Latest News
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Financial Times - Friday, June 4,
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch for the accuracy of these reports. Headlines - KKR feared a political risk in the Thames Water Rescue deal UK Serious Fraud Office investigates company who sold solar farms Thurrock Council British Industry Exempted From Trump's Doubling of Steel Tariffs Rachel Reeves, British Finance Minister, will support the Manchester-Liverpool railway link as part of a boost to transport spending Andrew Bailey, Governor of the Bank of England defends UK rules on ringfencing for lenders View the full article Thames Water has suffered a major blow in its battle to avoid nationalisation. The U.S. private-equity firm KKR withdrew from a multi-billion-pound rescue plan partly because of concerns over political interference. The Serious Fraud Office in Britain (SFO), has announced that it has launched an investigation against Rockfire Investment Finance. This company sold a bond scheme that was linked to solar farms, which led to a council in England being declared bankrupt by 2022. The U.S. President Donald Trump exempted the UK from doubling steel and aluminum tariffs in the United States, while British bosses urged British Prime Minister Keir starmer to act quickly on a deal that would completely eliminate these levies As part of the Whitehall Spending Review next week, UK Chancellor Rachel Reeves approved plans to spend billions of dollars on a new rail line between Manchester and Liverpool as well as other transport schemes. Andrew Bailey, governor of the Bank of England, has defended ringfencing regulations that force UK lenders separate their retail activities from other activities. He said that removing these rules would increase mortgages and other loan costs. (Compiled by Bengaluru Newsroom)
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Reeves, UK's Reeves, approves $21 billion in transport projects outside London
The British Finance Minister Rachel Reeves announced on Wednesday that she would commit 21.1 billion pounds (15.6 billion pounds) to transport projects outside London. These cities have been plagued by years of unfulfilled promises and underinvestment. Reeves will announce her first investment commitments in a speech to be delivered in Manchester, north-west England. Her June 11 Spending Review sets budgets for all government departments during the remainder of this parliamentary term. The Labour government of Prime Minister Keir starmer, which has suffered heavy losses in local elections, is being pressed to demonstrate that it is improving public services and infrastructure. Organisations like the OECD have identified outdated and insufficient transport links as a major factor. Reeves stated in an excerpt of her speech, provided by the Finance Ministry. She said that the growth of too few regions and large gaps in between them was the result of this type thinking. The former Conservative government led by Rishi Sunak, who cancelled a part of a north-south high-speed rail line in order to reallocate cash to local projects, had earmarked the majority of the 15,6 billion pounds. London has yet to give the green light for many cities. The budget announcement made on Wednesday represents an agreement to fund transportation projects between 2027/28 - 2031/32. These include investments in metro systems in the West Midlands and Greater Manchester as well as the North East, South Yorkshire and the North East. West Yorkshire – a city region with a population of 2.3 millions – will also have its first mass transit system. Jonny Haseldine is the head of the British Chambers of Commerce's business environment department. Since 1998, Britain has conducted periodic reviews of government spending, but this one is the first to cover several years since 2015. The only other review in 2021, which focused on the COVID epidemic, covered a single year. The Institute for Fiscal Studies, a non-partisan organization, said that this review of spending could be "one the most important domestic policy events" for Labour.
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Virgin Australia is seeking to raise $442.8 Million in IPO term sheet.
Virgin Australia, owned by Bain Capital According to a termsheet seen on Wednesday, is hoping to raise A$685 (442,78) million in an initial public offer. Virgin has set its offer price at A$2.90 a share. The offer size is 30% of Virgin's issued capital. Bain Capital didn't immediately respond to our request for a comment. The term sheet stated that the airline, Australia's 2nd largest after Qantas, would sell 236.2 millions shares to value the company A$2.32 Billion on a fully diluted base. Virgin's enterprise value will be A$3.6 billion after subtracting its A$1.31billion net debt. According to the terms sheet, Bain's stake will drop from 70% to 39.4% after the IPO. Qatar Airways will keep a 23% share.
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CANADA-CRUDE-Discount on Western Canada Select heavy crude widens; wildfires reduce Canadian output
The discount between the benchmark North American West Texas Intermediate (WTI) futures and Western Canada Select (WCS), widened Tuesday, but was still in historically tight territory due to wildfires that continue to disrupt Canadian oil output. WCS for Hardisty, Alberta delivery in July settled at $9 per barrel below the U.S. benchmark WTI according to brokerage CalRock. It had settled at $8.80 per barrel under the U.S. standard on Monday. Calculations show that wildfires in Canada's oil producing province of Alberta reduced Canada's daily crude output by about 7%. Although no significant infrastructure was damaged, companies shut down production of 344,000 barrels a day and evacuated some workers as a precaution. * The fires occur at a moment when Canadian heavy crude is already trading at an historically low discount, in part because of the Trans Mountain Pipeline expansion that was opened one year ago. This increased the country's capacity to export oil. Canadian crude also benefits from U.S. Sanctions on Venezuela and other nations, which boosts demand for heavy crude producers who are not sanctioned. * Oil prices rose about 2% globally on Tuesday, reaching a two-week peak as geopolitical tensions persist between Russia and Ukraine, and the U.S.
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ONEOK purchases remaining Delaware Basin Joint Venture stake for $940 Million
U.S. Pipeline Operator ONEOK announced on Tuesday that it has purchased the remaining stake in Delaware Basin Joint Venture from NGP XI Midstream Holdings for $940 million in cash and stock. By acquiring the remaining interest of 49.9%, ONEOK gained the sole ownership of this basin. It operates natural gas gathering, processing, and storage facilities in West Texas, and New Mexico’s Delaware Basin. The total processing capacity is over 700 million cubic feet a day. In the last two years, the operator of the pipeline has diversified its portfolio through acquisitions. These include a Gulf Coast NGL system from Easton Energy, and the purchase of Medallion Midstream, and EnLink Midstream. These moves are part a larger effort to increase its presence in Permian basin amid the growing consolidation of the U.S. Energy sector. The deal is worth $530 million cash and $410 millions in ONEOK common shares, according to the company. ONEOK has a pipeline network of 60,000 miles that transports crude oil, refined products and natural gas liquids. (Reporting and editing by Mohammed Safi Shamsi in Bengaluru. Katha Kalia is based in Bengaluru.
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US Airlines seeks 2-year delay in secondary cockpit barrier rule
The Federal Aviation Administration said that major U.S. carriers want to delay for two years, by August of this year, the requirement to install a secondary barrier in the cockpit to prevent intrusions. Airlines for America, a trade group that represents American Airlines, United Airlines and Delta Air Lines as well as other major carriers, argued in a petition to the FAA that it should delay the finalization of the 2023 requirement because the FAA has yet to approve a secondary cockpit barricade and there are no approved manuals, training programs or procedures. The FAA announced that it would be accepting public comments on the airline's request until June 23. The FAA adopted security standards for the flight deck after the September 11 hijackings of four U.S. planes. These standards are designed to prevent forcible entry and unauthorized access. In the petition, the airlines said that they expected the FAA would certify the barriers by June or July. The FAA declined to comment immediately. This rule requires aircraft manufactures to install a physical second barrier on all planes that are used for commercial passenger services in the United States. In 2023, the FAA stated that the additional barrier would protect the flight deck from intrusions when the flightdeck door is opened. Air Line Pilots Association president Jason Ambrosi criticised the industry's request. He said: "We urge FAA to reject the latest stalling tactics and implement the secondary barrier requirement, as Congress mandated, without delay." Boeing, Airbus and Airlines for America argued for three years, but unions in 2023 wanted the rule to take effect immediately after publication. According to a federal law passed in 2018, the FAA had to adopt rules by 2019. However, it has stated that it must follow certain procedural rules to be able to impose new rules. The FAA does not require retrofitting of existing aircraft. The FAA set up rules in 2007 to address the security of the flight deck when the cockpit doors were opened. These included requiring that the door must be locked while the aircraft is in operation unless it was necessary to unlock it for authorized personnel. (Reporting and editing by Leslie Adler, Marguerita Choy and David Shepardson)
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Bayer executive: Airlines need to sign long-term agreements on greener fuels in order to increase volumes.
MONTREAL (Rtrs), June 3, 2008 - If airlines want to increase global volumes of lower-emission fuel needed for industry climate goals, they need to sign long-term agreements that will allow them to purchase larger quantities of sustainable aviation. The International Air Transport Association's airline members are committed to the goal of zero net emissions by 2050, despite warnings from experts that they will have difficulty meeting such sustainability goals because of low production of SAF - which is more costly than conventional jet fuel. IATA, who concluded a summit in India Tuesday, expects sustainable aviation fuel production to double by 2025, reaching 2 million tons, or 0.7% of airline fuel consumption. In Montreal, Matthias Berninger said that while airlines have asked for more action from energy companies and partners to increase SAF volume, there should be more long-term purchasing of the fuel. This is similar to certain commitments made in the renewable energy industry. Bayer's Monsanto division sells seeds and insecticides to farmers that grow crops used as biomass feedstocks for biofuels. Berninger said that if airlines commit to buying a certain quantity over a period of time we can guarantee farmers will grow the crop and processors will process the crop. Berninger spoke on the sidelines the International Civil Aviation Organization’s aviation climate week. "And whether or not this supply meets the demand (market) depends on the long-term buying contracts of the airline sector sending a very clearly defined demand signal similar to what we currently have in the renewables space." SAF is made from plants, waste, cooking oil, and other products. (Allison Lampert, Montreal; Editing and proofreading by David Gregorio).
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Aerospace and airline industries warn that US tariffs may put safety at risk.
On Tuesday, groups representing U.S. and global airlines warned that new tariffs on imports of commercial aircraft, jet engine parts and other components could threaten air safety or the supply chain, and have unintended consequences. After President Donald Trump announced in April sweeping duties against trade partners, the industry is already facing 10% tariffs. The Commerce Department launched an investigation called Section 232 last month to examine the risks imported goods pose to U.S. security. This could lead to even higher tariffs for imported planes, engines, and parts. In a recent filing, the Aerospace Industries Association (which represents Boeing, Airbus and hundreds of other aerospace companies) urged the Commerce Department to extend the period for public comments on Section 232 from 90 days to 180 days, and not impose any new tariffs during that time. The group also urged for further consultations with the industry regarding "any Section 232 Tariffs" to ensure that they accurately reflect national safety concerns and don't put supply chain and aviation security at risk. The AIA highlighted the impact of a fire that occurred at a Pennsylvania aerospace fastener manufacturer in February on production, and the difficulty in finding parts from new suppliers. The group stated that it could take as long as 10 years to find a new supplier in the country and to ensure they have all of the necessary safety certifications. Airlines for America warns that tariffs will increase the cost of shipping and plane tickets. The airlines stated in comments filed with the Commerce Department that "injecting higher costs will weaken our economy and national security, and have a debilitating effect on the domestic commercial aircraft industry's capacity to grow, compete and innovate." The trade group warned that the tariffs could destabilize the aviation supply chain and lead to more counterfeit parts being sold. They also said the tariffs would have unintended and unexpected consequences. Airlines and manufacturers are lobbying Trump for a return to the tariff-free regime of the 1979 Civil Aircraft Agreement. The U.S. sector benefited from a $75 billion trade surplus each year. The agreement stipulates that parts must be approved by the Federal Aviation Administration in order to qualify for tariff-free status. (Reporting and editing by David Shepardson, Nia Williams and Chizu Nomiyama)
Egypt's eco-friendly power aspirations face grid difficulty
Egypt wishes to accelerate the arrangement of renewable resource that might reduce electrical power shortages and supply green power to Europe, but faces difficulties in moneying updates to its grid and unlocking investments for brand-new wind and solar plants.
Authorities promoted Egypt's potential in wind and solar power in addition to green hydrogen at a two-day Egypt-EU investment conference in Cairo at the weekend, hoping to protect funding and benefit from Europe's efforts to diversify and decarbonise its energy materials.
I believe this market represents the future for both sides, Egyptian Prime Minister Mostafa Madbouly informed the conference, adding that Egypt should make renewable parts such as solar panels, wind turbines and electrolysers.
Electrical Energy Minister Mohamed Shaker said Egypt was evaluating its tidy energy targets and would go for a 58% share of renewables in power generation by 2040.
He stated that considering that 2014, Egypt had spent more than 116 billion Egyptian pounds ($ 2.42 billion at existing exchange rates) on upgrading its transmission network, as it looked to expand into renewables.
We are ready with the facilities, stated Shaker, adding that the government was using a number of rewards to investors and could get approvals from President Abdel Fattah al-Sisi to raise the optimum heights for wind turbines from the ground to the pointer of their blades to 220 metres from 150 metres.
Expansion of installed sustainable capability mainly plateaued after the inauguration of the major Benban solar plant in 2019, according to information from Egypt's New and Renewable Energy Authority (NREA), putting in doubt an earlier target of 42% of power generation through renewables by 2030.
Less than 12% of Egypt's set up capability of almost 60GW is from renewables, the data programs.
A lot of power is produced by gas, and a gas lack has contributed to everyday power cuts that were extended to three hours recently, as well as causing interruptions at fertilizer and chemicals factories.
Egypt has signed many MoUs for renewable energy and green hydrogen development given that hosting the police 27 environment top in 2022. It has aspirations to export electricity to regional neighbours, as well as to Europe through a subsea cable television to Greece.
However experts state Egypt requires to adjust and extend its grid to the sites of potential projects to make them practical.
We have a lack in fuel today which indicates we have the power cuts, which makes more renewables the reasonable method forward ... but these need to be connected (to the grid) and this is where the difficulty is, stated Hamza al-Assad, Southern and Eastern Mediterranean environment technique head for the European Bank for Restoration and Development (EBRD), which is assisting financing Egypt's energy transition.
When those connections, or transmission lines, might be developed is unclear, partially since of a cap on public financial investments imposed this year to include Egypt's heavy financial obligation burden, individuals with knowledge of the sector stated. An Egyptian cabinet spokesman did not right away react to an ask for remark.
Grid advancement would cost billions in the longer term if major scaling up and the requirements of green hydrogen is included, though needs this year would be a portion of this, said Heike Harmgart, EBRD's handling director for the area.
(source: Reuters)