Cut In Diesel Prices On The Cards

The steep fall in the international prices of diesel has more than offset the fall in the value of the rupee.

If the government decides to change the domestic prices of diesel today to bring these on par with international prices, it will have to reduce these substantially, an official of the petroleum ministry told the Business Standard here yesterday.

However, the ministry has decided to keep the date of announcement of the new prices a secret to remove predictability in the operation. This is to ensure that diesel stockists do not indulge in hoarding.

After the announcement of the import parity prices for diesel in September last, the government has revised diesel prices twice once on November 6, 1997, when its prices were reduced by five-six paise a litre, and then on December 24, 1997, when these were raised by 10-11 paise a litre.

 

Though the official refused a hazard a guess on the exact quantum of reduction in diesel prices this time, he said it could be substantial. He, however, said that in case the government decides to postpone the price revision further, the quantum of price reduction could vary depending upon the international prices of diesel and the fluctuation in the value of the rupee.

He clarified that the government was not bound to pass on the entire increase or decrease in the international prices of diesel to its domestic consumers. The price revision being a continuing exercise, the balance of the increase or decrease in international diesel prices could be corrected in the next phase of price revision.

This, according to him, had the advantage of not putting too much burden on the domestic consumer in case international prices increase sharply during one pricing circle. Of course, the consumer would not get the full benefit of the fall in prices, in case there is a sharp decline in international prices during another pricing circle, like the present one.

Though earlier the government had declared that it would revise domestic prices every month, it has now decided to revise these only once in 60 days ensuring continuity over a longer period of time.

, it would enable the stockists plan their inventories better.