Oil ministry to seek cabinet nod for freeing diesel prices

India's petroleum ministry will soon seek cabinet approval for deregulation of domestic diesel prices, according to a Reuters report citing sources in the ministry.

Deregulation of the heavily-subsidised diesel prices could usher in the return of private producers like Reliance Industries and Essar Oil to retail sales.

These companies do not receive government support for selling diesel at controlled rates, and currently sell through state refiners. Although they already have their own sales infrastructure, it is currently useless.

In January 2013, a rising subsidy bill and strained public finances in a sluggish economy forced the previous government to allow state retailers to raise retail diesel prices marginally each month. Fuel retailers have been hiking pump prices by 40-50 paise each month since then.

The incremental increases along with falling global oil prices have reduced the diesel subsidy bill to less than Rs1 per litre.

Brent crude oil futures slipped below $103 a barrel on Friday, near a 14-month low, reflecting a strong dollar and plentiful supplies.