SC to hear dual diesel pricing, PSUs want their pleas clubbed

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: May 13 2013, 08:33am hrs
Public sector oil marketing companies have moved the Supreme Court, seeking transfer of the petitions challenging the Centres decision to deregulate prices of diesel supplied to bulk consumers of public utility services from different high courts to the apex court.

The petitions will be heard on Monday by a vacation bench headed by Justice BS Chauhan.

The firms want their petitions transferred from various HCs of Madras, Kerala, Andhra Pradesh, Karnataka and Gujarat.

Seeking the transfer against the petroleum ministrys decision to charge bulk consumers more as per its new dual pricing policy of January 17, the three OMCs Indian Oil Corporation, BPCL and HPCL said multiple litigations on the same issue would lead to conflicting decisions and it is in the interest of justice and public interest that all pending cases may be transferred to the apex court.

Multiplicity of proceedings/litigations would not only lead to possible conflicting and contradictory orders of the different HCs, but such a situation would also render the Centres policy ineffective and would completely defeat the rational justifying the issuance and implementation of the policy, the PSUs stated.

The ministry had authorised OMCs increase the retail selling prices of diesel in the range of 40-50 paise per litre a month, excluding VAT as applicable in different states/ union territories, until further orders.

The petition filed through Meharia and Company said that the primary objective behind the pricing reforms undertaken by the Centre is the growing imperative for fiscal consolidation and the need for reducing subsidy burden on petroleum products, so as to allocate more funds to social sector schemes for the common man and for ensuring countrys energy security in the long term. Failure to do so would have adversely impact the fiscal deficit, resulting in a downward spiralling effect on the economy with consequential significant adverse impact on the common man, they added.

While the Kerala high court had in March directed the two oil companies - IOC and HPCL - to sell high speed diesel at subsidised rates to the state water transport department and state road transport corporation, the Madras HC in April allowed the Centre and OMCs to sell diesel at market price to the Tamil Nadu State Transport Corporation, one of the bulk consumers of diesel, and had directed its the single judge bench to consider the issue afresh.

The Madras HC had rejected the arguments that eight state undertakings together would incur around R745.55 crore per annum because of the new policy.

According to the OMCs led by IOC, pricing of sensitive petroleum products such as diesel, PDS Kerosene and domestic subsidised LPG is done in a transparent manner by OMCs. Over 80% of the countrys crude oil requirement is met through imports. Consequent to the deregulation of the refining sector from April 1998, domestic refineries are totally exposed to the vagaries of international oil market and are not compensated in any form whatsoever based on their costs of refining activity..., the petitions settled by counsel Khushboo Jain said.

The OMCs during 2004-05 incurred under-recovery on sale of diesel and other regulated products due to non-revision of prices in line with the international prices, Jain further added that the continued incurrence of under-recoveries would create a situation where OMCs would not be in a position to maintain supplies of petroleum products in the country.