Dharmendra Pradhan (File photo)
In a bid to make cheap oil available for the consumer, the government will soon be rolling out new oil import policy .Under the new policy, oil marketing companies can purchase the commodity via a trading desk rather than the usual tendering route.
"India is the only country in the world which carries out tendering for oil purchase. This compels the consumer to shell out more. Our aim is to make oil cheaply available to the consumer and hence will soon be introducing an oil import policy which eliminates tendering entirely," Dharmendra Pradhan, Union petroleum minister, told reporters at the Make In India event held here today. However, he did not mention a timeline for the policy.
The petroleum sector is one of the 25 priority sectors identified under Make in India initiative. The sector has huge potential to promote manufacturing in India in the ancillary and service industries which cater to the petroleum industry.
India had imported 189.43 million tonnes of crude oil in 2014-15 for Rs 6.87 lakh crore. This fiscal the imports are projected at 188.23 million tonnes, almost the same level as last year.
"Purchase of oil via a trading desk will have several indirect benefits that will help us," B K Namdeo, director-refineries at Hindustan Petroleum Corporation, said. "We will be able to negotiate better as currently we have to pay premium for the commodity via tendering. It will bring in a lot of flexibility for us," he added.
Though the exact execution plan is not known, industry officials said that initially trading desk may be a centralised system with the appointment of a consultant and eventually it can be carried out individually.
Almost 80 per cent of crude oil is imported through term contracts and the balance from spot tenders. This does not allow oil marketing companies any leeway on price negotiations. As a result, state-owned refiners such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation end up buying crude oil at higher prices as against their private sector counterparts who can negotiate with their suppliers.
Meanwhile, the government is also planning to have its next round of auctioning which will include small and marginal oil fields.
"Roadshows will be primarily conducted in India but apart that, Singapore, Dubai, London and even Calagary are places where we are looking to do the road shows as well," said Pradhan. "The concept paper is ready and very soon we shall have the next auctioning round," he said without elaborating further.