Indian Economy-News & Updates

[Veeru]

Indian firm eyes Qatar, Australia gas supplies

Agencies/New Delhi

India’s Petronet LNG is looking to buy liquefied natural gas (LNG) from Australia and Qatar for a planned new terminal, its head said yesterday, and confirmed it would double target capacity of the Kochi site.

A K Balyan also told journalists the company planned to start the Kochi terminal by October next year instead of July as it will now double the terminal’s planned capacity to 5mn tonnes a year.

Balyan said the additional capacity will need an investment of $70mn. The company has invested about Rs35bn ($770mn) for the initial 2.5mn ton capacity at the Kochi terminal.

“We are trying to merge phase one and phase two [of the plan] as we would like to avoid any construction after commissioning the first phase,” he added.

“We are seeking gas from Australia. We will also be seeking gas from Qatar as we have been doing for the Dahej terminal,” Balyan said.
Petronet already operates a 10mn-tonne a year LNG re-gasification plant at Dahej in the western state of Gujarat.
Gas companies such as Petronet LNG, India’s largest LNG importer by volume, and transmission utility Gail India Ltd are benefiting from this increase in demand.

Petronet LNG is expanding its gas import capacity due to rising demand across several industrial sectors and following a decline in domestic gas output from Reliance Industries D6 block off India’s eastern coast.
Balyan said Petronet may also consider increasing the capacity of its 10mn tonne terminal at Dahej, which is currently operating at more than 95% capacity.

Petronet plans to build a Rs10bn jetty at Dahej that will raise the terminal’s capacity to 13mn tons a year and is expected to be completed in the second half of fiscal year 2014.

It is looking to tie-up supply contracts with overseas companies for its new terminals.
It currently has a 7.5mn ton long-term supply contract with Qatar’s Ras Laffan Liquefied Natural Gas Co, or RasGas, and an agreement to buy another 1.5mn tonnes from ExxonMobil’s Gorgon project in Australia.

He said the company was in talks with RasGas in Qatar, which has enhanced its gas generation capacity to 77mn tonnes.
“We’re also aware of several new projects in Australia coming up. We are in talks with them.”
State-run Oil & Natural Gas Corp, Gail India Ltd, Indian Oil Corp and Bharat Petroleum Corp each hold 12.5% stakes in Petronet.

Gulf Times ? Qatar?s top-selling English daily newspaper - Finance & Business

 

[Water Car Engineer]

India, Malaysia to sign free trade pact tomorrow

India will sign another free trade agreement with Malaysia tomorrow to boost the $8 billion bilateral trade by further reduction of duties by the two countries.The FTA with Malaysia will be signed on the heels of India inking a Comprehensive Economic Partnership Agreement (CEPA) with Japan in Tokyo yesterday.

India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) to be signed in Kuala Lumpur will cover trade in goods, services and investments.

The two countries have already liberalised their trade in goods through an India-ASEAN free trade agreement, which came into force from January 2010. Malaysia is a key member of Association of Southeast Asian Nations (ASEAN).

The new agreement with Malaysia will enable further reduction in duties, thus opening the bilateral trade.

Besides, opening market for merchandise, the pacts also aim at liberalising trade in services like relaxing barriers on movement of professionals, an area of particular interest to India.

The pact was aimed at reducing or eliminating tariffs over 90 per cent of the goods traded between the countries. It will give Malaysia concessions for export of palm oil and related products.

India will benefit from sectors like textiles and services like IT, lawyers and accountants in Malaysia. While Malaysia will get advantage in tourism industry.

The agreement will be signed by Malaysian International Trade and Industry Minister Mustapa Mohamed and Commerce and Industry minister Anand Sharma.

The pact was finalised during the visit of Prime Minister Manmohan Singh to Kuala Lumpur last October.

The agreement with Malaysia is expected to come into effect from July.

India, Malaysia to sign free trade pact tomorrow

 

[Water Car Engineer]

World Bank backs India's infra plans

The World Bank has endorsed India’s plans for investment in infrastructure during the next five years. Infrastructure sector analysts see in this endorsement a positive signal from the World Bank and likely assistance from the multilateral financial institution.

“I am not privy to any document with regard to the 12th Five Year Plan. However, the government will have to be ambitious on the development of roads, urban infrastructure, water supply and sanitation, power and agricultural production. The proposed investment is clearly an ambitious one. It also reflects the level of ambition,” World Bank Vice-President (sustainable development) Inger Andersen told Business Standard.

India’s proposed investment of over $1.3 trillion in infrastructure during the 12th Plan period reflected the level of its ambition, said Andersen. She was speaking to Business Standard on the sidelines of the launch of the World Bank report on “Empowering rural India: expanding electricity access by mobilising local resources”.

Andersen’s views are crucial, especially when the government plans to almost double the infrastructure spending to over $1.3 trillion in the 12th Plan from $500 billion in the 11th Plan.

She said India was a global player in politics, finance, infrastructure and information technology. “I fully endorse India’s inclusive growth agenda. Even when there has been increase in growth, there is poverty in the country. Therefore, there is a need for sustainable development and equitable distribution,” she said.

On the issue of subsidy allocation, Andersen said it was not prevailing in India alone, but in other countries, too. “There are well-off people as well as those who cannot afford a single day meal. Subsides are essential. However, the only consideration should be such subsidies be given to the neediest and in a right manner.”

http://www.business-standard.com/india/news/world-bank-backs-india%5Cs-infra-plans/425496/

 

[true_indian]

Not sure if the figure is right! but it is reported the same in multiple news sources.So please don't jump on my throat if its wrong.

India: Italian businesses eye infrastructure deals worth €640 billion

India: Italian businesses eye infrastructure deals worth €640 billion

Rome, 2 Feb. (AKI) - Companies from Italy's main business association Confindustria will visit the Indian capital New Delhi in October in a bid to clinch deals on infrastructure projects worth 640 billion euros.
Confindustria's head, Emma Marcegaglia, will lead the delegation to India - one of Asia's economic powerhouses.
"Our objective is to further strengthen our relationship with the Indian economy. There's great potential for growth," said Marcegaglia, recalling that Italy and India traded around six billion euros of goods and services in 2009.
"2011 is India's year, " said Marcegaglia.
India's gross domestic product grew 8.9 percent in the third quarter of 2010.
Driven by strong internal demand that weathered the global recession, India's economy is expected to expand 8.8 percent in 2010, according to forecasts.
It is predicted to become the world's third largest economy by 2020-2025.
"We want to work together side by side to solve our problems and bolster our ties," said Marcegaglia.
Ahead of the Confindustria visit in late October, delegations from the infrastructure, energy, automobile and other sectors will attend business forums in New Delhi in March, April and October.
Marcegaglia, Italy's industry minister Paolo Romani and representatives of major companies eyeing business with India this week met Indian commerce and industry minister Anand Sharma and the head of India's main business association FCCI, Rajan Bharti Mittal in Rome.
The Italian companies included engineering firm Tecnimont, construction companies Astaldi and Audostrade, Montante and coffee maker Lavazza, which last week announced it would set up its first coffee plant in Sri City in the eastern Indian state of Andhra Pradesh.
Lavazza, which bought India's second-biggest coffee shop chain Barista Coffee Company and Indian coffee vending company Fresh & Honest Cafe in 2007, expects India to become its second largest market after Italy, the company said last Friday.
Italy and India on Monday decided to set up a joint business council, a bilateral trade cooperation body, and to work together in 10 areas including internet and communications technology, infrastructure and manufacturing and elections.
The two countries decided to set up the joint business council during a meeting in Rome on Monday between Sharma and Romani.
"Italy is the world's largest democracy and its middle class is expanding," said Romani. "It is going to be worth an enormous amount economically in the coming years."
Romani moved to dispel fears that many firms could re-locate to India, taking advantage of low labour costs.
"The era of delocalisation is clear. India's development is based on its demand and Indian companies are not seeking to re-locate to India but to gear their production to the Indian market," he said.

 

[Veeru]

Sri Lanka to award 3 oil & gas blocks to ONGC Videsh

In what is being regarded as a diplomatic breakthrough, the Sri Lankan government is willing to award three hydrocarbon blocks in its northern offshore area to India’s ONGC Videsh Ltd (OVL) on a nomination basis, reports livemint.com. A team from OVL is scheduled to visit Sri Lanka shortly for discussions on the C1, C2 and C3 blocks, which will mark the company’s entry into the island nation.

The overseas arm of state-owned Oil and Natural Gas Corporation has been trying to secure blocks on a nomination basis for some time now with the active support of the Indian government. “We are working in the Kaveri and Mannar basin and had submitted our proposal earlier to the Sri Lankan government. We want these blocks on a nomination basis,” said a senior OVL executive, who did not wish to be identified.

The effort is seen as India’s attempt to engage Sri Lanka politically and economically at a time when China is becoming increasingly influential in that country. The development comes on the back of a meeting held between India’s former petroleum minister Murli Deora and Sri Lanka’s minister of petroleum industries Susil Premajayantha in November.

Sri Lanka to award 3 oil & gas blocks to ONGC Videsh - None -

 

[Veeru]

Reserve Bank of India’s investments in US treasury bonds touch all-time high at US $ 41.1 billion

MUMBAI: The Reserve Bank of India’s investments in US treasury bonds touched an all-time high of $41.1 billion in December as returns improved. Moreover, the concerns in the euro area too mounted during the month, prompting the central bank to move to safer and liquid dollar assets.

India figures among the top 20 investors in US treasury bonds. Throughout the year, it bought bonds worth almost $10 billion, with the bulk of the purchases made in June and July, according to the Treasury International Capital Report released by the US treasury department.

However, investments remained flat in the subsequent months and picked up again only in December. Overall foreign investors hiked their exposure by $25.8 billion during the month to $4372.6 billion. “Strong macro-economic numbers started changing the sentiments for the US dollar since December. The growth numbers have started looking better and the confidence in the US economy is returning.

This has led to expectations that the US might reverse its super-accommodative stance early this year. The dollar has shown some signs of stability. All these factors have contributed to the rise in yields on US treasury bonds,” said Abheek Barua , chief economist of HDFC Bank . The yield on the benchmark 10-year government bond rose 52 basis points (one bp is 0.01%) from 2.77% in end November to 3.29% in end December.

“Moreover, the US dollar still remains the default safe heaven,” said Mr Barua. “RBI actively manages its foreign currency assets portfolio. Post the quantitative easing in November, the dollar was seen appreciating against major global currencies in December which the central bank could have capitalised on, and hence, bought US treasury bonds,” said Sujan Hazra , chief economist of Anand Rathi Financial Services .

“Moreover the concerns in the euro area over the sovereign debt of some economies mounted during the month, which could have also prompted the central bank to US-denominated assets,” said an economist with a private bank, requesting anonymity. The Reserve Bank of India on its part is also very cautious of its reserve management as there are fears that a sudden reversal of FII inflows could result in a sharp demand for the foreign currency assets of which the central bank is a custodian.

“Our reserves comprise essentially borrowed resources, and we are therefore more vulnerable to sudden stops and reversals compared with countries with current account surpluses,” said RBI governor D Subbarao at at the Special Governors’ Meeting in Kyoto, Japan, last fortnight.

The current exposure in US treasury securities is a little over 10% of its total foreign exchange reserves, which is close to $300 billion, though the central bank has not bought any dollars from the market in recent years. The guiding objectives of foreign exchange reserves management in India are safety, liquidity and returns. “In India, given that the domestic interest rates are higher than return on reserves, the carrying cost is positive.

This cost has to be traded-off with the benefits associated with higher reserves in terms of confidence it provides to the market and serving as key ammunition to face crisis. The exchange rate movement of major currencies is exogenously given to any reserve manager. The reserve manager has to devise strategies as to minimise the losses or gain from the movement in exchange rate,” said Subbarao.

RBI investments in US T-bonds touch all-time high at $41.1 bn - The Economic Times

 

[Veeru]

Indian pharma exports to grow by 20% to Rs 50,000 crore current fiscal

Increasing number of drugs turning off-patent and greater acceptance of generic drugs in regulated
markets will help the pharmaceutical exports from India touch Rs 50,000 crore current fiscal, said Pharmaceutical Exports Promotion Council (Pharmexcil) Executive Director, P.V. Appaji.

Saying that the Indian pharmaceutical exports last fiscal amounted to Rs 42,000 crore, he said, “We expect the growth to be 20 per cent this year as the sector is coming of the recession effect.”

During 2009-10, the pharmaceutical exports saw only 4.13 per cent growth over the previous year. While the effect of slowdown on the other sectors was visible during 2008-09, the pharmaceutical sector witnessed it only during 2009-10. “The inventories of drugs lasted for period 2009-10 when the slowdown was at its peak,” he said.

However, barring 2009-10, the pharmaceutical sector saw a compounded annual growth rate of around 17 per cent over the years, he said.

During 2008-09, bulk drugs accounted for 42 per cent of the exports, formulations 56 per cent and herbals and ayurveda contributed the balance 2 per cent.

The US imports 22 cent of the total pharma exports from India, Africa 16 per cent and Commonwealth of Independent states eight per cent. In all, the pharma products are exported to 220 countries and colonies. Singapore, Malaysia, Vietnam, Russia, Ukraine, South Africa, Nigeria and Kenya are now the focus countries for exports, said Appaji.

Among the pharma exporting states, Maharashtra leads with 38 per cent contribution, followed by Andhra Pradesh at 23 per cent.

Appaji said the Indian pharmaceutical exports to Japan were expected to grow significantly owing to the bilateral free trade agreement signed this week, which would abolish duties on more than 90 per cent of the trade for ten years. “`Japan is a small market now. But we expect Japan to take about five per cent of the total exports in three to four years,” he said.

Though India was seen as a hub of generics, adverse publicity by certain companies was hurting the exports, he said citing instances of pharma shipments stranded on the shores. “`Pharmexcil has taken up this matter to the notice of the government and this is almost settled,”' he said.

On the proposed tracking and tracing mechanism that helps locate the origin of the pharma products, he said, “Many companies said they would not be in the position to bar code the products by the July 1 deadline. Also, the companies say it is difficult to have bar codes on primary packages of small products. We will have broader debate on this in March.”

Further, Appaji said the off-patent regime will also be to India’s advantage since nearly one-third of the total abbreviated new drug applications filed globally is from India.

Indian pharma exports to grow by 20 per cent to Rs 50,000 crore | mydigitalfc.com

 

[Veeru]

India-Malaysia trade to reach $15 bn by 2015

NEW DELHI/KUALA LUMPUR: India and Malaysia on Friday signed an economic partnership agreement that is expected to raise bilateral trade to $15 billion by 2015, just two days after New Delhi inked a similar pact with Tokyo, consolidating India's burgeoning economic ties with east and southeast Asia.

Indian Commerce and Industry Minister Anand Sharma signed the pact with Malaysia's Minister for International Trade and Industry Mustapa Mohamed in the administrative capital of Putrajaya, south of Kuala Lumpur, in the presence of Malaysian Prime Minister Najib Tun Razak.

The comprehensive economic cooperation agreement (CECA) will come into force July 1.

Friday's pact expands an economic agreement that came into effect in January last year between India and the Association of Southeast Asian Nations (ASEAN).

The India-Malaysia economic agreement had been in the works for long. It could not be sealed last year when Malaysian Prime Minister Najib Tun Razak visited India and later, his counterpart, Manmohan Singh, paid a return visit.

Malaysia is the third largest trading partner of India among the 10 members of the Association of Southeast Asian Nations (ASEAN).

India-Malaysia bilateral trade was worth $9.03 billion in 2010. It reached a peak of $10.65 billion in 2008.

Sharma said the new pact would help increase bilateral trade to over $15 billion by 2015.

"It is projected that in the next 15 to 20 years, of the five major economies of the world, three will be from Asia. Those three will be China, India and Japan. So we will have to work together," Sharma said at the signing ceremony.

Najib, who was also present at the ceremony, said: "I am very confident that when the agreement comes into force, the bilateral trade target that we have set at $15 billion by 2015 will be attained, if not earlier."

In a statement released by the Malaysian trade ministry, Mustapa said the Malaysia-India agreement is now more extensive -- covering services, investments and other areas that were excluded in the regional pact.

It will also give better tariff concessions, including Malaysia's palm oil exports, and advance the timetable for reduction or elimination of tariffs, he said.

Under the pact, the two countries will allow up to 100 percent foreign shareholding in more than 80 areas, including health care, telecommunications, retail, environmental services and other areas.

It will also make it easier for engineers, accountants, technology experts and other professionals from both countries to gain temporary entry for contract work, it said.

Service sectors like accounting and auditing, architecture, urban planning, engineering services, medical and dental, IT and IT-enabled services, and management consulting services will get access to the Malaysian market.

Sharma said the agreement will slash tariffs for 90 percent of Indian goods and 92 percent of Malaysian products.

India will get access in the Malaysian market for goods including fruits such as mangoes, banana and guava, basmati rice, two-wheelers and cotton garments.

Malaysia has offered comparatively higher level of foreign direct investment in key sectors of interest to India such as construction services (51 percent), computer and related services (100 percent) and management and consultancy services (100 percent).

With Asia emerging as a global economic power, Sharma said India was keen to deepen its economic ties in the region, especially with China.

He said a growing trade deficit with China was unhealthy but Chinese Premier Wen Jiabao during his visit to New Delhi in November promised to improve market access for Indian companies, especially in pharmaceutical and information technology sectors.

There were also talks to allow exports of some Indian agricultural products but he did not elaborate.

"We have been given assurances ... we have no reasons to doubt," he told reporters.

He brushed off talks of ongoing competition with China for regional influence, saying "the world is big enough to accommodate the rising aspirations of both China and India".

India-Malaysia trade to reach $15 bn by 2015 - The Economic Times

 

[Veeru]

India's Essar Energy to buy Shell's refinery in northwest England for $350 million in cash

LONDON, Feb 18 (Reuters) - Essar Energy said it has agreed to buy Royal Dutch Shell's Stanlow refinery in northwest England for $350 million in cash, giving the Indian focused oil and gas business direct access to the UK market.

Essar Energy, which has a majority stake in India-listed Essar Oil, said on Friday it had entered into an exclusive agreement until March 31 to buy the second largest refinery in the UK.

Naresh Nayyar, Essar Energy's chief executive, said Stanlow was a high quality refinery in terms of its employees, its assets, its location and its customer base.

"Stanlow also fits very well with our strategy of providing options for the export of high quality products from our Vadinar refinery in India," he said.

The exclusivity period allowed Shell to consult with its employees at the site, Essar said. It will pay Shell a break fee of $50 million if it does not proceed with the purchase.

Essar will make a separate payment for the oil and refined products on the site, estimated to be worth about $780 million based on current prices, when the deal completes. (Reporting by Paul Sandle; Editing by Hans Peters)

UPDATE 1-Essar agrees to buy Shell's Stanlow refinery | Energy & Oil | Reuters

 

[Bang Galore]

Bangalore shines among India's booming cities: Report

NEW DELHI: Tech hub Bangalore tops the list in a new Morgan Stanley report on how India's booming cities cope with problems from infrastructure to job creation, with Mumbai, India's financial capital, trailing in 21st place.

Asia's third-largest economy is home to one-quarter of the world's 20 most densely populated cities but the slow pace of urban development has been a drag on economic growth.

The report found that second-tier cities Mysore, in the southwest, and Meerut in the country's north, came in second and sixth places out of India's 50 most populated cities.

Nearly one-quarter of India's top 200 cities have no car dealership, less than 10 percent have a 5-star hotel, and nearly two-thirds were still waiting for a large-scale retail store or hypermarket, the report found.

Its findings are based on a City Vibrancy Index (CVI), which looks at, among other factors, infrastructure, job opportunities, modern consumer services and a city's ability to mobilise savings -- what it calls key drivers of urbanisation.

Bangalore, India's "Silicon Valley", came in first place, with Pune in third and Hyderabad in fourth while New Delhi ranked eighth.

Over the next two decades, India is expected to see an urban transformation the scale and speed of which has not happened anywhere except China, with many cities becoming larger than many countries, in terms of population size and GDP.

By 2030 India's cities will be home to about 590 million people -- nearly twice the population of the United States today.

However, India is dwarfed by China on infrastructure spending. India spends a mere $17 per capita on urban infrastructure, compared to rival China's $116. Poor infrastructure is estimated to shave a whole 2 percentage points off India's economic growth.

India's government is trying to bridge the gap and plans to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from 2012-17.

Bangalore shines among India's booming cities: Report - The Economic Times

 

[SpArK]

Sharing Info on Black Money with India: Mauritius

Mauritius has provided Indian authorities with banking information and other financial details on more than 90 cases of suspected tax evasion and financial malpractice over the past three years.

Asserting that it has put in place robust measures to help India track black money, the Mauritian Finance Ministry told PTI that the information sought by Indian authorities has been duly provided as per international norms.

While acknowledging that some unscrupulous persons might still beat the systems in place to check flows of black money, the Mauritian Finance Ministry said it has taken additional measures with respect to India.

"... With India, we have developed a mechanism to be in close consultation with the Indian authorities to deal with any issues that may arise. This includes the posting of an officer from the Central Board of Direct Taxes at the Indian High Commission in Mauritius," the ministry said.

Mauritius has often been suspected to be a facilitator of black money round-tripping or routing illicit wealth stashed abroad by Indians back into the country through their banking and financial institutions.

In a detailed reply to queries on the black money issue, Mauritius' Ministry of Finance and Economic Development said the tax treaty between the two countries provides for sharing of banking information.

"Over the last three years, we have received around 64 requests for bank information from India. The requested information was duly submitted to India," the ministry said.

In addition, the Mauritius Financial Services Commission has received 17 requests for information from India's market regulator, SEBI, since September, 2009.

Detailing the requests from India on the black money issue, the ministry further said: "Since late 2007 to date, the FIU-India has made 10 requests for information from the Mauritius FIU."

FIU-India (Financial Intelligence Unit of India) is the nodal agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs.

The Mauritius FIU has also made 15 information requests from its Indian counterpart.

"Mauritius' laws provide the competent authority with broad access powers to information relevant for exchange purposes, including access to bank information," the ministry said.

"Furthermore, it can obtain the required information from any person who is in possession or control of such information," it added.

There are agreements in place for exchange of information on entities indulging in tax evasion and tax frauds, but concerns have been raised over certain lapses.

As per the existing practice, a bank in Mauritius can inform its customer if a request has been made by India for information about that person on suspicion of wrong-doing and such disclosure to the concerned entity can hamper the probe.

Some lapses have also been been pointed out by OECD, the global agency working on implementation of international standards on taxation and other matters.

An OECD review report last month said that the two countries have a pact in place for automatic exchange of information on a routine basis, but this is not carried out in practice.

Mauritius has not exchanged information spontaneously either, over the last three years, the OECD said, while adding that the maximum number of information exchange requests received by Mauritius were from India.
FILED ON: FEB 21, 2011 12:37 IST

news.outlookindia.com | Sharing Info on Black Money with India: Mauritius

 

[SpArK]

India commits service sector FDI cap to Malaysia​

NEW DELHI: The government is yet to take a final call on allowing foreign investment in multi-brand retail but it has decided to commit itself to allowing 100% FDI in wholesale cash-and-carry and 51% in single-brand retailing under the Comprehensive Economic Cooperation Agreement (CECA) with Malaysia, signed on Friday. And, in this case, the commitment is binding where the FDI ceilings will not be lowered.

The two segments of retail are among the 84 services sectors, including telecom, professional services, healthcare, professional services and environmental services where India has decided to bind itself to allowing the present level of FDI for Malaysian companies. In case of foreign investors from other countries, the government has the right to lower the present ceiling. Commerce department officials said in no case has the government gone beyond what is permitted under the FDI policy. In return, India has managed to get Malaysia to provide a similar dispensation for 91 service sectors.

The Malaysian CECA could be the model the government might replicate in other comprehensive treaties that are under negotiations, including the one with Asean. A CECA (as is the case with certain countries) goes beyond a free trade agreement in goods to include services and in some cases investment pacts too.

Given India's vast talent pool, the government is keen that in return for lower tariffs in case of certain products, it will provide greater access to foreign companies through lower import duty on certain products and also by way of liberal foreign investment ceilings. In recent years, India has voluntarily gone beyond the commitment made under WTO's General Agreement on Trade in Services (GATS) that was signed in 1995. In the past, India had opposed binding itself to GATS-plus commitment, fearing that it would curb its policy flexibility. But with WTO's latest round of trade liberalization talks on hold, India is pushing for bilateral trade deals.

Read more: India commits service sector FDI cap to Malaysia - The Times of India India commits service sector FDI cap to Malaysia - The Times of India

 

[bhagat]

Mukesh Ambani's RIL signs $9 billion deal with BP

Mukesh Ambani led Reliance Industries Limited (RIL) has signed an agreement with oil major British Petroleum (BP) for 30 per cent stake in Reliance Industries' 23 oil and gas blocks including the KG-D6 gas fields . The deal, valued at $9 billion, is one of the biggest foreign direct investments in the country. According to the agreement, BP will get 30 per cent of RIL's upstream assets in 23 oil and gas blocks (including the producing KG D6 block) for $9 billion.

"BP will pay RIL an aggregate consideration of US$7.2 billion for the interests to be acquired in the 23 production sharing contracts. Future performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries. These payments and combined investment could amount to US$20 billion," RIL said in a press statement.

Mukesh Ambani said: "We are delighted to partner with BP, one of the largest energy majors and one of the finest deep water exploration companies in the world. This partnership combines the skills of both companies and will be focused on finding more hydrocarbons in the deep water blocks of India and significantly contribute to India's energy security."

"This partnership meets BP's strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets," said Mr. Carl-Henric Svanberg, Chairman of BP.

The deal is seen as a positive for the company. Ambareesh Baliga of Karvy Stock Broking said the rumour (on the deal) was in the market since the morning. This will play up tomorrow as it is extremely positive news. RIL has been an underperformer for the last 2 years and its time the patient investors bear some fruit. RIL rose 2.22 per cent on the NSE today though the deal was announced after market hours.



Read more at: Mukesh Ambani's RIL signs $9 billion deal with BP - NDTV Profit

 

[Water Car Engineer]

 

[Veeru]

Steel Authority of India (SAIL) to invest US$ 12 billion in four overseas plants in Indonesia, Mongolia, South Africa and Oman

Steel Authority of India (SAIL) on Monday said it was planning four three-mtpa manufacturing facilities, one each in Indonesia, Mongolia, South Africa and Oman, at a cumulative investment of $12 billion.

“We have already signed the memorandum of understanding with the Indonesian government and are in constant dialogue with the governments in Mongolia, South Africa and Oman for setting up the three-mtpa steel plant,” SAIL Chairman C S Verma told reporters on the sidelines of an ICC-organised conference.

“We are aiming to finalise all the plants in 2011-12. If all four plants are finalised, then the investment required would be at least $12 billion — $3 billion in each,” he said.

The proposed investments are likely to be financed in a 80:20 debt-equity ratio and the state-owned firm might rope in a strategic investor to part-finance the equity part.

The SAIL chairman said it would take three years for a plant to go onstream from the day of signing a definitive agreement. The plants would basically cater to the domestic requirement of steel in each country.

SAIL will set up the facilities only if the local governments ensure that the requisite raw material and land is made available to the proposed plants.

Apart from expanding its operations beyond the country’s borders, SAIL intends to solicit the allocation of raw material assets in these countries in lieu of setting up the plants. It will use these assets to meet the demand of the proposed plants, as well as existing and future projects in India.

The Maharatna company has already embarked on a Rs 70,000-crore capacity expansion plan to enhance its domestic production capacity from the current from 14.35 mtpa to 23.46 mtpa by 2012-13.

Out of the total capex, Rs 10,000 crore has been earmarked for the development of mines. SAIL also plans to enhance its steel-making capacity to 60 mtpa by 2020.
SAIL to invest $12 bn in four overseas plants