No hike in petrol, diesel prices on Wednesday
Wary of taking unpopular decisions in the midst of elections, the government today did not allow oil companies
New Delhi: Wary of taking unpopular decisions in the midst of elections, the government today did not allow oil companies to increase petrol and diesel prices as per the stated policy.
After two reductions this month, petrol prices should have been hiked by 40-50 paise a litre as the rupee’s depreciation against the US dollar and the firming up of international oil rates made imports costlier.
The same factors have also led to losses on diesel sales touching almost Rs 6.70 a litre. State-owned oil companies, however, did not revise the rates of both fuels, which were due today.
“I don’t think there is any change in rates happening today,” said a senior official at one of the three fuel retailers. “Please ask the oil ministry about the reasons.”
Petrol prices were freed in June 2010 and have at most times moved in tandem with costs with fortnightly revisions. The practice led to a cut in petrol prices by 75 paise on April 1 and then by 70 paise on April 16 as rupee appreciation made imports cheaper.
However, the practice was not followed today.
“There is some under-recovery (loss) on petrol but we think we can manage it,” another official at the oil company said.
For diesel, which is used for transportation and has a direct bearing on inflation, the government had in January last year decided to raise rates by up to 50 paise a litre every month till losses on the fuel are wiped out.
The practice was followed religiously until last month with a cumulative Rs 8.33 a litre hike in 14 instalments. But as the nation went to the polls, the increases were discontinued, citing a reason that had not prevented it from hiking rates uninhibitedly about a year ago.
Mindful of the fallout of the unpopular monthly increases during election season, the ministry had asked oil firms not to raise diesel prices on the grounds that the loss on sales of the fuel had fallen to less than Rs 6 a litre.
The ministry argued that Rs 6 is the subsidy that an expert committee headed by Kirit Parikh had suggested that the government should provide. The report was not accepted and the Cabinet had to take a view on it and so the ministry referred the issue to the Election Commission.
“We haven’t heard anything from Election Commission and since there is no communication there cannot be any price revision even though the under-recovery on diesel has risen to Rs 6.70 from Rs 5.49 a litre previously,” the official said.
There had been demands from within the ruling Congress party to stop the increases.
Oil companies skipped raising diesel prices in April last year, when assembly elections were held in Oil Minister M Veerappa Moily’s home state Karnataka. They made up by hiking diesel prices by 90 paise in the following month.