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Review of fuel prices must: Aiyar
India needs to review domestic fuel prices to ease the burden on state energy firms in wake of increase in crude prices, said energy minister Mani Shankar Aiyar.
India needs to review domestic fuel prices to ease the burden on state energy firms which have been selling petrol and diesel at the same rate for the past six months, oil minister Mani Shankar Aiyar said on Wednesday.
While other Asian countries, including China, have raised fuel prices in the past few months, India has not revised prices since November even though global crude oil prices have risen about 20 per cent.
Oil companies suffered a revenue loss of 200 billion rupees ($4.60 billion) in 2004/05 because of government controls on prices.
"If nothing changes, the revenue loss could double during the current year. So, obviously some rectification is required to arrive at an equitable sharing of burden," Aiyar told Reuters in an interview.
The cabinet may consider a proposal to review fuel prices next week, Aiyar said.
"I know that on Thursday the cabinet is meeting for this week and this is not on the agenda. Perhaps it will be on the agenda in the following week," he said.
He said the burden of high oil prices should be shared between consumers, oil companies and the government.
"Now in my view, the burden sharing since November has been a little inequitable. The consumer has not paid a penny more for six months," he said.
The government had reduced taxes on crude oil and refined products to share the cost of higher crude prices but not to a significant extent, he said.
The coalition government is under strong political pressure from its allies, particularly communist parties, to keep fuel prices low.
"Yes, there is a market distortion but there will be terrible social distortion if we didn't have this market distortion," he said.
