Date:16/05/2006 URL: http://www.thehindubusinessline.com/2006/05/16/stories/2006051605110900.htm

Back Another round of talks likely on petro products price hike

Our Bureau

Indications are that the Petroleum Minister has asked the Prime Minister to intervene to save oil PSUs.

New Delhi , May 15

The Petroleum Minister, Mr Murli Deora, and the Finance Minister, Mr P. Chidambaram, today met the Prime Minister, Dr Manmohan Singh, on the issue of working out a pricing mechanism for petroleum products to protect the bleeding oil marketing companies due to surging international crude prices.

Indications are that the Prime Minister will meet the two Ministers again soon to discuss the issue. Sources said that Dr Singh wanted more details by the Petroleum Ministry on fuel pricing and duty restructuring.

He is believed to have instructed the two Ministries to hold another round of Secretary-level discussions before the next meeting with him. After that a Cabinet note could be expected on the issue.

Indications are that the Petroleum Minister asked the Prime Minister to intervene to save public sector oil firms from suffering more financial losses, as surging crude prices had become unsustainable in the absence of a hike in retail fuel prices or duty cuts.

Market sources said a modest price hike on petrol and diesel of Rs 2.50-3 a litre might be expected. Mr Deora was not in favour of increasing the prices of cooking gas and kerosene.

The Prime Minister's intervention is being sought to avoid an increase in cooking gas and kerosene prices, sources said.

At the meeting, the Petroleum Minister also appraised the Prime Minister of the fact that oil retail companies are projected to lose Rs 73,512 crore this fiscal if measures like rise in fuel prices or duty cuts are not taken.

As per estimates, the required increase is Rs 9.33 per litre on petrol, Rs 10.43 on diesel, Rs 17.16 on kerosene, and Rs 114.45 on cooking gas.

The Petroleum Ministry has been seeking excise duty reduction and greater Budgetary allocation, and also suggested that the Finance Ministry be asked to part with a portion of the Rs 60,000 crore collected through a cess levied on domestic crude oil.