Oil Ministry puts diesel price increases on hold

Apparently worried about the fallout of the unpopular monthly increase of oil prices during election season, the Ministry of Petroleum has put on hold further hike in diesel prices.

The ministry on Monday asked state-owned oil refiners not to raise diesel prices by the scheduled 50 paise a litre on the grounds that the loss on sales of the fuel has fallen to less than Rs 6 a litre. Though the oil companies were keen on the monthly 50 paise increase, Oil Minister M Veerappa Moily has been under pressure from his partymen to put on hold the decision on diesel price reforms fearing political setback during the election season.

Moily had earlier written to the Prime Minister saying stalling of the decision would need the cabinet nod and clearance from the Election Commission as it would amount to ‘poll sop’. Interestingly, oil companies are now saying there is no need to increase rates because the Kriti Parikh-headed Committee suggested the government should provide a subsidy of Rs 6 a litre on diesel.

However, the government has never accepted the Parikh committee recommendations. “Hence, the issue of monthly price increase is under consideration of the government and the matter has been referred to the Election Commission. A decision regarding revision of diesel retail price shall, therefore, be taken on receipt of further advice by the government in this context,” it said.