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Air Turbine fuel decontrolled

Mar 16, 2000

The government has decided to decontrol aviation turbine fuel (ATF). This would put the local price on par with the global one. ATF is one of the five products which are controlled, the others being diesel, kerosene, LPG, and petrol. The decontrol would help refining companies in that the permission for raising the local price of ATF was considerably delayed despite the international oil prices tripling from levels of $ 9 per barrel to $ 30 per barrel.

However, the fact remains that earlier it was ATF that was used to cross subsidise the other fuels such as LPG, diesel and kerosene. These are the products whose prices are kept down artificially and this was done through higher petrol and ATF prices. The decontrol of kerosene, LPG and diesel prices, will require political will from the government.

Be that as it may, the fact remains that oil companies no longer have to seek government permission to raise prices in the future. That would be some relief for Indian Oil, Bharat Petroleum and Hindustan Petroleum whose bottomlines in the current year have been hit by higher crude prices without any increase in the price of the controlled products except for a 40% hike in the prices of diesel in October 1999.

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