The Hindu Business Line : Petrol, diesel prices hiked; LPG untouched

AFTER seven months of dithering, the Government today announced a hike of Rs 2.50 a litre in the price of petrol and Rs 2 a litre for diesel, braving opposition from Left allies who have threatened a nation-wide agitation on June 28. The price hike comes into effect from Monday midnight.

Petrol and diesel prices were last revised in November 2004, whereas international oil prices have continued to remain volatile during this period.

Speaking to newspersons after the Cabinet meeting, the Petroleum Minister, Mr Mani Shankar Aiyar, said: "The Government, after deliberations lasting more than an hour, has decided not to increase LPG and kerosene prices. However, it was agreed to increase petrol prices by Rs 2.50 and diesel by Rs 2 a litre."

The end-price will vary slightly in different States, depending upon local taxes.

The Government's decision, however, falls short of the demand of the oil companies that have been asking for a steep increase in all four major petroleum products to offset their losses.

Justifying the extent of the price increase, Mr Aiyar said that the Cabinet decision was based on the principle of equitable sharing of burden by all the stakeholders - the Government, the consumers, and the oil companies.

He also said that the Petroleum Ministry would share the burden of the oil marketing companies as well as upstream companies after factoring in the latest hike.

Upstream oil marketing companies — ONGC, OIL, and GAIL — shared the under-recoveries to the extent of Rs 3,000 crore in 2003-04 and Rs 6,000 crore in 2004-05.

The amount was one-third of the total under-recoveries shared by oil companies.

On whether the Government would be introducing the concept of price band mechanism, the Minister said that this was a one-time hike and the price band concept would be considered once the international prices stabilise.

The decision has been taken after wide consultations to neutralise the impact of sharp rise in the global prices and to shore up the health of public sector oil companies, said Mr Jaipal Reddy, Minister for Information and Broadcasting.

Meanwhile, the Left parties maintained that there was no need for price hike and that the Government could have resorted to other mechanisms.

Speaking to Business Line, Mr D. Raja, National Secretary of CPI, said: "Our stand remains the same. The four Left parties have issued a joint statement calling upon the people to go on a countrywide protest against the hike on June 28."

Strongly opposing the price hike, Mr Dipankar Mukherjee, MP, said: "The Government never responded to the proposal submitted by us."

In a note on petroleum product pricing, the CPI(M) had asked the Government to reconsider the duty changes brought in by the Finance Minister, Mr P. Chidambaram.

"The Finance Minister should ensure that proposed duty changes do not lead to retail price hike on account of his proposed excise duty changes," the note stated.

Creation of a price stabilisation fund with the cess collected on indigenous crude amounting to Rs 5,400 crore a year was also suggested by the CPI(M) in the note.

The Left had also urged keeping in abeyance the additional cess of 50 paise a litre on petrol and diesel to support the National Highway Development Project.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Monsoon makes its way to Kolkata

Ambani brothers' gesture

Petrol, diesel prices hiked; LPG untouched

Prepaid cards set to displace TCs

Cabinet okays economic agreement with Singapore

Auto component companies on expansion mode, to invest $1 b

Sensex scales 7,000, retreats

Centurion, Bank of Punjab agree to merge

Petroleum dealers threaten indefinite strike from July 18

Pocket