The CAA would replace the DGCA and administer and regulate civil aviation safety, manage safety oversight over air transport operators, air service navigation operators and operators of other civil aviation facilities
A bill to replace the DGCA (Directorate General of Civil Aviation) by a new aviation regulator, the Civil Aviation Authority (CAA), with full operational and financial autonomy is likely to be tabled in the upcoming Monsoon Session of Parliament.
The Union Cabinet, at its meeting today, accorded in-principle approval to the proposal of the Civil Aviation Ministry, information and broadcasting minister Manish Tewari said after the meeting.
The bill to establish the CAA is likely to be brought in the Monsoon Session, he said.
The CAA would replace the DGCA and administer and regulate civil aviation safety, manage safety oversight over air transport operators, air service navigation operators and operators of other civil aviation facilities.
Interestingly, the proposed CAA, like the DGCA, would also deal with matters relating to financial stress on safety of air operations, as witnessed in connection with the closure of the bankrupt Kingfisher Airlines last year.
Issues relating to consumer protection and environment regulations in civil aviation sector would also be addressed by the CAA, according to the draft legislation.
The proposed authority would have a chairperson, a director General and seven to nine members, including five whole-time members. All of them would be appointed by the Centre on the recommendation of a selection committee headed by the Cabinet secretary.
The CAA is being established by the government to meet the standards set by the UN’s International Civil Aviation Organisation (ICAO) and in line with aviation regulators in other countries like the US Federal Aviation Administration and UK’s CAA, official sources had said earlier.
The estimated cost of establishing the new Authority would be over Rs110 crore, they said.
Noting that DGCA has limited delegation of financial powers and hence was “incapable of making adequate structural changes” to meet the demands of a dynamic civil aviation sector, the sources said this had necessitated its replacement with CAA.
The CAA would have more administrative and financial powers to deal with the fast-changing aviation scenario.
While passenger and freight traffic as also aircraft movement has grown manifold in the past six years, the sources said the strength of DGCA, which regulates all these activities, has gone up only in “a miniscule manner” primarily due to the cumbersome recruitment process under the UPSC.
With full functional and financial autonomy, the proposed CAA would be able to recruit its own staff, decide on their pay structure and the powers to fix and collect fees for rendering services like safety oversight and surveillance of air navigation services, they said.
As it would be self-financing, the CAA would establish a separate fund, called the Civil Aviation Authority of India Fund, which would be used for all expenses of the authority.
In addition, this fund would also get budgetary support, the sources said.
Keywords: Civil Aviation Authority, aviation regulator, Directorate General of Civil Aviation, DGCA, Civil Aviation Ministry, Manish Tewari, aviation sector, Kingfisher Airlines
Reported net profit of private IPPs (excluding Reliance Power) would be dented by the significant rupee depreciation against the dollar during the current quarter, says Nomura Equity Research
Nomura Equity Research expects IPPs (including NTPC) and Coal India (CIL) to post a sub-par show in 1QFY14; reported PAT of private independent power producers (IPPs, excluding Reliance Power) would be dented by the significant rupee depreciation against the dollar during the quarter (8.6% on period-end basis, 3.2% on period average basis). Power Grid Corporation is likely to be the sole bright spot, delivering another par performance, believes Nomura.
In terms of normalized PAT (i.e. excluding the likely MTM exchange fluctuation losses), Nomura is cautious for all private IPPs in its coverage universe. Amongst private IPPs, its normalized loss forecasts are significantly above consensus for Adani and Lanco Infratech; normalized PAT forecasts for JSW Energy and Reliance Power are around 15% below and in line with consensus, respectively.
Nomura believes NTPC would have done well if it sustains normalized PAT at around Rs25 billion (in-line with consensus, up 3% q-o-q, 4% y-o-y), given the likelihood of a 300bps dip in coal-fired plant availability and lower generation. As regards Power Grid, the kicker from Rs40 billion effective incremental capitalization would help post a 22% y-o-y rise in EBITDA and 17% y-o-y rise in normalized PAT. Nomura’s earnings forecast for Power Grid is broadly in line with consensus.
Nomura expects Coal India’s earnings to disappoint on the back of a flat topline (higher FSA realization offset by lower e-auction revenues) and higher opex (employee & diesel expenses). At Rs37.6 billion, the brokerage’s normalized net profit forecast is 10% below consensus.
Nomura pegs Adani Power’s revenue at Rs23.7 billion (around 8.5 billion kWh sales, Rs2.7/kWh blended realization, Rs4/kWh merchant realization) and normalized EBITDA
(EBITDA excluding fuel creditors-linked MTM exchange fluctuation loss) at Rs5.5 billion (up 50% q-o-q). Including fuel creditors-linked MTM exchange fluctuation loss and assuming 15% effective tax provision, Nomura pegs normalized net loss at Rs7.9 billion (against a consensus net loss forecast of Rs4.4 billion). Together with potential MTM exchange fluctuation loss on derivative instruments, the brokerage expects reported net loss at Rs10.6 billion. Fuel mix at Mundra remains the key swing factor for profitability.
Nomura pegs JSW Energy’s 4QFY13 revenue at around Rss23.2 billion assuming blended realization at around Rs4.1/kWh and sales volume of around 5.0bn kWh. It expects a 5%
q-o-q rise in the coal cost (per kWh) resulting in EBITDA at Rs7.9 billion (34.1% margin) and normalized net profit at rs3.3 billion. Including potential MTM exchange fluctuation loss, we expect reported PAT at Rs2.53 billion (down around 20% q-o-q). Nomura’s forecast EBITDA for JSW Energy is marginally below consensus; normalized net profit is 17% below the street’s forecast.
Nomura expects Lanco Infratech’s consolidated revenues/EBITDA to drop 13%/14% q-o-q as contribution from the EPC business (solar and non-solar) tumbles due to slowdown in execution on the back of cash constraints. Together with a marginal uptick in interest outgo and assuming an effective 15% tax outgo, the brokerage forecasts normalized net loss at Rs5.3 billion (up 66% q-o-q); including potential MTM forex losses, it pegs reported net loss at Rs9.6 billion. Nomura’s 4QFY13 EBITDA forecast is 17% below consensus while its normalized net loss forecast is 56% above consensus.
Nomura believes NTPC’s key operating metrics for the quarter were weak—it estimates Plant Availability (PAF) for coal fired plants at around 85% (compared to 88% in 1QFY13) and coal-fired generation at around 57bn kWh (against 58.9 billion kWh in 1QFY13). Accordingly, the brokerage expects only a marginal uptick in normalized net profit to Rs24.9 billion (up 4% y-o-y, 3% q-o-q); its net profit forecast is in line with consensus.
Factoring in 40% RoE and higher proportion of linkage coal consumption at Rosa (1200MW), together with marginal operating loss at Butibori (300MW), Nomura expects Reliance Power’s consolidated EBITDA at around Rs4.1 billion (up 15.4% y-o-y, down 9.6% q-o-q). It expects non-operating income to spike to Rs1.2 billion on account of potential gains on translation of f/x treasury income (given the sharp rupee depreciation during the quarter). Assuming a 15% potential tax incidence, the brokerage expects normalized net profit at Rs2.2 billion (down 2% y-o-y, up 30% q-o-q) and reported PAT at Rs2.2 billion. Nomura’s 1QFY14F normalized earnings forecast is in-line with consensus.
Nomura expects a 5.2%/5.9% q-o-q growth in Power Grid’s revenues and EBITDA, driven by around Rs40 billion effective incremental capitalization of transmission assets on a sequential basis. Building in a 10% drop in non-operating income (on the back of a lower cash chest), it expects normalized net profit to be up around 3% q-o-q (up 17% y-o-y) at Rs10.6 billion. Nomura’s 4QFY13F earnings forecast is in-line with consensus.
On the back of Coal India’s 115million tonne (mt) offtake, Nomura expects  10% sales via e-auction, and  blended realization at Rs1437 per tonne (in-line with ex-incentives realization in 4QFY13). Despite an effective hike in FSA coal prices effective 29th May, lower contribution from e-auction sales is expected to keep revenues flat y-o-y, said the Nomura report. As higher diesel cost and employee expenses take a toll, Nomura pegs EBITDA at Rs36.4 billion (post OB removal adjustment of Rs8.8 billion), implying a 640bps y-o-y drop in margins. This translates to a 16% y-o-y drop in normalized PAT to Rs37.6 billion. Its net profit forecast is 10% below consensus.
The Janata Party president also urged the PM to impress upon his ministers to desist from becoming “advocates for the deal” that has no substantial or long-term economic benefit for India
Janata Party president Dr Subramanian Swamy has asked prime minister Manmohan Singh to suspend the bilateral agreement signed between India and Abu Dhabi.
“From the timing of it (bilateral agreement) and from a close reading of the minute note of P Chidambaram (finance minister) after the meeting convened by him as directed by you appears prima facie to be linked to the Jet-Etihad deal,” Dr Swamy said in a letter sent to the PM.
Urging Dr Singh to impress upon union ministers to desist from becoming advocates (for Jet-Etihad deal), the Janata Party president said, this deal has no substantial or long-term economic benefit for India.
According to Dr Swamy, there are two reasons to suspend the bilateral agreement...
1. The Constitutional Bench judgment of the Supreme Court constituted on a reference made by the UPA government regarding the mode of allocation of natural resources such as spectrum, held that if it is for commercial exploitation, then auction is a preferred mode of allocation unless compelling reasons are adduced for the contrary view. In this case, India allocated without any substantive reason to prefer a bilateral agreement allotment of air space. But this is untenable since the opinion tendered by the Constitutional Bench to the union government earlier this year, the government is bound to allocate airspace to civil aviation on the basis of auction or to the highest bidder and not otherwise.
2. Second, the Standing Committee of Parliament's recommendation and the Inter-Ministerial Group (IMG) views cannot be disregard in a cavalier manner which is what the group of four ministers did in their meeting of 22 April 2013 convened on the directions from the PM. Hence their decision is arbitrary, unreasonable, illegal and malafide in over-ruling these powerful recommendations without adequate consultation. It will not stand in a challenge in the court.
The deal between Naresh Goyal-led Jet Airways and Etihad Airways, the national airline of the United Arab Emirates (UAE), and the signing of the bilateral between India and Abu Dhabi comprises chain of events taking place one after another. The “smooth and automatic” flow of events makes one wonder whether these incidents were mere coincidence or part of collusion.
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