•P Vaidyanathan Iyer: Mr Behuria is one of the most visible faces of corporate India, particularly now with crude oil prices scaling new heights. In the last couple of years, Mr Behuria has been battling on many fronts with the government’s continuous postponement of a price hike in fuel products. The marginal price hike this month, does not really help IOC as he will explain.

•SARTHAK BEHURIA: I just want to give you a little background because everybody thinks that pricing is the only issue for oil companies.

The oil industry was nationalised in the 1980s when the government felt a need to protect it, develop it, and to encourage investment in it. The industry was compensated under the fixed price regime and a fixed return regime. All decisions — the production of crude oil, refinery processing or expansion, expenditure on investment, purchase of crude oil, etc — everything was regulated through a mechanism called the oil coordination committee. It had 20 pool accounts whether it related to crude oil price equalisation or refinery compensation. All the credits that companies made went into that pool account and all were paid a fixed rate of return on investment. Everybody was very happy because they got 16 per cent assured return.

This continued till about 2002 when the private sector entered the industry, in particular Reliance. From the historical perspective, Reliance would have been compensated on a cost-plus basis. But the government decided it was time to deregulate the industry, not only because of Reliance but also because the government felt the oil industry must compete in the globalised world. First, they deregulated the lubricants’ market then they deregulated refinery investment. Thereafter, they brought in parallel marketing for kerosene oil. Now anybody can import kerosene oil and market it.

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