Decision on petroleum price hike deferred by a week (Roundup)

May 24th, 2008 - 12:04 am ICT by admin  


New Delhi, May 23 (IANS) The government Friday deferred for a week a decision on hiking the prices of transport fuel in the face global crude crossing $135 a barrel as the Left parties put their foot down, reiterating that they will not accept a price hike. A series of high-level meetings took place Friday to decide on possible ways to alleviate the pressure on government oil retailers, that have been reeling due to massive under-recoveries.

The Communist Party of India-Marxist (CPI-M)-led Left allies of the government Friday said they would not accept a hike in petroleum prices.

Meanwhile, a meeting was held in the Prime Minister’s Office, chaired by the prime minister’s Principal Secretary T.K.A. Nair and attended by Petroleum Secretary M.S. Srinivasan, Finance Secretary D. Subbarao and the heads of three oil marketing public sector companies. This was to bring about reconciliation between the finance and petroleum ministries which differed on the extent of losses suffered by the oil companies.

Speaking to reporters Friday, the petroleum secretary said a decision would be taken “in three to four days”. This was in keeping with what Petroleum Minister Murli Deora said, giving a time frame of “a week”.

Earlier, Srinivasan said that an oil price hike was “inevitable”.

According to sources, the government is hoping to increase the price by about Rs.10 for petrol and Rs.5 for diesel only after the inflation starts to come down. The annual inflation this week was 7.82 percent for the week ended May 10, a marginal decrease from 7.83 percent a week earlier.

The Left parties’ opposition was articulated by CPI-M general secretary Prakash Karat after a one-and-a-half hour meeting of Left parties here Friday.

“There is no question of accepting any hike in oil prices,” said Karat.

“We have already given our proposals to the government for restructuring the petroleum tax structure,” said Karat following the United Progressive Alliance (UPA) government’s assertion that a hike in oil prices was imminent following rising international crude prices.

On Thursday, after global oil prices reached a high of $135.09 a barrel, Deora had said that he was “not ruling out anything”.

“The government and oil PSUs have shouldered the maximum burden of the highly volatile world oil prices insulating consumers in India from most of the impact,” he said in a statement Thursday. “We are concerned at the financial health of the PSUs.”

According to the petroleum and natural gas ministry, petrol was being sold at a loss of Rs.16.34 a litre, diesel at Rs.23.49 per litre, LPG at Rs.305.90 per cylinder and kerosene at a discount of Rs.28.72 per litre.

The central government currently issues bonds for 42.7 percent of the oil firms’ losses, with another 33 percent coming from upstream oil companies.

The petroleum ministry had sought the issue of oil bonds worth Rs.440 billion, amounting to 57.1 percent of the Rs.770 billion losses incurred by the state-run oil marketing companies during 2007-08. But, the finance ministry has so far rejected this proposal.

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