New Delhi: The Congress party-led United Progressive Alliance (UPA) government has signalled another cut in the prices of diesel, petrol and domestic cooking gas prices in the next few weeks.
Analysts see the move as an attempt to mollify truckers who have launched a nationwide protest demanding cheaper diesel and appeal to voters ahead of the general election scheduled to be held by May.
“We will try to reduce the prices of petrol and diesel in the next two-three weeks... There may be a Rs20-25 per cylinder reduction in (the price of) LPG (liquefied petroleum gas),” Petroleum minister Murli Deora told reporters at the headquarters of the Congress party. Around 40% of the country’s freight moves by road and a prolonged strike could impact supplies and stoke inflationary pressures.
Benefit plans: Petroleum minister Murli Deora, flanked by secretary R.S. Pandey (right) and chairman of Indian Oil Sarthak Behuria. Kamal Singh /PTI
The government had reduced the prices of petrol and diesel by Rs5 per litre and Rs2 per litre, respectively, on 5 December.
Truckers aren’t convinced by the government’s promise to cut fuel prices.
“The minister has made such promises on earlier occasions, too. But the trucks cannot run on promises. The brakes have been applied by the government and it is up to them to release it,” says Charan Singh, president of the All India Motor Transport Congress, or AIMTC.
The association, whose members own and operate 4.8 million trucks, has demanded that diesel prices be lowered by Rs10 per litre. They have also sought the withdrawal of service tax on truckers and a moratorium on all instalments for six months and waiver of interest on truck finance for the same period.
“The truckers will end their strike only after the fuel prices are reduced,” Singh added.
Meanwhile, the Left Front has come out in support of the AIMTC.
“The polit bureau of the CPI (M) supports the demand for reduction of price of diesel. This should be done forthwith. It calls upon the government to immediately discuss with the representatives of the motor transport association for the settlement of their other demands, so that the strike can be called off,” the Communist Party of India (Marxist) said in a statement.
The government’s decision comes after international crude prices dropped from record highs of nearly $147 (Rs7,144.2) per barrel to up to $50. India currently imports crude at around $48.63 per barrel.
The Bharatiya Janata Party, India’s main opposition party, also supported the demand for a reduction in petroleum product prices.
“This is not a gift but a rightful decision that a common man deserves to benefit from. Government cannot keep on making money by the ups in the market. This rationalization should be effected immediately without any problems,” said Bharatiya Janata Party spokesperson Rajiv Pratap Rudy.
India’s public sector oil marketing companies, or OMCs, earn Rs14.48 on the sale of per litre of petrol and Rs2.92 per litre of diesel. However, they lose Rs17.26 on each litre of kerosene sold and Rs148.43 on each LPG cylinder. As a result, despite the sharp fall in crude oil prices, OMCs such as Indian Oil Corp. Ltd, Hindustan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd, are losing Rs50 crore a day and are expected to end 2008-09 with losses of Rs1.09 trillion.
K.P. Narayana Kumar and PTI contributed to this story.