The Hindu Business Line : No price hike in petrol, diesel now: Aiyar

THE Minister for Petroleum and Natural Gas, Mr Mani Shankar Aiyar, today ruled out any immediate hike in petrol and diesel prices. "It's out of the question,'' Mr Aiyar said at a function when asked if the Government was contemplating any increase in petrol and diesel prices in the immediate future in view of rising global crude prices.

The year 2004-05 witnessed unprecedented high oil prices in the international markets. The international oil prices during March have risen sharply to over $54 a barrel. The Finance Minister, Mr P. Chidambaram, in his Budget proposal for 2005-06 had raised excise duty on petrol and diesel, which the oil firms are yet to pass on to the consumers.

Speaking on the sidelines of the function, the Minister said, ``We will have to go to the Cabinet for it. The Petroleum Ministry will finalise its proposal (on price change) after which it will be circulated and the Cabinet will consider it thereafter.'' Indications are that the proposal is unlikely to come before the Cabinet within a fortnight.

The petrol and diesel prices had been frozen in November last and prices have not changed since.

Mr Aiyar said a new pricing policy might be unveiled once international oil prices stabilise to reasonable levels.

The Minister had earlier said that the change in excise duties had put a heavy burden on the oil companies.

The Budget for 2005-06 had cut Customs duty on petrol and diesel to 10 per cent from 15 per cent but reworked the excise duty on both products to a mix of ad valorem and specific rates.

Additionally, the cess for road development has been increased by Rs 0.50 per litre to Rs 2.

Mr Aiyar said that the duty changes has left the oil firms poorer with the public sector refineries losing Rs 1,200 crore a year as their duty protection rate got reduced by one per cent with cuts in Customs duty on products.

When asked about the move to sell part of Government's stake in the state-run exploration firm Oil India Ltd, the Minister said, "no decision has been taken as yet."

He, however, said that the Government is considering divesting a minority holding in the company.

"There is a proposal before me to see how OIL's resources could be strengthened, possibly by adopting such a route (initial public offer)," he said.

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