The government’s decision on Friday to deregulate petrol price is expected to continue despite strong protests. The next logical step to link diesel price with that in international market may also happen in the near future.
The latest decision was taken by the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee. With this, the petrol price has gone up by Rs 3.50 per liter, diesel price by Rs 2 per liter, LPG price by Rs 35 per cylinder and kerosene price by Rs 3 per liter. While the price of petrol is on par with international petrol price, that of diesel is still Rs 1.50 less.
Earlier, Kirit Parikh Committee had advised total deregulation of oil prices. However EGoM favored partial implementation of the committee report, insisting on total deregulation of diesel prices in phases. However, along with periodical revision of petrol prices every fortnight to keep up with international price fluctuations, diesel prices may also see revisions.
The EGoM had recommended a hike of Rs 100 for LPG and Rs 6 for kerosene. Even with the price hike, there will remain a huge chasm between the actual prices levied and the international prices. The government has decided to continue the subsidy on LPG and kerosene for the time being.
The immediate impact of deregulation of petrol prices would be the return of private players such as Reliance Industries Ltd. and Essar Oil. They faded from the scene when oil prices went through the roof in international markets. In addition to them, the coming months will witness more and more private companies entering the market, presenting huge challenges to PSUs.
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