Major change likely in petro prices

hyderabad: a little less than one year from now, the country is expected to witness a sea change in the pricing of various petroleum products when the existing administered price mechanism would be done away with in april 2002. though neither the central government nor the union petroleum minister ram naik have gone into the detail of the impact of the apm dismantling, the initial consequence of the exercise, aimed at bringing parity between the domestic and international prices of petro products, could be a fall in the price of petrol and a hike in the price of diesel.however, naik had said recently in hyderabad that the government would ensure continuation of subsidy for kerosene and liquefied petroleum gas at the rate of 15 per cent and 33 per cent respectively. though the real impact of the apm dismantling will be known in the months to come when the government begins to unveil its full post-apm plan for petro products, it can be said the prices of diesel and petrol would be on a similar level as this is the international norm. the apm, which came into being in 1977 based on the recommendation of the oil pricing committee (opc), called for removal of import parity principle stating that 90 per cent of the then (1976) petrol oil lubricants demand was being met by domestic production and no major shortfall was expected. also factors like no commonality between prices of crude oil and finished products and differences in the cost pattern and operations of indian refineries were also considered by the opc before it mooted apm. once implemented, apm meant a fixation of petro product prices by the government which took into consideration various factors like import costs, demands for subsidies and the like. but over the years, the system led to huge oil pool deficits leading to a major burden on the economy. one aim of the apm dismantling is to put an end to this deficit. however, with the deficiencies in the apm making themselves felt over the years, the government set up a strategic planning group on restructuring the oil industry (r-group) in 1995. it was the r-group report that laid the groundwork for dismantling of the apm and cutting down of subsidies on various petro products.