Leave fuel prices to market, says plan panel
02 Sep 2009
The Planning Commission, which has been holding a full meeting under its chairman, Prime Minister Manmohan Singh, since Monday, has yet again recommended that prices of fossil fuels - petrol, diesel, gas and coal - should be freed from government control.
"Bring pricing of oil, gas and coal to trade parity or competitive marketing basis," the Commission said in a document on the 'integrated energy policy' which was placed before the panel.
Noting that the progress on various recommendations under the IEP, approved by the union cabinet in December 2008, has been slow, the commission said prices of various petroleum goods and coal are still administered.
Besides suggesting linking of petrol and diesel prices with international markets, the commission recommended that public sector companies should be allowed to raise gas prices. "Natural gas prices of PSUs (are) very low and need revision," it said in a presentation before the meeting.
Apart from the prime minister, the meeting was attended by about a dozen ministers, including finance minister Pranab Mukherjee, petroleum minister Murli Deora, and petroleum minister Sushilkumar Shinde.
Similar recommendations have been made frequently over the past years, but no government has found the political will to loosen its grasp on fuel prices. Going by precedent, the latest plan panel recommendations too are likely to lead to little more than cosmetic reforms.
On the coal front, the plan panel's view is that they should ''ideally be left to the market, and trading of coal, nationally and internationally, should be free." The commission advocated export of coking and non-coking coal and suggested benchmarking export prices along with import rates.
Although coal prices were de-regulated in 2000, prices are fixed by state-owned companies under the instructions of the coal ministry. 'Navratna' public sector undertaking Coal India, which holds more than 80 per cent of the country's total coal reserves, last raised coal prices in 2007 by a measly 10 per cent.
