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K. Parthasarathi

THE proposed break-up of Indian Oil Corporation and privatisation of its retail-marketing with a vast network of retail sales points across the country defies logic and a rationale. More so when it is a star performer and commands a major share of the market.

Would it not deprive IOC of its own marketing outlet for the huge quantities of products churned out of its refineries, and render it weak and dependent on others? Can the country throw away an assiduously built network of a prestigious and profitable PSU only to pursue mindlessly privatisation in the oil sector?

The apex court's judgment on HPCL and BPCL should have been accepted with grace and introspection undertaken. The Government should not display the childish attitude that `If I cannot break this, I will break that'. The consequences of the proposed step, conceived it seems more in anger than in wisdom, would not only strengthen the hands of a private player with a vast refining capacity but without a retail outlet network, but also doom IOC sans a marketing wing.

The proposed step runs counter to the view all along held that strategic sectors such as oil, Railways and Defence production should be under government control. It should not appear as if the entire exercise is being done to vest in the hands of the private players the facility of marketing they badly need and which they cannot obtain without spending huge amounts.

Another implication of this retrograde step of amputating this premium PSU would be to lose control over the price fixing. Private enterprises are free to fix their own prices depending upon the international prices without the millstone of a social obligation around their neck unless the Government intends to subsidise the private players heavily on LPG and kerosene.

The Government should eschew the sale through the strategic mode in vital areas that were reserved for public sector and particularly those that would lead to the establishment of a private monopoly. If money is needed for covering the fiscal deficit, there are other ways of selling the shares without diluting government control.

There is no loss of face in abiding by the enlightened views of the apex court and proceeding cautiously in the matter of privatisation of oil sector. The ministries concerned should have a larger say in the deliberations and the matter discussed widely even with opposition parties instead of rushing through to achieve the budgetary target of sale proceeds.

(The author is a Chennai-based freelance writer.)

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