The central governments seems to be all set to accept the Kirit Parikh committee’s recommendations on freeing the prices of petroleum products with some caveats attached to it.  The  empowered group of ministers (EGoM) is meeting on 7 June to discuss Parikh committee’s report on deregulation of fuel prices.

The cabinet note prepared by the ministry of petroleum and natural gas recommends freeing of retail prices of petrol and diesel and increase in prices of kerosene by Rs 6 a litre and cooking gas by Rs 100 per cylinder seems to have a wide support in the government.

If the proposal is implemented, pump prices of petrol and diesel may go up by about Rs 5 a litre each. Officials involved in fuel pricing issue say that this is the right time for deregulating fuel prices. “It (crude) may settle at US $65-70 a barrel in the next few weeks, implying that impact of decontrol will be minimal on consumers,” an energy expert in the government said.

The cabinet note also suggests periodical price revision and  price-band mechanism to protect consumers from sudden surge in auto fuel prices. This means oil marketing companies will be allowed to revise prices on fortnightly basis, however government will step in only if prices of crude touch or go beyond US $100 a barrel, explained anothere senior official.
 The move will benefit private oil firms like Reliance Industries (RIL), Essar Oil and Shell India — which are incurring huge losses in the retail operations.

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