The Hindu : National : Cabinet may consider oil price revision next week

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Cabinet may consider oil price revision next week

Special Correspondent

Different choices available to government to tide over the situation: Srinivasan

Coimbatore: The Union Cabinet is likely to consider revision of the prices of petroleum products next week, Petroleum Secretary M.S. Srinivasan said here on Saturday.

He was responding to a question on the reported remarks of the Chairman of the Indian Oil Corporation that oil marketing companies were losing heavily because of the current inadequate pricing and his company itself was losing Rs. 100 crores daily in petroproducts sale.

Mr. Srinivasan pointed out that the country had to import 110 million tonnes of crude at ever spiralling prices. “Different choices were available” to the government to tide over this situation. Revision of prices was just one. The marketing companies could be provided some sort of “compensation,” as 70 per cent of the products they sold were bringing them losses. Or upstream companies such as the refineries, which were making “windfall gains,” could be asked to part with “some of their margin” to cut the losses of the marketing companies. A third alternative was to restructure taxes. Issue of oil bonds could also be considered. Even last year, the government issued bonds for this purpose.

The Secretary was here to dedicate a 17.6 MW windfarm of the Chennai Petroleum Corporation at Pushpattiur in Dindigul district.

To another question, he said the U.S. had not opposed the Iran-India gas pipeline. “No opposition has been formally communicated to India by the U.S.,” he said. “And we will take our decision based on our energy requirement.”

He was confident that the project would go through. “All the technical aspects have been sorted out and many major issues solved. While the price of gas and the transportation tariff have been finalised, the major issue pending is the transit fee [How much India should pay for taking gas from the Iran-Pakistan border to the India-Pakistan border].” Unless this was finalised, no agreement could be signed.

The pipeline from Iran to India via Pakistan would cover a distance of 2080 km and was estimated to cost $7.4 billion. Of this, $2.5 billion would be India’s share and $2.8 billion Pakistan’s. The rest would be borne by Iran. The project would be completed within three years.Against the outlay of Rs 1.47 lakh crores for petroleum sector during the 10th Plan (2002-7), the next Plan (2007-12) outlay would be Rs 2.65 lakh crores. With such a huge outlay, the country’s refining capacity would go up from the current 152 million tonnes to 220 million tonnes by 2012. This would result in the exports of petroleum products going up from 30 million tonnes to 87-90 million tonnes at the end of the Plan. Work was in full swing for the establishment of half a dozen refineries and expansion in some more.

Since the opening up of exploration, a lot of money was flowing in from abroad, Mr. Srinivasan said. Against the $8 billion pumped in by overseas companies between 1999 and 2007, “we expect an inflow of at least 25 billion to 30 billion dollars in 10 years.”

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