Budget surprise expected for oil, gas and power sector

Vol 4, PW 1 (16 Feb 00) People & Policy

In a little under two weeks time (29th February) Indias finance minister Yashwant Sinha will present his annual budget the first of the new millennium.

It is only possible to speculate on the contents because (as in most countries) they are held in secret until the last minute. All the indications point to a budget that will contain encouraging policy statements for the oil, gas and power sectors, as well as for foreign investors in general.

It is reported for example, that the government will make it easier for foreign companies to repatriate profits by dispensing with the need for permission from Indias central bank, the Reserve Bank of India (RBI). If this happens, it will be a shift of seismic proportion.

Repatriation of profits can take months because the RBI needs secondary approval from a host of often-irrelevant government agencies. It is also suggested that Foreign Direct Investment (FDI) proposals in several sectors (including the oil, gas and power sectors) will no longer need approval from the Foreign Investment Promotion Board (FIPB), if they fall below a certain (as yet undefined) limit.

Pramod Mahajan, a cabinet minister, said the aim of is to attract FDI of $10bn a year instead of the present $4bn India attracts now. Finally, everyone is watching for any sign that the government will honour its oft-repeated pledge to reduce its stake in state-owned refiners.

One report suggests the oil ministry is advising the government to reduce its stake in either Bharat Petroleum or Hindustan Petroleum to 26% or below.