Comments on: The Oil Distribution Conundrum http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/ Issues & insights Tue, 07 Oct 2008 04:28:01 +0000 http://wordpress.org/?v=2.6.1 By: surajbhan http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/#comment-158131 surajbhan Wed, 09 May 2007 01:20:53 +0000 http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/#comment-158131 Govt's and PSUs/OMC expenses on quality controls is too high; recently a contract to M/s. SGS pvt ltd (A swiss co -a so-called "marker" supliers and exploring the marker at petroleum dealership saleable products; and for this purpose, extreme huge powers have been delegated by the Govt to OMC's officers ( they do not require to prove any suspected offence before any Law courts for penal actions) to penalze the dealers by themselves - a Consttutional breach -is again is causing sharing of illegal profits, making adultratons an incentives, and ultimate a second culprt. Hands in gloves ? Govt’s and PSUs/OMC expenses on quality controls is too high; recently a contract to M/s. SGS pvt ltd (A swiss co -a so-called “marker” supliers and exploring the marker at petroleum dealership saleable products; and for this purpose, extreme huge powers have been delegated by the Govt to OMC’s officers ( they do not require to prove any suspected offence before any Law courts for penal actions) to penalze the dealers by themselves - a Consttutional breach -is again is causing sharing of illegal profits, making adultratons an incentives, and ultimate a second culprt. Hands in gloves ?

]]> By: surajbhan http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/#comment-158126 surajbhan Wed, 09 May 2007 00:56:57 +0000 http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/#comment-158126 The ratio of allotted dealershps vz politcal leaders/non politicals, the main culprit in all incorrect policy makings becomes sucessful. Example, the price dfferential in Desel and kerosene is an incentive for adultration -resulting huge but illegal money collecton spoilng the whole system i.e. mother of culprit. If for any reasons includng politcs keepng kero PDS prices low is mandatory; HSD price must be put at par with it and for purpose to raise revenues from transport sector other things like tyres engines roadtaxes and insurance costs can be placed on hgher taxed avenues. The ratio of allotted dealershps vz politcal leaders/non politicals, the main culprit in all incorrect policy makings becomes sucessful. Example, the price dfferential in Desel and kerosene is an incentive for adultration -resulting huge but illegal money collecton spoilng the whole system i.e. mother of culprit. If for any reasons includng politcs keepng kero PDS prices low is mandatory; HSD price must be put at par with it and for purpose to raise revenues from transport sector other things like tyres engines roadtaxes and insurance costs can be placed on hgher taxed avenues.

]]> By: Shashikant http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/#comment-157888 Shashikant Tue, 08 May 2007 06:17:11 +0000 http://indianeconomy.org/2007/05/08/the-oil-pricing-conundrum/#comment-157888 I don't think oil distribution can be taken in isolation and made more efficient. The entire oil and gas sector, virtually ruled by PSUs, needs reforms. All the oil PSUs share a complex relationship. The upstream companies pay the deficit of the marketing companies. (eg ONGC sells crude to IOC,HPCL,BPCL at $45 or so irrespective of the price in international market.) The marketing companies are not allowed to charge "market" rates. Etc. etc. Will Govt bite the bullet? Call me pessimistic, but I don't see anything happening on this front. There is a simple reason for that. All the oil firms together post sales of close to $100 billion, contribute huge amount of money in terms of taxes, and the Petroleum Minister is bossing around these entities. The power Govt yields is intoxicating. They won't let it slip away from their hands. I don’t think oil distribution can be taken in isolation and made more efficient. The entire oil and gas sector, virtually ruled by PSUs, needs reforms. All the oil PSUs share a complex relationship. The upstream companies pay the deficit of the marketing companies. (eg ONGC sells crude to IOC,HPCL,BPCL at $45 or so irrespective of the price in international market.) The marketing companies are not allowed to charge “market” rates. Etc. etc.

Will Govt bite the bullet? Call me pessimistic, but I don’t see anything happening on this front. There is a simple reason for that. All the oil firms together post sales of close to $100 billion, contribute huge amount of money in terms of taxes, and the Petroleum Minister is bossing around these entities. The power Govt yields is intoxicating. They won’t let it slip away from their hands.

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