Crude costs going north, hike oil prices: Montek | business | Hindustan Times
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Crude costs going north, hike oil prices: Montek

Planning Commission Deputy Chairperson favours increasing prices of petroleum goods due to steep hike in global crude prices that was nearing a staggering $100 per barrel, report HT Correspondents.

business Updated: Nov 09, 2007 01:01 IST

Planning Commission Deputy Chairperson Montek Singh Ahluwalia on Thursday favoured increasing prices of petroleum goods due to steep hike in global crude prices that was nearing a staggering $100 per barrel.

“Our view is that energy cost should be passed on to the consumers while providing targeted subsidy to the needy,” Ahluwalia said after the full planning commission meeting here.

Earlier in the day, Prime Minister Manmohan Singh expressed concern about the mounting subsidy bill on account of fertilisers, food and petroleum.

Singh said that the subsidy bill this year is expected to be over Rs 1 lakh crore. “It is important that we restructure subsidies so that only the really needy and the poor benefit from them and all leakages are plugged”, the prime minister stated.

Ahluwalia echoed similar opinion. “The present policy of insulating the consumers from global price rise is not sustainable as the public sector oil companies bear a large burden of it,” he said.

“By the present policy, public sector oil companies are being run to the ground, which is not sustainable,” he said. “Frankly, any other option is unsustainable,” he said. “If we don't do something about it (rise in crude oil prices), you would not have resources for your social sector programmes,” Ahluwalia said.

The government has been concerned at the serious implications of its decision not to revise the retail prices of key petroleum products in spite of global crude prices nearing $100 per barrel. The Indian crude oil basket is hovering around $ 89 a barrel.

Estimates show the revenue loss of the public sector oil marketing firms could touch Rs. 70,000 crore in the current financial year if the prices are not changed. The Cabinet had earlier agreed to issue oil bonds to 42.70% of the under recoveries, while the upstream firms would cross subsidise to the tune of 35% of the revenue loss.