from the Soviet Union , there has been an increasing penetration of foreign oil companies into the public sector in this industry . The co-operation between the public sector and the foreign oil companies should have put the Soviet Union to shame for having been used by the comprador bourgeoisie to play the role of improving relations between the foreign oil companies and the public sector . Here , too , the Government of India put the industrial policy resolution into cold storage , and allowed the foreign oil companies not only to establish their branches of refineries in India but also to expand their production .
But the country is being told that , other than the private refineries , which were already established in 1956 , every new development in the oil sector is progressing only under the public sector . This is not quite true . After the three public sector refineries established with Soviet and Romanian help , oil has come almost entirely in the fold of the so-called joint sector - collaboration between public sector and foreign private capital , with complete domination by foreign finance .
On this question , too , it is better to allow the Estimates Committee of Parliament to give a few details . The Estimates Committee in its 34 th Report ( 1962-63 ) has the following to report : “ The Industrial Policy Resolution of April 1956 specified that the future development of mineral oil , will be the exclusive responsibility of the State ”. Yet , “ the laying and operation of the crude oil pipeline was the responsibility of the Oil India Ltd ., in which the Government of India and Burma Oil Company had an equal partnership in the ratio of 50:50 ”. ( Page 8 )
.... The Committee was informed that crude oil was supplied by the Oil India Ltd ., a company in which the Government of India holds 50 per cent shares . The crude oil produced by this company is sold only to two customers Viz ., Government of India for the use of Indian Refineries Ltd ,
August - 2022
( 2.75 million tonnes ) and Assam Refineries ( 0.25 million tonnes ) - making a total of 3 million tonnes in all . Clause 8 of the agreement entered into between the Oil India Ltd ., and the Government on June 27 , 1961 , which provides the-formula for the pricing of crude oil applied to both the customers is given below : ( 1 ) The price of crude oil would be based upon the C . I . F price of the Middle-East crude oil of equivalent quality at Calcutta .
( 2 ) On this C . I . F price of the Middle- East crude is a certain discount to be given by the Oil India Ltd .
( 3 ) The discount is to be so calculated that it would give Oil India Ltd . a net return of 10.8 per cent of its paid up capital ( which is Rs . 28 crores ) after payment of all taxes including taxes payable on Dividends . ( Page : 13-14 )
........ It was stated that at present the Indian Refineries Ltd . was paying a provisional price of Rs . 72.79 per tonne for its suppliers of crude oil . Since this price formula , referred to above was based on a total off-take of 3 million tonnes ...... and the actual off-take was only 5 lakh tonnes , for the proportionately higher price would have to be paid to the oil to ensure a minimum dividend of 9 per cent . ( Page-14 )
“ It will be seen that , even at present , Indian Refineries Ltd . is paying about Rs . 84 per tonne ( including Rs . 12 of sales tax per tonne ) for the indigenous crude oil compared to about Rs . 71 to 74 per tonne , paid by the refineries in the private sector for the crude oil imported by them ”. ( Page - 15 ) Excellent Condition for Success of Public Sector
In another report - the 28 th report of the year 1962-63 , the Estimates Committee , dealing with Indian Oil Company ’ s marketing facilities , reports about certain arrangements made with the foreign oil companies which resulted in a loss to the public sector company but benefited the foreign company .
It reports that since the Indian Oil Company had no marketing facilities , “ the company had entered into product exchange arrangements with the other oil companies in the private sector . “ The Indian Oil Company ” ‘ was marketing approximately 75 per cent of its production through other oil companies under the product exchange arrangements . These products were made available to the other oil companies on outright sale purchase basis . Similar reciprocal facilities were not stated to be available to Indian oil companies from the other oil companies or their refineries and the issue was at present under discussion ”. ( Page - 20 )
“ It is further stated that on the product exchange transactions , the Indian Oil Company loses all the profit margin provided on the Damle Committee ’ s cost ‘ build-up ’...... The Indian Oil Company earns no profit from the sale of products , of the Nunmati refinery , to other oil companies under the product exchange arrangements ..... The Indian Oil Company is not getting reciprocal facilities to obtain the products from these private sector companies or their refineries ”.
Therefore the Committee calls for an “ examination ” and revision as early as possible of the existing arrangements and “ that the terms of such agreements should be drafted in such a way as are capable of being worked to the mutual advantage of the parties concerned ”. ( Page - 20 )
“ In this connection ( sale of the imported Soviet oil ) it has been stated that as soon as supplies of H . S . D landed for the first time from Russia on Indian Oil Company ’ s account in August 1961 the foreign oil companies realized that , in the absence of retail outlets , the Indian Oil Company could sell only to bulk consumers , like D . G . S & D . State Transport undertakings , etc . In a bid to retain their business , they quoted special lower rates to the State Transport undertakings . To secure business , the Indian Oil Company , in its turn , had to enter into
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