Make ministry transparent

PETROLEUM PUZZLE: When there is a woeful lack of transparency in any government department, it becomes a fertile ground for nefarious activities.

The recent case of alleged corporate espionage in the Ministry of Petroleum and Natural Gas is a wake up call regarding the underhand dealings and mess that exists in the ministries connected with vital resources and essential infrastructure. During the UPA-II era, we saw the Ministry of Coal coming under the cloud of a huge corruption scandal.

The scandal connected to the Department of Telecommunications was instrumental in the fall of the earlier government. The rot continues to exist despite the good intentioned rhetoric of the new NDA government. Perhaps, it is time that the new government does an intensive search of the dirt in all such vital ministries that deal with important national resources or huge budgets and gets rid of the muck urgently.

The petroleum ministry has always been an enigma, particularly to the public. Whether it was the UPA or the NDA, the Centre has always kept the financial aspects of that ministry a secret to the public. People have only heard the usual sob stories from the ministry about how the international oil prices are way too high and how the oil companies are making a huge loss.

How is it costing the exchequer a huge amount to pay the rising petroleum procurement costs? How India’s trade balance is getting affected adversely due to the burden of the unavoidable import of oil? Most of the time, therefore, the government ended up hiking the prices of petrol and diesel.

The Indian consumer was given a benefit of only about 20-25 per cent and that too for a short period of time. The reaction of the government and that of our oil companies in reducing the retail price is generally quite delayed. The raise in retail prices is usually very quick though. How does the government justify this kind of retail pricing policy? One wonders as to what may be the government’s game plan, if any, behind this.

Generally, the argument of the government for the upward revision of retail petrol/diesel prices has been that the petroleum companies are making huge losses. Are they really? The balance sheets of these companies over the years show to the contrary.

The government sources would then be quick to point out that it is not the loss, but the ‘under-realisation’ or ‘under-recovery’ on the sale of petrol, diesel and domestic LPG as the retail prices are not in line with the international prices. So, it is the ‘under-recovery’ or notional loss of revenue had the prices been equal to the import prices of these products.

The government’s talk of losses is just about the ‘notional’ figures – in comparison to ‘import parity prices’ of these products. It is about the larger gains lost had they sold the products globally. Somehow, our government and the oil companies (a large majority of them being PSUs) seem to forget the special nature of our economy and its people; moreover, the very rationale of having PSUs in this sector has been to address our nation’s special problems.

The petroleum and natural gas sector is suffering from a lack of transparency. The public is mostly in the dark. People treat the prices of petrol or diesel or cooking gas in fatalistic manner – as something over which they have no control; something with which the ‘mai-baap government’ punishes most of the time and once in way doles out a small reward. The whole thing is an enigma.

As regards the high crude import bill, the government should inform the public about the exports of petroleum products from this country. In fact, the export of petroleum (refined) products is the largest component of exports from India. It constitutes almost 20 per cent of the total exports.

Import bill

The import bill is large; but the oil companies – public and private – are raking in large profits on the export front; which is never made public as much as the ‘notional’ losses are made out. Should you not always cry and weep about difficult things but also smile and laugh about good tidings? Does the government feel the need to always project the petroleum sector as a ‘loss-making’ sector? Isn’t it some kind of pretence on its part? Why is it, in collaboration with the oil companies, doing so?

Unfortunately, when there is a woeful lack of transparency in any government department, it becomes a fertile ground for shady and nefarious activities. Therefore, the recent reported filth of so-called ‘corporate espionage’ is not unexpected.

The Ministry of Coal had been one such about which citizens knew very little; for a long time it was always mired in mystery. The result is for all to see; the previous Manmohan Singh government has yet to explain the misgivings. The present petroleum ministry should not slip in the same way.

This lack of transparency also makes us wonder as to what additional or advance information the petroleum companies are interested in gaining from the ministry that they reportedly had to resort to stealing of documents? The darkness about the ministry and its public pricing policies made many think that the government and the oil companies – public and private – were taking decisions collectively, in any case. What could be so special now?

The current NDA government is new and a lot of hopes are pinned on them. People think of it as a total departure from the earlier governments – UPA or NDA.  The huge mandate that they gave in the general elections ten months ago was with that faith. Therefore, it is hoped that the Narendra Modi government does everything that does justice to the faith reposed by the masses.

(The writer is former Professor, IIM-Bangalore)