Mumbai // India's government has approved a restructuring package for state electricity distribution companies that are struggling under losses of 2.46 trillion rupees (Dh169bn), in the latest of a series of measures to boost economic growth.
The scheme is much needed by the ailing industry, with the severity of the problems in the country's power infrastructure highlighted when more than 600 million people were left without electricity this summer, in one of the biggest blackouts in history.
"The cabinet approval for restructuring is nothing short of a lifeline for state distribution companies," said Pawan Agrawal, a senior director at Crisil Ratings.
"In the short term, this will ensure the resumption of much-needed flow of credit for distribution companies, and as a result, provide a boost to the entire supply chain of equipment and power suppliers as well as lenders to the sectors. In addition, there will be clear structural positives that should enhance the longer-term viability of the distribution sector, improving their profitability and restoring lenders' confidence in them."
The accumulated losses of the state power distribution companies are estimated at about 1.9tn rupees as of the end of March last year, the government said.
Veerappa Moily, India's power minister, said Indian power distributors losses had reached 2.46tn rupees by the end of March this year, Reuters reported yesterday.
Mismanagement and selling power at a discount are factors that have hampered the sector, analysts say.
Under the voluntary restructuring scheme, state governments would take over half of the debts of power distribution companies, which would then be issued as bonds to lenders, backed by state government guarantee.
The rest of the debt would be restructured by banks, which would reschedule loans and allow a moratorium on repayments, the government said.
The move followed a flurry or reforms unleashed this month by the prime minister Manmohan Singh's government, including allowing up to 51 per cent foreign direct investment in the multi-brand retail sector and a reduction in fuel subsidies.
The government had previously been widely accused of dithering on big-ticket economic reforms that would help to boost investment and reduce India's fiscal deficit. Economists had cut economic growth forecasts for India in recent months, citing "policy paralysis", while ratings firms warned that India could face being downgraded to junk status without action.
But the recent announcements, while popular with many investors and companies, have been met with disapproval from shopkeepers and many politicians, who argue that the reforms will harm ordinary Indians.
Challenges remain with the restructuring plan for the power sector, too, analysts noted.
Dhananjay Sinha, the co-head of institutional research at Emkay Financial Services, said that the move could just be "a stopgap response".
A "pitfall for banks could be the transitional finance mechanism, which requires banks to finance interim losses during [the] three-year moratorium period", said Mr Sinha. "Given the poor track record of [state electricity boards] on the measures of the last bailout package [in 2001 and 2002], one can not rule out reemergence of the revenue gap funding after the moratorium period also."
Power companies are still expected to sell electricity cheaply.
"The desired impact of this restructuring will not be realised unless a broad-based political consensus is achieved to implement the much-needed tariff hikes, a timely and adequate financial support is provided by the state governments and the discipline of the regulatory process and disclosures is enhanced," said Mr Agrawal.
"In addition, some flexibility may be needed by state governments to accommodate the additional debt into their fiscal space."
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Tentative schedule of 2017/18 Ashes series
1st Test November 23-27, The Gabba, Brisbane
2nd Test December 2-6, Adelaide Oval, Adelaide
3rd Test Dcember 14-18, Waca, Perth
4th Test December 26-30, Melbourne Cricket Ground, Melbourne
5th Test January 4-8, Sydney Cricket Ground, Sydney
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
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Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
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The size of 16 tennis courts and weighs as much as 500 elephants
Al Wasl means connection in Arabic
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Remaining fixtures
Third-place-play-off: Portugal v Mexico, 4pm on Sunday
Final: Chile v Germany, 10pm on Sunday
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The flights
Flydubai operates up to seven flights a week to Helsinki. Return fares to Helsinki from Dubai start from Dh1,545 in Economy and Dh7,560 in Business Class.
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Golden Crown Igloos in Levi offer stays from Dh1,215 per person per night for a superior igloo; www.leviniglut.net
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UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
About Seez
Company name/date started: Seez, set up in September 2015 and the app was released in August 2017
Founder/CEO name(s): Tarek Kabrit, co-founder and chief executive, and Andrew Kabrit, co-founder and chief operating officer
Based in: Dubai, with operations also in Kuwait, Saudi Arabia and Lebanon
Sector: Search engine for car buying, selling and leasing
Size: (employees/revenue): 11; undisclosed
Stage of funding: $1.8 million in seed funding; followed by another $1.5m bridge round - in the process of closing Series A
Investors: Wamda Capital, B&Y and Phoenician Funds
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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US tops drug cost charts
The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.
Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.
In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.
Some of the costliest drugs worldwide include Lipitor for high cholesterol.
The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.
High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.
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Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
What is a black hole?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
