Petrol prices cut by Rs 2 a litre, diesel by Re 1

New Delhi, Nov 29 (UNI) Bowing to the demands from the ruling Congress party and Left allies, the Government today rolled back the prices of petrol by Rs 2 a litre and diesel by Re 1 a litre in view of the softening of prices in the international market.

The revised prices are effective from midnight tonight.

In New Delhi, petrol will cost Rs 44.85 per litre while diesel will cost Rs 31.25.

Announcing this in a suo motu statement in the Rajya Sabha, Union Petroleum Minister Murli Deora said the move was being taken in response to a request made by Congress President and UPA Chairperson Sonia Gandhi for protecting the interests of the consumers.

The prices of kerosene, the common man's fuel, and LPG will, however, remain unchanged, he said.

Responding to the demand made by Members of Parliament for rollback in the prices of petrol and diesel, the Minister announced that the Manmohan Singh Government ''has decided to reduce the retail selling prices of petrol by Rs two per litre and that of diesel by Re one per litre with effect from midnight tonight for public sector companies''.

He said the prices of petrol and diesel had remained high over last year, putting a heavy burden on the economy and oil companies peaking at US 75 dollars per barrel of crude oil.

As much as 87 per cent of this burden of increased international oil prices was being borne by the Government through oil bonds and the oil PSUs.

The decision to slash fuel prices follows a drop in global crude prices to 56 to 58 US dollars a barrel.

"In view of the softening of prices in the international oil markets there is widespread expectation among the public of a reduction in the retail prices of petrol and diesel," he said.

The Indian basket of crude oil was at about 67 dollars a barrel when petrol and diesel prices were last raised in June 2006. It came down to 57.26 dollars a barrel in October.

Earlier, the Minister had pointed out that the total under recovery on the four petroleum products last year stood at Rs 39,594 crore, of which the largest component was the under-recovery of Rs 14,384 crore in kerosene followed by Rs 12,284 crore on diesel and Rs 10,266 crore in LPG.

The expected under-recovery is Rs 73,512 crore with diesel amounting for Rs 37,940 crore and kerosene amounting for Rs 19,403 crore.

Mr Deora has argued that to keep a check on inflation, the domestic prices of petroleum products like petrol and diesel have not been raised to the international levels.

For kerosene and LPG, the Government and the oil companies between them are absorbing the burden of the much higher international price.

The PDS kerosene which is being supplied at Rs 9 per litre is perhaps one of the lowest prices in any non-oil producing nation, Mr Deora said. Both LPG and kerosene form 66 per cent of the total petroleum products.

Petrol is the only commodity that has shown a slight over-recovery of Rs four per litre. LPG has a under-recovery of Rs 102 per cyclinder and kerosene Rs 14 per litre, Mr Deora said on the sidelines of the signing of Coal Bed Methane (CBM) contracts under the third round of NELP.

In a suo motu statement, Mr Deora said x x x here picking up from para one of PAR 23, FUEL PRICES-CUT THREE RS.

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