Financial Daily from THE HINDU group of publications
Wednesday, Jun 07, 2006
Financial Daily from THE HINDU group of publications Wednesday, Jun 07, 2006 |
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Petroleum Government - Politics Industry & Economy - Economy No price hike rollback: Deora Our Bureau
Hike woes Price hike opposed by Left and section of Congress Ministry to launch ad campaign on reason for hike
MR MURLI DEORA
New Delhi , June 6 A day of high drama ended, with the Petroleum Minister, Mr Murli Deora, putting to rest all speculation on rolling back the petrol and diesel price hike announced by the Government on Monday. Speaking to newspersons, he said: "The Ministry is not considering a rollback as of now. But nothing can be ruled out in the future, tomorrow is another day." Amid large-scale opposition on the price increase from all quarters - the Left, the Opposition, and even a section of the Congress - there was speculation of a possible rollback. Rumours of a possible rethink became rife after the Minister met the UPA Chairperson, Ms Sonia Gandhi. However, he refused to comment on the meeting. The Cabinet on Monday announced an integrated package to protect the oil marketing companies from the impact of high international crude prices. It included an increase in the prices of petrol and diesel by Rs 4 and Rs 2 per litre respectively, issuance of oil bonds worth Rs 28,000 crore, reduction in Customs duty on petrol and diesel, limiting supply of PDS kerosene to families below poverty line, and moving to a trade parity mechanism for petrol and diesel. It had left the prices of cooking gas (LPG) and kerosene untouched. Mr Deora said that a decision on a rethink cannot be taken at his level. "The final decision on the issue rests with the Prime Minister." He added that the Ministry would launch an advertisement campaign across all national and regional newspapers explaining the reason for the hike.
Oil bonds issue soon
Earlier in the day, Mr Deora said that he expected that a portion of the Rs 28,000-crore oil bonds would be issued soon to partly compensate the oil marketing companies for their revenue losses for selling petroleum products below cost price. "We expect that part of the bonds will be issued in 10 days." The Ministry is in consultation with the Finance Ministry on the proposed coupon rate of the oil bonds and its tenure. Mr Deora said that even after the price hike, the oil marketing companies would keep losing substantial revenue on sale of petrol and diesel.
Revenue loss
According to an official estimate, these firms are likely to suffer a notional revenue loss of less than Rs 3,000 crore in 2006-07 after the revision. As regards reduction in excise duty, Mr Deora said that if the excise duty on petrol and diesel were reduced, the quantum of price increase could have been lower. Customs duty on petrol and diesel has been cut to 7.5 per cent from 10 per cent, while excise duty has been left untouched. Mr Deora said that he has received a memorandum of the Left parties opposing the price hike. "I am willing to meet them and try and convince them on the issue," he added. Asked about the opposition to price hike from a section of the Congress, he said: "We are a vibrant and democratic party and people can have their views."
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