CONTENTS Foreword v Preface ii 1. Refining Petroleum Crude: ATechnical Note 1 1.1: Properties of Hydrocarbons 2 1.2: Composition and Structure of the Components of 4 Petroleum 1.3: Refining the Crude 7 2. Evolution of Petroleum Refining in India 9 2.1: Nascent Petroleum Sector of India 9 2.2: Maturing Industry and Inadequacy of the Public Sector 12 2.3: A Broader Perspective 16 3. Industry Structure and Pricing of Products 19 3.1: The Major Players: Upstream Sector 19 3.2: The Major Players: Downstream Sector 20 3.3: Price Determination 22 4. Technical Efficiency and its Measurement 26 4.1: The Concept of Efficiency in Production 26 4.2: Necessary Abstraction of the Reality 29 4.3: Total Factor Productivity and Technical Efficiency 36 4.4: Data Generation 38 4.5: Some Final Comments 40 5. Estimation of Technical Efficiency Using Stochastic Frontier 42 5.1: Production Frontier Models 44 5.2: Stochastic Production Frontiers 47 5.3: Maximum Likelihood Estimation: The Normal-Truncated Normal Model 49 5.4: Some Empirical Applications for the Indian Economy 53 6. Measurement of Variables 57 6.1: Capital 57 6.2: Implications of Two Approaches: PIM and OHSM 60 6.3: EPD under the PIM 63 6.4: Measurement of Service Capital 65 6.5: Segregation of Refining and Marketing Operations 70 7. Technical Efficiency in Oil Refining Public Sector Companies 77 7.1: Earlier Studies on Performance of Oil Refining PSCs 79 7.2: Production and Inputs82 7.3: Factor Employment in Refining Operations and Partial Productivities 86 7.4: Technical Efficiency in Oil Refining PSCs 89 7.5: Conclusion 97 References 101