Oil Firms To Be Allowed To Sell At Mkt-Determined Prices

Domestic upstream oil companies will be allowed to sell their produce at the market-determined prices to domestic refineries after the dismantling of the administered pricing mechanism (APM) in the oil sector on March 31, 2002.

Earlier, the government had envisaged import parity price for domestic crude.

This will imply that the two national oil companies, Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), and some of the private sector producers of crude, will be competing with imported crude oil once the petroleum sector is fully decontrolled. Therefore, these companies may have to sell their produce at a slightly lower rate than the landed cost of imported crude oil.

At present, pricing of indigenous crude oil from nominated fields is regulated by the government.

The government pays ONGC and OIL 82.5 per cent of the import parity price with a cap of $16 a barrel.

In the matrix drawn up by the petroleum ministry, in the post-APM period, oil companies will themselves