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Save oil PSUs from bankruptcy, Deora to PM

Petroleum Minister Murli Deora today asked PM Manmohan Singh to intervene to save public sector oil firms from bankruptcy.

india Updated: May 15, 2006 20:06 IST

Petroleum Minister Murli Deora on Monday asked Prime Minister Manmohan Singh to intervene to save public sector oil firms from bankruptcy, as surging global oil prices had become unsustainable in the absence of a hike in retail fuel prices or duty cuts.

According to official sources, Deora, at a meeting convened by the Prime Minister, said that IOC, BPCL, HPCL and IBP stand to lose Rs 73,512 crore this fiscal if either fuel prices were not raised or import and excise duties were cut to cushion the impact of international prices.

Finance Minister P Chidambaram, who also attended the meeting, did not favour duty cuts to avoid the Rs 9.33 a litre hike in petrol, Rs 10.43 per litre increase in diesel, Rs 17.16 a litre rise in kerosene and Rs 114.45 per cylinder jump in LPG prices necessitated due to crude prices surging by more than $20 per barrel since the last retail fuel price hike in September 2005.

Sources said the Petroleum Ministry looked amenable to a modest Rs 2.50 to 3 per litre hike in petrol and diesel prices but wanted the Prime Minister to step in to avoid an increase in LPG and Kerosene prices.

It sought greater Budgetary allocation, possibly from the cess collected on domestic crude oil, towards subsidising the mass consumed cooking fuel, and proposed that the contribution by upstream companies including ONGC, OIL and GAIL towards subsidising LPG and Kerosene be enhanced from Rs 14,000 crore to Rs 24,000 crore for 2006-07.

In addition, IOC, HPCL, BPCL would be asked to rework refinery gate prices and contribute Rs 6,500 crore.