CPA to consider fuel price hike tomorrow
The Cabinet Committee on Political Affairs is likely to consider raising petrol price by Rs two a litre and diesel by Re one a litre in view of a surge in global crude oil prices.business Updated: Feb 13, 2008 19:52 IST
The Cabinet Committee on Political Affairs is likely to consider raising petrol price by Rs two a litre and diesel by Re one a litre on Thursday in view of a surge in global crude oil prices.
"The matter is listed before CCPA that will meet soon after the Cabinet meeting tomorrow morning," a government source said.
CCPA, headed by Prime Minister Manmohan Singh, comprises representatives from all political parties that form part of the ruling UPA alliance.
A Rs two a litre increase in petrol and Re one per litre hike in diesel prices is being contemplated but a duty rejig to minimise impact of high international crude oil prices looks unlikely.
The source said the government may raise the quantum of oil bonds to be issued to state-run oil retailers to partly compensate them for selling auto and cooking fuel below cost.
Presently, 42.7 per cent of the under-realisation on petrol, diesel, LPG and kerosene is met by the government through issuance of oil bonds. This percentage may increase, the source said.
Another 33 per cent is borne by up upstream companies like ONGC and GAIL, while the remaining has to be borne by the retailers - Indian Oil, Bharat Petroleum and Hindustan Petroleum.
The total under-realisation this fiscal is estimated at around 71,808 crore, he said, adding that the Finance Ministry was opposed to Petroleum Ministry's demand for a Re one per litre reduction in excise duty on petrol and diesel.
The state-run firms lose Rs 10.57 per litre on petrol, Rs 11.56 on diesel, Rs 19.89 on kerosene and Rs 331 on each LPG cylinder.
Earlier, a Group of Ministers headed by External Affairs Minister Pranab Mukherjee had left a decision on fuel prices to the Cabinet after the panel was split right in the middle on the issue. Petroleum Minister Murli Deora insisted on a duty cut rather than price hike, while Finance Minister P Chidambaram was opposed to any pre-Budget duty rejig.
Petrol and diesel prices were last raised in June 2006, when crude oil was at 67 dollars a barrel. It is at 92 dollars a barrel this year. LPG prices were last raised by Rs 20 per cylinder in November 2004 when crude was at 34 dollars a barrel. Kerosene prices have not been changed since 2002 when crude was at 23 dollars per barrel.
A Re one per litre increase in petrol price would give Rs 90 crore a month additional revenue to public sector oil companies. A similar hike in diesel would fetch Rs 360 crore a month. A Rs 10 per cylinder increase in LPG prices would result in Rs 58 crore additional revenues every month.