PSU refiners should set up JV to import crude oil: Parl panel
State-owned refiners like IOC, BPCL and HPCL should form a joint venture company to import crude oil efficiently and at competitive rates, a Parliamentary panel has suggested Wednesday.
New Delhi: State-owned refiners like IOC, BPCL and HPCL should form a joint venture company to import crude oil efficiently and at competitive rates, a Parliamentary panel has suggested Wednesday.
Currently, Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL), Hindustan Petroleum Corp (HPCL) and Mangalore Refinery (MRPL) import crude oil separately. Their combined imports total 120 million tonne in 2012-13.
"...Lot of resources of oil companies are spent on this activity. Instead of all oil PSUs carrying out purchase of crude oil, the Committee recommend for the formation of a joint venture company promoted by all interested PSUs and entrusted with the work of importing of crude oil required for them in line with their refining specification," it said.
The Standing Committee on Petroleum & Natural Gas, in its report tabled in Parliament today, noted that private refiners like Reliance Industries are able to procure crude oil at lower prices.
"The Committee desire that this (joint venture) company may be given enough flexibility as enjoyed by private sector refineries to carry out their operations including price negotiation, hiring of ships and negotiate better terms on freight etc which will help PSUs save lot of work relating to imports," the report said.
Till July 1998, the entire requirement of crude oil was canalised through IOC. Thereafter the import was decanalised and private refineries were allowed to procure their own requirement. Import of crude oil was further decanalised from April 2002, with all PSU oil firms being permitted to import crude oil independently.
The Committee said Middle East accounts for 69 percent of India's crude oil imports and there was a need to diversify sources of supply.
"Concerted efforts should be made by Ministry and PSUs to minimise the dependence on any single country or region to ensure that the country's crude oil supplies do not get adversely affected in case of geopolitical problems in any region and should plan accordingly for diversifying geographical sources," it added.
The panel report said the guidelines laid down by the Oil Ministry for import of crude oil were last revised in 2001 and no changes have been made in past 12 years.
"The guidelines have to reflect the present structure of the international oil market which has undergone lot of changes since 2001 and therefore recommend that the ministry review the guidelines in consultation with oil companies to widen their purchase opportunities," it said.