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Tuesday, Sep 24, 2019

Rs 5 oil price hike coming

The stage is set for another increase in the price of key petroleum products ? petrol, diesel and LPG ? notwithstanding the Left opposition to the move.

india Updated: May 11, 2006 14:35 IST
HT Correspondent
HT Correspondent

The stage is set for another increase in the price of key petroleum products — petrol, diesel and LPG — notwithstanding the Left opposition to the move.

The Petroleum Ministry favours a Rs 5 a litre rise in the price of petrol, diesel and kerosene oil, apart from Rs 50 increase in the price of domestic LPG cylinder.  This will result in Rs 26,700 crore burden on the consumers in the remaining 10 months of the fiscal.

Petroleum Minister Murli Deora, along with officials from the ministry, had an hour-long interaction on the nitty-gritty of the problems faced by the oil companies due to non-revision of retail prices of petroleum products since September last year. The Petroleum Ministry pointed out that under-recoveries on  diesel were to the tune of Rs 10.43 a litre,  Rs. 9.33 a litre on petrol, kerosene Rs. 17.16 and Rs 114.45 per cylinder in LPG.

The Left leaders Sitaram Yechuri, Gurudas Dasgupta, Basudeo Acharya and Abani Roy stressed the fact that the government should explore alternative options rather than burdening the consumers.

“A rationalisation of customs and excise duties along with utilisation of cess collected for Oil Industry Development Board would enable the government not to pass on the burden to the consumers,” they argued.

“Twice you have been allowed to raise fuel prices, we would not allow it for the third time,” Yechuri stated. Dasgupta, however, said, “The threat of withdrawal of support was not necessary to stop government from raising prices. We can stop the government even otherwise.”

Yechuri questioned the rationale of imposing tax on a necessary product like petroleum. “The import of crude oil is similar to importing foodgrain during a famine. The government is taxing a necessity merely to raise revenue,” he contended.

Rejecting government’s grim scenario of Rs 73,000 crore under-recoveries, he said these were not losses but merely reflected what the oil companies could have earned if international price parity had been adhered to. There was a need to re-visit the pricing mechanism being adopted by the government as it was based on international price parity of petroleum products and not crude oil, he added.

The Left leaders argued that the government had not fully implemented the decision to implement the decision to dismantle administered price mechanism.

“This was to coincide with nil duties on petroleum products. The Petroleum Ministry has not followed this with the Finance Ministry. We fear it is being done to benefit private sector refining companies,” Yechuri and Dasgupta underlined.

First Published: May 11, 2006 14:35 IST