Panel for privatisation of oil cos

Panel for privatisation of oil cos
AMITAV RANJAN

NEW DELHI, JANUARY 17: An Indian panel on hydrocarbon reforms has recommended that the government should move out of the oil sector by privatising all state-run firms by 2005, a government official said on Monday.

He said the panel has suggested that the three major oil firms - Indian Oil Corp, Oil and Natural Gas Corp and Gas Authority of India Ltd - be excluded from the first phase of privatisation.

IOC is the market leader in crude oil refining and marketing of petroleum products, ONGC is the largest exploration and crude producer, and GAIL has a monopoly in natural gas distribution in the country.

"The government must maintain majority holding in IOC, ONGC and GAIL until the market is deregulated (in 2002). By that time, a decision can be taken on the three, depending on the market scenario," he said.

The government also holds majority equity in Hindustan Petroleum Corporation, Bharat Petroleum Corporation, Oil India Ltd, Bongaigaon Refinery and Petrochemicals Ltd, IBP & Co, Madras Refineries Ltd,Numaligarh Refinery Ltd and Cochin Refineries Ltd.

India's decontrol programme, announced in 1997, is to open up the domestic oil sector before April 1, 2002. Recommendations of six sub-panels, which were set up to outline reforms for various segments in the oil sector, have been submitted to an inter-ministerial group which will make the blueprint for the second generation reforms.

The group - Hydrocarbon Vision 2025 - comprises ministers from finance, petroleum, external affairs and commerce ministry. It was set up in December 1998 with the objective of transforming India into a major hydrocarbon power by 2025.

The sub-group on deregulaton has said the privatisation of oil firms should be linked to setting up of a regulatory body for the oil sector which would ensure a level-playing field for existing players and new entrants, the official said.

The report said India needed investment of Rs 3,85,000 crore in refining and marketing sector alone and government should aggressively pursue the reforms ofthe oil sector for this purpose.