"These are going to be hard times and with the firming up of world prices, there is little user industries can do than pass on the hike to consumers," sources said. This, in effect, means that industries like petrochemicals and power, which are heavily dependent on naphtha, will increase the end selling price of their products. In fact, the hike in prices has been happening at fortnightly intervals and, during the last two months, it has seen an overall hike of close to 20 per cent for some products, especially naphtha.

There has been no change in the price of light diesel oil (LDO) which, according to experts, is of little significance given its low user base.

Effective Monday, portprice of naphtha will be Rs 8,450 per tonne, up from Rs 8,050/tonne a fortnight ago, an increase of 5 per cent. Following the new prices for inland refinery locations, naphtha ex-Mathura has gone up to Rs 9,020/tonne from Rs 8,620/tonne; for ex-Barauni, the new price is Rs 8,880/tonne naphtha ex-Koyali has increased to Rs 8,770/tonne from Rs 8,370/tonne while the price ex-Panipat is now Rs 9,140/tonne as against Rs 8,740/tonne two weeks ago. These are ex-terminal prices and have not factored in excise duty, freight, state sales tax and surcharge.

With all these considered, the final selling price of naphtha will be hefty enough for user industries to pass on the cost to the consumer. The first on the list will be the Indian Petrochemicals Corporation and Reliance Industries and experts say that the new prices will be effective during the course of the following week. The oil PSUs will now charge Rs 6,100/tonne for LSHS at all ports up from Rs 5,630/tonne in the beginning of this month.

The priceex-Mathura has increased to Rs 6,670/tonne from Rs 6,200/tonne; ex-Barauni to Rs 6,530/tonne from Rs 6,060/tonne while the new price ex-Koyali is Rs 6,420/tonne compared to Rs 5,950/tonne. In the case of ex-Panipat, the new price of LSHS is Rs 6,970/tonne up from Rs 6,320/tonne a fortnight ago. The increase in LSHS prices has been at an average of 8 per cent.

As for furnace oil, the revised price at ports is Rs 5,700/kilo litre, as against Rs 5,270/kl in the beginning of this month; for ex-Mathura, prices are up to Rs 6,230/kl from Rs 5,780/kl; ex-Barauni, the increase is again in the range of 8 per cent from Rs 5,650/kl to Rs 6,100/kl; ex-Koyali to Rs 6,000/kl from Rs 5,550/kl while in the case of ex-Panipat, price of furnace oil is up to Rs 6,350/kl from Rs 5,900/kl. These products were out of the administered pricing mechanism effective April 1 last year as part of the deregulation schedule recommended by the expert technical group headed by Nirmal Singh of the ministry of petroleum and natural gas.Prices saw a continuous downward trend for the first seven months till world prices began firming up and ever since, it has been on the rise.

Lest the era of APM be missed for its seemingly tangible comfort levels, it ought to be remembered that none of the benefits of reduced world prices were passed on to the consumer. This is exactly what the Nirmal Singh committee strove to reiterate in its report.

"Efficiency enhancements associated with a move from APM to MDPM (market-determined pricing mechanism) are to the benefit of all concerned in the medium to long run. The indirect benefits through better utilisation of hydrocarbon deposits, higher oil security, a more efficient allocation of resources in the country and, hence, better employment opportunities and higher income will far outweigh the direct costs."

The report has gone on to add that the "transition period can also be used to dispel some of the misplaced fears and apprehensions that exist about pricing reform in hydrocarbons. At the end ofthe transition period, prices will be determined by the interplay of market forces, competition and enhanced efficiency. These will lead to downward pressure on retail selling prices at the end of the transition period."

As per the committee's recommendations, the petroleum sector will be completely deregulated in 2002. This will involve a complete change in the import and excise duty structures during the next five years. By the end of the period, the subsidy on superior kerosene oil will be transferred to the fiscal budget of the government.