India’s oil minister today ruled out rollback of fuel price deregulation as a long-term solution to the volatility in prices of petrol and diesel.
“We have taken a reform earlier and there is no point in rolling back the reform,” Dharmendra Pradhan, minister of petroleum and natural gas said today at a press conference in New Delhi. Instead, the oil ministry is coordinating with the finance ministry to bring petroleum products under the ambit of the Goods and Services Tax and prevent higher prices from pinching customers.
Petrol and diesel prices in India touched all-time highs last month as prices of the international benchmark Brent crude rallied past the $80 per barrel mark. State-owned oil marketers hiked fuel prices for 16 consecutive days – between May 14 and May 29 – after a 19-day freeze ahead of the Karnataka assembly elections. Petrol prices were hiked by Rs 3.8 and diesel by Rs 3.38 per litre during this period in the national capital.
The previous United Progressive Alliance government had deregulated petrol price in 2010 and current National Democratic Alliance government had deregulated diesel price in 2014. That allowed oil marketing companies to revise prices of fuel based on changes in international oil prices and currency exchange rates.
International ratings agency Moody’s had said in May that the government is unlikely to reverse fuel price deregulation as it remains committed to reforms, but may reduce excise duties which make up 20 percent of retail selling prices. The Centre has, however, ruled out an excise duty hike, saying it would wait and watch if higher oil prices are here to stay.
“We will have to wait and watch to see the impact of US sanctions on Iran,” Pradhan said today. Last month’s spike in crude prices was driven by reimposition of U.S. sanctions on Iran and the political crisis in Venezuela.
An oil ministry official who did not wish to be named that a team of officials from the oil, finance and external affairs ministries are visiting Europe to study the impact and future of trade with Iran post the U.S. sanctions.
This week, members from OPEC countries – Saudi Arabia, the United Arab Emirates, Kuwait and Algeria met unofficially in Kuwait and agreed to lift the curb on crude supply. Following the report, the U.S. crude prices on Monday touched its lowest level in nearly two months at $64.75 per bbl.