Financial Daily from THE HINDU group of publications
Friday, Mar 29, 2002
Financial Daily from THE HINDU group of publications Friday, Mar 29, 2002 |
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Petroleum Industry & Economy - Petroleum Naik to take up petroleum product pricing with Sinha Our Bureau
NEW DELHI, March 28 THE Petroleum Minister, Mr Ram Naik, on Thursday indicated that he would be taking up the issue of fiscal intervention with the Finance Minister so as to ensure that the existing price levels of kerosene, LPG, diesel and petrol were maintained. The existing price levels were set on the basis of international crude prices of $19 per barrel, while over the last month the prices have firmed to $24 per barrel. Addressing a press conference on the eve of the dismantling of the administered pricing mechanism (APM) on April 1, Mr Naik said, "As a watch dog of the sector, I will be moving the Finance Minister as and when required. A reduction in excise duty on products is one of the measures to maintain prices". He, however, refused to elaborate on the issue. After April 1, petro-marketing companies will be technically free to set product prices in a commercial manner and claim the subsidy on kerosene and LPG from the Government. Short of issuing an administrative fiat to hold the existing prices, the companies would be `advised' to hold the prices for a three-month period. "I will not give directives. Expressing desire and giving directives are two different things." Driving home his point, he later added that, as of now, all the petro-marketing companies were Government-owned. "Since these are PSUs, I desire that the change should be smooth, keeping in mind the interest of the consumer as well as their commercial interests". On price behaviour in the post-APM period, Mr Naik said, "My endeavour will be that volatility in international prices should not be reflected in consumer prices on a daily basis. It can be once a month, or tri-monthly". On the business environment in the post-APM period, Mr Naik released the official notification, which among other issues, mentions the freeing of consumer prices of petrol, diesel, LPG and kerosene. The notification also empowers private parties in the retail sector to market petrol, diesel and aviation turbine fuel subject to their meeting the specified guidelines. According to the notification, subsidy on kerosene and LPG will be done away with in a 3-5 year time span; indigenous crude produced by ONGC and OIL will be market-determined; Oil Coordination Committee will be abolished and bonds to the tune of Rs 9,000 crore will be issued to the petro-marketing companies; and a `Petroleum Planning and Analysis Cell' to assist the functioning of the Ministry will be set up. As per the notification, the subsidies will be on a flat basis and not linked to the international price of crude. Further, a scheme to administer them will be notified shortly. On the regulation of the downstream oil sector, Mr Naik said that the regulatory Bill would be introduced in Parliament when it reassembles on April 14. Official sources said that the oil import bill for fiscal 2001 was Rs 65,855 crore (76.6 million tonne of crude) compared to Rs 70,353 crore (75 million tonne of crude) during the previous fiscal.
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