No hike in diesel, LPG prices for now
"We are not considering hike prices of diesel, domestic LPG and kerosene. It is out of question right now," Oil Minister S Jaipal Reddy told reporters after a meeting called by Finance Minister Pranab Mukherjee to discuss the impact of fuel price hike on inflation.
Chief Economic Adviser Kaushik Basu was also present at the inter-ministerial grouping on inflation. Reddy said no dates have yet been fixed for convening a meeting of a ministerial panel to decide on revising rates of diesel, LPG and kerosene.
The Empowered Group of Ministers (EGoM) on fuel prices, headed by Mukherjee, hasn`t met since June last year even though depreciation in the rupee and rise in international oil prices have raised the cost of imports.
"It was only a meeting of the inter-ministerial group to look at the question of inflation. I was requested to come and offer my insights before they finalise their group recommendations," Reddy said.
"I focused on the price of diesel and its impact on inflation as a whole," he said without elaborating. "No date has been fixed for EGoM on diesel price deregulation."
The EGoM had in June 2010 taken an in-principle decision to deregulate or decontrol diesel prices but its implementation was deferred.
"In my perception, the EGoM will not meet soon…certainly not this month," an official said.
The government is believed to be buying time to let flared tempers cool before calling the meeting of the EGoM where the Congress party`s ruling allies TMC and DMK are also represented. Both TMC and DMK have held street protests against the hike in petrol price. .
"I am not going to touch the prices of LPG, diesel, kerosene. Period," Reddy said. The minister had last week stated that he was urging Mukherjee to convene meeting of EGoM soon.
Reddy said he was not considering dual pricing of diesel — subsidised price for trucks and another rate for high-end luxury cars and power gensets, as it was not practical to implement.
Also, his proposal for levying a one-time duty of Rs 80,000 on diesel cars was under consideration of the Finance Ministry.
Reddy had stated last year, "The logic in favour of increase in price of diesel is unassailable but politics and logic don`t go together.
"What is desirable is known. Politics is the art of making desirable (politically) acceptable."
State-owned oil companies currently lose Rs 512 crore per day on selling diesel, domestic LPG and kerosene. Diesel is currently sold at a loss of Rs 15.35 a litre, kerosene at Rs 32.98 per litre loss and oil firms lose Rs 479 on sale of every 14.2-kg domestic LPG cylinder.
IOC, HPCL and BPCL had together lost Rs 138,541 crore in revenue in 2011-12. This year they are projected to lose a record Rs 193,880 crore.