A committee under Kirit Parikh, former member, Planning Commission, would suggest a pricing mechanism benchmarked to the export price for government-controlled oil marketing companies which sell fuel at subsidised rates.The petroleum ministry notified the terms of reference of the committee on Wednesday, after placating the ministry of finance. "We have also included their suggestions," a senior government functionary told Business Standard. The six-member committee would propose a mechanism to replace the current method of paring domestic price of products with 80 per cent weight to the import price and 20 per cent to export. The mechanism to be worked out in three months would be applicable from the current financial year.
Under the terms of the committee, the mechanism has to be linked to the price realised by private refiners through exports without including the cost of shipment.
The mechanism would be used for compensating oil marketing companies for their revenue loss on supplying petroleum products. Besides, it would also change the price charged to consumers even for decontrolled products.
