India: Dr Kirit Parikh To Head Up Oil Price Committee
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Sunday, 20 September 2009 |
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The Centre has set up new expert committee to suggest reform in the
pricing of oil-products and is to be headed by Dr Kirit Parikh.
The fact remains that India has a formula-based pricing — with
notional import parity prices and all — which, for instance, yields
refinery gate prices that are higher than that quoted at the main
international petro-goods markets, as per last year’s High Power
Committee on Financial Position of Oil Companies.
The Centre tends to keep retail prices of automotive and domestic fuels
unrevised by fiat, never mind the rising costs of crude oil — much of
it imported. In parallel, there is no real transparency when it comes
to markups like refinery-gate prices, distribution and marketing
costs. Central and state taxes on oil products can add up to half
the retail price.
The extant oil price regime has meant recklessly compromising, for
years into the future, limited budgetary resources via the issue of
bonds to oil PSUs. The subsidy regime has shoved private retailing out
of the market, and affected real competition. It makes no sense to
effectively ‘ring-fence’ retail oil sales. India needs a level playing
field in the oil sector which makes up over 10% of GDP.
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