Three cheers for the raj

BS OPINION

Look at the workings of the petroleum ministry, and you'd be pardoned for thinking the licence permit raj hasn't been dismantled in the least.

For it is the one sector where the government is still fully in control of what's happening, including all the irregularities as well, if the petrol pump scam exposes are anything to go by. The latest salvo is the ministry's turning down of the Gas Authority of India Limited's (GAIL) request that it be allowed to market LPG produced by it.

On the face of it, the rationale appears logical "" that it just isn't economical for GAIL to sell LPG given the huge subsidies on the product. But surely that is a decision that GAIL's brass need to be making, more so since the company is a navratna one.

Another argument, again seemingly logical, is that since other public sector undertakings (PSUs) already have huge LPG networks and bottling plants, there is no reason why these should be duplicated, and certainly not in the public sector. But both HPCL and BPCL are to be privatised in some form or the other.

So the PSU argument is a specious one. As for there being enough capacity, there is no such thing as enough capacity, with the use of LPG in the country still so miniscule. In today's situation, anyone in the oil sector will tell you, what passes for LPG demand is actually LPG supply. And a constrained one, at that.

Some months ago, in the same spirit of we-know-what's-right, the government's draft natural gas pipeline policy nominated GAIL as the monopoly builder of these pipelines! This, at a time when every regulator is trying to break up monopolies, and in any case, once you have what's called a common-carrier-principle which ensures everyone gets to use the pipeline irrespective of who owns it, there's no reason for the move.

Similarly, despite freeing up prices of both petrol and diesel, no PSU oil firm even today dares to hike prices in line with global trends without clearing it with the ministry. It has also been the petroleum ministry's directive, ably backed by large sections of the Union Cabinet, that has ensured the so-called dismantling of the administered price mechanism (APM) hasn't really taken place.

For, if this were done, subsidies on both LPG and kerosene would be a fraction of what they are today. In the event, the PSU oil companies are being forced to foot the bill for most of the subsidy, and that in turn, lowers the chances of these PSUs being privatised. Three cheers for the Raj!