• No one can predict where oil prices will stabilise: Dharmendra Pradhan

    Petroleum and steel minister Dharmendra Pradhan has spent the lockdown period trying to ensure that oil companies can take advantage of the low crude oil prices, while making cooking gas and subsidy available to Ujjwala scheme beneficiaries. In an interview, Pradhan tells Sanjay Dutta & Sidhartha that Indian steel producers have ramped up exports during the period.

    Excerpts:

    How has the lockdown affected petroleum and steel sectors?

    A: Lockdown is a global issue. It was needed to break the chain and there was consensus on it. Globally, the demand for oil products came down significantly. In April, nearly 70% of the demand went away. By May, 60-65% of the demand has been regained. With trains and civil aviation traffic returning, demand will improve. By June, we expect demand to be back at pre-lockdown levels. Also, before the lockdown, three large oil producers were trying to capture the oil market, which resulted in a glut. Coupled with low demand, prices crashed, which no one anticipated. While prices have started rising due to improved demand, no one can predict where prices will stabilize. The uncertainty in the oil market will remain for some time. In steel too, industrial and construction activity had come to a stop. India has managed to use its natural advantage of manpower and raw material and step up exports during this period.

    Despite a fall in global crude prices, retail prices remain high as the government has raised taxes…

    Pump prices correspond to crude price at $65 a barrel and does not put the burden (of hike in Central taxes) on consumers. Consumer prices have remained unchanged. There is an abnormal situation in the oil market when WTI (US benchmark crude) crashed below zero. In these times, it is pointless to revise prices, especially when demand is gone. What do you do when things are bad? You tighten the purse strings, focus on bare essentials. This is what all of us have seen our mothers do. This (tax hike) is the same. India has consciously adopted this fiscal model. We need resources for the poor, healthcare, to provide stimulus and build infrastructure. That is what the money will be used for.

    Due to movement of migrants, do you see labour problem in executing projects?

    Historically, eastern India has lagged in development. Since the Modi government came to power, it has been trying to correct this imbalance by pushing for a second Green Revolution with focus on the East, announced several large projects and major schemes also focused on benefiting people from this part of the country. Migration is not just an economic issue but a socio-psychological issue. It’s (currently) a reverse migration due to a health issue. Some people will return, others will look for new avenues. The projects announced in the East will create employment opportunities.

    The package that has been announced for MSME, how many units in the steel sector will benefit? How will it spur demand?

    It’s not just about MSMEs but a comprehensive package that addresses major issues in agriculture. There is special emphasis on housing which will benefit cement, steel, logistics, local industry and provide jobs. Every country has adopted different strategies, we have chosen this path. We are ahead of many countries on direct benefit transfer, which we have successfully used for transferring funds to the poor, including Ujjwala beneficiaries. It wasn’t a stimulus but a genuine money transfer.

    An important statement from the government is to enhance the role of the private sector. There are several oil and steel PSUs, what will be the strategy?

    It is a much-delayed and much-awaited decision which is consistent with our philosophy. It does not mean the closure of PSUs. There is unanimity on getting more capital and technology. This should have been done within two years of Independence. People want more job opportunities. The government should be a facilitator in getting investment. It should get more revenue which should be used for social welfare. The idea of the policies is to encourage value addition. We have opened the petroleum sector since 1990s, in steel private players are producing more steel than the public sector.

    What about BPCL disinvestment?

    An in-principle decision has been taken. It depends on the market.

    With oil prices falling, does the economics for electric vehicles change?

    There is no fundamental change. Electric vehicles were expected to contribute to the incremental requirement and not replace internal combustion engines. Naturally, people will use what is available. Price will be a factor and BS-6 fuel and vehicles are now available. The impact will be more in the three- and two-wheelers segment

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