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Friday,
September 26, 2003, Chandigarh, India  
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National
power corporation concerned over LNG pricing LG targets
1,000 cr turnover
FDI hike
in telecom sector approved SC
breather to telecom companies RBI scheme
to help states save 81,000 cr |
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National power corporation concerned over New Delhi, September 25 Speaking to newspersons here NTPC Chairman Mr C.P. Jain said that if the rate was higher than that of $ 3 per btu, “it would become non-competitive to coal”. “Our benchmark is a sustainable benchmark from the user as well as the suppliers’ point of view”, he said. Mr Jain’s observations have ostensibly come in the wake of reports expressing concern among LNG suppliers about the benchmark price set by the state-owned thermal power major. “Certain concerns have been expressed and reported about the pricing of LNG. But international studies show that LNG can be supplied within the benchmark price band of $ 2.4 to 2.7 per million btu”, he said. Quoting results of globally conducted studies, Mr Jain said that the cost in freight (C.I.F.) landed price of LNG inclusive of the basic customs duty from Qatar to the west coast of India was on an average $ 1.6 per million btu. “The C.I.F. price of LNG supply from Iran was $1.8 per million btu while that from Yemen was $ 1.97 per million btu. these are C.I.F landed prices including the basic customs duty”, he said. The average estimated cost of regasification and transportation was 50 and 15 cents per million btu. “Adding this to the landed price should result in a price band of $2.4 to 2.7 per million btu”, he said. Besides the price of LNG, there have also been reports about differences between NTPC and suppliers on the terms and conditions of the contract. While the suppliers have called for variable price band, NTPC has opposed this on grounds that India followed a two part tariff structure and indexing the LNG price to the international crude oil prices would not be appropriate. “Why should they not give us a price by delinking it with the oil prices. NTPC is prepared to give long term commitment ranging between 17 to 20 years. The Indian power sector cannot sustain fluctuations in prices and therefore cannot sustain a take or pay obligation”, he said. The power generation major had also initially asked for a bank guarantee of $ 20 million, which met with opposition from the suppliers on grounds that it did not conform to the international practice. “Since we are making an investment of Rs 10,000 crore ($ 2 billion) we had sought for a bank guarantee of $ 20 million. Eventually, however, we revised it to $ 4 million and that too as earnest money. This is very reasonable and soft”, Mr Jain said adding that this guarantee only till upto the time they achieve their financial closure. NTPC has decided to go for the bidding for sourcing of LNG/natural gas for expansion of gas projects (Kawas and Gandhar Expansion of 1300 MW each). Against request for qualification (RFQ) for North India, 19 parties submitted for qualification which consisted of 10 parties for supply of LNG, four parties for supply of natural gas and five parties for provision of services. Against request for proposal (RFP), seven parties submitted their bids which consisted of three parties for supply of LNG, one party for supply of natural gas and three parties for provision of services. On the proposed IPO, Mr Jain said that it is expected to hit the market by March 2004 and its size will be of Rs 400 crore. In 2002-03, NTPC recorded a turnover of Rs 19,984.58 crore as against Rs 18,594.18 crore in the previous year. Net profit after tax in 2002-03 stood at Rs 3607.57 crore as compared to Rs 3539.62 crore during the previous year.
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LG targets 1,000 cr turnover New Delhi, September 25 Speaking to newspersons Head of Marketing of LGEIL Anil Arora said that the company is expecting to achieve Rs 1,000 crore turnover during this Divali season which will be more than 54 per cent the sales revenue of last year’s festival season figures. The company has set a target to earn sales revenue of Rs 4,500 crore during 2003, up 35 per cent against the last year’s turnover of Rs 3,316 crore. LG is expecting to earn a 33 per cent growth in net profit at Rs 180 crore this calendar year. To this effect, the company today launched a festival offer —Patakha Ghumao Inam Pao— which will last till October 31, 2003. The offer involves gifts on every purchase of an LG product. The gifts range from flatron TV, washing machines, ACs, microwave oven to refrigerators. LG will spend Rs 25 crore in the campaign and Rs 35 crore in gifts. The company aims to sell 10,00,000 products during the festival period, up 54 per cent than the last year’s Divali season. It expects to achieve a 63 per cent of value growth in the consumer electronics category, 44 per cent in appliances and 36 per cent in IT, Mr Arora said. For the calendar year 2003, the company has projected a growth target of 23 lakh unit sales of CTVs against last year’s 16 lakh, 3.3 lakh of frost free refrigerators against 2.5 lakh and 11 lakh of direct cool refrigerators compared to 6
lakh. Mr Arora said that the company’s second manufacturing facility, in Pune will start functioning in August next year and will be devoted only to CTVs and refrigerators.
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FDI hike in telecom sector approved
New Delhi, September 25 While the FDI cap will stay at 49 per cent, FIIs would be allowed to go for another 25 per cent stake, taking the FDI-FII limit to 74 per cent, Communications Minister Arun Shourie told reporters after the first meeting of the GoM headed by Finance Minister Jaswant Singh. The GoM has finalised its recommendations on six of the eight issues referred to it, and the remaining two issues would be taken up at the next meeting on October 4, he said. The GoM was against imposing sales tax (ranging from 12 per cent to 15 per cent) on telecom services. Mr Shourie said the Telecom Engineering Corporation (TEC) presented a report to the GoM on limited mobility, observing that Reliance Infocomm was violating the spirit of the licence conditions and deliberations of the earlier GoT-IT. The TEC report would be submitted to the Cabinet, the Minister said without specifying the GoM’s view on the report. All the members of the GoM agreed that additional spectrum should be made available to telecom operators, particularly in cities where traffic was heavy. The meeting was also attended by Information and Broadcasting Minister Ravi Shankar Prasad and Law Minister Arun Jaitley, I and B Secretary Pawan Chopra and Defence Secretary Ajay Prasad. Mr Jaswant Singh told the GoM that the government was committed to increasing tele-density in rural areas. The Finance Ministry and the Department of Telecom would sit together and work out a joint note for operationalisation of the universal service obligation (USO) fund amounting to about Rs 3,170 crore — Rs 1,760 crore collected last year and about Rs 2,000 crore expected to accrue this year. The GoM also favoured extending support to BSNL for the entire period of the Tenth Plan (2002-07) for expanding the rural network.
— UNI
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SC breather to telecom companies New Delhi, September 25 A Bench comprising Mr Justice S. Rajendra Babu and Mr Justice A.R. Lakshmanan, however, declined to grant complete stay on the recoveries, saying the state tax authorities could take any remedy permitted under the law regarding the cases where the assessment of taxes had been completed. The court, however, referred the petitions and appeals of telecom companies to a larger Bench stating that an important question of law was involved in the matter. Apart from BSNL, Reliance Telecom, Reliance Infocom, Tata Teleservices, Idea, BPL mobile and Escotel, had moved the apex court challenging the recovery of sales tax by the states from them on the cellular services. They had said the provisions of the Sales Tax Act would not apply to the mobile services being provided by them to subscribers as it did not involve the transfer of goods but only the transfer of messages. The counsel for some of the companies alleged that several states had frozen their bank accounts and their Sales Tax Departments had been applying various other “coercive” measures to recover the tax dues.
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RBI scheme to help states save 81,000 cr Chandigarh, September 25 The apex bank, in its latest report, pointed out that all state loans from the Centre, bearing coupons in excess of 13 per cent, would be swapped with market borrowings and small savings swapped with market borrowings and small saving proceeds at the prevailing interest rates over a period of three years ending in 2004-05. The report points out that during 2002-03, 25 state governments, excluding Maharashtra, Sikkim and West Bengal, were permitted to pre-pay high cost debt from the Centre, partly from out of small savings collections and partly through fresh market borrowings of Rs 10,000 crore. During the current year, by August 12, the state governments raised Rs 15,000 crore from the market to meet their requirements. Appreciating the fiscal measures of the governments of Punjab and Andhra Pradesh, the RBI report has noted that both the states were able to mobilise loans at relatively lower rates. For instance, out of Rs 2,973 crore raised by the states through auction in 2002-03, Punjab raised Rs 85 crore at 6.8 per cent and Andhra Pradesh raised Rs 295 crore at 6.9 per cent. Punjab raised Rs 1,141 crore from the market in 2002-03 and Rs 1,308 crore through tap sale and repaid Rs 79 crore. According to provisional estimates of the RBI, out of a total Rs 4,054 crore outstanding amount, Punjab loans worth Rs 1,014 crore will mature over the next five years and Rs 3,039 crore in the five to 10 year period. In case of Haryana, as on March 31, out of Rs 2,739 crore
outstandings, the state government will have to repay Rs 723 crore in the next five years and Rs 2,016 crore during the next five to 10 years. To cut down the high interest costs, the Centre has also pre-paid foreign loans worth $ 3 billion to the World Bank, Asian Development Bank and other agencies. As part of the fiscal reforms, the RBI has revised the scheme of ways and means advances
(WMA) for the states to give them the benefit of higher limits in the last month of the fiscal year. It provides WMA to states to help them tide over temporary mismatches in cash flow. The limit for the Punjab Government has been raised from Rs 159 crore in 2001 to Rs 240 crore with effect from March 3, 2003. The current total normal WMA limits at Rs 7,170 crore is 18.8 per cent higher than the earlier limit of Rs 6,035 crore. The number of days that a state government can be in over draft has also been extended from 12 consecutive working days to 14 days.
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Govt to seek legal remedy on selloff New Delhi, September 25 “We are keeping all options open including review and ratification,” Minister of Disinvestment, Mr Arun Shourie, told newspersons here. Mr Shourie, who met Law Minister Arun Jaitley today, said that the “features and consequences” of the Supreme Court’s judgement was discussed in today’s meeting. “Jaitley and I discussed features of the judgement and its consequences and considered several options. We will prepare a paper and submit it to Jaitley tomorrow,” Mr Shourie told newspersons after the meeting. The Law Minister will finalise an action plan based on the detailed paper to submitted by the Department of Disinvestment. This action plan will then be placed before the Cabinet. The Cabinet Committee on Disinvestment (CCD) is scheduled to meet on October 3, 2003 to discuss the Supreme Court’s verdict and its fallout on the disinvestment process. Mr Shourie said that the Law Minister had several suggestions but did not elaborate on these. The government officials were of the view that seeking Parliamentary ratification could further delay the process of privatisation and also send wrong signals to foreign investors on the pace of economic reforms in India. Mr Shourie said that while the Supreme Court had
quoted from a World Bank report which stated that “the success of the programme (privatisation) hinges on, among other things, a basic consensus among Parliament, government and the head of state”. Mr Shourie advised journalists to read the other part of the same report which said that “Members of Parliament are usually neither the best informed nor the best placed to take speedy decisions that privatisation operations entail”.
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