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DAILY REVISION OF PETROL PRICES

NEW DELHI: State-run fuel retailers will revise petrol and diesel prices daily in five cities – Chandigarh, Udaipur, Vizag, Puducherry and Jamshedpur – from May 1 as a pilot run before a countrywide rollout to counter undercutting by private retailers.

Till the system is in place throughout the country, public sector retailers will continue with the practice of tweaking prices on the 15th and last day of each month in all other places.

Daily revision will take the sting out of price hikes as they would be in small doses – sometimes could even go unnoticed.

But more than that, the move has the potential to set off a price war and bring real competition in a market 95% of which is controlled by public sector retailers. Revising prices daily will give them a chance to match private companies who have been undercutting them in a free market in times of low oil prices.

Politically, a daily revision will help the government sidestep the political fallout of consumer ire. Though, technically, oil companies are free to revise rates, it is common knowledge that they are “guided” by political considerations.

While reductions have never been an issue, upward revisions, especially steep ones, always have the prospect of giving the opposition a stick to beat the ruling dispensation with. The idea of daily revision has been on the oil ministry’s table since 2012, first reported by TOI on June 27 that year. But state-run retailers, in a complacent market of high oil prices, subsidy and lack of competition, were loath to implement the idea, citing lack of connectivity and infrastructure in the hinterland.

SOLAR POWER TARIFF DROPS

NEW DELHI: Solar power tariffs appear to be on a free fall in India, finding a new floor at a tariff of Rs 3.15 per unit quoted by Solairedirect in the auction for state-run generation utility NTPC’s 250MW at Kadapa in Andhra Pradesh.

This beats the previous low of Rs 3.30 per unit tariff, on a basic bid of Rs 2.97 a unit for the first year, quoted in February for the first unit of the 750MW Rewa solar park in Madhya Pradesh.

Solar power tariffs have been falling in the last three years due to the Narendra Modi government’s thrust on raising India’s green energy footprint and reduce oil imports by 10% by 2030. After coming to power in 2014, the Modi government metamorphosed the UPA’s National Solar Mission by setting a target of building 175GW of green energy capacity by 2030.

“Clean affordable power for all,” power minister Piyush Goyal tweeted as the new floor is nearly equal to the average tariff for coal-fired power supplied by NTPC and cheaper than electricity supplied by some private power producers.

But some industry players cautioned that the “hidden costs” of integrating such large-scale plants into grid should be considered when calculating the landed cost. According to them, grid connected solar PV plants use transmission lines only 20% of the time compared to 70% by traditional plants, which makes it 3.5 times costlier to wheel solar power.

BAD LOANS 10 PERCENT TOTAL BANKING INDUSTRY ASSETS

Mumbai: Gross non-performing assets (NPAs) of the banking sector are estimated to be in the range of 9.7-10% of total assets as of end March 2017, according to rating agency ICRA. While the rate of NPA creation had slowed the fourth quarter, gross NPAs increased resulting in the stock of bad loans rising to Rs 7.5 to Rs 7.7 lakh crore.

As a result of growth in NPAs and due to increased capital requirements under new international norms, banks will need Rs 1.2 lakh crore to Rs 1.3 lakh crore equity capital by FY2019. As against this, the government has announced capital infusion of Rs 20,000 crore. In a research note published today ICRA said that the fresh additions to gross NPAs (GNPAs) during Q3 FY2017 stood lower at Rs 26,400 crore as compared to Rs 1.36 lakh crore during the first nine months of FY2017, partly aided by higher write-offs during the last quarter.

According to Karthik Srinivasan, senior vp in charge of financial sector ratings at ICRA: around 55% of fresh NPAs generated during January-March `17 quarter and around and around 77% of NPAs created in between April `16 to December `16 were loans other than those already restructured. Restructured loans are also advances where borrowers are facing stress but not classified as NPAs as they have been given more time to repay.

ICRA is also skeptical over the strategic debt restructuring scheme (which gives banks powers to change management) preventing loans from going bad. “The large share of advances undergoing resolution through various schemes on resolution of stressed assets, especially the strategic debt restructuring (SDR) scheme, is also a matter of concern,” the rating agency said.

In ICRA’s sample set of 61 large borrowers having a total debt of Rs 2.45 lakh crore, are currently undergoing a resolution through the SDR scheme. As on December 31, 2016, 72% of the debt continues to be classified as “standard” advance on account of the applicability of the standstill clause on asset classification under the SDR scheme.

INDIA TO IMPORT RAW SUGAR

COIMBATORE: The recent decision to allow duty free raw sugar imports of 0.5 million tonne is unlikely to have any significant negative impact on the prices or profitability of sugar mills in the near-term, ratings agency ICRA has said.

“However, should further import of duty free sugar be permitted, pressures on the stock position and the sugar prices cannot be ruled out in the forthcoming sugar year (2017-18),” it said.

“While raw sugar imports are unlikely to negatively impact domestic sugar prices, this move may dampen prospects of a further price rise, first by increasing the sugar supply in the near term,” said Sabyasachi Majumdar, senior vice-president and group head, ICRA Ratings. This apart, pressures on stocks and prices from any further allowance of duty free import cannot be ruled out,” he said.

“Including the 0.5 million tonnes of imported sugar, the closing stock for the current season is estimated to be around 4.5-5 million tonne, which would be sufficient to meet the requirement of around two months of domestic consumption,” ICRA estimated.

 

CORPORATE FUNDING IN SOLAR ENERGY

MUMBAI: Total corporate funding into the solar sector in the first quarter (Q1) of 2017 doubled with $3.2 billion compared to $1.6 billion in fourth quarter (Q4) 2016, according to Mercom Capital Group, llc, a global clean energy communications and consulting firm. This includes venture capital funding, public market and debt financing.

The report said year-over-year (YoY) funding in Q1 2017 was about 15% higher compared to the $2.8 billion raised in Q1 2016. “Q1 funding levels were up in the solar sector from the 2016 lows, largely due to increased debt financing activity. Corporate funding never reached $3 billion in any of the quarters in 2016. M&A activity was also strong with several large deals. Solar public companies also had a good first quarter,” commented Raj Prabhu, CEO of Mercom Capital Group.

Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector saw a 78% rise in Q1 2017 with $585 million in 22 deals compared to $329 million raised in the same number of deals in Q4 2016. The amount raised was also higher YoY compared to the $406 million raised in 23 deals in Q1 2016.

CONSUMER INFLATION GOES UP

MUMBAI, April 12 (Reuters) – India’s annual consumer price inflation accelerated to 3.81 percent in March from 3.65 percent in February, government data showed on Wednesday.

However, that was below the 3.98 percent predicted by economists.

MOBILE APP TO CHECK LOAD SHEDDING

NEW DELHI: Politicians will no longer be able to make tall claims on electricity supply in their state. People will be able to call their bluff easily with ‘Urja Mitra’, the latest app from the power ministry’s stable to track blackouts in real-time.

“Power today comes from sharing information and not by withholding it. Urja Mitraempowers citizens through real-time information-sharing on power supply,” Power minister Goyal said after launching the app and the portal as well as a scheme to monitor rural feeders.

The app will give consumers real-time status of outages in any part of the country and allow them to lodge complaint on blackout in their area. Complaints can also be lodged on the all-India helpline number 1912. Consumers can also get alerts on expected duration and cause of scheduled power outages as well as on reason and duration of unscheduled blackouts.

But, as Goyal said, effort must be on to ensure that there is no blackout so there is no need for sending messages or alerts.

RATE CUT BY BANKS TO USE LIQUIDITY AVAILABLE

NEW DELHI: Banks have been cutting rates in the recent times as they want to use liquidity available with them, Finance Minister Arun Jaitley on Tuesday said in the Rajya Sabha as some parties, including ruling NDA, said demonetisation did not have positive impact on credit growth.

Shiv Sena member Sanjay Raut said it was claimed that demonetization would have positive effects on credit growth but that did not seem to be happening while there were also concerns related to banks cutting down staff.

Minister of State for Finance Santosh Gangwar said, “while such concerns had been expressed, if we look at figures, there has been a positive impact on credit growth.”

Another member raised a question about sluggish credit growth, to which Jaitley said steps which are taken to give boost to the economy also mean that credit growth should increase.

Alternative source of credit such as bonds have seen a significant revival, he said. Jaitley said that, notwithstanding the monetary policy decisions of the Reserve Bank of India, immediately after the demonetisation in the first go itself, in the month of January, the banks had cut their rates down by almost about 80 to 85 basis points.

“Recently, again, at the beginning of this month, I saw there was a marginal cut by some banks,” Jaitley said, adding “therefore, banks have themselves also been indulging in the exercise of cutting down the rates, essentially, because excess liquidity is available with banks and they want to use this amount.”

PRIVATE COMPANIES TO RUN FREIGHT TRAINS

NEW DELHI: Indian Railwayswill soon allow private companies to run freight trains from their own private terminals, a move which could potentially break the monopoly of the national transporter on the country’s rail roads.

Companies from sectors such as cement, steel, auto, logistics, grains, chemicals and fertilisers have evinced interest in having their own fleet under the special freight train operations scheme of the railways, a senior rail official said.

“Through these private terminals, we’ll be able to add almost 20-25 million tonnes of additional loading capacity. The demand for all commodities other than coal have seen an uptick. So, we expect companies from various sectors to come forward and invest in their own terminals at their plants or any other convenient location,” the official said, adding, “They will also be able to run their own trains.”

If successful, it could pave the way for running private passenger trains eventually. Many of the private companies, including Tata Steel, Adani Agro, Kribhco and several others, have their own private terminals. For the current year, railways has decided to allow 55 private freight terminals in the country at an investment of Rs 5,000 crore.

In FY17, Indian Railways outperformed its revised targets and did a loading of 1,107 million tonne, a record high. For the current financial year, railway minister Suresh Prabhu has set a loading target of 1,200 million tonne.

NEW BANKS OFFER LITTLE MORE TO ATTRACT DEPOSITORS

Mumbai: The Indian consumer is the current king of banking – an industry least likely to favour individuals when borrowing isn’t cheap and savings rates trail headline inflation. But competition has made new banks generous with deposit rates, although the longevity of these offerings is in doubt.

New payment banks (PBs) and small-finance banks (SFBs) are offering savings interest rates as high as 7.25%, more than 300 basis points higher than what universal banks usually offer – 4%. While such freebies may help acquire customers, will the trend last?

Industry experts liken the initial offers to appetizers, saying rates will fall as the market evolves. “Savings accounts are meant for transactions, and our belief is that people are not rate sensitive regarding such accounts: Attractive offers can give a temporary bump, but will not be economically viable for the entity in the long run,” said Samit Ghosh, chief executive officer, Ujjivan Small Finance Bank.

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