Reddy calls for EGoM meet on raising fuel prices

With oil companies losing Rs 333 crore per day on selling fuel below cost, Petroleum Minister S Jaipal Reddy has sought a meeting of a high-powered ministerial panel to decide on revising the rates of diesel, domestic LPG and kerosene.

“I have asked for a meeting of the Empowered Group of Ministers (EGoM),” Reddy told reporters after a meeting with Finance Minister Pranab Mukherjee, who heads the EGoM.

Meanwhile the Oil Ministry has asked for a cash subsidy of over Rs 28,000 crore from the Finance Ministry to partially compensate state-owned oil firms for losses they incurred on selling fuel below cost in the first half this fiscal.

State-owned oil firms are currently losing Rs 9.27 per litre of diesel, Rs 26.94 per litre of kerosene sold through the public distribution system (PDS) and Rs 260.50 per 14.2-kg LPG cylinder supplied to households for cooking purposes.

Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) lost Rs 43,526 crore in the April-June quarter on selling diesel, domestic LPG and kerosene at government-controlled rates, which are way below cost.

The EGoM “meeting would take place before the Winter Session of Parliament”, beginning November 22, he said, adding that a decision on raising prices may “not be easy”.

The ministerial panel is essentially a consensus-building body of the Congress-led UPA government and comprises key allies like the DMK, TMC and NC.

The allies had in September scuttled plans to limit the supply of subsidised LPG cylinders to 4-6 per household in a year so that subsidies can be cut. Reddy said his ministry would push for raising prices of all three regulated products, diesel, LPG and kerosene.

On oil companies pressing for a hike in petrol prices, he said PSUs were fully empowered to take a view, keeping in mind rising crude oil prices and depreciating rupee. “Our ministry does not administer” the price of petrol, which was freed from government control in June last year, he said.

Yesterday, HPCL Director (Finance) B Mukherjee had said that oil firms may have to raise petrol prices, as they were losing Rs 1.50 per litre at the current rates.

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PTI