New Delhi: Finally bowing to the spiraling of crude prices globally, the government Wednesday announced the hike in fuel prices, risking its political future with the forthcoming elections next year and drawing the ire of its partners in power. Petrol would cost Rs5 per litre from midnight tonight while the diesel would be dearer by Rs3 and a LPG cylinder would be costlier by Rs50.
Briefing the Cabinet, Petroleum Minister Murli Deora announced that the excise duty on petrol and diesel will be cut by Rs1 per litre. Customs duty on crude oil is reduced from the present 5% to nil while the custom duty on petrol and diesel is reduced to 2.5% from the existing 7.5%.
Deora said that duty on other petroleum products like aviation fuel has been reduced from 10 to 5%. In view of these duty cuts the government revenues will come down by Rs22,660 crore in the remaining 10 months of the financial year while the bleeding public sector oil companies would recover Rs21,000 crore, the minister said.
Moreover, with the hike in the fuel prices, the under recoveries of these companies will further come down by Rs21,123 crore, Deora said.
Upstream oil companies such as ONGC and GAIL will bear Rs45,000 crore of the under recoveries in the current fiscal as compared with Rs 26,000 crore last year.