Bring oil, gas prices to trade parity: Plan panel

Special Correspondent

‘Encourage private oil companies to develop retail network’

Subsidies on LPG, kerosene should target BPL families

Coal pricing policies should be left to market

NEW DELHI: Seeking to put an end to the subsidy regime in the energy sector and de-controlling of prices, the Planning Commission on Tuesday recommended that prices of petrol, diesel, gas and coal should be freed or linked to international markets, a move, if accepted, would make energy costlier.

“Bring pricing of oil, gas and coal to trade parity or competitive marketing basis,” the Commission said in a document on the Integrated Energy Policy (IEP), which was placed before the full-fledged meeting of the Planning Commission chaired by Prime Minister Manmohan Singh.

Noting that the progress on various recommendations of the IEP, approved by the Cabinet in December 2008, has been slow, the Commission said, prices of various petroleum goods and coal are still administered.

It also suggested raising of gas prices by public sector companies. “Natural gas prices of public sector undertakings are very low and need revision,” it said.

The meeting was attended by Union Finance Minister Pranab Mukherjee, Petroleum and Natural Gas Minister Murli Deora and Union Power Minister Sushil Kumar Shinde. The Planning Commission also called for linking petrol and diesel prices with international markets and said that large subsidies in kerosene and LPG should be better targeted to benefit the below poverty line (BPL) families. Subsidised prices of LPG and kerosene are greatly misaligned and imply a very large subsidy. This is leading to huge uneconomic and unintended benefits to certain classes of consumers and widespread adulteration of petrol and diesel, the presentation said.

Favouring a stable price regime in the oil sector, the presentation said, it would encourage private oil companies to develop retail network for sale of petrol and diesel. Private oil companies are not using or developing retail network for sale of petrol and diesel in the absence of a stable price regime, it said. The coal pricing policies are distorting market demand and they should ideally be left to the market and trading of coal, nationally and internationally, should be free,” the presentation added.

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