This should create a pool of about Rs 25000 cr. per year that will be used for clean energy and should partially support the ambitious goals set by the government to increase renewables to 175 GW by 2022.
1. Power
a. The clean environment cess on coal of Rs 400 per tonne, up from earlier clean energy cess of Rs 200 per tonne should lead to an increase in input costs for power producers. This could impact electricity prices by 15-20 paisa per KWHr.
b. This should create a pool of about Rs 25000 cr. per year that will be used for clean energy and should partially support the ambitious goals set by the government to increase renewables to 175 GW by 2022. Note: now that this fund is called clean environment fund, some of this money may also get used for other projects like cleaning of Ganga etc.
2. Oil
a. The crude cess of flat Rs 4500 per tonne has been replaced with an ad-valorem cess of 20%. The Oil Industry Act provides for a cess as duty of excise on local crude oil which needs to be borne by the producers. This directly impacts margins of local producers like ONGC and Cairn India etc. If the price of crude settle at about $35 per barrel, it will bring saving ofs about $2 per barrel. However, if the crude price goes up to $45 it will mean no change in cess cost. At $100 per barrel, the cess cost will increase by $11 per barrel. Given that crude prices are expected to settle in the $30-45 range in the near term, this should be a positive for these companies for now.
b. The increase in jet fuel excise duty from 8% to 14% should offset some of the gains that airlines had from reduced crude oil prices.
3. Agri-Commodities
a. Creation of an e-portal for whole sale agriculture marketing under the Unified Agriculture Marketing Scheme will create a common e-market platform which will help break trade barriers, increase price discovery and speed up goods movement benefiting the farmers and the end users. States like Karnataka, Gujarat, Telangana and Maharashtra may form part of the first rollout of this.
b. 100% FDI in food processing should help strengthen the supply chain, reduce waste and lead to better realization of prices for all.
4. Derivative trading
a. It was reiterated that other financial instruments may be listed by SEBI for commodities markets. The items leading this list will be options and weather derivatives. One should expect options in non agri-commodities to be listed first, increasing the liquidity and market for crude, metals etc. and giving further boost to market making, hedging and speculation opportunities. Weather derivatives could also provide an important platform to hedge risks especially for our extremely rain dependent agricultural sectors.
a. The clean environment cess on coal of Rs 400 per tonne, up from earlier clean energy cess of Rs 200 per tonne should lead to an increase in input costs for power producers. This could impact electricity prices by 15-20 paisa per KWHr.
b. This should create a pool of about Rs 25000 cr. per year that will be used for clean energy and should partially support the ambitious goals set by the government to increase renewables to 175 GW by 2022. Note: now that this fund is called clean environment fund, some of this money may also get used for other projects like cleaning of Ganga etc.
2. Oil
a. The crude cess of flat Rs 4500 per tonne has been replaced with an ad-valorem cess of 20%. The Oil Industry Act provides for a cess as duty of excise on local crude oil which needs to be borne by the producers. This directly impacts margins of local producers like ONGC and Cairn India etc. If the price of crude settle at about $35 per barrel, it will bring saving ofs about $2 per barrel. However, if the crude price goes up to $45 it will mean no change in cess cost. At $100 per barrel, the cess cost will increase by $11 per barrel. Given that crude prices are expected to settle in the $30-45 range in the near term, this should be a positive for these companies for now.
b. The increase in jet fuel excise duty from 8% to 14% should offset some of the gains that airlines had from reduced crude oil prices.
3. Agri-Commodities
a. Creation of an e-portal for whole sale agriculture marketing under the Unified Agriculture Marketing Scheme will create a common e-market platform which will help break trade barriers, increase price discovery and speed up goods movement benefiting the farmers and the end users. States like Karnataka, Gujarat, Telangana and Maharashtra may form part of the first rollout of this.
b. 100% FDI in food processing should help strengthen the supply chain, reduce waste and lead to better realization of prices for all.
4. Derivative trading
a. It was reiterated that other financial instruments may be listed by SEBI for commodities markets. The items leading this list will be options and weather derivatives. One should expect options in non agri-commodities to be listed first, increasing the liquidity and market for crude, metals etc. and giving further boost to market making, hedging and speculation opportunities. Weather derivatives could also provide an important platform to hedge risks especially for our extremely rain dependent agricultural sectors.
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