Oil Pool Deficit Likely To Balloon To Rs 15,500 Cr

The current oil pool deficit is estimated at Rs 8,000 crore. This would almost double by the end of the year, with the outgo on subsidies on kerosene and LPG expected to jump to Rs 18,000 crore,he said at the Economic Editors Conference here yesterday.

Balu attributed the higher deficit to the depreciation in the value of the rupee by 4 per cent; increase in imports; rise in international prices from $16 in July to $22 per barrel at present; shortfall in domestic crude production and non-adjustment of selling prices to the "required extent".

With a spurt in the demand for petroleum products, the oil import bill has increased by 40 per cent in the first half of 1996-97. This is partly due to companies relying on diesel-powered generators in the wake of the power shortages.

 

Balu said the demand for petroleum products is expected to go up from 74.7 million tonnes in 1995-96 to about 81 million tonnes by the end of the current financial year.

At the end of September, oil imports were valued at $4.4 billion, up 42 per cent from last year. The petroleum ministry has projected an annual bill of $9.5 billion in the current year as compared with $7.5 billion in 1995-96.

The decline in domestic production of crude in the current year has further accentuated the problem. In 1995-96, crude production was 35.15 million tonnes and is expected to drop sharply to around 33.62 million tonnes. The finance ministry estimates that the output would actually be even lower.

Ministry officials maintained that the only way out of the impasse was either to lower customs and excise tariffs or increase domestic prices. On hiking prices, Balu remained ambivalent, saying that "I am not interested in hiking the prices. It is not my decision and is the cumulative responsibility of the cabinet." However, in his inaugural address, the minister said, "There is a need to change the present fiscal regime and rationalise subsidies and price structure. Market de-regulation and privatisation need to be taken up in a planned and time-bound manner.

Fuel hike for foreign airlines

Oil companies yesterday raised aviation turbine fuel prices by $2.64 per kilo litre or one cent per US gallon. The revised ATF price is $261.53 per kl. The revision applies only to international carriers, and not to domestic carriers. But it is not yet clear whether Air-India would also be affected. AI officials were not available for comment. IOC sources said the price hike follows the recent increase in the international oil prices.

The outbound cargo charges of the international carriers will also go up as a result of the increase, barring those such as Lufthansa which have already introduced a cargo surcharge which is expected to absorb the ATF hike.