(a) whether investors have to face losses in the absence of any clear and long term price
fixation policy of petroleum products;
(b) if so, whether the above reasons are responsible for less interest of investors towards
public sector undertakings;
(c) if so, the reasons therefor;
(d) whether the Government is contemplating for evolving long term price fixing policy of
petroleum products; and
(e) if so, the details thereof?
MINISTER OF THE STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI JITIN PRASADA)
(a)to(c): With effect from 1.04.2002, the Administered Pricing Mechanism (APM) for petroleum
products was dismantled and it was decided that the pricing of all petroleum products, except
PDS Kerosene and Domestic LPG, would be market-determined. However, in view of the steep
increase and high volatility in the international oil prices since 2004-05, the Government
has been modulating the retail selling prices of Petrol, Diesel, PDS Kerosene and Domestic
LPG sold by the three Public Sector Oil Marketing Companies (OMCs); namely, Indian Oil
Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, to protect
the consumer from the inflationary impact of international oil prices.
As passing on the entire impact of the increase in the oil prices to the consumers would
have resulted in a steep increase in the domestic prices and aggravated inflationary
conditions, the Government has been following an equitable Burden Sharing Mechanism,
to ensure that the burden of under-recoveries was shared by all the stakeholders;
namely the Government, the Public Sector Oil Companies and the consumers in the
following manner:
# Government through issue of Oil Bonds
# Domestic upstream oil companies by offering price discounts to OMCs
# OMCs to bear a portion of the under recoveries and
# Consumers to bear minimal price increases.
By adopting this approach, the Government has not only protected the consumers from high
international oil prices but has also ensured the financial health of the OMCs.
(d)&(e): The Government has constituted an Expert Group on 31.08.2009 under the chairmanship
of Dr. Kirit S. Parikh, former Member of Planning Commission to examine, inter-alia, the
current pricing policy of the four sensitive petroleum products; namely Petrol, Diesel,
PDS Kerosene and Domestic LPG and make recommendations for a viable and sustainable
pricing policy for petroleum products.