Fuel price hike not on CCPA agenda on Tuesday: Reddy
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An increase in diesel, cooking gas and kerosene price is 'unavoidable', Oil Minister S. Jaipal Reddy said on Tuesday but indicated that the hike may not be decided by the Cabinet Committee on Political Affairs (CCPA) at its meeting later in the evening.
"There is a meeting of the CCPA (Tuesday 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 on Tuesday."
Reddy said he had on Monday 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 on Tuesday, 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 on Tuesday, 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 on Monday, I don't know if it will be done on Tuesday or Wednesday".
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.
Comments
Things are not as bad as it
Abbas Ali
11 Sep 2012 - 16:37
Things are not as bad as it seems, if only the Government grabs the bull by its horns. If they increase Diesel and LPG prices, inflation will go through the roof, and the majority of Indians who are poor, middle class, lower middle class will not know what hit them. Social disturbances, and other evils will raise their heads. The government is charging roughly 50% in taxes, duties etc. on petroleum products. The Government should forgo all these duties, at the same time raise prices so that the Oil companies don't lose anything. To compensate for this loss in taxes, spread out the taxes in such a way, that the poor, lower middle class, and the middle class are spared the prospect of inflation which is already very high and has made the budget of many a poor housewife go haywire. The lion's share of these taxes should be on all those petrol/diesel guzzling SUVs, luxury cars, and other industrial products which only the rich can afford. Make Public Transport more streamlined and affordable: Trains, Buses, sea going vessels, Hovercrafts, Catamarans, etc.all these services can be improved, which will be better than putting more cars on the roads which usually not enough to take on the increasing traffic. Fuel whether, Petrol, Diesel, Kerosene, LPG, LNG, CNG, or Coal, are all something where prices should be kept affordable. In the meantime, more push be given to harness Wind, Solar, Tidal, and Hydel Power Stations, such that economies of scale can be availed of thereby reducing the dependence on Petroleum. There should be a political will from both the government and the opposition to tackle this pressing issue which cannot be kept on the back burner now. The Opposition, instead of wasting the Parliament's time and the taxpayers money, should join the Government to settle this issue in a wise and acceptable manner. This is not the time for petty politicing.
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