It may be recalled that a panel headed by former CRL chief J Jayaraman (who, incidentally, is part of the Sengupta committee) had recommended an IOC-MRL tie-up which could even lead to a merger in the future. In another report on CRL, another panel chaired again by Jayaraman had mooted an alliance of the standalone refining company with BPCL.

Hence, when the ministry of petroleum and natural gas asked the Sengupta committee to suggest an overall restructuring proposal of the downstream sector, it seemed only logical that MRL and CRL would tie-up with IOC and BPCL respectively. However, the last month has seen IOC enter into two arrangements with Reliance Petroleum and EssarOil for marketing 50 per cent of their products from their refineries.

This, by itself, is significant given that RPL is getting ready with a 18 million tonne refinery in Jamnagar while Essar has planned 10.5 million tonnes in Vadinar. In contrast, MRL and CRL have combined capacities of 15 million tonnes (with CRL planning an expansion from 7.5 million tonnes to 10.5 million tonnes) and oil sector experts say that both could be handled by BPCL.

The logic is not difficult to see. BPCL has only one refinery in Mumbai with a capacity of six million tonnes. However, it has a formidable marketing network of around 4,500 retail outlets and, among the three PSUs, it can rightfully boast of the strongest retail arm spread evenly across the country. Hence, it would make sense for both MRL and CRL to have their products vended by BPCL.

This would also mean that in the not so long run, translated as the post-deregulation period, IOC, HPCL and BPCL would be fairly placed as regards their market share. The Senguptacommittee could, in fact, include IBP with the BPCL-CRL-MRL group which, in effect, would answer IBP's need to market products and guard itself against a possible takoever.

No changes are envisaged in the case of HPCL which is already in a comfortable position with sufficient refining capacity at Mumbai, Vizag and Mangalore with a fourth project planned in Punjab. HPCL also has over 4,500 retail outlets with adequate product supply.

The Sengupta committee has had a series of meetings with the top brass of HPCL, BPCL and IBP recently. It is scheduled to hold similar sessions with the think-tank of Bongaigaon Refinery and Petrochemicals and IOC in January. The final report is expected to be submitted by February but it remains to be seen if all the suggestions are implemented. Eventually, the issue would boil down to the initiative displayed by individual PSUs in improving their market share.

The other factor to be considered is that committees, in the past, have made several suggestions but actualimplementation has been something quite different. Alliances between different oil companies call for bridging cultural differences and sometimes this is not the easiest of tasks.