Although private sector oil companies will not be allowed to market subsidised kerosene and domestic liquefied petroleum gas (LPG) immediately after the dismantling of administered pricing mechanism (APM) next month, their participation in the scheme might be considered later.
Private sector companies would be considered later for marketing of subsidised LPG and kerosene, said a draft note prepared by the petroleum ministry, detailing the roadmap for APM dismantling.
The roadmap is expected to be placed before Parliament later this month.
The note said to begin with, the post-APM subsidy on kerosene sold through the public distribution system and domestic LPG would be administered through the oil marketing companies currently marketing these products. These are Indian Oil Corporation, Hindustan Petroleum Corporation, Bharat Petroleum Corporation and IBP Ltd.
It said other companies would be considered later for participation in the scheme. Since subsidy on these products is expected to be completely phased out over a period of three to five years, industry circles hope the private sector will be involved in the scheme.
This comes as a setback to the parallel marketers of LPG and kerosene who have been complaining to the government that the denial of rights to them regarding the marketing of subsidised LPG and kerosene has pushed them out of business.
The Indian LPG Industries Association, while demanding a share in the domestic LPG market, has been arguing that the prevailing cost and price structure in the industry has put parallel marketers at a severe disadvantage in comparison to oil PSUs.
"The PSUs, cushioned by the subsidy, currently supply to the domestic segment of the market at prices far below the procurement cost of LPG incurred by the private companies. While tilting the market in favour of the PSUs, this situation has led to enormous losses to the private LPG companies who had entered the industry with substantial long-term financial and business commitments," it said.
