Petroleum Refining Industry

Key statistics for the petroleum refining industry, in million tons, are shown in the following table.

There are 13 petroleum refineries in India owned by six public sector enterprises. Indian Oil Corporation, owns a major share (43.5%) of the total refining capacity. Hindustan Petroleum and Bharat Petroleum together share more than 28% of the capacity. Thus, these three corporations account for around 72% of the refining capacity in the country.

The Eighth Plan outlay for the petroleum sector is Rs 265.52 billion. However it's expected that the total expenditure, by the end of the 4th Plan year, will have become 136% of the plan outlay. According to the Eighth Plan, consumption of petroleum products would reach 81 million tons by 1996-97.

Liberalisation and Privatisation

The refining industry was thrown open to the private sector in July 1991. Bids have been invited for private participation in exploration activity. The discovered medium/small oil and gas fields have been offered for development to private companies for accelerating production. The private sector has also been allowed to invest in development of infrastructure for petroleum marketing. Since then, a number of private sector enterprises have proposed to set up refineries in the private and joint sector. ONGC has already been converted to a corporation w.e.f. Feb 1, 1994.

To improve the supply conditions and to reduce the fiscal burden due to sale of subsidized petro products, the government has decanalised the imports of kerosene, Liquefied Petroleum Gas (LPG), Low Sulphur Heavy Stock (LSHS) and Superior Kerosene Oil (SKO). A Parallel Marketing System (PMS) for these has been set up since February 1993. Under this system, private parties are allowed to import and market LPG/SKO/LSHS through their own distribution networks at market determined prices. The government has brought down the import duties on LPG from 85% to 15%, with a 10% countervailing duty, in 1994-95. Safeguards have been incorporated into the system to prevent diversion of LPG and SKO marketed by public sector companies into the PMS.