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Oil bill assumes dearer crude

Our Bureau

MUMBAI, Oct. 22

THE Reserve Bank of India, in its credit policy, has placed the country's estimated oil import bill at $17.5-18 billion for the fiscal ending April 2002.

According to industry observers, however, the apex bank may well be in for a pleasant surprise.

"The policy assumes the import price of crude at $25 per barrel. But considering the crash of crude prices internationally, the amount could be less daunting," said a senior oil industry analysts.

India imports two-thirds of its crude requirement. As a result, crude procurement accounts for a substantial chunk of the country's foreign exchange outgo.

The RBI has, in the wake of "uncertainty about likely course of international oil prices," assumed the benchmark Brent crude prices at an average $25 per barrel.

Analysts and industry sources, expect Brent crude prices at $18 per barrel. This means a difference of about $5 billion and a substantially lower import bill.

Currently, Brent crude prices are ruling at $20-22 per barrel.

"We generally sign 30 to 45-day crude contracts. So, we may have suffered a loss in September after oil pries crashed in the international market following the US attacks on September 11," said a senior oil company official.

Post-September, the country's crude procurement costs may have been substantially lowered. India spent $15.6 billion on crude oil imports in the previous year.

According to the credit policy, the oil pool deficit decreased to $5.7 billion during April-August 2001 from $6.5 billion for the same period last year. India may also see a current account deficit less than two per cent of the GDP, with no pressure on t he balance of payments due to crude imports.