Ministers to meet this week on petroleum price
A GoM on Friday will consider a marginal hike in petrol and diesel costs and a cut in excise duty, reports Deepak Joshi.business Updated: Dec 10, 2007 22:11 IST
Petroleum Secretary MS Srinivasan said on Monday that a group of ministers (GoM) would on Friday consider a marginal increase in the prices of petrol and diesel and a reduction in excise duty to help public sector oil companies overcome Rs 7,840 crore in monthly losses.
“A hike in fuel prices, duty rationalisation and raising oil quantum of oil bonds are among the options that the GoM will consider when it meets for the first time on December 14,” Srinivasan said. He, however, added that a decision was unlikely to emerge from the discussions.
“It should be a set of measures, including bonds, upstream share, what amount will be absorbed by oil marketing companies, duty adjustments and price hike,” Srinivasan said of a possible package.
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 the 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 bear 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, headed by External Affairs Minister Pranab Mukherjee, includes Defence Minister A.K. Antony, Finance Minister P. Chidambaram, Railways Minister Lalu Prasad, Road Transport and Shipping Minister T.R. Baalu, Agriculture Minister Sharad Pawar and Petroleum Minister Murli Deora.
The group was set up in the wake of the persistent demand by oil marketing companies (OMCs) that the burden of increasing crude prices in the international market be passed on to consumers and the plea by the petroleum ministry that adjustments be made in the customs duties and in the excise structure of petroleum products.