EGoM Defers Decision on Fuel Price Hike

New Delhi
EGoM Defers Decision on Fuel Price Hike
outlookindia.com
-0001-11-30T00:00:00+0553
A panel of ministers today deferred a decision on raising fuel prices due to a lack of quorum, even though it appeared there was consensus on freeing petrol prices from government control and a hike of up to Rs 2 per litre in diesel rates.

An Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee could not arrive at a decision in the absence of four key ministers, including Railway Minister Mamata Banerjee and Agriculture Minister Sharad Pawar, a source privy to the deliberations at the EGOM said.

Banerjee, who is away in Kolkata, had communicated that her party, the Trinamool Congress, was against "any steep hike" in diesel prices and wanted domestic LPG and kerosene consumers to be spared, the source said.

With DMK leader and Chemicals and Fertilizer Minister M K Alagiri onboard, the EGoM veered around to freeing petrol prices from government control, a move that would result in rates in Delhi being hiked by Rs 3.35 per litre.

Accommodating Banerjee, the panel favoured only a Rs 2 per litre hike in diesel prices instead of the Rs 3.49 per litre increase needed to free the fuel from government control, the source said.

The panel, which went into the report of the expert group headed by Kirit Parikh calling for freeing petrol and diesel prices and a steep Rs 100 per cylinder hike in LPG rates and a Rs 6 per litre increase in kerosene prices, could not arrive at a decision on the two politically sensitive cooking fuels.

"The EGoM came to the conclusion that further discussion would be necessary before views are firmed up. A further meeting will be scheduled shortly," an oil ministry statement issued after the 50-minute meeting said.

Oil Secretary S Sundareshan described the meeting as "excellent" and said the EGoM may meet again in 10 days.

Pawar could not attend the meeting because of illness, while the absence of Transport Minister Kamal Nath and Power Minister Sushil Kumar Shinde was attributed to their being abroad on official business. "The ministers were not present (so a decision could not be reached)... We will meet again soon," Oil Minister Murli Deora said.

His ministry made a presentation on the impact of the Parikh committee's recommendation, projecting a revenue loss of Rs 72,300 crore if petrol, diesel, domestic LPG and kerosene continue to be sold at rates below the imported cost.

The EGoM discussed the impact of implementing the committee's report on inflation, the source said, adding that freeing auto fuel prices would lead to a 1.4 per cent rise in the Wholesale Price Index (WPI).

In April, WPI-based inflation was 9.59%.

The EGOM is likely to meet again next week, possibly with a larger quorum to endorse freeing of petrol prices, a hike of up to Rs 2 per litre in diesel prices and some increase in LPG and possibly kerosene rates, the source said.

Later, the Finance Minister told reporters that he will call a meeting of the EGoM shortly.

"I told them (EGoM) that I will call the meeting shortly. Exact date I will be able to finalise in consultation with the ministers concerned," he said.

But the meeting may not happen before Thursday.

"Today, it was not possible that all of them (EGoM members) could attend. Thursday will be a Cabinet day. Normally, all the ministers remain present. I will talk to them and after talking to them, I will call the meeting. It will be done shortly," he said.

The Oil Ministry made a presentation to the EGoM on the recommendations of the Kirit Parikh Committee that suggested freeing fuel prices from government control.

Oil companies have been selling fuel at less than the imported price and as a result, suffer huge losses.

It was noted at the meeting that under-recoveries of oil marketing companies on account of the current price structure and the burden faced the government by way of compensating the companies during the 2003-04 to 2009-10 period was in excess of Rs 3.45 lakh crore.

The possible inflationary impact of the rise in prices of petroleum products was also discussed.

IOC Chairman B M Bansal said he was hopeful that the EGoM would take a decision at the next meeting.

"We are losing Rs 110 crore per day on selling petrol, diesel, domestic LPG and kerosene below imported cost and we are hopeful of a decision at the next meeting," he said.

The source said Mukherjee and Planning Commission Deputy Chairman Montek Singh Ahluwalia were in favour of decontrolling auto-fuel prices, but given the political compulsions, settled for freeing just petrol prices for the time being and an up to Rs 2 per litre hike in diesel prices.

Petrol in Delhi currently costs Rs 47.93 a litre, while diesel is priced at Rs 38.10 a litre.

State-owned Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum currently lose Rs 203 crore per day on selling fuel below imported cost. They currently sell petrol at a loss of Rs 3.35 a litre, while the under-recovery is Rs 3.49 per litre of diesel, Rs 18.82 per litre of PDS kerosene and Rs 261.90 on every 14.2-kg LPG cylinder.

The source said the EGoM may not agree with the Parikh Committee's recommendation of raising the kerosene price by Rs 6 per litre and LPG rates by Rs 100 per cylinder. "These will have to be moderated," he said. PTI ANZ ARV The EGOM is likely to meet again next week, possibly with a larger quorum to endorse freeing of petrol prices, a hike of up to Rs 2 per litre in diesel prices and some increase in LPG and possibly kerosene rates, the source said.

Later, the Finance Minister told reporters that he will call a meeting of the EGoM shortly.

"I told them (EGoM) that I will call the meeting shortly. Exact date I will be able to finalise in consultation with the ministers concerned," he said.

But the meeting may not happen before Thursday.

"Today, it was not possible that all of them (EGoM members) could attend. Thursday will be a Cabinet day. Normally, all the ministers remain present. I will talk to them and after talking to them, I will call the meeting. It will be done shortly," he said.

The Oil Ministry made a presentation to the EGoM on the recommendations of the Kirit Parikh Committee that suggested freeing fuel prices from government control.

Oil companies have been selling fuel at less than the imported price and as a result, suffer huge losses.

It was noted at the meeting that under-recoveries of oil marketing companies on account of the current price structure and the burden faced the government by way of compensating the companies during the 2003-04 to 2009-10 period was in excess of Rs 3.45 lakh crore.

The possible inflationary impact of the rise in prices of petroleum products was also discussed.

IOC Chairman B M Bansal said he was hopeful that the EGoM would take a decision at the next meeting.

"We are losing Rs 110 crore per day on selling petrol, diesel, domestic LPG and kerosene below imported cost and we are hopeful of a decision at the next meeting," he said.

The source said Mukherjee and Planning Commission Deputy Chairman Montek Singh Ahluwalia were in favour of decontrolling auto-fuel prices, but given the political compulsions, settled for freeing just petrol prices for the time being and an up to Rs 2 per litre hike in diesel prices.

Petrol in Delhi currently costs Rs 47.93 a litre, while diesel is priced at Rs 38.10 a litre.

State-owned Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum currently lose Rs 203 crore per day on selling fuel below imported cost. They currently sell petrol at a loss of Rs 3.35 a litre, while the under-recovery is Rs 3.49 per litre of diesel, Rs 18.82 per litre of PDS kerosene and Rs 261.90 on every 14.2-kg LPG cylinder.

The source said the EGoM may not agree with the Parikh Committee's recommendation of raising the kerosene price by Rs 6 per litre and LPG rates by Rs 100 per cylinder. "These will have to be moderated," he said.
READ MORE IN:
Next Story : Vijay Mallya Enters RS Fray
Download the Outlook ​Magazines App. Six magazines, wherever you go! Play Store and App Store
THE LATEST ISSUE
CLICK IMAGE FOR CONTENTS
Online Casino Betway Banner