Oil skids on reforms

Updated: Mar 25 2005, 05:30am hrs
The rumour mills are agog with the news that hefty retail price increases are imminent for petrol and diesel and that the petroleum ministry is considering reintroduction of a price band.

Ever since the runaway prices of crude in the international market, there was always a lurking feeling that the government will have to do something to keep the marketing companies whole.

But, the answer begs the question whether this is the only option. What about the stabilisation fund that was being talked about to insulate the consumers What about the huge margins that the refiners are raking in

And, what about the obscene moolah that the domestic exploration companies are earning due to the free hand allowed to them to charge international prices on domestic production, without shel-ling out commensurate economic rent

Something is patently wrong in the way the rise in international crude prices is being addressed. On one side, we have an upsurge in oil diplomacy without commensurate near-term benefits in sight and on the other, we have the consumer interest sacrificed at the altar of corporate profitability.

After weeks of stability in the inflation index, price hikes will surely act as a trigger towards a jump in the index, which has already started showing signs of an upward movement with the onset of summer.

Isnt it high time, then, to go into the entire gamut of petroleum pricing, having regard to the interest of all stake holders And not make it simply an issue of source of revenue for the government or the profitability of marketing companies

The writer is former CMD, HPCL