New Delhi: The government on Wednesday announced a substantial hike in the prices of petrol, diesel and LPG to counter the spiraling crude oil prices. Petrol will now be dearer by Rs5 per litre, and diesel by Rs3 per litre. Cooking gas, or LPG, will now cost Rs50 more per cylinder of 14.2 kg. Kerosene prices remain unchanged.
Along with these measures the government also announced reduction in customs and excise duties. Customs duty on crude oil was reduced to 0% from 5%. Customs duty on diesel and petrol was reduced from 7.5% to 2.5% and duty on all other petroleum products including ATF was reduced from 10% to 5%.
The government also reduced excise duty on diesel and petrol by Rs 1. All these measures are expected to reduce the under recovery of oil marketing companies by Rs21,000 crore for the rest of the year, said petroleum minister Murli Deora in a press conference organized to announce the hike. The reductions are expected to cost the finance ministry Rs22,660 corore for the whole oil sector.
As part of measures, the government decided to take a burden of Rs94,601 crore for which it will issue oil bonds to state-run BPCL, HPCL and IOC which were reporting a daily loss of over Rs720 crore.
In addition, the oil producing PSUs like ONGC would shell out Rs60,000 crore through discounts to state-owned oil refiners and marketing companies.
Despite all the measures, there would still be a gap of Rs29,000 crore, revenue secretary P V Bhide told reporters briefing about the decisions taken at the Cabinet meeting.