New Delhi: The government yesterday deregulated diesel prices by linking the fuel cost to market-based pricing. The decision was taken by the union cabinet at a meeting held here.
While announcing the decision on diesel price deregulation Finance Minister Arun Jaitley said: “Price of diesel will be linked to the market, and therefore, depending on whatever is the cost involved, is the element that consumers will have to pay.”
“Just like petrol prices, diesel cost will now be governed by market forces. The diesel prices were being increased by 50 paise or so over the last few months.” According to Jaitley, the price of diesel will depend on the global crude oil costs and domestic demand.
“The prices should come down as the global crude oil prices have dropped substantially in recent times,”
Jaitley added.
Present at the conference where Jaitley was speaking was Indian Oil Corporation Chairman B Ashok, who announced that diesel prices will be cut by Rs3.37 per litre including taxes from midnight of October 18.
In September, the government had announced that for the first time in the history of the regulation era on diesel, the under-recovery, or revenue loss, applicable on the fuel had been wiped out, and there is instead a profit on sales.
The three state-run oil marketing companies (OMCs), were making an “over-recovery” of 35 paise a litre by selling diesel at the current prices. This fuelled expectations of a rate cut for the first time in seven years.
The ending of under-recoveries caused by selling diesel below cost was made possible by the softening international oil rates and the monthly price increases.
With international crude oil prices dropping below the $100 a barrel-mark last month, petrol rates were cut thrice which resulted in a price difference with diesel that has fallen below Rs.10 a litre.
IANS
