Indian Oil firms are weeks away from bankruptcy

[Rajiv]

Indian Oil firms are weeks away from bankruptcy

Note: 1 crore = 10 million
one dollar is currently Rs 43

There was no diesel for a day at a gas station in north India recently. The public sector oil companies are slowing down the issue of new gas connections to households. The private sector oil companies are closing down petrol pumps and exporting petrol and diesel. Kerosene is not easily available in the public distribution system; the open market rate is around Rs 30 a litre when the official rate is under Rs 10.

If you think these are isolated events, think again. A fuel shortage looms ahead of the nation as the oil companies rapidly head towards bankruptcy.

With international crude oil prices hovering around $129 a barrel, the country's three oil marketing companies – IndianOil, Bharat Petroleum, and Hindustan Petroleum – are collectively looking at losses of Rs 200,000 crore this year. These losses belong to the budget, but finance minister P Chidambaram doesn't want his own copybook ruined. If these numbers were added to this year's Union budget, Chidambaram's fiscal deficit – the borrowings needed to finance government expenditure – would bloat from a fictitious 2.5% of gross domestic product (GDP) to more than twice that figure.

Under the subsidy sharing formula designed by the government, the Oil & Natural Gas Corporation (ONGC), the country's main oil producer, along with gas pipeline company GAIL is supposed to share one-third of the oil marketing companies' losses. But ONGC's turnover for 2007-08 will be around Rs 65,000 crore – one-third of the projected losses. Loss-sharing can thus wipe out ONGC as well.

In less than two months from now, some oil companies will be plain and simple broke as they exhaust their borrowing limits of Rs 90,000 crore. They have already notched up borrowings of around Rs 70,000 crore when their combined net worth is just over Rs 54,000 crore. The only reason they are still able to borrow is because they are owned by the government, and governments are not expected to default.

By early July, they will simply have no cash to run their business and some of them will find it difficult to pay staff salaries. "It is like a time bomb ticking away. If the prices of petro-products are not increased immediately, they will just sink without a trace," top industry sources said.

What is worse, global suppliers of crude and petro-products are not going to honour contracts unless money is paid upfront, which means the country could be looking at a frightening scenario of a fuel shortage.
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[GRG55]

Re: Indian Oil firms are weeks away from bankruptcy

Indian Oil firms are weeks away from bankruptcy

Note: 1 crore = 10 million
one dollar is currently Rs 43

"...There was no diesel for a day at a gas station in north India recently. The public sector oil companies are slowing down the issue of new gas connections to households. The private sector oil companies are closing down petrol pumps and exporting petrol and diesel. Kerosene is not easily available in the public distribution system..."

This isn't amusing, but it's one way to cut consumption in the developing nations. You can't burn it if you can't buy it.

Maybe that wall that Lukester's been warning the world was going to hit, has just appeared in the windshield?

[jk]

Re: Indian Oil firms are weeks away from bankruptcy

This isn't amusing, but it's one way to cut consumption in the developing nations. You can't burn it if you can't buy it.

Maybe that wall that Lukester's been warning the world was going to hit, has just appeared in the windshield?

it's the subsidies that have to go. non oil-producers can't afford to subsidize consumption anymore. thank goodness, because their subsidies are distorting the market signal function of prices. if the indian gov't wants to subsidize the poor, then just give them cash and let them decide if they want to spend it on gas or something else. don't encourage fuel consumption in particular. and the same would help if imposed within oil producing nations as well.

[FRED]

Re: Indian Oil firms are weeks away from bankruptcy

it's the subsidies that have to go. non oil-producers can't afford to subsidize consumption anymore. thank goodness, because their subsidies are distorting the market signal function of prices. if the indian gov't wants to subsidize the poor, then just give them cash and let them decide if they want to spend it on gas or something else. don't encourage fuel consumption in particular. and the same would help if imposed within oil producing nations as well.

Exactly. We are ready to join the oil shorts, if at least to play a short term correction, if we saw evidence of governments in India, China, and oil producers heading in the direction of elimination of subsidies. The time to have done that, from a political standpoint, was back when oil prices were relatively low. We are not holding our breath now.

[touchring]

Re: Indian Oil firms are weeks away from bankruptcy

Alarming finding, looks like india is going to be in deep trouble. :eek:

[Rajiv]

Re: Indian Oil firms are weeks away from bankruptcy

I think the Indians have to a certain extent anticipated this, and have planned for it.

See Scooty Teenz : The electric scooter from TVS

In an effort to bring out the best in young ladies and empower them with independence and self-sufficiency, TVS Motor Company launched of its first electric scooter, Scooty Teenz Electric in Gujarat. The company thereby offers these teenagers an opportunity to be self-reliant and look at life from a whole new perspective. A first of its kind product innovation from TVS Motor Company and the result of committed and consistent innovation of the TVS Scooty brand, this new electric scooter promises to be a clear winner in its class.

The Scooty Teenz Electric has an edge over existing models as it packs in best-in-class comfort, ride quality, gradability, load carrying, fit and finish and is fitted with the maximum power pack in its category. It's ease of use and effortless maneuverability makes it an ideal choice for young women who need mobility and whose daily travel is limited to around 15-25 km per day. Stylish and durable, the Scooty Teenz Electric generates an average range of 40 km, per nine hours of charge. This can increase by fifty percent if the rider opts for lower speeds by using a unique feature of this electric bike, the range selector. The range selector allows the rider to select a preferred range, either high or low.

The Scooty Teenz Electric has been carefully engineered to high standards of quality. It is an ideal balance of style; solid performance and exceptional value with 800 watts of power driving this electric scooter to a maximum speed of 40 km ph. Added advantages include low running costs, no pollution, no noise and high durability.

The scooter is available in rich colours of red, black and lilac, which come with vibrant contemporary graphics. It is equipped with large utility spaces and promises a comfortable and effortless ride with ease of parking.

Kinetic to launch CNG/LPG 4S and electric scooters

Kinetic 4S CNG / LPG:
Kinetic which recently launched the 125cc Flyte seems to have a greener plan for its future offerings . Kinetic will launch a CNG or LPG version of Kinetic 4S (if launched first CNG or LPG scooter in India). Kinetic will be launching the CNG or LPG 4S by the end of January 2008. We have already reported you the major manufacturers such as Bajaj and TVS are working on CNG or LPG variants of their models. These bikes are expected to hit the market in 2008 and with the 4S CNG kinetic is preparing for the greener battle.


Kinetic electric scooter:
Also, if Hero goes electric with maxi and velociti through its tie-p with Ultra Motors, then why not kinetic? Kinetic will also launch a electric scooter which is expected to hit the market in next two months. Kinetic will first launch the electric scooters first in Maharashtra, then in Gujarat before going nationwide. TVS motors has already proposed an electric variant of scooty.

Hero Electric to launch five new electric scooter models this year

Note: 1 lakh = 100,000 1 crore = 10 million

Bangalore, May 27 : Hero Electric, a subsidiary of Hero Group, today announced its plans to launch a range of five Electric Scooters during the current fiscal.

Briefing reporters on the company's plans, Managing Director Naveen Munjal said the new models would include two in high speed and three in low speed category. The company already had two successful low speed models -- Maxi and Optima, in the market since last year.

Hero Electric had sold 21,000 scooters last year and it targetted of sell 70,000 during the current year. The National market for the two-wheeled EVs was expected to reach 1.6 lakh from last year's 70,000, he said.

"As the surging petrol price is expected to soar further, consumers are looking for economical methods of transportation.

Hero Electric's EVs are reasonably priced and the running costs is just a tenth of petrol driven vehicles. Under the MV Act, low speed electric vehicles needs no registration nor the rider need to take a driver's license," he said.

From Sri Lankan Sunday Observer

A model poses during a launch of a new electric motor-cycle ‘Velociti Hero Ultra electric scooter’ in New Delhi. The Hero Group of India has signed a joint venture agreement with Ultra Motor Company of Britain, to create a new joint venture company called Hero Ultra (Pvt) Ltd. The Velociti was launched alongside the Optima and both ranges will be priced between Indian Rupees 29,000 to 34,000 (USD 737-864). AFP

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[GRG55]

Re: Indian Oil firms are weeks away from bankruptcy

I think the Indians have to a certain extent anticipated this, and have planned for it.

See Scooty Teenz : The electric scooter from TVS



Kinetic to launch CNG/LPG 4S and electric scooters

Hero Electric to launch five new electric scooter models this year

Note: 1 lakh = 100,000 1 crore = 10 million



From Sri Lankan Sunday Observer

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Great. Now they just need to figure out a way to keep the mains power on during the recharge cycle. ;)

[metalman]

Re: Indian Oil firms are weeks away from bankruptcy

Great. Now they just need to figure out a way to keep the mains power on during the recharge cycle. ;)

see you've been to india, too.

[Rajiv]

Re: Indian Oil firms are weeks away from bankruptcy

See this article - A breakthrough for India - Thorium reactor makes civilian nuke deal with America unnecessary from July of last year

Strategically India needs the nuke deal with America. But technologically, India achieved a solid breakthrough that will make the nuclear deal with American unnecessary. A team of scientists at a premier Indian nuclear facility has designed an innovative reactor that can run on thorium - available in abundance in the country - and will eventually do away with the need for uranium.

That is a fitting reply to the Australians that sold Uranium to China in abundance and refused India any Uranium. It is also a fitting reply to America trying to control Indian nuclear independence.

According to media reports, the novel Fast Thorium Breeder Reactor (FTBR), being developed by V. Jagannathan and his team at the Bhabha Atomic Research Centre (BARC) in Mumbai, has received global attention after a paper was submitted to the International Conference on Emerging Nuclear Energy Systems (ICENES) held June 9-14 in Istanbul.

Power reactors of today mostly use a fissile fuel called uranium-235 (U-235), whose "fission" releases energy and some "spare" neutrons that maintain the chain reaction. But only seven out of 1,000 atoms of naturally occurring uranium are of this type. The rest are "fertile", meaning they cannot fission but can be converted into fissionable plutonium by neutrons released by U-235.

Thorium, which occurs naturally, is another "fertile" element that can be turned by neutrons into U-233, another uranium isotope. U-233 is the only other known fissionable material. It is also called the "third fuel".

Thorium is three times more abundant in the earth's crust than uranium but was never inducted into reactors because - unlike uranium - it has no fissionable atoms to start the chain reaction.

But once the world's uranium runs out, thorium - and the depleted uranium discharged by today's power reactors - could form the "fertile base" for nuclear power generation, the BARC scientists claim in their paper.

They believe their FTBR is one such "candidate" reactor that can produce energy from these two fertile materials with some help from fissile plutonium as a "seed" to start the fire.

By using a judicious mix of "seed" plutonium and fertile zones inside the core, the scientists show theoretically that their design can breed not one but two nuclear fuels - U-233 from thorium and plutonium from depleted uranium - within the same reactor.

This totally novel concept of fertile-to-fissile conversion has prompted its designers to christen their baby the Fast ''Twin'' Breeder Reactor.

See also "Has time run out for India-US nuclear deal?"

and "Indo-US nuclear deal on the rocks - 16 Oct 07"

and "Time for action on the civilian nuclear deal"

In my interactions with enlightened people in public life, this question is often posed: why is the nuclear scientific community so sharply divided on the Indo-U.S. civilian nuclear deal? Such people find it difficult to come to a conclusion on whether the deal is good or bad for India. I was a member of a group of eight nuclear scientists who, at the end of December 2006, warned parliamentarians and the government about the language of the Hyde Act (which had received approval of the U.S Congress). The Act was clearly India-unfriendly and greatly damaged the well-balanced U.S.-India agreement of July 2005. The Prime Minister patiently heard the group and assured us that the genuine fears we expressed would be taken care of while negotiating the U.S.-India bilateral agreement (the 123 agreement).
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Our group of nuclear scientists included three former chairmen of India’s Atomic Energy Commission, Homi Sethna, myself, and P.K.Iyengar. We have all been involved in high-level policy formulation over many years. Dr. Sethna has remained neutral while Dr. Iyenger has maintained his opposition on the ground that India’s nuclear autonomy would be compromised by the U.S.–India nuclear deal.

The reality is that the 123 specifically recognises the continuing existence of India’s nuclear strategic programme. There is confusion with regard to India’s freedom to carry out tests in future. It is useful to recall that R. Chidambaram, Chairman AEC during 1998, when the Pokhran II nuclear explosions were carried out, claimed in public that India had acquired the ability to design a whole range of nuclear weapons, based on the 1998 test results and the computer modelling competence generated in the DAE. It is strange that the Bharatiya Janata Party, the leader of the NDA coalition in power then, does not seem to be impressed by Dr Chidambaran’s claims, in spite of his having been the principal architect of Pokhran II.

Of course, under the 123 agreement read with the Hyde Act and the U.S. Atomic Energy Act of 1954, there is a real possibility of a future administration suspending cooperation following an Indian test. No doubt the language of the 123 provides some comfort to India but nothing takes away India’s right to conduct a test if it considers it absolutely necessary, even facing the consequences of a U.S. cut-off.

[GRG55]

Re: Indian Oil firms are weeks away from bankruptcy

it's the subsidies that have to go. non oil-producers can't afford to subsidize consumption anymore. thank goodness, because their subsidies are distorting the market signal function of prices. if the indian gov't wants to subsidize the poor, then just give them cash and let them decide if they want to spend it on gas or something else. don't encourage fuel consumption in particular. and the same would help if imposed within oil producing nations as well.

Exactly. We are ready to join the oil shorts, if at least to play a short term correction, if we saw evidence of governments in India, China, and oil producers heading in the direction of elimination of subsidies. The time to have done that, from a political standpoint, was back when oil prices were relatively low. We are not holding our breath now.

About six or seven years ago the Indian government announced in a national budget they were going to phase out the subsidies for LPG cooking fuel.

The government subsidizes LPG produced in the domestic refineries & gas plants which are owned by the state petroleum companies ONGC and GAIL (Gas Authority of India Ltd), or the well connected like the Ambani family's Reliance Industries. These facilities do not produce anywhere near enough volume to meet national demand. But since the imported stuff isn't subsidized, and therefore cannot compete with the domestic supply, there are perpetual shortages of LPG because Caltex and other traders/importers are tired of losing money. Sort of the reverse of the oil situation it would seem.

Due to political backlash the govt dithered after the budget announcement. Now that world LPG prices have increased from under $300 per metric tonne at the time of that budget, to over $800 per tonne there is absolutely no possible way the govt can completely remove that subsidy.

Isn't this fun?

[touchring]

Re: Indian Oil firms are weeks away from bankruptcy

see you've been to india, too.

they can run the backup diesel generator.