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The government may appoint an international expert to assess the reasons for the decline in gas output from Reliance Industries(RELI.NS)-operated D6 block in the east coast ahead of changes in gas pricing from April 1, Oil Secretary Vivek Rae said on Thursday.
Revision in gas pricing is expected to benefit Reliance, whose existing contracts for gas sales from D6 block in Krishna Godavari basin will expire on April 1, 2014.
Output from the block, which was expected to contribute up to a quarter of the gas supply in the country, has been falling since April 2010, cutting supply to power and other sectors.
While Reliance blames geological complexities for the decline, upstream regulator the Directorate General of Hydrocarbons believes production has fallen because the company failed to drill the promised number of wells.
"There is some technical dispute about the quantum of gas available in some discoveries in KG D6 block.. that matter needs to be resolved before we take a final decision on applicability of the new formula," Rae told reporters at an industry event.
The finance ministry and a parliamentary panel have urged the government to ensure Reliance delivers any shortfall of gas it owes to customers at the old prices of $4.2 per million British thermal units (mmBtu).
"That matter is under discussion and we will see how best to resolve it," Rae said, adding the committee overseeing operation of the block will decide on the reasons for decline in output.
"If necessary we will even get in international experts to give their independent opinion and once it is resolved then all roads will be cleared either way," he said.
Rae said his ministry had sought the opinion of the law ministry on levying additional penalties on Reliance for not producing the promised level of gas in 2012/13 financial year.
He said the government had already issued a notice to the company for a $1 billion penalty for the shortfall.
BP (BP.L) has a 30 percent stake in the block while Niko Resources owns a 10 percent share.

Govt eyes cotton duty, electronics in rupee fight

The government could impose a 10 percent duty on cotton exports as early as Thursday aiming to boost overseas sales of value-added textiles to take advantage of a weak rupee and reduce the current account deficit, government sources and industry officials said.
The measure is due to be considered at a cabinet meeting on Thursday, where ministers are also expected to discuss a long-delayed plan to build two semiconductor factories with government subsidies to attract some $4 billion in investment.
Both policies, and a proposal to raise India's World Bank borrowing limit by $4.3 billion, could help bring in foreign exchange as India struggles to narrow the world's third largest current account deficit.
India is the second-biggest cotton producer after China and any curb on cotton exports could boost flagging global prices.
The government is trying to reduce a current account deficit which hit a record 4.8 percent of gross domestic product in the year ended March 31.
It hopes to take advantage of what is otherwise a damaging 16 percent fall in the rupee against the dollar since June 1.
India earned about $8.94 billion from cotton exports in 2012/13, equivalent to some 2.92 percent of total goods exports.
The Cotton Association of India (CAI) on Thursday said production should be 37.5 million bales in the year from October 1. Domestic consumption is likely to be 27-28 million bales.
"Any kind of duty on cotton exports would hit overseas demand for Indian cotton and would reduce farmers' returns," said Arun Kumar Dalal, a trader from Ahmedabad, a cotton market in Gujarat.
Measures discussed on Thursday could also include other steps for increasing cotton availability for textiles mills, which have been complaining of higher prices, said government sources directly involved in decision making.
SEMICONDUCTORS
The cabinet will also consider proposals on semiconductor manufacturing, a government official with direct knowledge of the matter said. Another official said the cabinet may give "in-principle" approval to the proposals.
Media reports have named IBM (IBM.N) and STMicroelectronics (STM.PA) among potential investors, while the companies have not officially confirmed the reports.
Israeli chipmaker TowerJazz (TSEM.TA) has said it has submitted a bid with two partners to build a plant in India.
India's demand for electronics products is forecast to rise nearly 10 times during the current decade to reach $400 billion by 2020.
Policymakers have said the electronics import bill could surpass that of oil due to lack of major local manufacturing.
As sales of smartphones, computers, television sets surge, annual imports of semiconductors is expected to touch $50 billion by 2020 from $7 billion in 2010

Rupee ends at 63.5, snaps five days of gains

 

The rupee fell on Thursday, ending five days of gains, as state-run banks likely bought dollars to meet defence needs of the government and as investors booked profit in shares.
Dealers cited RBI intervention to support the rupee as it approached 64 to the dollar.
The rupee has been on a recovery trail helped by recent steps like the passage of the pension bill in parliament and the central bank providing a concessional swap facility to banks to attract overseas deposits from non-resident Indians, which by some estimates can net around $10 billion, helping ease some of the recent despondency about policy making in India.
Foreign buying in Indian equities has continued to remain strong, now adding up to nearly $900 million in five sessions, including provisional data for Wednesday.
Analysts, however, are cautious to already call a turn in fortunes for the rupee.
"We'd be hesitant to say that this denotes a serious sentiment shift for India, and more likely an opportunistic short-term dynamic reflecting buying at (short term) technically oversold levels in EM equities," said Sacha Tihanyi, senior currency strategist at Scotiabank.
The rupee ended at 63.50/51 to the dollar versus 63.38/39 last close. It rose to 62.92 in the session, its strongest level since August 19.
After favourable trade data, that showed the trade deficit narrowed most in five months, economists awaiting July factory and August retail inflation data later on Thursday to provide cues ahead of the central bank's policy meeting next week. Wholesale inflation data is due on Monday.
India's factory output likely shrank for the third straight month in July, while wholesale inflation likely edged up to a six-month high in August.
In the offshore non-deliverable forwards, the one-month contract was at 64.29 while the three-month was at 65.56.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 63.94 with a total traded volume of $3.4 billion.

CPI inflation 9.52 percent in August - govt

 

The annual consumer price inflation eased marginally in August to 9.52 percent in line with expectations from 9.64 in July, government data showed on Thursday.
Food prices for consumers also eased to an annual 11.06 percent in August from 11.24 percent in July.
A Reuters poll published this week forecast that consumer inflation would ease marginally to 9.55 percent year-on-year in August.
Unlike most central banks, the Reserve Bank of India mainly uses the wholesale price index (WPI) for setting its monetary policy. August WPI data is due to be released on Monday.
(Reporting by Rajesh Kumar Singh; Writing By Sruthi Gottipati; editing by Malini Menon)

Sensex snaps 5-day winning streak, falls over 200 points

 

The BSE Sensex fell more than 1 percent on Thursday to snap a five-day winning streak as lenders such as HDFC Bank dropped on profit-taking, while sentiment also waned as the rupee reversed part of its recent gains.
Caution prevailed ahead of factory output and CPI data, scheduled for release later in the day even as foreign institutional investors remained net buyers of shares, bringing their total to nearly 57.8 billion rupees over the previous five sessions.
The rupee also fell after five days of gains, even as teh Reserve Bank of India (RBI) likely sold dollars via state-run banks starting at around 63.95 levels to prevent further weakness in the currency.
Dealers say the wholesale price inflation data and tempered expectations over the pace at which the U.S. Federal Reserve would withdraw its stimulus after its meeting next week was also seen weighing on the market.
"Macro data, Fed meet hold importance, but I see RBI policy on September 20 to be a silver lining amid the dark clouds," said Deven Choksey, managing director of KR Choksey Securities.
The Sensex fell 1.08 percent, or 215.57 points, to end at 19,781.88, retreating from their highest level in nearly 1-1/2 months in the previous session.
The broader Nifty fell 1.06 percent, or 62.45 points, to end at 5,850.70, closing below the psychologically important 5,900 level after gaining nearly 11 percent over the previous five sessions.
Among banks, private lenders ICICI Bank (ICBK.NS) fell 1.9 percent, while HDFC Bank (HDBK.NS) ended 2.1 percent lower mainly on profit-taking.
Wholesale-funded banks were hit more. Yes Bank (YESB.NS) slumped 7.4 percent, while Indusind Bank (INBK.NS) ended 5.4 percent lower.
Jaiprakash Associates (JAIA.NS) slumped 11.6 percent after earlier rising as much as 2.1 percent on profit-taking. It agreed to sell its cement plant to UltraTech Cement (ULTC.NS) on Wednesday.
Jaiprakash Associates' shares had risen about 27 percent in the previous five sessions in anticipation of such a sale, dealers said.
Shares of Tata Motors (TAMO.NS), India's largest automaker by revenue, fell 2.1 percent after the company said on Wednesday its global wholesale vehicle sales fell 16 percent on year in August, hit by a drop in passenger vehicle sales.
Oil and Natural Gas Corp (ONGC.NS) fell 3.6 percent after India's oil secretary said India will decide on raising the retail prices of diesel and cooking gas in a few weeks, disappointing traders who were looking for an immediate decision.
Among the gainers, IDFC (IDFC.NS) shares rose 2.8 percent after the Reserve Bank of India on Wednesday lifted restrictions placed on foreign investors purchasing the company's stock as their shareholding fell below the prescribed limit.
Shares in Housing Development Finance Corp (HDFC.NS) ended 0.3 percent higher after earlier falling as much as 2.3 percent as FTSE increased its "investability weight" to 100 percent from 74 percent in its global equity index series, as per its website.