Double whammy for oil, gas companies - Hindu Business Line

Anand Kalyanaraman BL Research Bureau For the Indian oil and gas sector, Budget 2010 has little to cheer. On the contrary, its woes are likely to increase. The twin negative impact arising from the lack of a clear roadmap for implementation of the Kirit Parikh Committee report, and the hike in indirect taxes (customs and excise) are negatives for the sector.

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Given the current high inflationary environment, it comes as little surprise that the Government has again delayed biting the bullet on the Kirit Parikh Committee recommendations to deregulate transport fuel pricing and reduce subsidies on cooking fuels. This will continue to negatively impact the financial health of the sector, especially the public-sector oil marketing companies (OMCs) — IOC, BPCL and HPCL, which bear the brunt of under-recoveries. Also, public sector upstream companies, ONGC and OIL, and GAIL, which compensate the OMCs for under-recoveries on transport fuels will continue to be affected. Private refiners such as Reliance Industries and Essar Oil will also be impacted due to lack of a level-playing field in the petroleum products retail market.

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