Thursday, May 5, 2011

Fuel prices may be hiked next week

Sujay Mehdudia

With the last phase of the Assembly polls in West Bengal scheduled for May 10, the government is all set to hike the price of petrol and diesel. Indications are that a marginal hike in the price of domestic LPG too is likely to set off the massive losses being incurred by oil marketing companies (OMCs).

With huge mounting losses, due to sale of petroleum products at subsidised rates, the heads of OMCs are waiting for the Assembly elections to be over to allow them to go ahead with the petrol price hike. Petrol was de-controlled in June last year.

With diesel still under government control, a meeting of the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee has been reportedly convened for May 11 to consider a hike in diesel prices. “We have been pressing for a hike in petrol prices and want the government to revise diesel prices for the last two months. But the government has not given the go-ahead in view of the sensitivity of the situation as Assembly elections were on. Hopefully, we will get a positive response after the polls are over to hike prices,” an OMC official said.

It is leant that the OMCs are demanding that the price of diesel be hiked at least by Rs. 5 per litre and that of petrol by Rs. 3 per litre. The EGoM will debate the issue of mounting losses of the OMCs, which are likely to touch Rs. 180,000 crore in 2011-12.

The State-owned Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are now losing Rs. 16.17 a litre on diesel. The companies have been restrained from raising the prices of petrol in view of the elections.

Besides petrol and diesel, the three State oil firms lose Rs. 29.69 a litre on kerosene and Rs. 329.73 per 14.2 kg domestic LPG cylinder. “Losses on petrol are not included in the under-recovery figures for 2011-12 as it is a decontrolled commodity,” a Petroleum Ministry official said. The basket of crude oil India buys had averaged $83.57 per barrel in 2008-09 and calculations for the current fiscal have been done at the prevailing rates of around $110 a barrel.

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