EGoM on immediate fuel price hike

EGoM on fuel price hike likely tomorrow a high powered ministerial panel is likely to meet on Friday to consider a hike in diesel and domestic LPG prices, as well as a cut in duty rates to combat the high cost of crude oil.

The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, may meet at 1300 hours on Friday, a sources said in New Delhi.A hike of Rs 2-3 per litre in diesel prices and an increase of at least Rs 25 per domestic LPG cylinder are on the EGoM agenda.It may also consider raising kerosene prices.

Besides, the high powered panel may consider lowering customs or import duty on crude oil to nill from current 5 per cent, and on diesel from 7.5 per cent to 2.5 per cent.

The oil ministry is pushing for equitable sharing of the burden arising from the rise in crude oil prices among consumers, the government and state-owned companies, the source said.

State-owned oil companies now lose Rs 15.44 per litre on sale of diesel.One-third of this will have to be passed on to consumers in stages, while a similar amount will have to be borne by the government by way of either providing a cash subsidy or cutting customs and excise duty.

The remaining would be absorbed by upstream firms like ONGC and the fuel retailers.
A similar formula would apply to the Rs 27.47 per litre loss on kerosene and Rs 381.14 under-realisation on sale of every 14.2-kg domestic LPG cylinder.

The source said the ministry also wants a cut in Rs 4.60 per litre central excise duty levied on diesel to moderate the impact of high crude oil prices.