Naik promises to open up oil market by next year

Naik promises to open up oil market by next year
REUTERS

NEW DELHI, DECEMBER 3: Indian Petroleum Minister Ram Naik said on Friday the country's retail market for transport fuels would soon be deregulated, allowing private and foreign participation in the sector.

"The initial thrust of reforms has yielded some results and now it is time to push ahead with the balance of the reforms agenda," Naik told a seminar on deregulation and restructuring of the oil sector.

A government official said last week that the ministry planned to allow private and foreign firms to market and distribute transport fuels - aviation turbine fuel (ATF), petrol and diesel - by September 2000, or 18 months ahead of the original schedule set in 1997 in a decontrol blueprint.

Transport fuels are the only petroleum products whose direct sale to consumers is restricted to state-run firms. Foreign firms including Caltex, Royal Dutch/Shell, Saudi Aramco and Mobil Corp and private refiner Reliance Petroleum Ltd (RPL) have expressed interest in setting up retail outlets.

SPEED INVESTMENT: The government official had said the reforms would be hastened and state control would be completely lifted ahead of the original decontrol deadline of April 1, 2002.

"A time frame for dismantling the administered price regime will also be finalised quickly," Naik told the seminar, which is being attended by heads of Indian oil firms and senior oil ministry bureaucrats.

"The focus will be on increasing development investment both in the upstream and downstream sectors to meet other requirements of petroleum and natural gas in the coming millennium," he added.

Currently, the pricing, marketing and distribution of key petroleum products are controlled by the government through an administered price mechanism, the objective of which is to maintain low prices for essential fuels such as cooking gas and kerosene.

The subsidies for these fuels are generated from higher prices of petrol and ATF.

LEGAL CHANGES: The minister said tax and investment laws affecting the petroleum sector needed to beliberalised and an investment-friendly approach adopted to create the right conditions for reform.

India's 1997 order stipulates the rationalisation of customs duties, a gradual reduction in subsidies and lifting of controls starting 1998/99 to abolish the administered regime before April 2002.

Naik said a long-term policy to make India a hydrocarbon power by 2025 would also be finalised in a couple of months. "The sub-groups are in the process of finalising the report and the government would be finalising its recommendations for this sector within two months," he said.

The long-term policy, he said, would help the oil sector provide adequate quantities of clean fuel at reasonable prices to the consumer. An inter-ministerial panel headed by Finance Minister Yashwant Sinha was set up last year to chalk out the details of Hydrocarbon Vision 2025.