The committee, headed by former Planning Commission advisor Nitish Sengupta, will broadly evaluate a strategy that should enable stand-alone refineries and IBP Company, to cope with deregulated market conditions after the year 2002. The year will see the last vestiges of government controls vanish over oil production, refining, pricing and distribution.

Cochin Refineries Ltd (CRL), MRL and BRPL, that now market their products through other refining and marketing companies, will no longer have the shelter of the administered supply plan entitlements (SPE) after 2002, when marketing rights will be freed. Stand-alone refineries will then need a marketing network and marketing companies like IBP Company willrequire the comfort of a captive refinery.

The Oil Coordination Committee (OCC), which monitors the supply plan entitlement arrangements now, ensures that oil companies have access to petroleum products in proportion to their marketing rights. The system enables Indian Oil Corporation to market products refined by Madras Refineries and Bharat Petroleum Corporation to market the products of Cochin Refineries.

The SPE arrangements also entitle IBP Company to some products from BRPL, in proportion to its five per cent marketing right at home. Three years hence, the marketing arrangements will have to be negotiated by the oil companies themselves.

The panel will recommend strategies that will help MRL, CRL, BRPL and IBP Company survive in the liberalised and so, competitive climate, after the administered pricing mechanism (APM) has been dismantled. The five-member panel comprises former Cochin Refineries chairman J Jayaraman, Eicher Industries director (finance) Anil Sachdeva, Oil Coordination Committeedirector (finance) AK Bidde and IBP Company's director (finance) Anil Kumar Sinha.

The committee will submit its report by December. The holding company concept, similar to the Coal India Ltd (CIL) pattern, is in the air, even as the committee prepares for its first meeting next week.

Coal India is a shell company that has a controlling stake in eight coal producing subsidiaries. Such a company would enable the Centre to retain a controlling stake over all the three refineries and IBP Company, through a 51 per cent shareholding in the holding company.

The holding company in turn, could restrict its holding in the subsidiaries to 51 per cent. Keeping its shareholding to the bare minimum required to retain a controlling stake, would enable the Centre to make room for private sector capital, knowhow and expertise in the conglomeration.

The concept stems from a presentation the IBP Company made to the petroleum ministry last month, proposing a strategic alliance between itself and stand-alone refineries,that have no marketing acumen as yet. In its presentation, the company built a case for a `nearly integrated group', comprising stand-alone refineries and itself. The consortium members were intended to retain their own separate identities and still operate as a single entity through strategic alliances for marketing and refining. The committee will study whether a merger of the three refineries and IBP was a better option.

Apart from procedural rigmaroles, a merger would bring in its wake a plethora of problems, like adjusting the employees (and their aspirations) of all the companies. A holding company on the Coal India model would be simpler in comparison, apart from enabling the refineries and the marketing company to share their strategic advantages.

The committee will weigh such and other permutations that will enable MRL, CRL, BRPL and IBP Company cope with the deregulated oil market after 2002.