Fuel price hike not on CCPA agenda today: Reddy
“There is a meeting of the CCPA (this evening). This item (increase in diesel and cooking fuel) is not listed,” he told reporters after meeting Finance Minister P Chidambaram here.
“I am not sure if the item will be taken up at all today.” Reddy said he had yesterday circulated an updated version of a note detailing the crisis created by rise in crude oil prices and fall in value of rupee against the US dollar to members of the CCPA, which is headed by Prime Minister Manmohan Singh.
“I have tried to acquaint the members of CCPA about this matter… As I have said before, painful and difficult decisions on price of oil products will have to be taken. Increase in price is unavoidable,” he said.
Reddy added that if the CCPA does not discuss the fuel price issue today, it would be taken up at the next meeting of the Cabinet committee which takes decision that have wider political ramifications.
He said a decision on raising prices would have to be taken not just on economic facts but also taking into account the how much the consumers can absorb. “We have to take a balanced view.”
“If (price increase) is taken up today (by CCPA), which is not very likely, some decisions may be taken… if it is not taken up today, decision will be postponed,” he said.
Asked about the quantum of hike in rates that is likely, he said, “I can’t say to what extent (the price would be increased). If I had the powers it would have been done yesterday, I don’t know if it will be done today or tomorrow”.
On his meeting with Chidambaram, Reddy said he had “routine interactions” on various proposals but declined to elaborate. “We discussed the figures relating to under-recoveries (revenue loss that oil PSUs incur on selling fuel below cost),” he added.
PSU oil firms are losing a record Rs 560 crore per day on the sale of regulated diesel and cooking fuels, and another Rs 16 crore a day on petrol. If rates are not increased, state- owned oil firms will be saddled with an unprecedented Rs 1.88 crore revenue loss this fiscal.
They are losing about Rs 6 per litre on sale of petrol, a commodity which was freed from government control in June 2010 but whose rates haven’t moved in tandem with the cost. They sell diesel at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 per litre and domestic LPG at Rs 347 per 14.2-kg cylinder.
While diesel prices have not been revised since June last year, petrol rates were last hiked in July. A decision on raising petrol price will be taken after the CCPA decision on diesel, domestic LPG and kerosene.
Sources said the CCPA has been informed about how the three state-owned fuel retailers are borrowing to make up for the deficit. Their borrowings shot up to Rs 1,57,617 crore at end of June, from Rs 1,28,272 crore as on March 31.