Fuel price hike put off for now

A meeting of the Cabinet Committee on Political Affairs, which could have decided on raising diesel and cooking fuel prices, was on Tuesday postponed even as Oil Minister S Jaipal Reddy said the price increase was 'unavoidable'.

CCPA, which is headed by Prime Minister Manmohan Singh and includes ministers from allies of the United Progressive Alliance, was scheduled to meet on Tuesday evening but it was postponed without assigning any reason or fixing a new date.

Reddy said although the increase in diesel, cooking gas and kerosene prices was not listed on the agenda, CCPA could have discussed the issue based on the revised note on the subject that his ministry had circulated to its members on Monday.

"As I said before, however painful and difficult the increase in price of oil product may be, increase is unavoidable. (To) what extent can consumer take (it) is another

matter," he told reporters after meeting Finance Minister P Chidambaram before the announcement of CCPA meeting being postponed was made.

The double whammy of rising input cost (crude oil prices) and fall in value of rupee, which has made imports costlier, would mean that oil PSUs would end the fiscal with a huge Rs 1.88 lakh crore (Rs 1.88 trillion) revenue loss on selling fuel below cost, he said.

"If it (price hike) is not taken up today, decisions may have to postpone by few days. However I would like to tell the people (that) the increase in price is unavoidable.

"We will have to perform our unpleasant duty," Reddy said.

Diesel and cooking fuel rates have not been revised since June last year even as oil firms also sell deregulated petrol at a price which is almost Rs 6 a litre less than its cost.

"I can't say to what extent price rise will be. If I had the power it would had been done yesterday. I don't know if it will happen today or tomorrow or a week later," he said.