The Hindu Business Line : Left rejects proposal on petro price hike

Left suggestions
Halving of Customs duty.
Levy of specific excise duty.
Release of part of the cess money collected to the Oil Industry Development Board.

PETRO TALKS: The Minister for Petroleum and Natural Gas, Mr Murli Deora, flanked by Left party leaders, Mr Sitaram Yechury (left) and Mr Gurudas Dasgupta at a meeting over petroleum product prices in the Capital on Wednesday.

New Delhi , May 10

Even as the Left parties strongly opposed any petro product price hike, the Petroleum Ministry presented them with a scenario where petrol, diesel and kerosene prices could be raised by Rs 5 per litre and cooking gas by Rs 50 per cylinder.

This is against the required increase of Rs 9.33 per litre for petrol, Rs 10.43 per litre on diesel, Rs 17.16 per litre on kerosene and cooking gas by Rs 114.45 per cylinder, if domestic prices are to be brought in parity with import costs.

In its presentation to the Left party leaders Mr Sitaram Yechury and Mr Basudeo Acharya of CPI(M), Mr Gurudas Dasgupta of CPI, and Mr Abani Roy of RSP, the Ministry said that the required increase was necessary to protect oil companies from suffering severe losses. The Left leaders instead suggested duty reductions and wanted the Finance Ministry to release at least part of the money collected as cess to the Oil Industry Development Board (OIDB). The Left leaders argued that the intention should be to see how to minimise the burden on the consumer.

``Twice you have been allowed to raise fuel prices, we would not allow it for the third time,'' said the CPI(M) leader Mr Yechury.

In its presentation, the Ministry said without the price increase, oil companies would suffer under recoveries of Rs 73,512 crore (up from Rs 45,400 crore last year) in 2006-07 fiscal. To mitigate the impact of spiralling international crude prices, Left leaders wanted customs duty to be halved and a specific excise duty levied on products.

The Ministry also submitted that in 2005-06, the oil sector shouldered 63 per cent of the burden (upstream contribution: Rs 14,000 crore and refineries/OMCs: Rs 14,500 crore), Government shared 25 per cent (Rs 11,500 worth of bonds), and consumers' share stood at 12 per cent (Rs 5,400 crore).

Under recoveries

For 2006-07, the estimated under recoveries will be Rs 73,500 crore, of which upstream share is expected to be Rs 24,000 crore, while the amount for refineries and oil marketing companies is yet to be worked out. The Ministry has also suggested options for the Government to share the burden, including OIDB cess, excise duty reduction and budgetary support.

The Ministry also said that with an increase of Rs 5 per litre on petrol, diesel and kerosene, and Rs 50 per cylinder on cooking gas, the consumers share would stand at Rs 26,700 crore, that is, close to 36 per cent of the estimated under recoveries.

The Petroleum Minister, Mr Murli Deora, who has been against any increase in prices of cooking gas and kerosene, said that he was to meet the Finance Minister, Mr P. Chidambaram, soon to discuss the issue of petroleum product pricing.