- Competing insures help cut cost for shipping companies
The Economic Times, Monday, September 01, 2008 - Penalty fails to curb power overdrawal
The Hindu Business Line, Monday, September 01, 2008 - Govt extends DGCA’s tenure again
The Financial Express, Monday, September 01, 2008 - Bharti, TATA comm. come under DOT scanner
The Hindu Business Line, Saturday, September 06, 2008 - Concrete sleeper makers bend to railways terms
The Financial Express, Monday, September 08, 2008 - Foreign telcos can bid for 3g without indian partner
The Economic Times, Tuesday, September 09, 2008 - Govt mulls dipping into NIF to help bankroll power projects
The Financial Express, Wednesday, September 10, 2008 - TRAI chief ‘not consulted on 3G rules change’
Daily News & Analysis, Saturday, September 13, 2008 - Aircraft navigation services to be separated from AAI
The Financial Express, Saturday, September 13, 2008 - Fast-forward power reforms
The Economic Times, Wednesday, September 17, 2008 - BID row may hit delhi station upgrade
The Business Standard, Wednesday, September 17, 2008 - Market price for power on anvil
The Business Standard, Sunday, September 20, 2008 - Delhi metro MD smells a scam
The Economic Times, Sunday, September 21, 2008 - Competition-limiting clause discarded for highway projects
The Hindu Business Line, Tuesday, September 23, 2008 - Eased ECB norms welcome
The Economic Times, Tuesday, September 23, 2008 - CERC asks power companies to furnish technical details
PTI, Livemint.com, Wednesday, September 24, 2008 - UP modifies bidding terms for kushinagar airport
The Business Standard, Wednesday, September 24, 2008 - Air traffic growth hits Airpocket: E&Y
The Financial Express, Wednesday, September 24, 2008 - B’lore airport may have to charge lower user development fee due to high traffic
The Financial Express, Saturday, September 27, 2008
Competing insures help cut cost for shipping companies
The Economic Times, Monday, September 01, 2008
Increasing competition among insurance players has helped to reduce the outgoings of Indian ship owners and shipping companies, whose marine bills have reduced drastically over the years. The number of players who offer marine insurance products in the country has doubled from that existed a few years ago, and the resultant competition among them has also pulled down marine insurance premiums to less than half of what used to be before. It was not quite long ago that there were only four players in the marine insurance segment and all of them were government PSUs – New India Insurance (Mumbai), Oriental Insurance (New Delhi), United India Insurance (Chennai) and National Insurance (Kolkata).
With the entry of private insurance companies their number has more than doubled. Of the many players in the private domain ICICI Prudential, IFFCO-Tokyo Marine, Bajaj Alliance, and Reliance Insurance are the four leading players. There are companies like HDFC which are working towards joining the elite group of marine insurance companies.
Since government introduced de-tariff in insurance in April 2005, premium rates have come down. As a result, marine hull premiums have reduced more than 50% over the years. There is also substantial reduction in cargo insurance premiums. Increasing competition among insurance players has helped to reduce the outgoings of Indian ship owners and shipping companies, whose marine bills have reduced drastically over the years. The number of players who offer marine insurance products in the country has doubled from that existed a few years ago, and the resultant competition among them has also pulled down marine insurance premiums to less than half of what used to be before. It was not quite long ago that there were only four players in the marine insurance segment and all of them were government PSUs – New India Insurance (Mumbai), Oriental Insurance (New Delhi), United India Insurance (Chennai) and National Insurance (Kolkata).
With the entry of private insurance companies their number has more than doubled. Of the many players in the private domain ICICI Prudential, IFFCO-Tokyo Marine, Bajaj Alliance, and Reliance Insurance are the four leading players. There are companies like HDFC which are working towards joining the elite group of marine insurance companies.
Since government introduced de-tariff in insurance in April 2005, premium rates have come down. As a result, marine hull premiums have reduced more than 50% over the years. There is also substantial reduction in cargo insurance premiums.
Penalty fails to curb power overdrawal
The Hindu Business Line, Monday, September 01, 2008
Amid a surge in short-term power costs triggered by acute shortages, State Electricity Boards (SEBs) are increasingly opting to overdraw from the grid and shell out the Rs 10 per unit maximum penalty, instead of sourcing power from more expensive liquid fuel stations. While this trend is pushing the grid to the brink of a collapse, with frequency dipping way past the danger mark on numerous occasions over the past couple of days, rampant overdrawal by States comes even as nearly 3,000 MW of naphtha and diesel-based capacities lie idle across the country.
Flagged by outages in a key thermal power station, besides lower hydro generation in the southern region and a continuing dip in nuclear generation, the cost of short-term power has shot up well into double digits across regions over the last couple of days. “With the the maximum penalty for overdrawing from the grid during low frequency condition-scapped at Rs 10 per unit by the regulator, most States prefer to overdraw from the grid and pay the penalty to buying electricity from liquid-fuel stations, which could cost between Rs 12-14 per unit,” an official involved in the exercise said.
Govt extends DGCA’s tenure again
The Financial Express, Monday, September 01, 2008
Just when Kanu Gohain thought that he had finally been allowed to retire as the director general of civil aviation (DGCA) after the ministry settled on Nassim Zaidi as his replacement, the government has again extended his term by another three months. He has already got two extensions of six months each, the last of which expired on Sunday, after superannuating last year.
The extensions were given in order to give the ministry of civil aviation and the department of personnel and training ample time to find a candidate with suitable qualifications to fill the post. “This was harder than expected as very few who applied were qualified enough and those who are did not apply. They preferred private sector jobs that to be at the helm of the country’s aviation regulator,” a ministry official said.
Bharti, TATA comm. come under DOT scanner
The Hindu Business Line, Saturday, September 06, 2008
The Department of Telecom may impose a penalty on Bharti Airtel and Tata Communications (formerly VSNL) for allegedly violating long distance licence norms. While Bharti Airtel was found to have set up its gateways in Delhi and Chennai without proper clearances from the Government, Tata Communication has been hauled up for offering variable tariffs for its international leased line service. The DoT has set up an internal committee to figure out the quantum of the penalty.
“The committee shall recommend as to what should be the amount of penalty to be imposed on licence companies for various cases of violations of terms and conditions of the national long distance and international long distance licence commensurate with damage suffered by the Government in view of various aspects including national security,” said a DoT source. The recommendations of the committee, headed by the Additional Secretary of the DoT, will also be considered for any violations in the future.
This is not the first time long distance operators have come under DoT’s scanner. DoT had earlier issued show cause notices for various violations by operators including employing a foreign national without approval of Ministry of Home Affairs, failing to check the bona fide use and to detect any misuse of the services and provisioning of ISD services without clearance of security monitoring equipment. Long distance operators were also found to be routing calls through illegal channels to avoid paying Government levies and charges. Some of the operators’ networks were being used by illegal exchange operators to route grey calls.
Concrete sleeper makers bend to railways terms
The Financial Express, Monday, September 08, 2008
The Railways have used its monopsony position as the only buyer of concrete sleepers used on rail tracks to make 75 small and medium enterprises of the product to bend to its terms. Taking a hit on their margins, the concrete sleepers manufacturers across the country have temporarily agreed to end their pricing row with the ministry. They will continue to supply sleepers at Rs 1,132 per sleeper for a period of three months, after which a new tender will be floated by the ministry.
Sources familiar with the developments said this means the Railways will have already bought its quota of sleepers for the year soon and so the manufacturers will have to wait for another year to get the new prices. Concrete sleepers, on which the rails are laid, are made of cement and steel. Owing to the increasing input cost, mainly steel, the manufacturers had demanded an increase in the price. However, rail minister Lalu Prasad threatened to blacklist the sleepers manufacturers for making such demands. The ministry had also toyed with the idea of canceling their contracts and asking the companies to vacate the lands.
Foreign telcos can bid for 3g without indian partner
The Economic Times, Tuesday, September 09, 2008
Government today said it will allow foreign telcos to bid on their own without a domestic partner for the 3G spectrum but they have to find a local player before starting services. As per the Indian laws, foreign companies can own up to 74 per cent stake and thus they would be required to form a joint venture with an Indian company before starting the services, Telecom Secretary Siddharth Behura told reporters here.
“The foreign telcos can bid on their own for the 3G spectrum but before rolling out services they should find an Indian partner,” he said. The foreign players want DoT to allow them to bid as 100 per cent foreign entities or give them a minimum of six to seven months after announcement of bidding details to enable them form JV with Indian firms before the spectrum is auctioned. This, if allowed, can derail the 3G process rolled out by the government and further delay launch of the much awaited next generation mobile services in India. However, Behura assured that the auction process would be on time.
Govt mulls dipping into NIF to help bankroll power projects
The Financial Express, Wednesday, September 10, 2008
Can the rigid mandate of the National Investment Fund (NIF) be relaxed in the new political climate? It would seem so, according to a proposal under discussion between the finance ministry and the Planning Commission. Faced with the challenge of locating Rs 10.59 lakh crore ($252.14 billion) to finance the investment shortfall in the power sector until 2012, the government is planning to dip into the NIF. Just for comparison, the sum is about one-and-a-half times more than the entire central government Budget.
The plan, put up by the department of economic affairs in the finance ministry, says rather than let the funds—accruing from disinvestment in state-run companies—lie parked in the NIF, the government should let a national electricity fund invest it in the power sector. “It needs to be seen whether such a large quantum of disinvestments is feasible in the limited time span (of four years). The possibility of altering the extant scheme of investment of NIF has to be examined,” says the ministry’s concept paper.
This would mean reducing the government’s holding in five public sector power companies—NTPC, NHPC, Powergrid, PFC and REC—from the existing 81.82-89.78% range. Bringing the stake down to 51% would mean disinvestment of shares from 30.82% to 38.78% of their paid-up capital.
TRAI chief ‘not consulted on 3G rules change’
Daily News & Analysis, Saturday, September 13, 2008
The regulator has not been consulted before the government amended the 3G (third generation) telecom service guidelines, according to Nripendra Misra, chairman of the Telecom Regulatory Authority of India (Trai). Although he is yet to study details of the amended policy, Misra says it is tough to separate 3G revenue from the overall revenue of a company for paying the annual spectrum usage charge as per the changed norms.
Misra also points out that his biggest concern is the frequent legal scrutiny of Trai’s norms by the stakeholders, including the incumbent. He said that in other parts of the world, challenging telecom sector regulations is very rare.
Aircraft navigation services to be separated from AAI
The Financial Express, Saturday, September 13, 2008
The inter-ministerial group (IMG) looking into the restructuring of Airports Authority of India (AAI), in its third meeting on September 4, has decided that the aircraft navigation services (ANS) comprising the air traffic controllers (ATC) needs to be separated from the AAI. The decision comes after much deliberation over the issue. The restructuring was proposed in the civil aviation policy too, also known as vision 2020. Looking at an international trend towards privatisation of ATC services and increased private involvement in airport operations leading to many conflicts of interest, various committees set up by the civil aviation ministry had recommended that the ANS services be hived off from the AAI.
Earlier this year, AAI hired global consultancy major KPMG to look in to the issue. As per its recommendations, all the ANS should be hived off in a two-step process. As a result, ANS will become a wholly owned subsidiary of the government. The consultants also found that to bring about the change in structure and make the ANS a separate subsidiary, some legislative changes would have to be made. To avoid making such changes, KPMG suggested ANS be made a subsidiary of AAI.
Fast-forward power reforms
The Economic Times, Wednesday, September 17, 2008
Electricity regulator at the Centre, CERC, has put out a staff paper that cautiously calls for price regulation of short-term inter-state power sales. Given the large demand-supply gap pan-India in the vexed power sector, a reasonable cap on tariffs in the short-term seems to have some merit. If the objective is to avoid price shocks in power, the move can indeed be deemed sensible. But the plan surely ought not to be such as to discourage capacity addition, by mandating unrealistic tariffs and sending entirely wrong price signals. What’s needed are forward looking guidelines in terms of pricing and returns, together with clear-cut norms to invest and coagulate funds in power systems.
The paper mentions upfront that it does not necessarily reflect the stand of the CERC on the matter. So what’s preferred is a discussion paper to solicit views from various “stakeholders”. A word on ‘short-term’ electricity sales.
As the paper mentions, the ‘overwhelming majority’ of supplies continue to be as per long-term contracts at regulated prices. It’s basically for negotiated, short-term bilateral contracts that the price caps have been suggested.
BID row may hit delhi station upgrade
The Business Standard, Wednesday, September 17, 2008
The ambitious modernisation of the New Delhi Railway Station under private-public partnership could get derailed with some bidders planning to go to court challenging the bidding process. Of the 13 bidders which were technically qualified during the request-for-qualification (RFQ) stage, six have been shortlisted by the railways for financial bidding. The list includes DB Realty which has bid with Deutsche Bahn AG of Germany, Triff Infrastructure with Italy-based Grandi Stazioni SPA, China Railways 18 Bureau Group, the GVK group, Reliance Infrastructure and Indiabulls Real Estate.
The key players who have not made it in the top six list include Maytas Infrastructure with VIE of Austria, DS Construction with Russian Railways, Texmaco with FCC Construction of Spain, Larsen & Toubro and real estate major DLF. Some of these companies have questioned the transparency in the whole bidding process.
Market price for power on anvil
The Business Standard, Sunday, September 20, 2008
The Planning Commission today approved the draft integrated energy policy, which seeks to implement market-based pricing and bring about better coordination among ministries. The draft policy proposes a common appellate tribunal for all energy sub-sectors like coal, power, etc, to resolve disputes, but there is no recommendation for a common regulator.
The commission, chaired by Prime Minister Manmohan Singh, will forward the new energy policy in a month to the Union Cabinet for approval. “The prices should be market-determined because of the huge import dependence,” Planning Commission deputy-chairman Montek Singh Ahluwalia said today. “The prices should also take care of externalities like pollution.” Asked whether the commission had proposed private participation in nuclear energy, Ahluwalia said there had been a discussion on the importance of nuclear energy, but no specific discussion on private investment in the sector. “This is not legally possible,” he said.
Delhi metro MD smells a scam
The Economic Times, Sunday, September 21, 2008
In an attack on the private sector’s direct involvement in building metro rail in India, Delhi Metro Rail Corporation (DMRC) managing director E Sreedharan has hinted at a big political scandal in the Hyderabad Metro, and expressed concern at the slow pace of progress in the Mumbai Metro. Mr Sreedharan has been credited with building a large metro network in Delhi, which started making operating profit from day one. Besides, he also ensured that all projects, being built at a cost of Rs 29,500 cr, would be completed before the deadline.
While Mumbai Metro-I is a joint venture between Anil Ambani-led Reliance Infrastructure and state-owned Mumbai Metropolitan Regional Development Authority (MMRDA), the Rs 12,000-cr Hyderabad Metro project was recently bagged by a consortium led by Maytas Infra. In a letter to the deputy chairman of Planning Commission Montek Singh Ahluwalia, dated September 11, 2008, DMRC’s managing director cautioned that build-operate-transfer (BOT) mode of building metro rail could backfire. The Hyderabad Metro project is being cited as a successful example of BOT approach.
Competition-limiting clause discarded for highway projects
The Hindu Business Line, Tuesday, September 23, 2008
In what could be seen as a move to quash anti-competitive measures, the Finance Ministry has decided to delete the controversial clause that limits the number of financial bidders to five or six for all future public-private partnership (PPP) highway projects. The move is expected to bring some respite to the domestic highway developers who have been fighting this clause tooth and nail, and had even escalated the matter to the Prime Minister’s level.
Pointing out that the clause is anti-competitive and encourages cartelisation, the National Highways Builder Federation (NHBF) had moved Delhi High Court. The NHBF is a body of highway developers and includes Larsen & Toubro, Reliance Infrastructure, GMR and GVK as its members.
Eased ECB norms welcome
The Economic Times, Tuesday, September 23, 2008
The government has done the right thing by further relaxing norms for raising debt from abroad. Private infrastructure developers can now borrow long term up to $500 million a year for rupee expenditure. Earlier, infrastructure companies could raise no more than $100 million a year. Evidently the external commercial borrowing (ECB) norms are being eased against the backdrop of global liquidity somewhat drying up. Consequently, capital inflows into India are slowing down considerably from last year’s levels. The crisis on Wall Street may only worsen matters.
The tightening of ECB norms was done in an era of high global liquidity, when domestic policy had rightly attempted to prevent excess dollar flows into India to help in better monetary policy management. That situation does not exist anymore. Today we need a certain minimum foreign debt to drive our infrastructure projects. If we are to spend $500 billion on infrastructure over the Eleventh Plan period (2007-12), about $150 billion will have to be through foreign debt (assuming a total debt component of $350 billion).
CERC asks power companies to furnish technical details
PTI, Livemint.com, Wednesday, September 24, 2008
Power sector regulator Central Electricity Regulatory Commission has sought information on technical parameters from all electricity generating companies to forecast future demand for transmission network.-As per Electricity Act 2003, every power generating company should submit technical details regarding its stations to CERC and Central Electricity Authority (CEA),- an official statement said today.-These details would help us in ascertaining the demand for transmission services in future,- a senior CERC official said.
The generating company is also required to coordinate with the central and state transmission utilities for transmission of the electricity generated by it, CERC said. It would also help in knowing how much power capacity is coming in the market in the near future, it said.To facilitate the implementation of the provisions, CERC in its order dated June 4, 2008 had demanded the power generating companies to furnish the technical details in a notified format at least three years prior to the projected date of commissioning of first unit of the power station.
UP modifies bidding terms for kushinagar airport
The Business Standard, Wednesday, September 24, 2008
The Uttar Pradesh government has modified the bidding terms and conditions for preparing a comprehensive project report, bid document and a concession agreement for the development of the international airport at Kushinagar.
This will also include the development of the Buddhist Circuit in the PPP mode on a design-build-finance-operate- transfer (DBFOT) basis. Besides, the last date for the consultants to submit Request for Qualification (RFQ)/Proposal for Proposal (RFP) document has also been extended to October 10. “We have made some changes in the bidding terms to make it more attractive for the reputed consultancies to evince interest,” a senior tourism department official told Business Standard.
Now, the technical bids would be opened and evaluated on October 10. The financial bids of the qualifying firms would be opened on October 11. Only one consultancy firm had submitted its document last month, which came as a surprise for the tourism department.
State tourism Director General Sushil Kumar said, “The feedback that we got from some consultants was that since, it was an international project, they would like to bid jointly with foreign firms. They wanted more time to seal an alliance and then bid.”
Air traffic growth hits Airpocket: E&Y
The Financial Express, Wednesday, September 24, 2008
While the air traffic growth of the domestic aviation sector is experiencing a slump (from 5.4% CY08 to 5.1% in CY09), the rest of the sector is witnessing high growth. It is seeing emergence of new, high revenue-yielding sources that may lead to the ultimate survival of the aviation sector. According to a report from consultancy major Ernst and Young, air traffic growth slowed down to single digits (5.1%) in the first quarter this fiscal while international passenger traffic registered a year-on-year increase of around 10.6%. Domestic passenger traffic showed a marginal increase of 3.4%. However, this has not stopped the other areas of the aviation sector from getting more lucrative.
According to the report, airport traffic will continue to increase (both passenger and cargo), forcing the government to build, modernise and expand the country’s airport infrastructure. This has led to the requirement of financing for development and modernisation projects. An investment of approximately 31,100 crore is expected to be generated via PPP mode. Of this, Rs 1,500 crore is earmarked for city-side development. Apart from PPP investments, the prime sources of finance are likely to comprise internal accruals of the AAI, user development fees and external borrowings.
B’lore airport may have to charge lower user development fee due to high traffic
The Financial Express, Saturday, September 27, 2008
The Bangalore airport may be forced to charge lower user development fee (UDF) from domestic passengers than the Hyderabad airport. According to civil aviation ministry officials, the reason stated is Bangalore handles more passengers than the Andhra Pradesh airport. Analysts also feel that the Bangalore airport will make more non-aeronautical revenues due to larger amount of commercial land it has at its disposal. The GMR-run Hyderabad airport has already started charging UDF of Rs 375 while the Siemens consortium controlling the Bangalore airport will likely get an approval to charge around Rs 250. But, final decision on the exact fee that Bangalore can charge is expected to come by the end of next week as the ministry of civil aviation is still examining the proposal.
According to sources, the Bangalore airport handles around 3,000 passengers during peak hours. Of these, almost 82% of the passengers are domestic travelers. The airport is expected to handle an estimated 12 million passengers in this financial year. The airport’s present capacity is around 9-12 million and expansion plan of the airport is already being implemented.