Fuel hike decision deferred as key cabinet members skip meet

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Old 08-Jun-2010
Post Fuel hike decision deferred as key cabinet members skip meet

The ministerial panel on fuels under finance minister Pranab Mukherjee deferred a decision on either allowing oilmarketing companies to set pump prices in tune with international trend or simply raise petrol and diesel prices to reduce losses of state-run companies, ostensibly because key members could not attend the meeting on Monday.

Railway minister Mamata Banerjee, agriculture minister Sharad Pawar, power minister Sushilkumar Shinde and transport minister Kamal Nath did not attend the meeting for one reason or the other. But oil ministry bureaucrats claimed there was a general consensus among remaining members on freeing up petrol from government control and moderating the increase in diesel prices to Rs 2 a litre instead of Rs 3.49 required under market pricing, indicated by TOI.

A decision is finally expected at the panel's next meeting, which, political sources said, may be at least three weeks away. Ministry bureaucrats though would like to believe that the FM may call a meeting of the panel on Thursday after the meeting of the Cabinet since usually all ministers are present on the occasion.

As reported by TOI on Monday, Mamata did not attend the meeting but had already communicated her party's opposition to the idea of deregulation which would result in a steep rise in petrol and diesel prices.

Instead, she has suggested a marginal increase in motor fuel prices and does not want any increase in cooking gas or kerosene.

But according to sources, with fertiliser minister M K Alagiri on board and strong pitch by oil minister Murli Deora as well as Planning Commission deputy chairman Montek Singh Ahluwalia, there was a general agreement that petrol should be deregulated — which would become costlier by Rs 3.35 a litre — but limit the revision in diesel price to Rs 2.

The question of raising prices of cooking gas and kerosene remained "unresolved" but was unlikely to pass muster. The panel also looked into the inflationary pressures of a price hike, which, an oil ministry presentation said would lead to a 1.4% rise in the Wholesale Price Index if petrol prices were freed. At this point, state-run oilmarketing companies are estimated to lose Rs 72,300 crore this fiscal if they are not allowed to raise street prices.

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