INDIA EXPECTED TO SLASH OUTLAYS FOR OIL, POWER GENERATION SECTORS

INDIA EXPECTED TO SLASH OUTLAYS FOR OIL, POWER GENERATION SECTORS

The two crucial sectors of oil and power generation will get considerably less official funding than they wanted for the five-year plan beginning April 1, sources said.

The government's planning commission, which allocates funds, is understood to have told officials from the ministry of petroleum and natural gas and ministry of energy that allocations will be cut because of the continuing

financial crunch.The petroleum and natural gas ministry asked for $20 billion (530 billion rupees), but probably will get 325 billion, the sources told The Journal of Commerce.

The planning commission wants to give priority to exploration and suggests 255 billion rupees for this with the rest for refining and related areas.

The cumulative target for crude oil production has been fixed at 1.4 million barrels over the next five fiscal years, up from 1.2 million barrels in 1985-90.

The gas target is 4 trillion cubic feet compared with 2.1 trillion in 1985-90. Liquefied petroleum gas output is meant to hit 7.4 million tons against about 3 million tons in the previous plan.

The ministry justified its 530-billion-rupee request on grounds of growing demand for products and the need for additional refining capacity. The planning commission, while accepting the argument, said additional funds would have to be raised by the oil companies, through external borrowing, and by greater private sector participation.

The government late last year invited bids from foreign oil companies for the fourth round of exploration. It hopes better terms will attract participants and funds after three disappointing attempts.

The state-owned Oil and Natural Gas Commission gets the largest allocation of 240 billion rupees, though asked for 330 billion. The other state-owned exploration company, Oil India Ltd., will get 14.6 billion against the 17.3 billion it wanted.

State-owned Gas Authority of India Ltd. will get 19.6 billion rupees, and Indian Oil Corp. Ltd., which operates 12 refineries, 29.3 billion rupees.

On the power side, the energy ministry wanted 1.2 trillion rupees to add 38,000 megawatts to capacity over the five years. It probably will get 830 billion rupees, reducing the new capacity by 7,000 Mw.

Despite large investments in the power sector over the past four decades, there is persistent shortage of power in India. It runs to 10 percent countrywide and 18 percent at peak times. Power generation capacity at the end of last March was about 73,275 Mw.