Indian Oil Corp (IOC), the nation's largest oil company, has asked the government for freedom to fix retail fuel prices and more autonomy in carrying out day to day affairs of the company.
IOC, in the annual performance memorandum it signs with the Petroleum Ministry, stated that the Navratna oil companies should be granted freedom to fix retail selling price of petrol, diesel, domestic LPG and kerosene.
At present, the government does not allow oil companies to raise fuel prices to keep inflation under check. IOC may see a revenue loss of Rs 23,510 crore on selling petrol, diesel, domestic LPG and kerosene below cost in 2009-10.
The oil company said pricing freedom was essential to "prevent erosion in resource base and generate a reasonable amount of surplus to assist in capital formation and to enable redeployment in futuristic projects for maintaining competitive advantage in the trade at a minimum cost of capital."
The company currently loses Rs 3.63 on sale of every litre of petrol, Rs 2.33 per litre on diesel, Rs 17.15 a litre on kerosene and Rs 158.55 per 14.2-kg domestic LPG cylinder.
IOC also sought autonomy to appoint chief executives and directors of subsidiary companies. "The government should have dealing only at the Board level of the holding company (in this case IOC) and not with the subsidiary companies."
The oil company also wanted freedom in appointment of independent directors, deciding on compensation package, including perquisites and performance incentives of its employees, and board level appointees and designing and implementing VRS.
IOC, according to the Memorandum of Understanding signed on March 28, also wanted powers to "reallocate/re-designate portfolios of full-time functional directors."
The company, which has roughly 54 per cent of the market share, also wanted the government to delegate the power to sanction foreign tours of the Chairman and functional directors.
"In view of fast changing global scenario, commercial decision making process and IOC's vision to become a global energy major, the government may consider to empower the Chairman to approve the foreign tours of directors and the Navratna Board to approve foreign tours of the Chairman," it said.
