Allow free mkt flow: Oil regulator to govt
The petroleum regulator has decided to bite the bullet on retail fuel pricing even as the government continues to dilly dally on the issue.
By TNN |
NEW DELHI: The petroleum regulator has decided to bite the bullet on retail fuel pricing even as the government continues to dilly dally on the issue. The newly-constituted regulator has cautioned the government against tampering with fuel prices and distortaion of market forces. This assumes significance in the light of the meeting of the group of ministers on prices scheduled to be held on December 14.
In a letter to oil minister Murli Deora, petroleum & natural gas regulatory board (PNGRB) chairman L Mansingh said the government action, leading to “distortion of market forces and prevention of a free and competitive market” could be violation of the PNGRB Act.
The prices of petroleum products kept artificially low for about 18 months, impacting health of oil marketing companies (OMCs). The prices of auto fuel was last increased in June 2006. While public sector OMCs are losing Rs 6.34 per litre on the sale of petrol and Rs 7.88 per litre on diesel, the condition of private sector oilcos like RIL, Essar and Shell are worse as they don’t get compensation in the forms of oil bonds.
Stating that the government has the right to give subsidy to the poor, Mr Mansingh said, “Subsidisation should be direct, targeted beneficiary-wise and transparent not only to avoid conflict with any of the provisions of the said Act or other enactment such as MRTP Act or the Competition Act but also in conformity with the stated policy of the government.”
Mr Mansingh said the job of the regulator is to facilitate the orderly growth of the sector with a “fine balance” between interests of the consumers as well as the entities so that the massive resources required for infrastructure development in this sector materialise.
“Keeping this in view, the regulatory framework of the board and the policies of the government should complement each other and the last thing that should happen is the regulator being forced to intervene under the Act as a result of the direct or indirect consequences of any decision by the government,” he said in the letter.
Officials in the petroleum ministry confirmed that the minister had received the letter. Petroleum minister Murli Deora declined to comment on the issue.
In a letter to oil minister Murli Deora, petroleum & natural gas regulatory board (PNGRB) chairman L Mansingh said the government action, leading to “distortion of market forces and prevention of a free and competitive market” could be violation of the PNGRB Act.
The prices of petroleum products kept artificially low for about 18 months, impacting health of oil marketing companies (OMCs). The prices of auto fuel was last increased in June 2006. While public sector OMCs are losing Rs 6.34 per litre on the sale of petrol and Rs 7.88 per litre on diesel, the condition of private sector oilcos like RIL, Essar and Shell are worse as they don’t get compensation in the forms of oil bonds.
Stating that the government has the right to give subsidy to the poor, Mr Mansingh said, “Subsidisation should be direct, targeted beneficiary-wise and transparent not only to avoid conflict with any of the provisions of the said Act or other enactment such as MRTP Act or the Competition Act but also in conformity with the stated policy of the government.”
Mr Mansingh said the job of the regulator is to facilitate the orderly growth of the sector with a “fine balance” between interests of the consumers as well as the entities so that the massive resources required for infrastructure development in this sector materialise.
“Keeping this in view, the regulatory framework of the board and the policies of the government should complement each other and the last thing that should happen is the regulator being forced to intervene under the Act as a result of the direct or indirect consequences of any decision by the government,” he said in the letter.
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Officials in the petroleum ministry confirmed that the minister had received the letter. Petroleum minister Murli Deora declined to comment on the issue.
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