Uf Remains Deadlocked On Petrogoods Price Hike

The stalemate within the United Front (UF) on the proposal to hike the prices of petroleum products is likely to continue in the forthcoming meeting of the Fronts steering committee, as the Left parties are in no mood to budge from their earlier position and are busy convincing other UF constituents on the issue.

Left leaders say that unless the government changes its proposals, they cannot agree for an across-the-board hike. This is politically not advisable, they say. They do not want the oil sector to continue to suffer due to the finance ministrys bungling.

Among the new proposals the Left parties are to advance at the meeting include levying an oil pool deficit cess and devising ways to conserve oil in case there is a difficulty in waiving excise and customs duties on petroleum products.

 

The Left parties feel that there is no need for panic on the burgeoning oil pool deficit account and other options can be explored. They are likely to advance arguments against the governments view that a rising oil pool deficit account may disrupt supply line.

The DMK has joined the chorus with the Left parties on the issue and in one of its resolutions passed last week, opposed the proposed hike. Samajwadi Party leaders have already stated in some of the earlier steering committee meetings that efforts should be made to avoid a hike as it will effect the common people.

With the SP leader Janeshwar Mishra heading the petroleum ministry, Left leaders hope that he will not toe the line advanced by Union finance minister P Chidambaram. Mishra, on his part, has refused to commit himself on the issue and has said that he will go by the collective decision.

Some UF leaders argue that with developments in the Janata Dal which may snowball into a crisis for the UF government, any decision on the issue should be taken with utmost care.

In fact, one cabinet minister said: No one is concerned about a hike in the prices of petroleum products at this moment.

The most important issue facing us today is to resolve the Janata Dal crisis.

UF panel meet likely on June 16

The meeting of the steering committee of the United Front, which was scheduled to meet on Sunday, is likely to meet on June 16. Till late last night, no date had been fixed.

United Front convenor N Chandrababu Naidu is scheduled to arrive here on Monday morning.

Front leaders said the meeting will definitely not be held on Sunday, but no decision had been taken on Monday also.

Ministry hopes meet will resolve crisis

Our Energy Editor NEW DELHI

It could be third time lucky for the petroleum ministry. For the third time, the United Front steering committee is scheduled to meet this week to discuss hike in petroleum prices to put the countrys oil economy on an even keel.

Though the first two meetings of the steering committee failed to reach a consensus on the issue, officials are now hopeful of a positive direction from the committee on how to tackle the burgeoning oil pool deficit which is threatening to cross Rs 2,328 crore by the end of the current financial year.

The committee will be told that the Indian Oil Corporation (IOC), the sole canalising agency for petroleum imports, has crossed its external commercial borrowing limit of $ 3.5 billion and in view of its debt-equity ratio touching 2:1, it would not be easy for the corporation to tap the foreign debt market in future.

This might lead to reduced imports and could result in serious disruption in supplies. The implications of this are not only the long queues outside petrol pumps but also the general slowing down of the economy. In case 1997-98 turns out to be a bad monsoon year, diesel shortage may result in disastrous consequences for the agricultural sector as well.

It is not that the United Front constituents are not aware of the time-bomb that the country is sitting on, it is the fear of mid-term elections that is keeping them away from taking a highly unpopular decision like the petroleum price increase.

The fear of the mid-term elections has been reinforced by Sitaram Kesris landslide victory in the Congress presidential elections.

It is widely believed in political circles that in his renewed bid for the countrys prime ministership, Kesri might once again withdraw support from the United Front government and force elections on the country.

Moreover, the internal problems of the Janata Dal are also not conducive for the government to precipitate matters further with decisions like the increase in oil prices. This can lead to steering committee once again pushing the issue under the carpet.

Though privately all constituents of the United Front concede that the price-hike is imminent, no one wants to accept it in public. Even minister of state for petroleum and natural gas T R Baalu, who should be knowing better than others, has been advocating against the increase in his public meetings.

But the biggest stumbling block is the Left Front that has been maintaining a constant pressure on the government to look for alternative methods of tackling the oil pool deficit problem. According to its leaders, the best way out is to make the finance ministry return the Rs 4,000 crore that it had taken from the oil pool account in 1991 and reduce duties on petroleum products.

However, the finance ministry has been opposing both the moves on the ground that this would upset the current years Budget projections. Moreover, this would mean taking money out of the governments one pocket and putting it in the other.

It is to be seen how the steering committee brings about a compromise not only among its constituents but also among the conflicting stands taken by the various ministries on the contentious issue.