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Updated: June 22, 2010 23:53 IST

Fuel price hike imminent

Sujay Mehdudia
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Motorists line up to buy petrol expecting price increase. Freeing petrol prices from government control will be discussed later this week. File photo
The Hindu Motorists line up to buy petrol expecting price increase. Freeing petrol prices from government control will be discussed later this week. File photo

Petroleum Minister Murli Deora has already asked states to lower sales tax on petrol and diesel, as high as 33 per cent and 24.7 per cent respectively.

A hike in the prices of diesel and petrol seems imminent.

The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee is scheduled to meet on June 25 to take a final decision on the issue amid reports that a consensus on fuel hike seems to have emerged among the Congress and its allies.

Deora's letter

A fuel hike became apparent on Monday when Petroleum and Natural Gas Minister Murli Deora wrote a letter to the Chief Ministers to bring down sales tax and VAT on petrol and diesel and rationalise the whole gambit of State taxes on petroleum products. The move was seen as an attempt by the Central government to put the ball in the court of the States for providing any kind of relief to the common man.

Mamata mum

Although there were indications that the DMK had reluctantly given up its opposition to the hike, there is still uncertainty over the stand of Railway Minister Mamata Banerjee, who heads the Trinamool Congress.

The Congress is also trying to get Union Agriculture and Food Distribution Minister Sharad Pawar on board on the issue of fuel hike.

Second meet

The eight-member EGoM will meet for the second time this month on June 25 to consider freeing petrol and diesel prices from government control. “The meeting of the EGoM has been scheduled for Friday, June 25. I would like to assure you that whatever the outcome, the interests of the common man will be protected at any cost. We have to protect the oil marketing companies (OMCs) also in the larger interest of the nation. They should not suffer losses which could impact their future development and expansion plans,” Mr. Deora said.

The previous meeting was hit by lack of quorum.

OMCs running at loss

Freeing petrol and diesel prices will mean a hike of up to Rs. 3.50 a litre. The Petroleum Ministry team has already made an elaborate presentation to the EGoM on the recommendations of the Kirit Parikh Committee that suggested freeing fuel prices. OMCs have been selling fuel at less than the imported price and as a result are suffering huge losses.

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