Deora asks FM to cut excise on oil

Even as Petroleum Minister Murli Deora said he had again asked Finance Minister P Chidambaram to reduce excise duty on petroleum products, indications have emerged that the government is preparing for a mix of measures including a hike in end-user prices.

Speaking to reporters on the eve of the Oil and Natural Gas Corporation's golden jubilee function here, Deora said, "If the current trend of rising oil prices continues, we would not be left with any other option but to tighten our belt. However, there is no immediate plan for an oil price hike."

The spurt in global crude oil prices warrant a Rs 6.31 a litre hike in petrol, Rs 8.25 per litre increase in diesel, Rs 18.69 per litre raise in kerosene and Rs 166 per cylinder increase in LPG prices.

Deora said the government wanted to pass on the least possible burden to consumers but any duty relief should not hamper government's programme. "He (Chidambaram) has to see that the budget is not affected and ensure money for all welfare programmes," Deora said, adding that the ministries of petroleum and finance were working together to resolve the crisis.

He admitted that a reduction of excise duty would impact fund generation for several schemes. Deora pointed out that oil producing countries had indicated that prices may go up to around $100 per barrel.

Petroleum Secretary MS Srinivasan said the government was making every possible effort to contain prices, at the same time trying to save oil marketing companies from suffering further losses.

Indicating that if no duty respite is available and prices of global crude oil continue to rise, Srinivasan said the government would be left with no option but to pass on the marginal impact on to consumers.

"Government is doing whatever possible to contain price hike. About 7/8th of the burden is shared by the government and only 1/8th is passed on to the consumer," Srinivasan said.

He said the government had given freedom to public sector oil firms to revise petrol and diesel prices every month but they had not increased prices in line with the rise in international prices.