Press Release
Today, we are coming out with the sixth episode of our series, "Lies, damned lies and statistics", on the oil and gas sector in our effort to nail down the inaccuracies and falsehood in the `Shining India’ campaign.
We intend to point out that at the outset, in the wake of our independence, this is one sector which was exclusively dominated by private companies — and that too foreign players. Inspite of repeated appeals, these companies abandoned this sector in the country on the plea that it was unremunerative and that there was not a single drop of oil to be found in India. But, events proved otherwise. This sector was nationalised precisely to protect our national assets and utilise them for our country’s interests rather than profits for foreign capital. We, therefore, created exploration, refining, marketing and pipeline companies in oil and gas sector which are not only hugely profitable and contribute handsomely to the public exchequer through tax and dividends and have returned many-fold the public investment made in them but have grown to global level companies and entities like ONGC and IOC are majors in the sector appearing in the `Fortune 500′ list. In the last five years, the retail price for oil and gas have gone up which has cascading effect on the input price for other consumer infrastructure, agriculture and other such crucial sectors of the economy.
It is disturbing, the manner in which shares are being sold in ONGC and GAIL which surely undervalues the prices and leads to a huge national loss. This loss estimated to Rs. 5,000 to 6,000 crores on a conservative estimate of comparison between price earning per share as compared to similar international companies.
We will, or course, come back on this subject shortly.
Is India Really Shining?
Lies, Damned Lies and Statistics
Infrastructure: Oil
v On February 21, 2004, the Ministry of Petroleum and Natural Gas ran an advertisement, which contained some curious claims like a commitment towards no further increase in domestic LPG and kerosene prices, 90 exploration blocks awarded through global tender under NELP against 22 blocks in the previous 10 years in order to ensure self reliance and new oil and gas field discoveries. The advertisement further claimed credit for the disinvestment of government stakes in GAIL and ONGC.
v The price of fuel, especially kerosene which caters to the needs of a large section of the poor, has increased manifolds under the Vajpayee regime.
|
Annual Rate of Price Rise of Kerosene (in %) |
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|
|
2000-01 |
2001-02 |
2002-03 |
|
CPI |
145.0 |
-2.7 |
21.3 |
|
WPI |
235.0 |
-8.8 |
18.8 |
|
Source: Economic Survey, 2002-03 |
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Estimates based on the Consumer Price Index suggest a 145% hike in kerosene prices over 2000-01, which fell marginally in the next year only to rise by 21.3% in 2002-03. The fact that the Petroleum Ministry is making a commitment not to hike prices any more through a newspaper advertisement shows the discomfort of the government regarding the discontent within the masses on account of this tremendous hike in fuel price. However, there would hardly be any takers for such nonsensical claims.
v As far as the claims of new oil exploration ventures and oilfield discoveries are concerned, the results speak for themselves. While the import of crude oil has almost trebled from 1995-96 to 2001-02, domestic production has declined by nearly 3 million tonnes during the same period. So much for the propagated myth of new oilfield discoveries and self reliance in energy resources.
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Production and Import of Crude Oil |
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(in million tonnes) |
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|
|
1995-96 |
1996-97 |
1997-98 |
1998-99 |
1999-00 |
2000-01 |
2001-02 |
|
Domestic Production |
35.2 |
32.9 |
33.9 |
32.7 |
31.8 |
32.4 |
32.0 |
|
Imports |
27.3 |
33.9 |
34.5 |
39.8 |
45.0 |
74.1 |
78.7 |
|
Source: Economic Survey, 2002-03 |
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v The most appalling feature of this government is the celebration over the disinvestment of profit-making PSUs. Despite the Oil PSUs having earned a huge combined profit of Rs. 23,251 crores in 2002-03, the government has undertaken aggressive disinvestment of several strategic units. These privatisation measures can neither be justified from the ‘efficiency’ point of view, since the oil giants are highly profitable, nor argued to have contributed to net revenue mobilization since the government stands to loose much more in terms of the stream of profits which would have accrued in the future from these PSUs, than what it mopped up through one time sale. The government, however, far from providing justification for these outrageous privatisation measures has been celebrating it in advertisements.