The government has decided to sell Chennai Refinery and Bongaigaon Refinery to IOC, and Cochin Refinery and Numaligarh Refinery to BPCL for an estimated Rs 1,800 crore as part of restructuring, prior to complete liberalisation of the oil sector by 2002.

Stating that the issue of merging the stand alone refineries with oil PSUs or making them their subsidiaries would be sorted out by the month end,Mr Naik said, while Numaligarh and Bongaigaon refineries want to be merged, Kochi and Chennai refineries want to retain their identify by becoming subsidiaries of BPCL and IOC respectively."Once the issue is sorted out, pricing of the refineries will be taken up. A combination of all possible instruments, including, net present assets, market price, book value and independent valuation would be used to arrive at the price of transfer," he said, adding, the ministries of finance and petroleum would jointly work out the pricing by January 15.

The government would sell its entire 55.04 per cent equity in Cochin refineries to BPCL, while the entire 52.5 per cent government equity in Chennai Petroleum Corporation Ltd (Madras Refineries) would be sold to IOC, Mr Naik said.

He said, the finance minister, Yashwant Sinha, has already assured that money mopped up from the process would not be utilised for meeting revenue expenditure.

IOC will also buy the entire 74.46 per cent government stake in Bongaigon Refineries, he said, adding with regard to Numaligarh refinery, BPCL will buy the entire 19 per cent stake of IBP.

BPCL already holds a 32 per cent stake in Numaligarh refinery. While the Assam government and Oil Industry Development Board hold a 10 per cent stake each in the refinery, the remaining 29 per cent is held by the public.

The restructuring process would ensure the two marketing companies with supplies from these stand alone refineries, Mr Naik said.

Stressing duty cut on crude and petroleum products, rather than rolling back the hike in petro-product prices,Mr Ram Naik on Tuesday endorsed OPEC's contention of not increasing crude output, saying, duties in many consumer countries including India were very high, which need to be brought down to give relief to consumers."OPEC is justified in its rejection for extra supplies.Even after raising output three times in a year, if there is a shortfall, then we need to look at reasons beyond demand-supply equation," Mr Naik added.

The "shortage" could be due to strategic purchases by the US to fill up its used reserved stocks or profiteering by some people, he said, adding, high tax rates in importing countries was harming the interest of consumers more than anything else."In Delhi, various taxes and levies increase the price of landed petrol and diesel by as much as 92 per cent while in Mumbai, taxes jack up prices by 112 per cent," he said, pointing to the need for cut in tax rates.

Faced with criticism from ruling coalition NDA partner, Trinamool Congress leader and railway minister, Mamata Banerjee, for increasing the prices of petroleum products, Mr Naik is making a passionate plea for cut in high incidence of taxation, rather than rolling back the prices which according to him might further burden the oil pool account.

He, however, said that the ruling international crude oil price was unsustainable for developing economies and ways need to be explored for bringing down the fuel bill.As per the petroleum ministry's latest projections, if the October trend- increase in oil prices combined with the depreciation of the rupee vis-a-vis the dollar- continues, it would result in an extra burden of Rs 1,250 crore for the remaining months of the current fiscal, Mr Naik said.

The average crude procurement price for the remaining part of the fiscal was pegged at $30 per barrel( assuming a rupee value of 46 to a dollar), when the government hiked administered prices at the end of September, he said.

However, in October, the average procurement price increased to $30.75 a barrel and the value of the rupee declined to 46.40 to a dollar.

The price increase, combined with the depreciation of the rupee vis-a-vis the dollar, would translate into an additional burden of Rs 250 crore per month on the oil pool account- or Rs 1,250 crore for the remaining months of the fiscal,Mr Naik added.

Mr Naik also ruled out the possibility of a cut in crude import in the face of surpluses, with the refineries saying, surplus in petrol and diesel could be exported. He also ruled out any glut in demand and maintained that consumption of petro-products would be at the previously projected levels of 110 million tonne.

(PTI)