Pranab Mukherjee pointed out that India had managed the situation even when crude prices touched a record $147 per barrel in July 2008
New Delhi: Concerned over a spike in crude oil prices in international markets due to turmoil in the Middle East, finance minister Pranab Mukherjee today said the government is monitoring the situation and will manage it, reports PTI.
"Unfortunately, because of developments in the Middle East and its impact on the Arab world... (it) is causing uncertainty about production, about availability. We are watching the situation," Mr Mukherjee told reporters here.
He said the finance ministry is in constant touch with its counterparts in the petroleum ministry on the unfolding situation.
He pointed out that India had managed the situation even when crude prices touched a record $147 per barrel in July 2008.
"... At that time also, we had to manage the situation.
Government will take care of it (now)," Mr Mukherjee said.
The FM's comments come in the wake of massive protests in Egypt by demonstrators demanding the resignation of president Hosni Mubarak.
Similar protests have also erupted against the authoritarian regimes of other Arab nations like Yemen and Jordan. Last month, Tunisian dictator Zine al-Abedine ben Ali was deposed in an uprising that left 200 people dead.
The severe winter conditions in Europe and US had already pushed crude oil prices to a two-year high of over $90 per barrel in January 2011.
Crude oil prices continued to rise in Asian trade today, with Brent crude within a whisker of breaching the $102 per barrel mark as the unrest in Egypt and other parts of the Middle East continued to weigh on the investor mood, analysts said.
West Texas Intermediate (WTI) light sweet crude for March delivery, gained 2 cents to $90.79 per barrel, while Brent North Sea crude for March delivery advanced by 25 cents to $101.99 per barrel, in Asian trade today.
In addition, the turmoil in Egypt pushed up the price of Brent crude price to an intra-day high of $102.08 per barrel yesterday, its highest level since late-September 2008.
International consequences and impact on India will be more severe if situation deteriorates; other companies prefer to wait and watch for the situation to unfold
Marico and Dabur have temporarily shut down their units in Egypt and trade between the two countries has been disrupted following the worsening unrest in the Arab nation, according to companies and trade organisations.
It has been reported that at least two other companies-Asian Paints and Emami-which have operations in Egypt, are keeping a close watch on the situation before taking a decision either way. Wipro, Ranbaxy and IFFCO also have wholly-owned companies in the country.
Meanwhile, the government has said that it has "not received any information so far" of any disruption of India's shipping movements through the Suez Canal, following the Egyptian crisis.
Analysts suggest that if the situation worsens, not only would the trade of goods and services between the two countries be affected, but the consequent impact on businesses across the world could hurt critical inputs like oil that would also impact India.
"Egypt (and the Middle East and the North African region) is an important market for Marico. In view of the current situation, our factories have been temporarily closed as a safety measure," said a spokesperson for Marico Industries. The region accounts for about 7%-8% of the company's revenues which totalled over Rs2,660 crore in 2009-10.
It is difficult to say how long the unrest will go on-so many companies are waiting and watching for the situation to unfold before taking a decision.
Dabur India chief executive officer Sunil Duggal said that the company has suspended its hair oil production plant in Egypt. "We are watching the developments. If the unrest continues for a longer period of time, there might be some impact," said Mr Duggal. Egypt accounts for about 2.5% of Dabur's consolidated turnover, which was about Rs3,400 crore in 2009-10.
Besides these wholly-owned units in Egypt, Tata Motors, Aptech, Iflex and Essar Global have regional offices in that country, according to information available with the Federation of Indian Chambers of Commerce and Industry (FICCI).
Trade between the two countries has also been disrupted with traders fearing looting and arson.
"At this point of time, there is disruption in both export and import trade dispatches from Egypt and these have been kept on hold," said Ajay Sahai, director-general of the Federation of Indian Exports Organisation (FIEO).
There have been reports of looting and arson, which has been a cause for worry. Exports aggregated $1.4 billion and imports totalled $1.7 billion in the last fiscal. With the pickup in demand, exports were expected to grow by 20%-25% in the current fiscal year.
Oil & gas, coking coal, raw cotton, rock phosphate and marble comprise nearly 95% of India's imports from Egypt. The principal export items are frozen meat, cotton yarn and synthetic yarn, rice, diesel, tobacco, electrical machinery, soybean, chemicals, automobiles and components, sugar, pharmaceuticals and tea.
"It is very unfortunate that that business is affected. The problems will definitely impact our bilateral trade," said ASSOCHAM secretary general, D S Rawat.
Maruti Suzuki, India's number one carmaker, exported around 3,000 cars to Egypt. Indian carmakers exported vehicles worth about $85 million in 2009-10, which is about 5% of the country's total car exports. Bike exports totalled about $4 million and truck exports about $1.4 million in this period.
Shipping channels do not appear to have been affected so far. "We have not received any report from either the Shipping Corporation of India (SCI) or the rest of the maritime industry about any disruption so far," said a senior official in the shipping ministry. But there are fears that the crucial Suez Canal link between the Mediterranean Sea and the Red Sea could be affected.
Although Airtel's net profit fell during the third quarter, its flat ARPM indicates a stable tariff environment in the Indian telecom industry
Bharti Airtel Ltd, India's largest telecommunications company, today reported a 41% dip in third quarter net profit mainly due to re-branding cost, increased net interest cost, forex losses and higher spectrum charges.
For the quarter to end-December, the telecom operator said its net profit fell to Rs1,303.3 crore from Rs2,194.9 crore even as its total revenues increased 51% to Rs15,576 crore.
During the quarter, Bharti Airtel undertook re-branding, which cost it Rs340 crore, while adverse foreign currency fluctuation in Africa and India resulted in an exchange loss of Rs151 crore for the company. The company said its revenues also fell due to a Rs80 crore increase in spectrum charges in India and an increase of Rs471 crore in net interest outgo.
Sunil Bharti Mittal, chairman and managing director, Bharti Airtel, said, "In India we have commenced a new journey with the rollout of 3G services and the pilot launch of airtel money. In Africa, we have been focussed on developing a long-term sustainable business model that will transform the Africa market in terms of network coverage, quality of services and affordability."
Bharti's average revenue per minute (ARPM) declined to 44.2 paisa from 44.4 paisa and minutes of usage (MoU) also declined 1% to 449 minutes on a quarter-on-quarter (q-o-q) basis. The flattish ARPM is certainly positive for the Indian telecom industry and continues to resonate that competitive pressures are peaking. In other words, it also indicates a stable tariff environment.
The company's performance in Africa was also good, with strong subscriber addition and stable average revenues per user (ARPU). During the quarter, Bharti Airtel added two million subscribers, taking its total subscriber numbers in Africa to 42 million. In Africa, the company's ARPU remained flat at $7.3 and MoU increased 7% to 120 minutes.
Airtel has about 200 million mobile subscribers at present-about 152 million of them in India, 42 million across Africa and almost five million in Bangladesh and Sri Lanka. In India, it has 3.3 million telemedia and 4.9 million digital TV customers. During the last quarter, Bharti's share of net additions was 14.2% of all-India wireless subscriber net additions.