Oil prices set to increase by Rs 2-3, Deora meets FM

New Delhi, May 30 (UNI) A price hike of Rs 2 to 3 per litre of petrol is imminent while the prices of LPG and kerosene are likely to be kept untouched, even though many issues remained unresolved at the crucial meeting between Finance Minister P Chidambaram and Petroleum Minister Murli Deora here today.

The Petroleum Ministry has now been asked to prepare a cabinet note on hike in energy prices which will come up at the next cabinet meeting likely to take place on Thursday or Friday, official sources said.

While both Mr Chidambaram and Mr Deora refused to offer any comments after the meeting which took place in the North Block office of the Finance Minister, sources said not all issues could be resolved at the meeting.

While Petroleum Ministry is pressing for reduction in duties, the Finance Ministry wants the existing duty structures to be retained.

At the heart of the matter is the issue that oil marketing companies have been incurring losses as they have not been allowed to pass on the entire burden of the global crude prices to the consumers, the revenues of the government from the Petroleum sector has shored up.

Sources said the Finance Ministry was not in favour of issuing a second round of oil bonds to make good the losses. A demand for drastic reduction in duties structures also did not find favour with Mr Chidambaram.

The Finance Ministry rejected once again the demand for utilisation of a portion of the cess fund collected from crude oil to keep prices on petroleum products under check.

Today was the third meeting between Mr Chidambaram and Mr Deora, but given the sensitive nature of the issue a clear cut decision eluded the leaders.

The UPA Government has been discussing the issue with its Left allies, and sources said that at the end of the day a price hike of Rs two to three per litre of Petrol and a similar hike on diesel may be permitted.

The common man may, however, be spared from a hike in LPG and Kerosene prices.

UNI/BKS/GS VD VC1955