Government not to hike petrol, diesel prices

Our Economy Bureau
01 October 2004

New Delhi: The government yesterday decided that petrol and diesel prices would not be raised even though the public sector retailing companies have sought an upward revision owing to rising global crude prices.

IOC, BPCL, HPCL, and IBP have been seeking a hike of around Re1 per litre in the case of diesel over the last week, as per a formula set out by the government two months ago.

Following the government''s decision, the oil companies, in effect, will have to bear the burden.

"Today, inflation is surging and it is for all of us (in the government) to endeavour to keep prices (of essential commodities) under control. As far as the oil ministry is concerned, petrol and diesel prices will not be hiked," the petroleum minister, Mani Shankar Aiyar, told newspersons after a meeting with the prime minister, Manmohan Singh.

"The surge in crude oil prices have brought windfall profits to some companies like ONGC, while it has burdened the marketing firms. We believe that all stakeholders — the government, state-run companies and consumers — should share the burden (of rise in crude price)," he added.

According to Aiyar, oil companies, both upstream and downstream, will bear the burden of surge in crude oil prices, which touched $50 per barrel earlier this week. According to him, consumers have already been burdened while the government took a cut in its revenue by way of slashing excise and customs duty last month. As per the new pricing formula set out by the government two months back, the oil marketing companies can alter the petrol and diesel prices, if they step out of a `band.''