The Hindu : National : Deora seeks package to bail out oil companies

Online edition of India's National Newspaper
Tuesday, Mar 14, 2006

National

National

Deora seeks package to bail out oil companies

Special Correspondent

New Delhi: Petroleum Minister Murli Deora has urged the Prime Minister Manmohan Singh for restructuring the entire system of petroleum subsidies to make them more transparent along with raising the subsidy for LPG and kerosene to meet the need of the weaker sections of society. These issues were raised at a meeting convened by the Prime Minister to consider implementing the Rangarajan committee report on oil pricing and taxation. It was attended by Finance Minister P. Chidambaram, the chairman of the Prime Minister's Economic Advisory Council, C. Rangarajan and Mr. Deora.

The Petroleum Minister told reporters after the meeting that this was only the first meeting. He said the Prime Minister had asked him and Mr. Chidambaram to come back within a month with a roadmap on implementation of the Rangarajan Committee recommendations after due consideration of the impact on consumers.

Mr. Deora, however, sought a package to bail out the public sector oil firms, which are currently facing bankruptcy owing to losses on sale of fuels at the existing prices. He pointed out that the net worth of three major oil marketing companies (OMCs) — the IBP, Hindustan Petroleum Corporation and Bharat Petroleum Corporation — would become zero in two months, two years and three years respectively.

He therefore sought a transparent mechanism, as in the case of food and fertilizer subsidies, for disbursing subsidies on LPG and kerosene to bridge the difference between the cost and selling price of fuel.

He also suggested that the Rs. 60,000 crore collected as cess on domestic crude oil should be used to bridge the subsidy gap. He told the Prime Minister that if the prices were left unchanged, the net worth of the OMCs would be completely eroded very soon.

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