Govt to dismantle APM

new delhi: government on thursday committed to dismantling the administered pricing mechanism (apm) for the petroleum sector by march 31, 2002, but said a suitable mechanism to cushion the impact of volatile international prices on domestic prices need to be devised. "the deadline for dismantling apm will be met. however, there are certain issues which need to be addressed before that," petroleum minister ram naik said at a seminar on "road map to deregulation of the indina petroleum industry" here. stating that prices of domestic lpg, kerosene and diesel had a direct bearing on fares of goods and public transport, naik said in conditions of extreme volatility in international prices, the steep upward rise in consumer prices of these products would need to be managed to contain the impact of reasonable limits. "there appears to be a need for devising a suitable mechanism to cushion the impact of volatile international price on the domestic prices," he said. prices of kerosene for public distribution and domestic lpg need to be increased so as to reach a subsidy level of 33.33 per cent and 15 per cent of import parity, respectively, he said. mechanisms to administer these subsidies from the fiscal budget would need to be put in place. besides, the oil pool deficit which is expected to be around rs 14,500 crore by the end of current fiscal, would need to be done away with. various options of doing that are being currently looked into, naik added. naik said experiences of thailand and philippines have shown substantial increase in marketing margins and dealer's commission by the companies in the initial stages of freeing consumer prices of transportation fuel, and a mechanism is required to establish before the apm is dismantled to ensure reasonableness of consumer prices. "possibility of new entrants going in for selective marketing in attractive areas cannot be ruled out. therefore, equitable sharing of costs in less attractive markets, in the post apm period, will have to be ensured to reprieve a level playing field," he said. regulatory framework to oversee the functioning of and enforcing a competitive framework in the hydrocarbon sector is to be established. naik said freight subsidies for supplies to far flung areas would be met from the fiscal budget post apm. a mechanism to administer the subsidy directly from the fiscal budget would need to be put in place.