Allow oil PSUs hike prices, Aiyar to CCEA

So Aiyar has proposed to CCEA that the firms be allowed to raise the price of petrol by Rs 1.22 per litre and that of diesel by Rs 2.24 per litre — the outer limits of the band.

If it were not for the band and the prices had been allowed according to the market, the price of petrol would have risen by Rs 2.21 a litre. Diesel, on the other hand, would have gone up by Rs 4.28 a litre. LPG prices have remained stagnant since April 2002 except for a nominal increase in June this year. So Aiyar has proposed that the price of cooking gas be raised by Rs 20 a cylinder every three months. He has asked for kerosene prices to be raised by Re 1 a litre every quarter.

Aiyar’s logic seems to be that LPG and kerosene prices are currently subsidised and are far cheaper than what they should really be. This means that once the government subsidy is withdrawn from April 2007, there would have to be a sharp rise in their prices. He wants to bridge some of that gap now. While Aiyar met Prime Minister Manmohan Singh today, the decision was put off. “Whatever is the outcome will be announced by the oil companies tomorrow,’’ he said.