Supreme Court endorses government’s move to charge deregulated diesel prices to bulk consumers
NEW DELHI: The Supreme Court
has endorsed the government's decision to charge market prices for
diesel sold to bulk buyers such as defence, railways and transport
corporations. The decision had been stayed by some courts after
transport corporations challenged it.
The decision of the top court is a shot in the arm for the oil ministry, which is struggling to control the oil import bill due to rise in global crude oil prices and weakening of the rupee. It has faced several legal challenges against key pricing decisions for oil and natural gasBSE -1.34 %. Petitions challenging diesel price decontrol and raising natural gas prices are also pending in the court.
"Oil is important. But the rupee value is going down, there's a huge current account deficit. What will be the impact if prices are pegged at earlier currency rates? Oil has to be imported. We can't ignore this fact. You can't expect subsidies to be continued forever. Ultimately the economy has to survive," a two judge bench said.
Last January, the Centre announced that diesel prices would be raised every month and big buyers will not get fuel at below-market rates. Transport corporations challenged the move in the Madras, Kerala and Andhra high courts.
Justices RM Lodha and Madan B Lokur conceded the government's rationale for increasing prices of petroleum prices in a phased manner over the years after short arguments against any court intervention on the issue of pricing of diesel for bulk users by attorney general GE Vahanvati. "The national pricing policy is being sought to be dislocated. If this is done, oil companies will not be able to survive (under the load of subsidies).
They will fold up," Vahanvati contended, urging the top court to dismiss a plea by AP and Kerala transport corporations. "Price of crude (oil) has gone up. Subsidies have gone up, 80% of oil has to be imported," he said. "This is a policy matter. Government has decided that subsidies would be withdrawn from bulk consumers and retail prices of diesel would be increase in phases," he argued.
The decision of the top court is a shot in the arm for the oil ministry, which is struggling to control the oil import bill due to rise in global crude oil prices and weakening of the rupee. It has faced several legal challenges against key pricing decisions for oil and natural gasBSE -1.34 %. Petitions challenging diesel price decontrol and raising natural gas prices are also pending in the court.
"Oil is important. But the rupee value is going down, there's a huge current account deficit. What will be the impact if prices are pegged at earlier currency rates? Oil has to be imported. We can't ignore this fact. You can't expect subsidies to be continued forever. Ultimately the economy has to survive," a two judge bench said.
Last January, the Centre announced that diesel prices would be raised every month and big buyers will not get fuel at below-market rates. Transport corporations challenged the move in the Madras, Kerala and Andhra high courts.
Justices RM Lodha and Madan B Lokur conceded the government's rationale for increasing prices of petroleum prices in a phased manner over the years after short arguments against any court intervention on the issue of pricing of diesel for bulk users by attorney general GE Vahanvati. "The national pricing policy is being sought to be dislocated. If this is done, oil companies will not be able to survive (under the load of subsidies).
They will fold up," Vahanvati contended, urging the top court to dismiss a plea by AP and Kerala transport corporations. "Price of crude (oil) has gone up. Subsidies have gone up, 80% of oil has to be imported," he said. "This is a policy matter. Government has decided that subsidies would be withdrawn from bulk consumers and retail prices of diesel would be increase in phases," he argued.
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