Despite consensus, EGoM defers decision on fuel price hike | business | Hindustan Times
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Despite consensus, EGoM defers decision on fuel price hike

A panel of ministers today deferred a decision on raising fuel prices due to a lack of quorum, even though it appeared there was consensus on freeing petrol prices from government control and a hike of up to Rs 2 per litre in diesel rates.

business Updated: Jun 07, 2010 21:04 IST

A panel of ministers on Monday deferred a decision on raising fuel prices due to a lack of quorum, even though it appeared there was consensus on freeing petrol prices from government control and a hike of up to Rs 2 per litre in diesel rates.

An Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee could not arrive at a decision in the absence of four key ministers, including Railway Minister Mamata Banerjee and Agriculture Minister Sharad Pawar, a source privy to the deliberations at the EGOM said.

Banerjee, who is away in Kolkata, had communicated that her party, the Trinamool Congress, was against "any steep hike" in diesel prices and wanted domestic LPG and kerosene consumers to be spared, the source said.

With DMK leader and Chemicals and Fertilizer Minister M K Alagiri onboard, the EGoM veered around to freeing petrol prices from government control, a move that would result in rates in Delhi being hiked by Rs 3.35 per litre.

Accommodating Banerjee, the panel favoured only a Rs 2 per litre hike in diesel prices instead of the Rs 3.49 per litre increase needed to free the fuel from government control, the source said.

The panel, which went into the report of the expert group headed by Kirit Parikh calling for freeing petrol and diesel prices and a steep Rs 100 per cylinder hike in LPG rates and a Rs 6 per litre increase in kerosene prices, could not arrive at a decision on the two politically sensitive cooking fuels.

"The EGoM came to the conclusion that further discussion would be necessary before views are firmed up. A further meeting will be scheduled shortly," an oil ministry statement issued after the 50-minute meeting said.

Oil Secretary S Sundareshan described the meeting as "excellent" and said the EGoM may meet again in 10 days.

Pawar could not attend the meeting because of illness, while the absence of Transport Minister Kamal Nath and Power Minister Sushil Kumar Shinde was attributed to their being abroad on official business. "The ministers were not present (so a decision could not be reached)... We will meet again soon," Oil Minister Murli Deora said.

His ministry made a presentation on the impact of the Parikh committee's recommendation, projecting a revenue loss of Rs 72,300 crore if petrol, diesel, domestic LPG and kerosene continue to be sold at rates below the imported cost.

The EGoM discussed the impact of implementing the committee's report on inflation, the source said, adding that freeing auto fuel prices would lead to a 1.4 per cent rise in the Wholesale Price Index (WPI).

In April, WPI-based inflation was 9.59 per cent.