The deadlock on the proposed fuel price hike continued as the much anticipated meeting between Union Finance Minister Pranab Mukherjee and Petroleum and Natural Gas Minister Murli Deora failed to reach a “consensus” on the issue and also on the compensation for the loss-making oil marketing companies (OMCs), despite hectic consultations on Sunday.
Official sources in the Ministry said both Mr. Mukherjee and Mr. Deora favoured a hike of Rs. 2 to 3 a litre in petrol and diesel prices and Rs. 25 increase per LPG cylinder, but there was strong opposition from allies against increase in Liquefied Petroleum Gas (LPG) and kerosene prices.
Mr. Mukherjee and Mr. Deora were closeted for over 90 minutes to discuss the implications of the Kirit Parikh Committee report and the losses of the OMCs. Although there is a consensus on the need to undertake a hike in fuel prices, there is reluctance to take a call on increasing the LPG cylinder and the kerosene prices in view of the political repercussions.
“I met the Finance Minister and had a nice meeting with him. We discussed various issues including the Kirit Parikh Committee report but no final view has been taken and further consultations were required,” Mr. Deora said after the meeting.
The OMC retailers have projected a loss of Rs. 45,571 crore on selling petrol, diesel, domestic LPG and kerosene below cost. To avert bankruptcy, the Committee suggested freeing auto fuels from government control along with a steep hike in cooking fuel. Mr. Deora has been engaged in hectic consultations among the United Progressive Alliance (UPA) allies to arrive at a possible consensus over the proposed hike. Both the Trinamool Congress led by its leader and Railway Minister Mamata Banerjee and the DMK led by Tamil Nadu Chief Minister M. Karunanidhi are understood to have opposed the hike n fuel prices especially diesel, LPG and kerosene.
Oil bonds
The Finance Ministry has till date given Rs. 12,000 crore in oil bonds as compensation to the OMCs and Mr. Deora pleaded that another Rs. 31,574 crore be given to prevent the OMCs like Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited from going into the red.
