New Delhi, June 4 (UNI) The government announced an increase of Rs 5 per litre in the retail price of petrol, Rs 3 for diesel and Rs 50 for the domestic LPG from midnight tonight, but left the PDS kerosene untouched.
The hikes, which would provide an additional revenue of Rs 21,123 crore for the beleagured oil marketing companies (OMCs), were approved at a meeting of the Cabinet Committee on Political Affairs (CCPA) chaired by Prime Minister Manmohan Singh, Petroleum Minister Murli Deora told reporters.
Simultaneously, the government reduced the customs duty by 5 per cent on crude and its products and the excise duty by Re 1 per litre on petrol and diesel. The import duty on crude has been reduced from 5 per cent to zero per cent, on diesel and petrol from 7.5 per cent to 2.5 per cent and all other petroleum products, including aviation turbine fuel (ATF), from 10 per cent to 5 per cent.
The CCPA also approved several other measures to bring down the losses of OMCs which had been estimated for the current year (2008-09) at Rs 2,45,305 crore in view of the high crude prices in the international market and controlled retail prices.
The upstream petroleum companies, which had been apportioned a hit of Rs 26,000 crore last year, would have now to absorb a loss of Rs 45,000 crore and the OMCs would have to share the burden to the extent of Rs 20,000 crore, against Rs 16,000 crore last year.
Despite all these measures, there would be a shortfall of Rs 1,35,000 crore for which the Finance Ministry would make ''suitable provisions'' in the form of quarterly oil bonds.
Asked about the impact of the price hike on inflation, which had already spiralled to 8.1 per cent, Mr Deora said the government had no other option but to raise the retail rates of petroleum products.
The price increase would bring down the shortfall in the recoveries only 9 per cent, while the duty cuts would account for another 9 per cent. The upstream companies would absorb 18 per cent of the burden, the OMCs would take an eight per cent hit.
Asked about the high sales tax, with some states levying as much as 35 per cent, Mr Deora said the Centre would appeal to the Chief Ministers to moderate the tax.
The Minister said he talked to CPI(M) General Secretary Prakash Karat and CPI leader Gurudas Dasgupta shortly after the CCPA decision to explain to them the need for the move, which also included duty cuts as demanded by the Left parties. ''I hope they will be sympathetic and understand the need.'' The OMCs would be allowed to dispose of the bonds in favour of RBI to raise a maximum of Rs 1,000 crore a day so that crude imports would continue. Allowing the OMCs to sell the bonds in the open market would affect the dollar-rupee rate, he said.
If the government had to make-up for the shortfall only through price hikes, petrol would have to be raised by Rs 21.43 a litre, diesel by Rs 31.58 a litre and LPG by Rs 353 per cylinder, the Minister said.
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