The ongoing debate over gas pricing has taken a new turn with the petroleum ministry asking its technical wing, the petroleum planning of analysis cell (PPAC), to give comments on the recommendations made by the committee of secretaries (COS) on the vexed issue of creating a level-playing field for all players, including public and private oil marketing companies, in the sector.
The expert committee had suggested reduction or removal of government control in pricing of automotive fuels, including petrol and diesel as also domestic LPG and kerosene for public distribution system (PDS). This has also been laid in the integrated energy policy.
According to sources, the petroleum ministry has already accepted the fact that prices of fuels should be market driven. However, in order to protect consumers from unsustainable levels of fuel prices following a spurt in international oil prices, the retail prices of fuels have been moderated for product sold by oil marketing companies like IOC, HPCL and BPCL. The consequent financial burden in public interest is being borne by the oil companies and the government, with minimum pass-through to the consumers. However, the private sector is allowed to sell at prices as may be determined by them.
However, despite the petroleum ministry agreeing on the recommendation of a level-playing field for all players, no agreement has so far surfaced. The ministry has asked the PPAC to suggest practical innovative approaches, which may be brought before the COS.
The PPAC has also been asked to comment on pursuing a full-price competition policy at the refinery gate and at the retail level for all petroleum products. This would mean shifting back to import parity or export parity (as suggested by the Planning Commission) from the existing trade parity pricing for petrol and diesel (which is the weighted average of the import parity and export parity prices in the ratio of 80:20).