| A rise in the prices of petrol and diesel seems imminent, with the government deciding to launch a drive to evolve political consensus on the issue. |
| Petroleum Minister Mani Shankar Aiyar told Business Standard that he would be holding talks with the Left parties soon. "Had it not been for the sharing of burden by Oil and Natural Gas Corporation and Gail India, oil marketing companies would have incurred heavy losses because of non-revision of petroleum prices," he said. |
| Oil companies lost nearly Rs 20,000 crore during the last financial year on account of selling petrol, diesel, LPG and kerosene at subsidised rates. |
| Oil companies have demanded that diesel prices be increased by Rs 5.18 a litre and petrol by Rs 4.59 a litre following an increase in global prices in the first fortnight of April. |
| Crude oil prices hit an eight-week low of $50 a barrel, with the US light crude trading at $49.96 a barrel and the Brent at $50.73 a barrel, today. |
| Aiyar said he favoured a price band mechanism for changes in rates, but added that it was very difficult to evolve a sustainable pricing formula given the volatility in international prices. |
| "We need to devise a policy that assumes high prices as given," he said, adding that the pricing policy should be on the basis of equitable burden sharing by the government, oil companies and the customers. |
| On whether he would be seeking changes in the duty structure, he said the finance minister had claimed that the duty changes were revenue neutral but as far as oil marketing companies were concerned they were not. |
| He said increasing the retail prices might be a rational economic decision. "But what maybe a rational economic decision has to be reflected through the social and political prisms to become a reality," he said. |
| Aiyar said there were 700 million Indians who needed oil products and their needs had to be kept in mind. "This is certainly true for kerosene and diesel. While many people do not buy diesel but no tax is more regressive than inflation. It is easy to say petrol be sold at market prices but even two wheelers and three-wheelers run on petrol." |
| He predicted that in 2005-06 global oil prices would be lower though they would still be higher than 2003-04. |
| He termed the predictions made on oil prices touching $105 as "science fiction". He said extreme volatility in prices was seen on April 4 when the Indian basket touched $52, but the prices slumped by $5 since then. |
| The government had put on hold the increase in prices since the price of diesel had gone up in Delhi. The state government had, from April 1, increased the uniform floor rate for diesel to 20 per cent from 12 per cent, increasing the retail price of diesel by Rs 1.82 and LPG by Rs 13. |
| Oil consensus |
| PRICE PROBLEM |
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| CRUDE RELIEF |
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