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Journalism of Courage
India8217;s petroleum policies have pushed oil companies into deep trouble. Yet, the petroleum ministry wants to continue controlling petroleum policy. The better health of oil companies requires that two essential steps be taken immediately. First, the sector must be exposed to competition and, second, corporate governance in the oil sector must improve.
In the long run, the oil sector requires exposing local oil companies to global competition. At present, a host of barriers make it difficult for the private sector to import and sell petroleum products in the country. In the 8217;90s, India found its way out of a mess in the industrial sector 8212; where there were thousands of incompetent companies 8212; by cutting customs duties and opening up to imports. The same story should apply in the petroleum sector. We should focus on opening up the Indian market for petroleum products to global competition, so that consumers should be able to bypass the petroleum ministry, if they should want to. This will shield the consumer from predatory oil companies and ministers. It will put the sector on the path to meaningful adjustment to competition and efficiency in a globalised setting. Free entry should be allowed in the sector. Anyone should be allowed to open petrol pumps, buy petrol from anywhere in the world and sell to customers. This will help destroy the monopoly of oil companies and force them to work in a competitive framework. It will also help prevent the government forcing policies on them that will push them into the red.
