Petrol may cost Rs 2.60/ltr more

The petroleum ministry has recommended that oil marketing companies be allowed to raise petrol prices by Rs 2.60 a litre and diesel prices by Rs 3.75 a litre. The Prime Minister's Office is likely to discuss the matter on Friday.

Oil marketing companies were demanding that petrol prices be raised by Rs 4.84 a litre and diesel prices by Rs 4.52 a litre.

State-run Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd together lost Rs 2,560 crore (Rs 25.6 billion) on diesel and Rs 569 crore (Rs 6.69 billion) on petrol during the first six weeks of the current financial year.

During the period, the under-recoveries on account of auto fuels, kerosene and cooking gas were estimated at Rs 5,800 crore (Rs 58 billion). The under-recovery on kerosene was estimated at Rs 11.92 a litre and on LPG Rs 106 a cylinder.

IOC alone recorded Rs 1,200 crore (Rs 12 billion) in under-recoveries in petrol and diesel and Rs 1,400 crore (rs 14 billion) in kerosene and LPG during April and May.

The Left has demanded a rollback of excise duty increase announced in the Budget, shelving of the proposal to raise road cess and creation of a price stabilisation fund out of the cess collected on domestic crude oil.

In a letter to the government, CPI(M)'s Deepankar Mukherjee said the duty changes made in the Budget helped private refineries, especially Reliance, and hit the public sector oil companies.

"Import duty reduction has helped the refining sector but the excise duty changes, applicable after refining, adversely affects the marketing/retail sector managed by the oil PSUs," said the letter.

The government is also working on a new mechanism for sharing of under-recoveries of oil marketing companies by refining and upstream companies.

At present, only the upstream companies, Oil and Natural Gas Corporation, Oil India and Gail India, are sharing the under-recoveries incurred by OMCs.

In the Budget, the government had lowered Customs duty on crude oil, LPG, kerosene, petrol and diesel but raised excise duty on petrol and diesel even as the same on LPG and kerosene was lowered.