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Marginal hike in petrol, diesel prices likely
Manoj Kumar
Tribune News Service

New Delhi, May 24
The government is likely to announce a marginal increase of at least Re 1 per litre in petrol and diesel prices soon despite stiff opposition from the Left parties and partners in the ruling United Progressive Alliance (UPA). However, it may not touch the prices of kerosene and LPG for the time being to satisfy alliance partners and its voters.

Oil companies, which have already submitted proposals to the Ministry of Petroleum and Natural Gas, are hopeful that the new Union Minister of Petroleum and Natural Gas, Mr Mani Shankar Aiyer, who took charge of the Ministry today, will take a pragmatic decision in view of the steep increase in the international crude oil prices, which are currently hovering around $ 40 per barrel as against $ 31 per barrel during January this year.

After assuming the charge, Mr Aiyer said: “The Ministry will study the matter thoroughly and consult the Prime Minister before considering any revision in petroleum prices.” He has assured the oil companies that the Ministry will take a decision shortly after assessing the impact of rise in crude oil prices in the domestic market.

Officials in the Ministry said they would try to impress upon the Minister to push for “marginal increase in price of petrol and diesel, while keeping the price of kerosene and LPG intact for the time being, to partially cut down around Rs 900 crore as financial losses suffered by the major oil companies during January-May period.”

An official added that part of their losses could be met from around Rs 23,000 crore accumulated profits during the last year. Also, the Finance Ministry could also help keep the prices at the same level by reducing the import duty. The government is likely to collect Rs 6,500 crore, as against Rs 6,200 crore collected during last year.

He said it was the fault of the previous NDA government in not allowing the oil companies to increase oil prices in parity with the international crude oil prices during election period, which lead to the present crisis. Oil companies have been pressing upon by the Ministry of Petroleum and Natural Gas, he said, to increase petrol and diesel prices by Rs 3 to Rs 5 per litre, kerosene by Rs 2 per litre and LPG by Rs 50. The oil prices were revised upward on December 31, 2003.

Industry insiders said international crude oil prices were likely to remain high in the forthcoming months due to high demand of petroleum products in China, the USA, continuing crisis in Iraq and cut in production quota by the OPEC countries.