Transfer Of Funds To Oidb Ruled Out

The finance ministry has turned down a request by the petroleum ministry to transfer Rs 2,500 crore from oil cess account to the fund-starved Oil Industry Development Board (OIDB).

The finance ministry has not formally communicated its decision to the petroleum ministry. Sources say the forthcoming Union budget may contain some proposals to help shore up OIDBs finances.

The central government collects cess on indigenous crude oil after appropriations by Parlia-ment. Of Rs 26,100 crore collected by the centre as cess up to March 1996, it has transferred only Rs 902 crore to OIDB.

The petroleum ministry had requested the finance ministry to transfer the funds from the oil cess account to OIDB so that the industry could undertake various expansion and modernisation programmes.

 

In a letter to the finance minister, minister of state for petroleum and natural gas T R Baalu pointed out that the OIDB had virtually become defunct because of a cash-crunch. This, according to him, has crippled the modernisation and expansion plans of the industry.

In the absence of assistance from OIDB, many of the refineries were putting off their expansion plans, Baalu said. Some of the modernisation plans, so urgently needed to meet the new stringent pollution norms, were also being delayed due to the absence of funds.

The Oil and Natural Gas Corporation (ONGC) has asked the petroleum ministry for a grant of Rs 300 crore from OIDB to undertake deep-sea exploration. In case such funds are not forthcoming, the governments ambitious exploration programme to add to its oil reserves would also receive a set-back.

The oil industry had recently received another jolt with the Reserve Bank directing the State Bank of India to slash its exposure limit with immediate effect to three giant public sector undertakings ONGC, Indian Oil Corporation and Steel Authority of India Ltd.

Finance ministry officials are understood to have informally told petroleum ministry officials that they were aware of the resource crunch faced by the oil industry.

However, they said, the state of the oil industry was uppermost in their minds while formulating Budget proposals. This is being interpreted by the petroleum ministry that certain concessions are on the cards.