Recently, the new Indian Prime Minister, Narendra Modi started the process of lifting the governmental controls on the price of energy in the country. While this seems like it would be good news for investors in the country, it is important to remember that these changes do take some time to implement, and it may take a long time before there is actual profit in the country. One of the big elements causing the slowdown is the fact that many in the government do not really want this change. They liked the control the government held, and are not quite ready to give it up.
Modi seems committed to these changes though, and that should provide hope for investors who have been watching the country for some time now. They’ve deregulated diesel prices already, and this is a move in the right direction. Freeing the gas and diesel prices is certainly a positive, but the country still controls the natural gas prices. If they lower these prices, it would make it difficult to have success if the price for traditional gas and diesel were to rise.
Some investors saw this potential and actually started buying into stock a bit more quickly than they should have. They bought and pushed the stock higher, but the gas prices did not match their enthusiasm. One of the causes of this was simply the fact that the price reforms and changes are not entirely clear. Investors may have different perceptions of the stock and what is available than the reality. Lack of transparency between companies and the government is causing some issues in this regard.
India’s Oil and Natural Gas Company, owned mostly by the government, has had relatively weak oil production over the past few years as well, and this is yet another factor that could make it a risky investment right now. Still, the reform is starting to make some positive changes. Ultimately, it will help business in India, and will be good for the Oil and Natural Gas Company as well.
A Wait and See Approach
As much potential as this offers, it is important to keep in mind it is still just potential. Most investors will be better served if they decide to take a step back and take a wait and see approach. This ensures they don’t put money into a venture that will not provide the expected and hoped for returns.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair and Upgrades and complete Rig Solutions built to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.