Tag: government

Windfall tax explained — why ONGC, Oil India are spooked by it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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On a day the Indian market is making a sort of recovery — the Nifty50 is close to 150 points in the green — Indian oil producers are under pressure and are trading in the red.

Why? Well, the UK government yesterday (May 26) announced a 25 percent windfall tax on profits of oil and gas companies with crude surging over 50 percent in 2022 so far and now there is speculation that similar steps can be taken here too (in India) as the government looks at additional revenue mobilisation measures to offset revenue loss due to recent excise duty cuts, higher fertiliser subsidies etc.

This seems to have made investors nervous and it’s being reflected in the stock movement of all the oil and gas majors like ONGC, Oil India, Reliance and Vedanta.

Key things for govt to ponder

The government will need to weigh several key issues if it considers a windfall tax on oil producers. There are not one but several important critical factors to be considered.

The first consideration will be the production sharing contracts (PSCs). Now, these are long term contracts where the government is also a party and there are a lot of other investors involved. As the government is also party to whatever gains are made under the PSCs, when the prices go up, the government also stands to profit.

The second consideration is the royalties and ad valorem duties and most importantly, in case such changes are made to the taxation policy, the govt will have to consider what signal this will send out to the foreign investors under the FDI policy?

PSUs and dividends

If one looks at the revised estimates of the FY22 budget, most of the public sector units (PSUs) have paid up handsome dividends to the government. ONGC has alone paid over Rs 4000 crore. A windfall tax might mean fewer or no special dividends going forward.

Quick calculation

As per analysts, every $10/bbl change in net oil price realization, changes ONGC’s FY23E earnings by Rs 7.10/share (10.9 percent, Oil India’s earnings by Rs 7.60/share (7.7 percent).

It is noteworthy that in 2022 so far, crude has seen a gain of over 50 percent (From $78 on December 31, 2021, to $117 on May 26, 2022)

Watch the accompanying video of CNBC-TV18’s Sapna Das for more details.

Catch latest market updates with CNBCTV18.com’s blog

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Govt to stick to borrowing calendar; definitely looking at PSB privatisation: Sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government is not looking at extra borrowing at this moment,  official sources told CNBC-TV18, adding that it plans to stick to the borrowing calendar.

The government will have to balance the budget on revenue loss arising out of tax cuts. It will review the numbers after the first quarter this fiscal, the sources added.

The sources also said that revisiting the inflation target was not on the table.

Talking about the rupee-rouble arrangement, sources said that discussions were still on at present and the earlier system is still alive.

Sources said the government will have to see if earlier rupee-rouble arrangement could work in a changed global situation.

Also Read: FM Nirmala Sitharaman says entire burden of excise duty cuts borne by Centre

The sources said that the government was definitely looking at PSB privatisation and was expecting the land lease policy to up for the Cabinet’s approval soon as well. The CONCOR stake sale may take more time, even after the land lease policy receives the Cabinet’s approval, the sources said.

The time may still not be right for GST rationalisation due on inflation overhang, the sources said, adding that the government has to take a call on  rate rationalisation and the GoM report on rate rationalisation was still awaited.

The government is also not considering bringing ATF under GST, the sources added.

The GST Council meet is likely to be held in June. However, the date is not yet decided.

The sources also added that the government was looking at ways of bringing unutilised cement stocks from the south. “The government is planning to lift idle cement stocks from South India to cool prices,” the sources said.

Also Read: FICCI and CII welcome govt’s move to reduce excise duty on fuel, say will help bring down inflation

Watch video for more

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Left alleges ‘scam’ and ‘sell off’ ahead of LIC IPO as it accuses the government of selling off national assets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Left parties on Thursday attacked the government over its move to float the LIC IPO alleging that it was a “scam” and a “sell-off”. The CPI in a statement said it was a part of the “privatisation spree” of the government.

Communist Party of India (CPI) general secretary D Raja said it was a matter of regret that the BJP-led NDA government is selling off all national assets through monetisation policy and privatisation of public sector units.

He said it was a “tragedy” that those long-term assets are being sold to collect revenue to meet the current expenditure. Raja said the move was also the failure of the government to secure enough finances through either retaining the earlier higher corporate taxes or hiking them further, if necessary, to offset the heavy losses caused by rightist US-model economic policies.

The sell-offs are bound to affect the sovereignty and economic independence of country which in contrast will benefit the corporates, both domestic and foreign, he said.

Also Read: Fertilizer subsidy likely to shoot up to a record Rs 2.50 lakh crore

Continuing with retrograde right-wing measures, the Modi government has announced that its share capital in the country’s flagship financial institution, LIC will be sold off. With such sale, 22 crore of LIC’s shares are being given in private hands which will fetch about Rs 20,000 crore of revenue to the central government.

“The move is totally a retrograde one, which is against the national interests and against the interest of LIC’s policy holders. The Party calls upon the government to immediately halt its privatisation spree as well as sell-off of its national assets,” Raja said.

CPI-Marxist general secretary Sitaram Yechury called the move a Scam of gigantic proportions, and a mega plunder of people’s resources. “LIC has been the biggest contributor funding the development of India’s infrastructure. Since 1956 it contributed ? 35L Cr. Now these funds would be placed at the disposal of predatory foreign fund managers who seek private profit maximisation in stock markets of the world.”

In the interest of India and our people all these questions concerning LIC IPO must be answered. The procedures adopted smack of a scam of gigantic proportions. Scrap this IPO, he tweeted.

Also Read: LIC IPO may be the much needed windfall for this government department

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LIC IPO may be the much needed windfall for this government department

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The proceeds of insurance major Life Insurance Corporation’s (LIC) initial public offering (IPO) could be a bonus for the government’s divestment target for the financial year 2023. Government sources told CNBC-TV18 that the LIC IPO mop-up was not factored in for the budget estimates of divestment for the current financial year.

“Expect IPO receipts to be a bonus for FY23 budget aim,” said the sources, who did not want to be named.

The government has set its disinvestment target for the current fiscal at Rs 65,000 crore with the Rs 21,000 crore aimed to be raised from the LIC IPO not factored in as it had considered the proceeds from the public issue for FY22 divestment aims.

The government, for the past few years, has not been able to achieve its divestment targets. It mopped up Rs 18,000 crore against the Rs 78,000 crore divestment target set for FY22. In FY21, the Centre achieved only 16 percent of the Rs 2.10 lakh crore divestment target set while in FY20, it mopped up 48 percent of the Rs 1.05 lakh crore.

Source: DIPAM

“Aim was to get LIC listed even with the smallest possible issue size… The government’s concern was to get LIC listed instead of budget receipts,” added the sources.

The LIC IPO, which was to be launched in March this year, was postponed after Russia’s invasion of Ukraine that sent shockwaves through markets that may have led to reduced enthusiasm around the public issue.

The LIC IPO is now set to open on May 4 and will close on May 9. It will open for the anchor tranche on May 2.  The government has set a price band of Rs 902 to 949 per equity share, with a discount of Rs 60 for policyholders.

The IPO size has been trimmed to raise Rs 21,000 crore, from the earlier Rs 35,000 crore, with the government reducing its stake dilution to 3.5 percent from the earlier 5 percent.

As sources told CNBC-TV18 earlier, the government had asked for an exemption from market regulator SEBI from the mandatory 5 percent listing as the market would not have enough appetite for the same.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ola Electric and Pure EV may face “heavy penalty” for EV fires if government panel finds them guilty

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With increasing incidents of electric two-wheelers catching fire, Union minister Nitin Gadkari on Thursday said the government will issue necessary orders on defaulting companies after receiving the report of an expert panel that has been formed to enquire into the matter.

In a series of tweets, Gadkari said several mishaps involving electric two-wheelers have come to light in the last two months.

“We have constituted an expert committee to enquire into these incidents and make recommendations on remedial steps. “Based on the reports, we will issue necessary orders on the defaulting companies,” the road transport and highways minister said.

Also Read: Now, Okinawa Autotech dealership burns down to ashes in EV fire

Gadkari added: “We will soon issue quality-centric guidelines for Electric Vehicles.” The minister asserted that if any company is found negligent in its processes, a heavy penalty will be imposed and a recall of all defective vehicles will also be ordered.

Meanwhile, companies may take advance action to recall all defective batches of vehicles immediately, Gadkari tweeted. “Under the leadership of PM Shri @narendramodi ji, our government is committed to ensure safety of each and every commuter,” he tweeted.

The government had ordered a probe last month after an e-scooter launched by ride-hailing operator Ola’s electric mobility arm caught fire in Pune. The Centre for Fire Explosive and Environment Safety (CFEES) had been asked to probe the circumstances that led to the incident and also suggest remedial measures, according to the road transport ministry.

The ministry had also asked CFEES to share the findings along with its suggestions on measures to prevent such incidents.

With PTI inputs

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government invites Expression of Interest for setting up manufacturing zone for power, renewable energy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has invited EoIs from interested parties for setting up a manufacturing zone on pilot basis for the power and renewable energy sector. The last date to submit the proposal is June 8, 2022, according to a notification on the website of Ministry of Power.

Also Read: Have capital outlay of Rs 1,000 crore over next 5 years: Torrent Power

“Expression of Interest (EoI) for setting up a manufacturing zone on pilot basis for the power and renewable energy sector is on the website of Ministry of Power and MNRE and it is requested to consider participating for submission of EoI by June 8, 2022,” the notification dated April 13, said.

Ministry of Power had earlier issued orders for implementation of a scheme to set up a manufacturing zone for the sector on pilot basis with a budgetary outlay of Rs 400 crore over a period of five years.

Also Read: As renewable energy costs dip, usage steadily increases: IPCC report

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

E-passports to have advanced security features: Government

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Thursday said it is planning to roll out e-passports with advanced security features such as Radio Frequency Identification (RFID) chip. Minister of State for External Affairs V Muraleedharan said in Rajya Sabha that the personal particulars of an applicant would be digitally stored in the chip that would be embedded in the passport booklet.

The government is expected to roll out e-passports this year. ”The ministry is planning to issue chip-enabled e-passports to citizens with advanced security features. The e-passport features contactless smart card technology, including an embedded Radio Frequency Identification (RFID) chip embedded in the front or back cover or page of the passport,” he said in a written reply to a question on e-passports. He said the ”chip characteristics” are in line with guidelines of the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations which defines standards for travel documents.

”The personal particulars of the applicants would be digitally stored in the chip, which would be embedded in the physical passport booklet,” the minister said. ”In case, anyone tampers with the chip, the system shall be able to identify it, resulting in the failure of the passport authentication,” he added. He said in addition to providing protection against fraudulent practices and tampering, the e-passport will help in substantially upgrading existing passports and services to the citizens. Muraleedharan said that 93 passport Seva kendras and 428 post office passport Seva kendras are operational in the country at present. To a separate question, he said longer visa processing time has been reported in countries including UK and Canada during the COVID-19 pandemic. ”While the issuance of visa and the visa-related process is the sovereign and unilateral decision of the respective countries, the government emphasizes the importance of easier, faster and liberalized visa process for Indian nationals at various levels and in bilateral meetings/forums with foreign countries,” he said in his reply.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow