Rise in Fuel Product Prices Minimal: Deora

New Delhi
Rise in Fuel Product Prices Minimal: Deora
Defending the increase in fuel product prices and their de-regulation, Government today said the rise in their cost was "minimal" and such a decision was needed to improve the financial health of oil marketing companies.

"The price increases, particularly in respect of cooking gas, that is domestic LPG and PDS kerosene, have been quite minimal," Petroleum and Natural Gas Minister Murli Deora said in a statement in Lok Sabha, as opposition members trooped into the well shouting slogans to protest the hike.

Maintaining that pricing reforms were aimed at fiscal consolidation, he said the government has made it clear that "in case international oil prices display high volatility, the government will suitably intervene in the pricing of these products".

Deora laid the statement in the House as members of SP and RJD, led by their leaders Mulayam Singh Yadav and Lalu Prasad, trooped into the well raising anti-government slogans and demanding an immediate debate on price rise issue.

Shifting the blame on state governments for high rates of taxation on fuel products, Deora said he was "constrained" to say that in some states, the sales tax on petrol and diesel "is as high as 33 per cent and 24.7 per cent" while some states were levying sales tax on kerosene "as high as 12.5 per cent."

Deora said the primary objective of the pricing reforms was the "growing imperative for fiscal consolidation, the need for reducing the subsidy burden on petroleum products in order to allocate more funds to social sector schemes" and to ensure the country's energy security.

Maintaining that the government was conscious of the need to protect the common man's interests, the Minister said the oil marketing companies (OMCs) continued to incur under-recoveries of Rs 1.66 per litre on diesel, Rs 14.86 per litre of kerosene and Rs 201.80 per cylinder of LPG.

"The government and the OMCs are expected to bear an under-recovery burden of approximately Rs 53,000 crore on sensitive petroleum products during 2010-11 even after the price increase," he said.

Observing that retail kerosene prices had not been revised since March 2002, Deora said this was despite an increase in the international prices of kerosene by four times.

While the Kirit Parikh committee on petro product pricing had recommended a hike of Rs six per litre of PDS kerosene, the price was increased only by Rs three, he said claiming that the price was "still the lowest among the neighbouring countries".

He also claimed that the price of domestic LPG was the "lowest" among the neighbouring countries and said while the Expert Group had suggested an increase of Rs 100 per cylinder, it was hiked by only Rs 35.

"I reiterate that the government is committed to the twin objectives of protecting the interest of common man, particularly the vulnerable sections of society, as also to protect the financial health of the public sector OMCs", Deora said.

In 2008-09, the government and the oil PSUs subsidised the consumer "to the extent of Rs 1,03,292 crore on the four sensitive petroleum products," he said.
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