<p>As the ongoing phenomenon of rising global crude oil prices threaten to severely dent the bottom line of the state-owned Oil Marketing Companies (OMCs), Planning Commission Deputy Chairman Montek Singh Ahluwalia has vouched for linking the retail prices of petroleum products with the global crude oil prices.<br /><br />Pointing out that the country meets nearly 70 per cent of its oil requirements through import, he said it would be unsustainable to delink the retail prices from import costs.<br /><br />Virtually endorsing the suggestion for the deregulation of retail prices of petroleum products, Ahluwalia said: “The Planning Commission’s view, which has been reflected in the integrated energy policy, is that domestic oil prices should reflect world prices.” <br />He said: “It does not make sense in subsidising the imported oil products, which are mainly consumed by the well-off.” <br /><br />Targeted subsidy<br /><br />However, referring to the need for a targeted subsidy for the vulnerable section of the population, Ahluwalia said a methodology could be evolved to provide essential items like kerosene to the poor at a subsidised rate. In a bid to enable the state-owned OMCs to offset the impact of rising global crude oil prices, the petroleum ministry is putting forth a proposal to deregulate the pricing of at least two auto fuels—petrol and diesel. <br />As per the deregulation proposal, the state-owned firms will be allowed to fix the retail prices of petrol and diesel as per the market condition, once the global crude oil price exceeds $ 70 per barrel. <br /><br />With the basket of crude oil, country imports, averaging nearly $ 70 per barrel, the state-owned OMCs are losing about Rs 135 crore per day on sale of petrol, diesel, LPG and kerosene. Currently, the government is off-setting the revenue losses being incurred by the state-owned oil marketing firms through a three-pronged complex compensation mechanism. More than one-third of the revenue loss is being compensated through the sale of oil bonds to oil marketing firms while the other one-third is met through the sale of crude by state-owned oil and gas explorers like the ONGC and GAIL at a discount rate to state-owned oil retailers.<br /><br />The remaining revenue loss is partly covered by the periodic rise in retail prices of petroleum products as allowed by the government.</p>
<p>As the ongoing phenomenon of rising global crude oil prices threaten to severely dent the bottom line of the state-owned Oil Marketing Companies (OMCs), Planning Commission Deputy Chairman Montek Singh Ahluwalia has vouched for linking the retail prices of petroleum products with the global crude oil prices.<br /><br />Pointing out that the country meets nearly 70 per cent of its oil requirements through import, he said it would be unsustainable to delink the retail prices from import costs.<br /><br />Virtually endorsing the suggestion for the deregulation of retail prices of petroleum products, Ahluwalia said: “The Planning Commission’s view, which has been reflected in the integrated energy policy, is that domestic oil prices should reflect world prices.” <br />He said: “It does not make sense in subsidising the imported oil products, which are mainly consumed by the well-off.” <br /><br />Targeted subsidy<br /><br />However, referring to the need for a targeted subsidy for the vulnerable section of the population, Ahluwalia said a methodology could be evolved to provide essential items like kerosene to the poor at a subsidised rate. In a bid to enable the state-owned OMCs to offset the impact of rising global crude oil prices, the petroleum ministry is putting forth a proposal to deregulate the pricing of at least two auto fuels—petrol and diesel. <br />As per the deregulation proposal, the state-owned firms will be allowed to fix the retail prices of petrol and diesel as per the market condition, once the global crude oil price exceeds $ 70 per barrel. <br /><br />With the basket of crude oil, country imports, averaging nearly $ 70 per barrel, the state-owned OMCs are losing about Rs 135 crore per day on sale of petrol, diesel, LPG and kerosene. Currently, the government is off-setting the revenue losses being incurred by the state-owned oil marketing firms through a three-pronged complex compensation mechanism. More than one-third of the revenue loss is being compensated through the sale of oil bonds to oil marketing firms while the other one-third is met through the sale of crude by state-owned oil and gas explorers like the ONGC and GAIL at a discount rate to state-owned oil retailers.<br /><br />The remaining revenue loss is partly covered by the periodic rise in retail prices of petroleum products as allowed by the government.</p>