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Rediff.com  » Business » Oil marketing set to break free of licence raj

Oil marketing set to break free of licence raj

By Jyoti Mukul in New Delhi
October 13, 2005 10:20 IST
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In a move that may signal the end of its discretionary powers, the petroleum ministry has decided do away with licences for marketing oil.

To enter the oil marketing business, companies may need to only register themselves with the government after meeting certain criteria set by it.

A similar procedure will also be put in place for setting up regasification terminals for liquefied natural gas.

"This is being done with a view to removing the licence raj and moving towards a more open system for granting marketing rights," said an official.

Officials told Business Standard the proposed Petroleum and Gas Regulatory Board Bill would facilitate the shift from "authorisation" to "registration". The Bill is likely to be introduced in the winter session of Parliament.

The original draft, prepared by the petroleum ministry, did not include any eligibility criterion. The ministry had left it to the regulator to spell it out. But changes were made in the draft after the finance ministry suggested that the Bill clearly say that the petroleum products marketing business was being opened up without any restriction.

"The regulator's role in this aspect should be non-discretionary and non-discriminatory," said an official.

While making a distinction between authorisation and registration, the final draft of the Bill specified that companies would need the government's authorisation for laying, building and operating pipelines and local natural gas distribution networks.

Current norms stipulate that companies investing a minimum of Rs 2,000 crore (Rs 20 billion) in petroleum infrastructure can get marketing rights. While the government granted such rights to Reliance Industries, Essar Oil, Oil and Natural Gas Corporation, Shell India and Numaligarh Refinery Limited after the opening up of the sector in April 2002, it rejected the application of Bongaigaon Refinery, Chennai Petroleum and Kochi Refinery.


Oil's well

  • Registration procedure will be put in place for establishment of regassification terminals for LNG
  • The change from authorisation to registration will be made through the Petroleum and Gas Regulatory Board Bill
  • The final draft of the Bill specifies that companies will need government authorisation for laying, building and operating pipelines and local natural gas distribution network
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    Jyoti Mukul in New Delhi
    Source: source
     

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