WHITHER LEVEL PLAYING FIELD?

There seems to be a conspiracy here. With the private oil companies shutting down their entire petrol retail trade the entire business has shifted to the PSU cartel which the Government of India (GOI) is now subsidizing 100% with the Indian citizens’ hard earned money. If the GOI provides the even playing field as committed earlier to the private players like Reliance, Shell and ESSAR by extending the subsidy to them also in that case the GOI does NOT pay out ANY EXTRA subsidy as the demand for petrol/diesel is inelastic. But the GOI is not interested in world class service that the private oil companies provide which will contribute to the PSU cartel losing market share to the private players as indeed it did when the private players had a level playing initially.

The more the PSU dealers sell their adulterated and short delivered fuel to hapless vehicle owners the more money they make due to lesser working capital employed as also the “extra” fuel sold being unaccounted for and hence tax free. It may also be noted that thousands of petrol pumps, kerosene and gas agencies are owned by past and present Ministers, MPs, MLAs, bureaucrats and their family members, cronies or henchmen since time immemorial directly or in benami. The numbers of such perpetually lucrative dealerships are owned in direct proportion to the number of years a political party has been in power at the Centre ever since the government had regulated the petroleum retail trade after taking it over from the private multinational companies. This has resulted in this business today being dominated by a politically backed oil mafia who are beyond the control of the law or the government oil companies. Recall the gruesome murder of the IOC official in Uttar Pradesh at the hands of this same mafia. To make matters worse whilst Ministers make public speeches promising stern action against such elements, privately they ensure that none of their cronies or henchmen are touched by any of the agencies concerned.

At the same time Government is killing two birds with one stone. First, by depriving the private players of the subsidy it is projecting a spurious image that it is not influenced by the private players and second that it is "saving" the subsidy that would have to be paid to Private players. As the price of crude oil has fallen drastically and the PSU cartel is making huge margins, all the GOI has to do in order to save itself from a permanent headache is to take out petrol and diesel from the ambit of subsidies and oil bonds and throw it open to all players and leave it to them to fix their own prices. With competition amongst the Oil companies all of them will not only reduce their selling prices to retain/regain market share but will also drastically improve their services to customers. This will also improve the bottom lines of upstream oil companies like ONGC, GAIL and OIL who are today forced by the government to be a part of the subsidy sharing mechanism at a great cost to the country’s and their efforts at improving our self-reliance in oil.

The actual demand for kerosene used as domestic cooking and lighting fuel is only one third of what is allocated by the GOI that is consumed in the villages. The balance two thirds allotted to the urban areas is diverted for illegal uses fetching a huge premium to the politically powerful people who control this business. Example: How many people do you actually know in your city who actually use kerosene or even draw their quotas from ration shops for personal use? Where does the huge “lapsed” quota go? The price of petrol in Delhi today is Rs. 45.65 and diesel Rs. 32.86 per litre after the recent price reduction. Kerosene rules around Rs. 9 per litre. Even if 10 % of kerosene is used to adulterate Petrol without seriously affecting the anti-knock properties of petrol see the resultant unaccounted profit a petrol pump owner earns on every litre of petrol sold. The properties of diesel and kerosene being almost identical both being middle distillates in the petroleum hierarchy any amount of kerosene can be used as an adulterant without the vehicle driver realizing the nature of the fuel being used in his vehicle. Now if we calculate the volume of petrol and diesel being sold in the country one can have a shock realization of the mind boggling amounts of money involved in this huge scam successive governments have been carrying out in the name of the “aam admi”. Actually, the huge annual outlay made by the government for cheap kerosene is solely for the benefit of the adulteration business that fills many coffers as the poor hardly get it at the price fixed for it even in the countryside. By reducing its allocation to one third for the rural areas alone a huge saving can be made. This same kerosene but with a slight modification called aviation turbine fuel or ATF is what is used by all jet and turboprop aircraft in the country. Yet GOI can only keep raising the price of ATF and cripple the aviation business rather than stop the spurious activity of subsidized kerosene diversion to illegal ventures.

But with general elections round the corner the ruling party wants to fool the public by gimmickry by again reducing the prices close to the election dates apart from the vested interests raking in the unaccounted moolah mentioned earlier. Recommendations on similar lines by the GOI 's own PPAC which has replaced the earlier OCC is gathering dust within the Ministry of P&NG in Shastri Bhavan. Further, hopes that something positive would emerge from the Petroleum and Natural Gas Regulatory Board (PNGRB), on the petition filed by three private oil companies — Reliance, Shell and Essar have remained just that- high hopes. Many months ago the petition had asked the regulator to initiate adjudication proceedings against the oil PSUs cartel that indulges in unfair and restrictive trade practices in the sale of transportation fuels but as with all GOI sired bodies this too is a paper tiger as the occupant of this chair owes his continuance in the job to the blessings of the minions of the Ministry of P&NG. It is interesting to recall what the Prime Minister, an economist had promised eons ago on 9th November 2004:

PM promises MNCs oil regulator

THE HAGUE: Promising to usher in further tax reforms in the next Budget and to bring down tariffs in India to ASEAN levels, Prime Minister Manmohan Singh has assured multinational corporations that an independent Petroleum Regulatory Authority would be set up to provide a level playing field to them in the oil sector.

At an interaction with chief executive officers of European and Indian corporates last night, Singh also made it clear that India will adhere to all the commitments already at the World Trade Organisation, "I recognize that whoever comes to invest in India is entitled to expect a level-playing field. The government is in fact in the process of doing that. An independent and credible Petroleum Regulatory Authority will be set up," he told Jeroen van der Veer, chairman, Board of Management, Royal Dutch Shell, who was designated to take over as chairman of the whole Anglo-Dutch Shell Group after the forthcoming merger of the UK and Dutch branches, the first non-British Chairman of the combined firm.

Public memory is short but it is the job of analysts to remember the past and bring it repeatedly to public notice for their and the nation’s benefit. Only a strong public opinion based on facts can keep democracy vibrant and self-serving politicians at bay for all times. It will also compel the media to correctly reflect public mood and opinion instead of the media manipulating public thinking.