To deregulate oil or not? Consensus eludes Congress

There is a growing view in the Congress that petrol and diesel prices should be deregulated and linked to the market. HT Political Bureau reports.

There is a growing view in the Congress that petrol and diesel prices should be deregulated and linked to the market. But as the party gears up for the next round of electoral battle, this view is also tempered with the realisation that any such move should also carry a safety valve — a ceiling on the price so that the government can intervene in the interest of the ordinary consumer.

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Any sharp increase, as the one that happened last year, could spiral prices out of control — a situation no government can afford, particularly in an election year. Congress leaders are careful in articulating on the issue. “Oil prices will be freed from the administered regime. Slowly, we are coming out of it,” said Congress spokesman Veerappa Moily.

His colleague Manish Tewari, however, maintained that the final position on linking oil prices to the market has not evolved in the party. “There is an increasing view that the pragmatic way is to link prices to the market.”

In 2004, when the UPA came to power, it reintroduced the administered price mechanism (APM). Its predecessor, the NDA, had permitted fuel prices to ride the market but reviewed it every fortnight.

The Left, however, has slammed the proposal as a “dangerous policy”. The likely move has also failed to enthuse the public and private sector oil companies.

“We are currently living in an era of re-regulation as de-regulation of the oil sector happened in 2002 when the APM was dismantled and pricing of petroleum products was freed. But how long did it stay? Not even months,” said an official of IOC, one of the three big public sector fuel retailers.