NEW DELHI : The Government will decide on reducing petrol and diesel prices after examining the impact of the fall in global crude oil prices.

Union Petroleum Minister, Murli Deora,told newspersons here on Monday that it had to be seen to what extent the dip in world prices had helped oil companies to overcome the losses on petroleum products' sale. On the Left parties' demand for reducing oil prices, he said calculations were being done to find out if there was scope for it.

Mr. Deora was speaking in the context of the decline in international oil prices from over $75 a barrel in August to about $55-56 a barrel now. Despite the drop in world market prices, domestic oil companies were still making losses on the sale of petrol, diesel, LPG and kerosene.

The Minister said a decision on cutting prices would depend on the extent of oil bonds given to oil companies to cover for losses on LPG and kerosene sale and the contribution to be made by upstream companies such as Oil and Natural Gas Corporation.

The Government had announced that oil bonds worth Rs. 28,300 crore would be issued to oil companies in the current financial year.

Mr. Deora had also written to the Finance Minister P. Chidambaram suggesting that the government subsidy on domestic LPG and kerosene be extended for an indefinite period, as the gap between domestic and international prices was too wide to be bridged through a price hike. He had pointed out that LPG prices would have to be raised by Rs. 150 a cylinder and kerosene by Rs. 14 a litre.

The original plan for dismantling the administered pricing mechanism (APM) for petroleum products envisaged phasing out of the subsidy on kerosene for the PDS and domestic LPG by March 31, 2005. This deadline has been extended to March 31, 2007.

Printer friendly page  
Send this article to Friends by E-Mail