Financial Daily from THE HINDU group of publications
Friday, Nov 05, 2004
Industry & Economy - Petroleum
Government - Policy
LPG to cost more; petrol dearer by Rs 2.20, diesel Rs 2.10
New Delhi , Nov. 4
THE UPA Government has decided to increase the prices of petrol, diesel and LPG from midnight tonight.
While the price of LPG is to be increased by Rs 20 per cylinder with immediate effect and subsequently by Rs 5 each month, the new prices of petrol and diesel are to be worked out by the oil marketing companies based on a formula worked out by the Cabinet Committee on Economic Affairs (CCEA).
As had been expected, the poor man's fuel, the price of kerosene has been left untouched.
Briefing newspersons here at the conclusion of the CCEA meeting, the Petroleum Minister, Mr Mani Shankar Aiyar, said that the prices of petrol would be linked to its import parity prices while the increase in diesel prices would be pegged at half of its import parity.
In effect, this means that the prices of petrol and diesel would be raised in line with the increase in global crude prices.
Accordingly, prices of petrol are set to go up by about Rs 2.20 per litre while diesel prices are to be dearer by about Rs 2.10 per litre from midnight tonight.
It may be recalled that the CCEA, in its meeting held here on Wednesday had failed to take any decision on the issue even as the Finance Ministry had refused to concede to the Petroleum Minister's demand for a cut in duties.
In a detailed presentation to the CCEA on Wednesday, the Petroleum Minister had advocated the need for the Government to ensure that petrol products' availability was not affected and the rising under recoveries were brought down to realistic levels.
Petrol and diesel prices had not been hiked for over three months, while LPG prices were last raised on June 15.
Till now, petrol was being sold at Rs 2.20 per litre below the imported cost while diesel was priced at Rs 4.15 per litre below cost.
LPG was underpriced by Rs 158 per cylinder and kerosene, whose prices have not changed in the past 30 months, is being sold at Rs 11.76 per litre lower than the imported cost.
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