Diesel prices deregulated, price comes down by Rs 3.37 per litre

New Delhi, 18 October 2014

The government Saturday deregulated diesel prices by linking the fuel cost to market-based pricing.

The decision was taken by the Union cabinet in a meeting held here.

While announcing the decision on diesel price deregulation Finance Minister Arun Jaitley said: “Price of diesel will be linked to the market, and therefore, depending on whatever is the cost involved, is the element that consumers will have to pay.”

“Just like petrol prices, diesel cost will now be governed by market forces. The diesel prices were being increased by 50 paise or so over the last few months.”

According to Jaitley, the price of diesel will depend on the global crude oil costs and domestic demand.

“The prices should come down as the global crude oil prices have dropped substantially in the recent times,” Jaitley added.

In Delhi,price of diesel expected to go down by Rs. 3.37 effective midnight tonight.

Official note:

The Union Cabinet Committee of Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, today approved the issues relating to the under-recovery on sale of diesel and its present status. Instructions have been issued today i.e. on 18th October 2014 to make the price of Diesel market determined with effect from midnight of 18th-19th October 2014. The prices of Diesel will be market determined at both Retail and Refinery Gate level for all consumers thereafter.

Based on an earlier decision of the Cabinet Committee on Political Affairs (CCPA) dated 17th January 2013, instructions were issued to the Public Sector Oil Marketing Companies (OMCs) allowing them to increase the retail selling price of Diesel in the range of 40 paisa to 50 paisa per litre per month (excluding VAT as applicable in different States/Union Territories) till further orders.

Diesel prices will henceforth be market determined. This will facilitate greater competition in the Auto Fuels Retail segment and enhanced efficiency in service delivery of the oil companies. This is expected to benefit consumers due to greater competition among oil companies and more choices. The competition is also expected to foster greater efficiency in oil companies benefitting the consumers.