New Delhi: Government may raise petrol price by Rs2 a litre and diesel by Re one a litre this week, but a duty rejig to minimise impact of high international crude oil prices looks unlikely.
“The proposal to the Cabinet will be for a Rs2 per litre hike in petrol and Re one per litre hike in diesel prices,” a Petroleum Ministry official, who wished not to be identified, told reporters here.
The decision on the quantum of increase will be taken by the Cabinet headed by Prime Minister Manmohan Singh, possibly later this week.
“Earlier, we were given an indication of a Cabinet meeting this (4 February) afternoon, but it is not happening today... hope the meeting takes place soon,” he said.
The official said state-run Indian Oil, Bharat Petroleum and Hindustan Petroleum are together projected to lose over Rs71,000 crore on sale of petrol, diesel, domestic LPG and PDS kerosene this fiscal as the government has capped retail prices.
“We wanted a cut in customs duty on the products as well as crude oil and also a Re one a litre reduction in excise duty on petrol and diesel. But, I don’t think that is happening just now,” the official said.
The state-run firms lose Rs10.57 per litre on petrol, Rs11.56 on diesel, Rs19.89 on kerosene and Rs331 on each LPG cylinder.
Last week, a Group of Ministers headed by External Affairs Minister Pranab Mukherjee had left a decision on fuel prices to the Cabinet after the panel was split right in the middle on the issue. Petroleum Minister Murli Deora insisted on a duty cut rather than price hike, while Finance Minister P Chidambaram was of the opinion that it cannot be just one way street.
Petrol and diesel prices were last raised in June 2006 when crude oil was at $67 a barrel. It is at $92 a barrel this year. LPG prices were last raised by Rs20 per cylinder in November 2004 when crude was at $34 a barrel. Kerosene prices have not been changed since 2002 when crude was at $23 per barrel.
A Re one per litre increase in petrol price would give Rs90 crore a month additional revenue to public sector oil companies. A similar hike in diesel would fetch Rs360 crore a month. A Rs10 per cylinder increase in LPG prices would result in Rs58 crore additional revenues every month.
Going by the present formula of government oil bonds meeting 42.7% of the under-realisation on petrol, diesel, LPG and kerosene and 33% coming from upstream firms, Rs17,000 crore deficit has to be bridged, the official said.