What the budget should say but won't

Vol 4, PW 2 (01 Mar 00) People & Policy
     

As Petrowatch goes to press, Indian finance minister Yaswhant Sinha prepares to present his first budget of the millennium to parliament.

Only complete analysis of the speech (available in the next issue of Petrowatch) will provide us with an insight into what Sinha proposes to do by way of reform of India's oil, gas and power sectors. Until then educated guesswork suggests that the budget will provide little more than a coherently worded "fudge" on some of the critical issues faced by oil companies and foreign investors in the energy sector.

The main reason for this is the delay in publication of 'Hydrocarbon Vision 2025' - the latest in the government's 'Blueprints' on the sector's future. As of today, the final version of this document has still not emerged, leaving the finance minister's hands tied; with no option but to leave most oil and gas issues untouched.

Foreign companies would no doubt like to see Sinha announce the abolition of government-controlled pricing of kerosene, petrol, aviation turbine fuel and LPG, and with it an accelerated dismantling of the archaic Administered Pricing Mechanism ahead of March 31st 2002. It would also be encouraging to see a clear time-table for the privatisation of the country's downstream refiners - the subject of endless speculation but precious little action.

Instead we are most likely to hear that another committee has been set up to look into the recommendations of the several committees that sent in the reports which make up 'Hydrocarbon Vision 2025', and other policy statements before it.