New Delhi: The central government is likely to review retail prices of petrol and diesel in mid-July to bring them in line with the recent rise in global oil prices, a senior oil ministry official said on 11 June 2007.
“Once we have the trend for first quarter (April-June), we will review the situation. In early July, we hope to get a consolidated view after consultations with industry and the Left parties,” a top oil ministry official said.
The review will throw the exact quantum of under-realisation of petrol, diesel, domestic cooking gas (LPG) and kerosene for the full fiscal and how this has to be borne by all the stakeholders.
Atleast one-third of the projected Rs50,400 crore revenue loss on fuel sale will be borne by upstream firms like ONGC, while the Government will also share part of the burden by way of compensating fuel retailers through issue of oil bonds.
The rest will have to be split between the retailers and the consumers, the official said.
International oil prices have risen 10-12% since mid-February when petrol prices were slashed by Rs2 a litre and diesel by Re1per litre.
“Once we have a consolidated view, we will go to the Cabinet, possibly in second or third week of July, for a decision,” the official said. The Cabinet will decide on the quantum of bonds finance ministry will issue to Indian Oil, Bharat Petroleum and Hindustan Petroleum as also deliberate the need for raising petrol and diesel prices.
“You will have a decision in July,” he said adding discussions on sharing of under-recovery on fuel sales will begin with finance ministry after 2-3 July.
Oil prices were last revised upwards in June 2006. Thereafter, prices have been twice reduced, in line with the crude prices which had substantially cooled to under $60 per barrel. The first downward revision took place in November 2006, followed by another reduction in February 2007 when average crude price was in the range of $56 a barrel.
But now with average crude prices pushing upwards of $65 a barrel, oil marketing companies have been asking the government to increase the retail prices of petrol and diesel.