Reddy rules out rise in diesel prices

Even as the government has ruled out any increase in diesel prices in the near future, it is hoping for a moderation in global crude oil prices. After taking over as the petroleum minister today, S Jaipal Reddy ruled out any increase in diesel price, leaving the oil marketing companies burdened with a loss of Rs 7 on sale of every litre of the fuel.

“There is no proposal for an increase in diesel prices,” Reddy, who replaced Murli Deora as the petroleum minister, told reporters. On diesel deregulation, Reddy said: “I don’t think anybody can take such long-term decisions.” He, however, hinted there would be no rollback of the petrol price increase. “We must take the hard global and national realities into consideration,” he said. The oil marketing companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum — are expected to lose Rs 72,000 crore in revenue this financial year on account of subsidised fuel sales.

Reddy made a strong case for increased government share in petroleum subsidy while, at the same time, seeking a reduction in duties. “Our ministry, in principle, is for a reduction in the Customs and central excise duty,” he added. In the Budget for 2010-11, the government had restored a 5 per cent import duty on crude oil, while increasing the duty on petrol and diesel from 2.5 per cent to 7.5 per cent. In that Budget, excise duty on petrol and diesel was also increased by Re 1 a litre, taking it to Rs 14.35 and Rs 4.60 per litre, respectively.

The minister said country faced a peculiar situation with regard to petroleum, since the economic growth was driving demand for petroleum products. Reddy said his ministry would stress on acquisition of foreign energy resources and oil deposits to enhance energy security. The country meets 80 per cent of its crude oil requirements through imports.

To expedite Cairn-Vedanta deal
On the Cairn-Vedanta deal, Reddy said the ministry would not lose time in expediting the process for deciding. “We will go by the rule book,” he added. He said issues relating to the deal had legal implications and some of these had been referred to the law ministry. Anil Agarwal-promoted Vedanta Resources had last August announced it would purchase between 40 and 51 per cent stake in Cairn India — the operator of the nation’s largest onland oilfield — from Cairn Energy Plc for $6.65 billion to $8.48 billion. The petroleum and natural gas ministry forced Cairn Plc to apply for government permission to sell the stake. The ministry stand also came in the way of Sebi clearance for an open offer by Sesa Goa, a Vedanta group company.