State-run oil companies propose daily fixing of fuel prices
07 April 2017
State-run oil marketing companies have proposed a full float of fuel prices, under which the retail prices of petrol and diesel change almost on a daily basis, rather than every fortnight.
This would mean that prices don't drop or rise sharply, as prices may only change by a few paise every day and will not lead to price shock to customers.
Consumers may not care if prices go up by a few paise while oil marketing companies stand to benefit even with the small change as the small hikes would add to their daily revenues.
The changes may not be noticeable to the customer unless he or she is very alert and pays close attention to how the oil market behaves internationally.
Crude prices in the international markets change almost on a daily basis and oil marketing companies are mulling whether to start revising petrol and diesel on a daily basis in sync with these prices.
Oil companies have for long been planning a shift to daily revision of prices, but were held back due to the technical difficulties in implementing such a pricing policy.
Earlier, for every revision of fuel prices, companies had to make phone calls or send out faxes, but now, with various digital means, oil companies can centrally change prices from one location of all petrol pumps.
It may also help the government avoid any political backlash as incremental price changes may go mostly unnoticed.
Daily revision of fuel rates is common in various advanced markets and the introduction of daily price revision is about introducing international standards of free pricing in the Indian fuel retail market, say oil company executives.
With this India will shift entirely to market-led pricing of petrol and diesel, saving the government of all subsidy burdens.