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Ministry wants to increase price of petrol by Rs 5

Written by: Staff

New Delhi, May 10 (UNI) The Petroleum Ministry today said that it wanted to increase prices of petrol, diesel and kerosene by Rs 5 per litre each and LPG by Rs 50 per cyclinder, but the Left parties said they would oppose any such move.

The Ministry, in a presentation today to the Left parties, said at the present situation there is a need of increasing petrol prices by Rs 9.33 , diesel by Rs 10.43, Kerosene by Rs 17.16 and LPG by Rs 114.45. But after sharing the burden between the stakeholders (oil sector, government and consumers) the increase can be only by Rs 5 for petrol, diesel and kerosene and for LPG, Rs 50 per cylinder only, it said.

After the meeting, CPM leaders Sitaram Yechury and Basudev Acharaya said the government should rationalise the duty structure on petroleum products. Mr Yechury said import duty on crude oil should be totally abolished.

The presentation pointed out that the Rangarajan Committee on petroleum price review also recommended a Rs 75 hike for LPG cylinders and restriction of kerosene subsidy to Below Poverty Line (BPL) families. The committee was not in favour of putting the subsidy burden on oil companies. It should be fulfilled from budget provisions or by raising cess on indigenous crude oil production, the committee had said.

The oil ministry said that, without the price hike, oil companies would suffer a revenue loss of Rs 73,512 crore in 2006-07 fiscal.

Union Petroleum Minister Murli Deora said after the meeting that there was no proposal to hike the prices of petrol and diesel yet but any decision would be taken after his meeting with Finance Minister P Chidambaram slated for tomorrow.

After a detailed presentation by the Petroleum Ministry to the Left leaders, who are opposing any hike in fuel prices, Mr Deora said clarifications were given on the prices of these products in the neighbouring countries like Bangladesh, Pakistan and Sri Lanka.

Mr Deora said oil companies were bleeding, with under-recoveries hovering around Rs 73,500 crore. He said suggestions were sought from the Left on ways of tackling this issue.

Mr Yechury said the government should rationalise taxes after the dismantling of the Administered Price Mechanism (APM) prices.

He said there was a decision that taxes would be rationalised but that was not done.

The Left parties are opposed to any move to hike oil prices, saying the government should consider reducing excise and custom levies on petroleum products to mitigate the effect of surging international prices.

''It will be our endeavour not to hike prices, particularly of cooking gas and kerosene as these are used by the poor strata of society and the common man,'' the petroleum minister had said on Tuesday.

Mr Deora said that his ministry was studying the report of the Rangarajan Committee.

It is expected that during the meeting with the Finance Minister, the Petroleum Ministry will seek a cut in import and excise duties and increase in subsidies on cooking fuel as measures to help oil firms.

On the cards is a Rs 2-3 per litre hike in petrol and diesel prices and a Rs 15-20 increase per LPG cylinder, but a decision would be taken only after consultations with allies including the Left, sources said.

State-owned oil retailing firms are losing Rs 9.34 per litre on selling petrol below the imported cost while the loss on diesel was Rs 10.43 a litre. Kerosene was being sold at a loss of Rs 16.78 per litre and LPG at a loss of Rs 220 per cylinder.

State-run petroleum refiners have been unable to raise government-capped retail fuel prices since September last year, despite the surge in global crude oil prices which crossed 75 dollars per barrel.


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