The Hindu Business Line : Petro-price hike: Govt finds it tough to convince Left

Opposing any move to raise petroleum product prices, the senior leaders of Communist Party of India (CPI) on Monday asked the Petroleum Minister, Mr Mani Shankar Aiyar, to consider other options to cushion the impact of rising prices of crude on the profitability of public oil companies.

"We have clearly told them to refrain from any price hike," Mr D. Raja, CPI leader, told Business Line. The Petroleum Minister explained that with the international prices of petroleum products soaring, there is a need to revise the prices of these products upwards. "We have given certain suggestions and asked them consider it and then get back to us," he said.

Any price hike would have an inflationary effect, he added. The Petroleum Minister met Mr D. Raja and Mr A. B. Bardhan, senior leaders of CPI, as part of his consensus-building exercise for raising petroleum product prices.

"We suggested that excise and customs be brought to zero, refinery charges, which are the highest in India, be brought down and the proposed 50-paise cess on diesel and petrol for development of highways be reviewed," he said.

Currently, the pricing of petroleum products is done on the basis of import parity. But over 90 per cent of India's imports consist of crude.

The import parity, therefore, should not be on the basis of the international prices of different petro-products, but should only be linked to the international crude price. This will substantially lower the prices of various petroleum products.

The Petroleum Ministry has been holding the view that these measures would be inadequate, as crude prices account for maximum cost of the product - almost 75 per cent. CPI leaders were also explained that unless prices of petroleum products are hiked, the oil companies would take a hit of Rs 37,000 crore.

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