ASSOCHAM has suggested variable pricing of diesel linked to end consumers and early creation of fuel-pipeline-grid.
The chamber has recommended graduated steps towards market determined prices for diesel rather than de-regulation of the pricing system in one go.
The Chamber Secretary General Mr. D.S. Rawat said, as for the pricing, the full market price should be charged for diesel used for moving large cars and luxury buses while the increase should be very moderate for others to begin with. Smaller farmers should be exempt for sometime and in phases should be increased.
“It is inequity when the users of luxury vehicles get diesel fuel at the same subsidized rate as those who drive small and medium sized cars”, ASSOCHAM said.
ASSOCHAM has also suggested that Government should encourage replacing old vehicles, especially trucks, modern trailers with high efficiency engines.
ASSOCHAM said that the alternative option of reducing the duties on oil products especially on fuel, will be a move from frying pan to the fire. “If government gives up a major source of revenue like this, it could only do so at the expense of either cutting sharply its development expenditure or raising the level of deficit financing. Either way it would be counter productive for a government committed to raising the growth rate and also making this growth inclusive”, the industry body said.
An ASSOCHAM detailed study on diesel use has pointed out that use of high capacity trucks, paving of all major roads with cement and removal of administrative impediments to smooth highway movement of trucks alone could ensure large scale saving on the use of diesel in goods transportation and buses which could also mitigate the higher costs transport bodies would have to incur when diesel prices are aligned with the market price. The major user of diesel is the transport sector.
Among other users, diesel finds another massive use in the rising number of telecom towers. Though Government has promoted shared use of telecom towers by linking advances for them from the USO fund to sharing of the facility, some of the operators or would be operators are determined to set up their own towers. With some 4 lakh towers planned to carry telecom services to rural areas in the coming expansion phase, the use of diesel as fuel for the back up for the structure would make telecom towers as the 2nd most largest guzzler of this fuel.
ASSOCHAM suggests that no telecom operator should be allowed to go solo in this venture and licence to set up towers should be subject to sharing with other users to reduce use of diesel as back up power. Also incentives could be given for solar panels for back up instead of diesel generator sets.
“We plead that the issue of market pricing of fuel should not be seen as a linear imposition to overcome rising international prices of oil but must be presented as a holistic response to the challenge the country faces on the energy front” ASSOCHAM secretary general said.