Govt unlikely to hike petrol and diesel prices till 2007-end

After giving hints about issuing oil bonds worth Rs 24,000 crore for oil marketing companies, the Government is not likely...

After giving hints about issuing oil bonds worth Rs 24,000 crore for oil marketing companies (OMCs), the Government is not likely to hike petrol and diesel prices until the year-end. Ministry of Petroleum and Natural Gas sources say that apart from relying on the new trend of dipping crude prices in winter after a spurt in summer seen last year, the Government does want to “take any chance” ahead of the Gujarat elections scheduled in December.

Earlier, the oil ministry had prepared a Cabinet note on fuel price hikes. The note envisaged an increase in the price of petrol by Rs 2 per litre and diesel by Re 1 per litre. However, the note was not sent to the Cabinet due to political reasons.

Sources say that the Government expects crude prices to dip during the coming winter. In the last fiscal (2006-07), crude touched the highest price of $ 75.20 per barrel in August. The price dipped later on in winter. That is why the Government could reduce fuel prices in February last fiscal.

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The lowest price of crude oil at $49.85 per barrel was recorded in January last fiscal. However, crude prices generally remain up in winter. The Government expects lesser losses on sale of petrol, diesel, kerosene and domestic LPG to OMCs during winter too, they add.

In the present scenario, the OMCs have estimated a loss of more than Rs 50,000 crore on fuel sales. During the first quarter of the current fiscal (2007-08), the oil marketing companies have lost Rs 12,900 crore including Rs 6,700 on sale of domestic LPG and kerosene and Rs 6,200 crore on sale of petrol and diesel.

A senior oil ministry official said, “It is a fact that oil marketing companies would lose more than Rs 50,000 crore by the end of this fiscal. But everything here does not go by simple economics as politicians have a different mandate. No Government would take the risk of making a fuel price hike an issue during the Gujarat elections. It is possible that the Government may opt for a fuel price hike in 2008.”