India ending subsidies for gasoline, diesel

By OGJ editors
HOUSTON, July 1 -- India, one of the world’s top 10 oil markets, has removed price controls from gasoline and is phasing them out for diesel fuel.

The moves are part of a deregulation effort that began in 2002 when the government allowed private refiners to market directly to Indian customers and replaced its “administered price mechanism” with what it called a “market-determined price mechanism.”

Until now, the government has continued to subsidize electricity and fuels and in late 2008 and early 2009 cut diesel and gasoline prices.

The end of price controls on at least gasoline and diesel was expected. The Ministry of Petroleum and Natural Gas said subsidies would remain in effect for public distribution system kerosine and LPG.

The International Energy Agency projects Indian oil consumption at 3.3 million b/d this year, up 1.9% from 2009, when consumption grew 5.6%.