Slow decision to hurt IOC offer
New Delhi   03-Nov-2010

The share sale of IndianOil, the next big-ticket disinvestment on the horizon, may be hurt by the government’s decision to free diesel prices gradually and not all at once, Planning Commission deputy chairman Dr Montek Singh Ahluwalia said on Tuesday.

A delay in deregulation of diesel prices will result in lower interest in the share sale, particularly from FIIs, as IOC loses Rs 26 crore in revenue every day on selling the most used auto fuel below cost.

“It (diesel price deregulation) may impact the price of the public offers (of IOC and ONGC)... that is part of the cost of doing things gradually,” Dr Ahluwalia said.

Dr Ahluwalia further added “The policy is very clear, it (deregulation of prices of petroleum products) should be done gradually.”

While the government freed petrol prices from its control on June 25, it abstained from a similar move in the case of diesel, as this would result in a `2.95 a litre hike in the retail price of the transport fuel, something it cannot afford in times of high inflation.

Oil secretary Mr S.Sundareshan had ruled out freeing diesel prices on two occasions last month, saying it would be “unfair” to increase prices.