It is not clear if the GoM would take more than one meeting to vet the proposal, after which it has to go back to the Cabinet Committee on Economic Affairs (CCEA)-the final approval authority in this case
New Delhi: A ministerial panel is likely to meet on 27th May to consider Cairn Energy Plc's sale of a majority stake in its Indian unit to Vedanta Resources, a full seven days after the current deadline for closing the deal expires, reports PTI.
"A Group of Ministers (GoM) headed by finance minister Pranab Mukherjee is scheduled to meet at 1630 hours on 27th May to vet Cairn Energy's sale of 40% interest in Cairn India to Vedanta," a senior government official said here.
Cairn and Vedanta have set 20th May as the deadline for closing the $9.6 billion transaction.
Industry sources said Cairn is likely to seek another extension of the deadline in advance of its annual general meeting on 19th May.
It is not clear if the GoM would take more than one meeting to vet the proposal, after which it has to go back to the Cabinet Committee on Economic Affairs (CCEA)-the final approval authority in this case.
Cairn, which had previously set 15th April as the deadline for concluding the sale, had raised a hue and cry over the government's procrastinated approach to vetting the deal, saying the timelines were sacrosanct and could not be extended.
But a day after the CCEA on 6th April referred the deal for vetting to the GoM, the deadline was extended to 20th May.
The GoM, which, besides Mr Mukherjee, compromises oil minister S Jaipal Reddy, law minister M Veerappa Moily, Planning Commission deputy chairman Montek Singh Ahluwalia and telecom minister Kapil Sibal, is split right in the middle on the issue of giving approval to the deal.
The law ministry and Planning Commission have backed Mr Reddy's first option of giving clearance to Vedanta only if it agrees to ONGC being allowed to recover the Rs18,000 crore in royalty that the state-owned firm is liable to pay on behalf of Cairn India in the all-important Rajasthan oilfields.
The finance ministry is in favour of MR Reddy's second option of the government giving consent without any precondition and taking appropriate decisions to protect ONGC's interests.
The GoM to vet the Cairn-Vedanta deal was originally to have its first meeting on 2nd May. The ministerial panel was to deliberate on whether Vedanta, with no experience in oil and gas sector, should be given unconditional approval for buying a company that owns the nation's largest onland oil fields or given clearance after attaching reasonable conditions.
The official said Mr Reddy had listed two options. The first was giving approval subject to state-owned ONGC being allowed to recover the Rs18,000 crore it is liable to pay in royalty on behalf of Cairn India.
Alternatively, he suggested that the government gives its consent to the deal without any precondition and take an 'appropriate decision' to enforce ONGC's right.
Oil and Natural Gas Corporation (ONGC) has a 30% stake in Cairn India's mainstay Rajasthan oilfields, but it is liable to pay royalty not just on its share, but also on Cairn's 70% share of crude oil from the field.
Royalty at the rate of 20% of the crude price is payable to the state government and ONGC-a month before the Cairn-Vedanta deal was announced in August, 2010-had cited the provisions of the field contract to demand its cost recovery.
The oil ministry is backing the ONGC demand that royalty payment should be added to the project cost, which can be recovered from the sale of oil before profits are split between the partners and the government.
However, such a move is being opposed by Cairn Energy and Vedanta as it will lower Cairn India's profitability.
The Solicitor General of India, the nation's second highest law officer, had opined that Vedanta must agree to cost-recovery of royalty before the government nod.
Vedanta, a mining company with no experience in the oil and gas business and controlled by billionaire Anil Agarwal, agreed in August last year to buy at least 40% and as much as a 51% stake in Cairn India from Edinburgh-based Cairn Energy.
SEBI has allowed brokers an uninterrupted access to their clients’ accounts, dropping the requirement of stock brokers seeking ‘running account authorisation’ from their clients at least once a year—which was made mandatory in December 2009
New Delhi: The Securities and Exchange Board of India (SEBI) has allowed brokers an uninterrupted access to their clients’ accounts by seeking one-time authorisation, reversing its earlier direction of such a requirement every year, reports PTI.
SEBI has agreed to drop the requirement of stock brokers seeking ‘running account authorisation’ from their clients at least once a year—which was made mandatory in December 2009—after repeated requests from brokerages in this regard.
In a circular issued on 3 December 2009, SEBI had changed various regulations concerning dealings between stock brokers and investors and one of the requirements mandated at that time was a fresh ‘running account authorisation’ every year to access the funds and securities of the clients.
These rules were first scheduled to be implemented by 31 March 2010, but the deadline was extended to 30th June of that year on brokers’ requests.
However, the brokers continued to seek relaxation in these rules and SEBI has now given them further reprieve.
In a circular issued last week to chiefs of various bourses, SEBI informed them about the latest amendments to its earlier directions in this regard.
The exchanges have subsequently informed their member brokers about the new SEBI direction.
As per new SEBI circular, it has “received representations from market participants expressing difficulties in implementation of the requirements pertaining to renewal of Running Account Authorisation once in a year”.
SEBI said it has therefore decided to drop the clause pertaining to renewal of authorisation every year.
At the time of opening the trading accounts, brokers ask the investors to give them ‘Running Account Authorisation’, which makes the funds readily available for future buy orders.
Generally, investors also tend to keep some cash, whether fresh or those from sale of shares, in their trading accounts for instant access to funds needed for future buy orders.
However, there have been cases when the brokers use these funds for market dealings without the client’s knowledge and then return the funds back into accounts whenever the customer needs it.
Besides, brokers generally used to take 2-3 days to transfer back the funds to the clients from their trading accounts.
It was in this backdrop that SEBI in 2009 made it mandatory for brokers to return such funds within 24 hours, or get a ‘running account authorisation’.
Accordingly, the brokers were asked to give their clients an option to either take back the unutilised funds at the end of every month or quarter, as desired by them, or provide a ‘running account authorisation.’
During the first fortnight of May, the oil companies were losing Rs495 crore per day on the sale of diesel, domestic LPG and kerosene below their imported cost. However, in the second half of the month, the losses have come down to Rs479 crore
New Delhi: The fall in global oil prices has trimmed the losses of state-owned oil companies, but it may not be enough to prevent a Rs4 per litre increase in diesel prices and a Rs20-Rs25 per cylinder hike in LPG rates later this month, reports PTI.
During the first fortnight of May, the oil companies were losing Rs495 crore per day on the sale of diesel, domestic LPG and kerosene below their imported cost. However, in the second half of the month, the losses have come down to Rs479 crore.
Oil firms calculate the desired increase in fuel prices on 1st and 16th of every month, based on the average oil price of the previous fortnight.
“The 1-15 May average of the basket of crude oil India buys, at $112.32 per barrel, is lower than the $118 per barrel average of the previous month,” an industry official said.
Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) were projected to lose Rs180,208 crore in revenue for the full fiscal, but now, the projected revenue loss is down to Rs170,676 crore.
The official said the companies are losing Rs14.66 per litre on diesel currently, down from their Rs16.17 a litre under-recovery till last week. After adding local sales tax or VAT, the desired increase in diesel price to make it at par with international rates will be Rs16.49 per litre in Delhi.
State-run oil firms also lose Rs29.69 a litre on kerosene and Rs329.73 per 14.2-kg domestic LPG cylinder.
Yesterday, finance minister Pranab Mukherjee stated in Kolkata that an Empowered Group of Ministers (EGoM) under him would meet soon to decide on raising diesel, domestic LPG and possibly kerosene prices.
Last week's Rs5 per litre hike in petrol price was the steepest hike ever, but was short of the Rs10.50 per litre desired increase in rates to make the retail fuel price at par with the imported cost.
The government had in June last year freed petrol prices and had announced its intention to do the same for diesel pricing in due course of time. Though IOC, BPCL and HPCL had been given the freedom to decide on the retail selling price of petrol, they informally consulted the oil ministry on every revision.
The trio have not revised rates since January as five crucial states, including West Bengal, Tamil Nadu and Kerala, went to the polls.
A day after the state assembly results, the firms hiked the petrol price by Rs5 per litre, which was less than half of the Rs10.50 a litre increase needed to cover for the cost of imported crude oil, which had touched a two-and-half year high of $110 per barrel.
The official said crude oil was ruling at $73-$74 per barrel when diesel, LPG and kerosene rates were last revised in June 2010.