The oil industry has decided to set up a petroleum federation of India which would take over some of the functions of the Oil Coordination Committee (OCC) after the dismantling of the administered price mechanism.
All the major public, private and joint sector oil companies met in Mumbai last week to decide on the formation of PetroFed which would ensure marketing coordination in a deregulated scenario. The PetroFed would also ensure that there is no cartel formation among suppliers of petro products and that no one indulges in restrictive practices.
The main function of PetroFed would be to handle inter-company supply arrangements and logistics. As of now, if one public sector oil company having a refinery, say, in south, wants to sell its products in the north, it enters into an exchange agreement with the oil company having its refinery in the north. This cuts down on the unnecessary transporting products from one part of the country to another.
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This work is hitherto being handled by OCC. After the complete dismantling of APM on March 31, 2002, OCC would be wound up and its functions would have to be taken over by some other new organisations.
The government has already commissioned Tata Energy Research Institute to prepare a report regarding a regulatory authority for the hydrocarbon sector. This authority would take over those functions of OCC which require a legal sanction of the government. After TERI submits its report, a Bill would be presented to give it a legal framework. The Mumbai meeting, which was attended by, among others, IOC, HPCL, BPCL, Essar, Reliance, Enron and HOEC, reached a broad consensus on PetroFed but deferred a decision on its structure.
According to official sources, the structures of the American Petroleum Institution and the Australian Institute of Petroleum are being studied in this regard. In all probability, PetroFed would be structured on the lines of the American Petroleum Institution as it is looked upon as the leader in the field. The sources say that the name Petroleum Federation of India may also be changed to the Indian Federation of Petroleum Industry or the Indian Petroleum Institute if the majority of members so decide.