New Delhi: A hike in petrol and diesel prices looks imminent by the weekend after Prime Minister Manmohan Singh finalized details of a package on 29 May to bail out state-run oil firms reeling under high international oil prices.
Singh discussed with External Affairs Minister Pranab Mukherjee, Finance Minister P Chidambaram, Petroleum Minister Murli Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia the scenario emerging from doubling of crude prices since the last price hike in February.
“We discussed the various options... hopefully, by tomorrow or by day after tomorrow, we will have a solution,” Deora told reporters after the 75-minute long meeting.
Though Deora refused to say what the expected decision would be, official sources said a hike in petrol and diesel prices along with a minor duty rejig and oil bonds for fuel retailers would form part of the package that would be placed before the Cabinet for approval.
The package, they said, would be a climb down from the Rs10 a litre hike in petrol, Rs5 a litre in diesel and Rs50 per cylinder in LPG prices demanded by the Petroleum Ministry, along with cut in customs duty on crude oil and slashing excise duty on fuel.
“International prices touching $135 a barrel has forced down our throat Rs225,000 crore revenue loss (on sale of petrol, diesel, LPG and kerosene). Unless we act, companies will not be left with cash to import crude,” Deora said.
“The Prime Minister and Finance Minister saw papers (of projected revenue loss and options thereof). They realize very much that we need to help (PSU oil firms) on a war-footing,” Deora said.
While Deora has sounded the Left leaders including Sitaram Yechuri, Prime Minister Manmohan Singh will discuss the issue with UPA chairpeson Sonia Gandhi, Deora said. “It (taking Gandhi’s consent) is outside my jurisdiction.”
“Somethings have been agreed to at today’s meeting, but I cannot say what the Cabinet will decide,” he said after the meeting that was also attended by Prime Minister’s Principal Secretary T K Nair who had last week tried to mediate between finance and petroleum ministries on the bail out package.
Finance Ministry has been opposing a proposal to cut customs duty on crude oil to nil from 5%, slashing import duty on petrol and diesel to 2.5% from 7.5% and halving excise duty on the two fuels.
Deora said the presentations by the Petroleum Ministry were over and the matter would now go to the Cabinet or a sub-committee of the Cabinet.
“I am against any kind of price hike, but the situation sometimes forces you to do that,” he said about the move that may further burden the common man already reeling under the impact of inflation that is testing new highs.
Inflation for the week ended 10 May stood at 7.82%, a 44-month high.
“Prime Minister and all of us are trying to find solution to the problem.... Tomorrow or day after, we’ll sort everything out,” he said.
Indicating a possibility of a minor duty rejig, Deora also said the share of upstream oil companies will be raised from last year’s level, but the government bonds which were 50% of the total under realisation last year may not be of that order.