Destructive continuity

When governments change, new ministers often want to establish their superiority over their predecessors as quickly as possible. Some achieve this by design, others by luck, most not at all.

And, there is a special category, who while proclaiming a difference, end up following in the footsteps of the person they succeeded. When those footsteps lead in all the wrong directions, the continuity in approach can be destructive.

The petroleum ministry best represents this phenomenon. In 1997, before the NDA government came into office, a decision was taken to abolish the so-called Administered Price Mechanism (APM) for petro-products in five years.

The APM was dutifully laid to rest in 2002, with the liberalization of petrol and diesel pricing; oil marketing companies were now free, in theory, to adjust retail prices in response to market conditions. In practice, the freedom to change was vested in the hands of the minister.

All decisions about whether to raise or lower prices came from the minister's office, with the oil companies meekly complying with his orders.

The whole point of the liberalization was lost. A process that should have resulted in consumer benefits by virtue of the fact that different oil marketing companies could charge different prices, was enmeshed in cartel pricing by public sector oil companies, dictated to by the minister.

As far as consumers of petrol and diesel were concerned, there was no difference between the APM and what came after it, except that price changes were more frequent than before.

Even in matters such as allotting petrol pumps, which should clearly lie within the purview of the companies, the minister continued to exercise his personal authority.

In continuing with this discretionary control, the new minister has politicized what is essentially a commercial decision.

Every time an adjustment is called for, he goes into a huddle with his ministerial colleagues, while the pricing paralysis continues because no one can agree on a sensible re-aligning of duties on petroleum products--even as the increase in international crude prices continues unabated.

The country is simply back in the days of the APM, called by some other name.

The minister has also followed his predecessor's steps in firmly opposing privatisation. His grand plan to create two monoliths in the sector by merging various entities is being justified by the need to achieve global scale and the consequent efficiencies.

How this will happen when key business decisions are going to be made in the bhawan rather than the corporate office is another matter. The main achievement of such restructuring will be to make it impossible to ever privatise the companies that emerge, because they will simply be too big for anybody to absorb.

In their efforts to preserve the public sector cartel and ministerial discretion over its actions, the two ministers almost appear to be each other's clone.