Govt may ease PSU oilcos’ crude buy norms

NEW DELHI: The government may liberalise norms to import crude oil by public sector oil companies to help them efficiently manage purchases at competitive rates. The plan may give more autonomy to PSU oil firms in on-spot purchase of crude through their respective trading desk.

It is also proposed to relax the Central Vigilance Commission’s (CVC) guidelines for these oil companies in order to facilitate them for taking spot pricing decisions. “Technology is available to record quotes and data to determine that a deal has been made in the best interest of the company. Even if an order is finalised over telephone, the entire conversation could be recorded to ensure transparency,” a senior government official told ET.

While private firms have been able to import crude oil at relatively cheap rates, oil PSUs have to pay a higher price due to cumbersome purchase policy. In ’05-06, while private companies imported crude at a low average rate of Rs 1,605.73 crore/MMT, public sector companies had to pay Rs 1,790.28 crore/MMT, a government report said. The difference is significant as PSUs spent Rs 1,23,530 crore in ’05-06 on oil imports, while the private sector invested Rs 48,172 crore in the same period.

The report said that purchasing crude oil through modern trading desk approach could save oil PSUs about $0.2/barrel. Suffering from worst heavy losses, oil PSUs are looking for every opportunity to save their costs. PSU oil companies have also asked the government to increase the power of their boards while taking import decisions.

They have demanded that their oil purchase strategy should be approved by their respective boards and the system of getting approval from the empowered standing committee (ESC) should be abolished.“The system will empower PSUs without substantially altering the existing system of purchase,” an official said.