Companies & Sectors
Centre stops diversion of KG basin gas to Maharashtra

The Centre's decision comes as a relief to the power-starved AP, where the gas-based power plants were functioning with a plant load factor of less than 30%

 
Hyderabad: Conceding Andhra Pradesh's demand, the Centre has decided to stop diversion of natural gas from Krishna-Godavari (KG) basin to Maharashtra, reports PTI.
 
A day after a delegation, led by state Chief Minister N Kiran Kumar Reddy, met Prime Minister Manmohan Singh in New Delhi on the issue, the latter directed the Union Petroleum and Natural Gas Ministry to immediately stop diversion of two million metric standard cubic meters per day (MMSCMD) of natural gas to the Ratnagiri power plant in Maharashtra, sources in the Chief Minister's Office (CMO) said.
 
"The Prime Minister called the Chief Minister over phone and conveyed the decision," a CMO official revealed.
 
The Centre's decision comes as a relief to the power-starved AP, where the gas-based power plants were functioning with a plant load factor of less than 30%, resulting into power cuts for several hours every day.
 
The industries are the worst hit, as they are forced to follow a three-day power holiday every week due to scarcity of electricity.
 
It may be recalled that the Union Ministry of Petroleum and Natural Gas issued an order for diversion of two MMSCMD gas to Ratnagiri power plant, cutting into the supplies to Independent Power Producers in AP.
 
As a result of the gas diversion, the IPPs in AP would have got only 1.48 MMSCMD of gas, resulting in a drop in power generation by 400 MW.
 
Centre's decision created a storm in the state with opposition parties demanding the resignation of Union Petroleum and Natural Gas Minister S Jaipal Reddy, who hails from the state.
 
The Prime Minister, however, assured the CM-led delegation that the decision on gas diversion would be reviewed and accordingly he issued a fresh order this evening, a CMO official said.
 

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HC order not to impact Bombay Dyeing's land development: Wadia

Bombay Dyeing Chairman Nusli Wadia said as per the HC order, the company needs to give part of its land to the government only when it finishes its FSI and starts using balance land

 
Mumbai: Textile major Bombay Dyeing has said the High Court order in May asking the company to hand over a part of its mill land to the Maharashtra government will not affect the development of the land as of now, reports PTI.
 
"The (Bombay High Court) order will not affect the development of the land; we will continue to go ahead," Bombay Dyeing Chairman Nusli Wadia told shareholders at the company's annual general meeting.
 
"They (HC) want us to hand over a part of the land to Brihanmumbai Municipal Corporation (BMC) and MHADA. But legally we are not bound to have any obligation to hand it over today. It is only an obligation after we complete our floor space index or construction rights (FSI) and start using the balance land at which point of time we have to share. So sharing today does not arise." 
 
The high court in May had stayed the stop-work notice issued by the BMC to Bombay Dyeing for redeveloping the mill land. A Division Bench of Chief Justice Mohit Shah and Justice Roshan Dalvi later vacated the stay and asked the company to hand over the land to BMC.
 
The company had approached the HC after BMC issued a stop-work notice on 26 March 2010. The notice was issued following a direction from the monitoring committee that oversees redevelopment of mill lands in the metropolis.
 
The panel, headed by Justice (Retd) BV Chavan, had directed the civic body to issue notice on the grounds that Bombay Dyeing had failed to hand over land to MHADA and BMC for low-cost housing and recreational grounds respectively.
 
Earlier in the day, the company said its net loss narrowed to Rs27.50 crore in the June quarter from a net loss of Rs39.79 crore in the same period a year ago. 
 
"We have a situation where the economy is under stress and unfavourable situation is arising from poor monsoon. Besides, the loss in our polyester staple fiber (PSF) business is also a reason for poor numbers," Bombay Dyeing Managing Director Jeh Wadia told reporters on sidelines of the meeting.
 
The company's net sales rose to Rs465.73 crore for the quarter under review from Rs394.84 crore during the same period last fiscal.
 
On its real estate business, the Chairman told shareholders "We will unlock the value of Wadia Group's large land-bank by creating landmark projects and communities. We believe that the realty business will enhance future profitability and value creation for Bombay Dyeing." 
 
The company has launched two residential towers this year, Jeh Wadia said, adding "We are planning to launch five- star hotels in Dadar and Worli. We will continue to focus on the 70-acre land bank in Mumbai as well as on the retail real estate into which we recently forayed." 
 
Speaking about the company's Island City Centre coming up at Dadar, he said the project will be completed in the next three to four years.
 
The Mumbai-headquartered firm manufactures linens, towels, home furnishings, leisure clothing and kids wear.
 

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Coal India proposals: Are they realistic and practical?

With the continuing and worsening situation in the power supplies, it has become important that coal imports are arranged now, so that the situation could improve over next few months  

 
The last few days have witnessed a flurry of activity from Coal India (CIL) that shows the seriousness of the coal supply situation and how the company proposes to tackle it.
 
As a start, the penalty clause in the FSAs (Fuel Supply Agreements) will now cover a range of penalties from 1.5% to 40% if CIL fails to supply coal up to the 80% trigger level, while the supply however would be an imported and indigenous mix of coal.  It is unclear at this stage as to what will be the product mix be (indigenous and imported and their ratios), considering the imported coal has, an average, 6300 kcal (kilo calorie) or gross calorific value as against lower and possibly varying calorific value from indigenous mines. Only after some supplies have been effected would the power generator be able to comment on the mix.
 
In order to come to a price pooling arrangement, the Central Electricity Authority (CEA) has proposed that up to 20% of the imported coal be made available.
 
The projected coal demand for the power industry for the current year (2012-13) is estimated at 393 million tonnes (MT), and the Planning Commission has suggested that CIL import 45 MT of thermal coal, although Narasing Rao, chairman, CIL, has indicated recently that they may actually import 18 MT to 20 MT of thermal coal over and above the estimated 347 MT that would become available from indigenous sources. 
 
In a recent report published in the Mint, Chirag Shah, research director at Barclays had mentioned that as against the 88 MT of thermal coal imported in 2011-12, due to the poor monsoon, it may become necessary to import as much as 120 MT of this coal during the current season.
 
In this estimate of 347 MT, we are assuming availability of rakes, no loading difficulties at the pitheads and no transportation bottlenecks, not to speak of politically motivated labour problems!
 
The question of price pooling has already received flak and stiff opposition from coal bearing states such as West Bengal, Jharkhand, and Odisha, though, in the end, this may be overcome by political manoeuvring.  But the fact remains, power generators have little or no choice in the price they have to pay for coal!
 
In order therefore not to solely depend upon one source of supply of coal from Coal India, or from their own captive mines, if any, it would be prudent for the power generators to devise ways and means to source and carry out stand-by imports directly for any contingency.
 
The Indian Railways, on the other hand, are themselves the single largest consumers of electricity, estimated at 15 billion units, but so far they have not brought out any proposals to set up dedicated corridors from pitheads to power generating points, though, a couple of projects, such as the Eastern Corridor (85km) from Bhupdeopur to Khargoda and the East West Corridor between Khorba and Pendra Road are receiving top priority.  It is possible that they are closely watching the progress that is being made before embarking on others.
 
Land acquisition for such projects is still a major obstacle.  Besides, it has been reported that it is not easy to lay additional lines along with the existing tracks due to constant movement of traffic which has been increasing lately. Rescheduling of train timings and greater use of night operations, with additional or temporary stops, to permit scheduled trains to pass, will still help in the movement of coal supplies.
 
Also, the claim made earlier by CIL that it can offer 70 MT of coal at pitheads if power generators can shift them, has apparently not made much headway, though three of them had responded positively.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)

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