Within hours of raising petrol and diesel prices, Prime Minister Manmohan Singh constituted a high-power committee on Wednesday headed by former Cabinet Secretary B K Chaturvedi to go into the financial position of oil companies.
The committee would examine the impact of increase in oil prices between 2004-05 and 2008 on the financial health of oil companies including upstream exploration companies, refiners and downstream oil marketing companies.
The panel has been asked to analyse the cash flows and the profitability of all three groups of 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 of their operations.
It would also revisit the concept of 'under recoveries' and examine the reported deficit and the real deficit faced by oil marketing companies as a result of price constraints imposed on them.
The committee, as per the terms of reference, would estimate the financial needs of the refiners and the OMCs in order to continue their normal business activities and to meet the energy needs of the economy and the possible source of funds to meet their financial needs.
The Committee would examine the available options for burden-sharing by all stakeholders, including upstream exploration companies, refiners, downstream OMCs and standalone refiners.
Besides Chaturvedi, who is a member of Planning Commission, the committee will have Saumitra Chaudhuri, member, prime minister's Economic Advisory Council and Arvind Virmani, chief economic advisor as its members.
