Business Today

Tackling the oil crisis

The government is bracing itself for the worst on crude prices. While officially it has projected that the under-recoveries of the oil marketing companies will be around Rs 2,45,000 crore during 2008-09, estimating oil at $125 per barrel, it has also chalked out an alternate strategy just in case oil prices flare up again.

     Print Edition: June 29, 2008

The government is bracing itself for the worst on crude prices. While officially it has projected that the under-recoveries of the oil marketing companies will be around Rs 2,45,000 crore during 2008-09, estimating oil at $125 per barrel, it has also chalked out an alternate strategy just in case oil prices flare up again.

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The plan is to increase the burden on upstream companies like ONGC (they gain from high crude prices) going forward along with another round of duty cuts.

Says a senior bureaucrat: “The upstream companies were spared from making a major contribution to the bailout package this time. But a greater burden will be put on them in future.” Clearly, a cornered government is fast running out of options.

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