New Delhi, July 2: The official bio-data of the Union minister for petroleum and natural gas describes him as a `unique personality.' Ram Naik is probably `different' for different reasons to different people. Among the traits that mark out the Bharatiya Janata Party (BJP) leader is a steadfastness, that almost borders on truculence. Naik always wins. He won the North Mumbai Lok Sabha seat five times and the Assembly elections three times before that. He fought a painful battle against cancer and won in the end.He waged a prolonged crusade for restoring the ethnic name of the city he represents and succeeded in turning Bombay to Mumbai. The minister has never said as much, but has been persistently striving for a humane touch to the reforms in the petroleum sector. When an increase in petro-product prices became inevitable, Ram Naik pressed for duty cuts, to soften the blow for consumers.
He told The Financial Express last week that jet fuel prices would be freed by the end of the financial year and that no further tinkering with subsidies on kerosene and cooking gas (rolled back partially in March) was planned before the next Union Budget.
Naik obviously seems to be in a mood to keep petro-product prices down at home and Naik, always wins. Excerpts:
Crude oil and petroleum products prices will be freed in phases by the year 2002. At the moment petrol prices are loaded to pay for the subsidy on kerosene and liquefied petroleum gas (LPG). Diesel prices are controlled. When the subsidies are taken away, petrol will cost less, but diesel will cost more. In a country where a vast majority of the population cannot pay for food and fuel, that should make a difference. How is thepetroleum ministry preparing for the year 2002?
By the year 2002, the administered pricing mechanism (APM) will be phased out. Even so, there will be a 33 per cent subsidy on kerosene and another 15 per cent subsidy on LPG. The only difference will be that instead of adjusting the account (of the subsidy) in the oil pool, the subsidies will come out of the Union Budget...What about high speed diesel (HSD)? The subsidy on diesel was taken away in September 1997, but an unintended subsidy does creep into diesel prices every now and then. Even now, the ex-storage point price of diesel comes with subsidy of Rs 1 per litre. Are any attempts being made to rectify that?
HSD is not only used for transportation. It is also used for agriculture (for irrigation). We have not raised diesel prices (since October 1999) so that there is no further burden on the transport industry and on farmers.
Can you afford to keep diesel prices down when oil prices are soaring all over the world ? Crude oil prices have touched $30 a barrel at the North Sea again and HSD prices are almost $60 a tonne higher now than in October last year, when diesel prices were last revised here ?
We are waiting for the Organisation of Petroleum Exporting Countries (Opec) prices to come down. Any further revision of petro-products prices will depend on the direction in which international prices move.
The tremendous increase in prices of crude oil and so, petroleum products in the world market has also increased the subsidy element in the prices of kerosene and cooking gas (LPG) in the last few months. You did raise LPG and kerosene prices in March. Will it be necessary to roll back more of the subsidies now?
A decision on the subsidies will only be taken around the time of the next Union Budget. There is a question you have not yet asked, but I will answer it. Aviation turbine fuel (ATF) prices are scheduled to be brought on import parity this year. Aviation turbine fuel prices will be on import parity before March 31, 2001.
If subsidies are not rolled back, diesel prices are not increased and petrol and jet fuel (ATF) prices stay at present levels, how will you tackle the oil pool account deficit that has already crossed Rs 7,300 crore ? Will you ask for excise and customs duty cuts on petroleum products again?
We will not request any tax cuts now. Now our exercise (on tax levels for petro-products) is for the coming Budget, for the financial year 2001-02.
A committee has been set up under additional secretary Naresh Narad to consider giving marketing rights to stand-alone refineries, including the refineries of the private sector Reliance Petroleum Limited (RPL) and the joint sector Mangalore Refinery and Petrochemicals Limited (MRPL). How does this exercise fit in with the restructuring plan for the oil PSUs (public sector undertakings)?
That exercise is essentially for refineries like RPL and MRPL. The report will provide us a background paper that will help us prepare for the year 2002, when marketing rights for petroleum products will be freed. The committee will help us decide, for instance, what rates these refineries should pay.
Is the restructuring of the oil PSUs also not an attempt to prepare for a time when petroleum products prices will be freed?
Immediately, restructuring is being talked of for four stand-alone refineries, the Chennai Petroleum Corporation Limited (CPCL), Kochi Refineries Limited (KRL), the Bongaigaon Refineries and Petrochemicals Limited (BRPL) and the Numaligarh Refineries Limited (NRL). Some of these refineries will go to Indian Oil Corporation and some will go to Bharat Petroleum Corporation Limited (BPCL).
The reason behind this is that, stand-alone refineries will not be in a position to stand alone after 2002, since they do not have marketing facilities. They will therefore, be either merged with or become subsidiaries of Indian Oil or BPCL.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.