The Empowered Group of Ministers (EGoM) on oil prices, headed by Finance Minister Pranab Mukherjee, will meet on Friday to decide on the proposal to raise petrol and diesel prices.
A meeting of the group was scheduled last week but Mukherjee deferred it to seek political consensus before taking a call.
“The meeting of the EGoM is on Friday,” said Petroleum Minister Murli Deora on Tuesday. However, he declined to comment on the possibility of a fuel price hike.
According to sources, the petroleum ministry has proposed to increase the price of petrol by Rs 3 and diesel by Rs 2 a litre. The oil marketing companies have been making a loss of Rs 3.73 a litre on petrol and Rs 3.8 on diesel, Rs 18.82 on kerosene and Rs 261.90 on each LPG cylinder.
While it is believed that the Congress brass is ready for a petro-price hike considering the underrecovery of the oil marketing companies, key allies of the party like Mamata Banerjee’s Trinamool Congress and Sharad Pawar’s Nationalist Congress Party are strongly opposed to a fuel price rise.
Both Pawar and Banerjee are members of the EGoM but they had abstained from its last meeting on June 7. While Banerjee was in Kolkata, Pawar was in a Mumbai hospital. Later, Pawar visited the US for medical treatment for two weeks.
More From This Section
The eight-member EGoM also has Chemical and Fertilizer Minister M K Alagiri, the DMK nominee. Congress sources claim DMK might finally support the proposal for a price rise.
Railway Minister Mamata Banerjee had recently met Prime Minister Manmohan Singh and expressed her objections on diesel price increase. UPA sources claim she had assured the PM that her party would not embarrass the government over disinvestment proposals but urged the PM not to raise diesel prices.
Her logic is: an increase in diesel prices will invariably lead to further rise in food prices. With the common people reeling under high food prices, the government should take no step in that direction.
The EGoM is likely to consider the Kirit Parikh committee’s recommendations to de-control petrol and diesel prices. As the existing crude oil price is over $70 a barrel, Deora is of the opinion that at least petrol prices should be decontrolled.
According to sources, freeing of petrol prices would reduce the Rs 74,300-crore deficit by about Rs 5,000 crore. If the diesel price is raised even by Re 1 a litre, oil marketing companies will be able to cut their losses by Rs 3,800 to 4,000 crore.
While a rise in cooking gas is also being proposed by the petroleum ministry, Congress sources told Business Standard, there is no question of any hike in kerosene prices. Party president Sonia Gandhi has made it clear to her managers that kerosene price should not be tampered with as it is mostly used by the poorer section of the society.