Companies & Sectors
Dwindling gas supplies and ambiguous price situation

It may be presumed that Reliance will have to continue its supplies of gas, "on account basis", because, so far, no clear announcement has been made as to what would happen to pricing of natural gas

It took several months of negotiation. From a high production, the fall in gas supplies from Reliance Industries, has gone down to 10 msmcd, whereas, at once stage, it was in the 60s and hopes were high to reach the 80s! At the moment, it looks more like a geographical surprise than anything else, but our national plans have gone wary.


The revised price, announced by the Ministry of Petroleum, cannot be brought into effect from 1st April, in line with the existing contract, due to the ensuing elections when millions will go to the polls from 7th April. According to the announcement already made, polling will continue till the evening of 16th May, and the results will begin to hit the TV screens probably from 17/18th May onwards. Details are expected.


Though Reliance has 50 agreements with its consumers, only 16 of them are "active" or "alive" as these relate to supply of gas to fertiliser units. Exact quantities of gas supplied to each of these unit is not readily available, but, whatever the quantity supplied is not adequate to meet the full demand.


The model of code of conduct, which comes into effect now, technically expires only on 16th May as mentioned above. It may, therefore, be presumed that Reliance will have to continue its supplies of gas, "on account basis", because, so far, no clear announcement has been made as to what would happen after the "polling" is effectively completed on 16th May.


Since a clear cut statement has not been made by the Ministry, both Reliance and the fertiliser industry are at a loss to know what to do, except hope, that in order to maintain supply continuity, Reliance will serve the cause of the national interest and supply the gas "on account basis", till official announcement is made by the new government.


It is difficult to conjecture as to who will be forming the government, and what will be their order of priorities for the jobs to be done, since portfolios have to be allocated and cabinet meetings have to take place before decisions of such national importance are made.


Meantime, it is reported that Reliance wants to have new negotiated agreements with buyers, calling them as "bridge agreement" which may have to be revised when final decision on price is taken! As far as the fertiliser industry is concerned, they want such agreements to be for a period of 5 years, instead of one year as suggested by Reliance, who has also maintained that the proposed agreement is "aligned" with the Rangarajan price formula based on which price changes every quarter!


Revision of price, every quarter, would not be practical in actual implementation and a simpler annual rate, perhaps, would be more realistic and workable.


The other major issue that has been raised is to follow the global practice of adhering to "gross caloric value" (GVC); if Reliance calculates on GVC, then the price may go up by a $1 per unit. This again, needs further clarification and approval by the ministry.


Moneylife has regularly covered on the gas supplies in the past; and it is now time that, when the new government takes over the administration, a detailed study is made and discussions are carried in depth with all the gas and oil producers to come to a consensus decision, so that there are no periodic pinpricks that come up and affect the people at large.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also 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.)


RBI keeps repo, CRR, and other key rates unchanged

While keeping key rates unchanged, the RBI said it would allowing the rate increases undertaken during September 2013-January 2014 to work their way through the economy

The Reserve Bank of India (RBI), in its first bi-monthly credit policy review has kept repo, reverse repo, cash reserve ratio (CRR) and bank rate unchanged. The RBI said its policy stance will be firmly focussed on keeping the economy on a disinflationary glide path that is intended to hit 8% consumer price index (CPI) inflation by January 2015 and 6% by January 2016.


"At the current juncture, it is appropriate to hold the policy rate, while allowing the rate increases undertaken during September 2013-January 2014 to work their way through the economy. Furthermore, if inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture," the central bank in its policy statement.


With no change in key policy rates, the repo rate (the rate at which the RBI lends money to banks) remains at 8%. Similarly reverse repo rate (the rate at which the RBI borrows from banks), CRR, and bank rate remains at 7%, 4.00% and 9%, respectively.


Repo Rate.......................8%

Reverse Repo Rate...........7%


Bank Rate.......................9%


RBI said despite some positive movement in more recent data, industrial activity continues to be a drag on the economy, with retrenchment in both consumption and investment demand reflected in the contraction of output of consumer durables as well as capital goods.


"In the quarters ahead, the boost provided by robust agricultural production in 2013 may wane. Moreover, the outlook for the 2014 south-west monsoon appears uncertain. Sluggishness in industrial activity, exports and several categories of services underlines the need to revitalise productivity and competitiveness," the central bank said.


Pentagon overhauls effort to identify its missing

The restructuring promises to address many of the problems laid out in a recent ProPublica and NPR investigation.

The Pentagon is overhauling its efforts to find and identify missing service members from past wars, Defense Secretary Chuck Hagel announced Monday.

The changes address the problems laid out in an investigation by ProPublica and NPR, including outdated scientific methods, overlapping bureaucracy, a risk-averse disinterment policy for the 9,400 unknowns buried around the world, and poor laboratory management that inhibited the mission.

“The time has come for a paradigm shift,” said Acting Under Secretary of Defense for Policy Michael Lumpkin, who headed up a 30-day review of the mission Hagel ordered in February.

One of the bigger changes involves the military’s failure to embrace DNA. Our investigation detailed how the Pentagon identification effort relegated DNA to only a confirmation tool, rather than using it to lead the process as is now done in other countries.

Using a DNA-led process is “absolutely something we’re going to move toward,” Lumpkin said.

The Pentagon will “break away from the way of traditionally doing business...that didn’t fully embrace progressive science,” he said.

The Pentagon spends about $100 million a year on the MIA mission, yet it solves surprisingly few cases. Last year, the military identified just 60 service members out of the about 83,000 Americans missing from World War II, Korea and Vietnam. The lackluster efforts have been subjected to intense Congressional scrutiny and media coverage, including holding fake arrival ceremonies and mismanaging overseas excavations.

In restructuring the mission, the Pentagon is eliminating the two main agencies — the Hawaii-based Joint Prisoner of War/Missing in Action Accounting Command and the Washington-based Defense Prisoner of War Missing Personnel Office — and creating a new single agency. There will be one chain of command and one budget.

“We’re streamlining everything,” Hagel said.

The reorganization “resolves issues of duplication and inefficiency” and makes the effort “more transparent and responsive” to families, he said. The changes will be implemented over the next 18 months.

Although it’s unclear at this point what positions and personnel will be eliminated besides the commanders of JPAC and DPMO, Lumpkin insisted the as-yet-unnamed agency will be a “fundamentally new organization.”

“It’s not business as usual,” he said.

The restructuring pushes aside J-PAC’s scientific director, Tom Holland, who has held the position for 19 years. As ProPublica and NPR detailed, Holland has had nearly total control of each step in the identification process. That job will now be handled by an Armed Forces Medical Examiner.

The move appears meant to address the fact that sign-offs on the lab’s decisions were little more than a rubber stamp. Putting a medical examiner at the head of the process — someone who is scientifically knowledgeable — ensures “the opportunity for rubber stamping doesn’t exist,” Lumpkin said.

Outsiders and former J-PAC officials said the changes were promising.

“I think the Armed Forces Medical Examiners are probably as well suited to do that as anyone else I could think of,” said Mark Leney, a former JPAC anthropologist who now teaches at the University of Massachusetts Medical School.

“Selecting a scientific leader with a track record of working in an interdisciplinary scientific environment, preferably someone who has managed a large group of diverse technical and scientific experts before, will be key to making this work,” Leney said.

Hagel also announced a plan to develop public-private partnerships to “leverage capabilities” of nongovernmental groups who work on recovering and identifying MIAs – we which included last month in a rundown of potential ways to fix the effort. “I think that would be a waste if we didn't do that,” Lumpkin said.

ProPublica and NPR also reported that under Holland’s leadership the lab rejected 96 percent of potential disinterments of unknown servicemembers, despite DNA advances that could help lead to their identification.

Lumpkin said that policy will be changed, though he had no specifics.

The Pentagon is also considering a national campaign to collect DNA samples from family members of the missing.

The restructuring will create one case management system for all missing persons, which should make it simpler to conduct research and keep families informed. DPMO and JPAC, long embroiled in a turf war, have often fought over records, duplicated trips to the National Archives, and done competing investigations.

“We’re now taking concrete, enforceable steps to fix what has been a management mess—but as with any effort to demand accountability, the devil will be in the details and the implementation,” Senators Claire McCaskill, D-Mo., and Kelly Ayotte, R-N.H., said in a statement. “So we’re looking forward to working with the Pentagon to ensure the families of our missing heroes receive nothing less than honesty and transparency in our efforts to recover their loved ones.”




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