OMCs will revise price every month until losses are wiped out
The Centre is seized of some State governments’ directive to their transport undertakings (STU) to line up at retail outlets for refuelling following the removal of subsidy for bulk consumers of diesel, Petroleum Minister M. Veerappa Moily said on Friday.
Talking to reporters here, Mr. Moily said he had heard that States such as Gujarat and Tamil Nadu had asked their STUs to collect diesel at retail pumps instead of buying it directly from the oil marketing companies — as has been the current practice so far — in order to avoid paying the market price mandated for them.
“We need to look into the issue… When rules are laid down, there are people who find ways of circumventing them. Instead of buses being asked to refuel at petrol pumps, the States should reduce high local sales tax or VAT on diesel to cut prices.”
Giving firm indications that diesel would become costlier, the Minister said the OMCs would revise prices by 40-50 paise a litre every month until they completely wiped out the present subsidy component of Rs. 10.80 on sale of the fuel.
On January 17, the Cabinet decided to move towards deregulating diesel prices. The same day, the OMCs hiked diesel price by 45 paise.
The decision on the retail price hike was coupled with the move to charge bulk consumers such as defence, the Railways and STUs the market price — which is almost Rs. 10 a litre more than the retail rate — in a bid to save an estimated Rs.12,907 crore in annual subsidy.
Price catch goes for fishermen
In a relief to thousands of fishermen residing along the coastal belt, Petroleum Minister M. Veerappa Moily has directed the oil marketing companies (OMCs) to treat them as individual customers and not as bulk buyers for supply of diesel at a subsidised rate.
An official statement here said fishermen would be supplied diesel at the price applicable at the OMC retail outlets with immediate effect.
Mr. Moily said there appeared to be no specific criteria for bulk supplies. But as per the practice, customers who took delivery directly from OMCs’ installations were treated as bulk customers. In principle, the bulk customers should be those organisations and industries which had a single entity receiving supplies in bulk such as defence, the Railways, State Transport Undertakings, power units, cement and auto manufacturers.
But fishermen in essence were individual customers who for the sake of convenience had formed cooperatives and requested the OMCs to install outlets exclusively for their use. “So treating them at par with the industrial/commercial customers or government organisations would be unjust and unfair…,” the statement said. The Minister pointed out that fishermen had stopped taking supplies from the dedicated outlets and there had been no uplift from the fisheries’ consumer pumps from January 18. “As such it is not logical to continue to treat them as bulk customers.”