Business, Economy & Banking Current Affairs - 2019

Business, Economy and Banking in Current Affairs 2019 with latest news and current affairs in Agriculture, Industry, Banking, Capital Markets, Import and Export and Government schemes in commercial sector.

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CCEA approves Petroleum Ministry’s proposal on shale gas exploration and exploitation

The proposal of the Ministry of Petroleum and Natural Gas on the policy on exploration and exploitation of shale gas and oil by National Oil Companies (NOCs) on acreages under the nomination regime has been approved by the Cabinet Committee on Economic Affairs.

How the policy on exploration/exploitation of shale gas by NOCs would help?

The policy will facilitate NOCs to perform exploration and exploitation of unconventional hydro-carbon resources particularly shale gas and oil in their already awarded Petroleum Exploration License and Petroleum Mining Lease (PEL/PML) acreages under the nomination regime. The policy also stipulates the terms/conditions for guiding these activities.

Why the government is bringing a different policy for shale oil/gas?

The production requirements and profile for shale oil and gas is different from conventional gas and oil. Therefore, there was a need of the policy in order to achieve early development of these resources and to address issues evolving out of Exploration & Production activities in shale gas and oil.

CCEA approves auction methodology for Coal Block Auction

Screenshot_1Cabinet Committee on Economic Affairs (CCEA) has given approval to the policy for auction by competitive bidding of the coal blocks which aims to ensure greater transparency and will pave the way for the government to auction explored blocks.

The policy provides for:

Auctioning the fully explored coal blocks providing for upfront and production-linked payments and benchmarking of coal sale prices.
Expediting the auction by exploration of regionally explored blocks through up gradation of geological data to a reasonable level of certainty.
Production linked payment on rupee per tonne basis, plus a basic upfront payment of 10% of the intrinsic value of the coal block.
The intrinsic value of coal block will be estimated on the basis of Net Present Value (NPV) of the block arrived at through Discounted Cash Flow (DCF) method. To benchmark the selling price of coal, the international FoB (freight-on-board) price from the public indices like Argus/Platts will be used by adjusting it by 15% to provide for inland transport cost which would give the mine mouth price.
To avoid short-term volatility, the average sale price will be calculated by taking prices of the past five years. For the regulated power sector, a 90% discount will be provided on the intrinsic value. This will help to rationalise power tariffs.
Agreement between Ministry and the bidder to perform agreed minimum work programmes at all stages.
There would be development stage obligations in terms of milestones to be achieved such as getting mining lease, obtaining environment/forest clearances etc.
The bidder will have to give performance guarantee during the developmental stage. The successful bidder will get 2 years for exploration (for regionally upgraded blocks) and 5 years for development of coal blocks.
Relinquishment of the block without penalty provided, the bidder has carried out minimum work programme stipulated in the agreement.
The details of the coal blocks will be reviewed by the Ministry of Environment and Forest and communicate its findings before the blocks are put to auction. However, final approval will be subject to the statutory clearances under the law.