PM to discuss fuel hike soon

Prime Minister Manmohan Singh may convene a meeting of Finance Minister P Chidambaram and Oil Minister Murli Deora within a week to discuss fuel pricing and taxation regime on the sensitive products.

"(The meeting) may be next week," Deora said on sidelines of the 4th Asia Gas Summit in New Delhi.

The meeting may be convened to discuss the C Rangarajan Committee report which has recommended a steep Rs 75 per cylinder raise in domestic cooking gas price and a moderate Rs 1.21 per litre increase in petrol and Rs 1.96 per litre hike in diesel prices. Besides, it has suggested several duty changes.

"The committee submitted its report last week and we are examining (the recommendations). We need to go into it in details before deciding on its implementation," he said.

Chidambaram will present the Union Budget for 2006-07 on February 28 and it is expected that some of the suggestions made by the Committee may find place in the Budget.

Deora had previously stated that he wanted to nurse public sector oil firms, which for the first time in their history reported net losses this fiscal and at the same time protect the interests of consumers.

"We need to maintain a balance between protecting oil company's interest and making available fuel at affordable price to the common man," he said.

The committee, which also suggested restricting sale of subsidised kerosene to only below poverty line families, favoured lowering of customs duty on petrol and diesel and changing the mix of specific and ad valorem excise duty on the two auto fuels to a single specific duty.

The C Rangarajan Committee, which was appointed by the Prime Minister to suggest a fuel pricing policy and a taxation regime for the petroleum sector, favoured raising LPG price by Rs 75 per cylinder immediately and quarterly increases till the Rs 148 per cylinder gap between the current retail selling price and production cost was eliminated.

It suggested hiking kerosene price by Rs 10 a litre in the medium term and giving a Rs 9 per litre subsidy directly to poor families as coupons or vouchers.

On taxation, it recommended cut in customs duty on petrol and diesel to 7.5 per cent from current 10 per cent and changing excise duties on petrol and diesel (currently at 8 per cent plus Rs 13 a litre and 8 per cent plus Rs 3.25 per litre respectively) to Rs 5 per litre on diesel and Rs 14.75 a litre on petrol.

It suggested the government to stay at an arm's length from price determination and allow flexibility to oil companies to fix the retail price under the proposed trade parity formula.