India: Government Hints at Price Control Deregulation
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Friday, 19 December 2008 |
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India is planning to lift state controls on petrol and diesel prices by
February and introduce a market-based system to take the pressure off
oil refiners and marketing companies, which have been pushed into the
red when global crude oil prices move beyond domestic retail prices.
According to a senior Petroleum Ministry official, India may let
domestic oil prices be market driven, a move that has been promised on
many occasion but failed to materialise.
However, the current price of oil may provide the opportunity to
introduce the ‘price deregulation’ option. Presently, global
crude prices are hovering near $45 per barrel and "if this trend
sustains for 2-3 months, petrol and diesel prices are likely to be
freed from administrative controls," the official said.
According to market analysts, the new pricing system, if implemented,
would increase competition among oil companies and the government may
stop granting compensation to state-run oil companies. It
certainly will be a big bosst for the independent and private fuel
wholesale and retail marketers such as Essar and Reliance.
However even the state oil companies like IOC , Bharat and HPCL have
been making loses despite subsidies.
PetrolWorld 161208
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