Reddy explains logic behind petrol price hike to Ahmed Patel

May 24, 2012 22:09 IST

#Ahmed Patel   #NewsTracker   #Petrol   #S Jaipal Reddy  

New Delhi: With the party and the government coming under attack over the steep hike in petrol price, Petroleum Minister S Jaipal Reddy is understood to have met Ahmed Patel, political secretary to Congress president Sonia Gandhi, and discussed the issue.

The meeting comes against the backdrop of Congress president's concerns over the Rs 7.54 a litre increase and the party hinting at the possibility of at least a partial rollback of the decision.

Price problem. Image courtesy PIB

Reddy, who was in Turkeministan for signing of agreement for Tapi gas pipeline when the third hike in a year and the first in almost seven months was announced, arrived in New Delhi this evening after cutting short his visit by a day.

Sources said he drove straight from the airport to meet Patel to explain the rationale behind the decision taken by the state-owned oil companies.

State-owned oil firms, who had lost Rs 4,860 crore on not raising prices of the deregulated commodity last fiscal, had lost about Rs 2,400 crore since April as depreciation in rupee wiped away gains made from fall in crude oil prices.

They were losing Rs 6.28 per cent litre (excluding local sales tax or VAT) and the "urgency" of raising prices was conveyed by oil marketing companies to Reddy earlier this month.

Sources said the plan was to raise rates after the passage of finance bill in the Parliament but was at the last moment postponed till conclusion of the Budget session. The Budget session of Parliament ended on 22 May, which incidentally was also the third anniversary of UPA-II coming to power.

Reddy left for Turkmenistan on his official visit on 22 May and a day later oil firms raised prices by Rs 7.54 a litre in Delhi.

PTI