The EGoM may decide to free petrol price from government control for the first time since 2004. Also on the cards is a Rs25 per cylinder hike in domestic cooking gas rates in an effort to align retail prices closer to their cost
An Empowered Group of Ministers (EGoM) may meet on 17th June to consider freeing petrol prices from government control and possibly giving limited autonomy to oil firms to price diesel closer to market rates, reports PTI.
Also on the cards is a Rs25 per cylinder hike in domestic cooking gas (LPG) rates in an effort to align retail prices closer to their cost, sources in know of the development said.
The EGoM headed by finance minister Pranab Mukherjee may decide to free petrol price from government control for the first time since 2004, when the UPA in its first stint decided to price auto fuels below their imported cost to keep inflation under check.
This move, going up by the current international crude rates, will result in a Rs3.35 per litre increase in price of petrol in Delhi, sources said.
The EGoM, which could not reach a decision at its first meeting on 7th June as key ministers like railway minister Mamata Banerjee and agriculture minister Sharad Pawar were absent, may also decide to give oil companies freedom to price diesel if international oil price stayed below $90 per barrel.
If approved, diesel rates would immediately rise by Rs3.49 per litre as current retailing selling price is calculated on $60 per barrel-level of crude oil prices while the actual rate is $72 per barrel now, they said.
If crude climbs to $90 per barrel, diesel price in Delhi would rise by over Rs7 per litre over the current selling price of Rs38.10 a litre.
Petrol in Delhi currently costs Rs47.93 per litre.
The government would step in if crude oil crosses $90 per barrel and prices would be moderated either through cut in excise and customs duty or through subsidy from exchequer.
Sources said there may not be any problem in freeing pricing of petrol, which is considered a fuel used by the well-off, there were doubts on diesel which is used in transport sector and thus has inflationary impact.
If consensus at the EGoM is against even giving limited freedom to oil companies, then the government may settle for a Rs2 per litre hike and try to build consensus for freeing the fuel around budget time in 2011.
Ms Banerjee, who was away in Kolkata at the time of the first EGoM meeting, had communicated that her party, the Trinamool Congress, was against "any steep hike" in diesel prices and wanted domestic LPG and kerosene consumers to be spared, the source said.
Mr Pawar, not known for blocking reforms, could not attend the meeting because of illness, while DMK leader and chemicals and fertilizer minister M K Alagiri was present.
The EGoM had at the first meeting gone into the report of the expert group headed by Kirit Parikh that called for freeing petrol and diesel prices and a steep Rs100 per cylinder hike in LPG rates and a Rs6 per litre increase in kerosene prices.
The oil ministry made a presentation on the impact of the Parikh Committee's recommendation, projecting a revenue loss of Rs72,300 crore to state oil firms if petrol, diesel, domestic LPG and kerosene continue to be sold at rates below the imported cost.
The EGoM also discussed the impact implementing the committee's report would have on inflation, sources said, adding that freeing auto fuel prices would lead to a 1.4% rise in the Wholesale Price Index (WPI).
In April, WPI-based inflation was 9.59%.
State-owned Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum currently lose Rs203 crore per day on selling fuel below imported cost. They currently sell petrol at a loss of Rs3.35 a litre, while the under-recovery is Rs3.49 per litre of diesel, Rs18.82 per litre of public distribution scheme (PDS) kerosene and Rs261.90 on every 14.2-kg LPG cylinder.
The government is proposing to amend the licence norms of telecom service providers to incorporate the condition that the dependence on foreign engineers for maintaining telecom networks in the country would be reduced to nil in two years
Amid debate over security concerns relating to telecom equipments by Chinese vendors, the government is proposing to make it mandatory that only Indian engineers would operate and maintain the networks, reports PTI.
The government is proposing to amend license of Telecom Service Providers (TSPs) to incorporate a condition that the dependence on foreign engineers for maintaining telecom networks in the country would be reduced to nil in two years.
As per the proposed amendment, the Department of Telecom (DoT) has said "The licensee (telecom firm) should work towards a phased plan to take over the maintenance of the equipment locally... The operations and maintenance of networks should be entirely by Indian engineers and dependence on foreign engineers should be minimal and or almost nil within a period of two years from the date of this amendment."
The government had earlier asked operators to take security clearance before buying any key telecom gear. The telecom operators had been complaining about the strict rule, which forced the DoT to be very selective in giving approvals for equipment purchase.
The new amendments also made room for an Escrow deposit arrangement between the equipments suppliers and the telecom service providers wherein the suppliers shall keep all the information and documentation in relation to the supplies.
The information would include "without limitations, in respect to hardware, software, all source code, high level designs, detail design documents, listings and programmers note," it added.
The service providers shall have the right to use the escrow information, after its release, in order to use and maintain (including to upgrade) the software, to modify or have modified the software and to licence such modified software to or have it maintained by third parties.
However, it is yet to be ascertained that the new amendments are going to make it easier for foreign equipment vendors, especially Chinese vendors to supply gears to Indian operators.
The proposed amendment will also allow the telcos to allow third party (other than employees and servants of telecom service provider) to supply equipments and have access to the network only after a putting in place a legal agreement between the two with regard to security issues.
"The licences of the corporate agents will not be renewed with retrospective effect. The insurance policies will remain valid...the respective insurance companies will assign another agent," IRDA chief J Hari Narayan said
The Insurance Regulatory and Development Authority (IRDA) today sought to assure customers that their policies would remain valid despite the withdrawal of licences of over 4,200 corporate entities, including HDFC Bank, Indiabulls Insurance Advisors and Indian Overseas Bank, reports PTI.
At the same time, IRDA chairman J Hari Narayan said that the licences of the corporate agents would not be renewed with retrospective effect. Out of the 7,000 agents, IRDA withdrew licences of 4,261 agents, as they failed to renew them by 31st March this year.
"The licences of the corporate agents will not be renewed with retrospective effect. The insurance policies will remain valid...the respective insurance companies will assign another agent," Insurance Regulatory and Development Authority (IRDA) chief Hari Narayan told PTI.
IRDA on Tuesday evening cancelled the licences of 4,261 corporate agents, after they failed to renew their policies in time.
"The clients (insurance customers) should not do business with them (4,261 corporate agents). They have not applied for renewal of licences, so there licences currently stands cancelled," IRDA chief said.
Besides HDFC Bank and the Indian Overseas Bank, other agents whose licences were not renewed by IRDA include Oswal Consultancy, India Bulls Insurance Advisors, Bharat Overseas Bank, Max Healthcare Institute, Indian Medical Association (Pune) and Edelweiss Capital.
While withdrawing the licences of the corporate agents, IRDA had cautioned the public "not to transact any insurance business through them.