Petrol, diesel hike may in next week

New Delhi: Virtually securing the consent of Left parties, the government is likely to decide next week (May 29 to June 3) on a price hike of Rs four per litre for petrol and Rs 3 a litre for diesel while sparing cooking gas and kerosene.

Petroleum Ministry, after confabulating with Left leaders and other concerned ministries, is understood to have veered around to the moderate hike in prices of fuel but spare the common man from the burden of cooking medium.

Petroleum Minister Murli Deora is expected to meet Prime Minister Manmohan Singh on the issue in the next few days as the proposed meeting scheduled for tomorrow may not take place, sources in the know of the development said.

Although the price increase required for offsetting the impact of surge in global oil prices works out very high, the government would contain the burden to a moderate level.

Moreover, there are indications that there would not be another change in prices in the next couple of months even if international crude prices go up further.

According to estimates by oil marketing companies, petrol prices needed to increase by Rs 10.55 a litre, diesel by Rs 9.88 a litre, LPG by Rs 120 per cylinder and kerosene by Rs 16.28 per litre.

Petroleum Ministry had been working for some time to find an acceptable price hike formula to save oil companies from bankruptcy, which are likely to face under-recoveries of Rs 73,500 crore this fiscal on account of selling fuel below cost.

Deora had a series of meetings with Left leaders in the last few days and both sides agreed to keep prices of LPG and kerosene unchanged. He had earlier also met Finance Minister P Chidambaram and Prime Minister Manmohan Singh.

Deora is also expected to brief Congress President Sonia Gandhi in the next few days to apprise her of the oil scenario before a decision is taken by the government.

The prices of petrol and diesel were last revised in September 2005.

Leading private fuel retailer Reliance Industries has already increased prices of both diesel and petrol by Rs two a litre each. The effective increase after taxation works out to be about Rs 2.92 a litre.

The Prime Minister on Monday had stated that the government had moderated the inflational impact of high global crude prices and it cannot continue to subsidise energy consumption on this scale.

"No Government can spend its way to prosperity," he had said.