EGoM on oil will meet in presence of Pawar, Alagiri

The crucial meeting of the empowered group of ministers on oil, which will authorise a rise in diesel and liquefied petroleum gas prices, would take place only after ensuring the presence of Agriculture Minister Sharad Pawar and Chemical and Fertilisers Minister M K Alagiri, the finance ministry indicated on Monday.

Top sources in the government told Business Standard the Congress managers wanted the rise in prices to be a collective decision of the United Progressive Alliance and also make sure allies could not wriggle out of the exercise to take harsh economic decisions.

Nationalist Congress Party leader Sharad Pawar's presence is imperative, as a decision to hike diesel prices is expected to have a major impact on the agriculture sector.

A large number of farmers is dependent on diesel for irrigation while the transport sector is also likely to be hit making an overall inflationary impact on agricultural products.

The meeting of the EGoM on Oil prices was scheduled last week but it had to be cancelled as Pawar was unavailable. Alagiri, because of his interest and preoccupations in Tamil Nadu, is regularly absent from the crucial meetings of the GoMs and EGoMs in Delhi.

According to the assessment of the Congress brass, Alagiri's absence from the next meeting of the Oil EGoM would not make big difference but Pawar's presence is more important.

Last year, at a meeting of the GoM, when the petrol prices were hiked, Pawar had skipped the meeting and later his party, the Nationalist Congress Party, publicly went against the decision and tried to put the entire onus on Congress.

"This time, we want to make it a collective decision and make allies party to it. They can't shun responsibilities of a so-called

harsh economic decision," said a Congress manager.

Railway Minister Mamata Banerjee is also part of the GoM but as she is slated to become a chief minister she has already withdrawn herself from all government activities in Delhi.

On Sunday, Finance Minister Pranab Mukherjee said the EGoM headed by him would meet next week. Finance ministry officials are already in touch with the agriculture ministry and Alagiri's office to get a suitable date from the two ministers for the meeting.

The state-owned oil marketing companies on Saturday increased petrol prices by Rs 5 a litre after the petrol prices were deregulated in June 2010.

"Decision on petrol prices is taken by oil marketing companies.

"For other petroleum products like diesel, LPG and kerosene there is the empowered GoM," Mukherjee said yesterday.

The finance ministry has argued that the last time petroleum prices were revised when it was at $68 per barrel at the international market.

Now, it has reached $110 per barrel, forcing the government to take a look at the diesel and other prices.

"A subsidy of Rs 26 was given on a litre of kerosene, Rs 16 a litre of diesel and Rs 320 per cylinder of LPG," Mukherjee said.

The Prime Minister's Economic Advisory Council has also advised the government to quickly decide on freeing of diesel prices, citing huge losses incurred by oil companies on account of difference between domestic and international prices.