The meeting of the Empowered Group of Ministers (EGoM) on fuel pricing, scheduled for tomorrow, has been deferred. The group will now meet next week to consider oil ministry’s proposal of Rs 3 per litre increase in diesel price. However, a price increase of around Rs 3 per litre of petrol, a decontrolled product, is certain to happen later this week.
Diesel price that accounts for around 60 per cent of the under-recovery or losses of the oil marketing companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum — has remained unchanged for nearly 11 months. These companies currently lose Rs 16.17 on every litre of diesel.
“The EGoM headed by Finance Minister Pranab Mukherjee (on fuel price rise) was to meet tomorrow evening. It has been put off,” Oil Minister S Jaipal Reddy told reporters here. “It has been postponed to accommodate some ministers... It could be anytime on May 17 or 18,” he said.
In addition to diesel, these companies also lose Rs 28.28 per litre of kerosene and Rs 330 for every LPG cylinder. Prices of these three products are regulated by the government. At these rates, the OMCs could end the current financial year with an all-time high loss of Rs 180,000 crore. On petrol, the companies lose Rs 8.50 per litre. However, the full loss would not be passed to consumers at one go, said an oil industry executive.
Reddy said the day EGoM meets on fuel prices, a separate group of ministers (GoM), that is to vet Vedanta Resources proposed acquisition of Cairn India, might also meet. “I think when the next date is fixed, we will deal with both questions — the question of under-recoveries of oil companies and the question of government approval for Cairn-Vedanta deal,” he said.
In August 2010, Vedanta had announced plan to buy up to 60 per cent stake in Cairn India for $9.6 billion. The deal, government insists, requires government approval, as it involves scarce natural resources. The Union Cabinet, that was supposed to take a decision on the deal, chose to refer to a group of ministers on April 6.
The petroleum ministry had circulated a Cabinet note on the deal that presented two options — either conditional clearance or absolute clearance while leaving legal recourse open to both Cairn India and its partner, ONGC.