The meeting of empowered group of ministers (EGoM) on fuel has been rescheduled to late evening. As against the earlier time of 1 PM, the meeting will now take place at 7.30 pm. The meet is expected to review diesel and domestic LPG prices in a bid to cut down the rising losses of oil marketing companies (OMCs).
The government has deferred a ministerial meeting to decide on raising diesel and cooking fuel prices to 7:30 pm as the government is working on its options, Oil Minister Jaipal Reddy said on Friday.
The meet could lead to a diesel price hike which was last increased a year ago while the oil ministry has also made case for increase in domestic LPG price. LPG price was also revised a year ago by Rs 35 per cylinder and diesel by Rs 2. The EGoM was first supposed to meet on May 11, immediately after the end of Assembly elections in four states. However, it got deferred.
Shares of OMCs have opened with strong gains in the run up to the EGoM meet. At 1:10 pm, Hindustan Petroleum was up 4.39% at Rs 386, Bharat Petroleum was up 2.71% at Rs 633.55 while Indian Oil had gained 2.06% and was trading at Rs 334.85.
Earlier this month, Reddy met Finance Minister Pranab Mukherjee and Prime Minister Manmohan Singh to discuss the financial condition of the OMCs. The OMCs— Indian Oil, Bharat Petroleum and Hindustan petroleum— which purchase crude oil at market rates, are required to sell diesel, kerosene and liquefied petroleum gas (LPG) at government-subsidised prices, resulting in losses.
The companies currently incur an under-recovery or revenue loss of Rs 13.72 on every litre of diesel, Rs 26.16 on every litre of kerosene and Rs 381 for every LPG cylinder. At these rates, the OMCs could end up the current fiscal with an all-time high loss of Rs 166,440 crore. For the current quarter alone, the OMCs are estimated to incur a loss of Rs 45,000 crore compared to Rs 18,000 crore in corresponding quarter of last year. The rising losses have forced the companies to borrow heavily.
India is expected to take advantage of a plunge in global crude prices to raise fuel prices on Friday after months of delaying a politically unpopular decision that will add to inflation but ease a rising subsidy burden.