Free hand likely to oil firms on auto fuel prices

New Delhi, April 19 | Updated: Apr 20 2005, 05:30am hrs
The government is likely to give state-run oil firms freedom to adjust auto fuel prices within a narrow price band once international prices stabilise, petroleum minister Mani Shankar Aiyar said on Tuesday.

It is hoped that when international prices stabilise, or government so decides, the price band mechanism might be resorted, he said in a written statement in reply to a question in Rajya Sabha.

Although, with effect from August 1, 2004, the government had worked out a price band mechanism, allowing oil marketing companies freedom to revise the prices of petrol and diesel within the prescribed price band, the steep and volatile increase in the international prices of crude oil resulted in the ceiling of the price band being breached within weeks of its being made operational resulting in the mechanism being placed in abeyance, he said.

The Indian basket of crude oil touched an all-time high of $52.83 per barrel on April 4, compared to an average price of $27.96 per barrel in 2003-04 and $39.21 per barrel in 2004-05. There has since been some softening, the Indian basket having declined to around $47 per barrel in the week ending April 16, he said.