With global crude oil prices climbing to their highest level in two-and-a-half years, Oil Minister S Jaipal Reddy on Friday said a ministerial panel will take a call on raising petrol and diesel prices. "There is volatility in the international market. I wish to take the matter to the Empowered Group of Ministers (EGoM) after the Budget is presented," he said. International crude oil prices have topped $110 per barrel, widening the gap between the domestic retail selling price and cost of production.
"Finance Minister Pranab Mukherjee, who heads the EGoM, is at present busy with Budget. The matter will be considered by EGoM whenever he gives time (for the meeting)," he said.
The Petroleum Ministry is pinning hopes on customs and excise duty cut in the Union Budget to avoid hiking petrol and diesel prices. Petrol, whose pricing was freed from government control in June last year, is being sold at a discount of Rs 2.25 per litre to its imported cost.
On diesel, state-owned Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum lose Rs 10.74 a litre. Besides, they lose Rs 21.60 per litre on kerosene and Rs 356.07 per 14.2-kg domestic LPG cylinder.
The three firms are currently losing Rs 430 crore (Rs 4.3 billion) per day and at current rates are projected to end the fiscal with Rs 76,559 crore (Rs 765.59 billion) revenue loss.
"Strictly speaking, companies can increase price (of petrol) but it in view of the volatility in the international market, it is good for everyone to wait for EGoM to decide," Reddy said indicating that the state-run oil firms would not raise rates unilaterally.
The ministry is hoping Finance Minister Pranab Mukherjee in his Budget for 2010-11, to be presented on Monday, will abolish customs duty on crude oil and cut excise on petrol and diesel to avoid a further increase in retail prices.
It wants customs or import duty on crude oil to be reduced to zero from 5 per cent at present. Also it wants the customs duty on diesel slashed to 2.5 per cent from 7.5 per cent at present, along with a reduction in the specific excise duty imposed on the most-consumed fuel in the country.
"Eliminating customs duty on crude and correspondingly bringing down duty on finished products would reduce the under-recoveries (revenue loss on selling fuel below cost) that are compensated by the government," an official said.
The oil ministry is also hoping that Mukherjee would reduce specific excise duty of Rs 2.60 per litre on diesel and Rs 12.35 a litre basic and additional excise duty on petrol.
