India-UAE Current Affairs

First Investment Agreement signed between NIIF and Abu Dhabi Investment Authority

India’s National Investment and Infrastructure Fund (NIIF) of India on has signed an investment agreement worth $1 billion with Abu Dhabi Investment Authority (ADIA). With this, ADIA became first institutional investor in NIIF’s Master Fund and shareholder in NIIF’s investment management Company. NIIF is claimed to be India’s first sovereign wealth fund.

Background

The agreement was signed in pursuant to Memorandum of Understanding (MoU) between Department of Economic Affairs (DEA), Finance Ministry and Government of United Arab Emirates (UAE) to mobilise long term investment into NIIF.

National Investment and Infrastructure Fund (NIIF)

The Union Government has set up NIIF in 2015 with aim to attract investments from both domestic and international sources for infrastructure development in commercially viable projects both Greenfield and Brownfield, including stalled projects. It was envisaged to be Category II Alternative Investment Funds (AIFs) under SEBI Regulations. It will also serve as an umbrella fund with several funds underneath it.

It has proposed corpus of Rs. 40,000 crores (around $6 Billion).  Government’s contribution to NIIF is 49% of total commitment at any given point of time. NIIF has been mandated to solicit equity participation from strategic anchor partners, like overseas sovereign, quasi-sovereign, multilateral and bilateral investors.

Two companies viz. NIIFTL, trustee of fund and NIIFL, investment management company of NIIF were incorporated in 2015. Besides, Governing Council also has been set up under chairmanship of Union Finance Minister to act as an advisory council to NIIF.

Few investors of NIIF

NIIF has singed MoUs with Government of UAE, RUSNANO, QIA, RDIF and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN). In addition, DEA has signed terms for cooperation on NIIF with UK Treasury and US Treasury. Besides, India-UK Green Growth Equity Fund (GGEF) also has been announced in April 2017.

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Union Cabinet approves oil storage pact with UAE’s ADNOC

The Union Cabinet has approved signing of the Definitive Agreement on Oil Storage and Management between Indian Strategic Petroleum Reserve Ltd (ISPRL) and UAE’s Abu Dhabi National Oil Company (ADNOC).

Government’s this move aims at boosting India’s energy security by ensuring a strategic storage flow in for crude oil, from a government firm in Abu Dhabi for meeting unexpected future exigencies. 

According to the Agreement
  • ADNOC will fill up 0.81 MMT or 5,860,000 million barrels of crude oil at ISPRL storage facility at Mangalore, Karnataka.
  • Out of the crude stored, some part will be used for commercial purpose of ADNOC, while a major part will be purely for strategic purposes.
  • The investment by ADNOC is a major investment from UAE under the High Level Task Force on Investment (HLTFI). It is also first investment by UAE in India in the energy sector.
Background

India being fastest growing economies and world’s third-biggest oil consumer, is building emergency storage in underground caverns to hold 36.87 million barrels of crude. It is equivalent to about 10 days of its average daily oil demand. This move aims to hedge against energy security risks as it imports most of its oil needs.

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