“Allowing oil firms to control market will hurt economy”

De-regulation by which the three public sector oil companies are empowered to set the price of petrol and other petroleum products has been challenged in a public interest litigation petition in the Supreme Court.

The All India Youth Federation (AIYF), represented by its general secretary P. Sandoshkumar, said there was no rationale behind replacing the Administered Pricing Mechanism (APM) with the Import Parity Pricing (IPP) System to reduce under-recoveries, the calculation of which was also neither systematic nor scientific.

The AIYF said the oil marketing companies (OMCs) benefited by this system but the ordinary citizens were looted, the petition said. The oil industry contributed 6.7 per cent of the gross domestic product (GDP) of India and it was being controlled mainly by Indian Oil, Hindustan Petroleum and Bharat Petroleum.

‘Contradictory’

“Such companies shall not be allowed to control the market which will adversely affect the entire economy.” It was contradictory to say the companies were making losses while they were disbursing dividend to the government.”

The government could regulate the prices effectively and thereby avoid any further burden on the ordinary people.

Worsening pollution

Another impact of deregulation was that people were switching to diesel vehicles to avoid the higher cost of petrol driven vehicles, and thus adding to pollution. Conceivably, the state-owned companies with a nod and a wink from the government could now set the price of oil products in such a way as to shut out private competitors. India was not mature enough to allow the marketing firms to set the price as their own since any change in the price of the oil market would affect the economy, the petition said.

The AIYF pointed out that the cost of petrol in India, at Rs. 67.71 a litre, was the highest in the world.

In China, it was Rs. 47.50, in the U.S. Rs. 43.70, in Pakistan Rs. 43.29, in Russia Rs. 41.96 and in Malaysia Rs. 26.78.

On the contrary, the per capita GDP is: India $3,608.196; China $8,288.818; U.S. $48,665.805; Pakistan $2,851.056; Russia $16,840.802 and Malaysia $15,384.563.

“An oil budget like the Railway budget is necessary and it shall be presented by the government in Parliament to end the anarchism in the field.”

The petitioner sought a direction to the Centre to restore the APM, and another direction the Centre and the States to rationalise taxation of petroleum products.