The Union ministry of petroleum and natural gas, in order to prevent the closure of refineries in the north-eastern states due to non-viability of operations, is considering amendment of the Transport Subsidy Scheme, 1971, of the Department of Industry.
This is being done to include the refineries as units eligible for transport subsidies in the post-deregulation period of the petroleum sector.
A draft Cabinet note to amend Clause 3 of the transport subsidy scheme 1971, so as to include refineries as eligible units for transport subsidies, has been placed for consideration.
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According to ministry sources, "Unless the transport subsidy scheme is amended and additional budgetary provisions are made and extended to the refineries in the north-eastern region, their operations will be unviable."
The refineries which would be directly impacted by this move are the Numaligarh and Bongaigaon refineries as well as the Indian Oil Corporation refineries at Digboi and Guwahati.
So far, refineries were not covered under the subsidy scheme for provision of reimbursement of transportation costs of raw materials and finished products across locations in the north-east.
This currently forces oil marketing public sector units to undertake movement of petroleum goods to the region bearing under-recoveries, officials said. Since the refineries were earlier governed by the retention pricing mechanism, the need to bring them under the purview of the scheme was not felt.
"At present, as the oil pool mechanism is applicable, it is not possible for movement of decontrolled petroleum products. Moreover, from March 2002 onwards the remaining controlled petroleum products will also be out of the oil pool mechanism," they added.