Gas regulator may reopen price bands

The petroleum and gas regulator will be given powers to reopen the price bands for the industry. The regulator is, however, not expected to clear all pricing proposals but take up only cases which are referred to it or reopen cases suo motu.

A senior official told Business Standard that the final Cabinet note for introducing the Petroleum and Natural Gas Regulatory Board Bill will be circulated shortly and a Cabinet approval is expected to come before the month-end.

The creation of a regulator could also lead to doing away with the price band, said the official.

The import parity price of petrol annnounced by the government yesterday, will mean that oil marketing companies no more will be operating under the price band mechanism announced earlier. The proposed board will also have the last word in the case of any pricing dispute.

"The board's decision will prevail over any existing price band since it will be a statutory authority, while the band is only a creation of an official notification," said the official.

The government had in July granted oil marketing companies the freedom to fix their retail prices in accordance with the previous fortnight's average international price for petrol and diesel without the prior approval of the government provided it was within a reasonable band.

The price band was fixed at plus and minus 10 per cent around the mean of the last three months' rolling average prices and last one year's rolling average prices.

It was decided that the finance ministry would reduce excise duty rates of petrol and diesel in consumer interest in case C&F prices breached the ceiling due to high volatility in the international prices. The petroleum ministry would inform the finance ministry in case the band breached the floor.

The Bill, which was introduced by the National Democractic Alliance (NDA) government in Parliament, lapsed after the Lok Sabha elections and would have to be introduced afresh.