New Petro minister to look at freeing retail prices

Decontrolling the prices of petroleum products will be one of the key issues the new petroleum minister will have to address, according to the ministry's bureaucrats who have drawn up a list of priority items.

"Freeing prices of sensitive petroleum products to ensure financial health of oil marketing companies is one of the key issues that would be looked at by the new minister. However, some kind of ceiling in crude oil price may be put in place, beyond which the government would intervene in the interest of consumers," said an official.

A final decision on these would, of course be taken by the new Union cabinet.

The bottomlines of three OMCs -- Indian Oil, Hindustan Petroleum and Bharat Petroleum - have been in the red on account of subsidised sales of petrol, diesel, kerosene oil and liquefied petroleum gas. Notably, the Indian basket of imported crude oil touched a peak of $142 a barrel in last July.

IOC, the largest of the three, made a net loss of Rs 3,673.4 crore (Rs 36.73 billion) in the nine months ending December 31, HPCL  Rs 4,529.1 crore (Rs 45.29 billion) and BPCL  Rs 2,892 crore (Rs 28.92 billion), respectively. As a result of last year's spike in oil prices, the three companies are expected to close 2008-09 with total under-recoveries of Rs 103,908 crore (Rs 1,039.08 billion).

For most other areas like energy security, trans-national pipelines and oil exploration and production, the theme would be "continuity", according to R S Pandey, secretary in the ministry.

Two trans-national gas pipelines being pursued by the ministry are Iran-Pakistan-India and Turkmenistan-Afghanistan-Pakistan-India. The main reasons behind the slow development in both are the security issues and political uncertainty in the transit nations. Since both projects require huge investments, the concerns need to be adequately addressed.

Other areas of importance for the new minister would be expanding exploration and acquisition in oil and gas overseas to ensure energy security.

On the domestic front, checking adulteration in petroleum products and diversion of LPG cylinders would require attention of the new minister, officials said. These are all long-pending issues.