CUTS wary over lack of ‘neutral competition’ in auto fuel retail

The Hindu Business Line, April 03, 2008

CUTS International has expressed concern over the lack of “competitive neutrality” in enabling the private sector to sell petroleum goods in the market. The Government and the regulator need to create a level-playing field for operators to foster competition in the sector.

In a press release issued here on Wednesday, the CUTS Secretary General, Mr Pradeep S. Mehta, said, “shutting down of marketing outlets by private companies such as Reliance may adversely affect the level of private investment not only in oil, but in other sectors as well.”

“It is socially justified to provide subsidies to curb high prices. But at the same time, subsidies should be given in a transparent and non-discriminatory manner without having any harmful effect on the productive efficiency in the sector,” he said.

With the international crude oil prices hovering over $100 per barrel and given that domestic petroleum products retail prices is regulated, all oil companies including public sector undertakings are loosing Rs 8-10 per litre on petrol and diesel, he said.

“It is not possible for any of the companies to continue with such huge losses. The only option is to increase the price, if no subsidy is provided,” Mr Mehta said.

However, if the Government has decided to keep the petroleum prices at the same level, it should support all companies by giving justified amount of subsidy, he said.

Private companies are meeting the required norms and efficiency targets, therefore, they equally deserve the same subsidy, he added.

CUTS has also pointed out that the consumer choice would be restricted by forcing them to purchase the product only from the public sector companies.

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