Fuel price hike decision by May 31

A decision on raising retail fuel prices and partly compensating revenue losses of oil firms will be taken by Saturday.

A decision on raising retail fuel prices and partly compensating revenue losses of oil firms will be taken by Saturday, even as Prime Minister Manmohan Singh on Thursday assessed the problems caused by the spike in crude prices.

“Hopefully, by day after tomorrow, we will have a solution,” Petroleum Minister Murli Deora told reporters after a meeting with the Prime Minister and key ministers in New Delhi.

A meeting of the Cabinet, which was to have taken up the matter on Thursday, has been postponed, he said.

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Any hike in prices would be accompanied by a duty rejig to help state-run oil companies curtail revenue losses that are pegged at Rs 225,000 crore for this fiscal on account of crude prices touching a record level in the global market.

“The Prime Minister and Finance Minister saw papers of revenue losses and the price increase in the international market. They realised very much that we need to help (PSU oil companies) on a war-footing,” Deora said.

Singh would also discuss the issue with Congress President and UPA Chairperson Sonia Gandhi, the Petroleum Minister said, adding that these decisions (price hike) were outside his jurisdiction.

The Petroleum Ministry has been pushing for a combination of duty cuts and price hike (Rs 10 per litre in petrol, Rs 5 a litre in diesel and Rs 50 per LPG cylinder) to bail out PSUs IOC, HPCL and BPCL that are on the verge of running out of cash in the next 2-3 months to import crude.

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“Somethings have been agreed at today’s meeting, but I cannot say what the Cabinet will decide,” Deora said after the meeting that was attended by External Affairs Minister Pranab Mukherjee, Finance Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Prime Minister’s Principal Secretary T K Nair.

Deora said the presentations by the Petroleum Ministry are over and the matter would now go to the Cabinet or a sub-committee of the Cabinet.

“I am against any kind of price hike, but the situation sometimes forces you to do that,” he said about the move that may further burden the common man already reeling under the impact of inflation that is testing new highs.

Inflation for the week ended May 10 stood at 7.82 per cent, a 44-month high.

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Deora said leaders of UPA’s allies like Sitaram Yechury have been sounded of the situation, but added that he was not aware if they agreed to an upward revision in prices.

“Prime Minister and all of us are trying to find solutions to the problem…. Tomorrow or day after, we’ll sort everything out,” he said.

Indicating a possibility of a minor duty rejig, Deora also said that the share of upstream oil companies will be raised from 2007’s level, but the government bonds which were 50 per cent of the total under realisation in 2007 may not be of that order.