The Hindu : National : Manmohan convenes meet to discuss petrol price hike

Online edition of India's National Newspaper
Monday, Oct 08, 2007
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National

Manmohan convenes meet to discuss petrol price hike

Sujay Mehdudia

Chidambaram and Deora to place specific proposals

Oil bonds issue to figure at meet
Firms losing around Rs. 190 crore a day

NEW DELHI: Prime Minister Manmohan Singh has convened a meeting with Finance Minister P. Chidambaram and Petroleum and Natural Gas Minister Murli Deora on Monday to discuss the “possibility” of an increase in petrol and diesel prices and issue of oil bonds to the oil marketing companies (OMCs) that were recording “heavy losses” due to a rise in crude oil price in the international market.

Highly placed sources said the Prime Ministers’ Office was updated on the issue and both Mr. Chidambaram and Mr. Deora would come with specific proposals. A “final decision” could be taken on what course of action was required. Crude oil prices in the international market had touched $79 a barrel and the government had reduced petrol and diesel prices by Rs. 2 in February when the crude oil price was around $55 a barrel.

However, the situation has undergone a sea change and the OMCs have been crying hoarse for the last few months seeking hike of at least Rs. 2 a litre to off set their losses. However, Mr. Deora has ruled out any hike, stating that the government was committed to protect the interests of the common man as per the directions of UPA chairperson Sonia Gandhi.

It is learnt that the meeting would also discuss a possible restructuring of excise duty structure on diesel. The proposals were discussed between Mr. Chidambaram and Mr. Deora and the Finance Ministry was very positive on this issue.

The public sector oil firms are losing around Rs. 190 crore a day on sale of petrol, diesel, domestic LPG and kerosene as the government has not allowed them to raise prices in step with rise in international crude oil price.

The Indian basket of crude oil has risen more than 12 per cent since February when petrol and diesel prices were cut by Rs. 2 a litre and Re. 1 a litre respectively. It is understood that the Rs. 50,700 crore under-realisation was expected on petrol, diesel, domestic LPG and kerosene in 2007-08.

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