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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 82, 18 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,903.21 ▼ 108.68 NIFTY: 10,593.15 ▼ 35.35 NIKKEI 225: 22,539.54 ▲ 63.60 HANG SENG: 31,093.45 ▲ 95.47 `/$: 67.15 ▼ 0.04 `/€: 78.44 ▲ 0.30 BRENT: $74.37 ▼ $0.92 GOLD: `30,623.00 ▼ `93.00 STRESSED POWER ASSETS No distress sale: Centre SBI and other bankers identify 11 stressed projects for auction, REC moots a plan too THE SUPREME Court on Tuesday gave the go-ahead to the Centre for providing reservation in promotion in government jobs for employees belonging to the scheduled caste (SC) and scheduled tribe (ST) categories in "accordance with law", reports PTI. The court gave the order after taking into account the government's submissions that the entire promotion process had come to a "standstill" due to the orders passed by various high courts and also direction by the SC for "status quo" in a similar matter in 2015. Plans to up import tax on edible oils INDIA IS considering raising import tax on some edible oils, government sources said on Tuesday, reports Reuters. India, the world's biggest vegetable oil importer, currently levies 30% import tax on soyoil and 25% each on rapeseed and sunflower oils. Stressed assets in power sector ~`70,000 cr NPAs in the power sector 12,640 MW FE BUREAU New Delhi, June 5 STRESSED ASSETS IN the powersectorwould not be“sold for a song” as these projects would become viable with an upcoming surge in demand, powerministerRKSinghsaidon Tuesday.A State Bank of Indialed consortium of banks had identified as many as 11 stressed power projects with a combined capacity of 12,460 MW for possible takeover by new promoters under the so-called Samadhan scheme (see chart). Addressingthemedia,Singh saidstate-runRuralElectrification Corporation has also come upwithaplantorevivestressed power assets and the finance ministry would consider this proposal aswell. Under the Samadhan scheme, the identified power projects would be assigned to rating agencies to determine their“sustainable debt” levels. Thereafter, banks would put 51%equityoftheseprojectsup for auction to gauge the industry’s interest for such projects, while the remaining would be heldbackbybanksandexisting promoters so that they get a chance to redeem their stakes when demand revives.According to official sources, other power projects, apart from the 11 shortlisted,can also be considered underSamadhan. BANIKINKAR PATTANAYAK New Delhi, June 5 Assets identified under SBI-led 'Samadhan” scheme for take-over by other firms Continued on Page 2 THE GOVERNMENT IS weighing an option to rope in the NationalInvestmentandInfrastructure Fund (NIIF), apart from NTPC, to take over some stressed power assets, a senior official told FE.A detailed proposalisexpectedtobediscussed at a meeting that will be soon convened by the finance ministrytoresolvetheissueofmassive bad loans in power — estimated at `1.77 lakh crore — following last week’s order by theAllahabad High Court. “The power ministry is readyinganumberofproposals onhowtoaddresstheNPA(nonperforming asset) issue in the power sector.Asking NIIF and companieslikeNTPCtopitchin could be one of the options, which needs further deliberations though,” said the official. As part of the proposals, which are still at the discussions stage, the bad assets would be rated bycredit rating agencies and then a valuation ofthesewillbearrivedat,based on theirrevival prospects.Subsequently, they will be handed over to NIIF, which will invite bids for the assets, with a base price.Alternatively,it mayrope in state-run companies like NTPC or other private firms to operate the stressed assets on contractual basis. implemented soon, Page 3 Assets resolved through SHAKTI-scheme coal allocation Among the 11 projects under Samadhan scheme are KSK Mahanadi's 2,400-MW plant in Chhattisgarh Prayagraj Powergen's 1,980-MW unit in UP RKM Powergen's 1,440-MW unit in Chattisgarh Jaypee Power Ventures’ 1,320-MW Nigrie unit Lanco Infratech’s 1,200-MW Anpara project Ways to invest in volatile debt markets Investors who are wary of volatility in the debt markets should switch to either short-term funds or look at lock-in options like fixed maturity plans of mutual funds ■ Personal Finance, P13 QuickPicks Kerala to tap diaspora to raise funds for state’s development THE FISCALLY-STRESSED Kerala government will soon set in motion a process to tap its diaspora to ` raise funds for the state's physical and social infrastructure development, reports M Sarita Varma in Thiruvananthapuram. Pravasi Chitty, a chit fund for non-resident Keralites (NRKs), will be launched on June 12, with an initial plan to raise `10,000 crore from NRKs in the UAE in the current financial year. In the next phase, the facility will be extended to cover the NRKs in the Gulf Cooperation Council countries as well; the aim will be to mobilise `30,000 crore by 2020, official sources said. PAGE 2 CCI orders probe against BCCI for‘abuse of dominant position’ THE COMPETITION COMMISSION of India (CCI) has ordered a detailed investigation against the Indian cricket board (BCCI) for the alleged abuse of its dominant position with regard to running professional domestic cricket leagues in the country, reports PTI. The decision has come on a complaint filed by Pan India Infraprojects (formerly known as Essel Sports). In a 14-page order dated June 1, the CCI said there is "prima-facie" a case of abuse of dominant position by the BCCI, which is in violation of competition norms. PAGE 4 Oil nudges at one-month lows as supply concerns mount OIL NEARED its lowest in a month on Tuesday following a report that the US government had asked Saudi Arabia and other major exporters to increase oil output, reports Reuters. Brent crude futures lost $1.19 to trade at $74.10 a barrel by 2.21 pm GMT, having fallen earlier in the day to $73.81, the lowest since May 8. US West Texas Intermediate crude fell 8 cents to $64.67 a barrel. The US government has asked Saudi Arabia and some other Opec producers to increase oil production by about 1 million barrels per day, Bloomberg reported on Tuesday. Non-performing assets (NPAs)inthepowergeneration sectorhave more than doubled to around `70,000 crore from `34,244 crore a year ago.Also, about 10,000 MW of power generation assets with a total debt of over `34,600 crore are nowbefore National Company Law Tribunal, constituting 18% of the sector’s exposure to lenders. Out of these assets, 8,800 MW (debt of `24,000 crore)areinearlystagesofconstruction with major milestones yet to be achieved. The stressed asset situation in the power sector is seen to worsen after the the Reserve BankofIndia(RBI)issuedacircular on February 12 directing banks to finalise a resolution planincaseofadefaultonlarge accounts of `2,000 crore and above within 180 days, failing which insolvency proceedings will have to be invoked against the defaulter.The RBI refused to provide any special dispensation to the power industry, after it pleaded that the stress inthesectorwaslargelybeyond the control of the power companies.In a movewelcomed by lenders, the Allahabad High Court offered temporary relief to a clutch of such vulnerable powerprojectsbyorderingthat noactionbetakenintheircases under the RBI circular till the finance ministry called a meetingofrelevantstakeholders in June to see if the issues could be resolved. ● PUNJAB PANEL Special Feature Centre readying `8,000-cr sugar package, says Paswan Cabinet to take it up on Wednesday; package has sops announced in May Bagasse & largesse ■ Govt to bear interest subsidy of over `1,300 cr (over 5 years) on loans of `4,400 cr to mills to boost ethanol capacity ■ Setting up buffer stock of 3 million tonnes; carrying costs to govt at over `1,200 crore ■ Output-linked sop of `5.50/quintal of cane, announced in May ting up a buffer stock of 3 million tonnes of sugar and interest subvention on facilitating credit to sugar mills to boost theirethanol-makingcapacity. The government has to bear a carrying cost of around `1,200 crore ayearforthe creationofthebufferstock.Moreover, a two-year moratorium on repayment on the loans for increasing ethanol production could be provided to sugar mills.The governmentwill pay a part of the total interest burden over five years, which is expected to be in excess of `4,400 crore. The bailout package has been worked out by the food ministry and the Centre wants to launch it at the earliest, so that cane arrears are cleared much before the crucial 2019 general polls, analysts said. Already,theBJPwitnessedasetback in Lok Sabha by-poll in Kairana in sugarcane-growing westernUttarPradesh.Paswan, however, refuted suggestions thatthepackageislinkedtothe recent poll results. Continued on Page 2 9,030 MW FE BUREAU New Delhi, June 5 FACING FARMERS’ IRE over staggering sugarcane arrears of more than `22,000 crore, the Centre will soon announce a bailoutpackageof`8,000crore to enable sugar mills clear the dues,accordingtofoodminister RamVilas Paswan. The cabinet is expected to take up the proposals on Wednesday. “A proposal of `8,000 crore has been sent to the Cabinet and it will take the decision soon,” Paswan told reporters while highlighting his ministry’s achievements in the last fouryears. While the Centre has been helping the sugar industry clear cane dues in recent years through loans and interest subsidy, the steps haven’t prevented arrears from piling up atregularintervalswhensugar pricesdrop,thankstogenerous and unreasonable hikes in cane prices by both the Centre and states like Uttar Pradesh. Official sources said the packageincludesthe`5.5-perquintal production-linked subsidy already announced in May,apart from the costof set- CAIRN’S BARMER PSC ‘Let rich farmers pay for power’ FE BUREAU New Delhi, June 5 AFTER MORE THAN two decades, the Punjab government may start charging the state’s rich farmers for the electricity consumed for farming, a move that could also curb excessive use of groundwater for cultivation of rice and wheat in the sate. According to the draft farmers’policy,unveiled bythe Punjab State Farmers’ and Farm Workers’ Commission, “power subsidy will be strictly restricted to non-income tax payee farmers”. It added that initially,farmers owing 4 hectares of land or more will have to pay a flat rate of `100 per BHPper month for electricity;subsequently,itsuggested,powersubsidyshouldbe rationed to such farmers subject to a“financial cap”. Thecommission’schairman Ajay Vir Jakhar told FE: “We are not asking the government for anyadditional expenditure.” Continued on Page 2 ■ `1.4L-cr solar scheme to be 1995 Nov 2016: PSC for Rajasthan block signed between government and Cairn (now Vedanta) for 25 yrs » 2009 Company seeks extension of PSC Getting their heads around it Delhi HC directs government to take decision on PSC within two months » » Mar 2017 Govt extends PSC via modified policy, ups its profit share » May, 2018 Delhi HC directs government to extend PSC on initial terms PSC: Production-sharing contract SAURABH KUMAR New Delhi, June 5 THE GOVERNMENTIS likelyto appeal against the Delhi High CourtorderinfavourofCairn,an arm ofVedanta,that mandated that the initial terms must continue for the company’s extended production-sharing contract (PSC) with the government for its prolific Barmer (RJ-ON-90/1) block in Rajasthan. The order implied that the companywon’t have to shelloutanextra10percentage pointsasgovernment’sshareof “profit petroleum” during the Members of an NGO stage a demonstration to raise awareness on the occasion of World Environment Day, in Bengaluru on Tuesday extended term of the PSC between 2020 and 2030. Since the order was passed byasingle-judgebench,thegovernment may file the appeal before largerbench of the same court orgo to the apex court. According to a source, the government believes that the policy it made last year supersedestheinitialcontract.“Whatever was the initial contract, there was a policy made thereafter and the policy is uniform for all,” said the source, asking not to be quoted. Continued on Page 2 PMI FE BUREAU Services dip in May India's services sector activity contracted for the first time in three months in May as new business orders stagnated and cost pressures intensified amid higher fuel prices. 56 Manufacturing PMI 54 52 51.2 49.6 44 46.8 Dec 2016 MOST MAJOR ECONOMIES are either spelling out ambitious policies on artificial intelligence (AI)-led growth or, absent a vision statement, are letting their investment in AI do the talking. For instance, China, which has the most comprehensive national plan, is pumping in $7 billion through 2030,with a $150-billion AI industry in mind by that year; the US, ■ NITI working with Continued on Page 2 Dec 2018 Note: Reading below 50 suggests contraction and above it indicates expansion Source: Nikkei; IHS Markit Microsoft and Forus Health on early detection of diabetic retinopathy ■ Microsoft and Icrisat developed an AI app to send advisories on the optimal date to sow, sowing depth, etc ■ NITI hackathon featured ReadEx that does real-time question generation using neuro-linguistic programming ■ Railways will use AI for remote monitoring via nonintrusive sensors for monitoring signals, track circuits, etc BANIKINKAR PATTANAYAK New Delhi, June 5 Continued on Page 2 49.6 Services PMI AI could add ~$1 bn to India’s GVA by 2035: NITI Aayog which has no specific AI policy, is funding AI research through the Defense Advanced Research Projects Agency and Intelligence Advanced Research Projects Activity while its academia and private sector are pushing the frontiers of AI research.Against such a backdrop, the NITI Aayog’s recently published working paper, National Strategy for Artificial Intelligence #AIforAll,presents a comprehensive AI vision for India. Govt triples corpus to `8,000 cr for MSME cos AI adoption, NITI Aayog says citing Accenture data, could add $957 billion to the $6,397 billion gross value added projected for 2035—a 15% boost. The NITI Aayog paper identifies five focus areas where the gains could drive not just growth but greater inclusion — healthcare, agriculture, education, urban-/smart-city infrastructure, and transportation and mobility. 48 46 ● CREDIT GUARANTEE THE GOVERNMENT HAS effected a major overhaul of its credit guarantee scheme to make adequate loans available to micro and small enterprises easily by more than tripling its corpus to `8,000 crore and allowingnon-bankingfinancial companies (NBFCs),along with banks, to avail of official guarantees to extend credit to such units, MSME secretary Arun KumarPanda told FE. The corpus of the credit guaranteefundhasbeenraised substantiallyfrom`2,500crore at the behest of Prime Minister NarendraModi,Pandasaid.The governmenthasalsodecidedto raiseitsguaranteelevelto75% of such loans,against 50% earlier, as it intends to enable smoother credit flow to such units, keeping in minds their financial constraints and massive employment generation potential, Panda said. “With higher guarantee coverage, banks will feel more comfortable to sanction loans to such enterprises,”he added. 50 AI ON THE FUTURE SARTHAK RAY New Delhi, June 5 Continued on Page 2 Govt to challenge Delhi HC verdict ILLUSTRATION: ROHNIT PHORE IN THE NEWS Govt jobs: SC nod for reservation in promotions NIIF to be roped in for bailouts 40,000 MW FIXING CANE ARREARS
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