Cost Based Study on petroleum products was conducted by the Tariff Commission which has inter alia made recommendations on pricing policy to be followed for Upstream Companies and Oil Marketing Companies (OMCs), consolidation of operations under various segments of the three OMCs, separation of refinery and marketing functions, necessity to create a mechanism for better coordination regarding capacity expansion, reduction of entitlement of Kerosene under PDS, tax reforms and need to encourage cleaner sources of energy.

This information was given by the Minister of State for Finance, Smt. Nirmala Sitharaman in written reply to a question in Lok Sabha today.

Cost-based pricing recommendations for petroleum aim to reform sector governance through consolidation, separation, and subsidy rationalisation. The cost-based study recommends cost-based pricing for upstream companies and OMCs, consolidation of operations across the three OMCs, separation of refinery and marketing functions, establishment of a coordination mechanism for capacity expansion, reduction of kerosene entitlement under the public distribution system, tax reforms affecting the sector, and measures to encourage cleaner energy sources.