Maarg Manthan · Topic 12.13

Petroleum Planning and Analysis Cell (PPAC)

Environment & Ecology › Energy Resources · Topic 12.13

The Petroleum Planning and Analysis Cell (PPAC) is an attached office of the Ministry of Petroleum and Natural Gas that collects, analyses and publishes data on India's oil and gas sector and supports the Ministry in planning and policy. It was set up in 2002, after the administered pricing mechanism for petroleum products was dismantled in 2002, and took over the role of the older Oil Coordination Committee. PPAC's main tasks are collecting and publishing data on production, imports, refining, consumption, prices and stocks of crude oil, petroleum products, natural gas and LNG; monitoring prices, taxes and the working of the downstream sector; calculating subsidies, such as on domestic LPG and kerosene, and the payments to oil companies; analysing demand and supply and preparing outlook studies; and advising on policy and on strategic matters such as stock-holding. It publishes regular reports and a monthly ready reckoner, and is the main source for petroleum statistics in India.

5 min read · UPSC Prelims · Environment & Ecology · Energy Resources

At a Glance

Set up 2002
Ministry Petroleum and Natural Gas
Status Attached office
Replaced Oil Coordination Committee
Core work Data and analysis
Exam link UPSC Prelims, Environment & Ecology: Energy Resources

Where Does It Fit?

This is the last topic of the macro on energy resources. It covers the main institution that gives oil and gas data and analysis, complementing PCRA, which focuses on conservation. Previous topic: Solar Renewable Purchase Obligation. Next topic: Effects of Modern Agriculture, Housing, Power Generation, River Valley Projects, Mining, Transportation and Tourism on the Environment.

What Does PPAC Do?

Function	Details
Data collection	Collects data on crude oil and gas production, refining, imports, exports and consumption from oil companies
Publications	Publishes regular reports, ready reckoners and statistics for the oil and gas sector
Price monitoring	Tracks prices of crude oil, petroleum products, LPG and natural gas and the taxes and duties on them
Subsidy and compensation	Works out the amounts for LPG and kerosene subsidies and payments to oil companies
Analysis	Prepares studies on demand, supply, trade and long-term outlook for the Ministry
Policy support	Assists the Ministry on planning, pricing and strategic matters like strategic reserves
Natural gas pricing	Supports the work on gas pricing formulae and reporting

PCRA: focuses on conservation and efficiency of petroleum use
PPAC: focuses on data, analysis and planning
DGH: Directorate General of Hydrocarbons regulates upstream exploration and production
PNGRB: Petroleum and Natural Gas Regulatory Board regulates downstream activities like pipelines and city gas
BEE: Bureau of Energy Efficiency covers energy efficiency for all fuels
Oil marketing companies: Indian Oil, Bharat Petroleum and Hindustan Petroleum sell fuels
ISPRL: Indian Strategic Petroleum Reserves Limited manages underground crude stocks
OIDB: Oil Industry Development Board funds oil industry projects

What Else Should You Remember?

Attached office: a government body that gives support and data to a ministry without being a full department
Administered Pricing Mechanism: the old system in which the government fixed oil product prices and compensated oil companies; dismantled in 2002
Oil Coordination Committee: earlier body that managed the oil pool account
Under-recovery: loss by oil companies from selling fuel below cost, calculated by PPAC when prices were controlled
Deregulation: petrol prices were freed in 2010 and diesel prices in 2014
LPG subsidy: domestic LPG subsidy is paid directly into bank accounts under DBTL, a scheme begun in 2013 and expanded in 2015
PAHAL: the name for direct benefit transfer for LPG
PM Ujjwala Yojana: 2016 scheme to give LPG connections to poor households
Kerosene subsidy: kerosene subsidy for public distribution has been cut sharply over time
Import dependence: India imports about 85 percent of its crude oil needs
Refining capacity: India is among the largest refiners in the world
Product exports: India exports refined products to many countries
Petroleum products: LPG, petrol, naphtha, diesel, kerosene, ATF, fuel oil and others
Natural gas share: gas is about 6 percent of India’s primary energy and the aim is to raise it to 15 percent
LNG imports: India imports LNG through terminals such as Dahej and Hazira
Strategic reserves: India has underground crude storage at Visakhapatnam, Mangaluru and Padur
Ready reckoner: a PPAC summary of key data on the industry
Open data: PPAC data is used by researchers and journalists
Price build-up: PPAC shows how product price is made up of cost, taxes and dealer margins
Dealer margins: fees paid to retail outlets
Link to previous: see Solar Renewable Purchase Obligation
Link to next: see Effects of Modern Agriculture, Housing, Power Generation, River Valley Projects, Mining, Transportation and Tourism on the Environment
Link to conservation: see Petroleum Conservation Research Association (PCRA)
Caution: import dependence, gas share and reserve capacity figures change, so use the latest PPAC publications
Exam hint: distinguish PPAC, PCRA, DGH and PNGRB by function
Ministry of Petroleum and Natural Gas: the parent ministry responsible for exploration, production, refining, distribution, marketing, import, export and conservation of petroleum, natural gas and related products
Subsidies: PPAC calculates LPG and kerosene subsidies and reports on payments to oil companies
Natural gas: PPAC publishes gas production, consumption and price data

Why Does It Matter for the Exam?

Set up: 2002
Status: Attached office
Work: Data and analysis
Current affairs link: Fuel prices and LPG subsidy
Common errors: confusing PPAC with PNGRB or PCRA

As an analytical point, a reliable data and analysis body is vital for a sector that is import-dependent and politically sensitive. PPAC’s public data allows better planning, price transparency and scrutiny of subsidies.

Why Is This Topic Important?

Role Data
Link Price, subsidy
Use Planning

What Came Next?

The next macro covers air, marine, noise and other pollution, beginning with the environmental effects of modern agriculture, housing, power generation and other sectors. Next topic: Effects of Modern Agriculture, Housing, Power Generation, River Valley Projects, Mining, Transportation and Tourism on the Environment.

Key People and Terms

PPAC Petroleum Planning and Analysis Cell
APM Administered Pricing Mechanism
DBTL Direct Benefit Transfer for LPG
DGH Hydrocarbons regulator for upstream
PNGRB Downstream regulator
Under-recovery Loss from selling below cost

Exam Corner

Points to Remember

PPAC set up in 2002.
Attached to the Petroleum Ministry.
Replaced OCC.
Task: data and analysis.
APM ended in 2002.

Do Not Confuse With

PPAC and PCRA Data versus conservation
DGH and PNGRB Upstream versus downstream regulator
PPAC and BEE Oil data cell versus all-energy efficiency

Memory Hook

Two thousand two, price control ends, PPAC counts the barrels.

Mains Angle

Questions ask for role and distinction. These points help.

Role Data, analysis
Link Pricing
Others PCRA, PNGRB

A Question You May Face

An original practice question, not a past paper question.

“Describe the role of the Petroleum Planning and Analysis Cell and distinguish it from other bodies in the oil and gas sector.”

How to Answer

Origin 2002.
Role Data.
Others PCRA, DGH.
Use Planning.

GS Relevance

Prelims: role, ministry, year. GS Paper 3: energy data, pricing and subsidies.

Frequently Asked Questions

What is the Petroleum Planning and Analysis Cell?

The Petroleum Planning and Analysis Cell is an attached office of the Ministry of Petroleum and Natural Gas that collects, analyses and publishes data on India's oil and gas sector, monitors prices and subsidies, and supports the Ministry in planning and policy. It was set up in 2002 and is the main source of petroleum statistics.

When and why was PPAC set up?

PPAC was set up in 2002, when the Administered Pricing Mechanism for petroleum products was dismantled and the older Oil Coordination Committee was no longer needed. It was created to collect data, monitor the downstream sector, work out subsidy payments and give analysis and advice to the Ministry.

What is the difference between PPAC and PCRA?

PPAC deals with data collection, analysis, pricing and subsidy monitoring and supports planning in the petroleum ministry. PCRA, the Petroleum Conservation Research Association, deals with conservation and efficient use of petroleum products through awareness campaigns, training and energy audits.

Which bodies regulate the oil and gas sector in India?

The Directorate General of Hydrocarbons regulates upstream exploration and production, the Petroleum and Natural Gas Regulatory Board regulates downstream activities such as pipelines, storage and city gas distribution, and PPAC provides data and analysis. The Ministry of Petroleum and Natural Gas sets overall policy.

What is the Administered Pricing Mechanism?

The Administered Pricing Mechanism was the system in which the government fixed prices of petroleum products and compensated oil companies for losses through an oil pool account. It was dismantled on 1 April 2002, and prices of petrol and diesel were later freed from government control in 2010 and 2014.

PYQ Practice — Statement Analysis

1 PPAC was set up in 2002.

True

After APM ended.

2 PPAC regulates city gas distribution.

False

PNGRB does that.

3 PPAC works under the Ministry of Petroleum and Natural Gas.