'Restrict petro products import by private cos'

A parliamentary panel has asked the government to restrict imports of all petroleum products, especially transportation fuels (petrol and diesel) by private firms in view of the excess refining capacity in the country.

"The ministry of petroleum and natural gas should take up with the ministry of commerce the necessity to impose restrictions on the import of petroleum products especially on transportation fuels," the parliamentary standing committee on petroleum said in its latest report.

At present, private firms like Essar Oil, who have been granted a licence to set up petrol stations in the country, are selling most of the imported fuels to bulk consumers.

India has about 20 per cent excess refining capacity than the demand. During the 10th Plan period, the excess refining capacity might exceed 40 per cent than the demand.

The committee said all imports of petroleum products especially transportation fuels, if need be, should be made only through a public sector oil company.

The government had last year granted a licence to Reliance Industries Ltd to set up 5,849 petrol stations in the country, while Essar Oil was given an authorisation for 1,700 outlets.

This year, Royal Dutch/Shell was permitted to set up 2,000 petrol stations.

The committee expressed displeasure for not accepting its earlier recommendation of not lifting the restrictions imposed on import in name of providing competitive regime.

The export and import policy for 2003-04 had decanalised import of petrol and diesel by allowing firms holding marketing/retail licence to import the two fuels.

The imported fuel, especially diesel, was denting into sales and profitability of public sector oil firms as its landed cost in coastal areas was cheaper than selling price of PSU oil firms. The state-run firms follow the administered pricing norm of averaging out the freight cost to equalise the selling prices at different locations.

The imports have threatened the 3.5 million tonnes a year diesel sales on coastal locations.

"The committee express their apprehensions over the permission to import transportation fuel directly by companies who have been granted market authorisation. They, therefore, desire that this policy should be reviewed and all imports of petroleum products especially transportation fuel should be made only through a PSU oil company," the standing committee report said.