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Pvt oil cos put pressure on PSU rivals

Oil sector regulator Petroleum & Natural Gas Regulatory Board (PNGRB) has said it is empowered to look into the unfair pricing of petrol and diesel.

, ET Bureau|
Jan 19, 2009, 02.18 AM IST
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NEW DELHI: Oil sector regulator Petroleum & Natural Gas Regulatory Board (PNGRB) has said it is empowered to look into the unfair pricing of petrol and diesel.

Private oil companies ��� Reliance Industries (RIL), Essar Oil and Shell India ��� have filed a case against government-owned oil companies such as Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), accusing them of indulging in restrictive marketing practices while fixing retail prices of petrol and diesel.

���We have come to the conclusion that the board is competent to entertain and consider the complaint...��� a three-member bench of the board said. PNGRB is a quasi-judicial body constituted by an Act of Parliament.

Brushing aside the argument of public sector oil companies��� advocate that the board���s jurisdiction was confined to petroleum products notified by the central government, the bench said, ���...in consonance with the overall objective of the PNGRB Act as stated in the Preamble, section 11(a) of the Act makes it obligatory for the board to look into all the issues which may be detrimental to fair trade and competition amongst the entities in the sector affecting the overall interests of the consumer.��� Section 11(a) says the board ���shall protect the interest of consumers by fostering fair trade and competition amongst entities���.

PNGRB has directed the oil companies to make full submission on the merit of the case so that a final order can be issued. In a petition to PNGRB, private oil companies have demanded that the oil sector regulator should levy a penalty on the public sector oil companies for the losses suffered by them.

Private companies also asked the board to direct public sector companies to ���cease and desist from indulging in predatory pricing of transportation fuels���. The private companies had to scale down their fuel retail operations due to alleged cartelisation in marketing of petroleum products.

In April 2002, the government had ended the monopoly of public sector oil companies in fuel retail. This paved the way for private oil companies such as RIL, Essar Oil and Shell India to open petrol pumps. In the same year, the government also distanced itself from determining retail prices of auto fuels by putting an end to the administered price mechanism (APM).

However, later, due to surging global oil prices, the government forced public sector oil companies to sell petrol and diesel below cost. This created a non-competitive business atmosphere, resulting in RIL closing its 1,671 pumps in April last year. Essar Oil and Shell India also closed some of their retail outlets.
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