The Hindu : Front Page : Moderate hike in fuel prices “finalised”

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Friday, May 30, 2008
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Moderate hike in fuel prices “finalised”

Sujay Mehdudia

Petrol price may go up by Rs. 2 to 5 and diesel by Rs. 2-3

Package firmed up at Manmohan’s meeting with Sonia, Ministers
To be placed before Cabinet after consultations within UPA, Left

NEW DELHI: A “mixed bailout package,” comprising a “moderate hike” in the prices of diesel and petrol and a re-adjustment in the customs duty on crude oil and the excise duty on the two fuels, was understood to have been “finalised” at a meeting between Prime Minister Manmohan Singh and United Progressive Alliance (UPA) chairperson Sonia Gandhi and some Ministers on Thursday evening.

The meeting was convened to review the “imminent crisis in the oil sector” and finalise a “bailout package” for the Oil Marketing Companies (OMCs), which had warned of “severe shortages” due to mounting under-recoveries.

The “package” would be placed before the Cabinet after consultations within the UPA and Left parties. A hike of Rs.2 to Rs.5 a litre is likely in the case of petrol and Rs.2 to Rs.3 for diesel. An increase in the price of domestic LPG was also in the offing, informed sources said.

Finance Minister P. Chidambaram, Petroleum Minister Murli Deora and External Affairs Minister Pranab Mukherjee were present.

Earlier in the day, Dr. Singh held a meeting with Mr. Mukherjee, Mr. Chidambaram, Mr. Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

“International crude prices have touched $135 a barrel with losses threatening to reach Rs.2,25,000 crore. Unless we act, the companies will not be left with cash to import crude,” Mr. Deora said.

The Finance Ministry had opposed a proposal to cut the customs duty on crude oil to 0 from 5 per cent, slashing the import duty on petrol and diesel to 2.5 per cent from 7.5 per cent and halving the excise duty on the two fuels.

The OMCs now sell petrol at a discount of Rs. 16.34 a litre, diesel at Rs. 23.49, LPG at Rs. 305.9 a cylinder and kerosene at Rs. 28.72 a litre.

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