The Government is unlikely to increase the prices of motor fuels in the immediate future. The group of ministers (GoM), which was earlier set to meet next week, is now expected to meet after a fortnight.
With the ruling alliance suffering reverses in state elections, the petroleum ministry has decided to evolve a consensus among the allies before considering a marginal increase in the prices of petrol and diesel and a reduction in excise duty. These steps are aimed at enabling the public sector oil companies overcome a loss of Rs 7,840 crore every month.
“A consensus on price revision would help prevent an uproar later. The GoM will deliberate on the contours that emerge out of the consensus building exercise.. So, decision making may be delayed,” ministry sources told the Hindustan Times.
Petrol is being sold at a loss of Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene Rs 20.53 a litre and LPG at a loss of Rs 256.35 per cylinder.
The government has already decided to compensate public sector oil companies by issuing oil bonds to the tune of 42.70 per cent of the under recoveries. The upstream oil companies would be bearing 33 per cent of the under recoveries of Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum. The three oil marketing companies are expected to lose Rs 69,753 crore on the sale of petrol, diesel, LPG and PDS kerosene.
An increase of one rupee a litre in petrol price would cut under-recoveries by Rs 90 crore a litre and the same on diesel would slash the loss by Rs 360 crore a month.
If the government increases kerosene price by the same amount, losses would come down by Rs 95 crore per month and if LPG prices were raised by Rs 10 a cylinder, they would come down by Rs 58 crore per month. A reduction in excise duty by Re 1 per litre on petrol and diesel would reduce the under-recoveries of oil companies by Rs 1,380 crore and Rs 5,270 crore respectively.
The GoM, which is headed by External Affairs Minister Pranab Mukherjee, includes Defence Minister AK Antony, Finance Minister P Chidambaram, Railways Minister Lalu Prasad, Road Transport and Shipping Minister TR Baalu, Agriculture Minister Sharad Pawar and Petroleum Minister Murli Deora.