India: Another Government Committee to Look at Fuel Pricing
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Wednesday, 09 September 2009 |
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New Delhi has announced a new committee to look at the issue of
pricing oil products and how it affects the domestic operating oil
companies.
It is just a year ago that the High Powered Committee on Financial
Position of Oil Companies submitted its report, and the proposals were
never implemented. In 2006, another expert panel on petrol pricing had
put out a list of recommendations, only to meet a similar fate. In fact
there have been a numbrer of other oil-sector reports since
the nineties, and implementation has never taken place.
Now the standard policy response in the face of bouyant crude prices
has been to keep retail prices unrevised by fiat, and then to issue
government bonds to state-owned oil companies in lieu of the
"under-recoveries" of the latter. Independent oil companies get
no support and therefore have to suffer fuel price losses.
However oil bonds are not the answer either. Oil bonds are
redeemed from budgetary funds over a number of years with interest, and
given the huge volumes in oil, such a system is not sustainable.
There is a strong need for real reform and action by the authorities in
India. PetrolWorld will be following the process of the new
committee.
PetrolWorld 070909
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