Four oil marketers to go ahead with infrastructure sharing

Sunil Mukhopadhyay

Kolkata, Jan 4: Four public sector petroleum marketing companies -- Indian Oil Corp, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd and IBP Co Ltd -- will continue to share their infrastructure till the end of fiscal 2003-04.

The infrastructure include depots, pipelines and port facilities.
They will do the same with liquefied petroleum gas (LPG).

These oil companies sold 92 million tonnes of petroleum products in 2000-01. Although sales are not encouraging, the final tally is expected to be slightly more than last year’s figure.

The government is scheduled to dismantle the administered pricing mechanism for petroleum products by March 31 this year, and has already begun the process of selling a stake in IBP.

"The decision to continue sharing infrastructure has already been taken, but the form and extent of financial charges are being worked out. They are expected to be finalised before the end of the current fiscal," a senior industry official told The Financial Express.

However, the infrastructure sharing agreements would continue to be bilateral, he said. The agreements would also contain dispute settlement clauses.

At present, the Oil Coordination Committee, which has representatives of all oil companies and the petroleum ministry, sets the rate for sharing infrastructure and issues other guidelines. After the APM is dismantled, the OCC is likely to be replaced by a downstream regulatory authority.

Observers believe even after divestment IBP can continue to share infrastructure with other oil PSUs.