Govt to take a call on oil price hike

The government has put off until tomorrow midnight a decision to hike prices of petrol and diesel following a spurt in the international crude oil prices, which touched a historic high of $54 a barrel.

Public sector oil companies have demanded a Rs 1.60 per litre increase in diesel prices and 65 paise per litre hike in petrol prices in step with the surge in international oil prices that have breached the 54 dollar a barrel mark.

The combined under-recovery by oil marketing companies from the two auto-fuels are estimated at over Rs 2,000 crore. Petroleum Minister Mani Shanker Aiyar told reporters after an hour-long meeting with Prime Minister Manmohan Singh that the decision would be announced tomorrow as more discussions were needed.

"I had the opportunity to discuss with the prime minister various dimensions of petroleum products' prices issue. A decision is not required to be taken until tomorrow midnight.

The government discussions will continue tomorrow. I am sure the oil marketing companies will let you know the decision (to change prices, or to keep them unchanged) by the scheduled time of announcement tomorrow evening," he said. Asked if he would meet the prime minister again tomorrow, the minister replied, "not necessary."

He, however, did not rule out a meeting with Finance Minister P Chidambaram. Aiyar said the government would never forget the consumers, the citizens or the ministry of finance and the interest of the oil companies.

The increase proposed by the oil companies was in line with the policy of changes within the price band mechanism.

"If the domestic prices are to be aligned with the international prices, petrol prices would have to be raised by Rs 1.88 per litre and diesel, by Rs 3.30 per litre," an oil company executive said.

A section within the government was of the opinion that additional burden should not be passed on to consumers as the oil companies continued to have significant refining margins, while the petroleum ministry was trying to ensure that the margins of the public sector oil companies were not affected.