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Oil Companies to be given right to adjust fuel prices

Written by: Staff

New Delhi, Jun 7 (UNI) The Union government has in principle decided to allow oil companies to adjust prices automatically to bring them in alignment with international crude oil prices, but will indicate the modalities for doing so.

Highly placed sources in the Petroleum Ministry indicated today that the existing package will hold until global crude prices touch 75 dollars a barrel,Thereafter, the oil companies will be free to adjust prices on petrol and diesel on the basis of a formula given by the government.

"The modalities for the periodicity was being worked out," the sources said and added that suggestive details will be handed over to the oil majors soon.

This involves a 39 paise hike in petrol per dollar increase; 30 paise increase in the case of diesel and 36 paise for kerosene.

In the case of LPG the increase will be 67 paise.

The sources said the interest bearing bonds will be SLR compaitible enabling Financial Institutions to participate in the offer.

Bonds worth Rs 6,000 to Rs 7,000 crore will be issued in June and a meeting between Finance Ministry mandarins and Petroleum Ministry Officials in this regard will be held next week.

The Ministry sources said there will be no roll back on hike in prices of petrol and diesel as the increase has been carefully worked out. A minimal burden has been imposed on the consumer and the other two stake holders--the government and Oil Marketing Companies-- will continue to bear the brunt.

The Sources said Petroleum Minister Murli Deora has written a letter to all State governments to cut sales tax on petrol and diesel to provide a cushion to consumers.


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