Moily relief to fishing community on dual pricing

Diesel prices to be hiked every month till losses are completly wiped out

In a major relief to the fishing sector, which was in trouble following the dual pricing system for diesel, petroleum minister M Veerappa Moily said today that fishermen would be exempted from the category of bulk customers.

The recent decision for retail price hike was coupled with a move to charge bulk consumers like defence, railways and state transport undertakings market price which is almost Rs 10 a litre more than retail selling rate, to save an estimated Rs 12,907 crore in annual subsidy.

Fishing sector operators from many states had requested the ministry for exemption on considering them as bulk customers. “Supply to the fishermen would be treated as retail supply and will be supplied at the price applicable for the other retail outlets of the oil marketing companies, with immediate effect,” Moily said.

Apart from the fishing sector, other consumers like the Railways’, power units, auto manufacturers’ and state transport corporations were also against the bulk pricing mechanism. Defending the decision on dual pricing mechanism he said, “The idea behind denial of subsidy to the bulk customers is that these customers can afford to bear the burden of the market price either on their own or can pass on the burden to their end customers.” Of the total diesel consumption of 70 million tonnes per annum, bulk diesel sales are close to 12 MT.

Meanwhile, the minister reiterated that diesel prices will be hiked by 40-50 paise per litre every month till losses on the nation's most used fuel are completly wiped out. “Until further orders, oil marketing companies can increase it (diesel price) by 40-50 paise (per litre) every month,” he told reporters here.

The government had on January 17 decided to move towards deregulating or freeing diesel prices from state control and gave powers to state-owned oil firms to raise prices in small measures every month till all of their losses are wiped out.     

Diesel is currently sold at a loss of over Rs 10.80 per litre.  On January 17, oil firms hiked diesel price by 45 paise. After including local VAT, the increase in Delhi came to 50 paisa. The diesel now costs Rs 47.65 a litre in the capital.     

He, however, did not say when the oil firms will effect the second price increase.  Moily said he had heard of States like Gujarat and Tamil Nadu asking their public transport fleet to refuel at petrol pumps instead of buying diesel from oil firms directly as is the current practice. This is being done with a view to avoid paying the market price mandated for them.

“We need to look into that (issue). I have also heard about it. We are ceased of that matter," he said, adding when rules are laid there are people who find ways to circumvent it.  Instead of buses being asked to refuel at petrol pumps, the states should reduce high local sales tax or VAT on diesel to cut prices, Moily added.