Govt reconstitutes EGoM on fuel

The government has reconstituted a ministerial panel on fuel pricing, but the grouping headed by Finance Minister Pranab Mukherjee is unlikely to meet before Assembly elections in five states are completed in May.

"Reconstitution of the empowered group of ministers was necessitated due to the recent reshuffle in the Union Cabinet," a government official said.

The seven-member grouping has seen two changes -- S Jaipal Reddy replacing Murli Deora after taking over as the Oil Ministry, while Kamal Nath has given away to the new Road Transport and Highways Minister C P Joshi.

Other members of the EGoM remain the same -- Chemicals & Fertilisers Minister M K Alagiri represents the ruling United Progressive Alliance's crucial ally DMK, while the NPC is represented by Agriculture Minister Sharad Pawar in the panel.

Power Minister Sushil Kumar Shinde and Planning Commission Deputy Chairman Montek Singh Ahluwalia are the other members in the EGoM.

The official said though the EGoM has been reconstituted, the panel is unlikely to meet before May 13, when elections to assemblies in Assam, Kerala, Puducherry, Tamil Nadu and West Bengal will have run their course.

"Diesel pricing is a hugely political sensitive decision and the ruling combine doesn't want to take any chances in the Assembly polls," he said.

While diesel is a commodity whose pricing is explicitly controlled by the government, the rates for petrol -- which was freed from government control in June last year -- have also

not been allowed to be hiked in view of inflation already ruling at high levels.

State-run Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum are losing Rs 4.03 per litre on petrol, he said.

"Since June, the oil companies have chewed up about Rs 2,000-crore (Rs 20 billion) losses. . . Rs 400 crore (Rs 4 billion) is what these companies will lose in March alone," the official said.

Chief executives of the three firms recently gave a presentation to the Oil Ministry on the quantum of losses they are suffering, but were not allowed to hike prices despite crude ruling at a two-year high of over $110 per barrel.

The three firms had last hiked petrol prices by Rs 2.50 per litre on January 15.

Since deregulation of rates in June, the rates have gone up about Rs 7 per litre in five installments to Rs 58.37 per litre.

Besides petrol, the three retailers are losing a record Rs 12.56 a litre on diesel, Rs 24.74 per litre on kerosene and Rs 297.80 per 14.2-kg LPG cylinder.

The three firms are cumulatively losing Rs 392 crore (Rs 3.92 billion) in revenue every day on selling diesel, domestic LPG and kerosene below cost, the official said.

"For the full fiscal, the three are projected to lose Rs 77,645 crore (Rs 776.45 billion) in revenues at current prices," he said.