Government defers decision on diesel price hike again

29 Dec 2010

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The empowered group of ministers (EGoM), which was to meet on 30 December to decide on raising diesel prices, has postponed the meeting, ostensibly because the finance ministry and the petroleum ministry could not agree on the extent of subsidy compensation.

While there was wider consensus on the need for raising diesel prices, reports said, the finance ministry was against passing on the entire subsidy burden to the consumers or raising compensation to oil firms.

The EGoM, headed by finance minister Pranab Mukherjee was expected to announce a hike in diesel prices of around Rs2 per litre.

This is the second time that the government is seen dithering on a decision to hike fuel prices, which is widely expected to further push up inflation.

The EGoM, which was originally scheduled to meet on 15 December, deferred it to the month-end and it now stands postponed indefinitely.

State-run oil firms are reported to be losing Rs6.08 on every litre of diesel they sell while they lose Rs17.72 per litre of kerosene and Rs272.19 per every 14.2 kg cylinder of LPG (or cooking gas).

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