Bulk diesel users across different states are worried over the government’s move to allow oil marketing companies (OMCs) to charge market prices for these consumers.
In order to reduce the fuel subsidy burden, the central government recently allowed OMCs charge market prices for bulk consumers of diesel.
Some industry players expect the difference in the price charged for bulk users and retail customers may encourage diversion of the fuel. While bulk buyers are charged market rates, pumps sell the fuel about Rs 10 cheaper to retail users.
Federation of Andhra Pradesh Chambers of Commerce and Industry, said industrial operations would now be unviable and the price differential may encourage malpractices.
Industry has been depending on diesel generator sets and power costs will now go up at least 25 percent, severely denting the margins of companies. Several industrial units depend on diesel generator sets amounting to some 400 mw of capacity, accounting for around 12 percent of total industrial power requirement, reports suggest.
The Andhra Pradesh State Road Transport Corporation, one of India’s largest state-owned transport undertakings with nearly 25,000 buses, fears a burden of nearly Rs 780 crore a year on account of costlier diesel.
The good news for oil companies is that oil ministry is determined to gradually raise retail prices to the same level as bulk sales by 2014.
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