Discord leaves Bombay High renewal plan high and d
Sensex tumbles 196 pts on oil price hike fears
Rupee clobbered
Enron sounds states to set up broadband link
SSI to buy US firm for $ 63.6 m
IDBI raisesterm lending rate to 13%
New Act to guide govt�s debt manager
Foreign Exchange, Bullion, Stock Indices

New Delhi, Sept 18: 
Well begun, they say, is half done. This is not true of ONGC�s Bombay High, whose re-development plan finalised with the help of an international consultant has triggered a controversy before it is formally launched.

It is a case of too many cooks spoiling the broth. Bombay High has been facing production problems for over a decade now.

The ONGC management hired consultants, Gaffney, Cline and Associates, to identify the problems and work out a redevelopment plan.

The plan is now in trouble with members of the advisory council associated with the director general of hydrocarbons differing with the consultant and the ONGC experts in the prescriptions which should be implemented.

The world over, reservoir engineers are engaged in tackling reservoir problems. In India, the advisory council is an exclusive club of geologists whose competence in such matters is debatable. These superannuated geologists were picked up by former petroleum and natural gas secretary Vijay Kelkar, whose academic bent of mind got attracted to the unfamiliar geological language spoken by them.

The $ 400-million re-development plan for Bombay High North, worked out jointly by ONGC and its consultants, is based on the water injection technique.

This is a technique used in all fields for pressure maintenance in reservoir. Simply put, if a particular quantity of oil is withdrawn from the reservoir, an equal quantity of water is injected to maintain the pressure.

In some cases, reservoir engineers resort to polymer injection to reduce the viscosity of oil. The technique can differ across fields, depending on the nature of the problem and the characteristics of the reservoir.

One of the members of the advisory council suggested that ONGC inject polymer, not water, at Bombay High. His advice is based on his personal experience of having done this at the Naharkatiya field in Assam.

Experts in ONGC question the wisdom of his advice on the ground that the field in Assam has a sandstone reservoir whereas Bombay High is a limestone field. More important, the temperature at the oilfield is very much on the higher side, which makes it difficult to locate a suitable polymer.

Another geologist of the council does not like the foreign consultant. The dislike springs from a personal prick, not because of professional differences. The eminent geologist has even panned Gaffney, Cline and Associates., and cast doubts on its competence.

ONGC, on the other hand, is extremely happy with the consultants and is convinced that water injection is quite effective for Bombay High. However, it has agreed to have a pilot project based on polymer injection simultaneously.

Its only plea is that it should be allowed to go ahead with the re-development plan because considerable time has already been lost with too many experts meddling with Bombay High.

Remember that a top Indian geologist in early 70s went on record saying there was no oil in the Bombay High area. It was a Russian team which identified the location and persuaded ONGC to conduct a seismic survey and later drill there.

Similarly, another eminent geologist took the petroleum and natural gas ministry for a ride last year by making them believe that Andaman was floating on gas. Later, he proved himself wrong, and in the process, the government lost a considerable amount of foreign exchange.    

Mumbai, Sept 18: 
Investor anxieties over Friday�s selloff on US exchanges, high crude prices and a wobbly rupee sent the Bombay Stock Exchange (BSE) sensex tumbling 195.97 points amid concerns that the looming petro-price hike could keep markets on tenterhooks over the next few days.

When the 30-scrip index closed 4.30 per cent lower at 4366.41, it had lost a whopping 305.51 points in the last two sessions � one of the darkest days Dalal Street has seen in recent times.

The trigger, clearly, was Friday bloodbath on the US markets, and the weakness in the south-east Asian exchanges, most of which ended today�s turbulent sessions with steep losses. Hong Kong�s Hangseng index slid 689 points to 15,680 while the Nikkei 225 index in Tokyo slumped 152 points to 16,061.

Last week, the Nasdaq was whipped 3 per cent on Friday, and Dow Jones gave up 2.5 per cent after third-quarter corporate results failed to inspire a market looking for direction.

Back home, the local markets were losing sleep over the spurt in crude prices to $ 36 per barrel, and the prospect of what a battered rupee could mean for the country�s import bill. Crude prices have stayed firm despite a decision by Opec last week to raise production quotas by 8,00,000 barrels a day.

Dealers said they were waiting for the Prime Minister�s return from the US with a sense of fear, given that he will bite the bullet and clear the decision to increase petroleum prices.

The 30-scrip index opened weak at 4511.42, inched lower in early-session deals and nose-dived to 4366.41 at the close compared with Friday�s finish of 4562.38.

Of the 1476 shares traded, an overwhelming 855 declined, only 500 advanced while a minuscule 100 held their ground in what brokers said was an indication that the selloff was not restricted to technology shares, but was sparked by bigger worries over the direction of the economy.

Bulls, aware that a rise in petroleum prices can stoke inflation, swarmed key counters with sell orders. Jitters over a possible skirmish in West Asia � after fresh Iraq-Kuwait tensions and the threat of American intervention � also weighed heavily on the market.

The selloff was hastened by foreign institutional investors (FIIs), who preferred to stay on the sidelines, and domestic funds, which appeared interested in booking profits, sources said.

Telecom stocks were under heavy selling pressure as scrips like MTNL, Punjab Communication, Aksh Optifibre were whipped. So did cement stocks, media stocks, banks and automobile stocks also fell like nine pins during the day.

In the specified group, 100 counters including 26 index based shares registered sharp losses while 39 showed gains.

Infosys was the top traded scrip with a turnover of Rs 878.92 crore on a total volume of Rs 5668.48 crore. Other top traded shares were HFCL (Rs 783.42 crore), Global Tele (Rs 703.72 crore), Satyam Computer (Rs 674.27 crore) and Zee Telefilms (Rs 392.09 crore).    

Mumbai, Sept 18: 
The rupee today faced a fresh onslaught from the US dollar. Concerns about the country�s balance of payments coupled with meltdown in the global equity markets led to a persistent dollar buying. As a result, the rupee breached the 46 mark and closed at a new low of 45.99/46.01 to a dollar.

It is a significant drop of around 21 paise as compared to the previous close of Rs 45.78/79 to a dollar on Friday. The primary reason purports to be an overall feeling that the country�s balance of payments would be affected by the high oil prices. This triggered off a panic buying of dollars by banks on behalf of corporates.

Moreover, equity markets around the globe finished weaker consequent to the crude oil factor. Market expects a dwindling of dollar inflows from the foreign institutional investors.

Such negative sentiment is expected to rule the market tomorrow and the Indian unit is likely to remain below the 46 mark. �The previous record low of 46.08 is likely to be tested, if demand for dollars continue in the same fashion as it did today,� said N Subramanian, senior analyst at e-Mecklai.

In today�s trading, while the rupee opened weak at Rs 45.84/86 per dollar, it declined to 45.89/90 in early trade. It remained steady at these levels following fresh dollar inflows believed to have come from Singapore Telecom.

However, it started plummeting later in the day, particularly in the last 30 minutes of trading, as banks started bidding for dollars on behalf of corporates. In fact, enquiries have been reported at 46.04 level even after the closure.

While today�s close is a new record low for a closing quote over the previous low of 45.91/91, on August 24, the rupee seems to be still away from the all-time intra-day low of 46.08 recorded on August 11.    

Mumbai, Sept 18: 
Enron Corp, the US-based global energy major, plans to set up an optical fibre cable network in the country. It has initiated talks with state power utilities to seek �right of way� for the project.

Confirming this, an Enron official said the company has entered into an agreement with Maharashtra State Electricity Board and Global Telesystems. �We are now talking to other state governments for similar tie-ups,� said the senior Enron official.

The US major has taken rapid strides to flag off its local initiative in the broadband sector by setting up a data centre in the city at an investment of over Rs 100 crore. The annual lease rent to be paid by the company alone would be in the region of Rs 6.72 crore, sources said.

The power major eventually plans to spread its network to other major infotech cities like Bangalore, Hyderabad, Ahmedabad and New Delhi. The move will create ripples in the industry as several local players have planned an entry into this sunrise industry. BSES-Reliance and the Tatas through their electricity generating and distribution company�Tata Power�are already in the fray.

Several state utilities like the department of telecommunication, railways and Gas Authority of India Ltd have a �first movers� advantage in the sector.

Sources said that by setting up data centres, the local dotcom companies can save foreign exchange. �Earlier, their data used to be saved and therefore accessed from the servers based abroad. Enron plans to capture this business by providing the services locally. It will save time and foreign exchange for the local dotcom outfits,� said the official.

The new venture will be directly under Enron India, headed by Sanjay Bhatnagar.

Globally, Enron has made a strategic shift from a traditional brick and mortar unit to a company that is seeking a niche in the infotech sector. In the US, the company has set up �Enron Intelligent Network�, a new world network built on the latest optical technology to satisfy real business needs.

To implement its new plans, the company has formed global strategic alliances with Cisco Systems, Ciena Corporation and Sun Microsystems.

By offering virtually unlimited bandwidth and built-in intelligence the Enron Intelligent Network bridges the gap between very expensive dedicated (virtual private) networks and public network. It excels at transporting rich media and high bandwidth.    

Mumbai, Sept 18: 
SSI Ltd is set to acquire US-based AlbionOrion Co LLC (AOC) for $ 63.65 million (Rs 291 crore). SSI would pay $ 20 million in cash and issue about 6.5 million global depository shares, which at the Security and Exchange Board of India preferential price of around Rs 3,070 per share would amount to $ 43.65 million.

According to Kalpathi S Suresh, chairman & CEO of SSI, the transaction would lead to an equity dilution of about 5 per cent. It is expected to result in a substantial EPS accretion. Pointing out that the deal is the largest cross border acquisition by an Indian IT company, he said, �we can now create a global corporation from India.�

The acquisition, SSI officials said, would compliment its technologies� business model with a strong domain skills in telecom, healthcare and insurance. It will also provide a platform to move up the value chain.

While, at present, both the companies would continue to remain as separate entities, Suresh said AOC is likely to be made a division of SSI by June 2001. For this purpose, the company has sought PriceWaterhouse Coopers� consultancy. At present the company has plans to convert the GDS to American depository shares. It has appointed Ernst & Young for this purpose.

The growth strategy of SSI would revolve around a mix of organic and inorganic growth.    

Mumbai, Sept 18: 
The Industrial Development Bank of India (IDBI) today hiked its minimum term lending rate by 50 basis points to 13 per cent. The minimum short term lending rate remains unchanged at 12.5 per cent.

The decision to hike interest rates follow a similar move by ICICI on September 11. IDBI said this was in tune with the general increase in interest rates.

The interest rates on individual loans would be fixed within a band of 3.5 per cent over the minimum term lending rate and the minimum short-term lending rate depending on the risk perception, tenure and purpose of the loan. The revised rates will be applicable to loans in respect of which agreements are executed on or after September 18.

Earlier this month, ICICI Ltd and State Bank of India (SBI) hiked the prime lending rate and interest rates on domestic deposits points, respectively.

While ICICI raised its PLR by 50 basis points, SBI brought about a 0.50 per cent to 0.75 per cent increase in the deposit rates. It had raised PLR by 75 basis points to 12 per cent in August.

The decision to raise rates is a consequence of the Reserve Bank of India�s package of currency tightening measures, which included increasing the cash reserve ratio and the bank rate. This resulted in relatively tight liquidity conditions and increased the borrowing costs of various institutions.    

New Delhi, Sept 18: 
The finance ministry is planning a new Act which will allow debt management to be handed over to a separate, public-sector agency professionally equipped for the job.

This is a fallout of the Narasimhan Committee report, which suggested that the Reserve Bank of India shed its role as manager of the government�s market-borrowing programme. The report, made public last week, says the central bank should concentrate on formulating monetary policy.

The department of economic affairs (DEA) has prepared a brief on the issue for the committee of secretaries, as part of a larger note on economic reforms. It says the management of public debt is currently assigned to several departments and agencies.

While the RBI manages the government�s market borrowings, the finance ministry�s budget division monitors small savings; the Controller of Aid Accounts & Audits and the external debt monitoring cell within DEA monitor foreign debt.

As a result, the finance ministry wants a more consolidated approach. �With loosening RBI control, growing sophistication of domestic markets and the globalisation of financial markets, there is need for more active co-ordinated and professional management of public debt,� the note states.

The ministry initially thought, and even recorded, that the professional agency which could be trusted with the job could be in the private or joint sector. However, DEA officials said there are still confidential figures in the government�s debt portfolio and, as a result, it would be best serve the purpose if the agency selected or created was in the public sector.

�The finance ministry would obviously have to provide the overall risk limits and objectives within which the agency would function as well as monitor its performance,� officials said.

In the past few years, the government�s internal and foreign debt has shot up. Aggregate internal liabilities for the central government are budgeted to increase to Rs 9,25,036 crore in 1999-2000, or 48 per cent of the GDP, from Rs 8,19,966 crore in 1998-99, or 46.5 per cent of the GDP.

External liabilities at book value � at exchange rates when loans were taken � increased from Rs 55,960 crore in 1998-99 to Rs 56,134 crore in 1999-2000. But when the foreign debt burden is revalued at the current exchange rates, the figure for 1998-99 alone is a whopping Rs 1,77,934 crore. More important than everything else, the total outstanding liabilities of the government exceed half of the country�s GDP.

Worried by the government�s burgeoning debt, the finance ministry has been working to prepay some of the debt to the World Bank. The government wants to repay Rs 5,500 crore in multilateral debt repayment this fiscal compared with last year�s budget estimates of about Rs 4,500 crore.

The central government�s fiscal profligacy and poor tax collections are being largely blamed for the country�s current predicament, a situation in which it borrows more than its capacity. Analysts feel the current level of public debt, where the interest payment surpasses the growth rate of the economy, is unsustainable.    


Foreign Exchange

US $1	Rs. 45.46	HK $1	Rs. 5.80*
UK �1	Rs. 64.36	SW Fr 1	Rs. 25.30*
Euro	Rs.39.36	Sing $1	Rs. 25.85*
Yen 100	Rs. 43.05	Aus $1	Rs. 24.55*
*SBI TC buying rates; others are forex market closing rates


Calcutta	Bombay

Gold Std (10gm)	Rs. 4535	Gold Std (10 gm	4510
Gold 22 carat	Rs. 4280	Gold 22 carat	4170
Silver bar (Kg)	Rs.7900	Silver (Kg)	8020
Silver portion	Rs. 8000	Silver portion	8025

Stock Indices

Sensex	4366.41		-195.97
BSE-100	2200.10		-97.83
S&P CNX Nifty	1354.35		-62.85
Calcutta	120.93		-3.92
Skindia GDRNA	722.40		-20.31

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