The two companies, at a meeting with the ministry of petroleum and natural gas on Monday, have also reiterated that they would like to make their own marketing arrangements with one of the big three -- IOC, BPCL or HPCL. IOC has already entered into a five-year marketing agreement with CRL and is in the running with BPCL to forge a similar pact with MRL.

The other oil companies have also disagreed with the panel's observation that 33 per cent of the Government's stake in IBP should be sold to BPCL. Instead, they are of the view that the Centre should sell its entire 59 per cent holding in IBP to one of them, be it IOC, HPCL or BPCL. "This is the only way IBP can survive in a deregulated scenario and there is no pointin the Government keeping a stake here," experts aver.

Interestingly, in its turn, IBP has maintained its stance made over a year ago that it favours a strategic alliance with MRL and CRL so that it can hold its own in the south. As for the northern region, the company is of the opinion that it can enter into an agreement with IOC. IBP made this proposal during the time the Disinvestment Commission recommended a partial sale of Government equity in the company to a strategic partner.

The petroleum ministry is believed to have told the oil companies at the meeting that a decision would be taken on the issue within a month. However, what is of some concern is the fact that the current political stability at the Centre could result in the committee's report "being consigned to the files of history."

The ministry's verdict would be of paramount importance to BPCL which sorely needs products given that it has over 4,000 retail outlets but only one refinery in Mumbai with a capacity of six million tonnes. Theonly way it can effectively compete is to ensure that it enters into marketing arrangements with MRL and CRL so that its survival is not at stake in a deregulated scenario.

This becomes especially important in the backdrop of strong multinational oil companies keen on getting a foothold in marketing petro-products in the country. Recent reports have indicated that Shell and Aramco have revived their proposal to set up a 25:25 downstream venture here where the retail outlets of a strong marketing company would be the base for operations. This would leave companies like BPCL extremely vulnerable and could in fact compel them to spin off their marketing strengths to the venture.

Experts also reiterate that there is no way either CRL or MRL can survive in a free scenario despite their keenness on protecting their identities. They will necessarily have to absorbed in the fold of a stronger marketing ally and by doing so with BPCL, the Government will have ensured that all three companies hold their own in afiercely competitive market.

Similarly, observers say that the IBP proposal on an alliance with CRL and MRL is "wishful thinking" as it would not be of any help to the partners concerned. IBP already has an equity tieup with BPCL for the Numaligarh Refinery and the two companies have only recently entered into a product assistance agreement. Both are, reportedly, happy working with each other and hence it makes sense for such a partnership to continue in the long run also.

The ball is clearly in the Government's court but unless some quick decisions are made, some of the oil companies could face tricky times ahead. The Sengupta panel's observations on the formation of two umbrella companies in the future are relevant, experts say, as this is the only way the PSUs can survive.