December 8, 1956
THE ECONOMIC WEEKLY
in ordinary shares, thereby ensur-
g c o n t r o l i n g interest f o r t h e pub-
lic sector while t h e balance of the
W e c a p i t a l w o u l d b e subscribed
v p r i v a t e i n d u s t r i a l i s t s in I n d i a .
lessers B i r l a B r o t h e r s are appa-
r e n t l y eager t o collaborate. T h e
foreign otters m a y be utilised in the
firm of a loan to the proposed
efinery.
T h e scheme also envisages the
o t a t i o n o f a d i s t r i b u t i o n company
i t h a c a p i t a l of Rs 5 crores a n d
n arrangement for transportation
f oil f r o m Iran to Bhavnagar w i t h
n I r a n i a n t a n k e r Company.
T h e S a u r a s h t r a G o v e r n m e n t has
w o r k e d out the economics of the
effinery in great d e t a i l . The pro-
set w i l l it is expected, yield a net pro-
A of about Rs 6 crores a year, ex-
clusive of taxes a n d should be able
. meet the payment of instalments
or the purchase of equipment f r o m
M Krebs et Cie v e r y c o m f o r t a b l y .
It is a p i t y t h a t a p r o m i s i n g
t h e m e l i k e the one processed by
be Saurashtra G o v e r n m e n t over a
period o f t w o years remains i n cold
torage just because the C e n t r a l
Government cannot decide w h o
should deal w i t h i t .
Review Oil Concessions
THE G o v e r n m e n t of I n d i a is k n o w n
to be seriously concerned over
be allegedly large profits be-
i n g netted b y the S t a n d a r d V a c u u m
A d B u r m a h Shell refineries. T h e
concessions t h a t these companies
have obtained under t h e i r agree-
ments w i t h the Government o f
I n d i a are enormous. Besides an
assurance t h a t the refineries w o u l d
not be nationalised over a period
of 25 years, they have been a l l o w e d
to sell petroleum products in I n d i a
at prices equal to the theoretical
a n d n o w largely fictious landed cost
o f s i m i l a r products i m p o r t e d f r o m
a b r o a d based on the cost of t r a n s -
p o r t f r o m the G u l f Ports, w h a t e v e r
m a y be t h e i r actual source of sup-
p l y . T h i s clause alone w o u l d en-
able t h e m to make profits quite out
o f p r o p o r t i o n t o t h e i r investments.
A n o t h e r clause prevents Govern-
ment f r o m taxing them at a rate
higher than the general rate ob-
taining in the country.
T h e C e n t r a l Government pro-
poses to study the contracts in de-
t a i l , p a r t i c u l a r l y after; the refining
companies h a v e a t t a i n e d f u l l pro-
duction, w i t h a view to changing
the agreements by negotiation, if
possible. The r e f i n i n g companies
have not altogether shut the doors ce a n d I n d u s t r y a n d the W o r k s ,
a g a i n s t such t a l k s , B u t this is H o u s i n g a n d Supply also deal w i t h
j u s t a n o t h e r instance of the Gov- different aspects of the o i l p r o b l e m .
e r n m e n t h a v i n g acted i n haste t o The f o r m e r is responsible f o r ex-
ponder at leisure. p o r t and i m p o r t o f o i l w h i l e t h e
A second Instance is the prospect- l a t t e r looks a f t e r d i s t r i b u t i o n a n d
i n g license g r a n t e d t o the S t a n d a r d f i x e s prices. N o w the P l a n n i n g
V a c u u m O i l C o m p a n y f o r explora- Commission is t a k i n g a h a n d w i t h
t i o n i n the W e s t B e n g a l basin. The the appointment o f a n A d v i s e r o n
details of this l o n g - t e r m concession O i l d i r e c t l y a t the instance o f t h e
have y e t to be published. T h e r e is P r i m e Minister.
no g a i n s a y i n g , however, t h a t the
g r a n t of a license to a c o m p a n y Naval Bases
w h i c h holds s i m i l a r concessions i n A S B r i t a i n built her empire, she
E a s t P a k i s t a n , across the border, established n a v a l bases in h e r
was a n i n i t i a l blunder. Anyone colonies. B r i t a i n has w i t h d r a w n
f a m i l i a r w i t h the geology o f o i l f r o m her f o r m e r colonies i n
k n o w s t h a t petroleum occurs below
south-east Asia. Suez Canal has been
the g r o u n d In a continuous sheet evacuated. M a l a y a w i l l soon g a i n
e x t e n d i n g over several thousand
independence. B u t the B r i t i s h r e -
square miles. T h i s subterranean luctance to quit Singapore, A d e n
"river" of oil naturally knows no
M a l t a a n d Cyprus reflects t h e i m -
p o l i t i c a l frontiers. The i n t e r n a t i o n a l
portance o f f a r - f l u n g n a v a l a n d a i r
l a w o f o i l permits any c o u n t r y
bases in the B r i t i s h system of g l o -
w h i c h sinks the wells t o d r a w f r o m bal defence. Singapore's s t r a t e g i c
such reservoirs as m u c h as it can. importance as a n a v a l base has been
There is evidence t h a t because of seriously questioned. M a l t a is a
p o l i t i c a l a n d c o m m e r c i a l reasons, heavy economic l i a b i l i t y t o B r i t a i n ,
S t a n d a r d V a c u u m is m o r e serious H o n g k o n g i s o f d o u b t f u l value i n a n
about e x p l o r a t i o n in East Bengal emergency. Soon a f t e r B u r m a , I n d i a
t h a n i n West B e n g a l . T h a t recently a n d P a k i s t a n became independent,
Stan V a c diverted a d r i l l ordered B r i t a i n t r a n s f e r r e d power t o Ceylon.
f o r West Bengal to East P a k i s t a n B u t B r i t a i n continued t o enjoy
is cited as a g l a r i n g case of mis- "pocket sovereignty" in the n a v a l
demeanour. base at Trincomalee and in the a i r
It has also to be a d m i t t e d , how- base at K a t u n a y a k e . Ceylon's m e m -
ever, t h a t the Government's p e t t i - bership of the C o m m o n w e a l t h help-
f o g g i n g a n d w o b b l y policies do n o t ed B r i t a i n to enjoy "pocket sover-
help t o i n s t i l confidence i n t h e f o r e i g n e i g n t y " in the n a v a l a n d a i r bases
investor. There are whispers here i n Ceylon.
t h a t t h e agreement w i t h S t a n Vac
f o r e x p l o r a t i o n i n West B e n g a l m a y One of the issues on w h i c h Mr
be superseded by l e g i s l a t i o n if m o d i - B a n d a r n a i k e fought the recent
fication by negotiation is not pos- Ceylonese elections was the w i t h -
sible. T h e f o r e i g n companies natu- d r a w a l o f B r i t i s h bases f r o m Ceylon.
r a l l y c o n t r a s t the Government of I n his f i r s t m a j o r policy statement
India's keenness t o b r i n g o i l w i t h i n as Premier, he demanded British
the public sector w i t h the liberal w i t h d r a w a l f r o m Ceylonese bases.
He has n o w announced in L o ndon
terms offered by P a k i s t a n where
the share of the State is l i m i t e d to t h a t B r i t a i n has agreed i n principle
25 per cent in most ventures. The to w i t h d r a w her bases f r o m Ceylon.
fact t h a t the Russians and the Some day. A d e n , Singapore, Cyprus,
R u m a n i a n s are being encouraged M a l t a a n d H o n g k o n g would g a i n i n -
to p a r t i c i p a t e as m u c h as possible dependence. A n d , then, these areas
i n our o i l development p r o g r a m m e w o u l d repeat Ceylon's demand f o r
also acts as a deterrent to west- w i t h d r a w a l o f B r i t i s h bases. I t
ern prospectors. L a s t l y , moves are w o u l d be wise f o r B r i t a i n to be pre-
under w a y f o r r e s t r i c t i n g prospect- pared f o r such a contingency. She
i n g leases f o r o i l by a m e n d i n g the m a y emulate A m e r i c a In c r e a t i n g a
Mines a n d M i n e r a l s ( D e v e l o p m e n t "long-legged" n a v y so t h a t her n a v a l
a n d Regulations) A c t , 1948, a n d the forces c a n be m a i n t a i n e d and equip-
M i n i n g concession rules thereunder., ped f r o m home bases. In these days
of nuclear weapons a n d the guided
The oil p o l i t y seems to be so con- missile, n a v a l bases have lost m u c h
fused t h a t a. good b e g i n n i n g w o u l d of t h e i r significance. There is neer-
perhaps be to centralise a u t h o r i t y B r i t a i n , as w e l l as other Wester
It must be remembered t h a t besides E h l o p e a n Powers, to devise a ne-
the M i n i s t r i e s o f N R S R and P r o - a n d modern systems of g l o b a l de-
duction. the M i n i s t r i e s of C o m m e r - fence.