Power Prices fall by 22% in 2015, demand remains stagnant

Power Prices fall by 22% in 2015, demand remains stagnant

With 2015 being an epoch making year for improvement in fuel availability, the supply position and prices eased considerably. The power prices fell as much by 22% in the spot market as compared to year ago. The average power price in 2015 was Rs 2.81 per unit as against Rs 3.59 per unit in 2014.

The power market witnessed a healthy reduction in prices in 2015 with increase in supply of power due to capacity addition and increased generation during the year, said market analysts. The peak demand summer months of June, July and August witnessed prices reducing by 34%, 27% and 37%, respectively.

According to monthly report of Central Electricity Authority (CEA), power generation during April to October 2015 was 646 billion units with energy deficit of 2.4%. The power generation during the same period last year was 617 billion units while energy deficit was 4.1%.

The fuel constraints which prevailed in 2014, especially coal shortage, eased significantly in 2015. The average coal stock position has also increased to 21 days as on 30th Nov 2015 from 7 days as on 30th Nov 2014, said India Energy Exchange (IEX), one of the country’s leading power exchange platform.

“The power demand was not very high during the peak summer months as well. Only in September, the market saw peak demand of 153GW. More coal availability and 24GW capacity addition last year, resulted in surplus capacity,” said Rajesh K Mediratta, VP- Business Development, IEX.

However, tepid demand from the beleaguered state power distribution dampened the demand. Power market trackers said the country’s power situation is an ironical state.

According to CEA’s October report, coal production in the current year (Apr-Nov 15) has been 321 MT an increase of more than 8% over previous year when it was 295 MT, but there was no change in demand pattern.

“Three years back in 2012, when the peak demand was around 130GW the cumulative installed capacity was 200GW. But when in the last 3.5 years, the country added 80 GW capacity, demand increased by 33GW only during the same period, offsetting the increase in power production,” said a Delhi based expert.

The central government offered coal blocks to state and private sector power plants of around 28,000 Mw. Cheap domestic gas was also made available to gas based power plants totaling 14,000 Mw.

IEX said that inter-state transmission system congestion was eased significantly, especially towards the North, however southern states continue to witness power deficit.

“The exchange lost 3,887 million units in 2014 as compared to 2,445 million units being lost to congestion in 2015 (as on 16 Dec’15),” said Mediratta.

Month 2014 2015 % change**
January 3.14 2.82 -10
February 3.29 2.85 -13
March 3.03 2.82 -7
April 3.61 2.68 -26
May 3.28 2.62 -20
June 3.89 2.56 -34
July 3.76 2.74 -27
August 4.49 2.82 -37
September 4.18 3.68 -12
October 4.17 3.03 -27
November 3.01 2.67 -11
December 3.21 2.45* -24
Year’s average 3.59 2.81 -22

GAIL to buy 5% stake in consortium building TAPI pipeline

Gail

State-owned GAIL India Ltd will take 5% stake in the international consortium building the $8.7 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline.
The four nations building the pipeline had in August agreed to co-own the project and a joint venture company with participation of each country is to be set up to build and operate the 1,814-kilometre line.
“Turkmenistan’s state-owned TurkmenGaz will be the leader of the consortium and shall take 85 % equity. India will be represented by GAIL, which will take a 5% interest”, a senior government official said.
ISGS of Pakistan and Afghan Gas Enterprise (AGE) will also take 5% stake each.
The TAPI pipeline will have a capacity to carry 90 million standard cubic metres a day (mmscmd) gas for 30 years and is planned to become operational in 2018. India and Pakistan were originally to get 38 mmscmd each while the remaining 14 mmscmd was to be supplied to Afghanistan.
But Kabul is now willing to take only 1.5-4 mmscmd. So, the share of India and Pakistan will go up to 43-44.25 mmscmd each, he said.
TAPI will carry gas from Turkmenistan’s Galkynysh field, better known by its previous name South Yolotan Osman that holds gas reserves of 16 trillion cubic feet.
From the field, the pipeline will run to Herat and Kandahar province of Afghanistan, before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.
Turkmenistan on December 13 began work on the 214-km section of the pipeline in its territory. The pipeline will travel 773 km in Afghanistan and 827 km in Pakistan before touching Indian border.
For the security of the pipeline, the official said an inter-government Joint Security Task Force (JSTF) will be raised which will serve as nucleus of the security programme.

Exact role and responsibilities in each host country are being worked out, he said adding a team would also be established to ensure operational continuity and which is capable of rapid repair of critical facilities and equipment in case of sabotage or accident.

The four-nation consortium was stitched as no reputed international firm was willing to take lead in construction and operation of the pipeline.
French giant Total SA had initially shown interest in leading a consortium of national oil companiesof the four nations in the TAPI project. It, however, backed off after Turkmenistan refused to accept its condition of a stake in the gas field that will feed the pipeline.

Observe closely from the sidelines when you are not playing: Anup Kumar

Part of the Indian kabaddi team that won the gold at the Asian Games in 2010 and 2014, raider Anup Kumar led his team U Mumba to victory in the second edition of the Pro Kabaddi League (PKL). He was also the most valuable player in the first season of PKL and won the Arjuna Award in 2012.Part of the Indian kabaddi team that won the gold at the Asian Games in 2010 and 2014, raider Anup Kumar led his team U Mumba to victory in the second edition of the Pro Kabaddi League (PKL). He was also the most valuable player in the first season of PKL and won the Arjuna Award in 2012.

The lesson

If there is one player Kumar has learnt a lot from it is Prashant Chavan, a defender who was with Jaipur Pink Panthers in the first two seasons of PKL but has now moved to Puneri Paltan. “He is not tall but he can do so much. He has great willpower and body language. He keeps his opponent guessing.”

Kumar and Chavan played together for Air India for four years. Kumar says Chavan has always played his game the same way. “He has no attitude. He does not lose his cool or unnecessarily become aggressive. He stays calm and concentrates on winning.” Kumar adds that he has tried quite hard to be like him, but to no avail. “I don’t think I can even play 70% of the game he does. He manages to beat me.”

Kumar believes it is important that a kabaddi player, while on the sidelines, closely observe the game to be able to learn a lot from those in it.

We picked up from Whatsapp’s few shortcomings: Deepak Ravindran

WhatsApp and Facebook are our biggest competitors. We have drawn inspiration from WhatsApp, learning from its enormity and reach across the globe. However, it has a few shortcomings when it comes to its privacy concerns.Claim to fame

A college dropout who became famous for starting up the SMZ-based search engine Innoz

The lesson

WhatsApp and Facebook are our biggest competitors. We have drawn inspiration from WhatsApp, learning from its enormity and reach across the globe. However, it has a few shortcomings when it comes to its privacy concerns. It is not the best medium for business to business and business to consumer communications as it encroaches upon the privacy of both parties. This is what we feel was our biggest learning from WhatsApp. And we decided to bridge this gap by coming up with the idea of Lookup, which focuses on a communication system between a local business and its customer directly without having to share any confidential data such as phone numbers or pictures. It’s always great to observe your top competitors and see where they stop, so that you can carry on from there.

HUL, ITC, HDFC taught us the intrapreneurship culture: R Venkataraman

Being part of an exciting journey in IIFL, it has been a continuous learning curve. We picked up a lot of strategies based on hits and misses in our own experiences besides of course learning from the mistakes of others. In our initial days, our founder Nirmal (Jain) was very process-driven given what he had picked up during his stint at HUL.Claim to fame

Has close to two decades of experience in financial services, having worked at ICICI, GE Capital and BZW, amongst other firms

The lesson

Being part of an exciting journey in IIFL, it has been a continuous learning curve. We picked up a lot of strategies based on hits and misses in our own experiences besides of course learning from the mistakes of others. In our initial days, our founder Nirmal (Jain) was very process-driven given what he had picked up during his stint at HUL.

As our business grew, we were inspired by the systems and processes in HDFC Bank and by the leadership of Aditya Puri who redefined industry parameters, challenging fossilised thought processes and archaic work methods. Employee ownership was something we happily borrowed from successful entrepreneurs as we saw the success it gave to firms like Infosys.
Nirmal was also very impressed by the culture of intrapreneurship in organisations like HULBSE 0.22 %, ITC, HDFC where the intrapreneurs led the show. It led us to create a culture of intrapreneurship within IIFL, which has been very fulfilling.
When markets were in a downcycle, we saw many leading brokers succumb to the pressures of competition and the bear market. We managed to successfully diversify into various verticals but always keeping our focus on the financial space. We have seen players diversify randomly into unrelated businesses and lose whatever they had built in their core business. So even today we remain completely focused on the financial service space.

Biggest bank balance does not guarantee pole position: Anisha Singh

Biggest bank balance does not guarantee pole position: Anisha SinghClaim to fame

Began her career on Capitol hill with the Clinton administration, launched her first venture in the US to provide digital content to real estate firms in 2004; started Mydala in 2009.

The lesson

The biggest learning from my rivals is that the biggest bank balance does not guarantee a market leader position. We’ve had several competitors who were more funded and had more cash power behind them. There weren’t many who believed that Mydala would survive and our obituary was written several times. However, we knew we were solving a real need that existed on the merchant front as there were few ways for businesses to market themselves without upfront cash. We have constantly innovated to provide a great user experience. Not only are we still here after six years, we are by far the largest. The best lesson we learnt is just because there is someone with more cash in the bank cannot intimidate us. Our ability to not give up and focus on solving the problem makes us the force that we are.

India did well in year of global economic turmoil: Finance Minister Arun Jaitley

Finance Minister Arun Jaitley dismissed grumblings about the economy not having taken off as "cynicism - a way of life in India".NEW DELHI: Voicing “great satisfaction” over performance of the Indian economy in “a year of turmoil and volatility” globally, Finance Minister Arun Jaitley today dismissed grumblings about the economy not having taken off as “cynicism — a way of life in India”.

Looking back at 2015, Jaitley said India has been the bright spot with growth prospects of 7-7.5 per cent despite global slowdown and adversities, and expressed optimism that the growth rate which is “quite good” would improve further in the months to come.

India has responded well to the challenge posed by the slowdown in global economy, he said, but acknowledged that “there are areas (in which) we have to respond faster”.

“As the year ends, I look back with a sense of great satisfaction,” Jaitley told PTI in an interview, during which he underlined that India’s fiscal fundamentals are “extremely sound”.

Outlining his priorities for the New Year, the Finance Minister said he would continue with structural reforms and the priorities would include GST, rationalising direct taxes, further easing the system of doing business.

“After having done that, I would like to concentrate essentially on three things – more money for physical infrastructure, more money on social infrastructure and lastly more money on irrigation because that is a neglected sector.”

Asked about murmurs that the economy has not really taken off, Jaitley dismissed such grumblings as without merit and said that “the revenue collections do not go up without the economy taking off”.

“Cynicism is a way of life in India. You can question any other data but you cannot question the actual rise of revenue and the actual rise of revenue is showing that the economy is doing better,” he said.

Asked whether the Indian industry was also prone to such cynicism, Jaitley said, “Well, I think a section of the Indian industry has overstretched itself and those who have overstretched themselves see this as a universal problem.”

Besides global headwinds due to slowdown in China and weakness in commodity markets, India also had to face domestic challenges in form of two continuous weak monsoons and slower private sector investment, making the management of the Indian economy a “great challenge for us,” Jaitley said.

“Private sector investments continued to be slow because the private sector had overstretched itself… they had surplus capacity and demand was slow.”

The government responded well to these challenges by stepping up public investment, which has been complemented by 40 per cent rise in FDI and a rebound in consumption, he said.

The government has utilised the savings from low oil prices for infrastructure spending, resulting in sectors like highways, rural roads and railways getting a significant step-up of investment. Port areas have also been targets of private sector investments, he said.

“As a result, despite the global slowdown and adversities, India became the bright spot in the global economy with a growth prospect of 7-7.5 per cent. It is lesser than our targetted 8 per cent. I have no doubt if we have had a normal monsoon, we would have been close to the target.”

Jaitley said the services sector continues to be strong, while “revival of manufacturing and the IIP (Index of Industrial Production) are high points of this year”, which is also reflected in record rise in indirect tax collections.

“Inflation remains under control, the repo rate (the policy interest rate decided by RBI) has come down this year by 125 basis points. Foreign exchange reserves were as good as always. Compared to the rest of the global economies, we were far more stable vis-a-vis the dollar,” Jaitley said while summing up the macroeconomic trends for 2015.

“The year 2015 has been an extremely challenging year as far as economy is concerned, because the world economy has been going through a downturn,”he said, while adding that imports as well as exports have shrunk due to decline in prices and shrinking of the global trade.

“International trade has contracted. So both imports and exports have shrunk. In India context, the shrinkage is more in value (terms) because the prices are low and to some extent in volumes because of the shrinkage of global trade,” he said.

Jaitley further said that the government has continued with its reform process including on fronts like FDI norms and ease of doing business, while some of the old taxation issues are being resolved “one by one”.

“The rationalisation of subsidies in a big way has taken place. The methodology of distribution of natural resources has become extremely fair… These are important positives which have emerged as far as our economy is concerned.”

On way ahead for the Indian economy, Jaitley said a “fast moving economy” will help generate more revenues for investing in physical and social infrastructure as well as irrigation.

“I have already been constrained by a 42 per cent (tax) collections going to the states on recommendation of the Finance Commission. Next year, I am constrained by Rs 1,02,000 crore extra spending because of the Pay Commission. So, I have to always keep counting my balance resources,” he said.

On some states requesting deferring the Pay Panel recommendations due to lack of resources available with them, Jaitley said a committee of secretaries was already working on the implementation.

“The Pay Commission has already raised the expectations of government servants and defying that expectation is very difficult. I don’t grudge the government servants being paid more because after all they are supposed to work harder and work honestly.”

Asked whether it would be implemented from January 1, Jaitley said, “The expert committee will decide (that). The Secretaries Committee is already working on the matter”.

Asked whether there have been any disappointment, Jaitley said, “I would say fighting a slowdown is a challenge, it can never be a disappointment and we have responded to the challenge”.

On areas where the government needs to respond faster, he said these include various structural changes.

“We need to bring our direct taxes at par with what is happening elsewhere in the world… I had hoped that we complete the process of GST this year,” Jaitley said, while putting the blame on Congress for delaying this reform with its “plain and simple obstructionism”.

“In fact, a national party adopting a disruptionist role and getting a sadistic pleasure in stalling a reform which could add to India’s GDP is a disappointment.

“It used disruption in order to obstruct and I think it is a very bad precedent for India’s Parliamentary democracy if this is followed in state legislatures, if this is followed by future opposition parties, I think it would be a bad trend to set.”

Jaitley further said the Parliament itself would have to find alternative methods of approving legislation if the Congress party does not change its tactics.

Asked about such alternatives, he said, “I hope it does not come to a stage where all legislations are passed in a din or you rely on money legislations, you rely more on executive decision making”.

Stating that some of the legislations have been passed even without discussion, Jaitley said it was not the “ideal way how laws should be passed”.

On his comments about the role of Rajya Sabha, Jaitley said, “I have frankly not argued for a fresh look at Rajya Sabha. Rajya Sabha is essential and part of India’s basic structure. The structure of Rajya Sabha cannot be altered.”
Asserting that he would never suggest altering this structure, Jaitley said, “I am only on the impact on Parliamentary democracy if the indirectly elected house continues to veto a directly elected house”.

“… Rajya Sabha as a house which is supposed to maintain a check and balance, can once in a while disagree with a legislation passed by the Lok Sabha. It can be referred to a joint session, but every other law they cannot disagree with. It cannot happen too frequently.
“And if the indirectly elected house, for political and collateral reasons, vetoes a directly elected house, it does not augur well,” he said.

Talking about the system in other countries, Jaitley said, “In Britain, they follow a pattern that the Upper House can send it (a bill) back once for reconsideration to the Lower House and if the Lower House, which works on a mandate and which has been elected on a manifesto, second time approves it, the Upper House always accepts it.”

Asked whether that can be followed in India too, he said, “That could be accepted as a possible precedent.”

On rising bad loans of banks, Jaitley said it was “a problem inherited from the previous regime”.

“We are addressing each one of the sectors – the highways, the infrastructure contracts, the discoms. There is a lot of activity on each and all of these fronts. There is a system of recapitalisation of banks, but the problem is large and therefore, we will have to continue this effort and probably even improve on these efforts,” he added.

Petroleum products to be out of GST for now: CEA

He said that the GST council would decide for how long these products would be out of the new taxation regime.

KOLKATA: Petrol and other petroleum products would not be brought under the GST regime for some time after its roll out, Chief Economic Advisor Arvind Subramaniam said today.

“Constitutionally petrol and other petroleum products will be within the GST system. But it would be out of the GST dispensation after its implementation for some time”, Subramaniam told reporters on the sidelines of an event organised by ISI here.

He said that the GST council would decide for how long these products would be out of the new taxation regime.

“Even after GST, petrol and other petroleum products would continue to be taxed the way now both by the Centre and states”, he said.

Asked about the roll-out of GST, he said that Union Finance minister Arun Jaitley had said that the government was hoping that the GST Bill would be passed soon.

“All depends on when the Constitution amendment bill gets cleared”, Subramaniam said.

Outlining the benefits of GST, he said that it would give the country a wider tax base and `Make in India’ drive would get an impetus.

“However, no single reform could determine the long-term growth of the country”, he said.

Mann ki Baat: Action Plan on ‘Start-up India’ to be unveiled on January 16, says PM Narendra Modi

Modi said the programme will be designed to suit Indian conditions and focus would be on ensuring benefits for the youth from the lowest strata of the society.NEW DELHI: Seeking to boost entrepreneurship at the grassroots level, Prime Minister Narendra Modi today said the Action Plan of the ‘Start-up India, Stand-up India’ will be unveiled on January 16 and urged the states to help spread this campaign across the country’s nook and corner.

Modi, who had made the announcement about the campaign in his last Independence Day address, said the programme will be designed to suit Indian conditions and focus would be on ensuring benefits for the youth from the lowest strata of the society.

“My dear young friends, in my August 15 address from the Red Fort, I had made preliminary mention about ‘Start-up India, Stand-up India’. After that, this spread to all the departments of the government.

“Can India be a ‘Start-up Capital’? Can the youth in the states have the opportunities in the form of start-ups, with innovations, whether it be manufacturing, service sector or agriculture? In everything, there should be freshness, new ways, new thinking. The world cannot move ahead without innovation,” he said in his monthly ‘Mann ki Baat’ radio programme, the last one for this year.

He said the ‘Start-up India, Stand-up India’ campaign has brought new opportunities for the youth.

“On January 16, the government of India will unveil the full Action Plan of Start-up India, Stand-up India… A structure will be presented before you. This programme will be connected to the country’s IITs, IIMs, central universities and NITs. Wherever there are youth, they will be linked through ‘live connectivity,” the Prime Minister said.

The programme is aimed at promoting bank financing for start-up ventures and offer incentives to boost entrepreneurship and job creation.

FCI raises Rs 30,000 crore as short-term loan for capital needs

Maximum amount of Rs 10,000 crore has been raised from PNB, followed by Rs 7,000 crore from SBI and remaining from others including public and private sector banks.NEW DELHI: In view of mounting food subsidy arrears, state-run Food Corporation of India (FCI) has raised Rs 30,000 crore as a short-term loan from consortium of banks including SBI and PNB to meet working capital requirements.

The FCI, nodal agency for procurement and distribution of foodgrains, is facing a liquidity crunch as its subsidy arrears are estimated to cross Rs 58,000 crore by March 2016, against Rs 50,000 crore at the start of this fiscal.

In 2014-15, the government had allocated Rs 92,000 crore as food subsidy, out of which Rs 91,995.35 crore was given to the FCI. The actual subsidy outgo during the year was Rs 1,02,476 crore.

In the current fiscal, the government has allocated Rs 97,000 crore as subsidy to the FCI against the estimated bill of Rs 1,18,000 crore.

“FCI has finalised the tenders for Rs 30,000 crore as a short-term loan from 15 banks including State Bank of India and Punjab National Bank. The amount will be withdrawn in phases during the fourth quarter of the current fiscal,” a source said.

So far, the whole subsidy amount of Rs 97,000 crore has been released and it has been utilised, the short-term loan is being raised for the working capital requirements, the source added.

The loan has been raised at average interest rate of 9.6 per cent and is for the period of 150 days, the source added.

The loan has been raised at average interest rate of 9.6 per cent and is for the period of 150 days, the source added.

Maximum amount of Rs 10,000 crore has been raised from PNB, followed by Rs 7,000 crore from SBI and remaining from others including public and private sector banks.

FCI has a cash credit limit of Rs 54,495 crore with a consortium of 67 banks at a rate of 10.51 per cent. In addition, it can raise a short-term loan of up to Rs 30,000 crore by inviting tenders from the banks.

The bulk of the food subsidy is paid to the FCI for running the public distribution system (PDS).

The PDS operation cost has risen sharply in the past few years due to increase in the minimum support prices (MSP) of grains as well as high storage costs, the source added.

Meanwhile, the FCI had also moved a proposal to raise Rs 40,000 crore through long-term bonds from LIC to liquidate subsidy arrears due from the government.

The proposal is at present under review of the government, the source said.