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Oil cos unsure of pricing autonomy
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July 03, 2006

Director of Finance at Indian Oil [Get Quote] Corp, S V Narasimhan is unsure of the extent of pricing autonomy. He also states that there has been no confirmation from the oil ministry that pricing autonomy would be given to oil companies.

Excerpts from CNBC-TV18's exclusive interview with S V Narasimhan:

Do you think such a change is likely in the first place that you will get full autonomy to raise prices above USD 70 for the Indian basket?

I am not very sure about that because there are indications that the autonomy will be given but there haven't been any official indications.

Where does the Indian basket stands at right now? Is it fair, if indeed it comes true, for anything above USD 70 for the Indian basket, you would be able to raise prices?

According to the discussion, it was mentioned that there would be some autonomous power given to the oil companies. I am not sure how soon and to what extent that will be given because we have not got any instructions from the ministry. So we will have to wait for the instructions from the ministry.

What exactly is the communication you have got from the oil ministry and what sort of changes have they talked about?

There were indications that if crude goes beyond certain levels, then for every $1, there would be certain adjustments in the product prices; this was just a discussion and the details are not available.

As a ballpark, how is an Indian basket comparable with Nymex crude? For example, for the Indian basket to hit USD 70, where would Nymex crude be trading at?

I think the Indian basket in Nymex is going to be $2-3 differential compared to Brent Crude; the Nymex is normally $1-2 more. It sometimes depends on the supply demand situation of crude. Since June 30, the Indian basket was $69.5 and the WTI was $73.45. So there is a difference of about $3.5.

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