Industry sources say the panel, headed by former revenue secretary (and former member-secretary of the Planning Commission) Nitish Sengupta, was likely to come up with its recommendations by end January next year. Even as the five-member committee began calling on oil company brass late last month, some members seemed unsure whether a merger was a better option than a strategic alliances between oil refining and marketing companies.

The recommendations of the panel will have a bearing on the government's decision to disinvest in IBP Company. The Disinvestment Commission has recommended that the Centre offload 33.9 per cent of its 59 per cent shareholding in IBP Company in favour of a strategic buyer, but already the petroleum ministry isknown to have second thoughts about the proposal.

The ministry feels that the Centre should retain at least a 51 per cent stake in the oil PSUs to be able to have a say in the energy market, after oil price controls are lifted in 2002. Merging IBP with the smaller refineries may prove to be an alternative strategy to roping in a ``strategic partner.''

The Nitish Sengupta panel, comprising representatives of the oil industry, financial experts and the Oil Coordination Committee (OCC), was constituted in October, to devise post-liberalisation business strategies for stand-alone refineries and IBP Company. Three oil refining companies, Cochin Refineries Limited (CRL), Madras Refineries Limited (MRL) and Bongaigaon Refineries and Petrochemicals Limited (BRPL) will have to find a marketing outlet after the oil industry is liberalised three years hence.

The stand-alone marketing company, IBP, will need strategic alliances with oil refineries to be able to source petroleum products. The supply anddistribution of oil is now controlled by the OCC, through supply plan entitlements (SPE).

Indian Oil Corporation has the marketing rights for MRL and Bharat Petroleum markets petroleum products refined by CRL. IBP Company gets some products from BRPL in proportion to it marketing rights.

In another three years, the marketing rights will be freed and oil companies will have to devise their own strategies for survival. The IBP Company made a presentation to the Union petroleum ministry some time ago, proposing that the company be merged with the stand-alone refineries, bringing synergy in all their operations.

It suggested that the companies could alternatively operate together, through strategic alliance. Since the five-member panel was set up, concepts like a holding company for all the three refineries and IBP, have also been in the air.

The three stand-alone refineries, situated in Chennai and Kochi in the south and Bongaigaon in northeast (Assam) will together have a capacity to process roughlynine million tonne of crude, which is a little less than what Indianoil processes at its Koyali refinery is Gujarat. By themselves, the refineries will be pygmies competing with integrated oil giants in a free market.

The Nitish Sengupta committee is expected to device survival tactics for these refineries. The panel began screening oil industry statistics, on existing market shares, refining capacities and data on the global oil market, after its first meeting on November 26. The committee members also began bouncing off their ideas, on leading oil refining and marketing companies.

The exercise is likely to continue in the New Year. ``The committee will at best,'' said sources, ``be able to come up with a report by the end of January.''