Effective from Dec. 15, oil product distributors will be allowed to automatically raise pump prices without having to seek government approval if world crude prices rise by 7 per cent or more, the government said in a statement.

If world crude oil prices fall by 12 percent or more distributors must lower retail prices accordingly, the statement said. Distributors will only be allowed to adjust retail prices once every ten days, the statement said.

At present oil product distributors, all of which are state-run have to seek permission from the Finance Ministry and the Industry and Trade Ministry to change their pump prices and there is no formal arrangement linking tariffs to world oil price swings.

Reuters - October 19, 2009