Not wanting to provide ammunition to the opposition to corner it during the second half of the budget session, the Manmohan Singh Government is understood to have rejected the plea of the oil marketing companies (OMCs) for bringing back regulation of petrol or allow a price hike with immediate effect.
However, the Government has forwarded for the consideration of the Finance Ministry the case for cut in excise duty to provide relief to the OMCs reeling under the impact of selling petrol, diesel, LPG cylinder and kerosene at subsidised prices and not being adequately compensated by the Government. They had suggested that the Government could cut the Rs. 14.78 excise duty that the consumer has to pay on the purchase of one litre of petrol.
The OMCs had early this week written to the Petroleum and Natural Gas Ministry virtually serving an ultimatum that either petrol should be brought under regulation regime once again or compensation of Rs. 46 crore per day should be given to the OMCs with immediate effect. Further, the OMCs are losing another Rs. 573 crore every day due to under-price sale of diesel, domestic LPG and kerosene. The oil companies had threatened to hike prices by Rs. 8.04 per litre if no steps are taken to address the concerns.
Officials said on Friday that the Government has conveyed to the Petroleum Ministry that it was not in a position to allow a petrol price hike during the budget session that commences on April 23. “there are number of legislations and important matters that need to be taken up and passed during the session. It may not be desirable to allow a petrol price hike that could derail the functioning of Parliament and unite the Opposition on one issue. Any hike would only have to come after the budget session we have been told,’’ a senior official remarked.
But the Petroleum Ministry is taking up the case for cut in excise duty with the Finance Ministry in order to cushion the losses being suffered by OMCs. The Union Finance Minister Pranab Mukherjee while presenting the budget on March 16 had asserted that he was committed to bringing down the subsidies from 2 per cent of the GDP to 1.7 per cent but had failed to provide a roadmap for the same. “It has been more than a month since the budget was presented but no firm formula has been unveiled on how to tackle the rising subsidy in the oil sector. The compensation is not coming through as it should and there is a lot of confusion on how to deal with the rising losses of the front ranking oil companies,’’ another official said.
