The decision makes economic sense for Reliance. They capture the relatively high international margins and by minimising the sale into the local market they mitigate their domestic losses. Also they benefit from the duty concessions proffered to EOUs. It may not, however, make sense for India. For it could lead to a situation where despite having surplus refining capacity the country may be compelled to import relatively more expensive petroleum products. Reliance is not alone in adjusting its marketing plans. The end result will be a re-run of the conditions that prevailed for the two decades post the nationalisation of the private oil companies in the mid ‘70s and before the commencement of economic reforms in the mid ‘90s.

International petroleum companies are among the biggest investors in clean technology and renewable energy. They are not doing this out of charity. They are doing it because they recognise that the consumers want to move towards an energy system that is less dependent on fossil fuels. The Indian companies should also be making a comparable effort not simply because it is the future but because India must somehow reduce its vulnerability to the vicissitudes of the international oil market and, more important, weaken the current unhealthily strong link between economic demand, energy demand and environmental degradation. Unfortunately, the companies are not making such an effort. The reasons may be several but one must be their balance sheet. Given current conditions the management is focused on cost cutting to reduce losses rather than on plans to develop clean technology or to fund R&D.

... contd.