13 April, 2021

A Fossil Fueldom

The oil sector may be deregulated, but Naik's ministry still can't bear to part with this most cash-rich industry

A Fossil Fueldom
Frankly, what do you expect from a reforms initiative crystallised on April 1? The big, bold step of deregulating the oil sector this year was aimed at allowing the markets to determine the retail prices of petroleum products like diesel, petrol, LPG and kerosene. In essence, deregulation meant the government would not fix prices, nor would it pressure either private or public sector players while they were chalking out pricing strategies. For the consumers, it meant that, like in the US, each petrol pump would offer different prices based on its demand-supply assessment.

In such a competitive arena, price wars should have been the norm. And subsidies should have vanished. But even today, seven months down the line, price hikes in petrol and diesel are routinely being dictated by the government. At the same time, prices of LPG and kerosene remain rigid. Irrespective of global crude price hikes, these items are still heavily subsidised and there are no changes in their prices or in the amount of subsidy. What's worse, nobody has a clue about what the actual subsidy amount...

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