Higher compensation for oil marketing companies on agenda.
Facing opposition from key allies in the United Progressive Alliance government, Petroleum Minister Murli Deora will meet Finance Minister Pranab Mukherjee on Sunday to make a case for a higher compensation to oil marketing companies and to discuss a hike in fuel prices.
The meeting, to be held at Mukherjee’s residence, will work out a new proposal for fuel price increase, which will have least bearing on the common man. “The meeting on Sunday will work out the modalities of addressing the subsidy shortfall on cooking fuel under-recoveries of state-owned retailers. It will also discuss a possible increase in fuel prices,” said a top ministry official.
Separately, Deora said he met Mukherjee and Prime Minister Manmohan Singh late Wednesday to push for more subsidies for the three state-owned fuel retailers — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. “I have submitted a memorandum to the prime minister and finance minister, and requesting them to compensate the shortfall on account of kerosene and LPG,” Deora said.
For the current year, the underrecoveries on auto fuels are being fully compensated in the form of discounts from upstream companies like ONGC, OIL and Gail, while those on sales of kerosene and LPG is supposed to be compensated by the government, either through bonds or in cash.
| TREADING THE OILY PATH |
| * The meeting will work out a new proposal for fuel price increase, which will have least bearing on the common man |
| * The underrecoveries on auto fuels for the current financial year are being fully compensated by upstream companies like ONGC, OIL and Gail, while those on sales of kerosene and LPG is supposed to be compensated by the government |
| * The upstream companies have already given a subsidy of Rs 8,100 crore during the first three quarters of the current financial year |
| * As part of the government’s compensation, the finance ministry has so far agreed to pay Rs 12,000 crore in cash, against the demand for around Rs 21,000 crore for three quarters |
The upstream companies have already given a subsidy of Rs 8,100 crore during the first three quarters of the current financial year. However, as a part of the government’s compensation (on kerosene and LPG), the finance ministry has so far agreed to pay Rs 12,000 crore in cash as against the petroleum ministry’s demand for around Rs 21,000 crore for the first three quarters.
According to the latest estimates, the underrecoveries on sale of petrol for the current year is estimated at Rs 5,100 crore, while the sale of diesel is projected to have underrecoveries of Rs 8,480 crore. The underrecoveries on sale of kerosene and LPG is estimated at Rs 17,550 crore and Rs 14,250 crore, respectively.
The petroleum ministry has favoured a market-linked price for auto fuels while suggesting an immediate hike of Rs 3 and Rs 2 for petrol and diesel, respectively. While this is in tune with the recent recommendations of the Kirit Parikh committee, the ministry has chosen to push for half the hike recommended in LPG and kerosene keeping in view of the interest of common man.
