Competitive bidding mooted for city gas
Petroleum and Natural Gas Regulatory Board (PNGRB) has proposed a competitive bidding process to select public and private entities who would develop city gas distribution networks.
The downstream oil regulator has issued draft regulations to define the proposed method of selection and building or expanding local gas distribution networks, along with ways to determine the network tariff. The PNGRB invited suggestions from stakeholders and experts to finalise the draft regulations. These regulations intend to attract investments in the gas distribution networks, while protecting the interests of the consumers. The networks will have to follow technical standards and specifications, as may be prescribed by the Board.
According to the proposal, the Board may on its own invite preliminary bids from entities interested in laying, operating or expanding a network for any specified geographical area. The bids will then be evaluated basis the technical and tariff details submitted by the entities.
New guidelines to speed up public investment projects
The government has issued fresh guidelines intending to reduce delays in public investment projects, and to quicken the implementation of these projects. The guidelines include:
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It will become mandatory to obtain a fresh appraisal and approval in case the project costs increase by Rs.500 crore for a single project, instead of the current Rs.150 crore, for projects being undertaken by the Ministry of Surface Transport.
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The government has permitted ministries to approve the cost increase that may occur due to exchange rate variations, statutory levies and price escalations during the project's approved time cycle. The ministries may approve the increases independently or in consultation with the Planning Commission. The new rules will be applicable to all projects formulated in the Eleventh Plan period from 2007-12.
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The government departments will not require fresh approvals for seeking equity or loan support in the 11th Plan, in case these funds are within the already approved limits.
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Any support beyond the approved limit in the form of the Central government or a Central public sector enterprise (CPSE) providing share capital to a new or any existing company, will require fresh appraisal/approval.
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The Expenditure Finance Committee (EFC), headed by the expenditure secretary, will 'appraise' all those projects, which involve setting up new autonomous bodies, central universities or SPVs, irrespective of the outlay or the nature of ministry or department. All such, will need approvals by the Union Cabinet or the Cabinet Committee on Economic Affairs.
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New concession policy for single super phosphate planned
The Department of Fertilisers (DoF) is planning to shortly introduce an inputbased concession policy for single super phosphate (SSP).
The base price determined on the cost of raw materials, is slightly over Rs.1,300 per tonne. Currently, the DoF gives an ad-hoc concession of Rs.1,125 per tonne of SSP, which also includes a freight charge of Rs.150 introduced in April this year.
The subsidy to be paid by the government will be determined on the principle of escalation and de-escalation of the raw material costs. Also, a monthly review will be conducted to consider changes in the base price.
New aviation policy by early-2008
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Aerotropolis
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A city in which the layout, infrastructure, and economy are centered around a major airport. Some of the notable aerotropolis in the world are-Beijing Capital International Airport, Dallas-Fort Worth International Airport and Chicago O'Hare International Airport. |
The government will announce its new aviation policy by early-2008, to facilitate creating six regional airports by 2008 and 500 mega airports within 10 years. The policy will prescribe guidelines for state governments, private investors and Airport Authority of India (AAI) to build these airports.
Entrepreneurs will be entitled to set up merchant airports supported aerotropolis. It will have provisions to build 10 aerotropolis in 10 major metros and establish air linkages for passengers. Moreover, the number of operational airports will be increased from the present 50 to 80, by 2008. The Ministry is also developing a mechanism to set up multi-model merchant airports across India.
Government to allow 49 per cent foreign holding in PSU refineries
The Government proposes to allow 49 per cent as Foreign Direct Investment (FDI) in various areas including public sector oil refineries, commodity exchanges, and Credit Information Companies (CIC). Within civil aviation, it is likely to allow 74 per cent FDI for non-scheduled, chartered and cargo airlines.
These proposals have been finalised as part of the long-pending FDI policy review, and are likely to be presented to the Union Cabinet for approval.
In the petroleum and natural gas sector, the policy proposes to forgo the compulsion of foreign companies having to divest up to 26 per cent equity within five years for trading and marketing petroleum products. It also proposes to acquire FIPB approval to increase the foreign equity cap from 26 per cent to 49 per cent in petroleum refining, by public sector undertakings. However, the proposed policy does not envisage disinvestments or dilution of stake in existing PSUs.
The FII investment, which will be within the overall limit of 49 per cent foreign investment, will be subject to conditions including capping the holding (direct and indirect) of a single entity at 10 per cent, and declining representation of the FIIs on the Board of Directors. In addition, it has stipulated that any acquisition of over 1 per cent would have to be reported to the RBI. Also, FDI would have to comply with the Credit Information Companies (Regulation) Act, 2005.
For commodity exchanges, a composite ceiling of 49 per cent on foreign investment has been proposed, with FII investment limited to 24 per cent. FDI in commodity exchanges will be allowed with specific prior approval of FIPB. However, the policy does not permit FIIs to be represented on the Board of Directors of the commodity exchange.
Also, investments by registered FIIs under the portfolio investment scheme would be distinct from FDI, and would be outside the purview of conditions specified in Press Note 2 (2005) in case of construction development projects.
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