Deora hints at fuel price hike

15 June 2009

The government could raise petrol and diesel prices as it looks for ways to tackle the widening revenue deficit amidst a rise in international crude oil prices, union petroleum minister Murli Deora said today.

Deora, who met finance minister Pranab Mukherjee to demand restoration of tax breaks for natural gas production, also discussed dereguation of fuel prices with him.

"We appealed to him that the seven-year tax holiday from payment of income tax should also apply to natural gas as is the case with crude oil production," he said after the meeting.

"We are seriously concerned about the rise in crude oil prices," Deora said, adding, "The alternatives before us are raising petrol and diesel prices, asking the government to make up for revenue loss through issuing oil bonds and upstream firms chipping in."

"It could even be all of the three as had been the practice till now," he added.

Deregulating fuel prices has been on the cards since crude oil prices plummeted from the 2008 highs, falling by $100 a barrel to around $47 a barrel, lat month. But, with oil price climbing back to above $70 a barrel levels, the government is unlikely to fully deregulate fuel prices.