Sitting on the toilet seat, Edward Norton in the 1999 film Fight Club is browsing through the Ikea catalogue. In a narrator's voice he observes, "Like so many others, I had become a slave to the Ikea nesting instinct. If I saw something clever like a little coffee table in the shape of a yin-yang, I had to have it."
It's this feeling, the 'Ikea nesting instinct', that Indians haven't experienced till now. Simply because we don't have an Ikea here. And going by president and CEO of Ikea, the Scandinavian home products giant, Mikael Ohlsson's quiet visit last week, it will be some time before we know that feeling.
The moment the floodgates opened for 100% FDI in single-brand retail, all eyes were on Ikea, which has been playing the waiting game to launch its India operations for some years now.
On November 27, PTI reported that Ohlsson will be visiting India to "announce strategic initiative for Indian market". The furore over retail reforms has mainly been addressing the 51% FDI in multi-brand retail. The move to increase FDI to 100% in single-brand retail largely went unnoticed. Yet, Ohlsson, probably persuaded by the current political climate, came and went last week, without any "strategic" announcement.
An Ikea spokesperson said, "Ikea has decided to take some more time to plan its India strategy." Yet, Ikea is not exactly alien to India. How can it be? It's a brand that has 326 stores in 38 countries. And a catalogue print run that rivals Harry Potter books (197 million catalogues in 29 languages and 61 editions in 2010).
In 2009-10, it showed a profit of $23.1 billion, a 7.7% jump from the year before. Many Indians have managed to have Ikea furniture, ordering their local carpenter to copy iconic Lack tables, Billy bookcases or Malm dressers from the Ikea catalogue.
What's the Big Ikea?
In the West, Ikea has become the first furniture of any individual. The October 3, 2011, issue of The New Yorker had Lauren Collins dissect the brand, its philosophy and culture. Collins describes it as "Legos for grown ups, connecting the furniture of our adulthoods with the toys of our childhood." It's currently the world's biggest furniture and furnishing manufacturer and the third largest consumer of wood ahead of Walmart but behind Home Depot and Lowe's.
Did you know that one in 10 Europeans is conceived on an Ikea bed?
Furniture industry insiders in India too are waiting for Ikea. The industry joke is that local carpenters will get new ideas to copy after Ikea comes in. More seriously, and as Manish Parekh. executive director of @home by Nilkamal, a furniture & furnishing retailer . says, Ikea's entry will help the segment grow more organised.
"Our study shows, wherever Ikea has opened a store, it has helped to grow the market and all players flourish." Launched in 2005, @home is now 19 stores across 13 cities, the brand achieved its break-even last year. "There is definitely a shift towards organised furniture retailing. Growth rate of organised retail is much higher than the overall furniture industry," he says, "But in India, we need Ikea to educate customers about readymade furniture."
Success in my Habit
Sunday, December 4, 2011
NTIPL closes its Chennai unit, shifts to new facility in Goa
PANAJI: NETZSCH Technologies India Pvt Ltd (NTIPL), a subsidiary of a German firm, has shifted its pump manufacturing facility from Chennai to Goa's Verna Industrial estate, a senior official said today.
Vivek Norman, Managing Director, NTIPL, told reporters here that the company has closed the Chennai plant, which had capacity to manufacture 300 pumps per annum and has shifted in a new facility at Goa, with a capacity to produce 1500 units per year.
NTIPL is into progressing cavity pumps, industrial rotary lobe pumps, macerators and griders. It is the subsidiary of the German based NETZSCH Group of Companies, which has a global turnover of 400 million Euros.
Norman said that the India turnover is 2.5 million Euros and it will grow by more than 30 per cent for this Financial Year (FY) due to the Goa facility.
"The key factor for success is that we should be close to the local market," he said adding that 800 units per year is the Indian sale of the company, which could be achieved with the new plant.
Norman said the company in India enjoys a market share of 25 per cent with a compounded annual growth rate of 32 per cent. The company has its sales and service offices across eight towns in India.
Vivek Norman, Managing Director, NTIPL, told reporters here that the company has closed the Chennai plant, which had capacity to manufacture 300 pumps per annum and has shifted in a new facility at Goa, with a capacity to produce 1500 units per year.
NTIPL is into progressing cavity pumps, industrial rotary lobe pumps, macerators and griders. It is the subsidiary of the German based NETZSCH Group of Companies, which has a global turnover of 400 million Euros.
Norman said that the India turnover is 2.5 million Euros and it will grow by more than 30 per cent for this Financial Year (FY) due to the Goa facility.
"The key factor for success is that we should be close to the local market," he said adding that 800 units per year is the Indian sale of the company, which could be achieved with the new plant.
Norman said the company in India enjoys a market share of 25 per cent with a compounded annual growth rate of 32 per cent. The company has its sales and service offices across eight towns in India.
KEC International wins new orders worth Rs 147 crore in water, railway businesses
MUMBAI: KEC International (KEC), the flagship company of the RPG Group, today said it has won new orders worth Rs 147 crore in its emerging businesses - water and railways.
In the water business, the company has secured three new orders for construction of canals for irrigation projects in Gujarat and Madhya Pradesh worth Rs 98 crore, the global infrastructure engineering, procurement and construction ( EPC) major said in a release issued here.
With this addition, the order book of this business has increased to Rs 178 crore.
In the railway business, the company secured an order for supply of railway track materials, tools and railway signalling equipment worth Rs 49 crore from the Kenya Railway Corporation. With this, the order book of this business has touched Rs 400 crore.
"We are delighted to secure these orders in our emerging businesses - water and railways. We see large opportunities in both these businesses. We started our Water business early this year and today we have total order book of Rs 178 crore," KEC International Managing Director and CEO Ramesh Chandak said in a release issued here.
In addition to this, the company is leveraging its strong international presence in T&D business for its emerging businesses, he said.
"This is the second international order in the railway business. Last year, we secured a railway order from Malaysia," he said.
In the water business, the company has secured three new orders for construction of canals for irrigation projects in Gujarat and Madhya Pradesh worth Rs 98 crore, the global infrastructure engineering, procurement and construction ( EPC) major said in a release issued here.
With this addition, the order book of this business has increased to Rs 178 crore.
In the railway business, the company secured an order for supply of railway track materials, tools and railway signalling equipment worth Rs 49 crore from the Kenya Railway Corporation. With this, the order book of this business has touched Rs 400 crore.
"We are delighted to secure these orders in our emerging businesses - water and railways. We see large opportunities in both these businesses. We started our Water business early this year and today we have total order book of Rs 178 crore," KEC International Managing Director and CEO Ramesh Chandak said in a release issued here.
In addition to this, the company is leveraging its strong international presence in T&D business for its emerging businesses, he said.
"This is the second international order in the railway business. Last year, we secured a railway order from Malaysia," he said.
BHEL bags ArcelorMittal equipment contract for Ukraine plant
NEW DELHI: State-run BHEL today said it has bagged a Rs 40 crore contract to supply equipment for a captive power plant being set up at global steel giant ArcelorMittal's plant in Ukraine.
BHEL has bagged the contract for supplying the steam turbine generator (STG) package for the captive power project at ArcelorMittal Group's steel plant at Kryviy Rih, in Ukraine, an official statement said.
BHEL's scope of work under this contract involves design, engineering, manufacture, supply and supervision of the erection and commissioning of the 27-MW steam turbine & generator package, including controls and instrumentation (C&I).
The project is to be executed by BHEL within a contractual completion deadline of 18 months. The steam turbine generators and C&I systems are to be manufactured at BHEL's Hyderabad plant and its electronics division in Bangalore, respectively.
Up to June, 2011, BHEL had installed generation equipment with a cumulative capacity of over 8,500 MW in 21 countries outside India, while another 5,200 MW of power generation capacity was under various stages of execution in 19 countries.
BHEL has also set up a marketing office at Almaty, in Kazakhstan. The company has executed many contracts for various products and services in Russia, Azerbaijan, Kazakhstan and Tajikistan.
Presently, the company is executing a gas turbine-based combined heat and power plant project in Belarus.
BHEL has bagged the contract for supplying the steam turbine generator (STG) package for the captive power project at ArcelorMittal Group's steel plant at Kryviy Rih, in Ukraine, an official statement said.
BHEL's scope of work under this contract involves design, engineering, manufacture, supply and supervision of the erection and commissioning of the 27-MW steam turbine & generator package, including controls and instrumentation (C&I).
The project is to be executed by BHEL within a contractual completion deadline of 18 months. The steam turbine generators and C&I systems are to be manufactured at BHEL's Hyderabad plant and its electronics division in Bangalore, respectively.
Up to June, 2011, BHEL had installed generation equipment with a cumulative capacity of over 8,500 MW in 21 countries outside India, while another 5,200 MW of power generation capacity was under various stages of execution in 19 countries.
BHEL has also set up a marketing office at Almaty, in Kazakhstan. The company has executed many contracts for various products and services in Russia, Azerbaijan, Kazakhstan and Tajikistan.
Presently, the company is executing a gas turbine-based combined heat and power plant project in Belarus.
Anil Ambani-promoted Reliance Infrastructure can collect toll at 10 projects by March
NEW DELHI: Anil Ambani-promoted Reliance Infrastructure can start toll collection at its 10 road projects, which are being implemented at an estimated investment of Rs 10,000 crore, by the end of this fiscal.
"Six projects of Reliance Infrastructure would become revenue operational by March, 2012, four have already started generating revenues," a source said.
The company is executing these projects of the National Highways Authority of India under the public-private- partnership model and would earn revenue from toll collected from traffic.
In these six-laning projects, tolling can be commenced parallel to the commencement of construction from the day financial closure is achieved.
These projects include six-laning of NH 4 between Pune and Satara of length 140 km in Maharashtra, six-laning of NH 7 between Hosur and Krishnagiri of length 60 km in Tamil Nadu, six-laning of NH 2 between Delhi and Agra of length 180 km in Haryana and Uttar Pradesh.
Once these projects are completed, they are likely to generate a revenue of Rs 1,200-1,400 crore per annum.
Reliance Infrastructure plans to bag more highway projects in the future.
"Themega road projects...whenever they are bid out RInfra would been keen to develop them....only one mega road project has been bid out so far," sources said.
The 10 projects would be fully-commissioned by 2014. Reliance Infrastructure has 25 infrastructure projects totalling Rs 40,000 crore in hand, including these 10 projects.
The company had posted a net profit of Rs 362 crore in the quarter ended September 30, 2011.
"Six projects of Reliance Infrastructure would become revenue operational by March, 2012, four have already started generating revenues," a source said.
The company is executing these projects of the National Highways Authority of India under the public-private- partnership model and would earn revenue from toll collected from traffic.
In these six-laning projects, tolling can be commenced parallel to the commencement of construction from the day financial closure is achieved.
These projects include six-laning of NH 4 between Pune and Satara of length 140 km in Maharashtra, six-laning of NH 7 between Hosur and Krishnagiri of length 60 km in Tamil Nadu, six-laning of NH 2 between Delhi and Agra of length 180 km in Haryana and Uttar Pradesh.
Once these projects are completed, they are likely to generate a revenue of Rs 1,200-1,400 crore per annum.
Reliance Infrastructure plans to bag more highway projects in the future.
"Themega road projects...whenever they are bid out RInfra would been keen to develop them....only one mega road project has been bid out so far," sources said.
The 10 projects would be fully-commissioned by 2014. Reliance Infrastructure has 25 infrastructure projects totalling Rs 40,000 crore in hand, including these 10 projects.
The company had posted a net profit of Rs 362 crore in the quarter ended September 30, 2011.
GMR infra may face lawsuit over male airport user fee
BANGALORE: GMR Infrastructure, which is building Maldives' largest airport, the Male International Airport, could face a funding shortage of $25 million annually, after reports emerged that a local political party - Dhivehi Qaumee Party (DQP) - may file a case against the Bangalore-based company for collecting airport development charges (ADC).
GMR Infrastructure plans to charge $25 per passenger from the annual departing passenger count of one million, and wants to introduce a $2 insurance charge at the check-in counters starting January to offset the costs incurred in building the airport.
"The local opposition party is alleging that the ADC should be removed. However, GMR has mentioned that as per the terms of the airport agreement, it will be allowed. The company is looking to fund $25 million per annum for its capex plan of $511 million," said a person close to the development.
The company had earlier tried to include ADC within the airline ticket price itself, but the International Air Transport Association (IATA) didn't allow it.
DQP vice-president Imad Solih has already submitted a separate civil case, questioning the legitimacy of the charge, and has requested the court to take action against the country's finance ministry, according to a report by Haaveru Online, a local website.
"ADC at Ibrahim Nasir International Airport, Male, is a charge approved by the Government of Maldives and we will implement the same in due course of time. As of now, we have no official intimation of the same and thus, would not like to comment on speculative news," a GMR spokesperson said.
In June last year, the GMR-led consortium won a bid to build, operate, modernise and expand the Male airport for a period of 25 years, from the Maldives government. The Bangalore-based company holds a 77% stake in the international airport through a joint venture between GMR and Malaysia Airports Holdings Berhad.
Once upgraded, Male airport is expected to handle traffic of over 3 million passengers by 2014, and thereby increasing traffic by a further 2 million in the recent future. Currently, the airport handles 2.6 million passengers annually.
GMR has raised debt of $358 million from Axis Bank, Singapore branch, the sole underwriter and mandated lead arranger for the entire debt facility. The debt has a door-todoor tenure of 12 years with ballooning repayments over seven years, commencing from June 2015.
GMR Infrastructure plans to charge $25 per passenger from the annual departing passenger count of one million, and wants to introduce a $2 insurance charge at the check-in counters starting January to offset the costs incurred in building the airport.
"The local opposition party is alleging that the ADC should be removed. However, GMR has mentioned that as per the terms of the airport agreement, it will be allowed. The company is looking to fund $25 million per annum for its capex plan of $511 million," said a person close to the development.
The company had earlier tried to include ADC within the airline ticket price itself, but the International Air Transport Association (IATA) didn't allow it.
DQP vice-president Imad Solih has already submitted a separate civil case, questioning the legitimacy of the charge, and has requested the court to take action against the country's finance ministry, according to a report by Haaveru Online, a local website.
"ADC at Ibrahim Nasir International Airport, Male, is a charge approved by the Government of Maldives and we will implement the same in due course of time. As of now, we have no official intimation of the same and thus, would not like to comment on speculative news," a GMR spokesperson said.
In June last year, the GMR-led consortium won a bid to build, operate, modernise and expand the Male airport for a period of 25 years, from the Maldives government. The Bangalore-based company holds a 77% stake in the international airport through a joint venture between GMR and Malaysia Airports Holdings Berhad.
Once upgraded, Male airport is expected to handle traffic of over 3 million passengers by 2014, and thereby increasing traffic by a further 2 million in the recent future. Currently, the airport handles 2.6 million passengers annually.
GMR has raised debt of $358 million from Axis Bank, Singapore branch, the sole underwriter and mandated lead arranger for the entire debt facility. The debt has a door-todoor tenure of 12 years with ballooning repayments over seven years, commencing from June 2015.
Ramky Infrastructure bags two road projects worth Rs.2,240.65 crore
MUMBAI: Ramky Infrastructure Thursday said it has bagged two road projects worth Rs.2,240.65 crore from the National Highways Authority of India (NHAI).
The first project is for six-laning of the Agra-Etawah bypass section of National Highway (NH)-2 under the National Highways Development Project (NHDP) Phase V in Uttar Pradesh, the company said in a regulatory filing.
The second project is for four-laning of the Hospet-Chitradurga section of NH-3 in Karnataka under NHDP Phase III, it added.
The estimated costs of the projects are Rs.1,207.00 crore and Rs.1,033.65 crore, respectively. The concession period for the first project is 30 years and for the second 25 years. Both the projects include a construction period of 910 days each.
At the Bombay Stock Exchange, the shares of the company closed 4.75 per cent up at Rs.215.
The first project is for six-laning of the Agra-Etawah bypass section of National Highway (NH)-2 under the National Highways Development Project (NHDP) Phase V in Uttar Pradesh, the company said in a regulatory filing.
The second project is for four-laning of the Hospet-Chitradurga section of NH-3 in Karnataka under NHDP Phase III, it added.
The estimated costs of the projects are Rs.1,207.00 crore and Rs.1,033.65 crore, respectively. The concession period for the first project is 30 years and for the second 25 years. Both the projects include a construction period of 910 days each.
At the Bombay Stock Exchange, the shares of the company closed 4.75 per cent up at Rs.215.
FDI breathes new life into shelved projects of DLF, Unitech, Oberoi Realty and others
NEW DELHI: Despite intensifying political opposition in several states to the centre's nod to foreign direct investment in multi-brand retail, real estate developers are gearing up to fast-track their investments in shopping malls.
India's largest real estate developer DLF is re-evaluating its plan to build 4.5 million sq ft Mall of India in Gurgaon, a project that it had shelved following the global economic meltdown in 2008.
Similarly, other real estate developers are also looking to cater to demand from foreign retailers that have been waiting to set up shop in India. According to global consultancy Ernst &Young, the Indian retail market is expected to grow from $400 billion in 2010 to $700 billion by 2015.
With the easing of FDI norms, analysts expect the share of organised retail to rise from the current 5%-6% to about 10% over the next five years, spelling opportunity for real estate developers. DLF is planning to invest close toRs 2,500 crore over five years to develop malls across the country.
It is also planning retail complexes in its residential and commercial properties in Kolkata, Bangalore, Kochi, Goa, Chennai and Hyderabad. Unitech has lined up an investment of Rs 4,000 crore over the next four years to develop 13 malls across the country. "The demand for quality retail real estate will certainly grow as more and more players will invest in this sector," said Munish Baldev, the company's retail head.
"Mall development is very capital-intensive and companies with a strong balance sheet will be able to take advantage of the situation," said Vikas Oberoi, managing director of Mumbai-based Oberoi Realty, the only real estate developer which has a debt-free balance sheet with Rs 1,400 crore cash in hand. Bangalore-based Nitesh Estates recently started construction activity for its 1.3 million sq ft mall in the city centre in anticipation of the opening up of FDI, said managing director Nitesh Shetty.
The company will invest Rs 1,500 crore over the next three years to develop malls in Kochi and Chennai, along with Bangalore. "When foreign players come in, we will be able to fill up a large mall better. Today it doesn't make sense to make a big mall," said Kishore Bhatija, director and chief executive officer of Inorbit Malls, a part of Mumbai-based real estate developer K Raheja Corp.
India's largest real estate developer DLF is re-evaluating its plan to build 4.5 million sq ft Mall of India in Gurgaon, a project that it had shelved following the global economic meltdown in 2008.
Similarly, other real estate developers are also looking to cater to demand from foreign retailers that have been waiting to set up shop in India. According to global consultancy Ernst &Young, the Indian retail market is expected to grow from $400 billion in 2010 to $700 billion by 2015.
With the easing of FDI norms, analysts expect the share of organised retail to rise from the current 5%-6% to about 10% over the next five years, spelling opportunity for real estate developers. DLF is planning to invest close toRs 2,500 crore over five years to develop malls across the country.
It is also planning retail complexes in its residential and commercial properties in Kolkata, Bangalore, Kochi, Goa, Chennai and Hyderabad. Unitech has lined up an investment of Rs 4,000 crore over the next four years to develop 13 malls across the country. "The demand for quality retail real estate will certainly grow as more and more players will invest in this sector," said Munish Baldev, the company's retail head.
"Mall development is very capital-intensive and companies with a strong balance sheet will be able to take advantage of the situation," said Vikas Oberoi, managing director of Mumbai-based Oberoi Realty, the only real estate developer which has a debt-free balance sheet with Rs 1,400 crore cash in hand. Bangalore-based Nitesh Estates recently started construction activity for its 1.3 million sq ft mall in the city centre in anticipation of the opening up of FDI, said managing director Nitesh Shetty.
The company will invest Rs 1,500 crore over the next three years to develop malls in Kochi and Chennai, along with Bangalore. "When foreign players come in, we will be able to fill up a large mall better. Today it doesn't make sense to make a big mall," said Kishore Bhatija, director and chief executive officer of Inorbit Malls, a part of Mumbai-based real estate developer K Raheja Corp.
Escorts Construction Equipment eyes land in Gujarat and MP for manufacturing unit
BANGALORE: Escorts Construction Equipment (ECEL), the fully owned equipment arm of the Rs 3,000-crore Escorts Group, is in talks with the governments of Gujarat and Madhya Pradesh to acquire land for a manufacturing unit.
Escorts will manufacture cranes, backhoe loaders and excavators at the proposed plant, which will have an installed capacity of 50,000 units. The company refused to share investment details but industry sources said Escorts will invest over Rs 5,000 crore.
Madhya Pradesh is currently the frontrunner for the proposed plant, a company executive said on condition of anonymity. Escorts has zeroed in on the two states because of logistical convenience, huge vendor base and availability of huge land parcel.
"We will require 40 acres of land and are currently negotiating with state governments. The decision will depend on the facilities the state governments offer," said Rajesh Sharma, vice-president, sales and marketing, ECEL. Gujarat and Madhya Pradesh are fast emerging as the favoured investment destination for corporates because of their tax regime and cheap labour. Gujarat has already attracted investments from domestic and foreign automakers.
While Ford and Peugeot have decided to set up manufacturing plants in Sanand, Maruti Suzuki has finalised a deal with the state government to set up aRs 18,000-crore manufacturing facility after production at its Manesar plant in Haryana was hit by a series of labour strikes.
In 2008, Tata Motors moved its production of 'Nano', the world's cheapest car, to Gujarat from West Bengal where it was facing stiff resistance from farmers. In a recent report on India's manufacturing sector, property consultancy firm Knight Frank India said that Gujarat's manufacturing sector is growing at 30% annually and has gained traction from corporates due to faster project clearances.
Separately, the company is also doubling its manufacturing facility at Ballabhgarh, Haryana. "We are operating at full capacity and is de bottling the plant to take up the production capacity to 12,000 units by 2012," Sharma said.
Escorts will manufacture cranes, backhoe loaders and excavators at the proposed plant, which will have an installed capacity of 50,000 units. The company refused to share investment details but industry sources said Escorts will invest over Rs 5,000 crore.
Madhya Pradesh is currently the frontrunner for the proposed plant, a company executive said on condition of anonymity. Escorts has zeroed in on the two states because of logistical convenience, huge vendor base and availability of huge land parcel.
"We will require 40 acres of land and are currently negotiating with state governments. The decision will depend on the facilities the state governments offer," said Rajesh Sharma, vice-president, sales and marketing, ECEL. Gujarat and Madhya Pradesh are fast emerging as the favoured investment destination for corporates because of their tax regime and cheap labour. Gujarat has already attracted investments from domestic and foreign automakers.
While Ford and Peugeot have decided to set up manufacturing plants in Sanand, Maruti Suzuki has finalised a deal with the state government to set up aRs 18,000-crore manufacturing facility after production at its Manesar plant in Haryana was hit by a series of labour strikes.
In 2008, Tata Motors moved its production of 'Nano', the world's cheapest car, to Gujarat from West Bengal where it was facing stiff resistance from farmers. In a recent report on India's manufacturing sector, property consultancy firm Knight Frank India said that Gujarat's manufacturing sector is growing at 30% annually and has gained traction from corporates due to faster project clearances.
Separately, the company is also doubling its manufacturing facility at Ballabhgarh, Haryana. "We are operating at full capacity and is de bottling the plant to take up the production capacity to 12,000 units by 2012," Sharma said.
Government wants fresh estimate of RIL's KG-D 6 reserves
NEW DELHI: The oil ministry has asked Reliance Industries ( RIL) to prepare a fresh estimate of gas reserves in satellite fields of the KG-D 6 block and submit a cost assessment for developing the new discoveries, further delaying the $1.5-billion plan to raise gas output by 10 million cubic metres a day.
The proposal, which is awaiting government approval for two years, was discussed on Friday by the block's managing committee comprising oil ministry officials and executives of global oil major BP and Reliance Industries, government and industry officials said.
The relationship between Reliance and the oil ministry has deteriorated after the company slapped an arbitration notice on the government after Petroleum Secretary GC Chaturvedi publicly stated that the ministry may revise the production-sharing contract to penalize Reliance for falling output from the block.
The director general of hydrocarbons SK Srivastava and the oil ministry's joint-secretary for exploration D Narsimha Raju did not attend the three-hour meeting of the management committee. They were represented by their juniors, officials said, adding that the minutes of previous meetings had not been signed.
Sources close to the development said the government sought a fresh estimate because Reliance's proposal was based on prices prevailing in 2008 and officials wanted to prevent a cost review after approval. The development cost in the existing gas field in the block was reviewed, triggering strong comments from the Comptroller and Auditor General.
"After the current controversy over cost escalation and CAG's comments, we want to make sure that estimates of cost and gas reserves are accurate," an official at the directorate general of hydrocarbons (DGH) said. The management committee has asked Reliance to conduct fresh seabed surveys, which the company estimates would cost $30 million, an executive said.
This was expected be on the agenda of the next meeting of the committee, he said. Gas output from the D6 block has fallen to about 42 mmscmd against the target of 80 mmscmd, creating a severe shortage of gas for power, fertilizer and other units, which are being forced to import costly LNG.
The proposal, which is awaiting government approval for two years, was discussed on Friday by the block's managing committee comprising oil ministry officials and executives of global oil major BP and Reliance Industries, government and industry officials said.
The relationship between Reliance and the oil ministry has deteriorated after the company slapped an arbitration notice on the government after Petroleum Secretary GC Chaturvedi publicly stated that the ministry may revise the production-sharing contract to penalize Reliance for falling output from the block.
The director general of hydrocarbons SK Srivastava and the oil ministry's joint-secretary for exploration D Narsimha Raju did not attend the three-hour meeting of the management committee. They were represented by their juniors, officials said, adding that the minutes of previous meetings had not been signed.
Sources close to the development said the government sought a fresh estimate because Reliance's proposal was based on prices prevailing in 2008 and officials wanted to prevent a cost review after approval. The development cost in the existing gas field in the block was reviewed, triggering strong comments from the Comptroller and Auditor General.
"After the current controversy over cost escalation and CAG's comments, we want to make sure that estimates of cost and gas reserves are accurate," an official at the directorate general of hydrocarbons (DGH) said. The management committee has asked Reliance to conduct fresh seabed surveys, which the company estimates would cost $30 million, an executive said.
This was expected be on the agenda of the next meeting of the committee, he said. Gas output from the D6 block has fallen to about 42 mmscmd against the target of 80 mmscmd, creating a severe shortage of gas for power, fertilizer and other units, which are being forced to import costly LNG.
Subscribe to:
Posts (Atom)