New govt may delay oil price increase

Petroleum secretary rules out import parity prices.

The government is unlikely to allow fuel prices to rise to their import parity levels, and even a damped increase is not expected till some time after the new government assumes office.

Petroleum ministry officials are of the opinion that no coalition government at the Centre will like to raise a storm over oil prices immediately after assuming office. It will at least go through the motions of consulting its partners before biting the bullet.

Since a decision to hike oil prices would ruffle political feathers, the new government could not be expected to attempt it before proving its majority in the Lok Sabha, the officials said.

Previous attempts at raising oil prices have run into furious opposition, sometimes from allies of the ruling party. On February 28, 2002, when the National Democratic Alliance government last increased the prices of cooking gas by Rs 40 a cylinder, the Trinamool Congress and the Telugu Desam led in opposing it. A fortnight later, Prime Minister Atal Bihari Vajpayee had to roll back the prices by Rs 25 a cylinder.

Officials pointed out that even now, when the international price of crude oil is threatening to touch $40 a barrel, a new coalition government at the Centre could not afford to increase the prices of petrol, diesel, kerosene or cooking gas immediately after coming to power.

This was confirmed today by Petroleum Secretary B K Chaturvedi, who ruled out a major jump in petrol and diesel prices after the elections to cover the rise in the price of crude oil. He said a review to bring domestic prices in line with raw material costs would be undertaken by the new government.

Public sector oil firms have repeatedly written to the petroleum ministry to raise petrol prices by Rs 3 a litre and diesel prices by Rs 5 a litre to stay in step with in international crude oil prices.

"There will not be any such increase in petrol and diesel prices," Chaturvedi said on the sidelines of a conference on natural gas here. "The oil companies are reviewing (the spurt in crude prices) and they will take appropriate action. The fear of any substantial increase in prices is false," he said.

The petroleum secretary said cooking gas and kerosene prices, too, would be reviewed by the new government as the government subsidy on them fell far short of costs.

The government had last year decided to freeze LPG and kerosene prices till March 31, he said. Cooking gas prices will have to be raised by Rs 94 a cylinder and kerosene by Rs 4.90 a litre to bring them in line with costs.