The government is also thinking of constituting a petroleum regulatory body in lieu of the Oil Coordination Committee (OCC), which would regulate the supply of products besides handling critical issues during the transition period of the proposed deregulation.

It is proposed that all the existing pipelines excluding strategic pipelines owned by IOC should be transferred to an independent company such as the Petronet India Ltd so that all the marketing companies get fair and equitable access to these pipelines for movement of products.

Amongst several proposals before the government is that BPC should buy up the entire shareholding of the union government in CRL and make CRL its subsidiary. The marketing arrangement,if any, with IOC should accordingly be modified. Though at present IOC is a strong candidate for an alliance with MRL, for the time being the marketing arrangement of MRL with IOC should continue. Since IOC is already a dominant player and as it is necessary to ensure fair competition, BPC should also be considered in the immediate future as a serious candidate alongwith IOC to partner MRL. This can be done after about 18 to 24 months to allow BPC sufficient time to stabilise after its takeover of CRL and the demonstration of its ability to do so without affecting the supply line and its recommended investment in IBP.

IOC should buy up the entire shareholding of the union government in BRPL and make this company its subsidiary.

NRL should continue with BPC and IBP who are the majority shareholders along with the Assam government. However, OIL should be roped in as a shareholder with 10 per cent share, which can be allotted to them on preferential allotment basis out of shares earmarked for public issuethereby creating an integrated oil network in the northeast. This process will also enhance the sentiment of the prospective investors in the capital market for purposes of its ensuing public issue.

IBP should continue as a separate corporate entity for the time being. The government feels that IBP needs a strong strategic partner for continued supply of products and also for providing marketing back-up and necessary financial support. The government should disinvest its shareholdings in IBP in excess of 26 per cent in favour of BPC as permissible under the Sebi takeover guidelines. If these guidelines stand in the way of one shot of acquisition of this block of shareholding by BPC, this may have to be done in phases or a portion of the shareholding now held by financial institutions may be transferred to BPC.

IBP should be assured of the required products from Mathura and Panipat refineries in north and MRL and CRL in the south through appropriate marketing tie-ups for a period of at least five yearsafter the end of administrative pricing mechanism period in order to maintain its supplies.

These restructuring process will result in three main market players like IOC, HPC and BPC-IBP. At a later date there may be a possibility of a combination of HPC, BPC-IBP, CRL, MRL and NRL through an umbrella of a holding company. This new entity will be equal in size to IOC and would not only provide good competition but could also emerge as a global player in competition with the international oil majors.