A decision on raising retail fuel rates may not come before Thursday (June 5), with a consensus on price hike eluding the United Progressive Alliance government, even as losses of state-run oil companies widened to Rs 650 crore (Rs 6.50 billion) a day.
"There is no consensus within the UPA. It (government) is buying time and a decision may not be taken before day after Tuesday," a source familiar with the highest level of thinking in the government said in New Delhi.
Earlier on Monday, Prime Minister Manmohan Singh sought a wider political consensus on fuel prices, saying the country cannot allow the subsidy bill to balloon further.
His call for unanimity in thinking comes in the backdrop of opposition from Left parties, which props up the UPA from the outside, to any move to raise petrol, diesel and other domestic fuel prices.
Indian Oil, Bharat Petroleum and Hindustan Petroleum, who till last week were losing about Rs 580 crore (Rs 5.80 billion) per day on sale of petrol, diesel, domestic LPG (cooking gas) and kerosene, are incurring a revenue loss of close to Rs 650 crore from June 1, industry sources said.
The government spent most of its time last fortnight in consultations including at the highest level to combat the projected Rs 225,040 crore (Rs 2,250.40 billion) revenue losses on fuel sales. But with inflation climbing to 45-month high of 8.1 per cent, the several rounds of discussions at the level of Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi have yielded no decision.
Sources said the three firms, who till last week were losing Rs 16.34 a litre on petrol, are incurring a loss of Rs 21.43 on sale of every litre since June 1. Similarly, the losses on diesel have widened to Rs 31.58 per litre from Rs 23.49 while on kerosene they have jumped to Rs 35.98 from Rs 28.72 per litre.
Losses on LPG have swelled to Rs 353 per 14.2-kg cylinder from Rs 305.90.
"We cannot allow the subsidy bill to rise any further. Nor do we have the margin to fully insulate the consumer from the impact of world commodity and oil price inflation," the prime minister said at industry body Assocham's annual meeting.
IOC, BPCL and HPCL calculate import parity price of petrol and diesel on the first and the 16th of every month based on the average of the previous fortnight. LPG and kerosene prices are calculated one a month based on monthly average imported price.
There is likelihood that a meeting of the Cabinet may take place either on Wednesday or Thursday to decide on the fiscal package that may include raising fuel prices and marginal duty cuts.
