Moily expects total diesel decontrol in six months

Petroleum minister says no plan for higher dose of monthly decontrol

Petroleum Minister M Veerappa Moily on Wednesday said diesel prices would be completely decontrolled within the next six months.

“In the next six months’ time, diesel prices would be completely decontrolled, as the rupee may strengthen further and international prices are set to cool down. Underrecoveries had come down to Rs 2.50 per litre because of monthly increases, but it increased to Rs 14 per litre and again depreciated and now stands at Rs 9.5 per litre,” Moily said on the sidelines of KPMG Energy Conclave here on Wednesday.

The government had initiated phase-wise decontrol of diesel on January 17 this year, with a monthly increase of 50 paise. On the first fortnight of November, the under-recovery on diesel was seen at Rs 9.58 per litre, while that of kerosene and domestic LPG were seen at Rs 35.77 per litre and Rs 482.41 per cylinder.

However, Moily added that the ministry is not contemplating a higher dose of decontrol at the moment. At the current level of underrecovery, a monthly hike of 50 paise would take at least 19 months for the diesel to be completely at market rates.

The minister added that though world energy demand is projected to grow at a rate of 1-2 per cent per annum in the next 20-30 years, India’s energy demand is poised to grow between 6.5 and 8 per cent by 2030. He said the government has taken various steps to boost the domestic production and attract investments in hydrocarbon sector.

In early 2013, the Cabinet Committee on Investment had cleared 64 blocks in which exploration has already started. In the last one year, more than 100 pending management committee resolutions (MCR) pertaining to the work, reporting of discoveries, commerciality, development and approval of drilling locations. He added that in the upcoming new exploration licensing policy (Nelp) rounds at least 86 blocks would be up for grabs.  The offering of blocks under Nelp-X is likely to take place in January.  

On the other hand, the total refining capacity in the country at present is 215.07 million tonnes and projected to increase to 239.57 million tonnes in 2013-14 with the expansion of Kochi and Paradip refineries and establishment of a greenfield refinery at Barmer in Rajasthan, he said.