The Cabinet will ratify the decision of the Economic Co-ordination Committee (ECC) regarding deregulating margins on HSD for oil marketing companies (OMCs) and dealers. On Friday, the ECC approved the deregulation of HSD price with a directive that the impact of the policy would be reviewed after three months. The Oil and Gas Regulatory Authority (Ogra) would develop a mechanism to monitor the OMCs'' commercial stock position, inventory system and fuel marker system.
The Planning Commission and the Ogra had opposed the deregulation of diesel prices. They argued that similar arguments were given for deregulation of the oil sector involving healthy incentives of deemed duty which was misused for billions of rupees of additional profitability, instead of increasing storage capacity.
The Petroleum Ministry contended that the HSD should be deregulated under the government policy of liberalization and deregulation in a phased manner to encourage and support investment which may lead to increase in the oil storage capacity.
Sources in the Ministry of Petroleum said that after deregulation of margins on HSD, price will vary from pump to pump and regions across the country and the people will prefer to buy from the filling stations offering cheaper and efficient product.
The Planning Commission supported the increase in margins on diesel and petrol on the basis of CPI but opposed the deregulation of HSD without first formulating a clear-cut downstream oil policy. The Ogra also opposed the deregulation, saying the OMCs already prefer sharing their margins with dealers rather than passing its benefit to consumers.
Copyright Business Recorder, 2017