The government will shortly come out with a new crude import policy thereby enabling the country to do away with the existing practice of tendering and begin spot purchases, Petroleum and natural gas minister Dharmendra Pradhan said on February 15 during the Make in India Week in Mumbai.
Pradhan said the new policy will also provide a common crude platform for all state-owned oil refiners. “Once set up, it will be up to the companies to decide how to use the platform — individually or collectively,” he added.
While under the present tendering route, the oil companies normally pays higher prices and incurs delay, the system of spot purchases will enable better delivery at lower prices.
Pradhan also stressed on the need to enhance domestic production of Oil & Gas through process and technical improvements, besides enhanced exploratory coverage.
Despite being the third-largest consumer of oil, India is the only country that still procures crude through the tendering process. Pradhan has been pitching for an Asian discount against the Asian premium forced through by the oil cartel–OPEC.
Addressing the ‘Make in India’ event, Pradhan said the government is committed towards creating a conducive business environment through better policies and investment opportunities.
However, Pradhan clarified that he is not advocating a trading desk per se, but is all for better inventory management that helps reduce unnecessary losses from procuring crude months in advance.
Petroleum sector is one of the 25 priority sectors identified under Make in India initiative. The sector has huge potential to promote manufacturing in India in the ancillary and service industries which cater to the petroleum industry.