Reports suggest that oil marketing companies (OMCs) may decide on hiking diesel prices individually as collective decision invites suspicion of cartelisation from the Competition Commission of India (CCI).
In 2010, Reliance Industries had petitioned CCI, alleging the government OMCs acted as a cartel while pricing their aviation turbine fuel supply for Air India, on a tender floated by the National Aviation Company of India. This came on the heels of petrol price decontrol, when speculation was high that the companies would act like a cartel in the new regime.
Increasing diesel prices collectively might draw the adverse attention of the CCI, the legal watchdog in these matters, which has been flexing its muscles.
Therefore, the pricing committee of OMCs would decide independently on when and how to go about price change, reports suggest.
It may be recalled that the government allowed Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPC) and Bharat Petroleum Corporation (BPC) to raise diesel prices gradually by 45-50 paise per litre every month on January 17.
The government allowed state-run OMCs to raise diesel prices in order to check its rising fuel subsidy bill. The estimated reduction, through the rise in price, on diesel under-recovery is around Rs 2,700 crore during the current financial year. Overall under-recovery projected during this financial year is Rs 160,000 crore.