Reliance Industries (RIL) and Essar Oil were today joined by state-run Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) in criticising the government's "hotchpotch" fuel pricing policy which they alleged had ruined public sector firms and state finances, and demanded freeing of petrol and diesel prices immediately.
The ad-hoc policy had driven private firms out of business, loaded future generations with Rs 1,50,000 crore bonds to repay, discouraged conservation, starved fuel retailer of cash and robbed firms like ONGC of Rs 50,000 crore that it could have invested in acquiring oil assets.
The companies vented out their frustration to the Expert Group on Fuel Pricing headed by Kirit Parikh, the third panel on the issue with recommendations of previous C Rangarajan committee and B K Chaturvedi committee not fully implemented.
In separate presentations, Reliance, Essar and Royal Dutch/Shell demanded a level playing field with PSUs by either freeing petrol and diesel pricing or be given subsidy at par with state-run firms.
Freeing prices would mean a Rs 3.85 a litre increase in petrol and Rs 3.71 per litre hike in diesel rates.
IOC Chairman Sarthak Behuria favoured freeing auto fuel pricing but wanted the government to first commit upfront to meet in cash the revenue lost on selling LPG and kerosene.
ONGC said it was willing to share fuel subsidies but the mechanism should be transparent wherein incremental revenues it earned beyond a pre-decided threshold can be automatically parted for the same.
Finance Secretary Ashok Chawla, who is part of the five-member panel, skipped the meet and sources said the group may take one month to give its report.
Essar said time was appropriate for complete deregulation of auto fuel prices as oil prices had stabilised in the $70-80 a barrel range and rupee appreciation against dollar.
It suggested Philippines Model where free pricing of petrol and diesel is allowed within an agreed band. Flexible duty structure come in force in case of breach of band - rates coming down if prices spike and vice-versa.
The other option could be Grid-Based Price changes where oil firms are allowed to freely price fuel if crude stays between $50 and $70 a barrel range. In case it climbs to $70-80 range, partial increase of Rs 2 a litre allowed and remaining revenue loss for all private and public met by the government.
The three private firms said oil sector was the only sector where subsidy was limited only to public sector firms, driving private competition out of business.
"If prices are not freed, private sector should also be treated at par with PSUs (and given subsidy)," Reliance said.
