Oil ministry refuses approval to RIL’s $1.52 billion investment

The oil ministry and the DGH blocked the investment saying RIL and its partners, BP Plc of the UK and Niko Resources of Canada, need to rework financials as the original proposal was submitted in 2009

New Delhi: The oil ministry and its technical arm Directorate General of Hydrocarbons (DGH) on Friday refused approval to Reliance Industries’ (RIL) $1.529 billion investment plan to develop satellite fields to offset fall in gas output at its flagging KG-D6 block, reports PTI.

At the KG-D6 block’s oversight committee meeting here, the ministry and the DGH blocked the investment saying RIL and its partners, BP Plc of the UK and Niko Resources of Canada, need to rework financials as the original proposal was submitted in 2009, sources privy to the deliberations said.

The investment plan has been pending for approval with the DGH and the oil ministry for almost two years and when it came up for approval at the Management Committee (MC) meeting yesterday, the ministry and the DGH said investment plan needs to be reworked keeping changed prices of energy and services.

RIL request for approval of $30 million spending to do engineering studies so that a new field development plan can be submitted was also rejected by the MC, they said.

BP, which had earlier this year bought 30% stake in KG-D6 and 22 other blocks of RIL for $7.2 billion in India’s largest ever foreign direct investment, has been banking on ‘Next Wave’ strategy of developing satellite fields to reverse the fall in output at KG-D6 field which has dipped to 41 million metric standard cubic meters per day (mmscmd) from 61.5 mmscmd achieved in March last year.

DGH director general SK Srivastava, who had on Thursday confirmed his availability for the MC meeting, did not attend the meeting and instead sent his junior. DN Narasimha Raju, joint secretary (exploration), ministry of petroleum and natural gas, too skipped the meeting and sent his juniors for the meet.

Without engineering studies, an accurate financial estimate is not possible, sources said.

RIL had in 2009 submitted a field development plan (FPD) for four satellite fields surrounding the currently producing Dhirubhai-1 and 3 (D1 and D3) fields in KG-D6 block. It proposed to invest $1.529 billion for producing up to 10 mmscmd of gas from the Dhirubhai-2, 6, 19 and 22 (D-2, D-6, D-19 and D-22) fields in the KG-D6 block by 2016.

The company has so far made 18 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 the largest among the lot were brought into production from April 2009.

It had in July 2008, submitted a FDP for nine satellite gas discoveries (D-2, D-4, D-6, D-7, D-8, D-16, D-19, D-22 and D-23) with an estimated capex of $5.6 billion and reserves of 1,708 billion cubic feet (bcf).

RIL later submitted an optimised development plan for the four satellite gas fields in end-2009. It estimated 1,733 bcf of in-place gas reserves in the four finds, of which 626 bcf can be produced. However, the DGH trimmed down the estimates to 1,342 bcf and 617 bcf, respectively.

Fall in pressure, water ingress and thinner-than-expected reservoirs resulted in a drop in production at D1&D3 to 34.11 mmscmd from 54 mmscmd achieved in March last year. Together with around 7 mmscmd, the output from KG-D6 currently is 41.06 mmscmd.

BP’s India CFO Kris Sliger has earlier written to the oil ministry saying that Europe’s second-largest oil firm is preparing to explore newer areas of D6 as part of a ‘Next Wave’ strategy.

Production from KG-D6 had touched 61.5 mmscmd in March last year and was projected to rise to 69.2 mmscmd by this time, but has instead slumped.

BP had asked the oil ministry for approval to begin pre- development activities at both the R-Series and satellite fields that surround the currently producing Dhirubhai-1 and 3 fields.

RIL’s proposal for investment of $2.34 billion in developing R-Series fields in KG-D6 block is also pending approval.

Tests by RIL have shown that gas-bearing layers of sand in the Dhirubhai-1 and 3 fields of KG-D6 block are thinner than initially estimated and extraction may require costlier drilling techniques. Satellite fields in the KG-D6 block and discoveries, also known as the ‘R-Series’, together are estimated to have the potential to produce 35 mmscmd.

BP wanted the government to quickly approve plans for additional satellite and R series reservoirs so as to begin the process of engineering and hike production of gas from KG-D6 by 2014.

User

SEBI notifies guidelines for KYC Registration Agencies

SEBI on Friday issued guidelines for Know Your Customer Registration Agencies and said wholly-owned subsidiaries of stock exchanges and depositories would be eligible able to act in such a role

Mumbai: To prevent duplication in customer identification process, market regulator Securities Exchange Board of India (SEBI) on Friday issued guidelines for Know Your Customer (KYC) Registration Agencies and said wholly-owned subsidiaries of stock exchanges and depositories would be eligible able to act in such a role, reports PTI.

The Securities and Exchange Board of India (KYC Registration Agency) Regulations, 2011, came into effect from 2nd December.

In August, SEBI had simplified the account opening process for investors. It had issued guidelines for uniform KYC requirements for investors while opening accounts with any intermediary in the securities market.

“To avoid duplication of KYC process with every intermediary, a mechanism for centralisation of KYC records in the securities market has been developed. An intermediary shall perform the initial KYC of its clients and upload the details on the system of the KRA (KYC Registration Agency),” it said in a circular.

When the client approaches another intermediary, the intermediary can verify and download the client’s details from the system of the KRA.

As a result, once the client has done KYC with a SEBI registered intermediary, he need not undergo the same process again with another intermediary.

“The board shall not consider an application, unless the applicant is a fit and proper person to the satisfaction of the board and (is)...a wholly owned subsidiary of a recognised stock exchange, having nation-wide network of trading terminals...” SEBI said in a circular.

Besides, wholly-owned subsidiaries of depositories, other market intermediaries and Self Regulatory Organisations would also be able to secure certificate for initial registration as KRA.

“The KRA shall obtain the KYC documents of the client from the intermediary as prescribed by the board and in terms of the rules, regulations, guidelines and circulars issued by the board or any other authority for prevention of money laundering, from time to time,” the regulator said.

The KRAs can, in co-ordination with each other, prepare operating instructions for implementing requirements under the guidelines and share data on KYC documents.

“KRA shall be responsible for storing, safeguarding and retrieving the KYC documents and submit to the board or any other statutory authority as and when required.

“KRA shall retain the original KYC documents of the client, in both physical and electronic form... as well as ensuring that retrieval of KYC information is facilitated within stipulated time period,” SEBI said.

Such agencies will also have to a compliance officer who shall be responsible for monitoring the compliance of rules and regulations issued by SEBI and the central government for redressal of client’s grievances.

Market intermediaries have been directed to upload KYC information of clients on the KRA system and send the original data to them.

An applicant for KRA status must also have a net worth of Rs25 crore and have expertise for technology and systems and safeguards for maintaining data privacy and preventing unauthorised sharing of data.

“The board, on being satisfied that the applicant is eligible, shall send intimation to that effect to the applicant, for the grant of certificate of initial registration...” SEBI said, adding that an initial registration would be valid for a period of five years.

KRAs would be eligible for applying for permanent registration three months before the expiry of the period of certificate of initial registration.

SEBI has also made provisions for inspections of KRA regarding books of accounts, records, infrastructure, documents and procedures.

User

RBI notifies separate NBFC category for MFIs

The RBI said NBFC-MFIs should have a minimum net worth of Rs5 crore, while for those operating in the north-eastern states the slab has been kept at Rs2 crore. It has given time till 1 April 2012, to the existing MFIs, whose asset size is less than Rs100 crore to comply with the capital adequacy requirement of 15%

Mumbai: The Reserve Bank of India (RBI) on Friday approved creation of a separate category of non-banking financial companies (NBFC) for the microfinance institution (MFI) sector and specified that such institutions need to have a minimum net owned fund of Rs5 crore, reports PTI.

An RBI-appointed panel headed by YH Malegam had earlier this year recommended setting up of a special category of NBFCs operating in the micro finance sector.

The panel had suggested a minimum net worth of Rs15 crore for an entity to qualify as an NBFC-MFI.

“It has been decided to create a separate category of NBFCs—NBFC-MFI,” RBI said in a notification.

The RBI in its second quarter policy review in October had approved setting up of this category of specialised financial companies which would cater to low-income groups.

The RBI said NBFC-MFIs should have a minimum net worth of Rs5 crore, while for those operating in the north-eastern states the slab has been kept at Rs2 crore.

“All new NBFC-MFIs shall maintain a capital adequacy ratio consisting of Tier I and Tier II capital which shall not be less than 15% of its aggregate qualifying assets,” RBI said.

The RBI has given time till 1 April 2012, to the existing MFIs, whose asset size is less than Rs100 crore to comply with the capital adequacy requirement of 15%.

Regarding loan disbursal and repayment by such institutions, RBI said that ‘qualifying asset’ shall mean loan disbursed to a borrower with a rural household annual income not exceeding Rs60,000 or urban and semi-urban household income not exceeding Rs1,20,000.

Also the tenure of the loan not to be less than 24 months for loan amount in excess of Rs15,000 with prepayment without penalty and the loan has to be extended without collateral.

The RBI has directed the NBFC-MFIs not to resort to any coercive methods and it would be repayable on weekly, fortnightly or monthly instalments.

Currently, out of the 300 MFIs in the country, about 70 are regulated by the central bank as NBFCs, accounting for the majority of the loans disbursed by the sector.

As per the norms, NBFC-MFIs can lend to individual borrowers who is not a member of more than one self help group. Also not more than two NBFC-MFIs should lend to the same borrower.

“All sanctioning and disbursement of loans should be done only at a central location and more than one individual should be involved in this function. In addition, there should be close supervision of the disbursement function,” RBI said.

Battling allegations of high interest rates and coercive tactics used to recover loans, the MFI sector has been facing hard times since October 2010.

Following a spate of farmer suicide, the Andhra Pradesh state government had in November 2010 promulgated an ordinance, putting curbs on MFIs.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)