The Centre on Wednesday approved to deregulate the sale of domestically-produced crude oil from October 1.
Union minister Anurag Thakur said that the move will allow oil companies to sell their crude to private and government firms in India, according to ANI.
“The condition in the Production Sharing Contracts to sell crude oil to the government or its nominee or government companies shall accordingly be waived off,” a government release said. “[The] government revenues like royalty, cess, etc. will continue to be calculated on a uniform basis across all contracts.”
Previously, the central government would decide which state-run refinery got how much crude from each producer, according to Economic Times.
On Wednesday, the government said the decision would promote investments in the oil and gas sector.
“The policies relating to production, infrastructure and marketing of oil and gas have been made more transparent with a focus on ease of doing business and facilitating more operational flexibility to operators/industry,” it said.
India’s domestic crude production has declined over 20 years.
In 2021-’22, the production slipped to 28.4 million metric tonnes, the lowest in over two decades, Mint reported. The production decreased by 11.8% from 1995, when India had produced 32.2 million metric tonnes of crude.
The crude oil prices have been surging internationally. It has been cited as one of the reasons by analysts for decpreciating value of the rupeeagainst dollar.
On Wednesday, the Indian currency for the first time declined under the 79-mark against the US dollar.
The brent crude oil cost $118.38 (Rs 9,351.96) per barrel, an increase of 0.34% from Tuesday. Brent is a global price benchmark for crude oils from the Atlantic basin. It is used to set the price of two-thirds of the world’s trade of crude oil supply.
India imports nearly 85% of its oil. An increase in prices can push up inflation domestically, as well as widen the country’s trade and current account deficit.