Dismantling of APM will take time: Sinha

the government is chalking out a fresh roadmap for decontrolling the petroleum sector, keeping in view the difficulties in reducing the subsidies on kerosene and lpg and cutting duties on crude oil and petroleum products. finance minister yashwant sinha indicated on thursday that the previous targets for dismantling of the administered price mechanism will not be met, especially in case of the changes scheduled for april 1, '02. after a marathon meeting with petroleum minister ram naik, he said deviations are being worked out since it is not possible to adhere to the roadmap prepared in 1997. in some areas, we might deviate from the 1997 cabinet resolution for deregulation of petroleum sector, in view of the changed circumstances, he said. the government has committed itself to dismantling the apm from april 1, '02, and this exercise was to begin with reduction of subsidies on kerosene and lpg. neither mr sinha nor mr naik were willing to provide details, but the current buzz is that the government was unlikely to keep up its commitment to reduce subsidies on kerosene, supplied through the public distribution system (pds), to 33.3 per cent. similarly, the subsidy on lpg is unlikely to come down to 15 per cent as planned earlier. the government is also unwilling to bring down duties on crude oil to 5 per cent and petroleum products to 15 per cent as envisaged in the 1997 roadmap for apm dismantling. restoration of excise duties on petrol and diesel to the pre-budget level of 16 and 12 per cent, respectively, is also unlikely. in view of the downturn in revenue collections, the government is not inclined for any further downward revision in duties. even complete deregulation of natural gas prices is unlikely to keep date with april 1, '02. the linking of natural gas prices to 100 per cent import parity with fuel oil would now be done in instalments. mr naik had to climb down substantial during the seven marathon meetings with mr sinha in the past two months. fiscal concerns and political compulsions of a ruling party finally led to delaying the apm dismantling. the only target that has been fulfilled is decontrol of aviation turbine fuel. in case the government was to implement its earlier decision to bring down subsidies to residual level along with dismantling of apm, it would have meant a price increase of about rs 92 per cylinder of lpg and rs 1.20 per litre of kerosene. the other alternative is to bring down duties on these two products substantially. many of the issues related to apm dismantling are likely be dealt with in the '02-03 budget. while broad consensus has been reached to free petroleum sector from administrative price control, mr sinha said steps to be taken to free the sector would be drafted in a note, which would be put before the cabinet. consumer interest will be kept in mind while deciding these issues, he added. a regulator would be put in place for downstream petroleum refining and marketing, before the sector is decontrolled, mr sinha said. the present director general, hydrocarbons could be converted into upstream regulator.

Dismantling of APM will take time: Sinha

THE government is chalking out a fresh roadmap for decontrolling the petroleum sector, keeping in view the difficulties in reducing the subsidies on kerosene and LPG and cutting duties on crude oil and petroleum products.

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