The government is unlikely to hike domestic fuel prices in line with the global crude oil prices. UPA chairperson Sonia Gandhi along with the Prime Minister Manmohan Singh are understood to have conveyed to Pranab Mukherjee, heading the group of ministers (GoM) on fuel pricing, that the quantum of hike should be kept minimal and if possible avoided. The GoM is likely to meet on Thursday to discuss the issue of fuel price hike.
The draft of President?s annual address to Parliament at the beginning of the Budget session makes it clear that the government is unlikely to tinker with the prices of sensitive petroleum products. The draft speech of the President has, in fact, laid a lot of stress on the efforts of the government to protect the interest of the common man and the vulnerable sections of the society and how prices of sensitive petroleum products were not increased despite pressures of soaring international oil prices during 2007.
It has been further emphasised that the price of PDS kerosene has not been revised since March 2002 and the price of domestic LPG was last revised in November 2004. The oil marketing companies on their part have borne under-recoveries to the tune of about Rs.49,400 crore during 2006-07 and for the current year the under-recoveries are estimated to be about Rs 72,000 crore.
It also talks about the mechanism approved by the Cabinet for 2007-08 for sharing the burden of oil companies. Under the mechanism, the burden of under-recoveries on oil companies will be met by issuance of oil bonds to the tune of 42.7% of the total estimated under-recoveries; one-third of the under-recoveries will be borne by upstream oil companies like ONGC, OIL and Gail by offering discounts on crude oil and petroleum products and by extending the PDS kerosene and domestic LPG subsidy scheme, 2002 for three more years till March 31, 2010.
Asked to comment, petroleum minister Murli Deora, too, refused to commit anything and merely hoped that a decision on the ticklish issue of fuel price hike is taken by the GoM at its meeting on Thursday. Global crude oil prices are currently hovering at $92 a barrel and last hike was implemented when international oil prices were at $67 a barrel.
Indications from all political quarters on the issue of fuel price hike are not very positive. The Left and the BJP have already opposed to the idea of a price hike and even the Congress has signaled that they will be happy if the petrol and diesel prices are not increased. Even the finance minister P Chidambaram has been told to work out a people-friendly Budget with no harsh decisions having political repercussions.