Asian Development Bank (ADB) today cautioned that worsening global financial situation will have severe consequences for emerging economies like India and China.

"This global slump (in US, Euro area and Japan) will have a serious slump on the region's major economies, particularly on India and China" ADB President Haruhiko Kuroda said at a FICCI seminar here.

Their first target could be bulk buyers but state-owned companies are well-entrenched in that market

At 65 million tonnes per annum, diesel accounts for nearly 40 per cent of all petroleum products sold in the country. Not surprisingly, it is a huge opportunity for private oil marketing companies. Now that the government has decided to decontrol diesel prices for bulk users and allowed government-controlled oil marketing companies to raise retail prices in small monthly doses, private oil companies such as Reliance Industries, Essar Oil and Shell India have a real opportunity on their hands.

If the price rise is approved, it would raise costs for power and fertiliser companies and other natural gas buyers such as city gas distributors

The pricing of natural gas is set for a major revamp. An empowered group of ministers is likely to approve new policy guidelines based on the Rangarajan committee report; this would more-than-double the price of domestic gas sold by Oil and Natural Gas Corporation and Oil India. If the price rise is approved, it would raise costs for power and fertiliser companies and other natural gas buyers such as city gas distributors.

90% Of The Fuel Is Used For Intermediate Purposes

Every few days, Rajkumar Sharma, manager of a group housing society in Noida, trots off to the nearby petrol pump for his quota of diesel for the society’s power generators. But his back-of-an-envelope calculations have got more urgent of late. “Our average monthly consumption is around 400 litres, which means a monthly expenditure of Rs 20,000-22,000. I’m sure this will now go up by at least 10-15%.”

The decision to deregulate diesel prices may have been something the government could no longer delay, but the immediate impact being felt by those who are part of the ‘diesel economy’ is there for all to see.

Many commercial establishments are now switching to solar solutions for their captive power needs

Rising petroleum prices are expected to benefit renewable energy solution providers as commercial establishments that use diesel generator sets for their captive requirements may find solar power attractive. The city gas distribution (CGD) players too expect commercial establishments to switch from diesel to piped natural gas in the areas where power supply is unreliable.

Base price of domestic natural gas comes to around $7.4 per mBtu

Analysts may be seeing a positive for Reliance Industries Ltd (RIL) in the Rangarajan panel’s recommendations on gas pricing, but the committee’s formula would work out the natural gas price at less than what RIL has been seeking for its KG-D6 block produce. Based on the panel’s formula, the base price of domestic natural gas comes to around $7.4 per million British thermal unit (mBtu), but the pricing formula proposed by RIL, officials say, translates the price into $13-14 an mBtu.

Looking at ways to stop bulk diesel users from securing fuel from retail outlets

With dual pricing for diesel in place, oil marketing companies (OMCs) are looking at ways to stop bulk diesel users from securing the fuel from retail outlets. The three public sector OMCs — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation Limited — want the government to put in place regulations for this.

Industrialists in Punjab are upset over the Centre’s decision to partially deregulate diesel prices, allowing an increase of 40-50 paise a litre per month.

“The government’s decision to deregulate diesel prices partially has come as a shock to the industrial community. Diesel is the backbone of the industry as the transportation and the production process is dependent on it. The engineering exports are not doing well due to a slowdown in the global economy and instead of boosting exports, the government has increased diesel prices.