The Hindu Business Line : Rangarajan panel may propose changes in petro-pricing mechanism

THE committee on petroleum product pricing and tariff structure, headed by Dr C. Rangarajan, will submit its report on Tuesday. It is expected to lay emphasis on protecting the interests of all stakeholders - oil companies, Government revenue consideration and consumer interests.

The committee is also likely to recommend changes in the pricing mechanism policy and clearly define various components for fixing retail prices of petroleum products.

Speaking to newspersons after his brief meeting with the Petroleum Minister, Mr Murli Deora, here today, Dr Rangarajan said that though the report has not been finalised, a broad approach to various issues has been worked out.

"We have to take different stakeholders' interests into account, including keeping oil marketing companies in good financial health, revenue availability for Government and providing consumers fuel at affordable price."

Kerosene pricing: He said the issue of dual pricing of kerosene has to be faced squarely. Nearly 60 per cent of kerosene is sold to people below poverty line (BPL). "With 40 per cent of kerosene being consumed by people above poverty line (APL), there is a need to examine pricing mechanism treating different segments of the society differently," he said.

Dr Rangarajan said that there could be various options of targeting the subsidy through cash vouchers and debit cards to APL people. These options would allow single pricing of kerosene.

Uniform prices: He also said that the committee would look at the issue of uniform pricing of petroleum products across the country. However, significant issues relating to freight neutralisation have to be considered along with import parity or trade parity pricing.

He said in a market economy pricing implied competitive pricing and import parity price was one of the benchmarks. Export parity signifies the minimum price of a product. "Import parity prices include a component of taxes. Several countries impose large dose of taxes on petroleum products as one way of raising revenue," he added.