Wednesday, December 7, 2016
Glencore, Qatar buy 20% of Rosneft; India's indebted power retailers; After ISIS' fall in Sirte
1 Glencore, Qatar buy 20% of Rosneft (BBC) The Kremlin has announced that commodities trader Glencore and Qatar's sovereign wealth fund are together buying a 19.5% stake in Rosneft, Russia's largest oil company. "It is the largest privatisation deal, the largest sale and acquisition in the global oil and gas sector in 2016," President Vladimir Putin said.
The surprise move sees Glencore and Qatar paying $11.3bn for the stake in Rosneft, where BP already owns 19.75%. Moscow will keep the controlling stake. The long-planned sale is part of the Russian government's efforts to sell some state assets to help balance the budget amid a two-year recession caused by a drop in global oil prices and Western sanctions.
The deal also marks a turnaround for London-listed Glencore, which had seen a collapse in its share price amid a plan to sell assets and cut its huge debts. The Qatar Investment Authority is one of the biggest investors in Glencore.
It had been thought that US and EU sanctions imposed on Russia following the Ukraine conflict would deter huge investment in Russia, although companies were not explicitly prohibited from participating in the Rosneft sale. The election of Donald Trump as US president has, however, raised speculation of a thaw in relations with Moscow.
2 India’s indebted power retailers (Straits Times) India's money-losing state power retailers may be scaring off power plant investors, according to Sembcorp Industries, compounding the industry's woes that have left about 20 per cent of the country without electricity.
Delayed payments by the distributors and their reluctance to sign long-term purchase contracts are risks for investors, said Mr Vipul Tuli, chief executive of the Singapore company's India unit. Sembcorp joins Spanish wind power producer Acciona and Goldman Sachs Group-backed ReNew Power Ventures in voicing concerns about the precarious business environment in India's power industry.
Sembcorp, which is controlled by Temasek Holdings, has 2,748 megawatts of installed generation capacity in India, including three coal- based units of 660 megawatts each. One of those units has yet to find long-term buyers for its power. A fourth unit, also without a contract, is yet to be commissioned, Mr Tuli said.
Long-term purchase commitments are not available for almost 22 gigawatts of India's thermal plants, about 7 per cent of the country's total power generation capacity, according to a member of the Central Electricity Authority, the planning wing of India's power ministry. That is forcing generators to sell in short-term markets where tariffs are lower.
Most of India's provincial electricity retailers lose money on electricity sales, selling below cost to the poor and agricultural customers and losing revenue to people who illegally tap into power supplies. Subsidy payments from state governments and higher tariffs to rich households and industrial users partially compensate for the losses, but still leave retailers financially vulnerable.
3 After ISIS’ fall in Sirte (San Francisco Chronicle) The Islamic State group this week lost the city of Sirte, its only foothold in Libya, essentially ending its ambition to expand its self-styled "caliphate" into the North African nation, at least for now.
But that victory only opens the door for Libya's multiple armed factions to turn on each other in a new showdown. It could be over control of oil, the North African nation's only real source of revenue.
A UN-brokered peace deal was reached a year ago, trying to establish a unity government to end the chaos that has plagued Libya since the ouster and death of longtime strongman Moammar Gadhafi in a 2011 civil war. Instead, the country remains divided roughly between east and west, there is still no effective government and rival factions and militias — each side with backing from foreign countries — threaten a new chapter of violence.
The loss of Sirte is a significant reversal of how things looked in the summer of 2015 when IS took the city. This week, the last IS positions were taken. However, many of the estimated 2,500 militants likely escaped.
It is feared that potentially hundreds of IS fighters will find refuge in Libya's lawless south and regroup, able to carry out attacks and re-emerge as player at any time. Al-Qaida-linked extremists already have bases in Libya's vast desert regions, building ties with local tribes. With IS out of the way for the moment, Libya's rival domestic powers are face to face with each other.