INDIA BUSINESS WORLD - OCTOBER 2005
THE MONTH THAT WAS

IOC-IBP MERGER OKAYED

The Union Cabinet has approved, in principle, the merger of IBP, a subsidiary of IOC, with its parent company. Other important decisions included reworked uplinking and downlinking norms and the Parbati Hydel power project.
Briefing press persons after the meeting, I&B minister Jaipal Reddy said the Cabinet had agreed, "in principle", to approve the merger of IBP into the IOC. However, details have yet to be worked out.

Merger is expected to lead to better fiscal management and efficient marketing strategies. The route for the merger is, however, unclear. The petroleum ministry had preferred a trust route to avoid losses for IOC. The Cabinet also approved new uplinking and downlinking policy, including the ones that make it mandatory for private TV channels to share sports' contents with Prasar Bharti. These were proposed by the GoM earlier.

It has been decided that the revenue sharing for such events will be in the ratio of 75:25, in favour of rights holders without minimum guarantee or opportunity cost, according to a government statement."No television channel shall carry a live broadcast of whole or part of any event so notified by the ministry of information & broadcasting unless simultaneously Prasar Bharati has also been offered the terrestrial and DTH broadcasting rights for the same event on reasonable terms and conditions mutually agreed upon," it said.

While clearing downlinking guidelines it said the policy would provide better regulation of satellite TV channels uplinked from abroad and downlinked in India. The policy would institute a mechanism to verify legitimacy of owners and distributors of the channels being downlinked in India, it added. The Cabinet approved amendments in the Cable Television (networks) Rules, 1994 and DTH guidelines to ensure that only registered satellite TV channels are able to telecast through cable networks and provide DTH service.

Power shortage in the northern region was also addressed by today's Cabinet, paving the way for its reduction. The Cabinet approved the setting up of the Parbati Hydroelectric Project stage III. This 520 mw (4 x 130 mw) project undertaken by the NHPC in Himachal Pradesh was cleared by the CCEA The project is a run-of-the-river scheme on river Sainj in the Kullu district. Parbati Hydro is expected to generate 1,977 million units of power per year. The project, which will be completed in five years, is estimated to cost Rs 2,304.56 crore. NHPC has made a debt equity contribution of Rs 100 crore from its internal resources. It is expected to relax concession on the northern grid during peak hours. Punjab, Uttar Pradesh, Rajasthan, Haryana, Jammu & Kashmir, and Chandigrah have already signed PPAs.

It also approved a proposal to revive and eventually merge the Hyderabadbased HMT subsidiary, Praga Tools Ltd, into the parent outfit. The proposal envisages waiver of interest to the tune of Rs 94.73 core and a GoI loan to the tune of Rs 82 crore. In addition, the company will also sell part of its land to the tune of Rs 17.63 crore to pay off statutory penalties it has incurred and to clean up the balance sheet. The idea mooted the creation of a JV between HMT and Praga and move towards an eventual merger. Mr Reddy said approval from the BIFR would be sought. Clearing the formation of four subsidiaries of A-I, IA and the AAI, a draft for which has already been circulated by the civil aviation ministry, was deferred by the Cabinet.