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Decision on fuel prices deferred, CCPA meet
postponed
Tuesday September 11, 2012 10:55:46 PM,
IANS
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New Delhi, Sep 11 (IANS) A decision
on a hike in fuel prices was deferred Tuesday as a meeting of the
Cabinet Committee on Political Affairs (CCPA), scheduled for the
evening, was postponed.
Sources said the meeting was called off as some members of the
ruling alliance were not in favour of such a decision ahead of
state elections later this year.
Earlier in the day, Petroleum Minister Jaipal Reddy said an
increase in diesel, cooking gas and kerosene prices is
"unavoidable" to reduce under-recoveries of oil marketing
companies.
"As I have said before, painful and difficult decisions on price
of oil products will have to be taken. Increase in price is
unavoidable," Reddy told reporters on the sidelines of an event
here.
"To what extent can the consumers take it, is another matter."
Reddy said he had circulated an updated note to the CCPA, headed
by Prime Minister Manmohan Singh, detailing the financial stress
created by the rise in crude prices and fall in the value of rupee
against the US dollar.
State-run oil marketing companies are losing Rs.550 crore per day
on under-recoveries as a result of higher crude prices in the
global markets.
Their losses on sales are at the rate of Rs.17 per litre on
diesel, Rs.32.70 per litre on kerosene and Rs.347 per cylinder on
cooking gas.
Reports, meanwhile, said prices of oil jumped near the highest
level in a week amid speculation that countries like the US and
China will announce economic stimulus measures to pep up growth.
Indian Oil chairman R.S. Butola said oil marketing companies were
currently losing nearly Rs.6 per litre on petrol sales.
"There is a need to raise petrol prices. We are in consultations
with our colleagues at other oil marketing companies and
stakeholders," Butola said.
Though petrol prices are freed from administrative control since
June 2010, the OMCs consult the government before taking any
decision on the price front.
The finance ministry also supports the petroleum ministry's stand
on cutting the subsidies on petroleum products as the move would
lower the government's subsidy burden and improve the country's
fiscal outlook.
With the rising global prices of crude oil and hardening of other
commodities, it is feared that the fiscal deficit could breach the
budget estimate of 5.1 per cent of gross domestic product for the
current fiscal.
At the end of the day, Reddy proved himself prescient.
"If it (price increase) is taken up today (Tuesday), which is not
very likely, some decisions may be taken... if it is not taken up
today, decision will be postponed," he had said.
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