Dismantling of Administrative Pricing mechanism (APM)

• Pricing of petroleum would become market determined.
• Oil Pool Account, which was the balancing tool used under the APM, would be dismantled on April1, 2002. Any outstanding balance would be liquidated by issue of oil bonds to the concerned oil companies.
• Private companies would be permitted for retail distribution of petro-products, subject to specified guidelines, amongst which the main criterion, as per Shri Ram Nayak, Minister of Petroleum and Natural Gas is a minimum investment of Rs 2,000 Crores (about US$ 415 million) in the petroleum sector (a brief note is given below).
• Petroleum Regulatory Board would be set up.
• Subsidies on LPG and Kerosene would be reduced to 15% and 33% respectively by April 1, 2002 . These would be phased out in the next 3 to 5 years.