BUSINESS

No diesel price cut for now

Source:PTI
February 26, 2009 19:08 IST

The government will not reduce rates of diesel and other fuels just now even as indications poured in that it may not hesitate to cut prices even after the model code of conduct for the general elections comes in force.

"There is no proposal in the ministry of petroleum and natural gas on price changes at present," oil secretary R S Pandey told reporters in New Delhi.

Pandey, however, did not rule out the possibility of a reduction, which has risen with state-owned oil firms earning a neat Rs 3.26 per litre profit on diesel sales, in future.

"All I am saying is there is no proposal as of now. I have nothing more to add to that," he said. Earlier, there were indications that the Cabinet may decide on reduction in prices at its meeting on Thursday.

"Unfortunately, it was not on (the) agenda," petroleum minister Murli Deora told reporters.

Home minister P Chidambaram, who briefed reporters on the Cabinet decisions, said in his opinion there was no bar on the government from announcing a price cut even after polls are announced.

"In my view, there is no bar (on such decisions)," he said. There are sections within the ruling United Progressive Alliance who want the government to announce a reduction, on top of the Rs 4 a litre cut in two installments since December but there is no finality yet.

However, there may not be any reduction in petrol rates, which has already been slashed by Rs 10 a litre in two installments. A reduction in diesel price would pull down inflation and make goods transportation, especially fruit and vegetables, cheaper.

State-owned fuel retailers Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum are selling petrol at almost break-even point while they make Rs 3.26 a litre profit on diesel sales.

"There is a scope for reduction in diesel rates only," an official said. On petrol the margins are just Rs 0.08 per litre. The three firms are currently making Rs 36 crore (Rs 360 million) per day profit on diesel sales, enough to negate the Rs 24 crore (Rs 240 million) per day loss on kerosene and Rs 9 crore (Rs 90 million) on domestic LPG.

Kerosene is being sold at a loss of Rs 11.70 per litre and LPG at Rs 77.51 per 14.2-kg cylinder.

Source: PTI
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