PM to take up petro package on Friday

In an effort to finalise a new pricing policy for petro products, petroleum minister Mani Shankar Aiyar and Finance Minister P. Chidambaram ...

In an effort to finalise a new pricing policy for petro products, petroleum minister Mani Shankar Aiyar and Finance Minister P. Chidambaram would discuss the new package with Prime Minister Manmohan Singh on Friday.

After the PM gives his nod, the package would be discussed with the allies of the UPA government, specially with the Left parties. The government is expected to announce the package by June 15 which is the due date for the revision of the prices.

After a meeting with the finance minister on Wednesday, Aiyar said 8216;8216;we hope by June 15 we would be able to announce a full package. I had a fruitful and a very constructive meeting with the FM and there is a consensus on our approach to deal with the crisis. We are in agreement on tackling this problem. Over the next 24 hours, there is going to be a detailed toothcomb analysis of the figures submitted and we hope to be able to firm up a comprehensive package for discussion with the Prime Minister on June 11,8217;8217; Aiyar added.

The Left parties, who have decided to wait till the proposal is put forward to them, seemed still not very comfortable with a price hike.

CPM leader Nilotpal Basu said 8216;8216;we would stress on the issue of duty rationalisation. This, would, anyway happen in the budget. We would like to wait till the proposal is put forward before us for discussion8217;8217;. Basu also added any hike in the prices of petro products would have an inflationary pressure and hamper production.

According to sources in the petroleum ministry, the package is expected to consist of three components. There would some duty cuts, which, however, can only be announced in the budget. Part of the burden due to the hike in the international crude oil prices would be taken up by the oil companies and the rest would be taken care of by minimal a price hike. Further, the government is also considering a proposal to extend the subsidies on LPG and kerosene by two years to 2007 while it also plans to ensure that the subsidies are targeted at the needy by eliminating the rich. For petrol and diesel, the government is likely to give some leeway to the oil firms to fix auto fuel prices within a specified price band.

Further, customs duty on LPG, kerosene and diesel may be cut so that the import duty component included in calculating consumer price of these products comes down and consumers are insulated from spurts in international oil prices. Excise duty on LPG may also be reduced.