Tuesday, 11 July 2017

Ogra, PC Oppose Deregulation Of Diesel Prices

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Despite opposition from the planning committee and regulators, the oil minister is encouraging petroleum marketing companies (OMC) and dealers to invest in additional storage through the deregulation of high-speed diesel (HSD) prices, which is the next step in gasoline.

Oil has proposed an increase in OMC margins and agency fees for gasoline at a rate of 19 paisa and 14 paisa per liter in the summary report that was transferred to the Cabinet's Economic Coordination Committee (ECC) . Effective July 1.

The government insisted that dealers and OMC margins on HSD should increase by 16 and 14 pais per liter, respectively, if they do not want to dele a diesel price deregulation at this stage.

Regulatory authorities say such moves will limit the government's ability to absorb or transmit the impact of international price fluctuations

Meanwhile, the planning committee and oil-gas regulators (Ogra) opposed the claim that deregulation of diesel prices would lead to increased investment and additional storage capacity. The two institutions argued that the deregulation of the oil sector, which included an incentive for "obligation" in 2000, was used as an additional profit abuse of billions of Rs instead of increased storage capacity.


Developments were made when governments, regulators and oil companies were criticized for the poor operation of transportation and distribution networks on the 25th of June this year at the expense of 215 lives and a series of accidents in eastern Ahmed Pour. .

Oil said the dealer commission and OMCs margins on two major products, gasoline and HSD, are being revised annually on a yearly basis by the ECC, based on the consumer price index since 2014.

According to the same principle, the OMC margin for gasoline should be increased from Rs2.41 to Rs2.55 per liter, and for dealers Rs 3.16 to Rs.3.35 per liter, Petroleum Minister said.

The oil minister added that oil companies are demanding an increase of 18 paisa per liter instead of 14 paisa.

In the case of the HSD, the oil minister suggested that encouraging and supporting investment should be phased out in a phased manner in accordance with the government's liberalization and deregulation policies (instead of modifying the margin of dealers and OMC) in accordance with CPI standards. The oil storage capacity will improve for several days. "

The minister acknowledged that HSD's price would be different for each pump due to the deregulation of HSD margin, but said, "I expected people to want to buy at gas stations that offer cheap and efficient products."

"In addition, deregulation will create a competitive atmosphere, and prices will depend on market forces, depending on demand and supply location. Without quoting past success stories, including recent deregulation of CNG interest rates, We will avoid the pressure to increase the margins to meet costs and make a profit for market forces. "

Deregulation argued that the OMC would raise the level of commercial inventory / storage within the past 20 to 30 days within three years, maintain the online inventory on the tanker, and then maintain inventory online in one place. Made accessible.

The Planning Committee noted that although the diesel and gasoline margins increased on the basis of the CPI, they were not the first to formulate a "clear cut-down oil policy" covering all aspects of refining, petroleum product logistics, warehousing, I opposed. Various products. "

Changing the policy without proper grounds can be counterproductive.

Ogra also pointed out that "OMC prefers to share margins with dealers rather than deliver benefits to consumers," Ogra said, citing restrictions on the government's ability to absorb or pass the effects of international price fluctuations. did.

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