Production sharing contract

An agreement between Contractor and Government whereby Contractor bears all exploration risks, production and development costs in return for its stipulated share of production resulting from this effort. These costs are recoverable in case of commercial discovery. 


The title of the hydrocarbons remains with the State. The State maintains regulatory control and the Contractor is responsible for the execution of petroleum operations in accordance to the terms of the contract.

The contract is based on a production sharing and not on profit sharing basis.

During the term of the contract, after allowance for up to a specified percentage of annual production for recovery of costs, the remaining production is split between the contractor and State.

Equipment purchased and imported by the contractor becomes the property of the state. With the service company equipment and leased equipment being exempt.

Following activities are being carried out in PSC

• Review of work Programme and budget of all exploration blocks and fields under PSC’s.
• Facilitating of statutory and other clearances.
• Management Committee Meetings.
• Assignment of Participating Interest.
• Extension of phases, relinquishment of acreages, assignment, appointment of auditor, approval of auditing account and other PSC related issues as and when arise.

A commitee under chairmanship of C.Rangrajan has been constituted to review the existing production sharing contracts (PSCs) in light of the recent spat between Reliance Industries Ltd. (RIL) and the Petroleum Ministry and a similar recommendation in draft report of CAG.

Captive coal mining from ET

• ·         Despite having one of the world’s largest reserves of coal, India is unable to dig it up fast enough. This results in lost production and jobs, imports of expensive coal and petroleum, depreciation of the rupee that could have been avoided, leading to higher inflation.

• ·          Coal Mines (Nationalisation) Act of 1973. It made coal mining a public sector monopoly. The law was amended in 1976 to allow captive coal mining for production of iron and steel in the private sector. The law was amended again in 1993 to allow more captive private mining, for power plants and for other notified uses. In 1996, captive mining was extended to cement plants as well.

• ·         The term "captive" infers being locked up. In the sense of a policy, it is a mandatory allocation of resources. The intent of the captive coal mining policy is to allocate a specific block to a specific need for the country.

• ·         Coal India lords over mining coal. The mining is pretty crude : dig large pits and scoop out the coal. No underground mining deploying sophisticated technology and safety measures .

• ·         This inefficient monopoly just cannot meet the domestic demand for coal. The country, in the recent past, has had to import coal to fuel power plants built right at the pithead of coal mines , far away from the coast from where coal has to be moved at high cost.

• ·         Despite sitting on nearly 100 billion tonnes of coal reserves , waiting to be mined, India today imports more than 70 million tonnes a year. These avoidable imports add to the current account deficit and the rupee’s weakness. The weaker the rupee, the more expensive all imported inputs. So, Coal India’s inability to mine coal fast enough is a contributory factor to unrelenting inflation in the country as well.

• ·         But this is not Coal India’s only crime. Indian coal is up to 45% shale and rock, noncombustible material that turns into fly ash in power plants. The sensible thing to do is to remove this non-combustible material before coal is loaded on to trains and sent across the country.

• ·         But Coal India does virtually no beneficiation of coal before it is despatched. This means that railway wagons careen around the country carrying useless shale and rock, wasting precious diesel and power in the process. Roughly 40% of the Railways’ earnings come from coal. At least 50% of the energy spent on haulage will be on coal. Since 40% of the so-called coal is shale and rock, 16% of the Railways revenues come from and 20% of its fuel cost is spent on hauling future flyash all over the place.

• ·         The most urgent reform required in coal is to scrap state monopoly, open up mining, beneficiation and trading to private enterprise and break up Coal India into half a dozen companies so as to preempt a market-distorting behemoth . 

• ·         Mining should be done by professional miners who dig up coal, pay royalty on the mined coal and pay corporate tax on profits.

• ·         Politicians in the states and at the Centre see allocation of captive mines as a prime rent-seeking opportunity. BJP-ruled Rajasthan and Chhattisgarh and Left-run West Bengal stoutly opposed a PMO proposal in 2004 to auction captive mining blocks of coal, and so, allocation was done by a screening committee as in the past, much to everyone’ satisfaction, except for the CAG’s now.

• ·         .The T L Shankar panel that first mooted auction had suggested as the bid parameter  how much coal can be mined  — not how much money the miner would pay upfront. As regards undue benefit to companies, the real question is, is there any due benefit in captive mining at all? And captive mining is a fallout of state monopoly in coal. Scrap state monopoly: that is the starting point for cleaning up coal.

Guidelines followed for Identification of Coal Blocks for Captive Allocation

The guidelines adopted for demarcating the blocks are such that the developers would face a number of problems in quickly bringing the allotted blocks to the production stage. Ministry of Coal relies on Coal India Ltd (CIL) and Singareni Collieries Company Ltd (SCCL), for identifying the captive coal blocks. The guidelines adopted by CIL & SCCL for identifying and allotting coal blocks for captive mining are as follows:

•  The blocks offered to private sector should be at reasonable distance from existing mines and projects of CIL in order to avoid operational problems

•  Preferably, blocks in greenfield areas having less or no development of basic infrastructure like road, rail link, etc. may be allotted to the public/private sector for captive mining. The areas where CIL has already invested in creating such infrastructure for opening new mines should not be handed over to the private sector, except on reimbursement of costs

•  Blocks already identified for development by CIL where adequate funding is on hand or in sight should not be offered to the private sector

•  Public/private sector should be asked to bear the full cost of exploration in these blocks which may be offered

•  For identifying blocks, the requirement of coal for about 30 years would be considered

•  Others, which include Mine Plan approval under the provisions of Mines and Mineral (Development and Regulation) Act 1957, approval of the Directorate general of Mine Safety, and inspection by Coal Controller for an appropriate enforcement of conservation measures under the provisions of the Coal Mines (Conservation and Development) Act 1974.

Siachen issue

Why is the glacier so important?
The Siachen glacier is considered to be the largest single source of fresh water on the Indian subcontinent. Located in the Karakoram range, Siachen is the source of the Nubra river that eventually feeds the mighty Indus — the major water source that irrigates the Punjab plains in Pakistan. Siachen is near the Karakoram pass, forming almost a triangle with India, China and territory occupied by Pakistan touching the edges.

How did the disagreement over the glacier start?
India and Pakistan have a disputed border in Jammu and Kashmir, most of it delineated as the Line of Control (LoC) with troop positions on either side. While most positions were delineated as per the 1972 Shimla agreement, the boundary line was specified to only a point called NJ 9842. The agreement stated that after this point, the boundary would proceed “north to the glaciers” without specifying which nation would have control over which area.
The matter remained non-controversial until the 1980s when the Indian Army discovered that Pakistan was issuing permission to foreign expeditions to trek in Siachen. A reconnaissance mission was carried out and it found that foreign expeditions were being undertaken in the area. Indian troops moved into the glacier and occupied strategic positions along the Saltoro ridge that overlooks it after famously receiving information from a winter equipment maker that Pakistan was planning an occupation as it had ordered a large quantity of stores.

Where do the two sides disagree?
India’s stance is that the LoC runs from point NJ 9842 along the watersheds formed by the Saltoro ridge that puts the entire Siachen glacier within Indian territory. Pakistan claims that the line joins point NJ 9842 with the Karakoram pass that lies towards the northeast, putting Siachen within its territory.
The ground position now is that the Indian Army controls the entire Saltoro ridge. There is no presence of Pakistani troops on the Siachen glacier. In fact, the nearest Pakistani locations are on the lower reaches of the Saltoro ridge.

How much does India control today?
As India managed to get the upper hand, it currently controls all heights along the glacier on the Saltoro ridge and uses the glacier as a logistics base. Since 2007, India has been promoting treks and expeditions by civilians and foreigners in the vicinity of the glacier to reaffirm its claim on the region. The Army has given permission to several groups of mountaineers to climb peaks in the Eastern Karakoram range that adjoins the glacier. The Army also holds a civilian Siachen expedition every year and will in the future invite even foreigners to trek up the glacier.

Where do negotiations stand?
A year after India took over the glacier in 1984, talks started. After 13 rounds, both sides are now in agreement that the Siachen glacier should be demilitarised. The disagreement is on how this withdrawal of troops will take place. The Indian position is that both nations should jointly demarcate the current troop positions in the region. This would involve an exhaustive process to determine and delineate current troops positions both on the ground and on a map. After this demarcation or “authentication” of troop positions, India believes, troops can be moved back to pre-1984 positions and the border issue can be solved with dialogue.
Pakistan agrees that the issue should be resolved with talks but is strongly against a demarcation of troop positions. Pakistan believes that any joint demarcation or authentication of troops positions can be used as a claim by India for future talks to resolve the matter. It insists instead on a mutual withdrawal of troops to pre-1984 deployments for talks to begin.
India, however, has hardened its stance for authentication of troops positions after the 1999 Kargil conflict in which insurgents supported by the Pakistani Army occupied critical locations along the LoC. India wants a demarcation so that it can take military action, if necessary, should Pakistan stealthily occupy troops positions even after vacating these as per the demilitarisation plan.

What is the way forward?
A number of suggestions have been made on how the problem can be resolved, including declaring the area a peace park, joint patrolling of the region and even an international peacekeeping force being deployed in the region. However, the Indian Army stand, which is backed by the government, is very strict on the point of authentication of troop positions. The argument is that a demarcation will not take anything away from Pakistan on the negotiating table as current troop positions is a hard, cold fact. Marking the positions on a map, the Army believes, will facilitate a comfortable withdrawal of troops from both sides. Pakistan, on the other hand, believes India’s “occupation” of the glacier is illegal and hence cannot be authenticated jointly by both sides, lest it get validation.

GDRs being used to route black money back in the country, says I-T dept; initiates study

Round tripping
* Round tripping occurs when an investor sends money from one country to another and then routes it back to the original country dressed up as foreign capital
* Global Depository Receipts are instruments used by firms to raise funds from the overseas capital market
* The Income Tax Department has initiated a study on companies that have issued GDRs over the last five years
* The department feels that almost half of these companies could be front entities employed for round-tripping
* According to sources Luxembourg is emerging as a favoured nation for this exercise after Mauritius and Singapore
* Data available with the Sebi shows that most of the GDR-issuing companies are based out of Luxembourg, Singapore and London

Ethnic disturbances in Northern Myanmar

Moving to end 50 years of military rule and isolation, Myanmar is being roiled by sectarian violence on its western coast, the latest upsurge in one of the many ethnic divides that run deep in the country. At least 20 people have been killed and homes of several hundreds torched in ethnic clashes between Buddhists and the stateless Rohingya Muslims in the Rakhine State or the former Arakan, washed by the Bay of Bengal in the west and stretching up to Chittagong division in the northwest. As Rohingyas flee the fighting in Rakhine and the UNHCR urges Bangladesh not to close its borders, here is a look at the problem.

Who are the Rohingyas?
The Rohingyas are Sunni Muslims, one of the many ethnic minorities who live in Rakhine State where the majority population follows Theravada Buddhism. The Rohingya population is estimated at over 700,000. Of South Asian descent, Rohingyas stand out among people of East Asian stock.

Where did they come from?
Some accounts say the Rohingya forefathers were sea traders. But the Burmese military points to history, maintaining that the Rohingyas crossed over from present-day Bangladesh. Chittagong was under the Arakanese till it was lost to the Mughals in 1666. And in 1826, Arakan and Tenasserim were ceded to British India under the Treaty of Yandabo that ended the First Anglo-Burmese War.

How have the Rohingyas been treated?
The Pinlon Agreement of 1947, signed a year before Burma’s independence, included Rakhine in the new union but the Rohingyas were kept out of nation-building. After a military crackdown in 1978, Rohingyas fled in thousands to Bangladesh. Under world pressure, the military agreed to their repatriation. Another crackdown in 1991 again sent Rohingyas across the border. Some 30,000 still live in two refugee camps in Bangladesh and many others have found their way overseas. A few hundred showed up in New Delhi last month to seek refugee status.

How did the Rohingyas become stateless?
The Burma Citizenship Law of 1982, which repealed the 1948 Union Citizenship Act, sought to deny citizenship to people of Indian and Chinese descent and also targeted the Rohingyas. Under the law, full citizenship could be granted to people of 135 national races who lived in Burma before 1823 — i.e. before British colonisation. The Rohingyas did not figure in this list. One clause in the new law was very clear: “The Council of State may decide whether any ethnic group is national or not.” Clauses in two other categories — associate and naturalised citizenship — were of no help to the Rohingyas either.

What is the stand of Aung San Suu Kyi’s NLD on the Rohingyas?
In the 1990 general elections — nullified by the military after the NLD won by a landslide — Rohingyas had backed Suu Kyi’s candidates. Four months after her release from house arrest in November 2010, Suu Kyi met Rakhine state representatives. An NLD statement quoted her as saying that the “spirit of the Union is rooted in the heart of people from Rakhine and Chin State although they love their own ethnicity”. A month earlier, the NLD had released a statement, underlining that the Pinlon Agreement had made it clear that “Citizens of the Frontier Areas shall enjoy rights and privileges which are regarded as fundamental in democratic countries”.

***What is India’s interest in the Rakhine State?***
India and Myanmar are working on the Kaladan multimodal transport project. It involves construction of a deep-water port at Sittwe, capital of Rakhine State, dredging of the Kaladan river to let cargo vessels move from Sittwe to Mizoram, construction of a river port and upgradation of roads. Once complete, it will connect India’s Northeast to the Sittwe port. The road component is delaying the project, targeted for completion in 2013.

Why is Rakhine State important to China?
China has started work on twin oil and natural gas pipelines, stretching 1,060km from the Rakhine port of Kyaukpyu to Kunming, capital of Yunnan. Once complete, these pipelines will allow China to bring home fuel supplies from the Middle East and Africa without taking the long route via the Strait of Malacca.

Seabuckthorn

• Seabuckthorn is a medicinal plant found in the Himalayan region. Our country holds tremendous potential in respect of Seabuckthorn fruit production and diverse varieties which have health-promoting properties and can play a crucial role in preventing soil erosion and help nitrogen fixation in cold and desert areas. 
• Seabuckthorn fruit grows in the cold deserts of Ladakh region of Jammu and Kashmir, Lahul-Spiti in Himachal Pradesh and some parts of Arunachal Pradesh. 
• In 2010, the then Minister of Environment and Forests, Jairam Ramesh had launched the National Mission on Seabuckthorn in Leh. The minister stresses the need for creation of National Consortium of Seabuckthorn to integrate functioning of Defense Institute of High Altitude Research (DIHAR), Leh, which is one of the laboratories of Defense Research & Development Organization (DRDO) located at Leh (11,500 ft) and allied institutions for promoting its impact at national level.
•  The Mission sets a target for increasing the area under Seabuckthorn to 50,000 hectares of land by 2020 under phase one in four districts of Leh, Kargil, Kinnour and Lahoul and Spiti through a concerted effort by researchers, academicians, self help groups and Ministry of Forest.

XBRL

• XBRL refers to eXtensible Business Reporting Language, which is a computer language that enables documents to be read electronically. eXtensible Business Reporting Language (XBRL), promises to web-enable the financial reporting process for both preparers and consumers.
• XBRL is an open technology standard for reporting and analysing business and financial information. It is independent of the software used and is neutral to the accounting framework. 
• It helps in automation, cost saving, faster, more reliable and more accurate handling of data, improved analysis and in better quality of information and decision-making. XBRL enables producers and consumers of financial data to switch resources away from costly manual processes, typically involving time-consuming comparison, assembly and re-entry of data. 

GeoEye-2

• GeoEye-2 is a planned third generation commercial Earth observation satellite, due to launch in early 2013.
• It will be the highest resolution commercial Earth observation satellite in orbit, once it has been launched.
• When it goes up, GeoEye-2 will join two other satellites, GeoEye-1 and IKONOS, which are already in orbit.

Computable Document Format (CDF)

• a new electronic document format that has been designed to allow easy authoring of dynamically generated interactive content. 
• It was created by Wolfram Research. Computable document format supports GUI elements such as sliders, menus and buttons. 
• Contents can include formatted text, tables, images, sounds and animations. It allows document content to be generated in response to user interaction using any algorithms or visualizations.
• This makes it particularly suited to scientific, engineering and other technical content and digital textbooks.
• CDF files can be read using a proprietary CDF Player with a restrictive license, which can be downloaded free of charge from Wolfram Research.

Jiaolong

·         First manned submersible capable of reaching 7000 m sea dpths

·         Deep dive by china in Jiaolong

Gambusia and guppy

• mosquito larva eating fishes ; Larvivorous fishes
• Used as mosquito control strategy
• U.P to buy help from Karnataka in importing these fishes to their state to control the recent outbreak of Japanese encephalitis disease spread by mosquitoes.

Large underground xenon experiment: LUX

• Worlds first dark matter detection experiment
• A lead mining town 5000ft beneath the earth s surface, south Dakota will become the lab.
• Help understand how universe evolved

ET in the classroom: Pension Bill - What will it do?

On Thursday, the government was forced to defer a decision on the pension bill following objections raised by some UPA allies. Here's a look at the provisions of the bill:
What is the pension bill?
The Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011 is usually referred to as the pension bill. It wa

The government had introduced a similar bill in 2005 but it had lapsed as the term of the 14th Lok Sabha expired before it could be passed.
What does the bill seek to do?
The government was finding it difficult to manage its rising pension liability because of the defined-benefit system, under which the pension paid to employee was based on their last salary drawn.
In 2004, it shifted to a defined contribution system, which required employee to save for retirement from their earnings.
Towards this end, it set up a new pension system (NPS) for those joining government service after January 2004 and subsequently set up the Interim Pension Fund Regulatory and Development Authority to oversee the scheme that already managed the retirement savings of lakhs of state and central government employees.
The NPS was later extended to private individuals. The government now hopes to establish the NPS as the premier retirement savings scheme.
The pension bill seeks to give statutory or legal powers to the PFRDA, and set the framework for the regulation of pension fund schemes, including the ones being currently offered.
What is the current status?
The standing committee had submitted its report on the bill in August last year. The government has to now take a stand on the recommendations and bring an updated bill. However, it has not been able to build a consensus on the terms of the proposed law within the coalition.
What are the bill's key provisions?
Powers to PFRDA to regulate and develop the sector.
Provides for foreign investments in the sector but has not set a limit.
Detailed frame-work for the management of the NPS, which has two types of accounts, Tier-1 and Tier-2. Withdrawal from Tier-1 accounts will be allowed only on retirement. The NPS has three investment options of varying exposure to equities, govt debt and corporate debt.
What are the committee's main suggestions?
Mention a FDI limit of 26%, same as that for the insurance sector.
Allow emergency withdrawal facility even from Tier-1 account and a 100% government securities option for subscribers.
A minimum guaranteed return.
Why are UPA allies against the bill?
They are objecting to provisions enabling foreign direct investment in the sector and allowing management of pension schemes by private players.

s introduced in the Lok Sabha on March 24 last year and was subsequently referred to the standing committee on finance for a detailed examination.