Currently, state-owned oil marketing companies (OMCs) are losing over Rs 8 per litre on petrol by not linking its price with global market rates.
The Petroleum Ministry is understood to have indicated to the OMCs not to pass on the entire burden to consumers in one go. They could raise petrol price by Rs 3 to Rs 4 per litre now and then stagger the remaining hike over a period of time, the ministry suggested.
Diesel price hike in the range of Rs 2 to Rs 3 per litre was very much on the cards as the empowered group of ministers (EGoM) headed by Finance Minister Pranab Mukherjee was scheduled to meet on Wednesday to take stock of oil pricing in view of the rising global crude oil prices.
A hike of about Rs 25 per cylinder in the retail price of domestic cooking gas (LPG) is also on the anvil. “The EGoM was to meet tomorrow (Wednesday) evening. It has been postponed to accommodate some ministers. It could be on May 17 or 18,” Union Petroleum Minister S Jaipal Reddy told newspersons here.
In view of the Assembly elections in four states and a Union territory, the UPA government had delayed a decision on a hike in the prices of petrol, diesel, domestic cooking gas and kerosene.
Sensitive issue
The government appeared to be bracing up to bite the bullet on the politically sensitive issue by scheduling the EGoM meeting for the day after the conclusion of the poll process.
Political circles say the Centre preferred to move cautiously on the sensitive issue in the face of West Bengal Chief Minister Buddhadev Bhattacharjee’s biting observation that a hike in oil prices would be the Centre’s “gift” to the people soon after the elections. With Assembly polls concluding on Tuesday, the OMCs are likely to get the go-ahead from the Petroleum Ministry to raise the price of petrol.
Under the current oil pricing mechanism, the government does not allow the OMCs to fix the retail prices of diesel, LPG and kerosene in tune with the global crude oil price.
However, the companies have been allowed to fix the retail price of petrol as per market rates with the government deregulating pricing of petrol last June. Since then, the OMCs revised petrol prices on seven occasions, before deciding in the second half of January to freeze the prices.
Though the government has decontrolled petrol pricing, the OMCs continue to be guided by “informal” advice from the Petroleum Ministry.
The OMCs are currently incurring a loss of over Rs 16 per litre of diesel, Rs 29.69 a litre on kerosene and Rs 329.73 per 14.2 kg domestic LPG cylinder.
