Oil prices have touched $135 per barrel with US inventories falling—that’s a 20% hike in a month alone. And the International Energy Agency is expected to sharply lower its oil supply forecast soon.
International oil companies are, of course, making good money in such a tight market. At home, however, our state-owned oil companies are facing a cash crunch—the government will neither let them charge market price, nor compensate their under-recoveries fully. The oil bond route that the UPA government took to partly cover for its populist price policy is evidently not the right solution. A softer rupee-led higher oil import bill adds to the companies woes too. IOC Ltd can’t even wait for its annual meeting and is already seeking shareholder approval for extending its borrowing limit and mortgaging its assets to raise loans if need be. What will it take for the government to stop treating public companies as milch cows?