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Thursday, July 2, 2009

Petrol price up by Rs. 4, diesel by Rs. 2 (India)

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Domestic LPG and kerosene spared from the hike

NEW DELHI: Following a rise in the international price of crude oil and the increasing under-recovery of State-run Oil Marketing Companies (OMCs), the United Progressive Alliance government on Wednesday increased the price of petrol by Rs.4 a litre and diesel by Rs.2 a litre.

The hike comes on the eve of the budget session of Parliament. However, domestic LPG and kerosene were spared, keeping in mind the interests of the “aam aadmi.”

The decision to hike the prices was taken at a high-level meeting held under the chairmanship of Prime Minister Manmohan Singh. It was attended by Congress president Sonia Gandhi and Petroleum and Natural Gas Minister Murli Deora.

The hike came into effect from midnight on Wednesday. It is understood that Ms. Gandhi turned down the proposal of the Petroleum Ministry to increase LPG and kerosene prices, stating that these would directly impact the poor and women in particular.

At a news conference here, Mr. Deora said the hike was necessitated because international crude oil prices had doubled to $70 a barrel since December. Interestingly, the government did not even wait for the weekly Cabinet meeting, scheduled for Thursday, to discuss the hike.

Mr. Deora said the government had decided not to raise the domestic LPG and kerosene prices despite the public sector oil companies losing Rs.92.96 per gas cylinder and Rs.15.26 on a litre of kerosene. After the increase, petrol in Delhi will cost Rs. 44.63 a litre and diesel Rs. 32.87.
Limiting losses

Petroleum Secretary R.S. Pandey said this was an ‘ad hoc’ increase in fuel prices aimed at limiting the Rs.170 crore a day loss the Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited incurred on the sale of petrol, diesel, domestic LPG and kerosene.

Oil companies were losing Rs.5.82 a litre on petrol and Rs.3.62 a litre on diesel in Delhi, but the hike announced was lower than the desired increase, Mr. Pandey said.

While the revenue loss on LPG and kerosene, which came to over Rs. 30,000 crore for the fiscal, would be met by the government, the same on petrol and diesel would have to be shared by upstream oil firms such as the ONGC, he added.
Vegetables to be dearer

PTI reports:

Transporters are likely to raise freight rates on Thursday after the hike in diesel and petrol rates, a move traders said would increase the prices of fruits and vegetables.

“We will meet tomorrow to take stocks of the situation,” All-India Motor Transport Congress senior official Deepak Sachdeva told PTI.

Asked if freight rates will rise, he said, “We are forced to increase the price. But a decision will be taken tomorrow [on Thursday] by the association.”

Source: Hindu