<B>THE</B> automatic pricing mechanism (APM) has finally been implemented. As a result, oil prices have increased since last Friday. Petrol has gone up from Rs 20.40 to Rs 21.35 pe litre (4.66% rise) and diesel from Rs 11.90 to Rs 13.05 per litre (9.66% rise). As from now, oil prices will fluctuate every three months. This new system, announced about six months ago, may allow the State Trading Corporation (STC) to reduce its deficit.

Oil prices are at present subjected to unforeseen changes: exchange rates and prices on the world market, as well as economic and political upheavals around the world, and particularly in the Middle East. If the situation is favourable, prices could drop as well. This system, already applied in countries like Madagascar, Australia or India, will not take into account an increase that is less than 2.5% or more than 15%.

The APM is aimed at not bothering the consumer too much. The Institute for Consumers? Protection (ICP) has obtained the guarantee that economic activities will hardly suffer from the possible rises. Public transport, for instance, will not really see the difference.

<B>Pricing Committee</B>

Transparency is the key word for the system to work. Actually, the ICP supports the system as long as this principle is respected. A pricing committee will thus be set up to check the STC accounts. ?The pricing committee shall revise the wholesale and retail price of Mogas and Gas oil for each quarter after having established the related basic value.?

Wholesalers, who supply their filling stations, are delighted with the decision to implement APM. They made it clear that they do not benefit from the rise, as exceptional gains will be paid back to the government. The service stations, for their part, may benefit from a windfall gain. However, managers assert they will not take advantage of the situation.

Consumers seem quite blasé about this rise. Of course, it does not fill them with joy but they may think they have no choice anyway. Unless the hope of seeing prices fall in 3 months keeps them from protesting?.