Posts Tagged ‘oil marketing’

Petrol Prices to be Revised Uniformly

The government owned oil marketing companies – Indian Oil, Hindustan Petroleum, and Bharat Petroleum – will be reviewing petrol prices on a monthly basis, and any decisions regarding changes in prices will be on consensus basis within the public sector. This means that petrol prices will be uniform at the retail pumps of public sector companies. Private companies may however choose to differ.

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However, the government has made it clear that it will not be completely deregulating diesel prices for now. It had hiked diesel prices by Rs 2 last month while petrol prices were made market determined. Earlier it was expected that despite diesel prices still involving a subsidy of around Rs 2, they will too move in tandem with crude oil prices.

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A lot of political opposition to the move along with increasing inflation may have been responsible for the retreat by the government. Diesel is used largely by the transport sector as well as the farm sector and a further price hike would therefore push up prices of almost all other products. The government is already struggling to tackle surging food prices and therefore probably wants to wait till the inflation comes down.

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The decision was taken at a meeting called by the petroleum secretary S. Sundareshan to deliberate on price revision frequency and also on how the publicly owned OMCs will coordinate on the matter. “Petrol price will be reviewed monthly after a mutual consultation among the three (government owned) oil marketing companies. There is no need for revision of prices now. We will follow this mechanism for three months from now,” said Indian Oil director S V Narasimhan after the meet.

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There will be no revision however for the current month. Also, the oil companies have not announced any particular date for price revision to prevent any hoarding by the black marketers, who may try to store the petrol in anticipation of a fuel price hike and result in problems for masses.

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With regard to the determination of price of diesel the Petroleum Secretary said, “Right from the beginning we have been saying that the price of petrol will be market-determined and the oil companies will take the decision themselves. The decision of oil companies would be based on factors like what is the competition doing and whether prices will be determined jointly or on individual basis.”

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On issue of whether the private companies like Reliance Industries and Essar too will harmonise their decisions with the government OMCs he said, “We are given to understand that everyone has adopted a wait and watch policy for next few months until the situation stabilises. At present, there is no scope for price revision of petrol.” He also categorically stated that “government was not thinking on revising diesel prices for now.”

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With regard to another crucial aspect of oil sector, the sharing of subsidy burden between companies and government he said that for the first quarter of 2010-11, the upstream companies such as ONGC and Oil India will shoulder a burden of about Rs 6,000 crore. The total under-recovery for the quarter is expected to be about Rs 20,000 crore.

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