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This is an archive article published on June 21, 2013
Indian rupee fall steels govts resolve to push delayed reforms
The government is set to push major reform initiatives on Friday including decision to raise gas prices and permission to private sector power companies to get pass through status for high cost imported coal as it looks to boost economic sentiments in the country hit hard by a slowing industrial growth and sharp fall in rupee.
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Indian rupee fall steels govts resolve to push delayed reforms
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The government is set to push major reform initiatives on Friday including decision to raise gas prices and permission to private sector power companies to get pass through status for high cost imported coal as it looks to boost economic sentiments in the country hit hard by a slowing industrial growth and sharp fall in rupee.
The reform proposals are expected to be taken up by the cabinet committee on economic affairs that will meet on Friday. The CCEA is also likely to consider proposal to sell governments 5% stake in Neyveli Lignite and also allocate 10 million tonne of foodgrain to be sold under the Open Market Sale Scheme (OMSS) to release excess stock held with Food Corporation of India (FCI).
The CCEA proposal on gas price revision is broadly based on the recommendations of the Rangarajan panel that has said price of fuel to be raised to $ 8.8 per mmBtu from present 4.2 per mmBtu. Sources said that finance and fertiliser ministries have endorsed oil ministry’s proposal for a 60% increase in gas prices to about $ 6.7 per mmBtu immediately. Power and fertiliser ministry have also given their views on gas pricing that is well below Rangarajan’s formula.
Sources also said that while CCEA may consider the proposal on gas price hike,it may refer it back to e-GoM that was originally looking at issues pertaining to the fuel allocation and pricing. The matter was referred to CCEA as it was pointed out that the said E-GoM only has mandate on gas allocation and not on pricing.
With regard to the power sector,the CCEA is likely to approve amendments to the coal distribution policy,allowing power firms importing coal to meet shortfall in fuel supply from Coal India to pass on additional fuel costs to consumers.
The inter-ministerial panel on coal price pooling suggested amending the coal distribution policy on the advise of the Central Electricity Regulatory Commission (CERC).
This will give relief to several private sector power projects,many of which are facing the risk of default on power purchase agreements (PPA) due to the reduction of coal supply from CIL or delays in production from captive blocks.
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With regard to additional allocation of foodgrains under OMSS,8.5 mt of wheat would be allocated for bulk buyers like flour millers while rest would be sold through retail outlets. OMSS was not in operations since April as FCI was procuring wheat from farmers for the current season. FCI has a wheat stock of around 47 mt at the start of the month.
The CCEA will also push governments disinvestment agenda by allowing sale of 5% of its equity in NLC through OFS route to garner around R 450 crore to the exchequer.
The disinvestment in NLC was stuck for some time under pressure from the Tamil Nadu government.
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