Private companies can now sell petrol, diesel
Mumbai: The government is now paving the way for the total decontrol of the oil sector scheduled for April 1, 2002. The government has stipulated that private oil companies like Shell, Exxon or British Petroleum-Amoco will now be allowed to sell petrol or diesel to Indian consumers. However they will have to invest at least Rs 2,000 crore over a specified period.

The agreement will have to be in the form of a contract, backed with bank guarantees, according to draft deregulation guidelines drawn up by the ministry of petroleum.

The guidelines lay down the different time periods over which the investment will have to be completed. Investments in refineries will have to be completed over five years while projects involving exploration and production of crude could be executed over five to seven years.

Financial year 2000-01 will be considered the base year for the Rs 2,000-crore investment.

The guarantees could be invoked and the permission to sell petroleum products could be revoked if the investments are not made or are unduly delayed. The company’s assets can also be seized.

Among the approved list of investments are investments in oil, gas and petroleum product pipelines of over 100-km length, terminals for crude oil, LNG and petroleum products, refineries and exploration and production activities.

It may be recalled that private refiners in India as well as multinational oil companies are keenly awaiting the opening up of petroleum product marketing in India.
Back to News Review index page  

Debt, forex-clearing corporation; To be set up soon
Mumbai: The setting up of the debt and forex-clearing corporation is gaining momentum and seems to be in the final stages.

State Bank of India, the main promoter of aforesaid corporation, has decided to appoint former managing director of Discount & Finance House of India M R Ramesh as CEO of the corporation.

RH Patil, former National Stock Exchange managing director has been named as the chairman of the proposed clearing corporation.

Two major primary dealers, Securities Trading Corporation of India and DFHI have received their respective board approvals for picking up an equity stake in the proposed corporation.
The proposed corporation will have a paid-up capital of Rs 150 crore. SBI has already agreed to take 26 per cent stake in the venture. The other promoters are Bank of Baroda, HDFC Bank, ICICI, IDBI and PDAI.

The promoters have proposed a trade guarantee fund of Rs 1,000 crore for debt and $350 million for forex transactions.
Back to News Review index page  

Power loans worth Rs 16,306 cancelled by FIs
Mumbai: The power sector is reeling under the blow of the financial institutions, led by the Industrial Development Bank of India (IDBI), canceling assistance to 10 power projects that together represent an investment of Rs 16,306 crore.

Sources in FI’s say the decision was taken because these projects, which would have together generated 3,657 mw of power, failed to take off for a long time after the funds were sanctioned.

The projects affected include the Daewoo-promoted 1,070 mw venture in Madhya Pradesh, the 703 mw project in Rajasthan promoted by the RPG group, the two 525 mw projects promoted by the Spic group and Trishakti Energy in Tamil Nadu, and smaller projects like Atria Power (106 mw), Chambal Power (167 mw),GBL Power (166 mw), Phoenix Power (175 mw), and two Sujana Power-promoted projects at Tuticorin and Gangikondan (both of 110 mw).

FI officials attributed the poor financial health of the state electricity boards as the primary reason for the mess.

For instance, the Karnataka state electricity board cannot offer any payment security facility like an escrow account.

A committee headed by HDFC chairman Deepak Parekh had come to the conclusion that there was no escrow capacity in the state.

However, three major power projects have escaped the axe. These are the AV Birla group-promoted 578 mw Bina project in Madhya Pradesh, the Hinduja-promoted 1,040 mw project at Visakhapatnam in Andhra Pradesh and the 1,050 mw Videocon group-promoted project in Tamil Nadu.
Back to News Review index page  

Re-insurance; rough weather ahead
Mumbai: The country’s re-insurance programme is running into stormy weather.

The Oil and Natural Gas Commission (ONGC) with one of the largest sum-assured assets of the country, is without an insurance policy today as its previous policy expired on March 31.

It is still struggling to place the deal in London market, as the new premium rate quoted by the re-insurers is substantially higher than what the company paid for last year.

"The company has not been able to place the deal as it needs the board approval for accepting the new rate. The ONGC board is yet to meet to take a decision on this," said industry sources adding that almost Rs 200 crore of recent claims made by ONGC, coupled with the collapse of the largest oil rig Petrobras, have jacked up the premium for the domestic oil giant.

Explaining some of the reasons for such an ‘unpredictable situation’, industry sources said that a series of losses in Indian market both in marine, non-marine and energy sectors had added to the inability of the domestic non-life insurance players to re-adjust to the changing Indian market scenario.
The country’s reinsurance programme has been redefined on the basis of the Insurance Regulatory & Development Authority (IRDA) regulation with General Insurance Corporation (GIC) playing the central role as a national re-insurer.

There is said to be a lack of proper co-ordination between GIC and few of the existing four state-owned insurance companies, resulting in a higher premium charged by the re-insurers for placing business in London market. GIC has already taken up the issue of lack of coordination with IRDA.
Back to News Review index page