labels: Oil & gas
Government may hike fuel prices, cut excise duty on petroleum productsnews
07 December 2007

Mumbai: The government may marginally hike the prices of petrol and diesel and reduce excise duty on auto fuels in a bid to save public sector oil firms from the Rs7,840 crore loss they incur every month on selling fuel at government directed prices.

"The petroleum ministry is pushing for a marginal increase in petrol and diesel prices coupled with a cut in excise duty on the two fuels. A decision on the issue is likely to be taken after Gujarat assembly elections," an oil ministry official said.

Public sector refines in India sell petrol at a loss of Rs8.74 a litre, diesel at Rs9.92 per litre, kerosene Rs20.53 a litre and LPG at a loss of Rs256.35 per cylinder.

"Continued cash losses make refinery operations non-viable, sapping the PSUs'''' ability to generate resources for proposed investments and to service consumers," the official said.

A group of ministers headed by external affairs minister Pranab Mukherjee is reviewing commodity pricing, including fuel rates, and will have its first meeting on December 14.

Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to have suffered losses in excess of Rs69,750 crore on sale of petrol, diesel, LPG and PDS kerosene as government has not allowed them to raise prices in line with the price of imported crude.

The Planning Commission has made a case for increasing prices of petrol and diesel arguing that it was not a good idea to check inflation by keeping prices of petroleum products low.

The government has refrained from increasing domestic prices of petroleum goods because of political considerations especially forthcoming assembly elections in Gujarat, though the crude oil prices in the international market reached near $100 a barrel.

The current price of Indian basket of crude oil is up by around $22 a barrel from the international price prevailing at the time of last increase in petrol and diesel prices on June 6, 2006.


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Government may hike fuel prices, cut excise duty on petroleum products