JOIN USDecision on oil price hike deferred
The decision to postpone any hike in auto fuel prices emerged after a two-hour-long meeting between Prime Minister Manmohan Singh, Finance Minister Pranab Mukherjee and Petroleum Minister Murli Deora.
At the meeting, which reviewed the overall scenario of the petroleum sector in the face of continuing rise in global crude oil prices, it was decided that the petroleum ministry would hold further consultations with the finance ministry on how to minimise the revenue losses being incurred by the OMCs through subsidy-sharing formula, official sources said.
At the meeting, Deora was understood to have proposed deregulation of petrol prices and gradual phasing-out of subsidies on diesel to ease burden on public sector oil marketing companies.
Deora also made this suggestion in the face of “reluctance” on the part of the finance ministry to compensate state-owned OMCs through issue of higher amount of oil bonds, sources said.
With a rise in global crude oil prices, the state-owned OMCs are now incurring revenue losses as the government is not allowing three state-owned oil marketing firms Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum to raise retail prices of four mass consumed petroleum products – petrol, diesel, domestic LPG (Liquid Petroleum Gas) and Kerosene despite the cost of raw material – crude oil – touching $82 per barrel.
These three state-owned oil marketing firms are projected to incur a revenue loss of nearly Rs 44,300 crore on fuel sales in the current fiscal 2009-10.
As per the petroleum ministry the state-owned oil marketing firms are selling petrol at a loss of Rs 3.06 a litre, diesel at Rs 1.56 per litre, kerosene (supplied through Public Distribution System) at a loss of Rs 17.23 per litre and LPG at a discount of Rs 299.01 a cylinder.
Currently, the government is compensating the revenue losses being incurred by the state-owned oil marketing firms through a three-tier mechanism.