Prakash Kumar

Globally, if there is one commodity which generates the maximum bytes it is “OIL”. So many things give Oil the niche status which it deserves. Oil is the receipe for growth and disaster as it has precedence of writing various growth stories while there have been wars fought between nations surrogately over Oil.

Oil for long has remained in clutches of politics rather than economy where it should ideally have lived. Cartelisation rules over demand and supply matrix and the rick and powerful have historically stocked inventories to generate unprecedented bargaining power.

OPEC – as it is called the organization of Oil producing countries has middle east Oil economies and Venezuela as its core constituents. Each of these countries are opposed to America’s rule of law politically but give in to the uno position reserved for American economy globally. Dollar and Euro traditionally play hide and seek as the medium of transaction for Oil and strength of which currency which has a larger share in Oil market is today the stronger of the two currencies.

India, for decades has handled this critical sector in the worst possible way. More of a story of killing your golden goose. Subsidy to priority sector is one thing but at the expense of exploration (ONGC), refining and oil marketing companies (OMC) and distribution companies (GAIL) is totally un-economics. OMC are forced to sell at below cost and thus defy the simplest of economics fundamentals – sell more make more profit. For these OMC’s the incentive is there not to see a drop. Ironically, all these companies are Government majority listed companies. This makes it even more deplorable – Government through its diktat is punishing the shareholders of these companies at the expense of shareholders of other companies (who would benefit from cheap oil below cost). No one knows the true potential of any of these oil majors in any of the three categories exploration, distribution, refining and marketing as their economic fundamentals is doctored.

RNRL- RIL case – The way Supreme court has delivered the split verdit, lot left still to be desired. How can the apex court nullify a bilateral agreement and at the same time tell the warring brothers to negotiate a deal in 6 weeks. Makes little sense but well – ruling of SC is a law and we learn to abide by it. Ruling is expected to have a lasting impact on way bilateral Letter of intent and Letter of award are seen in an Indian scenario as long as they are not vetted by a government seal.  We believe, we were better off without giving such an impression to global investor community. Natural resouce are property is contry and its people, but since last 60+ years of independence what has government done to liberate the natural resource to uplift a society which is bereft of education, health care, food and shelter for one and all.

India needs power badly – barring the metros there is no single place which are not marred by power cuts.  Majority of village remains still un-electrified and all five year plan targets in terms of capacity addition goes hayware. Prima-facie the reason behind this complete power failure is lack of fuel supply arrangement for many of the proposed power projects. Such government mismanagement of fuel supply is expected to put the power sector into submission. We should not forget that Power sector is mother of all sectors, and we should forget about inclusive growth in absence of power.

Time was ripe in current fiscal for government to take compelling path chaning decision in terms of liberating oil from petty politics esp. at a time when Manmohan government is stable as a rock- opposition is in taters and India as a global economy is finally getting its recognition. Government had the chance to implement growth oriented terms of Kirit Parikh recommendation and give a verdict in Court in the RIL-RNRL case which made better sense. It failed to do so – and coalition politics make me believe that the next opportunity may not be too soon to rectify the misdeeds committed in 2010.

Till that we just live in a Country – Where the fuel for life is in Chains.