The price of Opec basket of crude stood at $68.54 a barrel on Friday. Speaking to FE over phone from Goa, Deora said, The international crude oil prices have gone up. The government will wait a little more to check whether the prices stabilise. The Cabinet will discuss the matter before any decision is taken.
The Centre is in a serious dilemma over whether to go for a hike. It is not in a position to overlook a strong opposition from UPA allies Trinamool Congress and DMK. Also, the ensuing Assembly elections in Maharashtra and Arunachal Pradesh are weighing on it.
Deoras statement assumes significance as the Centre will have to issue Rs 71,000 crore oil bonds in 2008-09. The total revenue loss of oil marketing companies (OMC) had surged by about 34% to around Rs 1,03,000 crore during the same period and the upstream companies had to pull in about Rs 32,000 crore. The state-owned OMCs are currently losing Rs 2.96 a litre on diesel and Rs 6.08 per litre on petrol.
The Congress-led government is fully aware that poor people suffer with a price hike. So we will try our level best to ensure that the prices are not hiked. We will increase the prices only when crude prices go high, the minister added.
A Mumbai-based analyst, however, said the Centre could make its stand clear on fuel price hike and deregulation in the ensuing Budget. At present, the ministry is considering various options; one of them is permitting oil companies to increase prices if the global crude price goes below $75. Once it crosses $75, the government will intervene to check the domestic prices. Moreover, the Planning Commission has also supported the petroleum ministrys move to deregulate auto fuel prices.