In what can be termed a new year gift for the aam admi, petrolelum minister Murli Deora on Saturday said the government is considering a Rs 5 and Rs 3 cut in petrol and diesel prices, respectively within next10 days. The prices of LPG will be also cut by Rs 25 per cylinder. The relief comes at time when global crude prices are witnessing a declining trend and is currently at around $40 per barrel. The government move is significant as Lok Sabha elections are knocking on the doors.
The Centre on December 5 had reduced petrol price by Rs 5 per litre and Rs 2 per litre in diesel. However, the government had not touched LPG prices neither it had reduced the kerosene prices which is sold at Rs 9 per litre.
?We have already talked to the Prime Minister, in coming days we are trying to reduce the prices of petrol, diesel and LPG. Give us 10-15 days,? Deora said. ?According to me the advisable reduction would be Rs 5 per litre for petrol, Rs 3 per litre for diesel and Rs 25 on LPG cylinder,? he said when asked about the extent of reduction in prices.
Deora hoped that from this quarter onwards, the government expects the oil marketing companies (OMCs) to start making profits. ?But, if the crude oil price rises beyond $40 per barrel, then it (profit) will not happen,? the minister added. This is quite crucial as OMCs?Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have reported combined losses of Rs 14,431 crore during the first half of 2008-09.
Moreover, Deora?s announcements are crucial especially when the sharp decline in crude prices has also resulted in the under-recoveries incurred by OMCs coming down significantly. When crude was at $147, the estimated under-recovery for the current fiscal was to be over Rs 2,00,000 crore. This is now projected at around Rs 1,10,000 crore. Besides, the margins on petrol and diesel, starting December 1, have increased substantially to Rs 15 per litre and Rs 3 per litre, respectively as against Rs 8.17 and Rs 0.65 a litre in the last fortnight. Losses on LPG, too, have narrowed down from Rs 338 per cylinder to just Rs 140 a cylinder. Kersoene losses, however, are still higher at Rs 19 a litre as against Rs 21.54 a litre last fortnight.
Meanwhile, on the three-day strike by officers of the oil companies, Deora came down heavily and said that it was an act of ?irresponsible? people from the oil companies at a time whne the country is going through a slowdown and also effectively tackling terrorism post 26/11.