The Central banker's Moor moment!

The Reserve Bank of India governor, a former International Monetary Fund economist, Raghuram Rajan, has claimed that the India is prepared for an eventual hike in the U S interest rates. He was quoted in the Times of India on August 31, 2014 saying, "My sense is that even when the Fed withdraws, people after an initial bout of withdrawal, may consider India a good place to leave their money. We have plenty of reserves, but I see reserves as a second or third line of defence."

(Raghuram Rajan is also professor of Finance of Chicago University. This is the same university that gave Chile's military dictator Augusto Pinochet, the Chicago Boys a band of economists that led the country to insolvency in 1982.)

A hike in interest rates by the U S Federal Reserve Board means, an uptick in the U S federal funds (Fed Funds) rate from the present level of 0.25 per cent. This is the rate at which American banks lend or borrow overnight reserve funds from each other. The Federal Reserve Board uses this rate as its monetary policy instrument to signal all rate changes in the U S banking system, in reality across all the dollar linked economies of the world.

So are RBI governor Rajan's claims tenable?

Fact 1 : India has a large holding of U S government securities. A large component of India's reserve ares parked in U S treasuries securities that include treasury bills, Treasury notes (securities of tenors up to 10 years) and Treasury bonds ( securities of tenors of 10 years and above).

As on June 30, this year, the holdings of U S Treasuries amounted to $ 72.9 billion¹ comprising 25 per cent of the country's currency reserves. Since  Raghuram Rajan took over as RBI governor, the increase was $ 16 billion. Predecessor Duvvuri Subbarao had actually made efforts to bring down the exposure. Between June and September 2013, the RBI sold $ 4.4 billion worth of U S treasuries, brought down the exposure to 22.91 per cent of the currency reserves. That's it ! Subba Rao ceased to be RBI governor effective from September 2013. For Subbarao situation was similar to the Moor in Fredrick Schiller' play, Fiesco's conspiracy at Genoa. "The Moor has done has job. The Moor can go."

 

Source: Reserve Bank of India, U S Department of Treasury.

Fact 2 :  The increased investment in the U S treasuries have not earned the RBI any returns. In fact, the effective returns on such increased investments have actually shrunk for the RBI, a reality admitted by the RBI annual report of 2013-14². The RBI's returns on the investments that include, interest, discount and trading income was down Rs 197.68 billion (19768 crore) from Rs 207.46 (20746 crore) . Interest income implies interest/coupon payments on bonds. Discount is earnings when securities are picked at prices lower than face value, but redeemed at face value. Trading income implies profits from purchase and sale of securities).  That means the effective yield realized on all its foreign investments fell to 1.21 per cent from 1.45 per cent. But hold a sec! Aren't traders supposed to ride the yield curve, sell when security prices are high (low yields) and buy when prices are low ( when yields are high)? So why was the RBI buying U S treasuries when prices were high ?

Indian mainstream corporate media doesn't speak all these facts, since journalists or whatever they call themselves now are purveyors of faf to readers than fact! The primary occupation of newspaper editors and financial analysts is marketing Rajan, as the rockstar of financial sector reforms!

Fact 3:  In the event of a FED hike in rates, RBI's will actually lose money, since depreciation on those securities would have to be provided. The RBI marks to market all its foreign dated securities each month. Losses or gains are transferred in and out of the investment revaluation reserve. In the last financial year, RBI has seen its assets appreciate as reflected in investment revaluation account. That account was Rs 3791 crore (37.91 billion) or a Rs 1306 crore (13.06 billion) increase over the previous year. A Fed rate hike could very well reverse this account.
  

That is unless there is a mad rush to buy up dollars.  For now, though Uncle Sam and Comrade Russie are just fiercely staring each other. Comrade Russie blinks, the dollar rockets and RBI's dollar assets soars. Uncle Sam blinks, RBI is in trouble. It could very well sink the Rockstar Rajan's ratings !

Fact 4 : Most of RBI's balance income came from domestic sources. Income from high coupon securities contributed Rs 47000 crore (470 billion). Trading in domestic securities, (read sale of reissue securities) contributed another Rs 33137 crore. Then there was liquidity support to the banks purchase and sale back of securities. The overnight transactions are called Liquidity Adjustment Facility (LAF) that provided cash or removed cash from the banking system. LAF allowed banks to borrow by pledging the surplus holdings of government securities over and above the mandated Statutory Liquidity Ratio. Overnight lending gave the RBI Rs 5902 crore (59.02 billion) for 2013-14, a Rs 577 crore (5.77 billion) drop over the previous year. But MSF that allows banks to borrow up to 2 per cent of their deposits with a waiver on their mandated government security holdings. The cost of this borrowing higher, or for the RBI it rakes in more income. And the RBI earned Rs 1745 crore(17.45 billion) against Rs 11 crore (110 million).

So when the U S federal does reverse stance and begin hiking rates, it does not mean more interest income from foreign securities' holdings. The benefit of those higher returns would be restricted to only incremental additions. That means the benefit of higher interest incomes would be available only new securities' purchases. But the increased income would be hardly be sufficient to cover depreciation costs of existing securities holdings.

But a Fed Hike also raises the risk of a tight domestic liquidity conditions. This is because domestic liquidity is tied to foreign currency reserves. High foreign reserves means greater domestic cash. At the same time foreign asset depreciation restricts the ability of balance sheet expansion.

Unlike India's BRICs partners, reserves have been built by borrowings and increased liabilities in the form capital flows, that included borrowing by foreign borrowings by domestic corporate houses. The rest of the BRICs have built reserves with current account surpluses. That makes India the BRICs' outlier!

Rajan's marketing pitch notwithstanding, the reality is that India is vulnerable. Even government borrowing costs are closely linked to the Fed's action that could rise sharply.   Markets have already factored a potential increase evident from the hardening of the ten year Indian government security yields to 8.5 per cent an increase of 0.6 per cent over the corresponding period of last year. That means any Fed move clearly limits the ability of further reductions in the Statutory Liquidity Ratio. Unless, of course, India’s corporates badger the Government into ‘fiscal prudence’ so that it can continue to play around with cheap funds.

Should the RBI still go ahead and reduce the cost of cash and then will Rajan really be able to sustain Rs 52700 crore to the Government that it paid last year? That is precisely what could bring the Moor moment for Rajan!  

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Fundamental question: The RBI has consistently spoken about fiscal displine. But why is the RBI financing the U S fiscal deficit, after all it is funded by the Indian tax payer? Buying into U S Treasury bills, notes or bonds, after all, amounts to funding American expenditure, including defence. India's debt stock to GDP is 66 per cent and U S is 101 per cent. The answer obviously lies in the fact that most of India's foreign exchange reserves have been built through capital flows and therefore prone to extreme volatility.

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1. U S Department of Treasury- Treasury International Capital System

2. Reserve bank of India Annual Report, 2013-14.

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A war on reform dissension

For the world's investment bankers used to pumping up bubbles, India remains a land of economic, or rather, financial promise. That pitch however masks the mounting social unrest that covers at least 40 per cent of the country’s geographical area.

India has opted to treat the unrest as "Maoist uprisings", though that is beginning to unravel as a highly simplistic, if not distorted, approach to the problem – one that fails to appreciate the economic dimensions of the unrest. Instead, the Maoism label allowed the state to use "heavy handed" methods.

Over the decades, the issues raised by the rebels, led by the CPI (Maoist), were never taken seriously by the state governments of central India and the central security establishments. The issues range from land alienation in favour of industry to human rights violations in tribal-dominated regions. Add to this general scenario of deprivation of rights, the relentless price rise in food items and rising unemployment and the situation is obviously desperate. Is it a matter of surprise that the desperation finds a violent expression?

However, state governments are slowly beginning to think, only think, changes may be necessary. In January this year India's former Minister for Rural Development Jairam Ramesh, an alumnus from the Massachusetts Institute of Technology, a former World Banker and one of the leading proponents of Enron power project in Maharastra during the 90s, is a prime mover of the new land acquisition statute. He claimed, "The new law that has been formed for land acquisition which has recently been passed in the Lok Sabha and Rajya Sabha, if implemented properly and with honesty will reduce a factor that has been spreading Maoism and it will provide the government a effective weapon against Maoists and it will help indigenous communities." The new bill proposes that farmers and landowners be paid up to four times the market value for land acquired in rural areas, and two times the market value in urban areas. The new ruling coalition led by the BJP that swept to power in June this year may just step up the pace of forced land displacement.

Yet the high prices are just a façade. Rural poverty caused by high food price inflation and low wages remains unaddressed. In fact, the government in India has failed to recognise the parallels of the Arab spring and the expanding unrest in India. Japan's Nomura Global Economics did an interesting study in 2011. Nomura compiled a food vulnerability in index for world economies. The Nomura index looks at food prices and how much food expenditure eats into household spend. In 2011, rising food prices pushed up consumer inflation in Egypt to 9 per cent and household spending on food was 49 per cent of the incomes. Hosni Mubarak lost his job! In Tunisia and Algeria, household spending on food was 36 and 53 per cent, providing a trigger a point for uprisings. In the U S and even Russia, food expenditure remains just about 8 to 15 per cent of household incomes.

In India, consumer price inflation has remained steadfastly high. In 2013 alone, consumer price inflation has accelerated to 12 per cent. That means household spending on food is closer to 65 per cent (elaborate on the relationship.) But the problem is worse in the states. Presently, the per capita income in states like Orissa, Chattisgarh, West Bengal, Bihar and Jharkhand is barely about Rs 40,000 a year or $1.76 a day at present dollar exchange rates and half the price of the cheapest Subway sandwich in the US. Even these figures conceal another reality. Per capita income is only an average. Therefore a large majority of the people in the regions earn far less wages.

The low incomes in these states, in turn translated into household spend on food of 80 per cent. That meant the bulk of a family's income was spent only for meeting food consumption, leavings little for savings or non-food consumption. In Jharkhand and Chhattisgarh, the situation is little different. But in Chhattisgarh, efforts have been made at state intervention or increase in food subsidies. Those measures, though, have had little impact, given the low wages in the region.

In India, high food prices are something of an oddity: the country has been reporting record foodgrain harvests year after year. So, the reasons for high food prices are not necessarily due to low farm productivity. The reasons lie elsewhere, an issue that the state refused to address, or even discuss. Take the case of rice that is one of the largest consumed cereals in the country. Farm gate price of rice is about Rs 15 per kilogramme (US cents 25). The wholesale price is Rs 25 (US cents 40) and the final average retail price Rs 30 (US cents 49), a price loading of 100 per cent. This is a national average, with region-wise discrepancies. The least price loadings are in Punjab and Kerala. The highest loading is in states like Orissa, West Bengal, Chattisgarh, Bihar and Jharkand, all states with high food spends, and food inflation.   

The results of this runway food inflation are apparent. Orissa has 20 districts under the influence of the rebel groups affiliated to Maoists. But rebel influence has been spreading around the country. The new regions under rebel influence include the Kerala's Wynad district and Karnataka's Chikmagalur and Kudremukh regions. These are also regions where unemployment and underemployment have increased during the last years.

In all these regions, the focus of the state has been to treat rebel violence, not as protests against economic oppression but rather as a law and order problem. The protesters, tribals and farmers on the margins of the economy, are dubbed as ‘anti-development’. The development, though, in these regions implies large-scale mining and deforestation, taking over large tracts of forest and farm land and depriving local populations of their livelihood. The projects that have come up on tribal land include those promoted by Vedanta aluminium project, South Korea's POSCO steel project, Utkal Alumina, Essar Steel and GMR's coal and power projects in Chattisgarh.

Despite the one-sidedness of the development process,former  economist Prime Minister Manmohan Singh went so far as to call the protesters or "Maoists as the biggest security threat to India." Incidentally there were however dissensions over the Congress party's former =Prime Minister's inferences. Indian government's Planning Commission report chaired by D Bandopadhyay observed " "it should not cause surprise that a large section of the people are angry and feel alienated from the polity. It is in this context that it has become necessary to identify the variety of causes of discontent and to seek ways by which the State could answer them in a humane, caring and democratic way. If the emphasis of this exploration is on the Naxalite phenomenon it is not because other modes and forms of agitation are less important but only because the method of struggle chosen by the Naxalites has brought the problem to a head." 

Ironically enough, few of the protesters are even aware of Maoist ideology! Documentary film maker Deba Ranjan who produced "At the Crossroads" -- a film on tribals of western Orissa being targeted by security forces for being ‘Maoists’ -- says, "When they resist corporate land grab for mining and industrialisation, they are called Maoists. Maoism is used as an excuse to target democratic struggles."   

An activist in Andhra Pradesh involved in counseling affected people said, "The state is simply unwilling to recognise the extent of economic despair and distress among population affected by severe poverty. The distress does not necessarily translate into discontent as in the case of Arab spring. Rural population faced with distress loses the will to survive."

This meant more affected by poverty and high food prices have chosen to commit suicide. Approximately 370 people commit sucide each day, most of them at young age in the country and more than half of the suicides are in states where unrest is high. Every 30 minutes a rural or agricultural worker commits suicide in India. These suicides conceal the numbers that have succumbed to state sponsored repression.

But then in any investment banker driven reforms, economic oppression is the reality. The inevitable fallout is tragedy. Has the country reached the tipping point? Doubtful! Instead, India appears firmly glued to Naipaul’s state of Million Mutinies!

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Book Review : Ticket to the Moon

By Radha Naresh

160 pages, Rs 1339.87

Writing for scientific journals is Dr Uthaya Kumar's regular bailiwick. Still his first foray into short story writing has resulted in an eminently readable treasure.

Ticket to the Moon, a collection of short stories is that maiden effort. Episodes in the stories are not all fiction. They are inspired by Uthaya Kumar's own life and times in a remote little village in India where he once lived, and the people he once knew intimately. He has since migrated to America, and through these stories he has recreated the larger than life personalities who profoundly influenced and moulded him in in his growing years and to whom he continued to be drawn inexorably. 

The author assumes the role of the village vet as the narrator of the stories. The vet in any village has a vital role to play in the wellbeing of livestock which is the precious asset of each homestead. Here in the village of Muvirundali, he also doubles as family physician, thereby making him privy to their most intimate secrets, which form the fabric of the stories.

As each story unfolds you get the sense of the extraordinary lives of these deceptively simple folk From the rural canvas emerge a protagonist for each story; the vegetable vendor, the child born into wealth, the forlorn widow, the brave wife of a soldier, the new bride and her borrowed jewellery, or the beggar with a mysterious past who can give Boo of To Kill a mockingbird a run for his money. Each story revolves around one such individual and their secret stories can warm the cockles of your heart.

The anonymity that one enjoys in cities is not present in villages. Nobody is a stranger to anyone else and anything that needs attention in one family is the concern of the rest of the village. There is the barber whose duty it is to play MC at funerals. The postman not only delivers letters but also reads them aloud to the recipient and writes out the replies as well. There is Natarajan, the man for all seasons.  A Good Samaritan and a guardian angel, he surfaces whenever there is a serious problem to be solved.

The characters are ordinary people whom we come across, whose simple faith, quiet courage and fortitude, and unswerving devotion to their principles is not only endearing but worthy of praise.

 A humble vegetable seller in Debt, clings on to her life for three years braving old age and illness, determined to repay a debt of forty rupees and forty paise.”I would rather die of hunger than have a debt on (sic) my life” she says, a day before she has finally paid her dues and bid adieu to life.

The Necklace is about the new bride in the village and how her integrity is put to the test when accused of stealing a necklace.

Legends of Veeran describes a heroic act of supreme sacrifice. Heir is the story of a person tormented with questions of his parentage.

The March is about the triumph of a woman who sends her husband to the warfront and waits stoically for his return..

Silence is paradoxically about the constant and loud repetitive jabbering by Murmurer who is an embarrassment to the village. However, it is Murmurer the seeming village idiot who saves them from being struck down by lightning and when illness threatens to silence Murmurer forever, the whole village rises as one to pay for his treatment.

Untouchability harks back to the days when this pernicious social system was practised and about one villager who bravely decided to defy the rules nobody dare challenge or violate.

My personal favourite story is The Postman’s Dilemma which amply describes the plight of postmen who have to bear bad tidings in a telegram. There are some interesting twists in the tale which is about a girl whose horoscope is supposed to have caused her own father’s death just one week after she is born.

The Gooseberry tree captures the pangs of separation that parents feel when their young ones leave the nest to seek better fortunes in foreign lands, as well as the distress of such children who cannot visit their parents at will.

All the stories end on a happy note. Woven into each story are nuggets of wisdom and amusing tidbits about customs, rituals, superstitions, deeply entrenched values, attitudes and practices. You also get to relive the celebratory mood of a newly independent nation and get glimpses of those heady times and to sense the impact of man’s stupendous leap into the future resulting from America’s Moon walk.

With the progress of each narrative, you are treated to a lot of interesting   village trivia. In Debt, there is mention of the ‘good death’ that comes from having lived a fulfilled life. The village barber taking charge as master of ceremonies at the funeral, placing of a coin on the forehead of the departed person who rides to his grave in a sitting position and never taking leave when departing from a funeral home.

In Santhosam’s riddles and Untouchability, the child of the town gets to experience the immeasurable fun to be had in watching birds or laying traps to catch them, listening to tales of the intrepid, riding a bull to cross a fjord, playing gilli in the wild open fields and coming home to a refreshing potful of millet gruel with a dab of pickle to go with it.

In the end, you realise that this is no second hand NRI experience. The good vet has not only tended to ailing animals, but also listened to many a human heart and checked many a human pulse.

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Radha Naresh is a traveller who spent time in Switzerland. She has chosen to settle in Coimbatore, Tamilnadu, India. She is now a book reviewer.

RIL gas price -- Modi Raj's first test for mass or class identity

The euphoria of power is over.  For the Narendra Modi led BJP Government the moment of truth has arrived, even as corporate lobbyists masquerading as media mount pressure for hiking the price for natural gas.

Ahead of budget 2014-15 there clearly is a deep sense of foreboding, although so far the BJP government has refused to relent to pressure. The proposal to hike gas prices from the Reliance Industries operated Krishna Godavari Basin well number 98/3 (Reliance calls it D6) is on hold for three months till the Rangarajan committee's specious pricing formula is reviewed. The committee's formula made in 2012 recommended gas prices be raised to $ 8.4 per million british thermal units (MMBTU).*¹ That committee's formula was based on the average of the prices of imported Liquiefied Natural Gas into India and the 12 month weighted average of gas prices in North America, Europe and Japan. 

The high prices of natural gas if conceded would in turn have a cascading effect across all sectors. India's gas requirement is about 350 million cubic metres per day. RIL's KG-Dwn98 output in 2013-14 was 178.3 billion cubic feet (5 billion cubic metres), 50 per cent less than previous year. Under the production sharing agreement, RIL's expected output was 80 million cubic metres per day. The actual output is now only 12.5 million cubic metres. The output restriction clearly appeared to be a pressure tactic for higher gas prices

The first effect would be on fertiliser prices. Fertiliser subsidy in 2013-14 was Rs 55926 crore and is estimated at Rs.67,970 crore for 2014-15. This was done on the basis of gas price assumption of $ 4.2 per mmbtu. Fertiliser plants consume about 115,632,095 mmbtu or 3191.45 million cubic metres of gas a year. A one dollar increase in gas prices translates to an increase of approximately $ 406 per tonne of fertilisers.   Therefore, an increase in gas price would naturally lead to increase in costs and lead to pressures to raise fertiliser prices or subsidies from the government.

The second effect gas price hike would be on power tariffs. India' gas based power stations of  17600 mega watts that require close to 86 million cubic metres of gas per day. The hike would mean that the fuel cost for generating a single unit of electricity would rise to Rs 1.8 from Rs 0.86. So following the pass through principle adopted in the power sector, tariffs would invariably be allowed to rise by all the electricity regulatory commissions.   

The consequent increase in fertiliser and power tariffs in turn would lead to an increase in the Minimum Support Prices (MSP) for agricultural produce. That MSP is another support to the farmer that assures minimum income. If the prices are passed on to PDS and retail food prices, then food inflation goes out of control. The Consumer Price Inflation for rural workers is already raging in double digits. Consequently, the CPI increases translates into an increase in wage bills both in government and in the private sector. So for the BJP, doesn't RILs gas price hike demand make price rise containment and fiscal consolidation a complete nonsense? Weren't these the primary electoral promises of Modi Raj?

Moreover, can domestically produced gas prices be linked to the U S dollar? Linking it to the dollar penalises domestic consumers and favours domestic suppliers to benefit from exchange rate shifts, essentially a refined form of rent seeking.  Can this be allowed especially when cost from domestic gas is in rupees? In fact this question itself was asked by the former cabinet secretary T S R Subramaniam. If the import parity pricing logic is to be applied, then all goods and services in the country would have to be invoiced in US $ !

Disinformation

But an editorial in the Hindu Business Line says the price hike is" in public interest".²! The conclusion is sweeping,"Consumers must get used to paying higher prices."  For the newspaper's editorial writer, RIL's super normal profits are synonymous to public interest! But the reality is that the editorial stance largely stems from Mukesh Ambani's corporate interests in media (or is it vice versa, after all editors are also investors in stocks including Reliance Industries Ltd).  The editorial stance,consequently completely confirms Indian media's complete departure from serving public interest. Instead, it clearly implies a sellout to corporate disinformation and abetting rent seeking.

The disinformation arguing for price increases completely ignores the fact that gas is a natural resource and a sovereign asset. Therefore, can private sector monopoly pricing of public resources a country be allowed to prevail? Then there is the fundamental question. Is RIL's gas price really in conformity with the market as envisaged by proponents of free market, like Rangarajan?

The Russia-China gas supply agreement of May 22, 2014 is a clear instance.  Gazprom, Russia's national gas company and the China national Petroleum Corporation had on May 22 this year signed a long term gas supply agreement. The agreement entailed supply of 38 billion cubic metres of gas per year at gross investment of $ 400 billion over a period of 30 years. Japan is also expected to work out a similar deal with Gazprom. Post Fukushima disaster, Japan is shifting fast to natural gas for power generation. Isn't Asia's largest buyer agreement the benchmark for market prices?

However, India's domestic media played down the Gazprom –CNPC deal. The reason for underplaying was apparent from the GAzprom- CNPC pricing. The levellised price for the entire 30 years is $9.7 per MMBTU. On the face of it, China appears to be paying a price. But that price includes the cost of infrastructure, pipelines for evacuation and transmission of the gas, for the entire contract period of 30 years.  The additional sweetener is that the gas settlement is in Russian Rubles. This is because the Ruble is a convertible currency, but far less volatile than the dollar. It became convertible in July 2006. The Renminbi Yuan is still not a fully convertible currency. The invoicing and settlement in Russian Rubles eliminate the possibility of price volatility due to exchange rate fluctuations and related disputes.

The Gazprom development is unlikely to have been missed by the Narendra Modi led BJP government. After all  the gas pricing is the first real test. A response to the gas pricing predicament is likely to define whether Modi Raj represents the masses or the classes.  The Congress government identified itself as former Petroleum Minister Veerappa Moily and former Finance Minister P Chidambaram aligned with corporate capture of government. It paid the price. Chidambaram has disappeared into oblivion. Moily is parked on the opposition bench. That political history lesson is unlikely to be forgotten soon.   

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 Notes:

1. Borrowing Lee Falk's phrase from the Phantom comic series -- For those who came in late "m" is Roman for one thousand. Therefore "mm" implies thousand thousand or one million british thermal units. In abbreviated form it is mmbtu.

2. The $ 15 per mmbtu mentioned in the editorial is misleading. It is a CIF (Cost Insurance and Freight) price and is crude oil indexed price. Stressing that price is obviously not inadvertent.  It clearly appears to make a deliberate case for RIL and in turn influence the stock values. Japan's import cost include liquefaction, shipping by from Qatar all the way up to any of the 31 regassfication terminals. Even assuming floating liquefaction and floating raegasification vessels, the costs will still remain high. In fact the Rangarajan committee did no factor in the cost of liquefaction and regassification while providing weightage for Japanese prices. Liquefaction comprises 32 per cent of the cost in the LNG chain. Liquefaction costs about $3 per mmbtu, Shipping costs another $1.5 to $ 3.5 per mmbtu and regassification costs depending on the charter arrangements, distance and vessel age. Regasification comprises about 24 per cent of the cost and adds another $0.5 per mmbtu. However, for getting gas from KG-DWN 98 none of these costs are involved. The editorial ignores these elements and passes them off as cost of gas. If this is not disinformation, what else is it?

 References :

1. Report of the Comptroller and Accountant General of India on hydrocarbons

2. International Gas Union – World LNG report

3. India government – Ministry of Petroleum and Natural Gas

4. Parliament Question – Fertiliser plant gas consumption. Lok Sabha unstarred question March 2013

5. Central Electricity Authority.  Report May 2014 

6. ITAR-Tass-- Gazprom,China's CNPC strike deal on gas supplies to China,

7. ITAR Tass -- Gazprom,CNPC agree on $25 billion advanced payment on gas contract