Ministry pitches for oil price hike

Pitching for a hike in the price of petroleum products, the petroleum ministry said today public sector oil marketing companies would suffer under-recoveries of Rs 73,512 crore in 2006-07 if prices were not raised immediately.

This is almost 90 per cent more than the under-recovery of Rs 39,000 crore incurred by the oil marketing companies last year.

While the loss because of selling petrol below cost was Rs 9.33 a litre, it was Rs 10.43 a litre for diesel, Rs 17.16 a litre for kerosene and Rs 114.45 for domestic cooking gas, the ministry said in a presentation to leaders of the Left parties.

Petroleum Secretary MS Srinivasan said when fuel prices were last revised in September 2005, international crude oil prices were reigning at $60 a barrel, though the average price of India's import basket was at $51. But, since then, the prices had appreciated sharply and the average price of the import basket had touched $71 a barrel on Wednesday.

The presentation indicated that if the prices of petrol, diesel and kerosene were increased by Rs 5 a litre and of domestic cooking gas by Rs 50 a cylinder, the customers would shell out Rs 26,700 crore more in 2006-07.

Top left leaders like CPI (M) Politburo member Sitaram Yechury and Gurudas Dasgupta attended the meeting.

But the leaders opposed any kind of hike and called for rationalisation of the duty structure on petroleum and petroleum products.

Yechury said, as part of the road map for dismantling the regulated price regime in 2002, the government had promised that Customs and excise levies would be reduced to zero.

"The petroleum ministry should push for fulfillment of this promise," he said.

Yechury added that finance ministry projected its tax collections on a certain benchmark price of crude oil.

As for this year, the benchmark has been set at $60 a barrel and the revenue from tax through additional $10 is a bonus for the government. As the duty structure is ad-valorem in nature, tax collection increases as prices rise.

"The government should at least maintain the collection according to the original estimates with respect to petroleum products," Yechury said.