Oil Minister Murli Deora on Wednesday said his ministry is not in favour of raising diesel and domestic LPG prices as response to spurt in global crude oil prices, as the move will add to already high inflation rate. "We are trying to see that we do not have to increase prices," he told reporters. Last week a meeting of the Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee was indefinitely postponed on Deora's insistence of not raising fuel prices just now.
"I don't think the EGoM should meet just now to decide on raising prices," Deora said. Others in the government have favoured raising fuel prices as a response to hardening of international crude oil rates to over $90 per barrel while Deora has preferred government subsidies to lessen burden on the common man.
Diesel has a weightage of 4.67 per cent in inflation, while LPG contributes 0.91 per cent. A hike now would further accelerate inflation, which is currently at 7.48 per cent. Deora wants the government to make up for at least half of the Rs 72,812 crore (Rs 728.12 billion) revenue loss state-owned oil firms are likely to incur this fiscal on selling diesel, LPG and kerosene below cost.
The EGoM was originally scheduled to meet on December 22 but was deferred to December 30. The meeting was at the last moment deferred without a new date being given.
The panel was to meet to consider at least a Rs 2 per litre hike in diesel price and Rs 30-40 per cylinder raise in LPG rates. Deora said the government would do everything possible to protect balance sheets of state-owned oil firms and insulate the common man from vagaries of international market.
"In 2008, when crude oil shot up to $147 per barrel, we insulated the common man and provided for Rs 103,000 crore from the budget to subsidise fuel," he said.
The under-recovery (or the revenue oil companies lose) on diesel today stands at Rs 6.99 per litre, sources said.
Besides diesel, the oil firms lose Rs 19.60 per litre on PDS kerosene sales and Rs 366.28 per 14.2-kg LPG cylinder.
The oil firms had last month raised petrol price by Rs 2.94-2.96 a litre but the hike was short of Rs 3.5 a litre desired increase to make retail prices at import parity.
The government had in June this year freed petrol prices, but the state firms, which control 98 per cent of the retail market, continue to informally consult the oil ministry before revising prices.
