Govt prepares for Rs 2 a litre petrol price hike

The government is preparing the ground for an increase in the prices of petrol and diesel in February to partly cushion losses, projected at Rs 70,000 crore this fiscal, which oil marketing companies make from selling fuel below cost against steadily rising crude oil prices.

The proposed price increase, the first in 18 months, is likely to be in the range of Rs 2 per litre for petrol and Re 1 per litre for diesel, senior petroleum ministry officials said.

Prices of kerosene and domestic LPG are unlikely to be raised, an oil ministry official said.

Petroleum Secretary MS Srinivasan had on Wednesday said that petrol prices were likely to be increased by Rs 4 per litre and diesel by Rs 2 per litre as news agencies reported today.

"The Rs 4 hike in petrol prices may be too steep, considering there are the Left parties to deal with. It will probably be Rs 2 for petrol and Re 1 for diesel," confirmed a top petroleum ministry official.
  

STEPPING ON THE GAS Fuel prices in Delhi since 2002
(Rs/litre)	Petrol	Diesel	Crude oil*
June 4, 02	29.94	17.99	25
Jan 1, 03	29.93	19.07	26
June 15, 04	35.71	22.74	37
Apr 1, 05	37.99	28.22	48
June 6, 06	47.51	32.47	62
June 6, 07	43.52	30.48	74
* Average price in $/barrel

The Left parties have suggested that the import duty on crude oil be reduced instead of increasing retail prices.

The government also runs the risk of inflation moving back above 5 per cent if fuel prices are raised. Inflation has been controlled to a shade above 3 per cent for the last half year.

"That is the risk the government runs. But the oil marketing companies cannot be made to suffer year after year either," a senior government official said.