The Petroleum and Natural Gas Minister, under pressure from the oil marketing companies (OMCs) and State Governments, is likely to approach the Cabinet soon to revoke its dual pricing policy for diesel for the State Transport Undertaking (STUs) and industrial units. However, it is likely to continue the policy for defence and railways.
Recently, the Petroleum and Natural Gas Minister, Veerappa Moily conceded that the dual pricing policy for diesel had not served the purpose for which it was introduced in January this year and indicated that government would have a re-look at it.
``There is no doubt that the dual pricing policy for diesel has not worked. We have been flooded with requests from the state governments and the OMCs pleading that they are losing heavily on revenue as STUs are using retail outlets rather than diesel dumps to meet their needs. Industries like civil construction, cement, mining, steel have also shifted to retail outlets for their requirements. We are going to approach the Cabinet soon to revoke the policy at least in case of industries and STUs if not defence and railways,’’ a senior Ministry official remarked.
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According to the Petroleum Planning and Analysis Cell, working under the Petroleum Ministry, there has been a sharp fall in the sale of bulk diesel since it was deregulated in January. Before the decision to charge market price of the fuel for bulk buyers, it constituted about 18 per cent of total diesel sales, which has now dropped to 10 per cent. The fall in the share of bulk diesel is mainly due to very limited intake by state transport undertakings and by industries like civil construction, cement, mining, steel, etc., which have shifted in to retail outlets or to alternate fuels, the PPAC report said.
On its part, the State governments have flooded the Petroleum Ministry with requests to reverse the decision as it had badly impacted operations of STUs. The Kirit Parikh committee had also concluded that most of the STUs have started procuring diesel from retail outlets to take advantage of significant gap between the price of bulk and retail diesel, thereby negating the benefit of dual pricing.