The petroleum sector is being privatized in India. But, after the entry of private players, will the motive of privatization stay or will it turn out to be a private monopoly?

It has been one and a half years since the government dismantled Administered Price Mechanism (APM). Earlier, under the tight control of APM, the Indian oil and gas sector had four major petroleum products: Petrol, diesel, kerosene and LPG. Out of these, LPG and kerosene were subsidized products priced lower because the middle and the lower middle classes use these products. These subsidies were compensated by higher prices charged on petrol and diesel. But the higher prices were not sufficient to cover the subsidies as a result of which the government was facing losses in the form of oil pool deficit.

To reduce the loss in oil pool deficit and match the international movements, APM was dismantled. Under the new scenario after dismantling APM, prices of all petroleum products have risen. But still prices of petroleum products in India are less compared to the international level. To match the international prices, the government has allowed PSUs to change their prices. With the entry of private players, petroleum products are priced at international levels resulting in the increase of the price volatility in the market and as a result of which the government has lost control over prices.

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