Interests of oil marketing firms alone is not reason enough to decontrol diesel prices, as doing away with the Rs 1.71 a litre subsidy on the fuel would hit the common man, Oil Secretary S Sundareshan has said.
"There is a vast body against decontrolling the diesel prices and the government will take a wider view, not just the commercial interest of the oil marketing companies, before arriving at a decision," he said here yesterday.
On June 25, after a lot of dithering, the government freed petrol prices (which were raised by Rs 3.50 a litre) from its control. It also increased prices of diesel by Rs 2, LPG by Rs 35 and kerosene by Rs 3 a litre to cut down on the huge oil subsidy burden and thus help the oil marketing companies reduce losses running into tens of thousands of crores.
The government had then said that it would eventually link diesel prices too to market rate.
Wholesale prices-based inflation jumped to 10.55 per cent in June, owing to the pass through effect of the June 25 hike in prices of petroleum products. A further hike in diesel rates could have a ripple effect on prices of goods of daily use, as still about 65 per cent of freight traffic is carried through road.
On the proposed uniform pricing of natural gas, he said the issue will take some time to evolve due to the complex nature of its implementation.
"Maybe in the course of the next year we would move to a situation where there could be a pool pricing of gas irrespective of the source, international or domestic, and gas could be uniformly priced," Sundareshan said.
To a question on whether the proposal to issue free LPG connections to BPL families will defeat the price decontrol objectives, Sundareshan said half of the funds for waiving the deposit amount for cooking gas connection will be met by diverting the CSR (corporate social responsibility) funds of the oil companies, while the rest will be borne by the government.
Explaining the broader objective of the proposal, he said, "The government wants to increase the LPG coverage to 75 per cent of the households by 2015 from the present 50 per cent. But we want to ensure that the benefits of such a wider reach of this essential fuel should not be limited only to the better off."