Deregulating diesel is fine with global oil price falling. What when they rise? Is BJP ready4 transport costs2 rise & farmers up in arms ? — K. C. Singh (@ambkcsingh) October 18, 2014

Reforms Shower! DBT for LPG subsidy restored. Diesel deregulated. End of Bungalow Raj. Gas price not 8, but 5.6$. Ferti subsidy spl arrngmnt — Ajit Ranade (@ajit_ranade) October 18, 2014

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Deregulate diesel prices at the earliest, RBI governor says

The diesel price cut will help the commercial vehicles manufacturing industry, trigger new demand. Could push some energy into the market — Ashok Malik (@MalikAshok) October 18, 2014

Modi Gov's deregulation of diesel pricing means even if global crude spike hugely it will provide no subsidy cushion for consumers !! — Puja Mehra (@pujamehra) October 18, 2014

Deregulation of Diesel would lead to Increase in Transportation Cost and would hit the Farmers though they consume 12% of total consumption — digvijaya singh (@digvijaya_28) October 18, 2014

Arun Jaitley gets things going. A'bad Metro; Diesel deregulation; gas price fixation; no bunglow politics. All in a day's work! — Sanjay Kaul (@sanjay_kaul) October 18, 2014

By the way BJP was against the deregulation of diesel prices na when they were in the opposition? — Siddharth Chhaya (@siddtalks) October 18, 2014

Govt raises natural gas price to $5.61/unit

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RIL charged more than approved gas price, CAG says

NEW DELHI: In much-awaited reform, the government on Saturday deregulated diesel prices, a move that will result in cut of Rs 3.37 per litre in diesel price with effect from midnight tonight.Finance minister Arun Jaitely said the Cabinet in its meeting decided to deregulate or free diesel prices. As a result, retail diesel rates will now reflect international movement in oil prices.This is the first reduction in diesel rates in over five years. Diesel rates were last cut on January 29, 2009 when they were reduced by Rs 2 a litre to Rs 30.86.Diesel prices were last raised by 50 paisa on September 1 and cumulatively risen by Rs 11.81 per litre in 19 instalments since January 2013.There couldn't have been more opportune time for the decision. Oil prices are near a four-year low and two major state elections are out of the way.Reserve Bank governor Raghuram Rajan had recently called on the government to "seize this moment", while inflation is the lowest in five years and refiners are selling at a profit for the first time ever.Brent crude has fallen 25 per cent this year to around $83 per barrel and expectation is that it may not cross $100 barrel anytime soon.The process was set in motion by the previous UPA government when it eliminated controls on petrol prices in 2010 and in January last year decided to raise diesel prices by up to 50 paisa a litre every month.The result has been that petrol prices have moved in tandem with global cost and retail rates being reduced on five occasions since August on falling oil rates. Prices have cumulative come down by close to Rs 7 per litre in last two-and-half months.On diesel, the entire under-recovery or loss has been eliminated and oil firms started making profit from second half of September. The over-recovery or profit has since reached Rs 3.56 per litre.Deregulation would mean that the government and state-owned explorers including Oil and Natural Gas Corp (ONGC) are no longer subsidising diesel.Finance minister Arun Jaitley had budgeted Rs 63,400 crore for petroleum subsidies which was 25 per cent lower than previous fiscal. But unlike past, the subsidy bill is unlikely to overshoot the budgeted amount due to fall in oil rates.Originally, petrol and diesel prices were deregulated in April 2002 when the NDA government was in power. Administered pricing regime, however, made a back-door entry towards the end of NDA regime in the first quarter of 2004 when crude prices started inching up.The Congress-led UPA controlled rates as international oil prices went through the roof. In June 2010, however, it freed petrol price from its control and rates have since then moved more or less in tandem with cost.It had in-principle decided to deregulate diesel, which is used in everything from cars and trucks to back-up power generators and agricultural water pumps. The fuel accounts for 43 per cent of the nation's fuel consumption.In January 2013, the then UPA government decided to deregulate diesel prices in stages through a monthly 50 paise a litre increase. Rates were last hike on September 1 after which losses have been wiped off.It is estimated that under-recovery or revenue loss on selling diesel, LPG and kerosene at prices lower than imported cost this fiscal will be around Rs 86,080 crore.This will have to be met by cash subsidy from government as well as dole from upstream oil producers like ONGC.The under-recovery estimate for the current fiscal is lower than Rs 1,39,869 crore of last fiscal. In 2013-14, the government had provided Rs 70,772 crore by way of cash subsidy while upstream firms picked up Rs 67,021 crore tab.Sources said the under-recovery in (April-June) was Rs 28,691 crore. This was mostly met by Rs 11,000 crore cash subsidy from the government and Rs 15,547 crore coming from ONGC, Oil India Ltd and GAIL. The remaining Rs 2,144 crore was absorbed by fuel retailers (IOC, BPCL and HPCL).In second quarter, the under-recovery is estimated at Rs 21,198 crore with diesel accounting for Rs 2,848 crore as compared to Rs 9,037 crore in the June quarter. Kerosene under-recovery was Rs 6,950 crore (Rs 7,524 crore in Q1) and LPG was Rs 11,400 crore (Rs 12,129 crore in Q1).While diesel losses have been wiped off, oil firms lose Rs 31.22 a litre on kerosene and Rs 404.64 per 14.2kg LPG cylinder.Sources said government had provided Rs 1,00,000 crore cash subsidy in 2012-13 when under-recoveries touched an all- time high of Rs 1,61,029 crore. In the preceding year, Rs 83,500 crore was given. Upstream firms had chipped in with Rs 60,000 crore in 2012-13 and Rs 55,000 crore in 2011-12.Government also approved raising natural gas price to $5.61 per mmBtu from November 1 but Reliance Industries will continue to get current $4.2 rate till it makes up for shortfall in output from KG-D6 block.The Cabinet modified the Rangarajan formula approved by previous UPA government to bring down the increase in rates from $8.4 to $5.61, finance minister Arun Jaitley said.The new formula will be effective November 1 and rates will be revised every six months with the next revision being on April 1.For RIL's flagging D1&D3 gas fields in KG-D6 block where output should have been 80 mmscmd but is languishing at less than 8 mmscmd, the Cabinet decided the current rates will continue to apply.Consumers will, however, pay the revised increased price but RIL will get only $4.2 with the difference being deposited in an escrow account.RIL will get the higher rates if it is legally able to prove that it did not deliberately cut production and output fall was a result of geological reasons as it claims.Higher gas prices would increase the expense of running power stations and fertilizer plants, raising infrastructure and food costs and accelerating the rate of inflation.Every dollar increase in gas price will lead to a Rs 1,370 per tonne rise in urea production cost and a 45 paise per unit increase in electricity tariff (for just the 7 per cent of the nation's power generation capacity based on gas).Also, there would be a minimum Rs 2.81 per kg increase in CNG price and a Rs 1.89 per standard cubic metre hike in piped cooking gas.Gas price increase had been deferred on three occasions previously.The previous UPA government had in June last year approved a price formula suggested by a panel headed by C Rangarajan and re-confirmed it in December 2013 with certain conditions for Reliance Industries' eastern offshore KG-D6 block.