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Petrol, diesel price hike looks imminent

The Govt hinted about a hike in petrol and diesel prices due to rise in crude oil rates.

business Updated: Jul 25, 2007 19:48 IST

The government on Wednesday broadly hinted about a hike in petrol and diesel prices, saying although it has kept retail prices unchanged it cannot do so for long given the rise in crude oil rates.

"We are trying very hard to see that prices are not increased (but) I cannot say if they will never be raised," Petroleum Minister Murli Deora told reporters in the Capital.

He said Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum were losing Rs 195 crore per day on account of selling petrol, diesel, domestic cooking gas (LPG) and kerosene below the cost price. "I don't know how long can we sustain this," he said.

Deora said he has held discussions with Finance Minister P Chidambaram on fiscal measures to ease burden of oil firms so that a fuel price hike can be avoided.

Petroleum Ministry is seeking at least one-third of the projected Rs 55,000 crore under-realisation on fuel sale this fiscal, be met through issue of oil bonds. Upstream firms like ONGC would contribute an equivalent amount.

Asked if his ministry was open to other fiscal measures as was suggested by Chidambaram on Tuesday, Deora said measures like reducing excise duty and shifting from ad-valorem rates to fixed rates were long pending demands that would certainly help ease the burden of spurt in international oil prices.

"No decision has been taken as yet and consultations will continue," he said, adding that he had briefed about the situation to Prime Minister Manmohan Singh and was also in touch with the leaders of Left parties.

Petrol and diesel prices were cut by Rs 2 a litre and Re one per litre respectively in February, but since global oil prices have appreciated. The Indian basket of crude oil has averaged 72.31 dollars per barrel this month, up 14 per cent from February.

First Published: Jul 25, 2007 19:44 IST