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Petrol, diesel prices likely to be hiked by Rs3.50 per litre

The EGoM, headed by finance minister Pranab Mukherjee, is scheduled to meet on 7th June to consider the Kirit Parikh Committee report that calls for the freeing of petrol and diesel prices from governmental control

The government may, from next week, find it easier to decontrol petrol and diesel prices as softening global rates would require fuel costs to be raised by just Rs3.50 a litre for the purpose, reports PTI.

An Empowered Group of Ministers (EGoM), headed by finance minister Pranab Mukherjee, is scheduled to meet on 7th June to consider a Kirit Parikh Committee report that calls for the freeing of petrol and diesel prices from governmental control, besides steep hikes in liquefied petroleum gas (LPG) and kerosene rates to cut fuel subsidy.

"Earlier, there were doubts if the government would actually free auto fuel prices—particularly that of diesel—as the hike required to make them at par with international rates was over Rs6 per litre. But the fall in global oil prices has made the task easier," an oil ministry official said.

The EGoM will have to raise the price of petrol by Rs3.35 per litre and that of diesel by Rs3.49 a litre to free them from government control.

Petrol in Delhi currently costs Rs47.93 a litre, while diesel is priced at Rs38.10.

International crude oil prices have shaved off over $10 per barrel to bring them down to $72-74 a barrel.

"The hike needed to free auto fuel prices till last week was Rs6.07 a litre in petrol and Rs .38 a litre in diesel.

Raising prices, particularly that of diesel by such an amount in one go, was considered politically difficult," he said.

"Things have, however, changed now," the official added.

The revenue loss that state-owned Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum incurred on fuel sales came down to Rs203 crore per day, from Rs255 crore a day till last week.

They currently sell petrol at a loss of Rs3.35 a litre, while that for diesel is Rs3.49, Rs18.82 for public distribution scheme (PDS) kerosene and Rs261.90 for every 14.2-kg LPG cylinder.

The official said the EGoM may not agree with the Parikh committee's recommendation of raising the kerosene price by Rs6 per litre and LPG rates by Rs100 per cylinder. "To my mind, a Rs20-Rs25 per cylinder increase in LPG price may be approved," he added.

Besides Mr Mukherjee, the EGoM on fuel prices also includes oil minister Murli Deora, agriculture minister Sharad Pawar, chemical and fertiliser minister M K Alagiri, railway minister Mamata Banerjee, road transport minister Kamal Nath and Planning Commission deputy chairman Montek Singh Ahluwalia.

State retailers are projected to lose Rs72,300 crore in revenue this fiscal if fuel prices do not change.

According to the terms of reference (ToR), the EGoM is to consider a pricing policy for petrol and diesel, including decontrol, he said, adding that it also has to decide on ways to bridge the deficit between the imported rate and retail price of LPG and kerosene.

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COMMENTS

Winner

7 years ago

What will be the effect on share value of ONGC or Oil Corporation on monday - 7th june 2010

shaileshbagaitkar

7 years ago

Sir,
Is there any other way, because once this cost increases, everything will automatically increase,and as per my knowledge, if it happens, we will not be in a position to achieve Economic Growht @9%, for this year, as recently Hon. Finance Miniser, declared.

I think, there are lot of measures, only govt. is avoiding it for their own interests and playing with the society.
It is very shameful on them, when you people have been selected and appointed by society and you are supposed to be work for and with society, however it seems you are working for your own interest.

Regards,

Shailesh Bagaitkar

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