The hike has been necessitated because IGL and other city gas firms were being forced to buy expensive imported LNG as supplies from Reliance Industries’ eastern offshore KG-D6 gas field have dried-up due to fall in output
New Delhi: The price of compressed natural gas (CNG) may be hiked by up to Rs2 per kg in the next few days as rupee devaluation has pushed up input cost, reports PTI.
City gas retailers including Indraprastha Gas, which supplies CNG to automobiles and piped cooking gas to households in the national capital, are likely to announce fuel price revision over the weekend, sources privy to the development said.
IGL had last raised CNG in Delhi by Rs2 to Rs32 per kg from 1st October.
Sources said the hike was necessitated because IGL and other city gas firms were being forced to buy expensive imported LNG as supplies from Reliance Industries’ eastern offshore KG-D6 gas field have dried-up due to fall in output.
Also, the rupee depreciation has made raw material—that is, natural gas from Reliance, state-owned GAIL and imported LNG—even costlier.
The rupee was at about Rs49.50 to a US dollar at the time of last price hike and it is today close to Rs53 to a US dollar.
The government has fixed the price of domestic gas produced by state-owned ONGC and RIL in US dollar terms and every time the rupee depreciates against the US currency, users end up paying more. Gas from both Reliance and ONGC is priced at $4.20 per million metric British thermal units (mmBtu).
IGL contracted 0.308 million standard cubic metres per day of gas from RIL, but following a 35% drop in KG-D6 output, supplies to city gas projects have been cut so that demand of priority power and fertiliser sector can be met.
Sources said companies like IGL and Mahanagar Gas in Mumbai are buying imported liquefied natural gas (LNG), which is priced at over $17 per mmBtu, to meet the shortfall.
IGL get up to 2.7 mmscmd of gas from domestic fields of Oil and Natural Gas Corporation (ONGC) and buys another 0.6 mmscmd as LNG.
Nifty has to close strongly above 4,800 for the upmove to continue. Support is at 4,665
The market closed near the high point of the day despite meagre institutional participation and little support from its Asian peers, most of which were closed for trade today. As expected, the Nifty closed in the positive, in spite of a low volume of 35.31 crore shares on the National Stock Exchange (NSE). The index is still in the range-bound zone with an upward bias. With the gains on 21st, 22nd December and today, the index has been able cover up more than five days of trading losses, beginning 14th December to 20th December and of 23 December 2011. The gains are happening with Nifty making higher highs and higher lows. For the upmove to continue the benchmark has to close strongly above 4800, else it may slip to the level of 4,665.
The market opened firm on the back of supportive global cues. US stocks closed higher on Friday, the fourth day in a row, on hopes that the improvement in the country’s economic data will boost growth. Tracking the US optimism, markets in Asia opened in the green this morning. The Nifty opened with a gain of four points at 4,718 and the Sensex resumed trade at 15,782, up 43 points over its previous close.
While the opening figure of the Nifty was its intraday low, the Sensex’s touched 15,761 at the day’s low. Brisk buying pushed the indices to a higher trajectory in the first hour after which the market remained sideways in subsequent trade.
The domestic market sustained its positive momentum in noon trade. Technology and IT sectors witnessed good buying interest; however, volumes were weak in the absence of institutional participation.
The market extended its gains into the late session with the benchmarks hitting their intraday high at around 3pm. At the highs, the Nifty touched 4,787 and the Sensex was within kissing distance of the 16,000 mark—at 15,998. The market closed a tad below those levels with the Nifty rising 65 points to 4,779 and the Sensex settling at 15,971, a surge of 232 points.
The advance-decline ratio on the NSE was 1100:584.
The broader indices underperformed the Sensex today as the BSE Mid-cap index gained 0.83% and the BSE Small-cap index climbed 0.98%.
Barring the BSE Healthcare index (down 0.04%), all other sectors ended in the positive. The top performers were BSE TECk (up 2.61%); BSE IT (up 2.39%); BSE Realty (up 1.59%); BSE Capital Goods (up 1.39%) and BSE Consumer Durables (up 1.34%).
The main gainers on the Sensex were Hero MotoCorp (up 4.75%); Bharti Airtel (up 4.31%); Tata Steel (up 3.01%); Infosys (up 2.91%) and Jaiprakash (up 2.89%). Cipla (down 0.64%); Maruti Suzuki (down 0.57%) and Hindalco Industries (down 0.53%) made up the declining stocks on the index.
Hero MotoCorp (up 4.86%); Bharti Airtel (up 4.51%); Reliance Communications (up 3.35%); Infosys (up 3.17%) and Tata Steel (up 3.01%) emerged as the top gainers on the Nifty. The main laggards were Axis Bank (down 1.24%); BPCL (down 1.09%); Maruti Suzuki (down 1.07%); Ranbaxy (down 1.02%) and Hindalco Ind (down 0.99%).
Most markets in Asia were closed for the Boxing Day holiday today. Of the ones that were open, the Chinese, South Korean and Taiwanese markets closed weak while Japanese stocks settled higher as the government on Saturday approved a $1.16 billion draft budget for the fiscal beginning 1st April.
The Shanghai Composite declined 0.67%, the Seoul Composite fell by 0.56% and the Taiwan Weighted slipped by 0.26%. Bucking the trend, the Nikkei 225 gained 1% in trade today. Markets in the US and Europe are closed for trade today.
Back home, foreign institutional investors were net buyers of equities worth Rs84.27 crore on Friday while domestic institutional investors were net sellers of stocks totalling Rs78.55 crore on the same day.
As it gets ready to take action against Reliance Industries (RIL) for dip in output at KG-D6 fields, the oil ministry has told a Parliamentary Committee that the Production Sharing Contract for the block does not provide for penalty in case of shortfall in production targets. RIL gained 1.73% to close at Rs759.30 on the NSE.
Apollo Tyres is expecting that the sales volume in 2011-12 to grow at the rate of 20%. The company is further expecting margins in October-December period to be healthier compared to July-September period. Higher production at the company’s Chennai plant is expected to boost the tyre major’s revenue growth. The stock declined 0.74% to end at Rs60 on the NSE.
Bangalore-based lender Vijaya Bank has decided to cut its processing fee on home loans by 50% under Home Utsav 2011 scheme. The stock gained 0.31% to close at Rs49.25 on the NSE.
Cairn will begin oil production from Bhagyam at the level of 20,000-25,000 barrels per day sometime next month
State-run Oil and Natural Gas Corp (ONGC) and the Oil Ministry's technical arm, the DGH (Directorate General of Hydrocarbon), have given Cairn India the go-ahead for commencement of production from the Bhagyam oilfield, the second-largest find in the prolific Rajasthan block.
Cairn, which was recently taken over by London-based mining group Vedanta, will begin oil production from Bhagyam at the level of 20,000-25,000 barrels per day sometime next month and it will reach the approved peak output of 40,000 bpd by April, sources privy to the development said.
ONGC, which holds a 30% stake in the Rajasthan block, had asked for third party certification to ascertain if Cairn's production plan will prudently exploit the reserves and if the surface facilities are capable of handling oil and water from the field.
Sources said third party certification endorsing the production plan came in a few days, after which ONGC gave its go-ahead for commencement of production.
Prior to this, the DGH had approved the production plan, they said, adding that the FY'12 production rate, work programme and Budget for the Bhagyam field would now be put up to the block oversight committee for approval.
Management Committee approval of the same is expected in 7-10 days, after which Cairn would looking at beginning output from Bhagyam.
Currently, Mangala—the biggest of the 18 oil discoveries in the Thar desert block— is producing 125,000 bpd, but it can produce 150,000 bpd within a few days from MC approval. Bhagyam, too, has the potential for output to go up to 60,000 bpd, sources said, adding that the Rajasthan block would have an output of close to 175,000 bpd by the end of the current fiscal.
Cairn, which is the operator of the Rajasthan block with a 70% stake, was ready to pump oil from Bhagyam in October, but delayed the production in the absence of regulatory approvals. So far, the company has committed more than $250 million toward development of Bhagyam against the approved Field Development Plan estimate of $470 million.
The approvals for the Bhagyam field were delayed because of a dispute over payment of royalty and oil cess with partner ONGC. But now that UK's Cairn Energy, which sold 40% of its stake in the Indian unit to the mining group, and Vedanta have agreed that Cairn India will share royalty and pay cess on its 70% share in the block, the approvals have started flowing.
Sources said the Rajasthan block has the potential to produce 300,000 bpd, a quarter more than the previously projected peak output. Besides enhanced output of 150,000 bpd from Mangala and 60,000 bpd from Bhagyam, the Aishwariya field in the block can contribute 25,000 bpd, compared to 10,000 bpd previously estimated.
The other fields in the block can produce 65,000 bpd.
Sources said the Bhagyam field is ready to start production, while output from Aishwariya will begin in 2012. At present, the approved peak output from Rajasthan is just 175,000 bpd—made up of 125,000 bpd from Mangala, 40,000 bpd from Bhagyam and 10,000 bpd from Aishwariya.
For the new peak, the government needs to approve field development and investment plans along with the extension of exploration activities over the rest of the block.
Cairn India holds 70% participating interest in the block and ONGC the remaining 30%.
On Monday, ONGC closed at Rs262.25 per share on the Bombay Stock Exchange, 0.27% up from the previous close.