On Board PM’s Special Aircraft: Prime Minister Manmohan Singh Tuesday said a Group of Ministers has been constituted to look into revision of fuel prices that has been necessitated because of spurt in global crude oil prices.
“Cabinet did discuss this matter. I have appointed a GoM to report back to the Cabinet within one month,” he told reporters on way to Singapore to attend the ASEAN Summit.
He, however, did not say when the Cabinet discussed the issue and as to who would head the GoM.
In New Delhi, a senior Petroleum Ministry official said the ministry has not received any communique on the appointment of a GoM. “In all probability it should be headed by External Affairs Minister Pranab Mukherjee,” he said.
Public sector oil firms Indian Oil, Bharat Petroleum and Hindustan Petroleum are together losing over Rs 250 crore per day on sale of petrol, diesel, domestic cooking gas LPG and kerosene as they have not been allowed to raise retail prices despite rise in international oil prices.
An industry official said a GoM may have become necessary as there was no unanimity on raising fuel prices and Finance Ministry was opposing Oil Ministry’s proposal to cut excise duty on petrol and diesel to ease the burden of oil firms.
Petrol attracts an excise duty of 6% plus Rs13 a litre while diesel is charged 6% plus Rs3.25 per litre excise duty. Petroleum Ministry wanted excise duty to the lowered by Rs1-2 a litre.
The Finance Ministry has so far not favoured reduction in excise duty on petrol and diesel, arguing that there has been no increase in excise collections from the two fuels.
However, oil ministry says overall excise collections have gone up and finance ministry should not take a sectoral view and share the gains among all sectors.
IOC, BPCL and HPCL are projected to lose Rs70,500 crore on fuel sales this fiscal. They may get compensated for 42.7% of this revenue loss through issue of oil bonds. Another 35% of this loss may be compensated through assistance from upstream firms like ONGC.
Government is now trying to apportion the remaining Rs15,721.5 crore loss between fuel retailers IOC, BPCL and HPCL on the one hand and consumers and the government on the other.