Refuting the news reports of a possible government intervention to keep the retail fuel prices under check, Oil Minister Dharmendra Pradhan categorically said that the government has “no business to interfere in the day-to-day functioning of the oil marketing companies”. Further, the minister also said that an analysis of the global trends indicates that the retail fuel prices will likely ease out in the days to come.
The dynamic fuel pricing mechanism is the best option in the interest of the consumers over the long term, Dharmendra Pradhan said after a meeting with the oil marketing companies’ executives. In an advanced economy, the pricing of retail fuel is best left to a formula-driven transparent method, and not knee-jerk reactions, he added.
Earlier today, TV news channels reported citing sources that the government may ask the oil marketing companies to absorb further increase in global crude oil prices, and that it is unlikely to pass further rise in fuel prices due to higher inflation.
The news reports of a possible government intervention to keep the retail fuel prices in check came in the wake of petrol and diesel prices rising to hit three-year highs in some cities, only, without the people noticing it much this time. The petrol in Mumbai has risen to Rs 79.48 per litre, a level last seen in August 2014 in the country’s financial capital. Similarly, the price of diesel is at a three-year high in the metro cities of Kolkata and Chennai at Rs 61.37 and 61.84 per litre respectively.
The news reports brought back the ghosts of the era of regulation, when petrol and diesel price movements were much hyped events with the government dictating how much the oil refining and marketing companies could charge. However, Dharmendra Pradhan’s statements sought to put the matter to a rest, at least for now.
The minister said that the deregulation of retail fuel prices, beginning with petrol in 2010, diesel in 2014, and then the shift to daily revision in June 2017, is a consumer-friendly approach, and in their best interests. Albeit, of late, the rise in the retail fuel prices was seen due the impact of hurricanes Harvey and Irma on the international fuel markets, Dharmendra Pradhan said, adding that the situation is likely to ease out in the coming days.
The two hurricanes to have hit the American shores in succession have hit the global refining capacity by as much as 13%, leading to a rise in the retail fuel prices in the international markets, Dharmendra Pradhan said. The price of petrol rose by 18% and that of diesel has gone up by 20% in the international market over the last three months, he said.
Going further, Dharmendra Pradhan also said that with more and more private sector players coming into the fuel retailing business, the sector will see more efficiencies from increased competition, leading to lower prices for the consumers.