M A I N   N E W S

Petrol, diesel may get costlier

New Delhi, May 3
The government is mulling Rs 2 to 3 per litre hike in petrol and diesel prices as oil firms are losing around Rs 10 per litre on the two fuels due to hardening global prices.

“A formal proposal for an increase may be considered after elections in five states are over next week,” a top official said.

Finance Minister P. Chidambaram yesterday indicated in Coimbatore that a fuel price hike couldn’t be avoided anymore.

The official said state-owned oil retailing firms were losing Rs 9.34 per litre on selling petrol below the imported cost, while the loss on diesel was Rs 10.43 a litre.

Kerosene is being sold at a loss of Rs 16.78 per litre and LPG at Rs 125 per cylinder.

Though there is an urgent need to raise prices of all four products, kerosene may be spared due to political compulsions. A moderate hike of Rs 10 to 15 per cylinder can also be approved by the Cabinet, official said.

State-run Indian refiners have been unable to raise government-capped retail fuel prices since September last year, despite the surge in crude oil prices to record $75 a barrel.

The non-revision of retail prices of petroleum products by the government is expected to lead to under-recoveries of an estimated Rs 75,000 crore by oil marketing companies —IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp in 2006-07. The three together lost Rs 4,722 crore in revenues in April.

In the year 2005-06, the OMCs’ gross under-recoveries amounted to Rs 39,600 crore.

IOC, which controls roughly half of the fuel market, lost Rs 2,450 crore on fuel sales in April and is projecting a loss of Rs 1,560 crore in the first fortnight of May if prices remained unchanged, the official said.

The official said Petroleum Secretary M.S. Srinivasan will meet his finance counterpart on May 5 to work out a package for bailing out oil firms.

This would be followed by a meeting between Petroleum Minister Murli Deora and Finance Minister P Chidambaram possibly on May 11. The two would then meet the Prime Minister on May 15.

The Cabinet would thereafter take up the issue, the official said. — PTI