Dharmendra Pradhan, minister of state (independent charge) for oil and gas, wants to provide the common man with affordable LPG cylinders and turn India into an oil refining and petrochemicals hub. He spoke to HT on a range of issues affecting the sector. Excerpts:
You have talked of reforming LPG distribution to benefit the common man. How will you do this?
Targeting LPG subsidy at the right audience after freeing diesel prices is my priority. The direct benefit transfer (DBT, which will transfer subsidies directly to the bank accounts of consumers) for LPG will be implemented across the country on January 1, 2015. Consumers will have to pay the full price of Rs 810 per 14.2-kg cylinder at the point of purchase.
The subsidy of Rs 393 per cylinder (for 12 cylinders per year) will then be transferred to the bank accounts of consumers.
Can every consumer afford to pay Rs 810 at one go? It is a large amount for a large section of our population. So, we need innovative marketing strategies to deliver cylinders to the masses. A large section of society wants LPG in small packs of 2 kg or 5 kg, at a price that he can afford.
So, borrowing a common marketing practice from FMCG companies, which sell shampoo sachets at Rs 2 each, if I can provide LPG in smaller cylinders, I will make cooking gas affordable for 160 million consumer base.
I am directing state-owned oil companies to make available 5-kg subsidised LPG cylinders on an all-India basis. This will put an end to the black marketing and pilferage of 5-kg cylinders that are currently available only for consumers in hilly and remote locations. That is what I would define as a reform measure that benefits the common man.
Your UPA predecessor, Veerappa Moily, had said the import lobby threatens every oil minister against taking decisions that can cut India’s rising oil import bill, which stood at about $145 billion last year. Your comments?
(Shakes his head vigorously in denial and laughs) My answer to that is: this is the Narendra Modi government.
Have you received any specific proposals from global investors?
Saudi Aramco (Saudi Arabia’s national oil company and one of the world’s largest hydrocarbon majors) is keen to invest in India’s refining and petrochemicals sector after the decision to free the prices of petrol and diesel. The petrochemicals sector offers tremendous growth opportunities for investors.
We need to look beyond our buyer-seller relationship with oil and gas producing countries. India has certain inherent advantages — it is a large market close to the oil and gas producing countries in the Gulf; then, it has a large base of intellectual capital. Many global majors such as Shell and Saudi Aramco have their R&D bases in India (Bangalore).
We can position India as an oil refining and petrochemicals hub to feed other big markets like China, Japan and Korea. Over the last 10 years, we have ignored the economic development. We missed the bus but let’s not waste any more time and act.
When are you coming out with the next round of auctions for oil and gas blocks?
The 10th round of oil and gas blocks offerings (or NELP-10) will come with a new look as we are completely revamping the previous policies and addressing the major concerns of all stakeholders. I’m in no hurry to announce the round till these concerns are addressed. First, the geology of India’s oil and gas blocks has to be mapped scientifically to provide investors with a fair idea on the prospects of blocks.
Then, given our past experience, we are revamping the existing production sharing contracts. We will have to decide whether we will give out the blocks in return for a share of revenues or share of production. I don’t want to commit anything till these issues are addressed. Several blocks were given out in the past but many of them haven’t produced a drop of oil.
I want to look into all these issues before I come out with another round of auctions. All I can say now is that my policies will be transparent and investor friendly.