New Delhi: Industrialist-politician Murli Deora has broken the jinx at one of the country's wealthiest ministries by being reappointed as Minister for Petroleum and Natural Gas.
The Ministry has a history of no minister ever returning to office and none ever completing a five-year term. BJP's Ram Naik has so far been the longest-serving Oil Minister, having been at the helm for four-and-a-half years during 1999-2004.
Widely considered pro-US and pro-business, 72-year-old Deora in January 2006 was paradropped as Cabinet minister of this vital ministry.
Deora, who replaced diplomat-turned-politician Mani Shankar Aiyar, took time to learn the ropes but soon had his hand on the pulse and this was reflected when he stonewalled attempts to pass on last year's record spike in international crude oil prices to consumers.
He succeeded in largely insulating consumers from increasing the prices of petrol, diesel, domestic LPG and kerosene in the international market.
In his second stint, maybe he will finally usher in reforms in auto fuel pricing, taking advantage of low crude oil prices.
Low crude cost may help him to deregulate petrol and diesel prices. Naik had in April 2002 freed the two fuel prices, giving oil firms the powers to review rates every fortnight. But state control was back when Aiyar became Petroleum Minister in 2004.
Also on Deora's menu is raising rates of natural gas produced by state-run firms like ONGC, which is losing about Rs 2,500 crore annually on selling the fuel at artificially subdued rates.
But his first priority would be to get the 8th round of auction of oil and gas exploration blocks on track by getting tax holiday for natural gas production. The round had been suspended because of concerns of investor backlash in absence of seven-year income tax holiday.
Reviving the initial public offering (IPO) of nation's second largest exploration firm Oil India would also be high on agenda.
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Deora, who had never held a ministerial position before in his Parliamentary career that began with his election from Mumbai South constituency in 1985-89, for many years has been the Congress party's principal interface with the industry.
An avid Bridge player, Deora is not only close to industrialists like Mukesh Ambani of Reliance Industries but also has deep links in the US, including knowing personally some of the Senators.
The 72-year old Minister during his 28-month stint at the Petroleum Ministry had been instrumental in bringing about some structural reforms driving state firms to their core competence rather than diversifying businesses.
Deora this year broke a strike by the powerful officers of oil PSUs just when the agitation had begun to hurt the economy by crippling fuel supplies to customers and industry.
Separate draft Cabinet notes for giving oil firms freedom to fix petrol and diesel prices when crude prices are below $75 a barrel and raising rates of natural gas produced by
Oil and Natural Gas Corp (ONGC) and OIL from nominated fields are ready.
At these levels, state-run oil retailing firms would compete to fix consumer price. In the event crude oil crosses the $75 per barrel mark, the government would intervene in the market to lessen the burden on the common man through a sharing of the revenue losses of retailers among the national treasury and upstream oil and gas companies.
Currently, government controls on the prices of automobile and cooking fuels force state-run refiners to sell oil products below cost and the losses are partly borne by exploration companies.
Also on agenda will be increasing price of gas that ONGC produces from fields given to it on nomination basis. ONGC currently gets about $2 per million British thermal unit while gas from fields operated by UK's BG is sold at $5.70 per mmBtu.
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