PSU oil firms move power tribunal in pricing case

Public sector oil marketing companies, led by Indian Oil Corporation, have approached the Appellate Tribunal for Electricity (APTEL) challenging the authority of the Petroleum and Natural Gas Regulatory Board (PNGRB) to decide a petition filed by private oil companies last year.

The private companies (Reliance Industries Ltd, Essar Oil and Shell India) had filed a petition against government-owned oil marketing companies (OMCs) for indulging in “predatory pricing” in sale of transport fuels. They had appealed to the board to levy a penalty on the government-owned companies for the losses incurred.

“The oil marketing companies have gone to APTEL…The tribunal has to take up the case,” said a board official.

The public sector companies, on their part, approached the Delhi High Court challenging the board’s jurisdiction. The court held that APTEL was the designated authority under the Electricity Act to take up the matter.

An Indian Oil official, however, said the company had sought the government’s direction. “We have no role in this,” he said.

The government regulates prices of petrol and diesel that OMCs sell, even if it means the companies have to incur losses. These losses are made up by government bonds and discounts by oil producers. The private oil marketing companies are not provided any such compensation and had to shut down their retail operations early last year when crude oil prices rallied to three digits, touching a high of $147 a barrel in July.

Even though the situation has changed now and crude oil prices have crashed to around $40 a barrel, private companies are adopting a cautious approach.

While Essar has opened most if its 1,250 outlets, Reliance has decided not to open any of its 1,400 outlets until the government brings in a level-playing field in the sector.