A government-appointed regulatory body will fix the norms for the free marketing regime and oversee pricing and marketing practices adopted by the players, both private and state-owned. Former petroleum secretary Probir Sengupta and outgoing ioc chairman M.A. Pathan seem front-runners for the chairman's post.
Both public and private sector companies can market petrol, diesel and cng from their respective outlets. Though petrol and diesel prices are supposed to be at import parity levels, the ministry will reduce rates only in phases, using the money to subsidise lpg and kerosene. (Currently, petrol prices in India fluctuate between Rs 27.50 to Rs 31.50 per litre against the international price of Rs 22). From April, subsidy on pds kerosene will be 33.33 per cent and on domestic lpg 15 per cent, but these will be gradually phased out in three years.
End-product prices will be monitored by a consortium of all marketing companies every month. ioc, the market leader with nearly 62 per cent share at 45 million mmt per annum refining capacity, may guide rate fixing while controlling any monopolistic attitudes, a move the ministry admits could raise the hackles of other members.
Marketing companies would be free to set up outlets anywhere in the country. lFluctuations in the prices of crude and gas will not affect domestic consumers, unless there's a prolonged global conflict affecting movement. This is because most companies work on a 45-day processing period from the time they acquire the crude.
Private players can access pipelines of state-owned oil and gas companies to move their products. For example, ioc would not be able to reject a Reliance Petroleum or Essar Oil demand for movement of products through the Kandla-Bhatinda pipeline.
State-owned oil and gas companies will launch 5-kg domestic lpg cylinders at Rs 80-90 for low-income groups, with Rs 400 initial connection charge.