The group of ministers (GoM) on pricing of sensitive petroleum products failed to arrive at a consensus over increasing the domestic fuel prices. The GoM, which met on Thursday evening, will meet again in the next two days to discuss price hike options proposed by the petroleum ministry.
?We discussed some proposals. Some ministers were not present, so the meeting was inconclusive. We will meet again tomorrow or the day after,? petroleum minister Murli Deora told reporters here.
However, officials said the GoM, headed by external affairs minister Pranab Mukherjee, deliberated on a host of options presented by the petroleum ministry on increasing the prices of sensitive petroleum products. The petroleum ministry proposed increasing the petrol price by Rs 4 or Rs 2 a litre and diesel by either Rs 2 or Re 1 per litre together with Rs 50 per cylinder LPG price increase. No increase in the in PDS Kerosene prices was, however, proposed by the petroleum ministry under this option.
Also, given the sensitivity attached to LPG being the fuel of the masses, sources said the proposed hike in LPG price was later moderated to Rs 20 per cylinder. Coupled with this increase in the fuel prices, the petroleum ministry also proposed a 2.5% cut in customs duty on crude oil and petroleum products besides a Re one a litre excise duty reduction on petrol and diesel.
Under another option, the petroleum ministry suggested a 5% reduction in customs duty on crude oil and petroleum products coupled with a Re one a litre excise duty drop on petrol and diesel.
A 5% cut in customs duty on crude oil and petroleum products and a Re 1 per litre reduction in excise duty on petrol and diesel would result in Rs 15,530 crore annual reduction in revenues for the central government.
Other options of the petroleum ministry that combined the two rates for auto fuel price hikes with a Re one a litre increase in PDS kerosene price were dropped by the GOM as the government did not want to hurt the common man.
Before the GoM meeting, Indian Oil Corp (IOC) chairman Sarthak Behuria said his company was losing Rs 170 crore a day on sale of fuel due to non-revision in prices in line with rise in international cost.
The state oil marketing firms are currently losing Rs 10.6 a litre on petrol, Rs 11.6 per litre on diesel, Rs 331.4 per LPG cylinder and Rs 19.89 a litre on PDS kerosene. IOC, HPCL and BPCL together are projected to lose Rs 71,808 crore on fuel sale in fiscal 2007-08 if prices and duties are not revised, the petroleum ministry told the GoM.
A Re 1-per litre increase in petrol price would give Rs 90 crore a month as additional revenue to public sector oil companies. A similar hike in diesel and kerosene would fetch Rs 360 crore a month and Rs 95 crore respectively. A Rs 10-per cylinder increase in LPG prices would result in Rs 58 crore additional revenues every month.