New Delhi: Union petroleum minister Murli Deora will meet finance minister Pranab Mukherjee on the weekend to discuss fuel prices as the Congress party-led United Progressive Alliance (UPA) government denied that Prime Minister Manmohan Singh’s cabinet discussed a possible price increase on Thursday.
“I submitted a memorandum to the Prime Minister and the finance minister requesting them to compensate the shortfall on account of sale of kerosene and LPG (liquefied petroleum gas),” Deora told reporters. “There is a meeting with Pranab Mukherjee at 7pm on Sunday evening.”
Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd are expected to end the current fiscal year with total under-recoveries of around Rs43,000 crore.
While the finance ministry has given Rs12,000 crore to the state-owned refiners, an additional Rs19,574 crore is required for the entire year.
The removal of price controls would help private sector oil marketing companies such as Reliance Industries Ltd, Essar Oil Ltd and Shell India that so far haven’t been able to match the subsidized prices at which state-owned refiners sell fuel.
The ruling Congress party continued to hedge its political bets even as it grapples with an issue that could recoil, making it vulnerable to attack by rivals, given the steep rise in inflation, especially that related to prices of food.
The petroleum ministry’s proposal, which could increase inflationary pressure on the economy, entails raising the prices of diesel, petrol, kerosene and cooking gas by as much as Rs2 per litre, Rs3 per litre, Rs3 per litre and Rs50 per cylinder, respectively, overturning decades of control by the government to shield consumers from global market fluctuations. The cabinet note on the initiative is ready.
According to home minister P. Chidambaram, the issue was not discussed at the Congress’ core committee meeting on Wednesday and at the cabinet meeting on Thursday.
Post the Congress core committee meeting on Wednesday, which was not attended by Deora, the petroleum minister met the Prime Minister late in the evening.
While the UPA government claims to have the support of its allies such as the Trinamool Congress and the Dravida Munnetra Kazhagam, Partha Chatterjee, Trinamool Congress spokesperson and leader of the Opposition in the West Bengal assembly, said: “We have not taken any decision and once a decision is taken, Ms (Mamata) Banerjee will announce the party’s stand.”
Deputy Planning Commission chairman Montek Singh Ahluwalia said that the government was trying to address the issue of fuel subsidy “very squarely” on Thursday.
Deora had earlier said that Prime Minister Singh was “very serious” about the Parikh committee recommendations.
The petroleum ministry’s proposals are based on the recommendations of a panel led by former Planning Commission member Kirit Parikh. The committee had suggested freeing petrol and diesel prices and an increase in retail prices of kerosene and LPG by Rs6 per litre and Rs100 per cylinder, respectively.
Romita Dutta in Kolkata contributed to this story.