Oil imports: $15 bn difference between two govt agencies!

According to Edelweiss, data from the commerce ministry shows that oil imports are higher by about $20 billion when compared with figures from the petroleum ministry! There is usually a difference of $4-$5 bn. So, what is the correct oil import figure?

While comparing data for oil imports from the ministry of commerce (MoC) and the ministry of petroleum and natural gas (MOPNG), Edelweiss Securities has found a $20 billion difference as against the average of $4-$5 billion. If one uses more reasonable data from the MOPNG, the current account deficit (CAD) for FY13 would be substantially lower by about 0.8% of the gross domestic product (GDP), says Edelweiss.
Can domestic demand suddenly rise especially in a slowdown? 
Edelweiss says this appears unlikely. “To confirm, we compare the net crude oil import data (a proxy for domestic consumption) provided by the MOPNG and MoC. We find that as per the MOPNG, net crude imports for FY13 should be about $96 billion, whereas according to MoC data, it would be around $115 billion (April-December net crude import was $85 billion; we assume another $30 billion in March quarter). This implies that the MoC data is exaggerated by about $15 billion,” it said. 

According to the brokerage, CAD has become the dominant policy concern in recent quarters. One of the major reasons behind the widening CAD is the unusually high oil imports. What is striking is that oil prices trend and crude oil imports bill are on a diverging trend. This disconnect is only possible if there is a significant volume surge. However, the volume surge is hard to explain. Neither  the  exports  of  petro  products  have  jumped,  nor  the  domestic consumption could have picked up amid severe downturn in the economy. This points towards a possible exaggeration in the oil import bills, it said.

Over the past couple of quarters, MoC data indicates that oil imports have risen sharply (about 20% year-on-year or YoY), even though crude oil price has been nearly flat YoY. Historically, since the volume of imports remains largely stable, the crude oil import bill has closely followed the trend in the crude oil prices. 
“However, in recent quarters there has been a divergence between oil prices and oil imports. A significant volume surge over the past couple of quarters seems to be the only plausible explanation for this divergence. This volume surge can be either to meet the rise in domestic consumption or to support higher exports of refined petroleum products," Edelweiss said.
Could higher exports explain high import volumes of crude oil?
According to the brokerage, one of reasons cited for higher imports of crude oil is the probable rise in the exports of refined petro products. However, a look at the MoC data shows that net oil imports (oil imports-exports of refined petro products) has continued to rise over the last few quarters. This means that increase in crude imports is meant to meet the rising domestic demand rather than higher exports.
CAD could be exaggerated by about 0.8% of GDP 
Overall, concerning crude import data, there is a significant divergence of $20 billion between the domestic demand of crude oil (based on the MOPNG data) and the net crude imports (from MoC data). “Historically, the average divergence between the two is $4-$5 billion. This means that MoC data for net crude imports could be exaggerated by $15 billion. If we go by the MPONG data, which is more reasonable, the FY13 CAD will be substantially lower by about 0.8% of GDP, Edelweiss said. 




4 years ago

It is erroneous to assume that these are Government agencies simply because their share holding is ostensibly in the hands of some "Retrospective" President of India. India's Public Sector and "Government" Agencies are firmly private enterprises controlled for profit by the Neta-Babu nexus and accountable to nobody. This is just another example of that.

Vinay Joshi

4 years ago

Edelweiss a regulated brokerage a firm, reputed, has such dispensation is questionable.

Does it not know the data for conclusion?

Does it give bifurcation of private & OMC's exports-imports?
Indigenous production vs exports.

They should have classified OMC's region wise imports, the pricing vis-a-vis Brent Crude & Nymex.

They should have putforth the private players data, all aspects in public domain. A regulated brokerage, reputed.

ARE THEY NOT ANALYZING OMC's B/S? vis-a-vis pvt players in crude processing?

Does it state CAD analysis as of Q3?

MLDT deems it fit so put!

A brokerage putting up a distorted data & MLDT seconding it should be explained in detail.

C'mon this is my question to MLDT & imp to the brokerage.

If not MLDT, the brokerage will definitely, be in the know [has to be] that as of now Irano-Hind 51:49 JV of Iran Govt & SCI, is
made redundant due to sanctions.

The asset split yet to take place.

The Iran Govt says that look - [rather Indian Govt enforces the tacit plea, should] we take over & compensate as per valuation thro' crude supply.

The above does not fall in the ambit of sanctions, the negotiated price oil index differential is off limits.

If the esteem brokerage does not factor such disparities in regular terms it's bound to give a distorted a version as put by MLDT.

Have they considered the barter - Iran deal - to beat sanction for short time - that in exchange of crude refined petro products were exported.

As of now the esteem brokerage has never stated that Iran had to import refined products.

The esteem brokerage has failed to imprint the factual data for last four years.


Bombay HC approves creation of Sesa Sterlite by way of merger

While the Bombay HC has given its approval for Vedanta's plan to merge Sterlite with other group companies, it needs to take permission from Madras HC as well for the merger

Vedanta group company Sterlite Industries (India) on Wednesday said the Bombay High Court has approved merger plan between the company and its sister concerns Madras Aluminium Company, Sterlite Energy, Vedanta Aluminium and Sesa Goa.


Sterlite, in a regulatory filing said, "The High Court of Bombay…approved the scheme of amalgamation and arrangement amongst Sterlite Industries (India), Madras Aluminium Company, Sterlite Energy, Vedanta Aluminium and Sesa Goa and their respective shareholders and creditors to create Sesa Sterlite.”


However, the merger is subject to approval of Madras High Court, it said.


The Anil Agarwal controlled Vedanta group had been planning to bring all its businesses except Konkola Copper Mines in Zambia, under the fold of Sesa Sterlite.


Sterlite Industries produces aluminium, copper, zinc, lead, silver and commercial energy and has operations in countries like Australia, Namibia, South Africa and Ireland.


HSBC Services PMI falls to 17-month low in March

After registering a 12-month high in January, India’s services sector has reported weak output in the last two months. However, service providers remain optimistic about the future

The headline HSBC Services Business Activity Index stood at 51.4 in March, down from 54.2 in February. Though the services output has grown in March, the growth has eased to its lowest level since October 2011.


“Growth in service sector activity slowed notably due to a deceleration in new business flows,” HSBC chief economist for India & ASEAN Leif Eskesen said adding that the backlogs of work and hiring rose at a slower pace.


Earlier data showed that India’s manufacturing sector also witnessed the slowest rate of expansion in 16 months in March as power outages hampered production activity along with a decline in new business orders.


Service sector firms as well as manufacturers added to their staff numbers during March, but the rate of job creation was ‘moderate’.


After registering a 12-month high in January, India’s services sector has reported weak output in the last two months. However, service providers remain optimistic about the future.


The degree of confidence among service providers was the strongest registered since December 2012 and service sector firms linked positive sentiment to expectations of stronger demand and planned investment in marketing, HSBC said.


On inflation, the report said input prices in the Indian service sector rose but moderately during March and subsequently, services companies increased their selling prices.


“Encouragingly, input prices and prices charged inflated less fast. Despite this the scope for further rate cuts is limited, and the next cut may well be the last,” Eskesen said.


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