New panel to revisit oil PSU mergers

Petroleum Minister Mani Shankar Aiyar now plans to set up another panel to advise on integrating the operations of public sector oil companies.

The Krishnamurthy Committee has already rejected his idea of merging the oil companies. Aiyar had created the earlier panel to suggest consolidation of oil PSUs, possibly into one or two mega corporations, so as to cut down 'destructive' competition.

Prime Minister Manmohan Singh has given a green signal for constituting a standing advisory committee on developing cutting edge technologically superior oil PSUs.

The report of the Krishnamurthy Committee on synergy in energy will be the starting point for the new advisory committee.

Giving the information at a parliamentary consultative committee meeting late on Thursday, Aiyar also said the oil sector has emerged as a significant exporter of refined products.

The exports stood at Rs 28,000 crore during 2004-05, while the expenditure was Rs 1,17,000 crore on crude oil import. He said the oil sector would soon replace the gems and jewellery sector as the leading exporting sector of the country.

He said in the current domestic pricing scenario and the shortfall in refining capacity for green fuel world over, Indian companies should focus more on setting up export-oriented refinery projects, as they would give them better refining margins.

In a presentation, members were informed that the average gross refinery margin was $3.9 a barrel in India, against $8.05 a barrel in Singapore. Asian and European markets are emerging as export targets for Indian refineries.

The world consumption of petroleum products is expected to grow by 1.9 per cent up to 2025, out of which the Asian market will grow by 2.8 per cent, European by 0.5 per cent and American market by 1.4 per cent. Against this, consumption of India and China will grow by 3.5 to 4.5 per cent annually.

India's refining capacity is estimated to increase to 153.7 million tonne per annum by 2006-07 from the current level of 127.37 mt. Based on the current plans, oil PSUs will invest Rs 63,348 core up to 2010.

On the spiralling international prices, Aiyar said for the first time, IOC, HPCL and BPCL have incurred huge losses.

Total net losses reported by four oil marketing PSUs, including IBP, were Rs 1,227 core during the first quarter of 2005-06.

On the issue of adulteration, he said the revised marketing discipline guidelines for petrol and diesel retail outlets and kerosene dealerships had been introduced from August 1, 2005. These guidelines provide for more stringent penalties to curb adulteration.