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The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a new regime for crude oil imports allowing state-owned oil firms to evolve their own import policies.
Post Wednesday’s decision, oil public sector undertakings (PSUs) would enjoy the freedom to choose source companies and pricing for their crude oil imports. “In the current system, companies have to seek the oil ministry’s approval for deciding on the seller and prices. That requirement has been done away with. But the PSUs would have to evolve their policies consistent with Central Vigilance Commission (CVC) guidelines,” said a senior oil ministry official.
Also, the new policy adopts the current market practice for crude purchase on spot basis, allowing firms to compete in the market effectively. A senior executive from Indian Oil Corporation, the nation’s largest fuel retailer, said the firm is still studying the Cabinet’s decision.
With the changing geopolitical environment, the crude import policy needs to be modified, says a government statement. “The Cabinet has approved that the oil PSUs shall be empowered to evolve their own policies for import of crude oil, consistent with CVC guidelines and get them approved by the respective boards.”
While the statement did not mention what kind of changes were being made in the policy, it noted the measure would improve the operational and commercial flexibility of oil companies and enable them to adopt the most effective procurement practices for crude oil import.
