With demand for diesel sold for bulk users having dipped, the Government has indicated that it is considering partial rollback of its market price and also plans to seek Cabinet approval soon for the Kirit Parikh Committee report - which had suggested reduction in subsidy burden of upstream companies.
This was revealed by Petroleum Secretary Vivek Rae on Thursday, who further added that the January 2013 decision to ask bulk users of diesel like the railways and defence to pay market price, which is about Rs 10 a litre more than petrol pump rates, had led to protests from several state transport utilities. They have now resorted to sending buses to retail outlets for refuelling instead of buying from oil company depots.
"The objective of differential pricing (subsidised rates for petrol pumps users and market price for bulk consumers) is not being met. We have seen buses queueing up at petrol pumps, leading to congestions and fuel wastage," he told reporters on the sidelines of an industry event conference.
With state road transport buses - classified as bulk users - going to petrol pumps, and oil companies setting up refuelling depots in their premises, bulk diesel sales have dropped. "We are considering partial rollback of the bulk diesel pricing order," Rae said. If approved by the Cabinet, state road transport corporations will get diesel at subsidised rates (equal to petrol pump price) while other bulk users - railways and defence, will have to continue buying the fuel at market price.
"Oil marketing companies have also reported that the dual pricing mechanism is not working since state transport utilities bus fleets are taking fuel from petrol pumps causing hindrance in the smooth functioning of retail outlets and in the process wasting fuel," he said. Since the decision to sell diesel to bulk consumers was taken by the Cabinet, any relaxation in it can only be done by it. The Supreme Court had in August last year endorsed the Government decision to charge market prices for diesel sold to bulk buyers such as defence, railways and transport corporations.
The apex court had said that subsidises can't continue forever and ultimately the economy has to survive. Meanwhile Rae further said that the Petroleum Ministry plans to go to the Cabinet seeking a minimum $65 per barrel price for state oil and gas explorers like ONGC to help bring 70 million tonnes of oil to production. He informed that the $40-42 per barrel net price realised by ONGC after paying for fuel subsidies, is barely enough to meet its costs.
"Upstream companies (like ONGC) bear disproportionately high subsidy burden. They need to generate investible surplus," he said, adding $65 is the minimum price that is needed to help bring marginal and deeper fields into production. Upstream firms pay for a portion of fuel subsidies by extending discounts on crude oil they sell to refiners who are forced by the Government to sell diesel and cooking fuel at rates lower than cost of production.
"It makes sense to pay them a price of $65 and produce more domestic crude oil rather than pay $110 per barrel for importing the same," he said, adding that the Government agrees that the burden of upstream companies should come down. PNS n New Delhi With demand for diesel sold for bulk users having dipped, the Government has indicated that it is considering partial rollback of its market price and also plans to seek Cabinet approval soon for the Kirit Parikh Committee report - which had suggested reduction in subsidy burden of upstream companies.
This was revealed by Petroleum Secretary Vivek Rae on Thursday, who further added that the January 2013 decision to ask bulk users of diesel like the railways and defence to pay market price, which is about Rs 10 a litre more than petrol pump rates, had led to protests from several state transport utilities. They have now resorted to sending buses to retail outlets for refuelling instead of buying from oil company depots.
"The objective of differential pricing (subsidised rates for petrol pumps users and market price for bulk consumers) is not being met. We have seen buses queueing up at petrol pumps, leading to congestions and fuel wastage," he told reporters on the sidelines of an industry event conference.
With state road transport buses - classified as bulk users - going to petrol pumps, and oil companies setting up refuelling depots in their premises, bulk diesel sales have dropped. "We are considering partial rollback of the bulk diesel pricing order," Rae said. If approved by the Cabinet, state road transport corporations will get diesel at subsidised rates (equal to petrol pump price) while other bulk users - railways and defence, will have to continue buying the fuel at market price.
"Oil marketing companies have also reported that the dual pricing mechanism is not working since state transport utilities bus fleets are taking fuel from petrol pumps causing hindrance in the smooth functioning of retail outlets and in the process wasting fuel," he said. Since the decision to sell diesel to bulk consumers was taken by the Cabinet, any relaxation in it can only be done by it. The Supreme Court had in August last year endorsed the Government decision to charge market prices for diesel sold to bulk buyers such as defence, railways and transport corporations.
The apex court had said that subsidises can't continue forever and ultimately the economy has to survive. Meanwhile Rae further said that the Petroleum Ministry plans to go to the Cabinet seeking a minimum $65 per barrel price for state oil and gas explorers like ONGC to help bring 70 million tonnes of oil to production.
He informed that the $40-42 per barrel net price realised by ONGC after paying for fuel subsidies, is barely enough to meet its costs. "Upstream companies (like ONGC) bear disproportionately high subsidy burden. They need to generate investible surplus," he said, adding $65 is the minimum price that is needed to help bring marginal and deeper fields into production.
Upstream firms pay for a portion of fuel subsidies by extending discounts on crude oil they sell to refiners who are forced by the Government to sell diesel and cooking fuel at rates lower than cost of production. "It makes sense to pay them a price of $65 and produce more domestic crude oil rather than pay $110 per barrel for importing the same," he said, adding that the Government agrees that the burden of upstream companies should come down.