‘We would not like to increase prices, but crude oil cost is prohibitive'
CHENNAI: A decision on revising the prices of automobile fuel, cooking gas and kerosene, as a measure to contain the under-recoveries of oil marketing companies (OMCs), will be taken by the Empowered Group of Ministers (EGoM), Union Minister of Petroleum and Natural Gas Murli Deora said here on Monday.
The group, headed by Finance Minister Pranab Mukherjee, is scheduled to meet on June 7, Mr. Deora said in response to queries on whether the prices would be increased.
Addressing journalists after a meeting of the Consultative Committee of Members of Parliament of his Ministry, Mr. Deora said: “We would not like to increase the prices, but the cost of crude oil is prohibitive.”
The meeting of the committee was on the under-recoveries of OMCs. While some members said there was no option but to increase the price (of petroleum products), others wanted the government to provide further subsidies, Mr. Deora said.
On the extent of the under-recoveries of OMCs on account of selling products below the cost, Petroleum Secretary S. Sundareshan said that in 2009-10, it was Rs.46,000 crore. While the upstream companies gave Rs.14,200 crore and the government Rs.26,000 crore, the OMCs had to absorb the rest.
At the current retail prices of petroleum products, the under-recoveries would be around Rs.1 lakh crore if the crude oil price (per barrel) touches $85.
Noting that though the prices of the products did not exactly move in tandem with the cost of the crude, Mr. Deora said: “At current prices we will certainly need to increase the prices [of petroleum products].”
He added that a new scheme — the Rajiv Gandhi Gramin LPG Vitrak — has been launched to increase the penetration of LPG connections in rural areas. The objective is to increase LPG coverage to 75 per cent of the population.
Mr. Sundareshan noted that during his meeting with Tamil Nadu Chief Minister M. Karunanidhi, Mr. Deora handed over a letter sanctioning six lakh free LPG connections to the State government.
“The request for further expansion was accepted and sanctioned,” Mr. Sundareshan said, adding that the LPG coverage in Tamil Nadu was at a good 73 per cent as against the national coverage of 51 per cent.