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Diesel,LPG price hike likely today

Formal announcement creates rush for topping up tanks,both by consumers,retail outlets.

Written by Amitav Ranjan | New Delhi |
September 11, 2012 12:49:29 am

Prices of diesel,LPG and kerosene may be raised from Tuesday when the Cabinet Committee on Political Affairs (CCPA) meets.

Though the listed agenda for the CCPA meeting is to discuss the BJP boycott of the Monsoon Session of Parliament,sources said the Petroleum Ministry’s comprehensive proposal on various pricing options could be circulated at the meeting itself.

Another pointer for the issue being slipped-in at Tuesday’s meeting is that Petroleum Minister S Jaipal Reddy on Monday sent out an eight-page backgrounder on the current financial crisis of the state-run oil marketing companies to all the ministers who are members of the CCPA.

“Save for the various pricing options for the three products,the backgrounder has all the details explaining the precarious situation facing the oil sector which has also been elaborated in the agenda note that was sent to the Cabinet Secretariat last week,” said sources.

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A formal announcement of listing of the pricing issue creates a scamper for topping up tanks,both by consumers and retail outlet owners to save and make money,respectively.

The backgrounder says the OMCs were currently losing Rs 17.05 on a litre of diesel,Rs 32.70 on a litre of kerosene and Rs 347 on a cylinder of cooking LPG and that their losses on these three fuels could touch Rs 1.87 lakh crores in the current fiscal.

“In order to enable the OMCs to maintain their financial strength to sustain regular supply of diesel,domestic LPG and kerosene,it is necessary to urgently compensate their under-recoveries,” says the note without referring to a price hike.

Besides price hike,Reddy is also seeking support to limit supply of subsidised LPG cylinders to 4-6 per household in a year. His backgrounder therefore prepares the CCPA members for considering an annual quota of cylinders for each connection on grounds that it was proposed by the Unique Identification Authority of India (UIDAI) for ushering direct transfer of cash subsidy and that it received “in principle” approval of the Empowered Group of Ministers in August 2011.

It explains that of the 14 crore domestic LPG consumers,29 per cent used four refills or less,38 per cent five refills or less and 47 per cent six refills or less in a year.

Last Friday,Reddy had said the price hike could happen as early as next week with petrol increase also clubbed with the three controlled fuels. “We are of course facing crisis of unpredictable magnitude…. We have to take some difficult,painful decisions,” he had said.

Diesel,domestic LPG and PDS kerosene rates have not been changed since June 2011 even though cost of production has soared 28 per cent.

The final outcome of the CCPA meeting would depend on the UPA allies present at the meeting as both the DMK and the Trinamool Congress are opposed to a price hike.

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