The Hindu Business Line : Industrial users must pay more for diesel: Oil marketing cos

New Delhi, Aug. 25 Industrial users of diesel may end up paying a little over Rs 22 for the product compared to retail customers if the proposal of the public sector oil marketing companies (OMCs) finds its way.

In a concept paper submitted to the Government on proposed differential diesel pricing for direct consumers (such as the Railways and power sector) following a Petroleum Ministry’s request, the OMCs have suggested a price of Rs 57 a litre for such consumers, almost 63 per cent higher than Rs 34.80 a litre price for retail consumers.

At a recent meeting convened by the Petroleum Minister, Mr Murli Deora, the OMCs were asked to come back with specific suggestions to tackle the situation arising out of unusually high consumption of diesel along with information on diesel usage in various sectors.

In fact, the high powered committee constituted by the Prime Minister, Dr Manmohan Singh, has also proposed differential pricing for diesel.

economic value

The three OMCs – Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation – were of the view that the time has come to implement differential pricing of diesel for direct consumers, by offering the product at its economic value, industry sources said.

The sector-wise consumption growth of diesel showed that for first quarter of 2008-09 (April-June), the power sector saw a phenomenal increase in demand by 152.4 per cent (53,000 tonne) followed by fisheries 39.4 per cent and marine 39.2 per cent. The total consumption growth by direct consumers was 10.4 per cent compared with the same period last year while retail sales saw a growth of 11.6 per cent. The combined growth registered in both the categories was 11.4 per cent during the period.

Sources said that the industrial units find subsidised diesel cheaper than other deregulated products such as fuel oil and naphtha. This has led to increase in demand and forcing the refiners to resort to imports to meet the requirements.

Besides, differential pricing for diesel consumers would also help to reduce under-realisation.