EGoM on fuel price, gas allocation deferred

Tomorrow’s proposed meeting of the empowered group of ministers on fuel price, headed by Finance Minister Pranab Mukherjee, has not yet been scheduled, officials said. The meeting of the EGoM on gas allocation scheduled for tomorrow has also been deferred.

A senior ministry official had said on May 26 that the EGoM will meet on June 9 to decide on raising diesel, domestic LPG and kerosene rates. “The official might have mixed up issues as a separate EGoM on natural gas allocation was the one that was scheduled for June 9," said an oil ministry official, adding that the scheduled meet has also been cancelled.

The gas EGoM was to decide on issues related to allocation of natural gas produced from fields like Reliance Industries' eastern offshore KG-D6.

OMCs – Indian Oil, Bharat Petroleum and Hindustan petroleum – have been running loses because the companies purchase crude oil at market rates but are required to sell diesel, kerosene and liquefied petroleum gas (LPG) at government-subsidised prices.

The companies incur an under-recovery (revenue loss) of Rs 12.64 per litre of diesel, Rs 26.16 on kerosene and Rs 381 per LPG cylinder. Diesel prices have not been raised since June 26 last year. At the existing rates, the OMCs could end up the current fiscal with an all-time high loss of Rs 180,000 crore.

The oil ministry has made a case for an increase in prices of all three controlled products. The oil companies are apprehensive that prices won't be increased once the monsoon session of Parliament begins mid July.

The prices for petroleum products was revised in June 2010 when crude was ruling around $72 per barrel. This month, crude oil has averaged $110 barrel.