EGoM on fuel decontrol tentatively scheduled to meet on 21 May

The empowered group of ministers on fuel price decontrol is likely to meet on 21 May to decide on freeing fuel prices from government an administered price regime.

The EGoM, headed by finance minister Pranab Mukherjee, is also likely to discuss revenue losses through the sale of domestic LPG and kerosene at subsidised rates.

The group of ministers include petroleum minister Murli Deora, Planning Commission deputy chairman Montek Singh Ahluwalia, railway minister Mamata Banerjee, road transport minister Kamal Nath, agriculture minister Sharad Pawar, chemical and fertilisers minister M K Alagiri.

In order to bridge the deficit between imported cost of crude oil and retail price of LPG and kerosene, rates for automobile fuels have to be increased by over Rs6 a litre and a mild hike in LPG and kerosene pricing - a politically sensitive issue.

The three public sector oil marketing companies Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum suffer a net loss of Rs6.63 a litre on petrol, Rs6.25 per litre on diesel, Rs19.74 per litre on PDS kerosene and Rs254.37 per domestic LPG cylinder, accounting for a daily collective loss of Rs272.5 crore a day by selling fuel below cost.

Last year the three oil companies collectively suffered under recoveries of Rs47,960 crore, which in 2010-11 will rise in proportion to the rising internation crude prices. By some estimates, the under recoveries may balloon to around Rs90,000 crore.