The Hindu Business Line : Govt permits autonomous fuel price adjustments by OMCs

Autonomous decision
PSU oil companies can adjust prices on a monthly basis in line with global prices
No adjustments in prices made so far
Last revision in fuel prices was on June 5

New Delhi , Aug.8

The Petroleum Minister, Mr Murli Deora, on Tuesday said that the Government has permitted autonomous adjustment in fuel prices by the State-owned oil marketing companies on a monthly basis in line with international prices. However, the oil marketing companies have, so far, not effected any adjustments in prices since the last revision on June 5, the Minister said.

Informing the Rajya Sabha in a written reply, the Minister said, "The international oil prices continue to be at a very high level now. The current situation is unprecedented and therefore the Government has approved a number of measures based on the principle of equitable burden sharing amongst the three stakeholders, namely, the consumers, PSU oil companies and the Government, to tackle the crisis."

The total burden on account of escalated international prices of crude oil is estimated at Rs 73,500 crore for the current year. "The Government along with the oil companies has decided to absorb over 87.5 per cent of this burden, leaving only the balance 12.5 per cent to be borne by the consumers by way of increase in petrol and diesel prices," he added.

Despite the unprecedented rise in international prices, the Government did not increase the prices of kerosene sold under public distribution system and liquefied petroleum gas to protect the interests of the consumers, the Minister said. As part of these measures, the Government has allowed the oil companies to adjust the fuel prices, he said.

ONGC retail plans

Mr Deora said that ONGC has decided to defer its plan for the development of retail outlets for petroleum products — petrol and diesel. Informing the Rajya Sabha, he said that ONGC had been granted authorisation for marketing of petrol and diesel in accordance with the guidelines issued by the Government in the resolution of March 8, 2002.

In the wake of rising oil prices and to contain the burden on the consumers, the Government has taken a conscious decision not to increase the prices of petrol and diesel at par with the international prices of these products resulting in under-recoveries towards their marketing, the Minister said. While the Government has decided to issue oil bonds to partially compensate the State-owned PSUs — Indian Oil, Hindustan Petroleum, Bharat Petroleum and IBP — for their under-recoveries on this account, no such compensation mechanism is available to the new players in this business including ONGC, he informed.

"In view of this, ONGC has decided to defer their plan for the development of retail outlets," he said.

ONGC had envisaged setting up 1,100 retail outlets in the country to take benefit of the complete value chain integration in line with such models followed by global oil majors, the Minister said. The company has incurred an expenditure of Rs 8.67 crore so far in this regard, he added.