Naik rules out oil price cut

By Sushma Ramachandran

NEW DELHI, DEC. 13. The Government today ruled out any cut in domestic oil prices even as it welcomed the fall in international crude oil prices to below $27 a barrel.

According to the Petroleum Minister, Mr. Ram Naik, this can be considered only after the deficit in the oil pool account was wiped out. He said the fall in international crude oil prices is a big relief. But passing it on to consumers would only be possible when the prices come to $22 per barrel and the oil pool deficit was entirely cleared.

He pointed out that India continued to have an oil pool deficit of around Rs. 13,000 crore in spite of the price hike in September. Once this deficit was wiped out, consumers could be given some relief, he said.

Earlier, speaking at a seminar on Petroleum Prices and Its Impact, organised by the Associated Chambers of Commerce and Industry of India (Assocham), he said the Government has finalised a programme for acquisition of foreign oil acreage by Indian companies like ONGC Videsh to ensure supply of security to the country.

MoUs in this respect have already been signed for blocks in Iraq and for exploration in Indonesia and Venezuela.

On the oil pool deficit, he said it had come down to Rs.3,408 crore at the end of 1998-99 and then increased to around Rs.6,300 crore as on March 31 this year. It was expected to go up to Rs.23,600 crore by March 31, 2001.

The Minister said the Government was committed to implement the framework designed for phasing out the administered price mechanism by 2002, but subsidy will be provided on kerosene through PDS and LPG for domestic use to the extent of 33.3 per cent and 15 per cent respectively.

The subsidy element will, however, become a part of the general budget and will not be reflected on the oil pool account.

Mr. Naik said oil prices have been showing a volatile trend for the last 18 months.

They have increased more than three times. The price of Brent Crude which was $10.23 per barrel in February, 1999 increased to $27.26 per barrel by March this year and to a ten-year high of over $37 per barrel in September. The average price during November this year has been $31.02 per barrel.

At current oil imports of 70 million tonnes per annum, he said an increase in price by $1 per barrel in the international market corresponds to an increase of $500 million or Rs.2,350 crore in the annual import bill.

The Minister expressed his concern over the dithering by states, except Goa, to give relief to the consumers on account of the incremental increase in prices following sales tax increases on petroleum products.

Send this article to Friends by E-Mail

Section  : National
Previous : Left, Congress closing ranks?
Next     : J&K Minister escapes bid on life