New Delhi, October 31
Amidst speculations that the crude oil prices in the international market might dip after the US Presidential elections, the UPA government today deferred its decision on the oil price hike as demanded by petroleum firms.
The Left parties, which had earlier given a green signal to Union Petroleum Minister Mani Shankar Aiyar to hike the prices of petrol and marginal increase in diesel and a firm no to any hike in the prices of kerosene and LPG, today asked the government to wait till the US polls.
Perhaps, acceding to the advice of the Left parties, the government deferred the decision even though the oil firms have been demanding 17 per cent hike in diesel and 6 per cent increase in petrol to cover up the financial loss, as the international crude prices are hovering around $ 51. India imports 70 per cent of its crude.
Analysts said despite partial dismantling of the Administrated Pricing Mechanism (APM), the oil firms were cross subsidising the LPG and kerosene prices from petrol and diesel prices. Otherwise, they said, the Indian consumers would pay lower prices than present ones despite hike in international crude oil price.
Talking to reporters here today Petroleum Minister said, “Prices are not being raised today.”
The oil companies have maintained that the 33 per cent rise in the cost of raw material (crude oil) since August 1, when the prices of petrol and diesel in the country were last revised, required petrol prices to be raised by Rs 1.22 a litre and diesel prices by Rs 2.24 per litre.
The Petroleum Minister said excessive volatility in the international oil market, which had seen the crude touch a record high of $ 56 a barrel earlier this month, was perhaps influenced by measures the US was supposed to take to check its fiscal and trade deficits but had not been taken due to Presidential elections.
The oil companies have claimed that they will suffer Rs 956-crore losses in the next fortnight due to the delay in decision.
“There is a general perception that crude prices will ease (after the elections),” he said.
When asked whether the decision not to increase petrol and diesel prices had been postponed due to Left parties’ pressure, Mr Aiyar said, “Today being a Sunday, we have not got full opportunity to talk to everybody. Consultations will continue.”
The Left parties, though not averse to a hike in petrol prices and a moderate increase in diesel prices, wanted the government to hold the price line for another fortnight hoping the US Presidential elections could have a sobering effect on global crude prices.
The CPI and CPM at their separate meetings with Mr Aiyar earlier this month had suggested that the increase in petroleum products be held back till the US Presidential elections.
After Mr Aiyar’s meeting with Prime Minister Manmohan Singh yesterday evening, there was a speculation in the market that oil companies would be allowed to raise prices.
It is pertinent to note that public sector oil companies, though given freedom to revise petrol and diesel prices within a 10 per cent band every fortnight, have been allowed to raise prices only twice — on June 15 and July 31 — since the UPA government came to office.
