Pune, June 23
The Reserve Bank today said country's priority should be to deal with the "oil shock" and allayed fears that measures to control soaring prices would counter India's growth story.

"I think priority is oil shock in India. There should be undiluted focus on that subject... We on the basis of current information do not come to conclusion that managing this (inflation) problem will necessarily involve sacrificing growth," RBI Governor Y.V. Reddy said here.

Asked when the inflationary pressure would ease, Reddy said, "As far as domestic situation is concerned, we are confident by and large we have reasonable balance. How future will evolve essentially depends on how global oil prices evolve." As of now RBI does not see any reason to jump to the conclusion that growth will be adversely affected, he said.

Crude oil was trading above $133 a barrel in the Asian market today.

When asked about whether the high interest rate would retard the economic expansion, Reddy said whether it will have impact on growth and if so to what extent is a matter that will have to be examined in detail.

"We are here to see that aggregate demand is so tuned that it does not add or intensify inflationary pressure and at the same time contains inflation expectations," he said.

The central bank in its annual credit policy in April had projected a GDP growth of 8-8.5 per cent for 2008-09. India grew by 9 per cent during 2007-08 against 9.6 per cent in the previous year.

However, an increase in petroleum prices earlier this month has triggered inflation to a 13-month high of 11.05 per cent, mounting pressure on RBI to tighten monetary policy further which many think may retard economic growth.

The RBI Governor who interacted with media on the sidelines of the convocation ceremony of the National Institute of Bank Management (NIBM) said though the price pressures on the account of oil were not entirely unanticipated, they had been "magnified" in the WPI figures last Friday.

The hike had come on top of some underlying inflationary pressures, he said, adding "at the current level of global prices, the pass-through of oil prices is not happening on a continuous basis".

Describing the inflation stemming from oil price hike as a problem for all countries, both developed and developing, Reddy said "our solutions to the problem will also be similar but tailored to suit our conditions.

The RBI had been taking pre-emptive measures to curb inflation, Reddy said noting the hikes of 25 and 50 basis points in CRR. "Subsequent to the announcement of the oil price hike, we had announced a hike of 25 basis points in the repo rate on June 11, 2008," he said. — PTI

London, June 23
Oil prices rose towards $137 today after major energy producers ruled out further output despite consumers' fears that the world faces a tight supply situation, traders said.

Saudi Arabia's King Abdullah announced yesterday that his country had increased output to 9.7 million barrels a day as he opened a summit on the soaring international price of crude in the Saudi city of Jeddah involving producers and consumers.

However, the market had already expected the formal announcement after the kingdom's London embassy had released a statement last Thursday, which outlined a plan to increase output by 200,000 barrels a day.

Prices also shot higher today after militants blew up a pipeline in Nigeria over the weekend, traders said.

At about 1530 IST, New York's main oil futures contract, light sweet crude for August delivery, was up by $1.42 to $136.78 per barrel.

Brent North Sea crude for August jumped $1.49 to $136.35.

"The debate regarding 'high' oil prices is no less transparent today than it was on Friday," said Stephen Schork, editor of the Schork Report energy newsletter.

"We fear that since the Saudis did not give this market a reason to sell, the market will interpret that as a reason to buy." Meanwhile, in Nigeria, militants attacked a key Chevron oil supply pipeline over the weekend in the latest attack targeting Nigeria's oil industry, company and military sources said.

The US oil giant was forced to shut down operations after the attack in the volatile Niger Delta, halting output by 120,000 barrels per day, an industry source said. 
— AFP 

New Delhi, June 23
Iran has sought three weeks time to prepare for further negotiations in the India, Pakistan and Iran pipeline that are likely to take place end of next month. Iran, sources close to the development say, is going to hold internal deliberations and get approval from the Supreme Council during this three- week period.

In the meantime, Pakistan has sent a fresh proposal to China to join the IPI pipeline.

Besides getting internal approval, Iran is also going to work towards identifying gas blocks for the pipeline so that they can be allocated to this project. This move comes in to take the matter a step further as India has demanded certification of reserves from which the gas will be allocated. Iran is also going to arrive at a consensus within its political establishment on the timeframe within which review of gas prices will be carried out.

India has also opposed price revision clause that Iran is seeking to insert in the gas sales agreement.

Another issue that Iran wants to work out is the point of handover of the gas, whether it will be in Pakistan border or at some location in India. India also wants to know alternate supply sources in event of depletion of reserves and Iran is working towards this issue as well, say sources.

India wants Iran to handover the gas at the India-Pakistan border and not at Iran-Pakistan border, as had been suggested by Tehran, to cut transit risk through Pakistan.

These talks were held between petroleum minister Murli Deora and his Iranian counterpart Gholam Hossein Nozari on the sidelines of a meeting of world oil producers and consumers in Jeddah on the weekend.

India had softened its stand on the IPI pipeline after negotiations with the Left parties last week on nuclear deal. India had, in fact, written to Iran to hold a trilateral meeting to resolve outstanding issue much before the Left's last week attack on the UPA government for allegedly dragging its feet on the pipeline project, say petroleum ministry sources.

New Delhi, June 23
The states have once again deferred the decision to review the issue of sales tax on aviation turbine fuel (ATF) and have asked the Centre to provide some fresh details.

Sources said officials from the civil aviation ministry made a case for lowering of sales tax on ATF before the Empowered Committee of state Finance Ministers in Srinagar today. However, the issue remained unresolved as the states asked for some new details from the Centre.

In its meeting held last week as well, the panel had asked the civil aviation ministry to explain how ATF prices were fixed before they could take a decision on reducing sales tax on jet fuel.

Airlines have been demanding that tax slab on aviation fuel to be reduced to four per cent. States had been asked by the Centre to consider cutting sales tax on jet fuel to help airlines tide over huge losses due to rising ATF costs. However, the general feeling in the industry is that States are unlikely to take a favourable decision. This just means that the woes of the airline industry are not going to get over in a hurry and passengers may see another hike, though not immediately. The past four hikes in ATF prices have made fuel account for more than half of airlines operating cost due to which passengers have seen a substantial hike. Aviation experts say airfare are likely to go up yet again. 

New Delhi, June 23
Anil Ambani-led Reliance Communications (RCom) and South Africa's MTN are likely to finalise a deal by the first week of July, with the former expected to hold about 40 per cent stake in the estimated $70 billion merged entity.

According to sources close to the development, both companies have been engaged in exclusive talks since the last week of May. A final shape to the deal may surface at the end of the 45-day exclusivity agreement that ends on July 8.

Asked about the details of the merged entity, sources said final details were still being worked out, but hinted that Anil Ambani would end up holding between 34 to 40 per cent stake in the merged entity in which Reliance Communications would become MTN's subsidiary.

MTN is also understood to have taken a legal opinion on the issue raised by elder Ambani sibling Mukesh, who had claimed right of first refusal in case RCom sells majority stake in favour of MTN.

The respective teams from MTN and RCom have travelled to India and South Africa for carrying out due diligence of the companies, sources said, adding that the negotiations so far have been progressing well.

Earlier in a letter to MTN, RIL had warned that it would take legal recourse and claim damages if MTN became party to violation of the right of first refusal. — PTI 

New Delhi, June 23
In a move that could bring down the mobile tariffs in a major way, the Department of Telecom (DoT) has asked telecom regulator TRAI to review termination charges on priority basis to make them cost-based.

Termination charges are the one paid by an operator, from whose network call originates, to a service provider on whose network the call is terminated.

Currently, the charges have been fixed at Rs 0.30 a minute and are considered too high.

DoT has expressed concern over delayed review of mobile regulations as the termination charges were fixed in 2003 and since then the cost of network and services have come down by more than 50 per cent.

In a letter to TRAI, the department has said, "Given the central aim of telecom policy to provide services at affordable rates, it is suggested that a review of the mobile termination charges, based on present and projected cost and traffic is undertaken by TRAI on a priority in a time bound manner".

"One of the major components of tariff is the termination charge, which is not under forbearance (not decided by market forces). The high termination charges have potential to stifle competition and may disturb the level playing field," DoT feels.

The termination charge is a function of traffic and such high increase in traffic must translate into reduction in such charges, DoT said in the letter.

Incidentally, some of the operators are of the opinion that regulations like termination charges should be reviewed on annual basis by TRAI as a delayed decision on this front has enabled existing mobile operators to make a lot of profit at the cost of consumers.

They point out that cost-based termination charges are actually less than Rs 0.10 a minute. If implemented, the existing operators would have to forego a substantial portion of their revenues, while new cellular operators would find it easy to establish themselves. 

New Delhi, June 23
The National Co-operative Development Corporation (NCDC) disbursed Rs 3,652 crore to the co-operative sector during 2007-08, exceeding the target of Rs 2,000 crore. Presiding over 66th General Council meeting of the NCDC today, agriculture minister Sharad Pawar said the NCDC was expecting a pre-tax profit of Rs 130 crore, which is substantially higher than that in the last fiscal

The minister informed the General Council that the Central Government and the state governments have reached an agreement on the content of the package to implement Prof Vaidyanathan Committee's report on reviving the long-term co-operative credit structure. The cost of the package is estimated at Rs 3,074 crore of which the Central Government's share will be 2,642 crore or 86 per cent of the total burden.

The meeting primarily discussed and approved programme of activities of the NCDC for 2008-09 with a financial outlay of Rs 3,000 crore. During the fiscal Rs 233 crore will be allocated for weaker section programmes, Rs 966 crore for marketing, Rs 450 crore for industrial/credit/service cooperatives, Rs 165 crore for integrated co-operative development projects (ICDP), and 38 per cent of the total outlay — Rs 1,134 crore — for agro-processing, including sugar co-operatives.

While helping these sectors, NCDC's focus during 2008-09 will also be on consolidating existing infrastructure and units established by cooperatives especially for value addition and processing of farmers' produce. 

BRIEFLY

Warburg Pincus plan
Mumbai: Leading out-of-home media advertising company, Laqshya Media on Monday said Warburg Pincus would invest Rs 276 crore in the company over the next 12 months. Laqshya Media's managing director Alok Jalan said, "We will be capitalising on the multiple growth opportunities we see for our business and accelerate our company's expansion plans to build our leadership position across India and overseas".— PTI

$45-m order for Maha Seamless
Mumbai: Maharashtra Seamless, a pipe manufacturing firm and part of the Rs 3,000-crore D.P. Jindal group, on Monday said it has bagged export orders worth $45 million from a US firm. "Export of seamless pipes is a big thrust area, particularly in the US market, as there has been a massive rise in exploration and drilling activities worldwide owing to rising crude oil prices," the company said in a filing to the BSE.— PTI

Deutsche ups stake in ICSA
Mumbai: Deutsche Securities Mauritius Ltd, along with its persons acting in concert, have increased their stake in ICSA (India) to 5.08 per cent through open market purchase. ICSA (India) is a leading player in developing technology solutions for the power, oil, water and gas sectors to identify transmission and distribution losses.— PTI

Tata Power PAT at Rs 869 cr
Mumbai: Tata Power Company on Monday announced a net profit after tax (PAT) of Rs 869.90 crore for the year ended March 31, 2008, an increase of 24.8 per cent as compared to the year-ago period. Its total income for the fiscal year 2007-08 stood at Rs 6,381.75 crore as against Rs 5,059.31 crore in fiscal year 2006-07. Further, the company's board has recommended a dividend of Rs 10.50 per share (105 per cent) to the shareholders for the year ended March 31, 2008.— PTI

ONGC contract
New Delhi: ONGC Tripura Power Co, a unit of ONGC, has awarded a Rs 2,207-crore order to a consortium of Bharat Heavy Electricals Ltd and General Electric for its 720 MW plant in Tripura. The 360x2 MW combined cycle gas turbine power plant is being developed by OTPC at Palatana in south Tripura. ONGC has 50 per cent equity stake in OTPC, the balance being held by IL&FS and the Government of Tripura.— PTI

Motorola, Kodak join hands
Beijing: US-based handset manufacturer, Motorola, has joined hands with digital imaging solution provider Kodak to launch a new line of camera phones, which will hit the market this year. The company unveiled the first phone of the series, MOTOZINE ZN5, here on Monday. It has features like 350 MB of available memory with an option of adding a micro SD card up to 4 GB in size, FM radio and MP3.— PTI

FNP to open store in Dubai
Chandigarh: Leading flower retailer Ferns'N' Petals has decided to foray into overseas market by opening its outlet in Dubai, besides scaling up its domestic presence by rolling out 35 new outlets, this fiscal. "We will open our first overseas showroom of flowers in Dubai in collaboration with an Indian partner in the next quarter which will allow us to cater to the untapped Middle East market," Ferns "N' Petals (FNP) general manager Lalita Raghav said here, adding they also had plans to enter Qatar.— PTI