The Hindu Business Line : Decision on petrol, diesel price cut likely today

Price relief
The Congress President and UPA Chairperson, Ms Sonia Gandhi, had discussed the price issue with the Prime Minister.
The Petroleum Minister, Mr Murli Deora, said he would meet the Prime Minister to decide on the matter.

New Delhi , Nov. 28

Users of petrol and diesel may get some respite from high domestic retail prices. A reduction in prices of the two products is likely to be announced in Parliament on Wednesday. Even while the Petroleum Ministry remained tight lipped on the quantum of reduction, indications are that petrol may be cheaper by Rs 2 per litre and diesel by Re 1 per litre.

This move comes soon after the Congress President, Ms Sonia Gandhi, said the steep rise in the diesel and petrol prices, despite the Government's efforts not to pass on the entire burden, has been causing hardship to the people.

"I had discussed with the Prime Minister the possibility of decreasing the prices of some of the petroleum products to provide relief to the people. He had assured me then that he would look into the matter. I am sure this is under examination," she said.

Ministry reaction

While acknowledging this, the Petroleum Minister, Mr Murli Deora, said he would meet the Prime Minister, Dr Manmohan Singh, to decide on the matter. "Any decision on price cuts will be taken after the meeting and the decision would be announced in Parliament tomorrow," he told mediapersons.

Besides, the Government has also been under pressure from the Left parties to roll back the price increases that took place in June.

While petrol is currently being sold at a profit of Rs 4 per litre, state-owned oil marketing companies are incurring a loss of 46 paise on sale of diesel. However, according to industry sources, it remains to be seen how the Petroleum Ministry works out the numbers.

Crude prices

The prices of petrol and diesel were last increased in June by Rs 4 per litre and Rs 2 per litre respectively. At that time, the Indian crude oil basket averaged at $67.29 a barrel in May and $67.15 a barrel in April. This price increase was also said to be not in line with the then prevailing international oil prices, but less.

Prices of domestic LPG and kerosene sold under public distribution system (PDS) remained untouched even then.

Even when the Indian basket touched a high of $75.20 a barrel on August 8, there was no increase in the retail prices. At the current prices of $57-58 a barrel, the oil marketing companies are still incurring under recoveries on diesel, kerosene and LPG.

The Indian basket on November 27 was at $58.13 per barrel.