Govt may not go for steep hikes in fuel prices

A day after an expert group suggested freeing petrol and diesel prices and steep hikes in LPG and kerosene rates to combat the rising input cost, the government on Thursday hinted that it may not accept the report in totality and will protect the common man's interest.

"The government will ensure that least burden is passed on to the poor and common man... while also ensuring that the financial health of (PSU fuel retailers) is protected," Minister of State for Petroleum and Natural Gas Jitin Prasada said in New Delhi.

Besides, deregulating auto fuel prices, which would result in hike in petrol price by Rs 4.72 a litre and diesel by Rs 2.33 per litre, the panel also suggested raising LPG rates by Rs 100 per cylinder and kerosene by Rs 6 per litre.

Speaking to reporters on the sidelines of The Press Trust of India's Diamond Jubilee function in New Delhi, he said it was the duty of the Kirit Parikh committee to submit a report on fuel pricing policy and it is incumbent upon the government to examine it thoroughly and take a considered view.

"All I can say is (that) consumer interest will be kept in mind (when a decision is taken on implementing the report," he said.

State-owned Indian Oil, Bharat Petroleum and Hindustan Petroleum currently lose Rs 180 crore (Rs 1.8 billion) per day on selling petrol, diesel, domestic LPG and kerosene below the imported cost. In full-fiscal, they are estimated to lose Rs 46,030 crore (Rs 460.3 billion).

Prasada said a considered view on the Parikh report would be taken but refused to give any timeframe.

A government that is battling high inflation may not agree to free both auto fuel prices from its control.

There might be a moderate Rs 1-2 a litre hike in diesel prices while there seems to be a consensus between the ministries of finance and petroleum on freeing petrol prices.

At present, kerosene is sold at a discount of Rs 18.06 a litre and domestic LPG cylinder at Rs 287.59. It appears that the common man's cooking fuel may just be spared from any hike while domestic cooking gas may see Rs 20-25 per cylinder increase.

Budget for 2010-11 fiscal may give an indication of the government's mind on the report even though Petroleum Minister Murli Deora had stated that the report would be 'processed' and presented to higher-ups within a week.

Sources said the committee's recommendation of meeting the deficit in LPG and kerosene through a combination of budgetary support and contribution from upstream firms like ONGC may be tweaked a bit to get a larger kitty to make up for not accepting the report in totality.