By IANS,
New Delhi : The government Wednesday issued terms of reference for the high-powered committee to examine the financial position of state-run oil companies.
One of the key remits of the committee is to “examine the impact of increase in oil prices between 2004-05 and 2008 on the financial position of oil companies, including upstream exploration companies, refiners and downstream oil marketing companies (OMCs).”
Prime Minister Manmohan Singh set up the committee June 4. It’s being headed by Planning Commission member B.K. Chaturvedi. It’s to look into the financial conditions of state-run oil firms against the backdrop of soaring crude oil prices in international markets. India imports around 70 percent of the oil it uses.
The decision had come hours after the government decided to hike prices of diesel and petrol by Rs.3 and Rs.5 per litre, respectively, and that of cooking gas by Rs.50 per cylinder.
The other members of the committee are Saumitra Chaudhuri, member of the Prime Minister’s Economic Advisory Council, and Arvind Virmani, chief economic advisor to the government.
Another important mandate of the committee is to “analyse the cash flows and the profitability of all oil companies so as to get a clear picture of the changes taking place in their operating positions, particularly the impact on access to credit and cash availability for their operations.”
The committee will “revisit the concept of under-recoveries and examine the reported deficit and the real deficit faced by OMCs as a result of price constraints imposed on them.”
An official press communiqué Wednesday said the committee will also “estimate the financial needs of the refiners and OMCs in order to continue their normal business activities and to meet the energy needs of the economy and the possible sources of funds to meet their financial needs.”
The committee will “examine the available options for burden sharing by all stakeholders, including upstream exploration companies, refiners, downstream OMCs and stand-alone refiners.”