New petro pricing policy soon

The government will unveil a new policy on pricing of petroleum products. Petroleum and Natural Gas Minister Mani Shankar Aiyar on Wednesday said the government would ensure that investment plans of oil marketing companies were not hit due to mounting losses caused by high crude oil prices.

Addressing a two-day conference on the downstream sector, Aiyar said public sector companies like Indian Oil Corporation had capped investment in a new refinery at Paradip, Orissa, owing to the cash-crunch it faced because of the freeze on petrol and diesel price.

"The cap should be removed. The country cannot afford not to invest in new refineries," he said. IOC will build the Paradip refinery by 2010 while new refineries at Bhatinda and Bina will also come up in the next four to five years.

"The government policy will ensure that capital expenditure of oil companies is not affected by the current pricing policy.We will come up with some new formula," he said while stating that the decision on increase in retail prices of oil products would be taken by the Cabinet.

Stressing the need for a strong, vibrant and integrated public sector, he said, "We cannot do this in refining, unless we find a new mechanism for hydrocarbons."

He said a new mechanism on the lines of New Exploration and Licensing Policy was required to attract foreign direct investment in the refining sector. "We are not going to get inward investments in refining unless we see ourselves as partners outside," Aiyar said while asking the domestic refiners to invest overseas.

"Currently, Iranian National Oil Co has a 15 per cent stake in Chennai Petroleum Corp Ltd and Oman has a miniscule stake in Bharat Petroleum Corporation Limited's proposed Bina refinery in Madhya Pradesh," the minister said stating that there was virtually no foreign collaboration in the refining sector.

"We were hoping that HPCL may get a stake in Saudi Aramco's Yanbu refinery but that has not happened."

On India losing out to China in the bid to acquire 51 per cent of Canada-based PetroKazakhstan, he said companies needed to bid aggressively and India and China should co-operate with each other rather than compete for stake in overseas oil and gas assets.