Indian Oil Corporation (IOC), the country's sole canalising agent and the largest importer of crude oil, is planning to levy a service fee for importing crude on behalf of other oil companies following the deregulation of the petroleum sector.
The decision could result in significant additional revenues for the corporation, which currently canalises crude to most other oil companies in India, from both public and private sectors, at no additional cost. IOC had accounted for almost the entire imports of over 42 million tonne from the private sector during 2000-01.
India imports more than 70 per cent of its 104 million tonne requirements of crude and petroleum products. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) supplies 30 per cent of the country's crude.
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Reliance Petroleum is the private sector oil major player in the country to import most of its crude oil requirements independently.
A top official of Indian Oil said, "We are planning to charge other oil companies for sourcing their crude requirements. An internal committee has been constituted to decide on the amount of service fee. We have a very good rating for crude imports, which helps us in clinching deals at good price."
At present, IOC charges 1.5 per cent as marketing fees for importing liquefied petroleum gas (LPG). Although LPG is under open general licence (OGL), private and other state-owned companies have imported only limited parcels of the product due to lack of infrastructure to handle petroleum products.
According to oil analysts, "The proposed service charges on crude may be a win-win situation for both IOC and other oil companies. IOC with its exposure to the global market has been procuring crude at a good price. The oil companies can bank on IOC's experience and get the same crude by paying for its services rendered".
Moreover, for certain oil companies, large supplies of crude would be mean discounts, analysts added. "It would be purely a business following deregulation of the oil sector".
IOC officials hinted that the corporation was working on a formula to be levied in addition to the crude price. "The charges levied will be based on percentages", the official said.
Meanwhile, ONGC has demanded oil refining and marketing companies to enter into a business contract for supplies of crude. ONGC has demanded international price for supplies of crude.
Currently government gives only 60 per cent of global price of crude to ONGC against the 82.4 per cent. After April 2002, ONGC expects to get international rate for its crude supplies.