Centre will not regulate fuel prices, says Union Minister Dharmendra Pradhan

Centre will not regulate fuel prices, says Union Minister Dharmendra Pradhan

The government can not change fuel prices on a knee-jerk basis, Petroleum Minister Dharmendra Pradhan said on Wednesday on a day when stocks of state-run oil marketing companies (OMCs) tanked by as much as eight per cent following recent hikes in transport fuel prices.

The dynamic fuel pricing mechanism is the best option in the interest of the consumers over the long term, Dharmendra Pradhan said after a meeting with the oil marketing companies' executives.

"Daily revision in prices is good". Further, the minister also said that an analysis of the global trends indicates that the retail fuel prices will likely ease out in the days to come.

Earlier in the day, the Congress slammed the Prime Minister Narendra Modi-led government over spike in petrol, diesel prices and urged the Centre to pass on the benefit of 50 per cent reduction in worldwide prices of crude oil to the common person. The price of petrol in Delhi, for instance, has cumulatively increased by nearly Rs. 5 since the introduction of the daily pricing policy on June 16 this year. These taxes impose an artificial limit on the amount of supply that can be profitably sold to the Indian consumer, which in turn leads to consumers paying higher prices for petrol and diesel. That's why, benchmark price of petrol has risen 18% from $57.42 per barrel in June to $67.85 on September 8.

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Similarly, petrol per litre cost Rs 70.38 in Delhi, Rs 73.12 in Kolkata and Rs 72.95 in Chennai while diesel price was Rs 58.72 in Delhi, Rs 61.37 in Kolkata, Rs 62.37 in Mumbai and Rs 61.84 in Chennai. However, Dharmendra Pradhan's statements sought to put the matter to a rest, at least for now.

"GST is the only way to have a rational price mechanism for petroleum products. the industry has been demanding it and Finance Minister Arun Jaitley (who heads the GST Council) is very interested to have it", Pradhan said, pointing to the substantial difference in prices between Delhi and Mumbai, for instance, on account of local taxes.

Though global crude and product prices have been rising for some time, the recent spike has been stoked mainly by fears of product shortage in the wake of hurricanes Harvey and Irma knocking out 13% of USA refining capacity. The price of petrol rose by 18% and that of diesel has gone up by 20% in the worldwide market over the last three months, he said.

Higher crude prices has been partly responsible for consumer price inflation accelerating at the fastest pace since March to 3.36% from a year earlier.

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