Fuel Price Hike Imminent; Govt ...

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[In a clear indication of an imminent fuel price hike, Prime Minister Manmohan Singh today said consumers cannot be fully insulated from the impact of rising international oil prices, even though a consensus eludes the government on the issue. With the surge in global oil prices leaving a Rs 225,040 crore revenue deficit with oil companies, Singh has over the past one week held several rounds of consultations with senior ministers and UPA Chairperson Sonia Gandhi on raising fuel prices but a consensus has eluded the government. &quot;We cannot allow the subsidy bill to rise any further. Nor do we have the margin to fully insulate the consumer from the impact of world commodity and oil price inflation,&quot; the Prime Minister said at Assocham's annual meeting in New Delhi. Petroleum Minister Murli Deora, who has been pushing for a Rs 10 a litre hike in petrol, Rs 5 per litre increase in diesel and Rs 50 per cylinder raise in LPG prices, readied a note for consideration of the Cabinet that by today's indication may take place on Wednesday. &quot;There is no consensus on the issue and therefore they (the government) is buying time,&quot; one of Deora's aide said. The Prime Minister also talked of building wider political consensus on the issue saying the government could insulate poor people &quot;up to a point&quot; and economic pricing of oil was essential to sustain growth. The recent reverses suffered by the ruling Congress in Karnataka Assembly elections and inflation rate climbing up to 45-month high of 8.1 per cent, are underpinning government's willingness to take drastic measures. Finance Minister P. Chidambaram has vehemently opposed to a duty cut to cushion the impact of global prices. He is also not in favour of raising prices as it may fuel inflation. At current global oil prices, India's oil subsidy bill may shoot up three times to 2.2 per cent of the GDP this year. State-run fuel retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum face a revenue loss of Rs 225,040 crore on sale of petrol, diesel, domestic LPG and kerosene this fiscal on not being allowed to align retail prices with cost. BPCL and HPCL would run out of cash to even import crude oil in July while IOC can sustain imports till September. Sources said the government's reluctance to take a decision on the issue has this month seen widening of losses of state-run companies on fuel sales to Rs 650 crore per day from Rs 580 crore of last week. The three firms, who till last week were losing Rs 16.34 a litre on petrol, are incurring a loss of Rs 21.43 on sale of every litre since June 1. Similarly, the losses on diesel have widened to Rs 31.58 per litre from Rs 23.47 while on kerosene they have jumped to Rs 35.98 from Rs 28.72 per litre. Losses on LPG have swelled to Rs 353 per 14.2-kg cylinder from Rs 305.90. IOC, BPCL and HPCL calculate import parity price of petrol and diesel on 1st and 16th of every month based on the average of the previous fortnight. LPG and kerosene prices are calculated once a month based on monthly average imported price. There is likelihood that a meeting of the Cabinet may take place either on Wednesday or Thursday to decide on the fiscal package that may include raising fuel prices and marginal duty cuts. The basket of crude oil India buys averaged USD 124.02 per barrel in the second fortnight of May as against $115.09 in the first fortnight. The Indian basket was at $67 per barrel in February when petrol and diesel price were raised by Rs 2 and Re 1 a litre respectively. (PTI)