Arijit Barman: At the recent oil conference in Japan, you raised the issue of how Asian countriessituated east of Suez were paying a higher price for crude. Has India been alone in raising this concern?
Ram Naik: Two years ago, I had raised this issue in a oil conference in Riyadh. After that I had discussed this issuewith individual OPEC members. This time, prior to my announcement, I held meetings with Japan, Korea, Chinaand they have fully supported my views. All the Asian countries have recognised the issue of the Asian premiumwhere countries East Of Suez pay $1.5-$2 more per barrel for the crude. We will together try and find asolution as it will have a significant impact.
When will you announce the LPG/kerosene subsidy and how much will it be? Especially since it isimpacting the economics of Indian oil companies.
Oil companies need not be so worried. Government has announced the policy of APM dismantling and thesimultaneous deregulation in the oil sector. But it takes some time to settle all issues. The question ofsubsidy is receiving our attention and I am discussing the matter with the finance ministry. So one can expecta solution soon.
And what is the status of the duty concessions for the oil companies?
The oil companies are panicking and are unnecessarily dragging this issue to the public forum. They arefully aware that we are discussing this issue and it will be settled soon. These are the most organised andefficient PSUs, they should not crib all the time and seek comparison with other sick government units. I amnot for haste. I won't hurry for policy decisions to repent later.
Although the prices of petroleum products are being revised fortnightly, the general impression is thatthey are still controlled by your ministry. Does the ministry really plan to relinquish control?
Some people are spreading this misinformation. Post April 1, 2002, pricing is left to the oil PSUs who arefree to take a call and we have advised them to work independently. But as they are all government companies,we have to ensure that they don't indulge in profiteering. So we are striking a balance. There is freedomamidst some minimal checks.
Why can't individual petrol pumps offer competitive (and different) prices when it comes to baseproducts like petrol and diesel?
Full deregulation will take time. Until a private player enters the market (read retail marketing) pricingwill be bunched. Moreover, the hospitality arrangements among the PSUs are age old. In the north for example,there are IOC, BPCL and BPCL pumps, but supply to all them goes from IOC's Mathura refinery. Throughout thecountry, supply has been interlinked for all the oil PSUs. Today the competition is in the services front.When private players move in, pricing will drive the war.
When will the issues related to pricing of crude supplied by ONGC be finalised? Are we going to revisegas prices also?
These are all interlinked issues. So they are being discussed. After all, it all boils down to one point:to what extent will the prices be linked to import parity and what will be the duty structure. It will not becorrect to rush through these sensitive points. Just like petrol and diesel, the pricing of gas is also underour consideration. All these matters will be resolved soon, once and for all.
Is your opposition to HPCL/BPCL selloff a time-sensitive response or are you firmly againstreconsidering your stand even at a later date?
A sustained campaign of misinformation is being launched against me. Eighty per cent of the totaldisinvestment proceeds have come from the oil sector. So how can people say I am against sell-offs? I pity mycritics' knowledge of arithmetic. But at the same time we should not forget that prior to nationalisation ofthe oil companies, MNCs did not co-operate with government during the 1971 war. They artificially createdshortages and didn't supply aviation turbine fuel. Moreover, from 1974, the asset base of the oil PSUs hasmore than doubled. It also needs to be seen whether these successful oil companies should be sold through thestrategic sell-off route. Unless somebody has a vested interest, he would appreciate government holding on tothese companies that give 110 per cent dividend.
Given the excess refining capacity in the country and the large retail network of PSUs, isn't thedecision against disinvestment virtually shutting doors to foreign competition? Why should they invest in acontrolled sector? So aren't we saying indirectly that we don't want FDI in oil?
Foreign companies are always welcome. We have opened exploration, refining and the global companies areshowing interest in Indian exploration. Marketing too has been opened and the private players are setting uptheir outlets. But at the same time, security and strategic importance should not be ignored in the name ofFDI.
How do you propose to resolve the issue of crossholdings in ONGC, IOC and GAIL? How would thesecompanies be privatised?
Crossholdings and disinvestment are interlinked. The cabinet committee has postponed the sell-off of twooil PSUs by three months. In both the cases, the depth of the market is essential. If we allow these PSUs tooffload their crossholdings in the market and subsequently, we divest 10-15 per cent, will the market be ableto absorb both?
Why should we increase our strategic oil reserves when even during the Gulf War, our crude suppliesremained intact? Won't stockpiling have tremendous cost implications?
There is change in on the ground. Gulf War of the early 90's or the present Iraq-US tensions or a possiblewar amongst India and Pakistan are different scenarios altogether. Thus to keep the economy running in thesedifferent scenarios, it's desirable that we maintain strategic stocks. Very few people know but even Japankeeps reserves for 6 months even though they do not have border tensions like us. The cost implications arebeen worked out and certainly there will be a foolproof formula that would benefit both the PSUs and thegovernment.
Industry watchers feel that our oil companies are missing out on a golden opportunity to indulge in riskmanagement instruments. What is the ministry doing about it?
To begin with, it will be incorrect to say that our oil PSUs are completely barred from participating inthe futures market. They are government companies and are accountable to Parliament. Hence their functioningand decision making differs from that of a private company. But the oil PSUs are given some autonomy under theNavratna status.
What is the status of the oil regulator?
The draft bill is currently with the standing committee of petroleum and natural gas for review. Theregulator will be in place shortly but till then government will continue to regulate the sector as it isdoing now.
