The Hindu Business Line : Petrol, diesel price band mooted

So far, the prices of these two products have been reviewed on a fortnightly basis by the Government, whose control has ensured little or no revision of consumer prices even in the face of spiralling global prices.

According to oil industry sources, this measure, if implemented, would insulate the consumers from the volatility of the global prices. "Allowing a price band will not financially help the oil companies which are suffering huge losses in the sale of LPG and kerosene," a senior oil company official said when queried on the proposed government move.

The `moving average' price band would be a 10 per cent variation of the rolling average of the product price over a three-month period as well as that over a year.

So, if the global crude price is around $30 per barrel, and consequently the product price is in the region of around $34 per barrel, then the allowed band would be 10 per cent of $34 or $3.4 per barrel or Rs 1-Rs 1.5 per litre.

At a meeting held today between the Petroleum Minister, Mr Mani Shankar Aiyer and the heads of the public sector oil marketing companies as well as that of Oil and Natural Gas Corporation, it was decided that the proposal to form a price band would be taken to a Committee of Secretaries (CoS) for approval and further on to the Cabinet before implementation.

At the time of hiking petrol prices by Rs 2 per litre, diesel by Re 1 per litre and cooking gas LPG by Rs 20 per cylinder on June 15, the Cabinet was informed by the Petroleum Ministry that a mechanism for insulating the common man from volatilities would be devised.