No dates for EGoM meet on hiking diesel rates fixed yet

With inflation rate ruling at an uncomfortable over 9%, the government, it seems, has not yet made up its mind on raising prices of diesel, domestic LPG and kerosene.

State oil firms also appear to have applied brakes on hike in petrol price after inflation in May topped 9.06%. Oil firms, which last month hiked petrol price by a steep Rs 5 per litre, are losing Rs 1.98 a litre on a commodity which was freed from government control last June.

Oil Minister S Jaipal Reddy said no dates for the meeting of an Empowered Group of Ministers (EGoM), which is the decision making body for revision in rates of diesel, domestic LPG and kerosene, has been fixed yet.

"We are still exchanging notes [with finance ministry]," he told reporters here.

Reddy had on June 14 met Prime Minister Manmohan Singh to push for an early decision on fuel price revision in view of mounting losses of state oil firms.

The EGoM headed by Finance Minister Pranab Mukherjee has not met since June last year even though crude oil prices have spiralled upward by about 50%.

Reddy, who had earlier this month met Mukherjee for early convening of the EGoM meeting, said no dates have been fixed yet.

State-owned fuel retailers Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum together lose about Rs 450 crore per day on selling diesel, domestic LPG and kerosene at government-controlled prices, which have been set at way below market rates.

The three firms are virtually living off borrowed money as current realisation on fuel sales is not sufficient to meet the cost of importing raw material (crude oil).

The Oil Ministry has been pushing for an increase in diesel, domestic LPG and kerosene rates and wants the government needs to muster the political will to take the hard decision.

The EGoM was originally scheduled to meet on May 11, but was postponed at the last moment. There was talk of an EGoM -- which comprises representatives of all major allies in the ruling UPA -- meeting on June 9, but the meet was never scheduled for that day.

Reddy said no new date for the EGoM meeting has been fixed yet.

His ministry is pushing for a Rs 3-4 per litre hike in diesel and a Rs 20-25 per cylinder increase in LPG rates. Also, it is looking at a possible hike in kerosene prices.

State-owned oil firms had last month hiked petrol prices by a steep Rs 5 per litre and are looking another increase as they are losing a little less than Rs 2 per litre on a commodity that was freed from government control in June last year.