Oil Minister Dharmendra Pradhan on Friday said there is no alarming situation in India following rising oil prices in the international market, which has crossed the psychological barrier of $50 per barrel. “I don’t think there is any alarming situation. Consciously, the government of India has taken a decision to deregulate the market,” he told reporters here.
Market watchers fear that the rising oil prices, which had crossed $50 per barrel, would adversely affect the India market. Speaking to reporters after the inauguration of Hindustan Petroleum Corporation Ltd’s Green R&D centre near Hoskote, about 30 km from here, he said government has taken steps to link the oil price to the market and hence there was no such alarming situation. “For a robust economy (like India), for a long-term period, for the interest of consumers, price link to the market is needed - that we have done and there is no such alarming situation,” the minister for petroleum and natural gas said. Pradhan said “Whenever there will be a price reduction in the market, it will be passed on to the consumer and wherever there will be a price hike it will be taken care by consumer.”
Market watchers fear that the effects of increasing oil prices will first be seen on petrol and diesel prices, which are influenced by global prices and could soon rise steeply.
They also fear the country-wide effect on increasing cost of oil imports will have an even bigger impact on businesses and economy as a whole, while also reducing disposable incomes as citizens will spend more for the same quantity of fuel on their daily use and commute.
It is also speculated that the trade deficit would start ballooning, causing the Current Account Deficit to widen.
On the RIL and ONGC gas migration dispute, Pradhan said the Oil Ministry’s technical arm, Directorate General of Hydrocarbons (DGH) would come out with its quantification of the compensation which Reliance Industries (RIL) has to pay for drawing out natural gas belonging of state-owned ONGC. “The job has been given to DGH. DGH will come out with the quantification of the amount within one month. The stakeholder will be properly informed and they have to repay. It will be done,” he said.
The Justice A P Shah Committee had in a report presented to Pradhan on August 31 said RIL should pay the government for the natural gas it has drawn from an adjacent block of ONGC in the KG basin of the Bay of Bengal in the past seven years.
The same day Pradhan had said that the Ministry, according to an order of Delhi High Court which ONGC had approached to seek compensation for its gas, has one month to decide on the issue from the date of presentation of the report.