APM returns as crude oil prices surge | mydigitalfc

Caught between election compulsions and a surge in global crude oil prices, administered price regime seems to have made a hurried come back in the petroleum sector with state-owned oil companies beginning to hold back any increase in retail prices of petrol and diesel.

While the move has come as a big boon for transportation — fuel consumers who have been forced to pay higher prices daily for the last few months — it has rung alarm bells for oil marketing firms who see a return of under recoveries pushing them into the red again. For two straight weeks starting April 24, retail prices of petrol and diesel have remained unchanged across the country even though during this period crude oil prices have jumped by more than $4 a barrel requiring more than Rs 2 per litre increase in price of the two petroleum products.
This is a retrograde step as the government as part of a large reform programme for the oil sector a few years back freed petrol and diesel pricing. In fact, public sector oil marketing firms had switched to a daily price revision scheme since June last year allowing prices of the two products top move in tandem with market forces every day.

“The price of petrol and diesel is not being revised mainly on account upcoming assembly elections in Karnataka. It should certainly not trigger restart of administered price mechanism (APM) for the two products and pricing freedom should make a return post-May 12 polls in the state. But the companies will make losses in several hundreds of crores during the period,” said an executive of a public sector oil company asking not to be named.

The government has told oil executives not to discuss petroleum product pricing in public. The constant increase in retail price of petrol and diesel, that has breached all time high levels in most states across the country, has brought negative publicity in hordes for the government.

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APM returns as crude oil prices surge | mydigitalfc.