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Hinting that deregulation of diesel prices was imminent, oil minister Dharmendra Pradhan on Tuesday said there were good signals from international market and his ministry will approach the appropriate forum for freeing of rates.
“We are getting good signals from the international markets. Nothing conclusive as yet though,” Pradhan said on the sidelines of a Bureau of Energy Efficiency event.
Diesel under-recovery — the gap between retail selling price and the cost of import — dipped to an all-time low of 8 paise per litre this month, helped by the monthly increases in prices of the fuel as well as softening in international crude oil rates.
Pradhan said oil marketing companies review diesel prices every month and will continue to follow the January 2013 policy for monthly increase. On being asked as to when the ministry will approach Cabinet for diesel price deregulation, he said: “Whatever is the procedure we will follow it.”
In January 2013, the UPA decided to deregulate diesel prices in stages by monthly increases of 50 paisa per litre.
Diesel prices were last raised on August 31 and have cumulatively risen by `11.81 per litre in 19 installments since January 2013.
Oil ministry officials said once the under-recovery is eliminated, a proposal would be put up before the Cabinet Committee on Political Affairs for decontrol of diesel prices.
Deregulation would empower state-owned oil companies to change rates in tandem with cost in a manner similar to petrol.
Originally, petrol and diesel prices were deregulated in April 2002 when NDA government was in power. But use of administered pricing regime started in first quarter of 2004.
In June 2010 petrol price were freed from government control and have since them moved more or less in tandem with cost.