SIDBI to receive $600 mn loan from World Bank and Japanese Agency

The Financial institution Small Industries Development Bank of India (SIDBI) is receiving loan worth $600 mn from two international development agencies to provide credit to Micro and Small & Medium Enterprises. These loans are expected to be received by the Indian financial institution during the period 2010-11.

World Bank, one of the providers of this loan, amounting to $300 mn, would be utlised by SIDBI solely for the purpose for providing credit to MSME and SME sector. The SME sector will account for the larger pie of $200mn while remaining will go to the MSME sector.

The other $300mn, which will be provided by Japan International Cooperation Agency (JICA), would be utlised by SIDBI for financing energy efficient projects of Micro and Small & Medium Enterprises. Such disbursement will be given to MSMEs which have incorporated energy efficient technology and require capital to further finance their projects. These loans will be soft loans and would be made available to the companies at concessional rate.

Both of these financing arrangements by SIDBI is going to benefit MSME and SME sectors, which are always in dearth of funding and have been suffering a lot for past two years due to financial meltdown. The measure to provide soft loan on long term basis will boost these companies not only financially but also technologically as they will be able to adopt new and efficient technologies for their production and services.

Sovereign Wealth Funds to Invest in India’s Oil Exploration Sector

E&Y report also lists China’s SWF as possible investor in India

Ernst & Young has come out with a new report that forecasts India will receive up to USD10 bn of investment in oil exploration and production sector. Interestingly, report also suggests that Sovereign Wealth Fund (SWFs) of Mid-east, Singapore and China would be making such future investments in India’s oil and gas exploration. Also, exploring there chances would be much reluctant Japanese Banking institutions, which so far don’t have a bigger presence in India.

SWFs are surprise entrant to the Indian exploration market. SWFs have been making huge investments in energy sector focused around Mid-east and Africa region but India was never on its target as most of the investment is directed towards securing it energy needs. E&Y has unexpectedly included SWFs from China, which have been in forefront of securing China’s growing energy need and have been competing with India on foreign acquisitions.

India opened its oil and gas exploration sector for private players through New Exploration and Licensing Policy in 1998, so far seven rounds have taken place and 207 blocks have been awarded to the participating companies. This has brought down the average unexplored acreage in India’s total sedimentary area to 15% in FY07 from 41% in FY '99.

OVL & Cairn boost India’s Energy Security

OVL acquires oil block in Columbia; Cairn hikes crude production in Mangala

India’s energy security got a boost last week when ONGC’s overseas arm OVL succeeded in bagging an oil block in latin American country of Columbia. The oil block is located in north-western Columbia near La Creciente natural gas field. The oil block has been awarded as equal joint venture between Columbia and OVL, which will remain property of Columbian government. The awarded block is 550km long and has total area of 2.7 Lac hectares. The OVL consortium will initially invest USD 23mn in first phase of the exploration.

In another development, the Cairn India announced that it will increase the production capacity of its Mangala oilfields to 175,000 barrels per day from present 65,000 bpd. This would increase Mangala oilfields contribution to 25% of the present domestic production capacity. Increase in production capacity will help India in reducing its oil import bill and further securing in energy needs.