CCPA meet to decide on oil prices

Written by Anupama Airy | Swaraj Thapa | New Delhi, Jun 3 | Updated: Jun 4 2008, 07:20am hrs
The Cabinet committee on political affairs (CCPA) is meeting on Wednesday morning to give its consent to the proposal for hiking the prices of petrol by Rs 4 a litre and that of diesel by Rs 2 a litre. The proposed hike of Rs 20 a cylinder in the cooking gas prices will also be taken up at the meeting.

Prime Minister Manmohan Singh is also likely to address the nation to explain his governments decision on hiking the fuel prices.

Sources said the government, while hiking LPG prices by Rs 20 a cylinder, may also take the nod of Cabinet committee of economic affairs for introducing subsidy coupons for cooking gas (LPG) and kerosene for consumers falling below the poverty line (BPL). In addition, a minor rejig of petroleum duties, along with a higher quantum of oil bonds to oil marketing companies, is also part of the bailout package.

The government has decided to restrict the subsidy on LPG and kerosene to BPL families. There is no other way to check the diversion of LPG and kerosene, which are currently under-priced by Rs 306 a cylinder and Rs 37 a litre respectively, said a senior minister.

CCPAs nod will ensure that the politically sensitive fuel price hike has the approval of major allies in the UPA. CCEA is expected to meet subsequently to clear a slew of other measures required, along with a fuel price hike, to bail out the cash-strapped public sector oil marketing companies from the impact of crude oil prices.

That the price hike issue has been weighing heavily on Prime Minister Manmohan Singhs mind was evident when he asked some of his Cabinet colleagues to call off foreign visits this week. Finance minister P Chidambaram as well as panchayati raj minister Mani Shankar Aiyar were scheduled to visit Stanford University on June 6 to participate in the universitys ninth annual conference on Indian economic policy reforms.

External affairs minister Pranab Mukherjee, who heads the empowered group of ministers on petroleum, though, will be proceeding on Wednesday on a four-day visit to China as the visit cannot be postponed. The CCPA meeting, however, has been convened early morning so that Mukherjee can attend it and then leave for Guangzhou, where he will inaugurate the Indian consulate.