Govt mulls moderating hike in petrol, diesel

The note dated March 16 has also added that due to shortage of time, the note may be put up for the consideration of the Cabinet directly instead of circulating it among the various ministries.

According to the petroleum ministry’s note, international oil prices have shot up and as a result the required increase, considering that in the first fortnight of March 2005 prices in petrol and diesel were Rs 3.94 per litre and Rs 3.59 per litre, respectively. The ministry further added that keeping in mind the higher specification fuels (Bharat II and Euro III) with effect from April 1, 2005, an additional hike of Re 0.30 per litre in petrol and Re 0.24 per litre in diesel is also required. Hence, the total increase at Delhi works out to Rs 4.24 per litre for petrol and to Rs 3.83 pe litre for diesel.

The ministry added that considering the stiff hike required as well as the low price revision frequency, an earlier proposal to hike prices by only Re 0.91 per litre for petrol and Re 0.81 per litre for diesel would put a tremendous burden on oil marketing companies.

The ministry is, hence, planning to propose before the Cabinet that the dual effect of hike due to duty and oil specifications changes (from April 1, 2005) be put into the proposed price hike of the two fuels. To moderate this, the effect of the crude price hike has been kept away from the fresh proposal. According to sources in the petroleum ministry, the new Cabinet note is likely to have the consent of all the political allies of the UPA government.