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Corporate Jul 5, 2012

No cartelisation by public sector oil firms, says regulator

New Delhi: Oil regulator PNGRB has dismissed private fuel retailers Reliance Industries, Shell and Essar Oil's allegations of "cartelisation and predatory pricing" by public sector oil firms in pricing petrol and diesel below cost saying market pricing of fuel would jeopardise consumer interest.

Petroleum and Natural Gas Regulatory Board (PNGRB) in its 2 July order imposed a cost of Rs 100,000 on the three private fuel retailers who filed a complaint against Indian Oil, Bharat Petroleum and Hindustan Petroleum for indulging in "restrictive and unfair trade practices and cartelisation".

Rejecting cartelisation. Reuters

"It is our view that if fostering competition by allowing prices to rise to levels of import parity as prayed for by the complainants will, instead of promoting consumer interests, actually jeopardise it," a two-member bench of PNGRB said.

While the government had freed petrol and diesel price from its control from April 2002, the fuel have not been priced at their imported cost since May 2004 as international oil rates rose.

Price was once again decontrolled in June 2010 but rarely did its price move in tandem with cost. Diesel on the other hand continued to be subsidised with current retail rates about Rs 10 a litre lower than its cost.

"The mandate of the Board is to protect consumer interest by promoting competitive markets... Consumer interest will not be served by mandating that domestic prices should be benchmarked to import party," PNGRB said.

Observing that the government subsidies to state retailers for selling fuel below cost had resulted in loss of market share for private firms, the Board, however, said allegations of restrictive trade practice, cartelisation, collusion and monopolistic behaviour had no basis.

PTI


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