The APM is scheduled to be abandoned in phases and vanish altogether after March 2002, but that schedule is now under review. Meanwhile, the private sector (Reliance Petroleum) is already in the supply market, necessitating some fast thinking among policymakers at Shastri Bhavan.

The Union ministry for petroleum and natural gas is expected to set up a Group on Private Sector Marketing soon to evolve guidelines for the free market. The marketing norms, or rather controls, will be necessary to ensure that far-flung and remote parts of the country and ``low-turnover'' oil markets continue to get supplies of petrol, diesel, liquefied petroleum gas (LPG) and kerosene at fair prices. The prices of the four most widely-usedpetroleum products are now controlled by the Oil Coordination Committee (OCC) through a system of cross-subsidisation. The OCC also monitors distribution of petroleum products and ensures supplies to remote Ladakh, sparsely populated Bastar or the far-flung Kutch desert.

When the price and distribution controls are gone, commercial wisdom will prevent oil companies from servicing such low-turnover markets. Oil companies will also not want to bear the cost of transporting products to distant areas. Essential petroleum products will, therefore, turn both scarce and costly in the interiors and far-reaching parts of the country. Some remote control over petrol, diesel, LPG and kerosene distribution will then become necessary through new clauses notified through the Essential Commodities Act.

It is still not clear how the marketing practices of the oil companies will be monitored once they have their new-found freedom. Some discussions have begun on options like a price cap, retaining some element of subsidyin petroleum products and licensing retail outlets. A ceiling on prices could ensure that cooking gas, motor spirit and other essential fuels were available at affordable rates even at unprofitable locations like the Thar desert. The price cap would not quite be in tune with the spirit of marketing freedom though.

Subsidising essential fuels could prove a more viable alternative. The national oil companies already have some experience in handling subsidies, but no one knows whether the system would prove equally effective with private sector players in the market.