The Hindu Business Line : GoM may consider hike in auto fuel prices

New Delhi, Dec. 10 Marginal hike in auto fuel prices, duty cuts and issuance of bonds to PSU oil marketing companies are some of the options likely to be considered by the Group of Ministers (GoM) on commodity pricing.

Speaking to newspersons, the Petroleum Secretary, Mr M.S. Srinivasan, said here on Monday that “at Friday’s (December 14) meeting, the GoM is likely to consider these options, but it is unlikely that a final decision will be taken at the first meeting.”

Mr Srinivasan was speaking on the sidelines of the three-day conference on ‘Safety Competencies in Petroleum Refining, Petrochemicals and Gas Processing’. The Government is also looking at increasing bonds issued to oil marketing companies (OMCs) and asking upstream companies to share a large burden of the subsidies.

Concerned with the volatility in the international crude prices, the GoM headed by the External Affairs Minister, Mr Pranab Mukherjee, was set up by the Prime Minister, Dr Manmohan Singh, last month.

The current projected annual under recoveries on the four petroleum products — petrol, diesel, PDS kerosene, and domestic liquefied petroleum gas (LPG) — are estimated to exceed Rs 69,700 crore. Out of these under recoveries, about Rs 33,600 crore are on account of domestic LPG and PDS kerosene. The OMCs suffer revenue loss on the four products due to selling them below the cost price.

The Indian crude basket on Friday was at $86.22 a barrel, which was about $30 a barrel higher since the last petroleum product price revision in February. At the current prices, the revenue loss of OMCs is likely to touch Rs 70,000 crore on an annualised basis, Mr Srinivasan said.

“The GoM will submit its suggestions to the Cabinet,” he said. At this estimated under recovery figures, the Government would need to issue Rs 29,000 crore worth of bonds to the OMCs. He said the GoM would also look into the quantum of the revenue loss to be absorbed by the OMCs.

Safety emphasis

Earlier, speaking at the function, Mr Srinivasan emphasised the importance of safety in the operations undertaken in vital sectors like oil and gas. Inaugurating the conference on energy safety, he called upon corporate undertakings to take no chances and follow safety practices at all levels in the organisation.