Public sector oil marketing companies (OMCs) like Indian Oil (IOC) opposed the proposal of the finance ministry to adopt export pricing method for calculating under-recoveries on cooking gas and diesel.
State-run OMCs argue that if the finance ministry’s proposed formula for subsidy sharing is accepted, they stand to lose out on compensation and it will also impact their investment and expansion plans.
The finance ministry had decided to shift to the new subsidy regime from the March quarter but petroleum minister Veerappa Moily approached Prime Minister Manmohan Singh to get North Block to defer its plans, subject to a review by the Kirit Parikh panel. The committee met for the first time recently.
During a presentation before the Parikh committee, IOC said in a host of sectors such as petrochemicals and chemicals, fertilizer, steel and even crude domestic prices are linked to the international price.
IOC argues that the export parity pricing proposed by the finance ministry will lower the protection level at a time when petrochemicals and others have been given more benefits.
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