Sept 19: India's oil minister Ram Naik said on Tuesday privatisation of his country's petroleum industry was on schedule and private retailers were unlikely to enter the market before April 2002. "Advancement of the retail programme would not benefit anyone because as long as an administered price mechanism remains it could not be possible for them (private retailers) to have commercial benefits," Naik told Reuters ahead of an oil conference in the Indonesian capital. "Who would go to them if subsidised items are available?" In November 1997, India said it would remove government control over the sector, including price setting, before April 2002, thus allowing private companies to enter the retail market. As part of restructuring ahead of lifting controls, the government early this month approved the sale of four stand-alone refineries to two state-run oil marketing companies - Indian Oil Corporation (IOC) and Bharat Petroleum (BPCL) The consolidation of stand-alone firms with larger ones stems from India's view that the small firms would find it difficult to compete once controls were lifted. IOC, the country's largest refiner and products distributing firm, would take over Chennai Petroleum Corporation and Bongaigaon Refinery and Petrochemicals Ltd. BPCL would take over Kochi Refineries Ltd and Numaligarth Refinery. "That restructuring work will be completed in this financial year (ending March 2001)," Naik said. He said privatisation of state-run firm IBP Co Ltd would also take place by the end of the current financial year. "The marketing company IBP will be disinvested in this financial year," he said. "The decision has been taken, (but) the actual implementation decision will be made this month as in how many shares will be offered, what percentage, those details will be finalised," he said. Naik said the government would also decide by the end of September what steps should be taken to reduce losses incurred from domestic subsidies on some petroleum products. He had said earlier this month that options under consideration included the issue of bonds to oil companies for monies owed to them, reductions in excise duties and higher government-set prices for petroleum products. The government oil pool account, maintained on behalf of the oil firms, is used to balance subsidies on products such as liquefied petroleum gas and kerosene with surcharges on petrol and aviation fuel. The account goes into deficit when subsidy outflows exceed surcharge inflows. Naik said OPEC's latest decision to raise production helped to cool the heated crude market, but he did not see it as enough. "Though I welcome OPEC's decision (to raise production), it doesn't meet expectations. I had expected that they would produce about 1.0-1.2 million barrels per day," he said. OPEC agreed at their September 10 meeting to increase output by 800,000 barrels per day (bpd) from October. "The decision of producing 800,000 bpd doesn't meet the demand of the market, taking into account the winter requirement in the western sectors," Naik said. "They (OPEC) said in March that they would increase production in such a way that prices would be in the band of $22-$28. We're nowhere near that figure, so they must ensure that prices come down," he said.
