The Government has decided to completely de-regulate prices of retail diesel resulting in the first price cut of the fuel since January 2009. Indian Oil will cut diesel prices by Rs 3.37 per litre (including taxes) from midnight in Delhi as a result of the deregulation of diesel price and linking it to market rates.
"The union cabinet has decided to completely de-regulate the price of diesel. Henceforth the price will be linked to the market," said Finance Minister, Arun Jaitley, at a briefing after the meeting of the Cabinet Committee on Economic Affairs.
"Over the last five years, prices of diesel has significantly gone up. But given the crude price today, diesel prices would stand to be reduced after being market linked," he added.
Public sector oil marketing companies have been making a profit of ₹ 3.56 a litre (over-recovery) on diesel between October 2 and October 16, according to the Petroleum Planning and Analysis Cell.
This is due to the falling price of crude oil internationally, which has brought down the Indian basket to $83.85 a barrel as on October 15.
Private players welcomed the move to deregulate diesel prices. "We welcome government's decision to deregulate diesel. This will not only help in controlling the fiscal deficit, but also be advantageous for the consumers as they will now pay market rates for the fuel which is lower by more than Rs. 3 per litre," said LK Gupta, Managing Director and Chief Executive Officer, Essar Oil.
"This will also leave more money with upstream companies for investment in E & P sector thereby enhancing our efforts for energy security for the country. Diesel deregulation will also bring the private oil marketing company retail network into system. This will increase competition, benefiting the end consumer," he added.