Petroleum and Natural Gas Minister M Veerappa Moily has reportedly asked Prime Minister Manmohan Singh to constitute an expert committee to examine the issue of fuel pricing over fears that oil refineries will be hit hard by the finance ministry's move to change the way petrol and diesel are priced.
The Finance Ministry has informed the Petroleum Ministry that auto fuel needs to be priced at export parity rather than import parity as the 2.5 per cent customs duty was adding to the under-recoveries of the state-run oil marketing companies without contributing any revenue to the exchequer.
Oil companies, Moily said, feel the new pricing norm would make oil refining a difficult business.
"I am suggesting to Prime Minister that an expert committee, like the previous ones headed by C Rangarajan and Kirit Parekh (based on whose suggestion trade parity pricing was adopted), can be constituted," the Economic Times quoted him, as saying.
Moily said India's surplus refining capacity, which enables export of large volumes of petroleum products, was a strength and if refineries do not function to their full capacity, imports of fuel would add to the current Rs 7,00,000 crore of oil import bill. (ANI)