While most retailers favour fortnightly revisions in retail rates to reflect changes in cost of crude oil, the nation's largest oil firm IOC is at variance, wanting rates not to be revised too often
State-owned oil firms may opt to revise petrol prices every fortnight to reflect changes in the global oil market in the free pricing regime that kicks in from next week, reports PTI.
Petrol prices were freed from government control last month resulting in a Rs3.50 per litre hike in rates in Delhi, but modalities of subsequent retail price adjustments were left to the industry to deliberate and decide.
Sources said Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) on Thursday began consultations on modalities like the frequency or interval at which prices will be revised and if the PSUs should have uniform rate that would change on same date.
Private firms Reliance Industries (RIL), Essar Oil and Royal Dutch/Shell too are being consulted in the exercise.
Sources said most retailers favour fortnightly revisions in retail rates to reflect changes in cost of raw material (crude oil), but the nation's largest oil firm IOC was at variance, wanting rates not to be revised too often.
Those in favour of a 15-day cycle for price adjustment argue that oil firms already have a mechanism of calculating the desired fuel prices on 1st and 16th of every month. Also, rates of aviation turbine fuel (ATF), which was freed from government control in 2002, change with cost every fortnight.
But IOC does not want frequent price changes, saying a fixed date for revision may lead to hoarding at pump end.
The BJP-led National Democratic Alliance (NDA) government had in 2002 decontrolled petrol and diesel prices and rates from 1 April, 2002, which were revised every fortnight for almost 21 months. The practice was stopped a few months before the May general elections in 2004, and controls were back when the when United Progressive Alliance (UPA) came to power.
Sources said modalities are likely to be finalised by next week and pump rates would be revised accordingly.
An Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee had on 25th June decided to free petrol and diesel prices from government control. While petrol was being decontrolled with immediate effect, the implementation of the same in diesel was put on hold for the time being.
Freeing of petrol price resulted in a Rs3.50 per litre hike in petrol price while diesel rates were raised by an ad-hoc Rs2 per litre instead of Rs3.80 per litre increase required to align them with international market.
Also, domestic liquefied petroleum gas (LPG) prices were increased by Rs35 per 14.2 kg cylinder and kerosene rates hiked by Rs3 per litre to cut government's fuel subsidy.
The cost for the long-awaited Mumbai Trans Harbour Link (MTHL) project has almost doubled due to the inclusion of a metro lane. Introduction of a soft loan has been suggested to make the project developer-friendly
The project cost for the Mumbai Trans Harbour Link (MTHL) has almost doubled from what was quoted at its initial bidding stage in 2008. It has doubled from Rs4,000 crore to Rs8,300 crore due to the addition of a metro lane. While the cost of the project has gone up, a soft loan is being suggested in the restructured bid.
In 2008, when bids for the project were opened for the first time, the project cost for the sea-link bridge was around Rs4,000 crore. However, two years later, the projected cost is being estimated at Rs8,300 crore. The cost escalation is being attributed to delays and the new provision for metro lanes.
The new restructured bid for MTHL has inclusions of a soft loan along with a two-phased development plan with additional metro lanes. These modifications have been made to make the bid more developer-friendly.
Consultancy firm KPMG, along with Mumbai Transformation Support Unit (MTSU) was assigned the work for restructuring the MTHL bid. The suggestions on the restructured bid had been submitted to the Mumbai Metropolitan and Regional Development Authority (MMRDA) a few months back.
The main features of this restructured bid include: six road lanes and provisions for two metro lanes, introduction of a soft loan and a two-phased development plan.
The soft loan could help make the project more financially viable and investment friendly. "We expect it on a build-operate-transfer (BOT) model. The other financial aspects will depend on the viability gap funding to be quoted by the private developer," said UPS Madan, project manager, MTSU. The bid restructuring has been undertaken after due consultation with the previous bidders and potential developers for the project.
According to sources, private developers are much more comfortable with the provisions of the restructured bid. It is believed that bankers were not happy with the earlier proposed bid.
"It will be completed in two phases - rather than all the eight lanes being completed in one go. The first phase will be completed in four years and the rest in two years. This has been proposed with the intention of starting the usage of the bridge and a revenue stream at the end of a four-year period, than waiting for six years at a stretch," said Mr Madan.
"Financial restructuring has been done keeping in mind the development of (the) Navi Mumbai area. Decongestion of the city through redevelopment of Navi Mumbai is being aimed at," said Ajay Saxena, PPP expert, officer on special duty-Maharashtra, who has been actively involved in restructuring the project.
While the consulting agency has submitted the restructured project proposal, final approval for the project is still awaited. "We have submitted the restructured bid to MMRDA, but the government's decision on the implementing agency is yet to be finalised," said Mr Madan.
MTHL has been plagued by various controversies over the past few decades. The most recent controversies surrounding the project included the Reliance spat followed by a bureaucratic tussle between government entities MMRDA and the Maharashtra State Road Development Corporation (MSRDC).
MMRDA had proposed a city development project which included developing four road lanes and two metro lanes. However, MSRDC's proposal involved building six road lanes, making it a road-development project. MMRDA was finally given the go-ahead to develop the project by State chief minister Ashok Chavan in March 2010.
Total redemptions of all schemes stood at Rs1.19 lakh crore in June while equity funds witnessed Rs1,446 crore of net redemptions, despite the launch of six NFOs
The inflow of Rs1,256 crore for equity funds in May 2010 was a fleeting affair. Equity funds have continued to witness outflows in June 2010 and this time the outflow is one of the highest, which would lead to intense debate on the current regulations that govern fund-selling and put pressure on the market to introspect.
According to data released by the Association of Mutual Funds in India (AMFI), equity mutual funds have recorded Rs1,446 crore of redemptions in June 2010.
Meanwhile, the BSE Sensex was up 7% in June. The total outflow of all schemes stood at Rs1.19 lakh crore. Income funds have also suffered Rs1.34 lakh crore in outflows.
In June, six equity funds were launched. These were Baroda Pioneer Infrastructure Fund, Birla SunLife India Reforms Fund, DSP BlackRock Focus 25 Fund, ICICI Prudential Nifty Junior Index Fund, IDBI Nifty Index Fund and Taurus Nifty Index Fund. Put together, they raised Rs1,068 crore. Gross sales of existing schemes were Rs3,873 crore. However, redemptions from existing schemes were as high as Rs6,387 crore, leaving a net outflow of Rs1,446 crore.
Industry experts are citing low sales and continuous profit-booking as the reason for redemption in equity funds. Sales of equity schemes stood at Rs1,068 crore in June 2010.