India’s crude oil import has hit the highest level in the past seven years, reveals the recent reports from the Petroleum Planning and Analysis Cell (PPAC).
At present, the country has increased crude oil imports from Iran by 36 percentage making it the second-largest oil importer from Iran. Who is to be blamed for this heavy dependency?
Data coming out from PPAC suggest that the domestic production of crude oil has hit an all-time low, at 20,954 thousand tonnes, dipping by 5 per cent in a single month.
Interestingly, the crude oil imports of other countries in the same time period has reduced drastically, suggesting the inefficiency of the Indian government to deal with the situation at home.
Facts and Figures
As per a report by Petroleum Planning and Analysis Cell (PPAC), “The import bill of crude oil is estimated to increase by 42 per cent from $88 billion in 2017-18 to $125 billion in 2018-19 considering the Indian basket crude oil price of $77.88/bbl and $/Rs exchange rate of 72.22 for the balance part of the year.”
India imports around 80% of its crude oil requirements, making it the third-largest importer of crude oil in the world. In the financial year 2017, crude oil import accounted for 81.7% of overall consumption.
In 2018, this has risen to 82.8%. In terms of volume, crude oil import has hiked by 3.72 per cent to 228.6 million tonnes (MT) in the current fiscal from 220.4 MT the last financial year. PPAC further predicted the import to be 227 MMT for 2019.
Between April and September 2018, crude oil import bill rose by 56.11% to $58.7 billion. In terms of volume, the rise was by 5.8% to 113 MT, during the period.
Meanwhile, India’s domestic crude oil production is static at 3-3.1 MMT, since 2013. The rise in import despite the rising crude oil prices implies the high demand for crude oil and the lack of development of alternative energy sources.
The production of natural gas has been falling within the country, increasing the import of re-liquefied natural gas due to increased demand. While the production fell by 1.5%YOY, the demand is 6.2%YOY higher as of May 2018. Liquefied natural gas imports have risen by 7.3% YOY in the financial year 2018. This increase in imports has widened the trade deficit and increased pressure on the Current Account Deficit.
The trade deficit has increased to $18.02 billion in July ’18 from $16.61 billion in June. CAD is expected to increase by 2.5% of Gross Domestic Product as opposed to 1.5% in 2017-18 as per Moody’s Investor Service.
The 3.3% fiscal deficit target might also have to be breached. The 2018-19 union budget hastened the petrol subsidy at a mere 2% increase from last year; from Rs 24,460 crore in 2017-18 to Rs 24,933 crore in 2018-19.
Response from Ministry
Union Minister Dharmendra Pradhan, however, claims that the centre is taking several measures to control imported crude oil costs by focusing on alternatives like ethanol, biodiesel and CNG. The use of food grains for the production of ethanol to be blended with petrol was an innovative idea put forth by the minister.
“There is also a provision to allow surplus food grains for ethanol production during the surplus phase as decided by the National Biofuel Coordination Committee,” Pradhan said.
But none of this is a surprise considering how Bharatiya Janata Party national spokesperson, Sambit Patra, was appointed an independent director on the board of Oil and Natural Gas Corporation on 28th October 2017.
A PIL was then filed by an NGO, Energy Watchdog, in the High Court of Delhi questioning how a person who is actively involved with the ruling party could be a good choice for an impartial post.
The process of selection and his eligibility to be the director was also questioned. The appointment of Shashi Shanker as ONGC Chairman and Managing Director was also questioned in light of his suspension for misconduct in February 2015 as the director of ONGC.
However, his suspension was revoked in July 2015. The High Court rejected the PIL and refused to interfere with the appointments.
As a dedicated spokesperson and an ‘independent’ director, Sambit Patra has been explaining, justifying and diverting questions on the matter of fuel price hike.
Sambit Patra went ahead to claim that the Bharat Bandh called by the Congress against the fuel price hike was to divert attention from the National Herald case.
“Rahul Gandhi and Sonia Gandhi knew very well that they are going to lose the case in the High Court… (that) the verdict is going to be against the Gandhi family… that is the reason why they gave a call for the Bharat Bandh on Monday,” Patra said.