Oil bill may touch 9.8 bn

MUMBAI, AUG 21: India is expected to pay a higher price for oil imports this year. The import bill should be at least 30 per cent higher ...

MUMBAI, AUG 21: India is expected to pay a higher price for oil imports this year. The import bill should be at least 30 per cent higher than last year8217;s 7.5 billion and will certainly surpass the 1996-97 record, the highest pay-out for oil so far. By more conservative estimates, the import bill is expected to touch 9.8 billion by March end, or 0.5 billion more than the all-time high of 9.32 billion in 1996-97.

Oil industry sources said the import bill could go up further if crude oil and petroleum products continue to get dearer at the present rate. Crude oil prices have doubled since January, when the prevailing rates were roughly 9 a barrel. Petroleum product prices have increased by more than 30 per cent since March, when crude prices turned the corner at 11 a barrel.

In 1996-97 crude oil prices were steep at 18 a barrel. This year crude rates have already crossed the 19.5 a barrel in West Asia and 20 a barrel in the North Sea. The West Texas Intermediate WTI crude crossed the 21a barrel mark last week.

Soaring oil prices will push up the import bill this year, much the same way low oil prices had kept it on reins despite growth in the volume of imports last year. The country imported altogether 57 million tonne of crude oil and petroleum products last year for 7.5 billion. The year before, in 1997-98, the Oil Coordination Committee had paid out almost as much 7.39 billion for 53 million tonne of oil imports. The fast soaring crude oil price coincides with a nearly 40 per cent growth in India8217;s oil refining capacity. After the Panipat refinery went on stream earlier this year, the cumulative refining capacity of all the 15 refineries in the country was 67 million tonne.

Since then Reliance Petroleum has commissioned its giant refinery at Jamnagar, estimated to have a capacity to process 27 million tonne of crude. Mangalore Refinery and Petrochemicals Limited MRPL is expanding capacity by another six million tonne. The three-million tonne Numaligarh Refinery is scheduledto go on stream soon.

The Oil Coordination Committee is known to have budgeted for 28 million tonne of additional crude imports this year. Reliance Petroleum alone will require 21 million tonne of crude oil for the three quarters of this year. Crude imports should increase to nearly 60 million tonne by end March from roughly 38 million tonne last year. Petroleum product imports should drop drastically to half on the contrary, with the increase in the indigenous availability of diesel, kerosene and liquefied petroleum gas LPG.

Petroleum product imports may plunge to a little more than eight million tonne from 19 million tonne last year, but the import bill may remain more or less the same, because of the tremendous increase in prices in the last few months. The oil price boom took off bang at the start of the new fiscal in April and now seems poised to see the year through.