At home, petro price hike now imminent

With international crude oil prices firming up again after the US election to over $50 a barrel, the government seems convinced that a hike ...

With international crude oil prices firming up again after the US election to over $50 a barrel, the government seems convinced that a hike in prices of petrol and diesel is imminent. The CCEA meeting on Wednesday decided to hold another meet within a couple of days to decide on the quantum of hike.

However, after Maharashtra elections and Diwali, what might crop up as an obstacle in the revision of prices of petrol and diesel is the Bihar Assembly elections. According to petroleum ministry sources, railway minister Lalu Prasad Yadav of the RJD is not in favour of a hike before the pending Bihar assembly elections. It is learnt Yadav feels that as prices were not revised before the Maharashtra elections, the same yardstick should be applied now.

In fact, the CCEA decided to hold another meeting on the issue mainly due to the fact that Lalu Prasad Yadav was not present in Wednesday’s CCEA meet. After the CCEA meeting, finance minister P Chidambaram clarified that defence minister Pranab Mukherjee, agriculture minister Sharad Pawar and railways minister Lalu Prasad Yadav, who did not attend the CCEA, will be present at the next CCEA to take a final call on fuel prices.

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Petroleum minister Mani Shankar Aiyar made a presentation in the CCEA on Wednesday and made a case in favour of a possible hike in prices of petrol and diesel. Sources said that the ministry is the opinion that while the oil marketing firms be allowed to make up the shortfall in petrol and diesel within the price band, a nominal hike in LPG and kerosene will also be of immense help.

Hence, the petroleum ministry suggested raising petrol prices by up to Rs 0.77 per litre, diesel by Rs 1.25-1.84 a litre, LPG by Rs 20 per cylinder and kerosene by Rs 1 per litre. Petrol and diesel prices have not been raised for over three months now while LPG prices were last raised on June 15. However, while LPG and kerosene prices will not be revised, a hike in the petrol and diesel prices seemed more and less decided if Lalu Prasad Yadav can be convinced, sources added.

Aiyar has also suggested cutting import duty on crude oil from 10 per cent to 5 per cent and slashing customs duty on petrol and diesel to 15 per cent from 20 per cent. He has also suggested nil excise duty on LPG and kerosene to contain the effect of surge in crude oil prices. However, the finance ministry is not in favour of any duty cuts as the move will result in fiscal slippages. Hence, a hike in prices cannot be avoided any further, sources said.