Oil PSUs questioned on aviation turbine fuel pricing

NEW DELHI: Oil Minister Veerappa Moily has questioned state oil firms for charging about 25% more for jet fuel supplied to Indian carriers and sought their explanation for allegedly indulging in opaque pricing of aviation turbine fuel (ATF).

Moily is considering asking the downstream petroleum regulator to monitor ATF rates after Civil Aviation Minister Ajit Sigh alleged that state oil companies are discriminating between domestic and international airlines, government and industry officials said.

"The minister (Moily) has given a week's notice to oil PSUs to explain why he shouldn't ask Petroleum and Natural Gas Regulatory Board to monitor their ATF pricing, which is allegedly non-transparent?" said an official with direct knowledge of the matter. Moily had a meeting with top officials of state oil marketing firms last Friday. Singh had met Moily a month ago and urged him to bring in more transparency in fixing ATF prices because fuel cost accounts for about 40% of operating cost of domestic air carriers.

"Foreign airlines enjoy transparent pricing mechanism whereas Indian carriers suffer from opaque pricing method known as import parity pricing," a civil aviation ministry official alleged. Oil marketing companies argue that ATF prices are revised every month in line with international prices published by Platts and Argus.