Marginal cost – 6 Toros 6 Mon, 27 Jun 2022 02:31:59 +0000 en-US hourly 1 Marginal cost – 6 Toros 6 32 32 The ATO’s crackdown on family trusts is about to get serious Mon, 27 Jun 2022 02:31:59 +0000
There is concern that the ATO will investigate previous tax returns and charge applicable interest and penalties.

If there’s one low-key but important battle to watch this year, it’s the one between the Australian Taxation Office and the beneficiaries of family trusts.

It’s been going on for a while, but now that the battle lines have been drawn, the rubber will really start to hit the road this week as trusts begin filing their annual returns at the end of the tax year. .

This filing will come on the heels of some very clear warnings from the ATO that they are looking for a range of ‘questionable’ behavior within trusts and will also come looking for accounting firms that have given advice that could have helped people avoid paying taxes.

Family trusts have long been used as a tool by the wealthy to efficiently pass income to beneficiaries who are in lower or zero tax brackets and also as a way to keep important assets like a farm intact for future generations. .

The trusts themselves generally pay no tax – which is paid under normal income tax rules by the person receiving the distribution – and by splitting the income between lower rate taxpayers, the aggregate amount of l tax paid can be significantly reduced.

What the ATO is cracking down on are a series of contrived schemes in which money flows to and from businesses, as well as money that is paid to children, who quickly reimburse their parents for the cost of their education.

Will the ATO go back to the past years?

There has been a lot of commotion among those with faiths about the crackdown, the very big fear being that the ATO will start going back in time to find this kind of behavior and then go through the usual enforcement of retroactive interest and penalties.

The ATO has denied it was a fishing expedition, but there is no doubt it wants to crack down on a range of practices which have accumulated over the years and revolve around payments to beneficiaries low or no taxes that accrue to high levels. tax individuals.

One of the examples they use is a family trust giving a college student with no other source of income an entitlement to $180,000, which would put him just below the top tax rate of 45%.

The student would then pay the $180,000, less any taxes paid, to his parents to “reimburse” the cost of his childhood.

In other words, the beneficiary of the trust didn’t actually get the benefit, but his parents did – using a potentially lower tax rate than their own.

Similarly, the ATO is looking for arrangements in which a trust pays money to a company it owns, which is then returned to the trust in the form of dividends – potentially fending off any tax payable by individual beneficiaries in the future.

Loans between companies and trusts are also scrutinized.

The ATO is also requesting the tax file numbers of all beneficiaries who will receive a distribution from a trust for the first time in the year 2022, with notices to be filed with the ATO by July 31, 2022.

The ATO also wants all trust distribution resolutions to be filed on the same date, with trust income subject to the highest marginal tax rate if this is not done.

Blind eyes won’t be closed from now on

This is a complex area spanning thousands of trusts, but what is clear is that over time a series of rather dubious practices have emerged within family trusts which greatly expand the idea income splitting so as to significantly reduce the income tax paid by the beneficiaries.

It remains to be seen how hard the ATO will strive to root out past botched practices – and how far they will go – but the clear warning is that they won’t turn a blind eye to whatever trusts are doing from From now.

In political terms, with the Albanian government seeking more revenue wherever it can find it, there will be very little sympathy for those who use trusts as a means of reducing tax bills.

In accountancy offices across Australia this week there will be a flurry of last-minute filings as trusts and their beneficiaries try to ensure they comply with what appears to be a much more regulatory regime strict for trusts.

What happens from now on – particularly how hard the ATO will go to crack down on trusts and their advisers who have failed to comply with the tougher new rules – will be a really interesting battle.

Brendan Caldwell’s Top Picks: June 24, 2022 Fri, 24 Jun 2022 18:01:18 +0000

Brendan Caldwell, President and CEO, Caldwell Investment Management

FOCUS: North American Large Cap Equities


As 2022 approached, a concoction of headwinds created the perfect storm for equity markets and the ensuing selloff sent most benchmark equity indices down 20% or more from recent highs. Russia continues its assault on Ukraine, which has impacted global flows of key commodities. China’s zero COVID policy has forced port closures, exacerbating existing supply chain issues. Finally, the persistence of high inflation means that the Federal Reserve (and other central banks) may have to act much more aggressively to raise rates than investors expected just a few months ago.

We think the market is grappling with the fact that interest rates could stay high if inflation stays high. And after 12 years of near-zero interest rates, more pandemic stimulus and growing risks of recession, the outlook is very uncertain. One thing we are reasonably sure of is that the markets are likely to experience high levels of volatility for the foreseeable future. We will continue to focus our efforts on finding high quality, well managed companies with a proven track record in challenging environments and believe that professional investment advice is extremely valuable at times like these.

  • Sign up for the Market Call Top Picks newsletter at
  • Listen to the Market Call podcast on iHeartor wherever you get your podcasts


Brendan Caldwell’s Top Picks

Brendan Caldwell, President and CEO of Caldwell Investment Management, discusses his top picks: Quanta Services, Capital Power and Murphy USA Inc.

Quanta Services (PWR NYSE)

Quanta Services is no longer a fund holding company but remains at the top of our watch list

  • It is a well-managed engineering and construction company with a lower risk profile than its peers
  • End markets benefit from strong secular tailwinds

    • Utilities are investing to strengthen the grid and expand to prepare for things like electric vehicle charging
    • Telecoms build 5G infrastructure over several years

  • Majority of revenue comes from small maintenance type contracts which are unit price/cost plus, meaning they represent higher input costs compared to fixed price contracts
  • These contracts also contribute to greater revenue and profit stability over time compared to other engineering and construction peers (PWR has done a great job of minimizing exposure to fixed-price contracts more important over time)
  • Finally, the industry is highly fragmented and PWR has demonstrated a strong history of growth through acquisitions; so we think there is still a long avenue of growth there
  • More recently: we don’t believe the solar industry disruption is a significant headwind

    • Biden admin seeks to temporarily eliminate Trump-era tariffs
    • Solar power is crucial to US carbon reduction goals, investments cannot be avoided, and domestic supply is likely to become a bigger focal point in the years to come.
    • PWR management said it can shift work to other areas to catch up with delayed solar projects in 2022

Capital Power (CPX TSX)

Holding the CVM; most recent purchase: May 18, 2022, at $44.92

  • Capital Power is an independent power producer with approximately 6,600 megawatts of generating capacity at 27 facilities in North America
  • They are operating in a strong pricing environment that we view as sustainable in the short to medium term given the favorable supply and demand dynamics for electricity pricing in Alberta. Specifically:

    • Oil and gas demand returns
    • The industry’s aging thermal power generation assets are retired without major replacements through 2024-25
    • Marginal costs of production are higher than before the pandemic

  • They are in an envious position relative to their peers, having sold forward about 60% of 2023 baseload power generation while locking in more than 90% of its natural gas feedstock requirements at far lower prices. at the market.
  • Finally, they have pledged to spend $0.5 billion in capital per year to grow its revolving platform both organically and inorganically.
  • Noted a strong pipeline of acquisitions on the inorganic side

Murphy United States (MUSA NYSE)

Last purchase: June 21, 2022, at $223.78

  • Murphy USA is a leading supplier of refined petroleum products to the United States
  • It serves its customers through a network of approximately 1,700 retail gasoline stores and through non-branded sales to wholesale customers.
  • It’s a story of strong organic growth that still has legs. Historically, early results have been driven by a combination of building new stores and renovating and expanding existing stores with management, aiming for store growth of 2-4% per year
  • Recent mergers and acquisitions expected to accelerate growth by strengthening the company’s convenience store offering

    • Similar to Couche-Tard, MUSA hopes to apply lessons learned from the acquisition of QuickChek, which has industry-leading gross margins in merchandising and was historically strong in food and convenience products, relative to the rest. chain.

  • This should increase the company’s margins over time
  • MUSA’s core businesses have an industry-leading cost structure, partially funded by its owned real estate portfolio, and lower-than-industry retail fuel profitability levels, helping to generate market share gains while increasing fuel margins

    • In the current inflationary environment, the price gap at MUSA is widening against smaller competitors who must pass on higher costs to survive; MUSA reinvests part of the margin expansion to gain market share (so we see this as a trade down game for consumers)

  • Q1 2022 Gallons Sold Surpassed Q1 2019 Levels; management. Seeing smaller ticket sizes but more frequent rides helps merchandise attachment rates (i.e. buying something inside with your gas purchase) to recover

PAST CHOICES: May 3, 2021

Brendan Caldwell’s Past Picks

Brendan Caldwell, President and CEO of Caldwell Investment Management, discusses his past picks: Martin Marietta Materials, Inc., Watsco and Fastenal Company.

Martin Marietta (MLM NYSE)

  • So: $354.56
  • Now: $302.79
  • Return: -15%
  • Total return: -14%

Watsco (WSO NYSE)

  • So: $295.46
  • Now: $235.18
  • Return: -20%
  • Total return: -18%

Fastenal (FAST NASD)

  • Then: $53.00
  • Now: $50.97
  • Yield: -4%
  • Total return: -2%

Average total return: -11%


Businesses passing high costs onto consumers at the fastest rate since the 1950s Wed, 22 Jun 2022 18:45:55 +0000
  • Profit margins and corporate profits hit record highs in 2021, researchers at the Roosevelt Institute have found.
  • Businesses charged on average about 72% more than their input costs.
  • Reversing that surge is one way policymakers can help calm inflation in the United States, the researchers said.

Several factors, from Russia’s invasion of Ukraine to supply chain issues, are fueling today’s skyrocketing inflation. Yet new research from the Roosevelt Institute reveals that the blame lies with American corporations, and corporations are charging Americans the most they have ever done.

Inflation is closely tied to rising business prices, starting with an increase in costs that go into business operations, ranging from more expensive materials for manufacturers to higher rents for retailers. Affected firms then raise consumer prices to compensate for these more expensive inputs. The differences between price and cost are known as mark-ups, and in the pandemic-era economy, these differentials are wider than ever.

Profit margins and earnings at 3,698 U.S. companies soared last year to the highest levels since the 1950s, Mike Konczal and Niko Lusiani of the Roosevelt Institute said in a June statement. The average markup reached 1.72 in 2021, meaning that the typical price offered by businesses to their customers was 72% above business costs. This is up from an average of 1.56 in the 2010s, or 56% above marginal cost.

Last year also boasted the largest annual increase in margins since at least the 1950s, the period for which the duo conducted their analysis. The rise was more than 2.5 times larger than the other largest annual increases seen before.

This transfer of higher costs has helped drive inflation to levels not seen in four decades. The consumer price index – a closely watched national measure of inflation – climbed 8.6% in the year to May, beating economists’ forecasts and marking the pace fastest price growth since 1981.

The measure was largely boosted by soaring gasoline prices, but the report also showed lingering inflationary pressures in nearly every corner of the economy. With global supply chains still far from healed and gas prices rising further in June, hopes of a cooling are largely dashed.

The researchers’ findings may be specific to the inflation seen throughout last year, but the lack of a slowdown in 2022 suggests there is opportunity for relief, the team wrote.

“With margins being abnormally and suddenly high, this means there is room for them to reverse with little economic damage and with likely societal benefits,” Konczal and Lusiani said in the brief.

Konczal told Insider that inflation in 2022 was different from last year, calling it “wider and a bit more persistent than it was in 2021.”

“Having said that, the big margins in these companies are still there and they need to come down, or at least if they come down, if those profit margins come down, that would help ease the pressure of inflationary pressures,” he added.


Federal Reserve

is the primary body tasked with curbing inflation, but the researchers highlighted several options that Congress could pursue if lawmakers wanted to tackle price hikes at the corporate level. Antitrust “cures” can better match supply and demand in a more “targeted and nuanced” way, Konczal told Insider, citing the cost of prescription drugs as an example.

Moreover, “higher margins do not necessarily have to translate to higher profits” as they did last year, the authors wrote. They suggested that an excess profits tax could be a solution to “distribute uncontrollable economic gains” while “eroding” the pressure on companies to increase margins.

The situation may look “bleak” to policymakers, Konczal told Insider, but targeting industry concentration can counter soaring margins.

“How the business sector evolves over the next two years — whether or not prices fall, especially for many goods — will largely determine the trajectory of the economy,” Konczal said.

“Whether [policymakers] end up hoping that the Federal Reserve will solve this problem, it will probably lead to a bad result or a worse result than if other options were also in play.

The arrival of Amazon America in Nigeria Mon, 20 Jun 2022 14:11:51 +0000

In June 2017, I wrote and asked Amazon coming to Nigeria. I also made a video (below). The main premise is: Amazon has the ability to become the postal service system in Nigeria that will connect rural and urban Nigeria on a large scale. Yes, Nigeria needs Amazon to help support its infrastructural development, particularly in the areas of logistics and transportation.

Rumor has it that Amazon is coming to Nigeria. If that’s true, that’s a big deal. Amazon is more important to Nigeria than Google or Facebook. Why? Amazon has the ability to unite rural and urban Nigeria through catalytic infrastructure. Nigeria began to disappear on a large scale when the postal system collapsed.

Today, there are two generations in Nigeria: those who saw a functioning postal (and rail) system and those who came when everything was gone. If Amazon comes and invests billions of dollars – more than Nigeria’s national budget in logistics and transport, and opens it up to all farmers, shippers, etc. through its execution business model, that would be magical. (Of course, the vibes of neocolonialism will increase; I get it.)

Tekedia Mini-MBA (June 6 – September 3, 2022) started. You can still register until June 20. register here . The cost is N60,000 or $140 for the 12 week program.

Read what I wrote in June 2017 when I was dreaming about the impact of Amazon coming to Nigeria not only to sell cloud services but also to run e-commerce operations.

Amazon is now a bank, lending to small businesses that sell on its platform. It is also an expert processing company in air, sea and road logistics. With its networks of empires, anyone can live in Amazon America, eat food from Whole Foods, watch movements from Amazon, read on Kindle, buy most things from Amazon. The list continues. Its impact permeates industrial sectors and all those it touches, securing it as Napoleon Bonaparte did when he conquered nations in the 18th century.

According to the Business Insider leak, Amazon will launch in April 2023. With that, Jumia and Konga will see more competition. This review differs from another here which focuses on Amazon Web Services.

  • “The Belgian market, called Project Red Devil, is scheduled for the end of September 2022. The one in Colombia, called Project Salsa, is scheduled for February 2023.
  • “South Africa, codenamed Project Fela, is also expected in February 2023. The market in Nigeria is expected to launch in April 2023. This project shares the codename Project Fela with South Africa,” a- he declared.
  • “Chile is also scheduled for April 2023. It shares the Project Salsa name with Colombia,” the report adds.

All countries plan to launch with their own marketplace and access Amazon’s fulfillment service called Fulfillment by Amazon, according to one of the documents.

For Amazon, expanding into more countries now makes sense. The company needs to generate more demand as growth slows across the board after a two-year pandemic-induced sales boom. Amazon has cut hiring, sublet warehouse space and limited delivery network expansion this year in anticipation of a prolonged downturn. Onboarding more sellers in new countries can help Amazon fill more of its warehouses, which are facing excess capacity after overbuilding facilities during COVID-19 shutdowns.

If this comes to fruition, Amazon’s infrastructure can solve marginal cost issues for many sellers. I expect Amazon to have an immediate impact because many people can start selling online, plugging into the logistics apparatus that Amazon is expected to build. It is losing $5 billion in the Indian market, a fraction of which will go towards basic logistics infrastructure that will help Nigeria. You can call it Nigeria ecommerce 2.0.

Opportunity for the B2C sector

The reason e-commerce businesses, especially B2C ones, are struggling in Nigeria, is the huge marginal cost of distribution. If Amazon comes along and builds the basic operating system for logistics, and enables everyone to access it, Nigeria will begin the era of e-commerce 2.0. Sure, Amazon will “tax” Nigerian businesses, but when you compound the impact, good things will happen.

Of course, what does it do for a nation to pin its hopes on another conglomerate? Nigeria is waiting for the Dangote refinery to fix its currency by replacing the import of fuel. Now, Ndubuisi hopes Amazon will fix its e-commerce B2C marketplace by providing logistics.

Don’t blame me: it’s being pragmatic. The Nigerian B2C e-commerce market will not be profitable until we have a postal system; Amazon has a chance to build a quasi-version. However, this is a rumor since Amazon has not confirmed the leak!

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How to get a better MP class? Help mothers run for parliament | women in politics Sat, 18 Jun 2022 19:07:00 +0000

SAshby’s first insight into what it means to be a politician involves feeling overwhelmingly condescending. She was a teenager in South Wales when the local Tory MP visited her school to discuss Welsh devolution. Young Ashby plucked up the courage to ask a question about the Welsh language and was told, she said scathingly, to ask for something ‘sensitive’. “I always remembered that,” she said. “That was my first impression of what a politician was.”

But the 40-year-old single mother of three may end up having the last laugh; in May she won one of the first 18 grants from MotherED, Labor MP Stella Creasy’s project encouraging more mothers to run for parliament. After months of scandals, sordidness and complaints that politics is alienated from ordinary life, the aim is to shake things up a bit.

The grants of up to £2,000 are designed to cover campaign childcare costs, but also to signal that mothers – far from being dated or sidelined – are valued in politics.

For Ashby, who works part-time for a project helping mothers get back to work and has three daughters aged 11, 8 and 4, the money makes applying for the selection in her hometown of Chepstow suddenly seem achievable .

“I thought it would be something I couldn’t start thinking about until later in life, when the kids were older. It made me think it might be possible now,” she says.

“When you have kids, your perspective changes – there’s so much power and so much passion. But so many mums can’t go back to work – the mums I work with are often long-term unemployed and for many of them there are so many barriers. I feel like Westminster isn’t very representative of a lot of mums I know.

Meanwhile, fellow scholarship recipient Nazia Rehman, a full-time Labor Wigan councilor and mother of three, thinks the money also carries more symbolic weight: ‘It sends a message that mothers can be ambitious . I think this will only start a wider debate in the community that you can raise your children, you can do all the care work and still aspire to pursue your dreams.

Some may wonder why a woman wants to join a parliament still mired in allegations of sexual misconduct. (Last week, former Scottish National Party chief whip Patrick Grady became the latest MP to face a brief suspension for making an unwanted sexual advance to a staff member.)

Yet, says Creasy, exasperation with dirty politics seems to galvanize women to sign up: “They think parliament is a place where privileges and rights have come together and twisted, and it needs people who just don’t come from that background. And one group of people currently missing are moms.

The point of subsidizing mothers, she added, is not to discriminate against childless women, but to remove barriers for an underrepresented group: “Evidence shows, time and time again, that women with children don’t run for office, because of the costs and practicalities of trying to look after your children and run a campaign.

The unexpected bonus, however, is that MotherED seems to be attracting candidates who don’t necessarily fit the standard Westminster model. A third were single mothers and a third were BAME (black, Asian and minority ethnic) women. Could relatively small grants be an answer to a parliament that, in the midst of a cost-of-living crisis, has begun to look dangerously out of touch?

Nazia Rehman, a Labor councilor from Wigan and mother of three, received one of the grants. Photograph: Richard Saker/The Guardian

When writer Isabel Hardman polled MPs for her book Why we get bad politicians, she found that on average getting elected cost them £11,000 each out of their own pocket, factoring in time off for campaigning, travel, overnight stays and ad hoc expenses such as buying drinks to thank the volunteers. But in the marginal seats, some spent well into the six figures. Losing candidates, meanwhile, can find themselves deeply in debt without showing anything for it.

It is perhaps unsurprising that many of those who are willing to take such a financial risk come from relatively affluent backgrounds. While the 2019 ‘Red Wall’ push brought more working-class Conservative MPs to parliament, 44% of Tories elected that year were still privately educated, alongside 38% of Liberal Democrats and 19 % of Labor MPs.

Former cabinet minister Jacqui Smith, who served on the MotherRED grants jury, said applicants are often embarrassed to admit they are struggling financially for fear of appearing unprofessional. “Most people would look at someone who is a candidate for Parliament and already see them as advantaged. You don’t want to say, “I’m dipping into my savings. Or: “I can’t afford to travel up to three times a week.”

Grant recipient Samantha Townsend, a mother of three from County Durham, says her interest in politics was sparked by cuts to family support services
Grant recipient Samantha Townsend, a mother of three from County Durham, says her interest in politics was sparked by cuts to family support services. Photograph: Gary Calton/The Observer

This resonates with Samantha Townsend, a 36-year-old mother of three from County Durham and fellow grant recipient. Just passing the Labor candidate selection process could cost £1,000 and although she has three jobs – in community engagement for the co-op, for an education company and as a councilor – she doesn’t there’s no money lying around.

“There’s no wealth in my family, there’s no credit card funds – I’ve used my credit card to feed my family for the past 10 years. I live in a rented house. I was thinking, ‘How am I going to do this?’ »

Townsend’s two eldest children, now aged 10 and 8, both have autism and his interest in politics was sparked by cuts to family support services. She argues Westminster needs more women like her with experience of the welfare system and fewer MPs, saying the poor can face skyrocketing bills by learning to cook better or buying brands of value: “It fuels the distrust people have of politicians, when they see conservatives on TV saying ridiculous things about what it’s like to live in poverty.

It was frustration at the lack of diverse voices in government that led former Lib Dem special adviser Vanessa Pine to co-found the Activate Collective two years ago, raising funds for women activists of all stripes. parties seeking national or local elections, but focusing on low-income, ethnic minority and disabled women.

The 46 candidates he has backed so far needed everything from childcare to laptops and smart clothes, though the saddest story Pine has heard came from an adviser who spent two hours returning home from evening meetings to save the bus fare: “She was potentially putting herself in a dangerous position to come home late at night because that £2.30 bus fare was something that she couldn’t afford.

Perspectives like this, Pine said, would be invaluable in local or national politics. “You get better politics when you have people who know what they’re talking about. Things like changes to Universal Credit payments [scrapping the requirement to wait six weeks for a payment] would have happened much sooner if there had been someone in the room who had already had to wait for their benefits.

Sally Ashby from Chepstow
Sally Ashby of Chepstow says the grant will make the possibility of her running for parliament more feasible. Photograph: Francesca Jones/The Observer

But, like Creasy, she points out that money isn’t the only hurdle mothers face when trying to get elected. “I’ve heard of women candidates being asked, ‘What am I going to do if I get pregnant?’ “, she says. “Women are also often vying for much less winnable seats first and being asked to ‘prove themselves’ [before getting a safe seat].”

At Chepstow, Ashby admits she braces herself for questions about how she would juggle family responsibilities as a single mother. But winning the grant made her more confident to respond, she says: “I think it’s important that I’m true to myself and my situation, and that I recognize that having more people like me in parliament is a good thing. So many people are just disengaged from politics right now – the reaction is, ‘They’re all the same, I won’t vote for any of them.’

“There’s something about getting the message across that we’re not all the same; there are normal people who care enough to show up because it matters to them – and because they want those normal voices to be heard.

Oil deals: NUPRC to award licenses after N174 billion bonus payment Fri, 17 Jun 2022 04:50:55 +0000

As the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) plans to close the 2020 Marginal Fields Bidding Round (MFBR), the commission has insisted on following due process in the award final documents and Petroleum Prospecting Licenses (PPL) to the winners.

The federal government has earned 174 billion naira so far after signing bonuses were fully paid for 119 awards earlier this year, with nine others partially paid while 33 awards went unpaid.

Speaking on the closing of the tender, the Director General of the Commission (CCE), Mr. Gbenga Komolafe, said that this would be done in a way that showed strict adherence to the rules governing approvals and licensing in the upstream sector of the country’s oil and gas industry. .

Komolafe, who had hinted in May 2022 that the publication of the final documents could take place this month, insisted on the need for the regulator (NUPRC) to ensure that the law and due process are respected in the allocation of licenses to operators.

He said that under his leadership, no fringe field operator would be allowed to “trade” papers issued by the organization.

“The rule of law would be strictly adhered to in issuing final licenses to winners, and there would be no pressure for the commission to award final documents without due process,” Komolafe stressed.

How 57 oilfields were opened for lease

The defunct Department of Petroleum Resources (DPR), in June 2020, announced 57 marginal field offers.

The DPR said 661 companies submitted their expression of interest forms, of which 540 were shortlisted, while 405 applicants submitted 482 bids.

DPR then shortlisted 161 companies as potential recipients, 50% of which would have met all the conditions and, therefore, were eligible for the marginal oilfield awards.

In May 2021, the successful bidders were named in a $500 million (N235 billion) deal while the winners received their letters on May 30, 2021, but the process was later halted after the new tax law. industry (PIA) of August 2021.

Along with the PIA, the DPR was among the agencies that merged to form the new Nigeria Upstream Petroleum Regulatory Commission (NUPRC) whose management team was led by Mr Komolafe in October 2021.

In December 2021, the NUPRC said it had begun finalizing the closing process for the 2020 Marginal Oilfields Tender Program in accordance with the 2021 Petroleum Industry Act (PIA).

Mr. Komolafe, in a notice to program participants, had indicated that an internal task force was being formed and was addressing outstanding issues.

One was the concerns of beneficiaries who argued that there were, in some cases, multiple beneficiaries per asset.

Komolafe also said that the winners trained Special Purpose Vehicles (SPVs) in accordance with the respective award letters.

Through the notice, the NUPRC gave a six-month window to awardees who have problems using the resolution mechanism provided, indicating that the national interest must prevail.

The commission, for its part, since December 2021, has started working with current tenants to agree on transition mechanisms for the tendering exercise for marginal oil fields.

This is to ensure that new licensees will take over the marginal oilfield seamlessly from previous lessees who did not win a bid for such an asset.

Also in December, the 45-day deadline granted by the NUPRC for the payment of the signing bonus by the winners, as stipulated by the guidelines on marginal fields, had expired.

For those who have paid in full, the commission said it will ensure that all applicable guidelines to allow them to proceed to the next stage of the exercise are fully implemented.

Winners pay N174bn, await final documents

In January, the commission confirmed that at least N174 billion had been earned through the payment of signature bonuses by winners for the 2020 marginal oil fields.

Komolafe, who spoke as he contracted winners and tenants of marginal fields in Abuja, said 57 fields had been identified for the 2020 round of tender exercise, while a total of 665 entities expressed interest.

The NUPRC CEC said 161 investors emerged as potential winners after extensive evaluation processes, as required by law.

He revealed that signing bonuses for 119 awards have been fully paid, while nine awards have been partially paid and 33 have not been paid.

Speaking further recently, Komolafe said the marginal oilfield supply was designed in the urgent need for the country to increase its oil production.

Komolafe said: “One of our cardinal objectives is to ensure that we increase national oil production and, of course, we now realize that the marginal field could really help to improve it.

“As of this moment still, we have registered almost 90% of the co-beneficiaries forming their SPV and at this stage, it is the very comfortable stage where the commission can move forward to issue petroleum exploration licenses (PPL ),” the NUPRC boss noted.

The federal government’s regulatory agency in the oil and gas sector further stated that the allocation of the marginal fields was intended to increase indigenous participation in the upstream sector of the petroleum industry; increase oil and gas reserves and production volumes; improve technology transfer; enable job creation and generate revenue for the government.

Funding of marginal operations in the field

Speaking at a stakeholder engagement session on the marginal land bidding round, which is the fourth in six months, the NUPRC CCE, said the serial engagements were aimed at ensuring stakeholder input and alignment before the commission releases the final documents.

However, in one of these recent stakeholder sessions, some participants raised questions about the bidding cycle, mostly saying it was not long-term.

According to the Director of Underground, Energy and Mineral Resources Limited, Mr Collins Ibekwe, a participant, those who set up the process were not focused on the long term; they were too focused on the short term, adding that “but it won’t be too late to say, let’s reverse this process, give that money back.”

Another concern of stakeholders is that given the schedule set for oil production, some of the indigenous beneficiaries may not have the capacity to realize the full potential of the marginal oil field which they would take possession of in a few weeks.

However, alleviating fears, the Head of Pool Valuation and Lease Administration, NUPRC, who spoke on behalf of Mr Komolafe at the meeting, said that being aware that funding could be a hurdle, the NUPRC has identified various financing options that operators and investors can tap into. .

These options include private equity, capital market, strategic alliance and debt financing. Further, Section 95(5) of the POA also provides that licensees or lessees may, as security, assign, pledge, hypothecate their interest, in whole or in part under the applicable license or lease, provided that the consent of the commission is obtained.

This means that the law allows a tenant to involve other investors in its operations as long as it presents its model and the NUPRC approves it.

The current and pioneering leadership of NUPRC said it is still finding ways to reduce the cost per barrel (cost of production) through key initiatives.

These include improving due diligence protocols to enable investors and operators to access information before making investment decisions, encouraging synergies in the use of shared facilities and facilitating crude oil handling/transportation agreements to ensure favorable terms for all parties.

As the Petroleum Exploration Licensing (PPL) processes are being finalized according to the NUPRC, Komolafe urged co-beneficiaries who trained Special Purpose Vehicles (SPVs) to be assured that due process is followed to historically close the offer.

“I want to say to the co-winners to be less worried about this given that as a responsible regulator we are very concerned, especially since the level of investment that the co-winners have made is very huge.

“We are very aware of that, especially the cost of capital, because investing is not charity,” Komolafe said.

By Sunday Michael Ogwu and Simon Echewofun Sunday

Regulator reminds producers of market obligations as Bowen downplays risk of outages Tue, 14 Jun 2022 06:31:01 +0000

Federal Energy Minister Chris Bowen said he expects no need for forced shedding as energy market regulators write to producers reminding them of their need to bid fairly in the market Energy.

On Tuesday, Bowen played down the prospect of blackouts despite an expected lack of power supply in several states, saying he was confident there was enough capacity available that could be directed to power supply. if the need arose.

“There is enough supply in the system to avoid load shedding – [such as] asking large industrial users to reduce their energy consumption – or indeed – as I’ve seen some public speculation – blackouts,” Bowen said.

“There is enough supply in the system to avoid these for the foreseeable future, subject to further unplanned outages.”

On Tuesday afternoon, the Australian Energy Market Operator (AEMO) announced that it expects a generation capacity shortfall of more than 1,700 MW in New South Wales and 1,500 MW in Queensland. for Tuesday evening.

AEMO has called on generators to meet the projected shortfall, but also has the power to direct generators to supply power to the market to avoid any need for load shedding or blackouts.

The projected shortfall follows the AEMO’s imposition of “administered price caps” in Queensland, New South Wales, Victoria and South Australia, capping the wholesale electricity price at 300 $ per megawatt hour.

The ceiling price – which is now below the marginal cost of generation for most coal and gas generators due to high fuel costs – led producers to withdraw their offers from the electricity market, creating the appearance of a shortfall.

Asked if games had taken place in the electricity market, Bowen said Australia’s energy regulator had written to producers reminding them of their legal obligations, to bid accurately and fairly on the electricity market and the potential ramifications if generators are found to break these rules. obligations.

“Australia’s energy regulator wrote to producers this morning reminding them of their obligations under the law for fair bidding, for accurate bidding, and reminding them of the ramifications if they fail to do so,” said Bowen,

“The Australian Energy Regulator is monitoring and will continue to monitor their behavior very closely.”

Letter sent to generators by AER President Clare Savage tells generators that under national electricity rules they cannot contribute in circumstances where AEMO is forced to issue a directive that generators supply electricity to the market.

Bowen said he was confident sufficient generating capacity remained available to meet consumer needs in New South Wales and Queensland, with AEMO able to run generators to provide power despite the price cap.

If the AEMO orders power plants to produce power and supply electricity at a loss due to the imposed price cap, producers will be able to seek compensation to avoid any direct loss.

This means that for many coal and gas producers in the current market, it makes more financial sense to withhold their otherwise available capacity in the market and wait for AEMO direction rather than offer their capacity on the market as they normally would.

Reflecting this, Bowen said there will be a “bumpy winter” ahead for energy markets and price limits will remain in place until electricity prices come down, and the AEMO would continue to run the generators as needed to avoid any load shedding events.

But it also sees generators playing a form of ‘trend to the brink’ with the power market operator, knowing they can get higher payments for their generation, as load shedding will always be the option. least preferred for AEMO.

Bowen stressed that it was not necessary for households or businesses to stop all necessary electricity consumption, but suggested that some households might want to reduce excessive and unnecessary consumption due to current high electricity prices.

“No one should cut off the power supply they need and use for their comfort or safety. Nobody is asking for that to happen,” Bowen said.

“There was a general demand [to turn off] everything that is excess. I think most of these things would have been turned off by now because electricity bills have been higher – like pool filters, pool heaters and outdoor lighting not needed at this particular time.

“But no one should turn off the heating or whatever it uses that is necessary,” Bowen added.

Bowen added that “everything is on the table” as the Albanian government considers potential reforms to the gas supply mechanism, known as the “gas trigger” – suggesting that its regulations could be changed to allow the “ trigger” to be activated much faster than is currently possible.

Under current gas trigger regulations, this would not come into effect until January 1, 2023, significantly delaying any potential price relief that may be provided by requiring gas producers to reserve gas for domestic users.

See also: The day the fossil fuel industry lost perspective and threw away its social license

This 84-year-old commercial bank plans to raise FD rates and MCLR Sat, 11 Jun 2022 07:56:50 +0000

Jammu and Kashmir Bank (J&K Bank) established in 1938 is a regular commercial bank and is one of India’s oldest private sector banks with 84 years of presence in the country. The bank has revised its interest rates on fixed deposits and as of June 11, 2022, Jammu & Kashmir Bank is now offering an interest rate of 2.90% to 5.55% on deposits ranging from 7 days in 10 years.

Rates Jammu and Kashmir FD

The bank will continue to grant an interest rate of 2.90% on deposits of 7 days to 30 days, while the interest rate on deposits of 31 days to 45 days will remain stable at 3.00%. Deposits with maturities between 46 and 90 days will continue to earn an interest rate of 3.90%, while deposits with maturities between 91 and 180 days will earn an interest rate of 4 .00%. Jammu and Kashmir Bank will now pay an interest rate of 4.45%, down from 4.40%, on deposits of 181 days to 270 days, and 4.50% on deposits of 271 days to less than one year .

J&K Bank will now offer an interest rate of 5.20% on deposits maturing in one year to less than two years, and an interest rate of 5.40% on deposits maturing in two years to less than three years, against 5.25%. Deposits maturing in 3 years to less than 5 years will now earn 5.50%, down from 5.45% previously, while deposits maturing in 5 years to less than 10 years will earn 5.55%, down from 5. .50% previously. Domestic time deposits held by resident seniors will continue to benefit from an additional rate of 0.50% on all maturities.

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Jammu & Kashmir Bank FD Rates (


On June 10, 2022 the bank also increased its MCLR (marginal cost of funds lending rate) and now the overnight MCLR will be 7.10% from 6.60%, the 1 month MCLR will be 7.20% vs. 6.70%, 3 months MCLR will be 7.40% instead of 6.90%, six month MCLR will be 7.705 instead of 7.20%, MCLR of a an will be 7.85% will be 7.35%, the two year MCLR will be 8.30% instead of 7.80% and the 3 year MCLR will be 8.35% will be 7.85%, therefore the Borrowers with outstanding loan amount with Jammu and Kashmir Bank should note that their EMIs will increase. “For all types of fund-based working capital, including ad-hocs/TODs, the applicable MCLR will be 1 year,” the bank said on its website.

Bank of Jammu and Kashmir MCLR

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Bank of Jammu and Kashmir MCLR (

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Expert highlights need for better discussion on ongoing energy crisis Thu, 09 Jun 2022 20:45:37 +0000

Commonwealth, state and territory energy ministers met this week to try to resolve the energy crisis that emerged overnight but has been going on for 20 years. While many of the factors contributing to rising wholesale energy prices are international in scope, the way forward will depend heavily on national energy security.

A bold argument

(Photo: SIMON MAINA/AFP via Getty Images)

Experts have argued that those who argue that fossil fuels are necessary for the transition are completely missing the point. While no one is suggesting shutting down gas and coal plants this afternoon, the truth is that we are moving away from carbon-based power. That’s not part of the answer at all.

Energy storage

Energy storage is one of the missing pieces of the puzzle. Government and corporate energy planners need to change the way they think about batteries to successfully accelerate the transition to renewable infrastructure while keeping the lights on. They are now seen as a buffer for existing energy infrastructure rather than a pathway to a new paradigm characterized by ubiquitous renewable energy and national energy security.

One reason is that current lithium battery technology is best suited for fast charge and discharge storage regimes. It’s fantastic for supporting an energy infrastructure that is deteriorating as coal and gas plants close. Yet lithium cannot be the full story, especially given its supply chain issues and pricing challenges for longer-term energy storage. Other battery technologies must become available before a paradigm shift in thinking – and implementing energy storage systems – can occur.

Battery energy storage infrastructure has the advantage that it can be implemented in months rather than years to commission new gas installations. Solar and wind power combined with battery storage is the best way to switch to renewable energy.

Also read: Cost of renewable energy like solar and wind farms is slowly falling, research shows

Energy prices

Electrical network

(Photo: Wikimedia Commons)

Energy prices are rising not only because of change, but also because we are taking too long to recognize the benefits of renewable energy. An example of what is possible in the nation’s capital is shown. While the rest of us face rising electricity prices of 20% or more, average consumer spending in the Australian Capital Territory will fall by 1.25% next month.

This is just the tip of the iceberg in terms of what can be accomplished. Renewable energy, whether through initiatives such as Sun Cable, green hydrogen or the export of Australian-made solar and battery technology, remains a huge untapped resource for Australia that can not only ensure the country’s energy security, but also provide a dynamo for energy exports.

If we really want to put the climate battles behind us, we can focus on transforming Australia into a global renewable energy giant. However, this will require rethinking battery technology and supporting battery manufacturing in Australia.

Bottlenecks in global energy supply chains hurt energy markets and limit opportunities for economic progress around the world. The Russian invasion of Ukraine has created a situation where the electricity supply is used as a weapon of conflict. President Joe Biden of the United States used Cold War powers to ensure the availability of lithium for battery development.

Global dilemma

Given the global nature of the dilemma and its militarization in geopolitics, Australia’s potential to achieve energy security and sovereignty through renewables must be accelerated. We all expected gasoline prices to remain constant during last year’s transition. It turned out to be a bad decision.

How can Australian solutions weather this perfect storm head-on? Today, battery technology offers a no-marginal-cost alternative to meeting these energy demands. Once built, storage solutions effectively pay for themselves over time.

However, we need to start thinking about batteries in an entirely new way. This is not just a back-up plan in case “real energy” solutions fail; they are the only way to achieve energy independence and a low-carbon economy. And we can produce them right here in the United States, using recyclable materials and reliable supply networks.

While lithium will continue to be part of the answer, there is not enough ore available to meet demand. Lithium prices have increased almost tenfold over the past 18 months, but China still handles 80% of the world’s battery-grade lithium.

Other metals and technologies, such as the zinc used by Gelion, will need to be developed to diversify supply chains and create storage solutions that can support the shift to long-term storage needed to run energy solar as the basic energy source.

Need urgent solutions

This requires immediate investment in medium and long-term solutions rather than energy bets based on an outdated perspective. We must also ensure that we support Australian solutions. Otherwise, our economy will become too dependent on foreign technology and services, which is unwise in the current political climate. Renewables are gaining ground as the EU weans off Russian gas and the US seeks energy security. Australia can no longer afford to fall behind.

Related Article: Experts Say Renewable Energy Sources Are Not Enough to Solve Europe’s Energy Crisis

For more environmental news, don’t forget to follow Nature World News!

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Inflation, rising prices: why companies raise their prices: because they can Tue, 07 Jun 2022 06:08:05 +0000

Despite the steady increase, shoppers still bought their favorite breakfast cereals, paper towels and other consumer goods in the decade and a half before the pandemic began Image: Shutterstock

gRockery bills can be ridiculously high these days, but supply chain issues, energy costs and inflation aren’t the only factors to blame. New research suggests companies are raising prices just because they can.

In 2021, American companies recorded their most profitable year since the 1950s, as many took advantage of economies of scale and other more efficient production processes. Yet companies have increasingly retained the savings from these reduced costs, rather than passing them on to customers in the form of lower prices.

Instead, markups — the difference between the prices charged at the checkout and the marginal costs incurred by a business to make a product — increased by about 25% between 2006 and 2019, according to a study by Alexander J. MacKay, assistant professor at Harvard Business School.

Despite the steady increase, shoppers still bought their favorite breakfast cereals, paper towels and other consumer goods in the decade and a half before the pandemic began, write MacKay, Nathan Miller of the Georgetown University and Hendrik Döpper and Hendrik Döpper of the Düsseldorf Institute of Competition Economics. Joel Stiebale in Rising Markups and the Role of Consumer Preferences (pdf). The research sheds light on how mark-ups on key household items had already taken off in the years before the Covid-19 pandemic.

“I was surprised to see that product margins grew as much as they did,” MacKay says.

Rising prices don’t stop consumers

To test consumers’ willingness to continue buying more expensive everyday products, the researchers looked at Kilts Nielsen scanner and consumer panel data for approximately 14.4 million retail products across 133 categories. The researchers focused on the top 20 brands in each category, including private label products.

The data included unit sales and revenue by Universal Product Code, or UPC, for each week and physical store. Products included everything from cereal, bottled water, paper towels and over-the-counter cold medicine to specialty soaps, coffee and frozen pizza.

Researchers came to a startling conclusion: consumers were 30% less price-sensitive—that is, less likely to abandon their favorite brands and seek out cheaper equivalent products—in 2019 than they expected. were in 2006.

“Here’s one way to think about it: how much should you be paid to switch from your favorite brand to your second favorite brand?” MacKay said. “Maybe you value a few dollars here and there a little less than before. Maybe your preference for your flagship brand is even stronger than it was 15 years ago. in this component of price sensitivity. Regardless, our results indicate that consumers should be paid more.

Consumers cut fewer coupons

The authors looked at several possible reasons for this shift, including whether the shift to online sales during this period prompted consumers to pay more for the products. While they found that some categories were more impacted by online shopping than others, web shopping “doesn’t really seem to explain the price sensitivity trend,” MacKay says.

To investigate whether the decline in consumer sensitivity was part of a longer-term trend, the researchers turned to coupons because their use requires effort from the consumer and shows a willingness to seek higher prices. low for similar products.

They found that the use of coupons dropped from the early 1990s after decades of rapid growth. Consumers redeemed about 7.7 billion coupons in 1992, about double the amount of the previous decade. In 2006, that number fell to 2.6 billion, the authors found using data from NCH Marketing and Inmar Intelligence.

In 2019, the last year included in the research, consumers redeemed 1.3 billion coupons, half of 2006, despite the abundance of coupons available to cut, MacKay notes.

“The number of coupons redeemed has declined faster than the number of coupons issued by businesses,” MacKay notes. “It’s not 100% conclusive, but it’s consistent with consumers becoming less price sensitive.”

Will prices rise even faster?

Meanwhile, business costs have fallen over time as companies have extracted more productivity from increasingly efficient operations. Since 2006, marginal costs have fallen by an average of 2.1% per year, the authors estimate. In the latter part of the study period, from 2017 to 2019, business costs were around 25 percentage points lower than in 2006.

The rise in margins comes either from price increases or from reductions in marginal costs. These reductions can come from investments and economies of scale that make it cheaper to produce larger quantities. The authors find that falling marginal costs are the main driver of rising profit margins, in part because cost reductions are not passed on to consumers.

“What we’re seeing, at least in our article, is that companies are already realizing this to the extent that they can determine what price they can charge for their products,” MacKay says. “If you knew your costs were going down, but you didn’t have to lower your price, they’re already internalizing that consumers are a little less price-sensitive.”

This can ultimately mean companies can cut costs and continue to raise prices without losing a lot of customers, MacKay says. Take consumer products giant Procter & Gamble, one of the largest companies in the study. In 2012, P&G announced a “productivity and cost reduction plan” to cut $3.6 billion in expenses by 2019.

In 2021, long before the economic disruption caused by the pandemic, P&G management announced price increases for a range of products, from adult diapers and baby care products to laundry detergents and household cleaners. .

“Despite rapid price inflation since the start of the pandemic, consumers continue to buy, likely reflecting lower price sensitivity. This could continue to allow businesses to raise prices more quickly,” said MacKay.

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[This article was provided with permission from Harvard Business School Working Knowledge.]