New Delhi, September 28
With the international crude oil prices today crossing $ 50-per-barrel mark, the Indian oil companies have sought government’s permission to hike diesel prices by
Rs 2.70 per litre, besides marginal hike in LPG and kerosene retail prices to meet the increasing deficit.

The government is likely to allow a marginal increase in diesel prices besides reducing the customs and excise duty on petro-products to compensate the oil companies. Revised oil prices are scheduled to be announced on October 1.

Talking to The Tribune, a senior official of the Indian Oil Corporation (IOC), disclosed that though international crude oil prices would not have so much impact on the Indian companies as compared to the US and European companies, but the average price of Indian basket of oil products has crossed $ 40 per barrel from around $ 36 per barrel till recently.

“The IOC will send another letter to the Ministry of Petroleum by tomorrow afternoon asking for a hike of Rs 2.70 per litre, Rs 5 per litre hike in kerosene prices and substantial hike in LPG cylinder prices to meet the parity of imported oil products,” he said adding that at present petrol prices were within the stipulated band of prices.

“We have not asked for increase in petrol prices,” he said.

He claimed that despite repeated reminders the government had not responded to their demand to increase LPG and kerosene prices. “To meet the import parity price, we will have to increase the LPG cylinder prices by Rs 110 per cylinder, kerosene prices by Rs 5 per litre, besides Rs 2.70 per litre hike in diesel prices, “ he said.

Sources in the Petroleum Ministry said the government was reluctant to allow the oil marketing companies to increase the price of diesel due to its adverse impact on the economy.

Petroleum Minister Mani Shankar Aiyar has also admitted that the government is concerned about the impact of hike in oil prices on the economy and especially the “common man.” The inflation has once again registered an increase to 7.86 per cent after showing a marginal fall in the previous week.

Officials in the Petroleum Ministry admitted that the government would think twice before increasing LPG or kerosene prices at a time when the elections were due in Maharashtra on October 13. However, they added that government may allow a marginal increase of Re 1 per litre in diesel prices on October 1.