Govt decides to reduce Petrol, diesel prices

New Delhi, Feb 15: The Government today decided to reduce the price of petrol by Rs two per litre and diesel by rupee one per litre in Delhi with effect from midnight.

The burden will be met partly by revenues and partly through oil bonds already approved by the Government, Oil and Petroleum Minister Murli Deora told reporters here.

After the deduction, the retail selling price of petrol in Delhi will be Rs 42.85 per litre and of diesel Rs 30.25 a litre.

Mr Deora said the prices in other states would vary marginally.

The government had hiked prices of petrol on June 5, 2006. The hike by the state-owned companies as the compensation given to them in the form of government oil bonds and assistance from companies like ONGC has been found adequate to cover for the revenue loss arising from selling the fuel below the production cost.

The Cabinet had on June 5, 2006 decided to raise petrol price by Rs 4 per litre and diesel by Rs 2 per litre and had given autonomy to public sector retailers to raise prices when Indian basket of crude oil stays above 70 dollars a barrel for a month.

The Government, however, did not increase the prices of PDS kerosene and domestic LPG to protect the interests of the common man and the weaker sections of society.

The average price of the Indian basket of crude oil at the last time of hike was 66-67 dollars a barrel. Eventhough the July average, stayed well over 71 dollars a barrel public sector oil firms have decided not to pass on the surge on August 1, when the monthly revision was due.

Last year, the total under recovery on the four petroleum products was Rs 39,594 crore. The largest component in this was the under recovery in kerosene of Rs 14,384 crore followed by that on diesel of Rs 12,284 crore and in LPG, Rs 10,266 crore.

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.

For kerosene and LPG, the common man's household fuel, the government and the oil companies between them are absorbing the burden of the much higher international price.

The PDS kersoene 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.

UNI