Govt lets oil PSUs evolve crude import policy

In a move to further liberalise the hydrocarbon sector, the government has allowed state-run oil marketing companies to decide on their own crude import policy on their own and replace the existing policy without its approval.

The union cabinet chaired by Prime Minister Narendra Modi today gave its approval to replace the existing policy on crude oil import by oil PSUs and vest the oil PSUs with the power to evolve their own policies.

This will provide a more efficient, flexible and dynamic policy for crude procurement, eventually benefiting the consumers, a petroleum ministry release stated.

The existing policy on crude oil imports evolved in 1979 and it was further amended in 2001, the cabinet approving some amendments to the policy. While the current policy has ensured that collective energy needs of Oil PSUs are consistently met over the years, the policy needs to evolve with the changing times, the release pointed out.

''With the changing geo-political environment, the crude oil import policy needs to be modified to bring it in tune with current needs. The current market practices for purchase of crude oil on spot basis also need to be adopted to compete effectively in the market,'' the release stated, adding that the current policy has certain limitations and restrictions in this regard, which limit the potential sources and methods of procurement.

After the last cabinet decision in 2001, the government has delegated substantial powers to Navaratna and Maharatna companies among PSUs. Such companies are given high degree of autonomy in various operational, financial and investment matters.

The decision to empower oil PSUs to evolve their own policies for import of crude oil is consistent with CVC guidelines and get them approved by the respective boards.

This measure, which is in keeping with the principle of minimum government maximum governance, will increase the operational and commercial flexibility of the oil companies and enable them to adopt the most effective procurement practices for import of crude oil, the release added.