman CS Verma said.

“They may give NTPC’s stake to steel companies. But, whatever it be, SAIL is the largest shareholder in ICVL now and will remain the largest shareholder,” Verma, who is also the Chairman of ICVL, added. If NTPC’s stake is given to steel firms alone, the Coal Ministry’s only representative Coal India would be deprived of acquiring additional stake in ICVL, which enjoys the autonomy accorded to Navratna companies without having formal Navratna status. International Coal Ventures Ltd (ICVL) was incorporated in 2009 for buying coking coal assets abroad. SAIL and CIL hold 28 per cent each in the consortium, while RINL and NMDC have 14 per cent each.

NTPC wished to exit from the consortium since the mandate of ICVL is to acquire coking coal assets. This is in contrast to NTPC’s interest of thermal coal. ICVL, which has Rs 10,000 crore authorised capital and Rs 3,500 crore equity capital, has not been able to taste success since its journey; but exuding confidence, Verma said that the consortium was very close on hitting its maiden target and the deal would be struck within the current fiscal itself.

The consortium aims to be an owner of about 500 million tonnes of met coal reserves by 2019-20.

BHATINDA-SRINAGAR GAS PIPELINE PROJECT AWARDED TO GSPL

The Centre has awarded the Rs 855-crore Bhatinda-Jammu-Srinagar gas pipeline project to Gujarat State Petronet Ltd (GSPL).

This was revealed at a high-level meeting of officers chaired by the Chief Secretary Madhav Lal, who reviewed the 750-km long gas pipeline project here. The project stretches from Bhatinda in Punjab via Jammu to Srinagar.

The project contract has been awarded by the Petroleum and Natural Gas Regulatory Board (PNGRB) of India to a consortium led by Gujarat State Petronet Ltd.

Lal emphasised the significance of the inter-State gas pipeline project for the people of the State saying that its early completion would ensure unabated gas supply throughout the year to the State, especially in times when energy needs rise.

The Chief Secretary called for close coordination between agencies and directed fast-tracking the project.

The Chief Secretary was given a presentation of the project’s current status and its different phases, surveys and route plans for laying pipelines. The State Government’s assistance was also sought for future development of city gas distribution networks and clearance issues and other related matters.

The total investment for the project will be Rs 855 crore in the State within 36 months. It was further informed that a State Act for acquiring the ‘Right of Use (RoU)’ for laying cross-country pipelines needs to be enacted by the Government.

HOW WILL IRAN’S CRUDE OIL CRISIS HIT INDIA?

AS PRICES BITE, INDIA COULD REPLACE IRANIAN CRUDE WITH THE SAUDI VARIETY

Last month’s embargo on Iranian oil from the EU and the US is sure to impact India. Nearly 10 per cent of India’s crude oil requirement, worth $13 billion, is met by Iran at present. Given India’s high dependence on Iran, any drastic step has been ruled out. Though Iran is offering a very competitive payment option to India for its crude oil, India is likely to cut imports by 10 per cent as have China and Japan.

For starters, the Iran situation is sure to have an impact on crude oil prices, as the world has little spare capacity. Iran exports 2.5 million barrels of crude oil every day. Oil experts estimate the current OPEC spare capacity at 3.8 million barrels a day or 4.2 per cent of current global oil demand. Of this, 1.8 million barrels a day is with Saudi Arabia.

Given the disruptions caused in West Asian countries last year, it appears that most OPEC members are producing at optimum capacity. Hence, disruption of crude oil prices and supplies could affect India very negatively. Also, Asia’s 10 per cent cutback “may appease the US and EU” for only some time, believe analysts.

Given the world is not flush with crude supplies at the moment, disruption in supplies will mean significantly higher prices. Brent crude is already at $120 a barrel, indicating upward bias. Not only will this impact the cost at which India imports crude oil, but will also impact companies that have any kind of an exposure to Iran.

According to Macquarie, “As the US and EU-led oil embargo on Iran bites, we believe India may undergo severe economic stress.” This apart, companies which have an exposure to Iran could also be affected, albeit in different ways. Macquarie says seven of Aban’s 17 rigs are deployed in Iran, which typically earn 30-50 per cent premium over market rates.

“Potential war or payment disruptions could cripple its severely debt ridden balance sheet,” the report says. However, this development may have some positive implications for refiners. Given India may have to replace some of Iran’s sweet light crude supplies with the heavier Saudi variety, the refining spreads between light and heavy crude will rise.

In recent times, spreads have narrowed, which has impacted the profitability of players like Reliance Industries. Some of the companies that import crude from Iran include MRPL (seven million tonnes per annum or mtpa of Iranian crude), Essar Oil (five mtpa), HPCL (3.2 mtpa) and IOC (2.5 mtpa). Analysts say Indian firms with the highest complexity that could benefit from rise in light-heavy crude oil spread are RIL, HPCL, Essar Oil and BPCL.

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