Energy tribunal issues notices to PSU oil firms

New Delhi: Energy tribunal ATE today issued notices to IOC, HPCL and BPCL on petitions filed by Reliance Industries, Essar Oil and Shell challenging the dismissal of their plea by sector regulator PNGRB against alleged cartelisation in petrol and diesel pricing by the PSUs.

The Petroleum and Natural Gas Regulatory Board (PNGRB) had in July dismissed a petition by the three private fuel retailers alleging “cartelisation and predatory pricing” by PSU oil firms in pricing petrol and diesel below cost saying market pricing of fuel would jeopardise consumer interest.[caption id=“attachment_453420” align=“alignleft” width=“380”]  Oil problems. Reuters[/caption]

Admitting the petitions, a two-member bench of the Appellate Tribunal for Electricity (ATE) also issued notice to PNGRB and asked them to file their replies by 5 October.

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The ATE has additional jurisdiction to hear appeals against orders of the PNGRB.

RIL, Essar and Shell will get a weeks time after that to file rejoinders to the replies filed by the PSUs and the sector regulator.

The tribunal, headed by its chairman Justice MK Vinayagam, also condoned the delay on part of the private retailers on filing appeal against the order of the PNGRB.

The matter would now come on 15 October for hearing.

During the proceedings of the tribunal, senior advocates CS Vaidyanathan and R Chandrachud appearing for RIL contended that PSUs were selling diesel and petrol below the market cost and it was an “unfair trade and anti-competitive practices” by them on the instruction of the government which is their majority shareholder.

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“We have made investment only on the believe that the prices would be market linked,” he said, adding that even the regulator had virtually accepted the contention PSUs were artificially keeping prices lower but did not allow its claim.

The tribunal was hearing the appeal against an order of the PNGRB, which had on 2 July dismissed the cartelisation charges by the private retailer observing that market pricing of fuel would jeopardise consumer interest.

PNGRB, while passing orders had also imposed a cost of Rs 100,000 on the three private fuel retailers.

“It is our view that if fostering competition by allowing prices to rise to levels of import parity as prayed for by the complainants will, instead of promoting consumer interests, actually jeopardies it,” a two-member bench of PNGRB had said.

While the government had freed petrol and diesel price from its control from April 2002, the fuel have not been priced at their imported cost since May 2004 as international oil rates rose.

Price was once again decontrolled in June 2010 but rarely did its price move in tandem with cost. Diesel, on the other hand, continued to be subsidised with current retail rates about Rs 10 a litre lower than cost.

“The mandate of the Board is to protect consumer interest by promoting competitive markets… Consumer interest will not be served by mandating that domestic prices should be benchmarked to import party,” PNGRB had said in its order.

PTI