The Hindu Business Line : Minimal fuel price hike imminent

New Delhi, Jan. 18 A minimal increase in fuel prices seems imminent. The Petroleum Minister, Mr Murli Deora, today hinted that if at all the Government does decide to raise fuel prices, the hike would be minimal. A decision to this effect is expected by next week.

“The Government will find a solution so that consumers would be protected. I don’t want to burden the consumers. If we have to raise prices, it will be minimal,” he told newspersons at the sidelines of an energy conservation conference. “Our endeavour is that consumers should not be burdened too much and the losses of oil companies are also taken care of,” he said.

He said the inconclusive meeting of the Group of Ministers (GoM) on fuel prices, headed by the External Affairs Minister, Mr Pranab Mukherjee, on Thursday and would reconvene either “tomorrow or day after.” Indications are that the GoM is expected to meet on Saturday and if it comes to a definitive conclusion, the Cabinet may be pressed to meet on Monday so that a decision is taken before the Petroleum Minister and his officials leave for overseas roadshows for NELP-VII, beginning January 24-25 in London.

The Indian crude basket on Thursday stood at $87.38 a barrel. The basket averaged $91.16 a barrel in the current month till Thursday.

According to sources in the Petroleum Ministry, the proposal is for a marginal increase in fuel prices coupled with rationalisation of import and excise duties to contain the impact high crude oil prices.

The GoM on Thursday discussed the options of raising petrol price by Rs 4 or Rs 2 a litre and diesel by either Rs 2 or Re 1 per litre. It also discussed Rs 50 per 14.5-kg cylinder LPG price increase, but with no rise in PDS kerosene prices.

However, seeing the sensitivity of the product the proposed hike in LPG price may be moderated to Rs 20 per cylinder or possibly even dropped.

While the maximum increase in petrol and diesel has been suggested to come with a 2.5 per cent cut in customs duty on crude oil and petroleum products and a Re 1 a litre excise duty reduction on petrol and diesel, a lower hike, would be with a five per cent cut in customs duty on crude oil and petroleum products coupled with a Re 1 a litre excise duty drop on petrol and diesel.

At the current price, the oil marketing companies are losing Rs 10.60 a litre on petrol, Rs 11.60 per litre on diesel, Rs 331.4 per LPG cylinder and Rs 19.89 a litre on PDS kerosene.

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