Deregulation of diesel prices will encourage private oil companies to enter retail sales while low fuel price is expected to result in fall of truck rentals helping to arrest rising inflation.
With the Centre lifting the long pending control on diesel on Saturday, the government hopes that private oil companies like Reliance and Essar Oil will enter retail marketing by opening their own outlets.
“Diesel deregulation will also bring the private oil marketing companies retail network into system. This will increase competition, benefiting the end consumer,” said L K Gupta, MD and CEO of Essar Oil said.
However, the private oil companies may not be in a hurry to return for retail sales immediately unless the government announce its fine print on the issue.
Though in 2002, the National Democratic Alliance (NDA) government led by Atal Bihari Vajpayee deregulated petrol and diesel for the first time, the United Progressive Alliance (UPA) government led by Manmohan Singh reversed that decision under pressure from Left parties. In January 2013, again the UPA government lifted the control on petrol and decided to deregulate diesel pricing in stages.
When the Centre lifted control on diesel prices in 2002, several private oil companies like Reliance, Shell and Essar entered the retail sales by opening pumps across the country. However, their euphoria ended soon after the UPA-I government reversed its decision and brought diesel price under its control, which led to closer of private retail outlets.
“One has to wait and watch what would be government’s move if the diesel prices go up once international prices of crude oil also jump. If government against started the control the prices if international market go up, there will be repeat of same old story,” said an executive from private oil company.
