The Hindu : National : Oil price hike decision only after talks: Aiyar

Online edition of India's National Newspaper
Wednesday, Aug 24, 2005

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Oil price hike decision only after talks: Aiyar

Special Correspondent

Left parties' proposals on cut in duties put before Cabinet

Petroleum Minister Mani Shankar Aiyar

NEW DELHI: Petroleum Minister Mani Shankar Aiyar has said a decision on raising oil product prices would be taken only after consultations with the UPA allies, including the Left parties. He said the Left has suggested that duties need to be cut proportionate to the increase in revenues from higher crude oil imports, but these proposals had now been put before the Cabinet for a decision.

His comments come a day after Planning Commission Deputy Chairman Montek Singh Ahluwalia and Finance Minister P. Chidambaram both said that an increase in oil prices was inevitable.

Mr. Aiyar told reporters they had used the words which he had been avoiding.

On the failure of the joint venture between the steel giant, Mittals and the Oil and Natural Gas Corporation (ONGC) to bag the Canada-based PetroKazakhstan, he underlined the need for joint bidding by Indian and Chinese firms for scarce energy resources.

He felt it was imperative for the two countries to adopt a collaborative approach in bidding for oil and gas assets. China National Petroleum Corporation (CNPC) acquired the third largest oil producer of Kazakhstan with a revised bid of $ 4.18 billion.

Mr. Aiyar said the ONGC-Mittal company can still make a counter-offer, but its earlier bid was still very good and it lost by a thin margin.

He would be going to Beijing in November to consolidate ties between the two countries and also to ensure that wherever possible and when in mutual interest, the two countries mount joint bids.

Earlier in the day, he told the Rajya Sabha in a written reply that the oil marketing companies requested a review of the prices of sensitive products, such as petrol, diesel, PDS kerosene and domestic LPG on account of unprecedented, sharp and spiralling increase in international oil prices.

"As India is highly dependent on oil imports, with about 76 per cent of crude processed in Indian refineries being imported, international oil prices decisively impact on domestic crude prices and, therefore, on domestic retail product prices," he said.

Mr. Aiyar said the Indian basket of crude oil touched an all-time high of $ 62.11 per barrel on August 12.

Against the average Indian Crude Basket price of $ 27.96 a barrel during 2003-04 and $ 39.21 a barrel during 2004-05, the average for July 2005 was $ 55.05 per barrel.

"Keeping in view the interests of consumers, at the instance of the Government, oil marketing companies did not increase the prices of these sensitive products of public consumption in line with the international prices," he said.

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