The Hindu : Business : OMCs moot differential pricing for fuels

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Tuesday, Aug 26, 2008
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OMCs moot differential pricing for fuels

Special Correspondent

NEW DELHI: Stung by the spurt in demand for diesel from various sectors, particularly the industrial sector, and the continued misuse of the subsidised fuel by various other commercial segments, Oil Marketing Companies (OMCs) have set in motion the process for differential pricing of fuels proposing sale for industrial users at Rs. 57 a litre.

Subsidised sales

Officials in the Petroleum Ministry said that the three OMCs have approached the Ministry for differential pricing of diesel for consumers like Railways and power producers who, they felt, should pay the market price for diesel. The OMCs feel that subsidised sales should be limited to the transport and agriculture sectors.

Sources said that the power sector had seen a steep 152 per cent rise in demand for diesel in the first quarter to 53,000 tonnes, while the fisheries and marine sector had seen a near-40 per cent growth. Differential pricing of diesel would reduce the revenue loss by Rs. 27,202 crore in 2008-09.

Rise in demand

Sources said that the Petroleum Ministry was examining the proposal and it was being deliberated if the Union Cabinet approval would be required for implementing the differential pricing scheme. During the first four months, diesel demand had grown at 18 per cent, IOC had stated.

While the demand for diesel from the transport and agriculture sector had grown by 10-12 per cent, consumption by power producers and other industries had risen by 30 per cent.

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