M A I N   N E W S

Falling oil prices bring cheer
T. V. Lakshminarayan
Tribune News Service

New Delhi, September 27
Falling oil prices in the international markets have brought cheer to the government as the trend is expected to stabilise India’s oil pool account deficit and enable a smooth transition to a free market regime in the new financial year beginning 2002.

The terror attacks in the USA on September 11 had led to the crude oil prices in the international market, touching new highs at more than 31 dollars to a barrel, raising fears of a hike in domestic oil prices and a setback to the government’s effort to dismantle the administered price mechanism for oil products like petrol.

However, with the USA announcing that there would be no ‘D-day’ war and it intends to carry on a protracted fight against terrorism, ruffled market sentiments have been soothened and traders are reverting to long-term positions.

International oil analysts are expecting oil prices to stabilise between $20 and $25 a barrel for the next three months, a range that would help contain the oil pool account deficit to around Rs 12,000 crore. Each dollar fluctuation would increase or decrease the pressure on oil pool account by around Rs 200 crore. On an annualised basis the effect could be as much as Rs 500 crore.

The government is expected to wipe out the oil pool account, a mechanism to check the impact of volatility in international prices on domestic prices before dismantling the APM regime. Once this is done, petroleum products prices like that of petrol would be directly linked to the international prices.

The government, however, plans to provide some subsidy for kerosene and cooking gas from the budget provisions.

According to the Minister for Petroleum and Natural Gas, Mr Ram Naik, the fall in prices in the international market is a result of several factors, including OPEC’s decision to maintain current supplies and grounding of several air services which has led to a slump in the demand for aviation turbine fuel.

There is also a general slowdown in the economies across the world and there is not much pressure on the demand for oil.

The crash in oil prices has also helped the sagging share market and the falling rupee in recent days.

Since India imports 70 per cent of its crude oil requirements, the fall in prices would result in heavy savings in the import bill. This expectation has, to some extent, helped strengthen the rupee.

The only negative fallout of the fall in crude prices is that revenues from customs duty would come down for the government.

Sky marshals for pvt airlines too

New Delhi, September 27
Disregarding the opposition by private airlines operators, the Centre has made it mandatory for them to deploy sky marshals on all domestic flights to foil any hijack attempt, Civil Aviation Minister Syed Shahnawaz Hussain said today.

The minister said the deployment of sky marshals in Indian Airlines aircraft had also been ordered with immediate effect. The commandos of the National Security Guards (NSG) were being deployed on the Indian Airlines flights.

Special training on aviation security was being imparted to these commandos to deal with any incident of aircraft hijacking, he said.

Asked about the deployment of sky marshals on Air India flights, Mr Hussain said the government was awaiting international guidelines on the issue before making suitable security arrangements on the aircraft operating under the country’s flagship carrier. UNI