Plan panel for oil monolith

The Planning Commission today made a strong plea for the merger of oil public sector undertakings (PSUs) to create a monolith to ensure fair competition and facilitate entry of more private players into the oil and gas sector.

"Oil and Natural Gas Corporation, ONGC Videsh Ltd and IOC should be merged. There is no point having six PSUs and making them compete against each other. OVL is too small a company and if we want good competition in the international market, the three should be merged to create a large company for effective bidding globally," the commission's member in charge of energy, Kirit Parikh, said after a meeting with representatives of the petroleum ministry.

"We have also suggested diversified ownership structure in Hindustan Petroleum and Bharat Petroleum because privatisation of these two will not be possible due to the present government's policy on privatisation of profit-making PSUs," he said, adding: "We are in favour of privatising them."

"Our idea is to open up the sector and create an environment to allow entry of more private players," Parikh said.

To attract private parties into the sector, Parikh said certain common facilities like storage facilities had to be taken away from the PSUs and something similar to Petronet created so that all companies in the sector could have easy access to the facilities.

The issue of pricing was also discussed at the meeting and the commission suggested certain reforms in the pricing system, including changing the import parity price to trade parity price. Setting up a regulator for upstream and downstream activities also figured in the meeting.

Parikh said the commission would make more presentations to the ministry and Petroleum Minister Mani Shankar Aiyar in the coming weeks to evolve a strategy to ensure transparency and more competition in the sector.