The Hindu : Front Page : Petrol, diesel prices not to be raised

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Friday, Oct 01, 2004

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Front Page

Petrol, diesel prices not to be raised

By Our Special Correspondent

NEW DELHI, SEPT. 30 . The Government today decided not to raise the prices of petrol and diesel despite a surge in world markets. Instead, the public sector oil companies would absorb the shock of the rise in international prices that are touching $50 a barrel.

Disclosing this after a meeting with the Prime Minister, Manmohan Singh, the Petroleum Minister, Mani Shankar Aiyar, said that as inflation was surging, it would be the Government's endeavour to keep the prices under control. A committee had been set up to study the duty structure in oil products and the additional revenue accruing to the exchequer from the rise in crude oil prices. It would submit a report soon.

Mr. Aiyar said the hike in world prices had brought profits to companies such as ONGC and GAIL, but burdened the oil marketing firms. The Government, therefore, decided that these companies should share the burden of the crude price increase and the resulting under-recoveries by the oil companies. "We believe that all stakeholders — the Government, state-run companies and consumers — should share the burden,'' he said.

Consumers took their share of the burden when the petrol and diesel prices were hiked on August 1, and the Government contributed by cutting the excise and customs duties. Under the formula evolved last month, the diesel price should have risen by Re. 0.89 a litre and the petrol price should have fallen by five paise, he said.

`Indian basket'

Giving details of the "Indian basket" of the imported crude, Mr. Aiyar said the price was $40.53 a barrel in August and $39.01 the next month. The average price of the basket was $27.98 in the last financial year — 2003-04. As a result, he said, there would definitely be a significant increase in the crude import bill. Mr. Aiyar said companies such as ONGC would also have to bear the additional burden of subsidy on LPG and kerosene in the second quarter of the current fiscal — July to September.

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