The present under pricing of diesel will be removed progressively by mid-2015, Planning Commission Deputy Chairman Montek Singh Ahluwalia said in his address at India Energy Congress recently.
Recently, oil marketing companies (OMCs) were allowed to charge market price for bulk diesel consumers. Also, for retail users of diesel, the government allowed OMCs to raise prices by about 40-50 paise per litre every month.
Such a gradual hike in diesel price would enable recovery of losses of OMCs by about Rs 10 per litre on selling the fuel at subsidised rates currently.
Ahluwalia said the management of energy resources in a world of scarcity is a big challenge. Rich countries can afford to have energy subsidies because it will not prevent them from becoming richer. But poorer countries, that want to get richer, cannot continue with it, he said.
Ahluwalia said that from a political point, it was a difficult message to convey (to raise diesel prices). The (energy) resources are scarce and finite and the capacity for growth and our ambitions are very high, he said, adding that domestic endowment of energy will not be sustainable without renewable resources of energy.
As part of its efforts to tap unconventional energy sources, the government is exploring shale gas, though the initial assessment has not been very good, he said.