‘Decision on diesel likely soon’

Deregulation of petrol prices is expected to change the fortunes of state-owned oil marketing companies and to bring competition in the market by allowing each player to quote different prices for its products. Ashok Sinha, chairman & managing director of Bharat Petroleum Corporation (BPCL), spoke with DNA after the government announced the deregulation of petrol prices in the country.

How will the government’s decision to deregulate petrol prices impact the business of oil marketing companies? What would be the periodicity of price revision?
We are moving towards a more competitive pricing. Now the oil marketing companies will set their own prices. The periodicity of price revision will also differ from company to company, going forward, each company, including the private retailers, will set its own pricing. And there is no more gross margin and under-recoveries; they have got merged into net corporate realisation and that’s the margin and profitability that each company has to decide for itself.

The government has said it may intervene in price mechanism if the prices go up significantly. What according to you would be the price point at which the government will intervene?
I think the government will intervene only if the crude oil prices in the international market reach an excess point and its impact is seen as unbearable for the Indian consumers. At that time, some consumer interest protection would be required. But it would be difficult to say at what particular price the government will intervene.

When do you think diesel prices would also be market-linked?
I think after the decision of deregulating the petrol prices, the decision on diesel would also come shortly.

How will it impact the balance sheet of your company?
The figure is known in terms of under-recoveries. So, now, the under-recoveries on petrol will go away and we will move towards far more robust profitability.