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Fuel prices could go up this weekend

business Updated: May 30, 2008 13:30 IST
HT Correspondents

The Cabinet is likely to take a final decision on fuel prices on Saturday, but top officials said a hike was inevitable. Petrol could go up by Rs 4-5 per litre and diesel by Rs 2-3 per litre, PTI reported. The petroleum ministry has sought a hike of Rs 10/litre for petrol and Rs 5/litre for diesel, besides a rejig of taxes and possible issuance of a fresh set of bonds to oil companies.

Oil Minister Murli Deora met Prime Minister Manmohan Singh on Thursday to discuss a bailout package for public sector oil companies. External Affairs Minister Pranab Mukherjee, Finance Minister P. Chidambaram, and Planning Commission Deputy Chairman Montek Singh Ahluwalia were also present.

“We discussed various options... Hopefully, by tomorrow or day after tomorrow, we will have a solution,” Deora told reporters.

Congress chief Sonia Gandhi too met the PM. They are believed to have discussed the political fallout of a fuel price hike, which will hit the aam aadmi, the UPA’s election mascot. Inflation is seen as having cost the Congress the elections in Karnataka, and the cascading impact of fuel prices could eclipse the UPA’s achievements as assembly and Lok Sabha polls approach.

The RBI on Thursday evening allowed oil companies to borrow more to meet crude import bills. Banks can now lend up to 25 per cent of their base capital, up from 15 per cent.

But the companies, losing a cumulative Rs 580 crore daily, remained unimpressed. An IOC spokesman said: “The issue is about cash crunch, not more borrowings. If the cash crunch is not dealt with, servicing bonds or loans will remain a problem.”

(With PTI inputs)