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By:

Correspondent

21 August 2024 at 10:20:16 am

Crude Reality

Since the Iran crisis erupted five months ago and sent tremors through global energy markets, India’s motorists have been spared the full force of the oil shock. Despite a hike, petrol pumps have generally continued to display familiar prices even as crude surged, because state-owned oil companies quietly absorbed the damage. However, with losses now piling up at Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), it appears that the bill, which had been...

Crude Reality

Since the Iran crisis erupted five months ago and sent tremors through global energy markets, India’s motorists have been spared the full force of the oil shock. Despite a hike, petrol pumps have generally continued to display familiar prices even as crude surged, because state-owned oil companies quietly absorbed the damage. However, with losses now piling up at Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), it appears that the bill, which had been deferred all this while, cannot be avoided. Unless global crude prices retreat sharply, Indian consumers may soon feel the full force of the unabating West Asian crisis. HPCL plunged into a consolidated loss of Rs. 12,265 crore in the June quarter, while BPCL reported a loss of Rs. 3,962 crore - the first quarterly loss for the latter in 15 quarters. The crisis has exposed that India’s fuel-price stability remains heavily dependent on the financial health of state-run oil companies. When global markets turn hostile, these companies are expected to sacrifice margins, protect consumers and absorb geopolitical shocks. This model becomes increasingly fragile when crises become prolonged. Crude oil prices briefly approached $125 a barrel during the height of the West Asia conflict, rising more than 50 percent as fears grew over supply disruptions. Though petrol and diesel prices were eventually raised by more than Rs 7.50 per litre and domestic LPG prices by Rs. 89 per cylinder, the adjustments came too late and were insufficient. Government estimates suggest oil marketing companies have accumulated under-recoveries of around Rs. 75,000 crore during the Iran crisis. HPCL’s refining business in fact had delivered an impressive gross refining margin of $23.80 per barrel in the first quarter, compared with just $3.08 a year earlier. Yet those gains were wiped out by losses in fuel marketing. BPCL faced a similar squeeze. Higher revenues of Rs. 1.59 lakh crore during the quarter could not compensate for suppressed margins and LPG losses. This is the familiar political dilemma of fuel pricing. Governments fear the inflationary consequences of raising prices sharply, especially in an economy where transport costs influence everything from food prices to manufacturing expenses. But delaying adjustments merely shifts it from consumers to public-sector balance sheets. The consequences are already visible. HPCL reported LPG under-recoveries of Rs. 3,607 crore, while BPCL recorded losses of Rs. 3,485 crore on LPG sales. Both companies also face thousands of crores in unpaid subsidy dues. If global crude prices remain elevated, the pressure valve will eventually have to open. Either the government compensates oil companies through larger subsidies by squeezing public finances or consumers face higher fuel prices. India has long benefited from relatively stable domestic fuel prices despite global volatility. But energy markets do not respect political calendars.

Bad Roads, Ugly Politics


The pathetic state of roads in Mumbai city as well as its suburbs has made daily commute a dangerous affair. The residents are miffed with the BMC over its lackadaisical attitude. Mumbaikars tweet photos, post videos to grab attention, but everything is in vain. Who cares for the common people. Backbreaking journeys have become part and parcel of life. Political leaders are busy mud-slinging.


This year the monsoon took a break after almost four and half months. During this time some of the roads virtually became non commutable. It may be recalled that the Chief Minister Eknath Shinde first announced to make Mumbai roads pothole free.


Its almost two years now the BMC has concretised only 9 percent of roads it planned to concretise. This decision was taken when it came to light that due to the properties of bitumen in asphalt roads, potholes are a regular occurrence due to contact with water during monsoons.


Hence, to solve the problem of potholes, the corporation has adopted a policy of cement concreting of 6-meter-wide roads in phases. The decision was taken but the dilly-dallying affair made things more difficult.


Mumbai’s traffic does put a lot of strain on roads which is not the case in the other developed countries. Second most important aspect is concretisation of roads is done partly and in phases.


The worst problem which is faced is repeated digging for cables and drainage, which weakens the roads. Above all corruption in BMC makes matters worse as a result everything comes to grinding halt.


According to experts, repairing potholes is a reaction with symptomatic treatment. By and large we are dispensing superficial treatment without addressing the root cause. The long-term solution will be to have roads with no potholes but what we need is the means and technology to achieve this. But for this political will is necessary which we lack on every step.


Mumbaikar’s are convience that corruption in the municipal corporation is the main reason. Contractors have had a monopoly over the last 20 years and this is the reason why reputed companies never come ahead for these projects.


As a result, in the name of attendance and repair, the BMC does shoddy work. Crores are spent but the end result is nothing. The BMC is not paying attention to the crust. If the crust is weak, potholes will see an increase. Without any thought or technical know-how, potholes are filled with cold mix.


This is the reason why the city and suburbs continue to have craters on the roads.


Craters, a serious threat to the safety and security of people. Mumbaikars fade up from their repeated visits to orthopedic surgeons.


They are in a mood to teach a proper lesson to those who were at the helm of the affairs.

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