The Hindu Business Line : Petrol, diesel prices may go up by Rs 2-3

Pricing woes
The decision on petroleum pricing would be an integrated package — a mix of price revision, duty cuts on oil products and oil bonds.
Cabinet is likely to take up the issue on Thursday or Friday.
Petroleum Ministry working out a mechanism for equitable burden sharing by all stakeholders — consumers, the Government and the oil companies.
The OMCs were demanding an increase of Rs 10.5 per litre of petrol, Rs 9.88 per litre on diesel, Rs 120 per LPG cylinder and Rs 16.78 on a litre of kerosene.

New Delhi , May 30

A decision on revision of domestic fuel prices could be expected in the next two days (Thursday or Friday).

Indications are that the prices of petrol and diesel may increase by Rs 2 to Rs 3 per litre, while kerosene and cooking gas could be spared from any hike in prices.

The decision on petroleum pricing would be an integrated package — a mix of price revision, duty cuts on oil products and oil bonds.

Soon after his meeting with the Finance Minister, Mr P. Chidambaram, the Petroleum Minister, Mr Murli Deora, said that his Ministry would prepare a Cabinet note on the package.

Cabinet meeting

The note is expected to be circulated tonight among various Ministries to seek their views and would be taken up in the next Cabinet meeting scheduled for Thursday or Friday.

Talking to the media, Mr Deora said, "Very soon the Cabinet will take a decision on how much to increase or not to increase. The Cabinet will also decide on the products where prices would be revised."

The Petroleum Minister discussed with the Finance Minister the current crude scenario in the wake of surge in international crude prices and its effect on the domestic oil marketing companies.

The Petroleum Ministry has been in close consultation with the Finance Ministry to work out a mechanism for equitable burden sharing by all stakeholders — consumers, the Government and the oil companies.

According to official sources, duty cuts may not be an easy task as the Finance Ministry has refused to bend from its earlier position.

Excise duty

The oil marketing companies (OMCs) - IndianOil, Bharat Petroleum Corp, Hindustan Petroleum Corp and IBP - are collectively projected to suffer under realisation of about Rs 73,500 crore for 2006-07.

While the customs duty on crude is 5 per cent, petrol and diesel attract a customs duty of 10 per cent each.

The excise duty on the two oil products is at 8 per cent.

Indications are that the Government may also issue bonds to state-run oil companies to partly offset their losses.

The OMCs are demanding an increase of Rs 10.5 per litre of petrol, Rs 9.88 per litre on diesel, Rs 120 per LPG cylinder and Rs 16.78 on a litre of kerosene.