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Rediff.com  » Business » BJP blames faulty govt policy for fuel price hike

BJP blames faulty govt policy for fuel price hike

April 26, 2010 15:46 IST

Petrol pumpAhead of an anticipated increase in petrol and diesel prices, Opposition Bharatiya Janata Party has criticised Oil Minister Murli Deora's 'indecisiveness', saying his 'ad-hoc' fuel pricing policy has led to a vicious circle of price hikes.

Deora, who last year lost a golden opportunity to free auto fuel prices when international crude rates dropped to below $50 per barrel, is believed to be readying for a hike in petrol and diesel prices next month to cut losses of Rs 265 crore (Rs 2.65 billion) a day that state-owned oil firms incur by selling fuel below cost.

"There is a lurking doubt in minds of people that diesel and petrol prices are likely to be increased no sooner than the current session of Parliament ends (on May 12)," former Oil Minister and senior BJP leader Ram Naik said.

Petrol is currently sold at a loss of Rs 6.68 per litre and diesel at Rs 5.81 per litre. Naik said the Vajpayee government had given Navratna oil firms the freedom to decide fuel prices.

But this was replaced by 'ad-hocism' in the United Progressive Alliance regime, he said referring to February 26 hike of Rs 2.71 a litre in petrol and Rs 2.55 per litre in diesel rates that did not help in any reduction in the losses of oil firms.

After Deora took over in January 2006, 'the ship has become rudderless,' he said.

"Deora appointed three committees -- first headed by former RBI Governor C Rangarajan, then by former Cabinet secretary B K Chaturvedi and now by former Planning Commission member Kirit Parikh, on fuel pricing policy.

"The reports are now adorning the library of petroleum ministry," he said.

While all the three reports gave almost identical remedy to current crisis -- freeing auto fuel pricing from government control, Deora has not acted on any of them.

"Indecision in this vital sector is causing irreparable loss to the country, to the people and also to the oil firms. Navratna companies have lost their shine and the people are paying very heavily by way of higher prices," he said.

"Increasing prices without a pricing policy is accelerating the vicious circle of price rise," he said.

The government till last year on ad-hoc basis decided to partly make up for losses suffered by retailers Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited by way of bonds, cash or assistance from upstream sector.

"It is a misfortune that petroleum sector which is of vital importance to the national economy is going through ad-hoc phases," he said.

Naik said Deora was enjoying fruits of the initiatives taken during National Democratic Alliance rule.

"The KG basin gas find (of Reliance Industries) that has transformed the energy landscape happened in the Vajpayee government's regime and because of the revolutionary New Exploration Licencing Policy we launched."

Cairn's giant Rajasthan discoveries came when Naik was the minister and he named three of the fields.

The United Progressive Alliance government has undone all the good work of NELP by going back on the sovereign commitment of a 7-year income tax holiday, Naik said.

"Now gas is available but it cannot be used because of government's lethargy and indecisiveness," he said with reference to RIL producing less than capacity in the absence of government nominated customers.

Naik said Indian oil firms made their first overseas investments during the Atal Bihari Vajpayee government.

"For the first time, we made an investment outside India to the tune of Rs 9,000 crore (Rs 90 billion) in Sakhalin-1 project in Russia and Rs 3,500 crore (Rs 35 billion) in Sudan oilfields.

"There was criticism by the Congress at that time that we have gone for junk purchases. But Sudan investment was repaid within three years and oil from Sakhalin is coming for last three years," he said, adding no major investment had taken place during Deora's tenure.

"The picture is gloomy. What is needed is initiative and bold decisions," he added.

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