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Deregulation of fuel prices might come up

Neha Sood


After the global fuel prices coming down to below $40 per barrel, attempts are being made to echo this change domestically too. Consequently, the proposal to decontrol petrol and fuel prices has been proposed. This would link the rates of fuel to market conditions; thereby increasing the chances of an abrupt fall in the value.


In relation to this advancement, PMO (Prime Minister’s Office) has instructed the petroleum ministry to give it a thought before finalizing rates in the end of the week. Both the Planning Commission and Finance Ministry (headed by PM himself) have favored the directive. The development if materializes, will permit Public sector Companies to decide on the rates in an independent manner, as per the cost of crude imports. Also, the private players like Reliance and Essar Oil will be able to compete better with the ‘subsidized’ rates of their Public sector counterparts. Inability to do this in the past caused the private companies to shut down the filling stations.


However, the petroleum ministry does not seem very interested in acting on the proposal as the state-owned firms are already losing money in the process of retail sales of cooking gas and kerosene oil. Compensation, to some extent was possible with the petrol and diesel sales. However, if the prices of the latter are also decreased, this would leave those with even less margins. Also, the ministry is yet to circulate note on this. So, it might take some time.

 
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