Moily defends diesel price hike for bulk users; offers relief to fishermen co-ops

The government  has authorised public sector oil marketing companies (OMCs) to sell diesel to all consumers taking bulk supplies directly from the installations of the OMCs at the non-subsidised market determined price in order to reduce under-recovery of the OMCs on sale of diesel, petroleum minister M Veerappa Moily informed the Lok Sabha in a written reply on Friday.

However, the minister said, the government has decided to supply  diesel to fishermen consumer pumps at the price applicable for retail outlets of OMCs effective 7 February 2013 considering several representations on the hardships being faced by fishermen.

He said, diesel sales accounts for around 57 per cent of the total projected under recovery of Rs1,63,969 crore of public sector oil marketing companies (OMCs) on the sale of sensitive petroleum products during 2012-13.

OMCs have implemented the new pricing formula from 18 January, he added.

''The primary objective behind the pricing reforms undertaken by the government is the growing imperative for fiscal consolidation, the need for reducing the subsidy burden on petroleum products so as to allocate more funds to social sector schemes for the common man and for ensuring country's energy security in the long term'', the
minister said.

Moily also emphasised that his ministry has advised OMCs to take sufficient safeguards and all necessary measures to avoid diversion of subsidised diesel from their retail outlets.

He said OMCs are incurring under-recovery of Rs11.26 per litre on sale of diesel to retail consumers, Rs33.43 per litre on PDS kerosene and Rs439.00 per 14.2 kg cylinder on subsidized domestic LPG.

The government, however, continues to subsidise diesel, kerosene and domestic cooking gas in order to insulate the common man from the impact of rise in oil prices in the international market and in view of the domestic inflationary conditions.