Ruling out an Empowered Group of Ministers (EGoM) meeting in the near future, Petroleum and Natural Gas Minister Murli Deora on Wednesday said his Ministry was not in favour of a hike in diesel and domestic LPG cylinder prices.
Talking to reporters on the sidelines of an Oil and Natural Gas Corporation (ONGC) function here, Mr. Deora said the country and its people were already battling high inflation and the government did not want to burden them with a hike in prices of diesel and LPG cylinders. “We are trying to ensure that we do not have to increase prices in the given circumstances,” he added.
The meeting of the EGoM, headed by Pranab Mukherjee, was recently postponed indefinitely. “I don't think the EGoM should meet just now to decide on raising prices. The decision could wait till the inflation pressure eases and the price situation stabilises,” Mr. Deora said.
Mr. Deora said the government would bear the burden of providing subsidies to protect the interests of the common man. However, there is a section within the government and among the oil marketing companies (OMC) that wants a hike in the prices of diesel and LPG cylinders as a response to the hardening of international crude oil rates to over $90 a barrel.
Diesel has a weightage of 4.67 per cent in inflation calculation, while LPG contributes 0.91 per cent. A hike now would further accelerate inflation, which is currently at 7.48 per cent.
Mr. Deora said the government should make up for at least half of the Rs.72,812-crore revenue loss that State-owned oil firms are likely to incur this fiscal on the sale of diesel, LPG and kerosene below cost.
He said the government would do everything possible to protect the balance sheets of State-owned oil firms and insulate the common man from the vagaries of the international market. “In 2008, when crude oil shot up to $147 a barrel, we insulated the common man and provided for Rs.1,03,000 crore from the budget to subsidise fuel,” he said.
The under-recovery on diesel currently stands at Rs.6.99 a litre. Besides, the oil firms lose Rs. 19.60 a litre on kerosene sales and Rs.366.28 per 14.2-kg LPG cylinder. The OMCs had last month raised the petrol price by Rs.2.94-Rs.2.96 a litre but the hike was still short of the desired increase of Rs.3.5 a litre for making retail prices stand at import parity.
