India: Petrol Deregulation & Pricing Deferred
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Thursday, 11 February 2010 |
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The debate on fuel deregulation and pricing at the Indian cabinet did
not take place as expected and was deferred.
 Finance and oil ministers will meet on Feb.14 to discuss fuel pricing and subsidies, according to a senior government official.
"We will discuss fuel pricing and if there is a need to raise prices,
then to what extent and how much to be raised for which product," he
said. The Indian government is concerned about the mounting oil subsidy
bill, but raising fuel prices would affect inflation.
India's wholesale price index rose to one-year high of 7.31 percent in
December, while food prices rose an annual 18 percent in January. The
Petroleum Minister, Mr Murli Deora, said his ministry would submit its
recommendations on fuel prices to the cabinet. Apparently the
minister has been seeking consensus since the the Kirit Parikh panel
recommendation of petrol price deregulation and fuel
pricing reforms.
Meanwhile the petroleum downstream industry is left with
uncertainty. At the recent PetrolWorld Business Forum held in
Mumbai, the consensus was that the political aspect of the issue would
inhibit any major change overnight. The more likely outcome would be a
stepping stone approach over a longer period of time.
David Egan
PetrolWorld Thursday 11th February 2010
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