ONGC, OIL to get import parity price for crude

new delhi: oil and natural gas corporation and oil india will get import parity price for domestically produced crude oil from april 1, 2002, when the administered pricing mechanism is to be dismantled. they will, however, continue to get a capped fixed price for natural gas. domestic crude oil producers will get 100 per cent import parity price from april 1, 2002, petroleum minister ram naik said. ongc and oil would be free to market the crude oil produced by them in the domestic market. accordingly, it is proposed that the prices of indigenous crude oil would be market determined, without any floor or ceiling, he said. according to a 1997 cabinet decision, the price receivable by ongc and oil for indigenous crude oil was to be increased to international levels in a phased manner by paying a percentage of the weighted average of actual international fob (freight-on-board) price of comparable crude oil. however, in november 1999 the government fixed an ad hoc price of rs 5570 per tonne that was lower than the entitlement of 77.5 per cent of the international fob price approved for the year 1999-2000. ongc and oil were entitled to 80 and 82.5 per cent import parity prices during 2000-01 and 2001-02 respectively but are being paid as per the cap. this price cap is now being removed, naik said. naik, however, said that natural gas would not be given 100 per cent import parity price from april 1, 2002. presently domestic natural gas has a price ceiling fixed at 75 per cent of import parity price of fuel oil. this ceiling of rs 2,850 per million cubic metres is less than 50 per cent of international natural gas prices. according to petroleum ministry sources, natural gas prices are likely to be linked to 100 per cent import parity in two annual installments or three half-yearly installments. naik said the changes in pricing of domestically produced crude oil would have to be approved by the cabinet and would form a part of finance minister's budget for 2002-03. finance ministry would also separately work out the modalities to raise resources from the incremental gains accruing to ongc and oil through the sale of indigenous crude. while crude oil and natural gas from exploration blocks awarded under the new exploration licensing policy and through joint venture route are priced at international rates, domestic companies like ongc and oil are being paid at a cap price. this ceiling price was initially fixed to generate inflows to the oil pool account to service the oil bonds issued by the government in 1997-98 and later retained to contain the oil pool account deficit, sources said. as per the 1997 cabinet decision, natural gas should have been priced at 75 per cent import parity in 2000-01 and at 100 per cent from 2001-02. the minister said the 100 per cent import parity to natural gas would be worked out separately and did not form part of the cabinet note for dismantling of apm in hydrocarbon sector. upon dismantling of the apm, whereas the pds kerosene and domestic lpg would continue to be subsidised, the oil companies would be free to fix the retail consumer prices of petrol and diesel, naik said. post-apm, the government will fix the uniform ex-depot/bottling plant issue price of kerosene for pds and domestic cooking gas to provide 33.3 and 15 per cent subsidies respectively, and oil companies will be given freedom to fix their own consumer price, margins and commissions. post-apm, the consumer prices of petrol and diesel would be fixed at import party level and would be the summation of the landed cost at the nearest port location, applicable customs duties, actual freight from the port location to the market, local taxes and distribution cost, the minister added.

ONGC, OIL to get import parity price for crude

<img src=/photo.cms?msid=1212261105 align=left>NEW DELHI: Oil and Natural Gas Corporation and Oil India will get import parity price for domestically produced crude oil from April 1, 2002, when the administered pricing mechanism is to be dismantled.

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