New Delhi:
In a bid to bring some respite to the bleeding Oil Marketing Companies (OMCs), the Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee are meeting in New Delhi to review the diesel and domestic LPG prices.
Ahead of the meeting, Petroleum Minister S Jaipal Reddy said his ministry has been working out various options, and a decision will be taken after that.
Mr Reddy stated that his ministry had not made any specific proposal on the quantum of increase or the duty cut desired. "Nothing (on quantum of hike in diesel, domestic LPG or kerosene price as well as reduction in customs and excise duties) has been circulated. Any speculations (on these) are unfounded."
The EGoM was scheduled to meet at 1:00 pm today, but was put off for 7:30 in the evening. Raising diesel, domestic LPG and possibly kerosene rates is a politically sensitive decision and the government wants to take all sections on board before taking a decision.Mr Reddy said the brief postponement is also because a revision in prices, if done, would be effected from midnight tonight.
Any price increase is announced closer to this deadline to avoid hoarding by petrol pump owners, who have in the past shown a tendency to put up 'no-stock' signs so as to earn quick money by selling fuel they bought at the old price, after the new rates have come into effect.
There is speculation that the meet could lead to a diesel price hike which was last revised in June 2010 by Rs. 2. The Oil Ministry has also made case for increase in domestic LPG price which was also revised last year in June, by Rs. 35 per cylinder.
A hike of Rs. 2-3 per litre in diesel prices and an increase of at least Rs. 25 per domestic LPG cylinder are on the EGoM agenda. It may also consider raising kerosene prices.
The high powered panel may also consider lowering customs or import duty on crude oil to zero from the current 5 per cent, and on diesel from 7.5 per cent to 2.5 per cent.
Sources say the ministry wants a cut in Rs. 4.60 per litre Central excise duty levied on diesel to moderate the impact of high crude oil prices.
Earlier this month, Mr Reddy met Mukherjee and Prime Minister Manmohan Singh to discuss the financial condition of the OMCs. The OMCs - Indian Oil, Bharat Petroleum and Hindustan Petroleum - purchase crude oil at market rates but are required to sell diesel, kerosene and liquefied petroleum gas (LPG) at government-subsidised prices, resulting in losses.
The Oil Ministry is pushing for equitable sharing of the burden arising from the rise in crude oil prices among consumers, the government and state-owned companies, the sources said.
The companies currently incur an under-recovery or revenue loss of Rs. 13.72 on every litre of diesel, Rs. 26.16 on every litre of kerosene and Rs. 381 for every LPG cylinder. This translates into a daily loss of Rs. 456 crore that could lead to a record annual loss of Rs. 166,440 crore in the current fiscal. For the current quarter alone, the OMCs are estimated to incur a loss of Rs. 45,000 crore compared to Rs. 18,000 crore in corresponding quarter of last year.
The hike aim at passing on one-third of this loss to consumers in stages, while a similar amount will have to be borne by the government by way of either providing a cash subsidy or cutting customs and excise duty. The remaining would be absorbed by upstream firms like ONGC and the fuel retailers.
A similar formula would apply to the Rs. 27.47 per litre loss on kerosene and Rs. 381.14 under-realisation on sale of every 14.2-kg domestic LPG cylinder.
The last increase in prices of these three products was taken in June last year when crude was ruling around $72 per barrel. The current price for Indian basket of crude is around $108 per barrel.
The EGoM headed by Finance Minister Pranab Mukherjee includes Agriculture Minister Sharad Pawar, Power Minister Sushil Kumar Shinde, Road Transport Minister C P Joshi, Chemical and Fertiliser Minister M K Alagiri and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
(
With PTI inputs)