The Hindu : Front Page : Petrol prices set to rise again

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Sunday, Aug 22, 2010
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Petrol prices set to rise again

Sujay Mehdudia

NEW DELHI: Despite an uproar by Opposition parties inside and outside Parliament, the Petroleum and Natural Gas Ministry is likely to undertake a further, but a minor hike in the prices of petrol after the conclusion of Parliament's monsoon session in the first week of September.

Officials sources said here the recent spurt in international crude prices had not helped the situation and the Oil Marketing Companies (OMCs) were losing around 50 paise to Re. 1 a litre on petrol. The average crude oil basket is around $81 a barrel and shows no signs of moderating.

After it decontrolled petrol prices on June 25, the government contemplated issuing guidelines to the OMCs for adjusting the price of petrol against the movement of crude oil price in the international market. However, those guidelines are still to come. The State-owned OMCs are likely to raise petrol prices by at least Re.1 per litre by early next month. A hike is imminent to keep the mounting under-recoveries under control.

“Petrol price hike is imminent. Only the quantum of increase will have to be decided. At the beginning of this month, under-recoveries on petrol stood at 50 paise per litre, which has now gone up to Re. 1. This is something that OMCs now want to pass on to the consumers under the new pricing regime,” said an official.

Global crude prices have been rising for the past few weeks on hopes of recovery in energy demand.

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