The Hindu : More transparency sought in pricing mechanism for petrol, diesel

Online edition of India's National Newspaper
Monday, Sep 16, 2002

Southern States

Southern States - Tamil Nadu-Chennai

More transparency sought in pricing mechanism for petrol, diesel

By N. Ravi Kumar

CHENNAI Sept. 14. Like most dreams, the dream of market-determined fall in prices remains shattered, say auto fuel consumers, even as the city petroleum trade ponders the changing economics of the business.

Six months into the market-determined pricing mechanism for petrol and diesel, both the motorists and petroleum dealers are puzzled as never before.

Contrary to the hype in the months preceding the dismantling of the administered pricing mechanism about petrol and diesel prices dropping drastically in the post-APM regime, the city consumers have incurred a Rs.3.17 increase in per litre petrol prices since March 1 to September 15.

During the same period, the State Government blocked the benefit of a few paise reduction in the prices by some alterations to the sales tax structure, and as a result, the diesel price has risen by Rs. 2.08 per litre till Sunday.

With another of the fortnightly price revisions, coming into force from September 16, whispers for more transparency in the pricing mechanism are growing louder.

The only solace for consumers of outlets in the city is that the price will be the same within the CMDA limits. This follows the extension of the supply of the premium grade low sulphur petrol and diesel, which is priced marginally higher, to the CMDA areas by the oil companies from September 1.

But, it is the `inaction' of the Centre that pinches the consumers. Though the national oil companies never miss an opportunity to `match' the price of the products with the prevailing global rates, the Centre continues to levy a Rs.6 per litre surcharge on petrol. The common belief at the time of its announcements in the Union Budget was that the surcharge would provide a cushion effect during times of upward fluctuation in international crude prices, obviating the need for further upward revision of prices.

Moreover, there is little transparency about the linkage between international crude prices and the revision in domestic petrol and diesel prices, consumers allege. And, some officials of the national oil companies admit that this is the time to introduce an open style of functioning.

The ground reality for the dealers, according to M.Kannan, president, Tamilnadu Petroleum Dealers Association, has changed drastically after the new pricing regime was introduced in April.

``While a slight drop in the offtake of the products is noticed after every price increase, the reverse of it does not happen when the prices drop'', he adds.

Meanwhile, scotching rumours about the oil companies reducing the indent of the retail outlets, industry sources said there was a slight reduction in the availability of petrol, which had since been set right.

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