The finance ministry wants upstream oil and gas producers like ONGC to meet one-third of the Rs1,70,140 crore revenue loss that was projected prior to the June fuel price hike and duty cuts instead of about Rs1,14,084 crore actual loss the retailers may suffer on selling fuel below cost this fiscal
New Delhi: The finance ministry wants Oil and Natural Gas Corporation's (ONGC) fuel subsidy outgo to increase almost double to Rs47,640 crore this fiscal so that diesel, domestic LPG and kerosene can be sold at below market prices to consumers, reports PTI.
The finance ministry wants upstream oil and gas producers like ONGC to meet one-third of the Rs1,70,140 crore revenue loss that was projected prior to the June fuel price hike and duty cuts instead of about Rs1,14,084 crore actual loss the retailers may suffer on selling fuel below cost this fiscal.
Upstream oil firms bear one-third of the revenue that retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates. A similar amount is contributed by the government by way of cash subsidy while the rest is either absorbed by the retailers or passed on to consumers.
Sources privy to the development said the finance ministry wants upstream share to be fixed at Rs56,707 crore or one-third of the revenue loss estimated before the June price hike and cut in customs and excise duty. Of this, ONGC's share would be Rs47,640 crore and the rest would be split between Oil India and GAIL India.
It argues that the government has taken a hit of Rs49,000 crore by way of cut in customs duty on crude oil and petroleum products, and reduction in excise duty on diesel.
Post duty rejig and a Rs3 per litre hike in diesel, Rs2 per litre increase in kerosene and Rs50 per cylinder hike in domestic LPG rates, the revenue loss now is estimated at Rs114,084 crore. One-third of this comes to Rs38,024 crore, of which ONGC would have borne Rs31,943.5 crore.
ONGC in 2010-11 provided Rs24,892 crore fuel subsidy.
Company officials said they haven't got anything in writing from the government on subsidy sharing but confirmed there were talks of raising ONGC's outgo.
Some industry observers are linking the postponement of the follow-on public offer (FPO) of ONGC to hammering its scrip may see because of increased subsidy outgo.
But ONGC officials maintained that the decision to defer the share sale was taken by finance minister Pranab Mukherjee and the disinvestment secretary Mohammed Haleem Khan who felt the FPO may not garner the right value keeping in mind the market volatility.
The public issue through which the government is to sell 5% of its shareholding to garner between Rs11,000 crore to Rs12,000 crore, was to open on 20th September and close on 23rd September.
Sources said the FPO can happen by mid-October on the basis of the red herring prospectus filed by the company with the Registrar of Companies earlier this month. Beyond that, it would be required to update the RHP with second quarter earning numbers and refile it.
Watch out for Nifty below 4,990, for further declines
The market closed lower, snapping its three-day winning streak, mainly on weak global cues. The National Stock Exchange witnessed a volume of 50.31 crore shares, the lowest in the past 11 days. The benchmark Nifty touched an intra-day high of 5,068, which was below the 5,070 mark, the level it should have stayed above for an uptrend.
After closing in the positive for the last three trading sessions, the domestic market opened lower, tracking weak Asian markets. The Nifty opened at 5,068, down 16 points from its previous close and the Sensex declined 68 points to start the week at 16,866. Worries over the escalating debt crisis in Europe after the EU delayed a decision on releasing critical rescue funds to Greece, dampened trading sentiment in Asia this morning.
The opening figure on the Nifty was its intra-day high, while the intra-day high on the Sensex came in the first hour at 16,866. Sideways trade continued for a major portion of the morning session.
The lower opening of the European indices on account of a slide in banking stocks and US stock futures trading down resulted in the domestic market edging further southward in the post-noon session. In the last hour, the Nifty dropped to 5,019, its intra-day low, and the Sensex slipped to 16,709. However, a minor pull-back in subsequent trade ensured that the market closed off the day's low. The Nifty closed 52 points down at 5,032 and the Sensex settled at 16,745, a loss of 188 points.
The advance-decline ratio on the NSE was 748:946.
Among the broader indices, the BSE Mid-cap index slipped 0.29% and the BSE Small-cap index shed 0.02%.
Eleven of the 13 sectoral gauges settled lower today. The losers were led by rate-sensitives like BSE Capital Goods (down 2.19%), BSE Bankex (down 1.17%), BSE Power (down 1.15%), BSE Metal (down 1.12%) and BSE PSU (down 1.05%). The gainers were BSE Consumer Durables (up 0.75%) and BSE Auto (up 0.34).
The top gainers on the Sensex were Maruti Suzuki (up 3.09%), Jaiprakash Associates (up 2.17%), Wipro (up 0.52%), Hero MotoCorp (up 0.39%) and Bharti Airtel (up 0.29%). The top laggards were Sterlite Industries (down 3.49%), Larsen & Toubro (down 3.02%), Sun Pharma (down 2.62%), ICICI Bank (down 2.42%) and DLF (down 2.08%).
The key gainers on the Nifty were JP Associates (up 3.22%), Maruti Suzuki (up 2.75%), GAIL (up 2.34%), HCL Technologies (up 1.92%) and Wipro (up 1.55%). On the other hand, Reliance Infrastructure (down 4.29%), Sterlite Ind (down 4.26%), L&T (down 3%, ICICI Bank (down 2.99%) and Axis Bank (down 2.94%) were at the bottom.
Markets in Asia settled in the negative as investors await the outcome of the International Monetary Fund meting on 23rd September for fresh bail-out funds for Greece. Market participants are also eagerly awaiting the US Federal Open Market Committee meeting for announcements of any new stimulus to put the world's largest economy back on track.
The Shanghai Composite declined 1.79%, the Hang Seng tumbled 2.76%, the Jakarta Composite fell by 2.09%, the KLSE Composite slipped 1.24%, the Straits Times lost 1.14%, the Seoul Composite declined 1.04% and the Taiwan Weighted settled 1.27% down. The Nikkei 225 was closed for a local holiday.
Back home, institutional investors-both foreign and domestic-were net buyers of stocks on Friday though in a minor way. While foreign institutional investors pumped in funds worth Rs395.16 crore, domestic institutional investors invested Rs39.33 crore in shares.
Fortis Healthcare has drawn up plans to invest $1 billion (over Rs4,700 crore) in the next three years, for expansion in India as well as global markets. Besides, the company also said that it will acquire its Singapore-based arm Fortis Healthcare International Pte Ltd from a firm owned by its promoters-the Singh brothers-as part of consolidation of domestic and global operations. Fortis Healthcare settled at Rs144.75, down 1.60% on the NSE.
Tata Consultancy Services (TCS) has been roped in by Deutsche Bank to provide software solutions to the financial services firm's capital markets business unit. TCS will deliver a global application service desk, ITIL (IT Infrastructure Library) services, besides other software solutions, to the bank at locations across seven countries-the US, the UK, Germany, Hungary, Philippines, Singapore and India-the country's largest software exporter said in a statement. TCS fell 1.03% to Rs1,017.20.
Sun Pharmaceutical Industries today said its US arm has resolved issues raised by the country's health regulator regarding violation of manufacturing standards. The USFDA had pulled up the company for violation of manufacturing standards, such as its inability to produce batches of consistent quality and lack of sufficient corrective actions. Sun Pharma declined 2.66% to close at Rs473.
Taxis are not easily available to travellers arriving at the airport and public buses are inconvenient, underlining the case for a proper bus shuttle service
Transport experts in Mumbai agree that there is a desperate need to initiate action to end the harassment of passengers at the domestic and international airport.
This is the result of the regular refusals by taxi and autorickshaw drivers to ferry passengers without a fuss, the inadequate public transport and expensive-but-usually-unavailable pre-paid taxis, due to which many people are stranded at the airport terminals for as much as two hours.
The solution to this is a special bus shuttle with adequate luggage space from the Mumbai airport and transport experts are pushing hard for it.
Mumbai's Chhatrapati Shivaji International Airport is one of the busiest air terminals in the world, but it doesn't have a dedicated bus shuttle service to various parts of the city, even today. While some major cities like Bangalore and Hyderabad have launched efficient, air-conditioned bus services, the country's commercial capital has none. Even Delhi airport now has a special train service-the Delhi Airport Express-that is a convenient facility for travellers. (Read, 'Delhi Airport Express is a brilliant train service which requires finishing touches'.)
With passengers at the mercy of errant taxi drivers who often refuse to ply and an inadequate number of public bus services to the airport, it is common to see many travellers cart their baggage to the main connecting highway a kilometre away. Most of them are professionals travelling on official work.
While many regular taxi drivers try to fleece passengers, the pre-paid taxi services (like Radio Taxi) are expensive and few. Even those who have cars, find parking charges and the long wait to get to their vehicles unaffordable.
Transport experts insist it is high time Mumbai had a special bus shuttle to and from the airport to eliminate this painful inconvenience.
Ashok Datar, an expert in transport, says, "This is absolutely correct. (This is) the least we can do in Mumbai, without fuss or investment and within a few months, without waiting for a bus lane, but by undertaking proper publicity at the bus stops on the frequency of service and appropriate signage (say aircraft) to identify these buses. At the bus stops, the service should get prime space at the airport terminals, with information easily available at various points, for the benefit of passengers as well as those who come to receive them or see them off. We must have at least three routes with a half an hour frequency throughout the night and day, and each should go to south Mumbai, the western suburbs and to Vashi /Thane."
Sudhir Badami, transport activist, estimates the frequency of buses at 3.5 minutes. "In fact, the whole concept of reducing carbon footprint has to come into arguments and we must provide for higher frequencies to attract almost every potential air passenger. These buses need not be restricted to air travellers, so long as other passengers are also willing to pay the fare might be higher on account of the fewer number of people using the service, as the luggage space will reduce seating. Also, these buses should not allow standees, from the point of view of safety of luggage."
Not very long ago, Indian Airlines provided a pick-up facility from certain points in the city to the airport. "In the Indian Airlines days, I used to board the airport bus from Shivaji Park. There was no need to discontinue it. Today, taxis don't come to Mahim, considering it is a short distance for a fare of Rs100. Taxi drivers are known to pay traffic police about Rs100 to get a slot in the queue. Since I always carry a handbag I prefer to come out of the airport and hop in to 'dropping cabs'. I entirely agree that this is urgently needed across Mumbai. I understand that with the phasing out of Fiats, Mumbai is short by 35,000 cabs," says Nagesh Kini, Mumbai-based social activist.
The monopoly by the taxi unions is the main reason for such inconvenience to travellers. Walter Vieira, marketing consultant, says, "Mumbai is like Goa airport, where the union of taxi drivers, in connivance with politicians, have successfully thwarted all attempts for a bus service. When Damania (Airlines) introduced a free bus service from the city office to/from the airport in Goa, the buses were attacked and the company was compelled to discontinue the service. The government did not intervene and just looked the other way as if nothing had happened. This is also one of the foremost reasons why foreign tourists dislike coming to Goa, for the first hurdle they are faced with on landing is the unreasonable demands of taxi drivers."