Government eliminates regulatory control over non-PDS kerosene

The petroleum ministry on Tuesday announced that the government has freed regulatory control over storage, transportation and sale of kerosene sold outside of the public distribution system (PDS).

To facilitate the move, aimed at increasing availability of white or market-priced kerosene, the government has amended the kerosene (restriction on use and fixation of ceiling price) order of 1993.

“By virtue of this amendment, all the activities of storage, transportation and sale of non-PDS kerosene have been freed of regulatory control,” the ministry said in a statement.

The move will reduce demand for diverted PDS kerosene by improving availability of non-PDS kerosene in the open market and, therefore, meet the demand of kerosene for various legitimate end-uses for the industry and for individual consumption by those who can afford it at market price.

The latest step by the government to plug kerosene leakages comes amid reports the government is mulling scrapping the PDS in kerosene supply and provide subsidy on the fuel as cash transfers to cut down leakages.

India consumed 158 million tonne (mt) of petroleum products last financial year, including 7.1 mt of kerosene. Thanks to near stagnant domestic prices, oil marketing companies’ under-recoveries on kerosene have swelled over years, leading to significant subsidy-sharing burden for the government too.

Subsidised kerosene accounted for 21 per cent or Rs 30,000 crore of total under-recoveries of Rs 1,39,000 crore last financial year. The share increased to 31 per cent (Rs 21,000 crore) of the total under-recoveries of Rs 67,000 crore in the first half current financial year. Kerosene prices have risen marginally from Rs 14.8 per litre in June 2011 to Rs 15 at present. OMCs are, therefore, losing Rs 13.32 on every litre of kerosene sold.