The Hindu : National : Steep petrol price hike ruled out

Online edition of India's National Newspaper
Saturday, May 08, 2004

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National

Steep petrol price hike ruled out

By Our Special Correspondent

NEW DELHI, MAY 7. Despite world oil prices spurting to 13-year highs, the government has ruled out a steep rise in petrol and diesel prices after the elections. It conceded, however, that the oil companies are carrying out a review of the impact of international prices going up and may have to take appropriate action. Speaking to newspersons here, Petroleum Secretary, B.K. Chaturvedi, expressed scepticism over reports that the oil companies are running up losses of up to Rs. 2,000 crores due to the non-revision of petrol and diesel prices. He said that rather than losses, the oil companies' net profits have risen by 50 per cent in the first three quarters of 2003-04.

Describing the fear of any substantial increase in prices as false, he said the new government would have to review the subsidy being given on cooking gas and kerosene prices since production costs are much higher right now than the retail prices. Cooking gas prices will have to be raised by Rs. 94 a cylinder and kerosene by Rs. 4.90 a litre to completely eliminate the subsidy on these products.

Though the public sector oil companies have been seeking a hike in petrol and diesel prices, the government has been staving off any decisions till after the elections. Technically, the oil companies are free to revise prices of petrol and diesel every fortnight since the administered pricing mechanism has been dismantled. In reality, industry sources say the decisions are taken after consultations with the Petroleum Ministry.

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