Election on the cards, govt to steer clear of steep hike in fuel prices

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Moily’s “recollection” remembered to include revision in guidelines for opening petrol pumps and market discipline norms for LPG distributors. Reuters Moily’s “recollection” remembered to include revision in guidelines for opening petrol pumps and market discipline norms for LPG distributors. Reuters
SummaryGovt has decided not to implement a steep hike in price of diesel, LPG and kerosene.

With general elections scheduled to be announced end-February, the government has decided not to implement a steep hike in price of diesel, LPG and kerosene — as recommended by the Kirit Parikh Committee last October.

The political mindset was contained in petroleum minister M Veerappa Moily’s “unfinished agenda” which does not feature a change in the current pricing methodology of controlled products among the 16 pending issues listed by the minister on Tuesday. “We have taken a number of policy and administrative decisions during last one year which have significantly contributed in changing the perception of the stakeholders and turning around investors’ sentiment,” Moily wrote to petroleum secretary Vivek Rae.

“However, there are some unfinished agenda which need to be taken on priority and we should try to ensure that all these pending decisions are taken up before end-January,” he wrote while jotting down the outstanding issues.

Market pricing of the three products is key to the reforms in the petroleum sector as their under-recovery is largely passed on to upstream national oil companies which have to forego a part of their earnings, thereby reducing investible surplus for exploration and production. Sources said the Moily’s omission was deliberate as a Cabinet proposal on an immediate hike in diesel price by Rs 5 per litre, cooking gas LPG by Rs 250 per cylinder and kerosene by Rs 4 a litre has been pending with him for almost a fortnight.

In fact, Moily quietly buried the pricing proposal by including another of Parikh’s recommendation — “cap on sharing of subsidy burden by ONGC and Oil India Ltd” — in the list of items. Interestingly, Moily’s “recollection” remembered to include revision in guidelines for opening petrol pumps and market discipline norms for LPG distributors.

Amitav Ranjan

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