It has been a disastrous first quarter for the oil marketing companies but R.K. Singh, Chairman and Managing Director, Bharat Petroleum Corporation, reiterates that petrol prices should stay deregulated.
Deregulation
“There is no point in petrol being part of the administered pricing mechanism (APM) all over again. All we need to do is to work out a suitable mechanism to ensure that the process of deregulation works out well,” he told Business Line .
On Thursday, the top management of Indian Oil made a strong pitch for re-regulating petrol prices since its losses are, in any case, not being compensated by the Government.
Net loss
The oil major had posted a whopping net loss of Rs 22,450 crore for its first quarter. BPCL and Hindustan Petroleum Corporation, likewise, reported combined losses of over Rs 18,000 crore.
Benefit to consumer
While the Government has in place a compensation mechanism for oil refiners to make good losses incurred on diesel, cooking gas and kerosene, petrol (which accounts for less than ten per cent of fuel losses) is not included in this basket.
This is because it has been freed of price controls since June 2010. In reality, though, the Government still has the last word on any price revision which prompted IOC to seek for petrol’s reclassification as a regulated fuel.
Singh, however, maintained that consumers would benefit from deregulated pricing of petrol even, while the system has not worked on the desired lines.
Parleys
“This is still a better bet than keeping prices controlled. The consumers should be able to avail themselves of the benefits of lower prices too and this can only happen in a deregulated scenario,” he said.
What has been particularly infuriating for customers is that petrol price hikes have often been abrupt and steep as seen recently when they were up by Rs 7.50a litre.
There have been talks of duty cuts and daily revision of prices but it remains to be seen when these changes will be implemented.
The Government had also indicated in June 2010 that it would only be a matter of time before diesel prices were gradually freed too.
This has been easier said than done given that world prices of crude and petro-products have seen a relentless rise which has made the job of deregulation doubly difficult.