The Hindu Business Line : `Petro price hike was inevitable'

The unprecedented rise in international oil prices has been estimated to put an unbearable burden of under recovery of approximately Rs 73,000 crore on oil PSUs.

New Delhi , July 13

The Members of the Parliamentary Consultative Committee (PCC) have recognised the Government's compulsion to raise prices of petrol and diesel marginally in the backdrop of international crude oil prices rising to over $70 per barrel in July this year against $23.31 per barrel in March 2002.

Global oil prices

Chairing a meeting of the parliamentary committee attached to his Ministry in Mumbai, the Minister of Petroleum and Natural Gas, Mr Murli Deora, has said that three-fourths of the country's crude oil requirement are met from imports and the unprecedented rise in international oil prices has been estimated to put an unbearable burden of under recovery of approximately Rs 73,000 crore on oil public sector undertakings (PSUs).

Kerosene under PDS

Even though petrol and diesel prices were marginally raised by Rs 4 and Rs 2 per litre respectively against the required increase of about Rs 10 per litre, the Government decided not to increase prices of kerosene sold under the public distribution system (PDS) and domestic liquefied petroleum gas (LPG).

The price increase of kerosene and cooking gas (LPG) needed was Rs 17.16 per litre and Rs 114.45 per cylinder respectively. Mr Deora also informed the members that the Government has in-principle approved to restrict PDS kerosene supply to below poverty line families as suggested by the Dr Rangarajan Committee.

States come to the rescue

The Minister said that in addition to the steps taken by the Government to absorb 87 per cent of burden caused by rising international oil prices, some State Governments have responded positively to his request for providing relief to consumers by forgoing sales tax on the increased amount of the price of petrol and diesel. He announced that Assam has also decided to reduce the increased component of sales tax to the tune of Rs 0.69 per litre for petrol and Rs 0.29 in case of diesel. The Government of Assam thus joins the eight other State Governments — Andhra Pradesh, Delhi, Goa, Haryana, Himachal Pradesh, Maharashtra, Tamil Nadu and Uttranchal — that reduced the sales tax on petrol and diesel. The committee members joined the Petroleum Minister in calling upon other States to also reduce the increased component of sales tax for the benefit of consumers.

Checking adulteration

The members were further informed that checking adulteration of petroleum products is a top priority for the Petroleum Ministry. Mr Deora has directed that oil marketing companies (OMCs) to use the latest technology besides other measures to check this menace.

The OMCs have been directed to carry out marking of kerosene with the help of standard marker with effect from October all over India. SKO is used for adulteration of diesel. The oil marketing companies have also been asked to place Global Positioning System (GPS) on tankers by March 2007, carry out third certification of retail outlets (ROs), embark on automation of ROs, and to intensify surprise inspections of ROs.

On the exploration and production (E&P) front the members underlined that domestic E&P must be enhanced employing more investment and latest technology. Members also made several other important suggestions to spruce up the oil and gas sector in the country.