The Hindu : Business : Industry seeks to `de-risk' oil needs

Online edition of India's National Newspaper
Thursday, Dec 16, 2004

Business

Business

Industry seeks to `de-risk' oil needs — survey

By Our Special Correspondent

NEW DELHI, DEC. 15. Indian industry feels the Government needs to take steps to "de-risk'' the country's oil needs by promoting alternative energy sources and diversifying sources of oil imports. According to a survey carried out by the Federation of Indian Chambers of Commerce and Industry (FICCI) on "emerging oil price scenario,'' corporates feel several measures are needed as a cushion against future oil price increases including energy conservation and building of strategic petroleum reserves.

The survey, which was conducted at a time when oil prices shot up to $50 a barrel, revealed that as many as 77 per cent of the 147 companies studied said their cost of production had risen by up to 20 per cent due to rising oil prices. Of these 77 per cent companies, 63 per cent said production costs had risen by 5 to 20 per cent following the oil price hike.

However, despite this increase in costs, a majority 60 per cent reported that this incremental cost was being absorbed internally. But the situation of internal absorption might not continue for long if oil prices continued to remain high. About 79 per cent of companies surveyed, which had not yet resorted to a price increase, might be forced to do so in the next three to six months if the present situation continued.

According to the survey, the measures rated the highest in terms of priority in dealing with future oil price increases in energy conservation and promoting efficiency in use of petroleum products. Other important steps needed are developing alternative sources of energy that would entail lower oil sensitivity for the economy as a whole.

Printer friendly page
Send this article to Friends by E-Mail

Business