TEAM HERALD
NEW DELHI: The Union Cabinet may decontrol diesel as early as the next week that will give a bonanza to two private oil companies — Reliance of Mukesh Ambani and Essar of the Ruias — that had shut their retail operations over a decade ago because of the government control.
The Oil Ministry has prepared a Cabinet note for the purpose after the two companies’ executives called on its minister Dharmendra Pradhan to explain that the government-subsidy on diesel has been reduced to “zero” and hence this was the right time to go for decontrol like petrol. This has been possible because of the public sector oil companies hiking the retail diesel price every month by 50 paise a litre.
The ministry sources also confirmed that the retail diesel prices are at par with the market-determined prices over the past 10 days. They said the government has no problem in the private companies entering the retail diesel business, once the control is lifted, but it will have to take a policy decision on how to cushion the consumers in case of sharp global crude price increase.
They point out that the government can persuade the public sector oil companies not to increase the diesel prices to match the market level, but it will adversely affect the private companies keen to enter the retail arena.
Finance Minister Arun Jaitley had envisaged complete diesel decontrol in his July budget speech before the next March end as he estimated that the gap between the administered and market prices would be completely eliminated. It has, however, happened much earlier in September because instead of under-recoveries, the public sector oil companies are reporting over-recoveries warranting an early decontrol, the sources added.
