PM appoints high powered committee on oil companies' finances

05 June 2008

Prime Minister Dr Manmohan Singh has constituted a high powered committee under the chairmanship of B K Chaturvedi, member, Planning Commission to examine the financial position of oil companies. Dr Saumitra Chaudhuri, member, prime minister's economic advisory council and Dr Arvind Virmani, chief economic advisor to the union government will be the other members of the committee.

The public sector oil marketing companies, Indian Oil, Hindustan Petroleum and Bahrat Petroleum, have been moderating the impact of high international oil prices, which touched record high of $136. The Indian basket of crude oil is $ 123 / bbl, having recently touched its highest level at $129 per barrel. At the current international price levels, the under-recoveries of oil marketing companies (OMCs) on the sale of petrol, diesel, public deistribution kerosene and domestic LPG are projected to exceed Rs245,305 crore during 2008-09.

To protect consumers from the inflationary impact of high international oil prices, the government and the public sector OMCs have been absorbing most of the burden.

The terms of reference of the committee will be to:

(i) Examine the impact of the increase in oil prices between 2004-05 and 2008 on the financial position of oil companies, including upstream exploration companies, refiners and downstream Oil Marketing Companies (OMCs).

(ii) Analyse the cash flows and the profitability of all three groups of companies so as to get a clear picture of the changes taking place in their operating positions, particularly the impact on access to credit and cash availability for their operations.