Union Petroleum and Natural Gas Minister Murli Deora said on Monday that decontrolling the prices of petroleum products was high on the agenda of his Ministry, but ruled out any immediate increase in the prices of petrol and diesel to make up for the losses suffered by oil marketing companies.
“We are awaiting the report of the expert committee, headed by Kirit Parikh, constituted to look into the issue of pricing. The committee is expected to submit its report this week, and only then will the government decide on freeing petrol and diesel prices,” he said.
Mr. Deora said he would meet Finance Minister Pranab Mukherjee on Tuesday to discuss compensation to the oil companies. The issue of decontrol would also be discussed.
“We are trying our best to see that the prices are not raised. But a rate hike may become inevitable, as the government’s limited financial resources are not enough to meet the loss on account of revenue lost on selling petrol, diesel, LPG and kerosene below cost. The Cabinet had, in July 2009, decided that the government will meet all of the under-recovery [revenue loss] on domestic LPG and kerosene either through bonds or in cash, and the same on petrol and diesel was to be met by upstream companies like Oil and Natural Gas Corporation (ONGC),” he said.
While the ONGC, the Oil India Corporation and the Gas Authority of India Limited (GAIL) bore the entire Rs.8,364-crore under-recovery on petrol and diesel in the first three quarters of the current fiscal, the Centre had agreed to give only Rs.12,000 crore in cash against the Rs.20,989 crore loss on cooking fuel during April-December.
Mr. Deora said there were some who were advocating freeing petrol and diesel prices while the government and upstream companies together subsidised LPG and kerosene. “The government is extremely conscious of the effect of any increase in fuel prices. But there is an urgent need to find a permanent solution to this recurring problem of under-recoveries.”
The newly appointed Petroleum Secretary, S. Sundareshan, said it was estimated that the total revenue loss on the four products this fiscal would be more than Rs.45,500 crore. The three firms were projected to lose Rs.17,422 crore on kerosene and Rs.14,152 crore on LPG.
