No rollback in fuel prices: Deora

Undeterred by the scathing attack from rival political parties, Petroleum Minister Murli Deora today rejected outright any demand to roll back the rise in fuel prices announced on Friday. “There is no question of any rollback as the rise in the prices of automobile fuels, kerosene and LPG has already come into effect since midnight yesterday. The decision will help improve the financial health of the state-owned oil marketing companies and it will enable the government to allocate greater resources for social-sector schemes,” Deora told Business Standard.

Deora lashed out at the Bharatiya Janata Party (BJP) which today protested the decision. “BJP has no face to oppose the government’s decision as during its rule the price of kerosene was increased six times,” he said. Deora rejected the allegation of the Left that the decision to decontrol fuel prices would benefit private oil companies. “There is no truth in it. Market-determined pricing is expected to attract higher investments in the fuel retail sector; by spurring competition, it will encourage state-owned retailers to reduce costs, and improve efficiency and service standards. It would also incentivise fuel conservation and encourage the consumer to adopt fuel-efficiency practices,” he said.

Even after full decontrol of petrol prices, Deora said these companies are still selling at a loss of Rs 3.11 per litre. The monthly burden would be around Rs 500 crore.  With the increase in price by Rs3.50 per litre, the average expenditure on petrol for two-wheelers is expected to go up by Rs 27 per month and for cars by Rs 185 per month, the minister added.

After the partial decontrol of diesel prices, the state-owned retailers are selling at a loss of Rs 3.17 per litre, which works out to an under-recovery of around Rs 1,850 crore per month.  Diesel is an important fuel for public transport and agricultural pumps. Keeping in view the inflationary impact of diesel prices, prices have been increased by Rs 2 per litre only, Deora informed.

Deora strongly justified the rise of Rs 3 per litre in kerosene prices, against the Rs 16 per litre recommended by the expert group headed by Kirit Parikh. “Despite a rise of Rs 3 per litre in kerosene price, there remains a huge subsidy of Rs 15.90 per litre,” he added.

On the rise of Rs 35 in LPG cylinders, Deora said there would an extra financial burden of Rs 17 per month on lower middle-class families.  “The expert group had recommended an increase of Rs 100 per cylinder. However, considering the need to promote LPG as an environment-friendly cooking fuel, its price has been increased by Rs 35 per cylinder,” he added.