M A I N   N E W S

All set for oil price hike
Cabinet meets today; Naik cuts visit
From T.V. Lakshminarayan
Tribune News Service

NEW DELHI, Sept 22 — After dilly dallying for several months on hiking oil prices, the government is all set to bite the bullet by going in for a price rise.

The Petroleum Minister, Mr Ram Naik, has been asked to cut short his visit to Jakarta, ahead of a Union Cabinet meeting tomorrow, indicating that a review of oil prices is very much on the government’s agenda.

Prime Minister Atal Behari Vajpayee too set the ground for the imminent hike when he told party workers that hard decisions would have to be taken to deal with surging international crude prices.

A meeting of the National Democratic Alliance partners has also been called by the Prime Minister tomorrow to discuss the proposed hike. Once the NDA partners give the nod, the decision at the Cabinet level will be only a formality. Even otherwise the Petroleum Ministry does not require Cabinet sanction to increase oil and oil product prices.

According to PTI the government is likely to hike prices of diesel, kerosene and cooking gas by 10-15 per cent and lower import duty on crude and products to stem the oil pool deficit.

With international crude prices ruling above the $ 35 level per barrel, the import bill this fiscal could cross $ 20 billion, which is a very high amount considering that the country’s foreign exchange reserves is only around $ 35 billion.

The state-run oil companies have also told the government that they were no more in a position to carry on business as they were facing a cash crunch. The Government owes the Indian Oil Corporation, the Hindustan Petroleum Corporation and Bharat Petroleum thousands of crores of rupees from the oil pool account. The oil pool account deficit now stands at 10,500 crore and if there is no price hike this figure could cross the Rs 15,000 crore mark.

The public oil companies today joined hands to release a joint advertisement spelling out the need for increasing oil prices in the country.

The government had earlier decided that diesel would be sold at imported prices and there would be no subsidy on the oil. However, the Assembly elections and political compulsions have prevented the government from undertaking the unpopular step. Today, the subsidy on diesel is about Rs 3.50 per litre while the cooking gas carries a subsidy tag of Rs 165 per litre. Kerosene has a subsidy of Rs 5.50 per litre.

Mr Ram Naik has indicated that while a price hike was inevitable, the government was also looking at reducing the import duty to reduce the burden on the common man. The Finance Ministry has opposed such a move. It is believed that there might be a compromise on the issue tomorrow and the adjustments in oil prices would be a mixture of price increase and levy rationalisation.

Pak raises petroleum prices by 11 pc

KARACHI, Sept 22 (AFP) — Pakistan’s military regime today increased petroleum prices by 11 per cent, citing an upward trend in the international oil market.

“The prices have been increased because of the current international price hike,” Petroleum Minister Usman Aminuddin said, adding that if world oil prices fall the government would reduce prices.