GoM to discuss fuel prices on Dec 14

Pricing of essential commodities including the sensitive fuels?petrol, diesel, domestic LPG and PDS kerosene?will be discussed by the high-powered group of ministers (GoM), headed by external affairs minister Pranab Mukherjee for the first time on December 14.

?The first meeting of the GoM constituted by Prime Minister Manmohan Singh will be held on December 14,? petroleum minister Murli Deora said. The GoM also includes defence minister AK Antony, finance minister P Chidambaram, railway minister Lalu Prasad, road transport, highways and shipping minister TR Baalu and consumer affairs minister Sharad Pawar.

Official sources said a GoM may have become necessary as there was no unanimity on raising fuel prices and the finance ministry was opposing the 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 Rs 13 a litre while diesel is charged 6% plus Rs 3.25 per litre excise duty. Petroleum ministry wants the excise duty to be lowered by Rs 1-2 a litre. Earlier, Deora, in a written reply to a question in Lok Sabha, said international oil prices have risen to record levels.

But, to protect the common man, domestic retail prices of PDS kerosene and domestic LPG have not been increased over the last three years.

PDS kerosene is being supplied at Rs 9.09 a litre in Delhi as against Rs 24.39 per litre based on international oil prices. Similarly, domestic LPG in Delhi is retailed at Rs 294.75 per cylinder against its international equivalent of Rs 487.95 per cylinder.

?The current projected annual under recoveries (difference between cost and sale price) on petrol, diesel, PDS kerosene and domestic LPG are estimated to exceed Rs 69,700 crore. Out of these under recoveries, about Rs 33,600 crore are on account of domestic LPG and PDS kerosene,? Deora said.

Deora said Rs 29,761.9 crore or 42.7% of total under-recoveries would be met by the government through oil bonds and about one-third (Rs 23,001 crore) of these would be borne by upstream companies like ONGC. The balance Rs 16,937.1 crore would be absorbed by the oil marketing companies (OMCs).

Gross under-recoveries during April-September 2007 were Rs 26,363 crore?Rs 2,638 crore on petrol, Rs 9,911 crore, Rs 8,206 crore and Rs 5,608 crore, he said. ?The government has adopted the principle of equitable burden sharing between the government and the oil PSUs to protect the interests of common man, vulnerable sections of societyand also the financial health of OMCs,? he said.