Vol. 6 | issue 7 | August 2012
Oil & gas crisis
Poor governance of hydrocarbon reforms and a disjointed pursuit of policy and regulatory changes have jeopardised the country’s energy security.
by Naresh Minocha
Reforms in India’s oil and gas sectors are caught in a perpetual whirlpool. The recent cut in excise duty on petrol, hike in diesel prices, rationing of LPG, the move to recast the exploration and production framework, and the proposed pooling of imported and domestic gas prices are a few pointers in that direction.
Take any segment – upstream (exploration and production), mid-stream (oil and gas infrastructure such as pipelines), or downstream (refining and petro-products marketing), each is bedevilled with uncertainty.
Big-bang ideas, such as making India a global refining hub with a chain of export-oriented refineries and radical restructuring, including mergers of national oil companies to make them globally competitive, are initially hailed but subsequently forgotten. The Government does not even have a proper regulatory framework for oil and gas in place, something that is crucial for the country’s energy, food, economic and national security.
The Ministry of Petroleum and Natural Gas continues to control exploration and production of oil and gas through its lame-duck appendage, the Directorate General of Hydrocarbons. This is despite the fact that the Cabinet had approved the setting up of a statutory regulator – Hydrocarbon Regulatory and Development Authority (HRDA) – way back in November 1997. Similarly, the ministry continues to regulate pricing, subsidisation and marketing of automobile and domestic fuels in the refining sector, which form the core of the downstream segment. This is a stand that is also evident in the case of pricing and marketing of natural gas as also of gas produced under production sharing contracts (PSCs) that were supposed to provide pricing and marketing freedom....................READ MORE