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Control on petro-product pricing to continue

Our Bureau

New Delhi , Nov. 18

THE Government on Thursday said that it would continue to administer the prices of sensitive petroleum products such as diesel, LPG and kerosene even though a decision to dismantle the Administered Price Mechanism (APM) for the oil sector came into force on April 1, 2002.

This is the first official confirmation by a Government official that the dismantling of the APM for the oil sector has not been adhered to. Even after April 1, 2002, the oil marketing companies had to approach the Government seeking permission to revise the prices of petroleum products, rendering the deregulation process ineffective.

``Was there ever an APM dismantling? Only an announcement was made (to dismantle APM for petrol and diesel from April 1, 2002). Was it ever dismantled for kerosene and LPG? And, since January 1, 2004, the Government was dictating even petrol and diesel prices,'' the Petroleum Minister, Mr Mani Shankar Aiyar, said at the Economic Editors' Conference here.

"We have been far more honest in saying that the Government will control prices of cooking and auto fuels," he stated. The UPA Government had hiked diesel, petrol and LPG prices on June 15, the first in 2004, and then attempted to set prices within a band, thereby giving limited freedom to oil companies to revise prices. But, the band had to be abandoned due to continuous rise in international crude prices, he noted.

``Instead of pretending that the APM has been dismantled, we accept that in the present circumstances, the Government has to have a major role in determining what the fuel prices are,'' he said, adding that prices would be fixed keeping in mind economic and social considerations.

Mr Aiyar said that on November 4, the Government decided to link petrol price to import parity to align India with global trends. This was not applied for diesel, LPG and kerosene.

``This, I confess, is an anomalous situation. This anomaly needs to be examined,'' he said, without elaborating.

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