NEW DELHI, Feb 27 – Once pride of Assam, the oil sector, particularly the refining industry in the State faces an uncertain future in the face of a move to dismantle the administrative price mechanism (APM) forcing a high-powered parliamentary committee to recommend special fiscal measures to bail out the refineries in Assam. Union Finance Minister, Yashwant Sinha’s Budget for the year to be tabled tomorrow would have a special significance for the State because his fiscal proposals would have a significant bearing on survival of the State’s four refineries. It is apprehended that dismantling of the APM scheduled to be put into effect from April 1 would tilt the economy of scale leaving the refineries high and dry.
If the apprehension expressed by the Parliamentary Standing Committee on Petroleum and Natural Gas under chairmanship of Mulayam Singh Yadav in its recent report tabled here yesterday, is anything to go by then dismantling of the APM countrywide may sound the death-knell for the State refineries unless corrective measures are taken by the Central Government. The Parliamentary Committee also has Paban Singh Ghatowar and Bijoy Krishna Handique as its members from the region.
“One of the areas demanding the attention of the Government” the committee said, “is the economies of the North-east refineries. These refineries are very small and do not have the minimum scale of economy”. Crude production of the North-east is of the order of 5.5 MMTPA as against the refining capacity of 7 MMTPA. Since the demand in North-east is much less than the refining capacity, most of the refined products have to be moved out of the North-east over long distances to centres of demand. Given the surplus product situation in the country and more competitive sources of supply within the country these refineries cannot dispose of their products without incurring huge losses, it warned. It was recommended by the Committee that special measures such as freight subsidy, transport subsidy, among others to given to these refineries till the consumption and demand in these areas rise to the extent of the production capacity of the refineries. It may be mentioned here that Bongaigaon Refinery and Petrochemical Limited (BRPL), would be one of the worst hit refineries in Assam and it is estimated that the oil company would go down in two years.
Meanwhile, the Parliamentary Committee has pulled up OIL for continuing to flare up gas. The committee therefore desires the OIL take all possible measures to find the consumers for such gas so that this is gainfully utilised and not left for flaring. The committee hopes that OIL will come up with some solution in three months’ time. The committee observed a peculiar situation of gas flaring in ONGC and OIL operated fields where a huge quantity of gas from isolated fields is being flared due to fluctuation in consumer intake or lack of consumers. It further commented that it has noted that gas continued to be flared up in the oil fields in upper Assam and Arunachal Pradesh due to adverse techno-economics of gas transportation though through such flaring, there is substantial financial loss.
The committee said it had noticed that onshore flaring in the fields of ONGC and OIL is still at the higher range of 10 per cent of the total has production. “The Committee therefore, desires that OIL and ONGC should take all possible steps to reduce the gas flaring on onshore area and bring it to the level of international standard of five per cent”. While OIL and ONGC continue to flare up gas in oil fields in Assam and Arunachal Pradesh, implementation of the mega gas cracker project has run into rough weather pending execution for last 14 years owing to scarcity of gas in the region.