If the finance ministry has its way, a new pricing policy for petrol and diesel will soon be put into place that will benefit consumers by bringing down the price of the two fuels by anywhere between Rs. 1- 2 a litre each.
The new pricing mechanism will also bring down the government’s subsidy bill substantially by Rs. 15,000 crore.
Under the new policy, the finance ministry has proposed shifting the pricing of petrol and diesel from the current trade parity basis to export parity basis, which would help in excluding extra costs like freight and various taxes and duties.
“Oil companies are currently pricing petrol and diesel by adding 2.5% customs duty as well as freight charges of shipping the fuel. These are notional charges and do not exist in reality since India no longer imports petrol and diesel but is a net exporter of these products,” said a senior government official. However, the finance ministry’s proposal is being opposed by the petroleum ministry, which feels that the new export parity mechanism will make the refineries unviable.
The two ministries have sought the intervention of the Prime Minister's Office (PMO) and the issue will be discussed on Wednesday at a high-level meeting.
Speaking to HT, economist Kirit Parikh confirmed the forming of a committee comprising officials from the oil and finance ministries who will submit a report by the end of August.