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Govt to cut fuel prices after state polls end on 24 Dec

Govt to cut fuel prices after state polls end on 24 Dec
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First Published: Wed, Nov 26 2008. 12 49 AM IST

Rooting for cuts: Murli Deora, minister for petroleum and natural gas. Harikrishna Katragadda / Mint
Rooting for cuts: Murli Deora, minister for petroleum and natural gas. Harikrishna Katragadda / Mint
Updated: Wed, Nov 26 2008. 12 49 AM IST
New Delhi: Petroleum minister Murli Deora on Tuesday said the government plans to cut diesel and petrol prices after the assembly elections in six states conclude on 24 December.
“The international prices have fallen and there is an expectation that prices need to be reduced. I am also of the opinion that they should be reduced and that will happen after 24 December. We should reduce prices, but we cannot do it before 24 December because of the code of conduct,” he said.
Rooting for cuts: Murli Deora, minister for petroleum and natural gas. Harikrishna Katragadda / Mint
The government is likely to cut petrol price by Rs5 a litre and diesel by Rs3 per litre after 24 December, according to ‘PTI’. While the margins of Indian Oil Corp. Ltd, Hindustan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd have turned positive on petrol and diesel sales, the losses from selling fuel below cost at state-run oil marketing companies (OMCs) are estimated at Rs1.22 trillion in the current fiscal year. OMCs posted an overall second quarter loss of Rs12,891.19 crore.
Deora’s statement provoked the main opposition, the Bharatiya Janata Party (BJP), which saw it as an attempt to court voters in state elections.
“This is a violation of the model code of conduct aimed at wooing the voters ahead of the assembly elections in many states... The announcement will certainly benefit the ruling coalition at the Centre and we will file a complaint with the Election Commission,” V.K. Malhotra, BJP leader and chief ministerial candidate for Delhi, said.
Global crude prices were around $52.17 (Rs2,609) a barrel on Tuesday after rising to more than $145 in July.
OMCs are earning Rs9.86 on the sale of per litre of petrol and 70 paise on per litre of diesel. However, due to the subsidy component involved in the sale of kerosene and on a 14.2kg domestic LPG (liquefied petroleum gas) cylinder, they are losing Rs22.40 on each litre of kerosene sold and Rs343.49 on each cylinder. The companies are losing Rs110 crore per day.
R.S. Pandey, petroleum secretary, said his ministry would approach the Cabinet Committee on Economic Affairs with a proposal that would include, among others, the issues of a revision in petrol and diesel prices, losses suffered by OMCs and the estimated under-recoveries by the end of this fiscal year.
(PTI contributed to this story.)
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First Published: Wed, Nov 26 2008. 12 49 AM IST