The Hindu Business Line : Govt closer to bail-out plan for oil cos

New Delhi, May 29 The UPA Government seems to have inched closer to working out a bail-out package for the public sector oil marketing companies (OMCs), following a series of high-powered consultations among the core Group of Ministers, which included the Finance Minister, Mr P. Chidambaram, and the Petroleum Minister, Mr. Murli Deora. Indications are that the package, expected shortly, would include a combination of price hike on auto fuels, duty rationalisation, oil bonds, and sharing of subsidy by upstream companies.

The Prime Minister, Dr Manmohan Singh, had discussions with the External Affairs Minister, Mr Pranab Mukherjee, the Finance Minister, the Petroleum Minister and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia. Later in the day, the leaders also met the UPA Chairperson, Ms Sonia Gandhi.

Earlier, after the Prime Minister’s meeting, Mr Murli Deora said “we discussed the various options. Hopefully, by tomorrow or day after tomorrow we will have a solution.” He, however, declined to comment on what the expected decision could be.

Softer package?

Though the Petroleum Ministry has been seeking Rs 10 a litre hike in petrol, Rs 5/litre in diesel and Rs 50/ cylinder increase in LPG, besides cut in customs duty on crude oil and excise duty on auto fuels, indications are that the package could be softer.

Indications are that petrol and diesel prices would go up by Rs 4-5 per litre and Rs 2-3 a litre respectively. The proposal would be placed before the Cabinet for its approval.

Mr Deora said, “International prices touching $ 135 a barrel have forced down our throat Rs 2,25,000 crore revenue loss on sale of petrol, diesel, LPG and kerosene. Unless we act, companies will not be left with cash to import crude.”

“Some things have been agreed to at today’s (morning) meeting, but I cannot say what the Cabinet will decide,” he said.

The Petroleum Ministry has been facing opposition from the Finance Ministry on its proposal to cut customs duty on crude oil to zero from five per cent, and on petrol and diesel to 2.5 per cent from 7.5 per cent.

The Finance Ministry was also not in favour of reducing the excise duty on the two fuels by half.

“I am against any kind of price hike, but the situation sometimes forces you to do that,” he said adding that “the Prime Minister and all of us are trying to find solution to the problem. Tomorrow or day after, we’ll sort everything out.”