By TN Ashok Economics Editor
New Delhi, March 27 Prime Minister Narendra Modi today set a 10% reduction in crude oil imports for India by 2022 which could ultimately be scaled up to 50% reduction by 2030 while aiming at a 10% GDP growth during the period. The year 2022 was significant as India would be completing 75 years of its independence.
Inaugurating the 2015 Urja Sangram (Energy Conclave) , organised by the Ministry of Petroleum and Natural Gas , Prime Minister Modi said India’s oil imports was of the order of 77% relating to both crude oil and natural gas. If domestic production of oil and gas could be scaled up, imports could come down saving valuable foreign exchange of the country, he pointed out.
Stating that the targets being set for reducing imports was part of a larger plan of ensuring “ Energy Security “ for the country, Modi said, the two most important issues on the energy sector challenging the government were Energy Security on the one hand and Energy Diplomacy on the other.
India imports a large quantity of its crude oil and petroleum products from gulf countries such as Oman, Qatar, Saudi Arabia and the bench mark price of India’s crude oil set against Brent crude. :
Between 2000 and 2012 the consumption of natural gas doubled, and a dependency on imported gas was established, growing from zero to 22% of consumed natural gas. In 1990 India imported 37% of oil it consumed while in 2012 it imported a staggering 82% of consumed oil, pushing the import bill to US $ 120 billion and making it the energy source with the highest import dependency.
According to official figures, India’s oil import bill in terms of value actually increased from Rs 409,077 crore in 2009-10 to Rs 726,386 crore in 2011-12. The increase in import bill of crude oil was due to increase in price of crude oil and petroleum products in the international market, depreciation of Rupee, increase in domestic consumption of petroleum products from 137.8 MMT in 2009-10 to 148.0 MMT in 2011-12 as well as on account of rise in the level of exports from 51.0 MMT in 2009-10 to 60.8 MMT in 2011-12.
Consumption and exports of value added products during 2011-12 contributed to higher level of GDP. Increase in refining throughput has reduced import dependency on petroleum products and the country has exported petroleum products worth Rs 2, 84,643/- crore during 2011-12.
However, India has since benefitted since the last ten months from a steep fall in the prices of crude oil in the international market from as high as US $ 100 a barrel to almost less than half at US $ 55 a barrel from upto early 2014 and most parts of 2015. Prices went high as demand was more and supplies less especially as Iran oil went out of the market , but prices crashed as the bulk consumer of oil, China at 40% of global consumption, reduced imports as growth declined as also growth shrunk in most parts of the world following l recession. Moreover United States increased production of oil and gas substantially to over 4.2 million barrels a day and reduced imports from 60% in 2005 to 25% in 2015.
India, in sharp comparison, increased its oil imports from 17% in 2005 to 35% in 2015. So Modi’s statement is very significant on reduction of oil imports even as India has benefitted to the extent of over almost US $ 50 billion from the fall in prices of oil.
Touching on another sensitive subject of oil subsidies that generated pressures on the profit lines of state owned oil companies, Modi launched an initiative under the ministry of petroleum and natural gas today asking the well off in society to voluntarily surrender the benefits of subsidy so that government could use the monies for development projects.
Modi said that more than 2, 80,000 people had responded to the scheme resulting in a saving of Rs 100 crore to the government. The Prime Minister pointed out that his government was the first to introduce the direct cash transfer benefit of subsidy to the people which benefitted almost 12 crore. The scheme had also resulted in plugging leakage of revenues under the subsidy scheme and ensuring the poor benefitted.
On how best to ensure Energy Security for the country, Prime Minister said, this depended on technological innovations and skill development, both of which were being looked at very seriously by the government.
Those who spoke earlier included the Minister of State for Petroleum and Natural Gas Dharmendra Pradhan , Saurabh Chandra, Secretary in Ministry of P and NG.
The Prime Minister released two books on the occasion: A History Book of ONGC, Coffee Table Book on Engineers India ltd. A special commemorative stamp on EIL was released by the Prime Minister in the presence of the Minister for Telecommunications Ravi Shankar Prasad and the Minister of State for Commerce Ms Nirmala Sitaraman.
