Diesel will become a completely deregulated product in six months, said M. Veerappa Moily, Petroleum and Natural Gas Minister, on Wednesday.
The Government has partially deregulated diesel with the public sector oil marketing companies being allowed to raise the fuel’s price in small doses every month till the rates become market linked.
“We are planning (to deregulate diesel in six months). We are already going in that direction. With the rupee appreciation (against the dollar) and drop in international crude oil price, we will be in a position to completely deregulate. The rupee would stabilise. And there are ways to do it,” Moily told mediapersons at the KPMG Energy Conclave in New Delhi.
However, the Minister said that there are no proposals to go for a one-time hike in diesel price to meet the gap between the market and selling price of the fuel (commonly known as under-recovery).
At present, companies raise prices by 45-50 paise every month. Going at this rate, it would take at least 18 months to meet the under recovery. Currently, diesel is sold at a discount of Rs 9.69 a litre.
Asked if this move would be supported by the UPA allies as five States are holding polls, Moily said, “Don't worry. UPA-III will come back.”
Shares of Indian Oil Corporation and Hindustan Petroleum Corporation rose by around 1-2 per cent in the early morning trade on the BSE.
However, by the end of the trading session, Indian Oil closed 1.85 per cent lower at Rs 201.20, while the HPCL scrip closed 1.24 per cent lower at Rs 211.75.