Transfin.

RIL Shares Fall As Govt Seeks to Block Its Deal With Saudi Aramco, China Lowers Tariffs to Boost Slowing Economy

RIL shares fall on news that government is seeking to block its deal with Saudi Aramco. Govt's 5G spectrum auction could raise only INR40,000cr, analysts fear. Oil marketing companies ask government to charge premium on retail fuel prices to support switching BS-VI switch. Methanol-blended fuel being considered to trim oil import bill and consumers' fuel expenses. Amazon should be broken up, says e-commerce giant's second employee. Tariffs on 859 types of products to be lowered as Beijing seeks boost economy and reach trade deal with the US.

 

 

POLICY TANTRUMS

Govt's 5G spectrum auction could raise only INR40,000cr, analysts fear.

Not-So-Great Expectations: On Friday, the Telecom Department gave the green-light for the largest-ever spectrum auction, which will be held in March-April 2020. At base price, the auction could be expected to raise INR5.22Lcr for the exchequer.

 

But the steep starting price of the 5G spectrum might play spoiler. In fact, as per analysts, the government could end up selling less than 10% of the spectrum and raise only INR40,000cr.

 

“Given the high reserve prices, acute balance sheet stress of older carriers and absence of an immediate 5G business case, the government is unlikely to see any meaningful take up of pure 5G and 700 MHz airwaves,” Rajiv Sharma, research head at SBICap Securities, told ET. “So, it won’t raise even 10% of the targeted sales proceeds in the upcoming auction.” ET Telecom

How bankruptcy was redefined in India.

Changing Times: ArcelorMittal SA's acquisition of Essar Steel India Ltd was not an overnight process. It took two gruelling years.

 

In a country like India, the idea of bankruptcy is still nascent and the process of winding down a business while repaying debtors remains muddled in uncertainty and doubt. Today, however, slowly but surely, bankruptcy is getting redefined in India. Here's a deep-dive into the issue.

 

RIL'S ARAMCO TROUBLES

RIL shares fall on news that government is seeking to block its deal with Saudi Aramco.

Shares of Reliance Industries Ltd (RIL) fell as much as 2.8% today, erasing about $2bn off its market value on reports that the government was seeking to block its deal with Saudi Aramco. Livemint

 

Previously: The government had filed a petition in the Delhi High Court seeking to block RIL's plans of selling a 20% stake in its oil-to-chemicals (O2C) business to Saudi Aramco. The deal valued the O2C business at $75bn and was part of the plan to make RIL a zero-debt company in the next 18 months.

 

Then, on Friday, the Court reportedly asked RIL and British Gas to disclose their assets. (Since 2010, the government has been fighting an arbitration with RIL and its partner, alleging that the companies appropriated huge sums of money in violation of the production sharing contract in the PMT oil and gas fields.)

 

Every Action Has a Reaction: In a counter affidavit submitted today, RIL said it was a ‘falsehood’ that the arbitration tribunal had passed an award requiring the company and its partners to pay $3.5bn to the government. It said the petition was an abuse of process as “it portrays that a sum of money is due and payable under the final award and purports to compute the money payable on a basis neither found in the arbitration award nor disclosed in the petition.” BS

 

At closing bell, RIL's shares were down 1.76%.

 

FUEL SEE-SAW

Oil marketing companies ask govt to charge premium on retail fuel prices to support BS-VI switch.

What Could Go Up...: Public and private sector oil marketing companies (OMCs) have approached the Petroleum Ministry to seek support for a plan to raise consumer prices of auto fuels to recover their investment in upgrading their refineries to produce BS Stage-VI less-polluting fuel.

 

If the government accepts these companies' demands, OMCs could charge a premium on retail prices of petrol and diesel. Thus, retail prices of petrol and diesel could come at a premium of about INR0.80 a litre and INR1.50 a litre respectively for the next five years. CNBC TV18

Methanol-blended fuel being considered to trim oil import bill and consumers' fuel expenses.

...Could Also Go Down: Transport Minister Nitin Gadkari has reportedly written to Petroleum Minister Dharmendra Pradhan asking him to "make all efforts" to ensure that methanol is readily available for commercial use at fuel stations.

 

Presently, vehicles in India use up to 10% ethanol-blended fuel. Using methanol, or methyl alcohol, has its own benefits. Methanol-blended fuel could potentially reduce one’s fuel bill by at least 10%, lower vehicular pollution levels by over 30%, and save the exchequer INR5,000cr in its annual import bill. ET Auto

 

RIL Shares Fall As Govt Seeks to Block Its Deal With Saudi Aramco, China Lowers Tariffs to Boost Slowing Economy

 

BIG TECH

Amazon should be broken up, says e-commerce giant's second employee.

We Are On A Break: Paul Davis was the second employee hired by Jeff Bezos to work for Amazon back in 1994. Today, he is a proponent for breaking up the e-commerce behemoth.

 

Davis recently told media platform ReCode: "...the company that operates the marketplace is also a retailer. They have complete access to every single piece of data and can use that to shape their own retail marketplace."

 

Similarly, last week, Davis commented on a New York Times article on Amazon by saying: "For nearly two decades. Amazon has used its control of its marketplace to strengthen its own hand as a retailer. This should not be allowed to continue." The Hindu

As data prices go up, streaming wars heat up.

Netflix and Pay the Bill: The streaming wars are about to get even more brutal.

 

India's top three wireless carriers hiked data tariffs by c. 41% earlier this month. Coupled with the economic slowdown and dampening consumer sentiment, this means people could be less willing and less likely to spare money for over-the-top (OTT) platforms like Netflix, Amazon Prime, Hotstar etc.

 

To race ahead, streaming platforms are announcing various offers and slashing rates. To read more on how companies are dealing with the cut-throat competition and rising costs, click here.

 

CHINA

Tariffs on 859 types of products to be lowered as Beijing seeks to boost the economy and reach trade deal with the US.

Beijing Blues: China has had typically high tariffs in order to protect and support local industries. But now, it has said it will cut tariffs in order to protect and support the economy.

 

The Ministry of Finance said the tariff changes would be made to "increase imports of products facing a relative domestic shortage, or foreign specialty goods for everyday consumption".

 

That includes tariff rates on 859 types of products, including some semiconductors, medications, and frozen pork - due to be lowered to 8% from 12% for some countries. (FYI: China is struggling to cope with an outbreak of African swine fever, which has wiped out as much as half the country's pig population.)

 

The countries that will benefit most from the lower tariffs will include New Zealand, Peru, Singapore and Pakistan. BBC

 

Making Nice: China's announcement comes as it is in talks to sign a comprehensive trade deal with the US so that the bitter trade war - which has raged for two long years - can come to an end. Beijing has said it would purchase more American goods, including farm products. WSJ

 

All Fall Down: Adam Boehler, chief executive of the US International Development Finance Corporation, recently told the Financial Times that China's international infrastructural investments were like a "house of cards" that could one day come crashing down, taking with it several emerging economies. He cited debt overload, poor infrastructure, bribes and lack of transparency as reasons for this. Read more here.

FIN.

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