New Delhi: Petroleum Minister Murli Deora on Monday said that decision on giving oil companies freedom to fix price of Petrol and diesel will be taken after an expert committee’s report this week. Freeing auto fuel pricing would mean a hike of Rs 4.72 a litre on petrol rates and Rs 2.33 per litre on diesel prices.
“We are trying our best to see that prices are not raised,” Deora told reporters in New Delhi.
“But a rate hike may become inevitable as government’s limited financial resources are not enough to meet the revenue lost on selling petrol, diesel, LPG and kerosene below cost.”
“The Cabinet had in July 2009 decided that government will meet all of the under-recovery (revenue loss) on domestic LPG and kerosene either through bonds or in cash and the same on petrol and diesel was to be met by upstream companies like ONGC ,” he said.
While Oil and Natural Gas Corporation, Oil India and GAIL borne the entire Rs 8,364 crore (Rs 83.64 billion) under-recovery on petrol and diesel in first three quarters of current fiscal, the government has agreed to give only Rs 12,000 crore (Rs 120 billion) in cash against the Rs 20,989 crore (Rs 209.89 billion)revenue loss on cooking fuel in April-December.
“We will be meeting finance minister tomorrow to see how this under-recovery is to be met,” Deora said adding a decision on fuel pricing was likely only after the Kirit Parikh committee submits its report this week.
Freeing auto fuel pricing would mean a hike of Rs 4.72 a litre on petrol rates and Rs 2.33 per litre on diesel prices as Indian Oil Corporation , Hindustan Petroleum and Bharat Petroleum sell them at rates lower than the imported cost.
Deora said there were some people who were advocating freeing petrol and diesel prices while the government and upstream companies together subsidised LPG and kerosene.
“We will decide on the pricing after due consultations on the Parikh committee report,” he said. “Petroleum ministry is not a private company that can decide on such issue by itself.
“Government is extremely conscious of the effect any increase in fuel prices. . . the cascading effect of a Rs 2 per litre increase indiesel prices, for example, would be felt on prices of food items,” he said.
“But there was an urgent need to find a permanent solution to this recurring problem of under-recoveries.”
Petroleum secretary S Sunderashan said it was estimated that the total revenue loss on the four products this fiscal would be over Rs 45,500 crore (Rs 455 billion).
Deora said the report of Parikh committee, the third panel on the issue, is expected this week.
“There are suggestions that petrol prices should be freed immediately while there can be dual prices for diesel — market rates for bulk consumers like Railways and subsidised rates for fuel sold from petrol pumps,” he said adding, the issue would be decided after getting the committee report.