Slipping on oil prices

Dual diesel rates will be distortionary

The government-controlled oil-marketing companies’ (OMCs’) decision to raise diesel prices by a steep Rs 25 a litre for bulk users while keeping retail prices unchanged is likely to create serious distortions in the market for fuel and raise fresh questions about pricing reforms. On Sunday, the three companies that account for 90 per cent of fuel sales —Indian Oil, Hindustan Petroleum Corporation Ltd (HPCL), and Bharat Petroleum Corporation Ltd (BPCL) —raised diesel prices only for bulk users such as public transport buses, industries, airports, malls, and the Indian Railways. Diesel sold to bulk users now costs Rs 122.05 a litre