In 2012, the erstwhile UPA – government had granted a financial restructuring package [FRP] to deal with a mammoth Rs 200,000 crores debt of ailing state electricity boards [SEBs]. Under it, 50% of the outstanding liabilities were taken over by respective state governments and for balance 50% bonds were issued to public sector banks [PSBs] carrying an interest as low as 9%. The FRP was conditional on states taking requisite steps to increase tariff in a calibrated manner and reduce transmission and distribution [T&D] losses in order to improve realization from sale of electricity so that it converges to its cost of procurement. The overarching objective was to eliminate losses in 2-3 years and thus ensure that they are no...
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Gas allocation must be ‘policy’ driven
A 2-judge bench of the Delhi High Court [DHC] in an interim order, has ordered the department of fertilizers [DOF], ministry of chemicals and fertilisers to resume supply of natural gas to Deepak Fertilizer and Petrochemicals Corporation Limited [DFPCL] – a company manufacturing complex phosphate fertilizers – which was suspended last year. The order is on an appeal by Government of India [GOI] seeking stay on an earlier order of a single-judge [July 7, 2015] which had directed resumption of gas supply. The bench has stated that gas supply to DFPCL will continue till such time government finalizes the guidelines on supply of gas to fertilizer companies and implements the policy decision against two other manufacturers of complex phosphate fertilizers...
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Why falling imported gas price brings no relief?
Petronet LNG Limited, a consortium of 4 public sector undertakings [PSUs] viz., Oil and Natural Gas Corporation [ONGC], Gas Authority of India Limited [GAIL], Indian Oil Corporation Limited [IOCL] and Bharat Petroleum Corporation Limited [BPCL] – India’s leading LNG [liquefied natural gas] importer – is shelling out Rs 400 crores every quarter in demurrage charges for ships idling because of its PSU buyers refusing to buy expensive imported gas. At a time when Modi – government is imparting momentum to economic reforms and an important component is to make the PSUs cost competitive and improve their profitability, a loss of Rs 1600 crores annually by a joint venture [JV] of 4 PSUs is a matter of grave concern. This requires...
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Revival of ‘Collegium’ – onslaught on Constitution, yet again
On October 16, 2015, a 5-judge Constitution bench of the Supreme Court [SC] of India by majority vote of 4 has quashed the 99th constitution amendment and follow-on enactment setting up the National Judicial Appointment Commission [NJAC] for appointment of judges of SC and High Courts [HCs]. With this, the SC has also resurrected the erstwhile “Collegium” system which NJAC had replaced. It has invited suggestions on how to improve upon the Collegium which will be taken up in its next hearing on November 3. The setting up of NJAC was the outcome of a marathon exercise – that started with the recommendation of Justice Venkatachaliah Committee in 2002 [set up by NDA-I] that appointment of judges be made by...
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E-commerce giants using ‘surrogates’ to escape VAT
In a game that resembles kid’s play “cat and mouse chasing each other”, the e-commerce companies have so far succeeded in eluding the state sales tax/VAT [value added tax] authorities not paying thousands of crores that are legitimately due to the latter on transactions done on their portal. In a bid to nab them, the Karnataka commercial taxes department has now come up with an ingenious idea asking the e-commerce company to deduct 1% of the money payable to the merchant towards tax and remit the same to the department. The merchant/dealer in turn, can then claim credit or refund on this amount while discharging his liabilities. What is this 1%? It is certainly not the applicable VAT rate which...
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Toxic food – sign of deeper malaise in pesticide sector
Crop protection products [CPP] or pesticides as these are commonly known – are meant to protect plants from pests and disease so that they are healthy and in turn, help farmers in garnering higher yield and better crop quality. But, imagine what would happen if pesticides themselves start posing risk to humans, animals, birds, water, air, land etc? This is precisely what has happened during the last more than a decade ago or so. In 2003, a joint parliamentary committee [JPC] had taken a serious view of presence of pesticides in drinking water, beverages and soft drinks much in excess of global standards. The JPC had then made far reaching recommendations that included inter alia formulation of standards for individual...
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Patent linkage – ‘must’ to safeguard holder’s rights
About 30 months back, the US drug multinational Merck Sharp Dohme (MSD) had petitioned the Delhi High Court [DHC] to restrain an Indian firm Glenmark Pharmaceuticals from manufacturing and selling its anti-diabetes drugs viz., Zita and Zita-Met which violated its patents in India. The drugs contain ‘Sitagliptin’ salt for which MSD has a patent in India. Then, the court had rejected the stance of MSD. However, in a landmark judgement delivered on October 7, 2015, reversing the earlier stance, a bench of DHC has “restrained Glenmark by decree of permanent injunction from making, using, selling, distributing, advertising, exporting, offering for sale or dealing in Sitagliptin phosphate monohydrate or any other salt of Sitagliptin in any form, alone or in combination...
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Supreme Court renders ‘Aadhaar’ dysfunctional
Believe it or not but it is true. From October 7, 2015 onwards if a person wants to open an account in a bank using Aadhaar card, he cannot do so. If, he wants to buy an insurance policy using this card as proof of identity, he can’t. If, he wants to draw pension on its strength, he can’t. A recent order of the apex court has brought all these and a host of other very basic activities to a grinding halt. Let us look at the facts. Aadhaar card is a bio-metric identification card issued by Unique Identification Authority of India [UIDAI]. So far, over 900 millions cards have been issued which is many times more than any other...
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ONGC harping on higher gas/oil price – untenable
The declining international prices of crude oil and gas [since last year] has brought huge relief to critical sectors like fertilizers, power, transport, households etc besides helping the government in reining in subsidies [fertilizers] in turn, helping fiscal consolidation and reducing losses of state electricity boards [SEBs]. However, international rating agencies [Moody & Standards and Poor] as well as domestic rating agencies viz., CRISIL feel that this will have deleterious impact on Oil and Natural Gas Corporation [ONGC] and Oil India Limited [OIL] – both central public sector undertakings [PSUs] which supply indigenous crude to oil refineries. This would be an overly simplistic way of looking at an otherwise complex situation on the ground. They argue that price paid to...
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Domestic gas price cut – can help end urea mess
Under new pricing guidelines notified in October, 2014, the price of all domestic gas was fixed at US$ 5.61 per mBtu [million British thermal units] on net calorific value [NCV] basis w.e.f November 1, 2014 which was an increase of 33% over US$ 4.2 per mBtu prior to that date. The price was applicable till March 31, 2015. The price was arrived at by taking a weighted average of gas prices in Henry Hub [USA], NBP [National Balancing Point] [UK], AGR [Alberta Gas Reference] [Canada] and Russia. It was to be revised once in 6 months based on movement in these indices for a full year three months prior to the date of next revision. Thus, for price effective from...
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