Faced with the prospect of revenue loss on fuel jumping to Rs 700 billion (Rs 70,000 crore) next fiscal, Petroleum Ministry on Wednesday called for "harsh decisions" even as it hinted that cleaner Euro-IV fuel in 13 metro cities will cost more from April 1.
The government on Friday decontrolled petroleum prices to bring fuel costs in line with global oil rates after an Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, met for the second time in less than three weeks to decide on raising fuel prices. Railway Minister Mamata Banerjee was absent again.
International crude oil prices may have eased but the government has no immediate plans to pass on the benefit to the consumers, as it wants to wait for the prices to stabilise further.
According to reports, the price of petrol is expected to go up by Rs 5 and diesel by Rs 6.
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State-owned oil firms are likely to announce reduction in rates, made possible because of softening in international oil rates, this evening, government and industry sources said.
International oil prices have hit a six-month low, helping Indian fuel retailers breakeven on petrol but they continue to lose money on diesel - the most used fuel in the country, officials said. The world's best-known crude benchmark, Brent was trading at $94.91 per barrel on Thursday after concerns of a global recession led to it slipping to a six-month low of $91.51 on the previous day. The current rates are a relief to India, which is 85 per cent dependent on imports for meeting its oil needs.
Attributing the steep hike in petrol prices to declining value of rupee, Planning Commission on Wednesday said it will have immediate impact on the price situation but things will stabilise in the long run.
Petrol price was freed from government control in June 2010 but public sector companies continue to informally consult their parent Oil Ministry before taking a decision.
The Planning Commission said the decision of oil marketing companies to raise petrol price by Rs 3.14 per litre is a good news and will provide credibility to the economic reforms process.
While consumers feel that petrol pinches directly, diesel hurts indirectly, as it is an input in almost all the goods and services we use.
Prime Minister Manmohan Singh on Saturday hinted at replacing the current practice of fortnightly revision of petrol and diesel prices with a more stable pricing policy once the volatile international crude prices stabilise.
The VW cars are well known in the country's car market for having sturdy body structures, which are combined with powerful fuel efficient engines and abundant comfort and safety features.
Petrol and diesel prices are unlikely to be reduced in line with falling international prices as the government is working on a stable pricing regime.
The Cabinet Committee for Economic Affairs is expected to meet on Wednesday evening to take this decision, given the cheap crude prices in the global market. The government had last cut petrol prices on December by Rs 5, and diesel rates by Rs 2 a litre.
In first clear indications of a further reduction in petrol and diesel prices, Petroleum Minister Murli Deora on Monday said the government was considering passing on the benefit of the fall in international crude oil prices to consumers.
"There is no immediate plan to decontrol diesel or LPG as they have cascading effect (on general prices)," Minister of State for Petroleum and Natural Gas R P N Singh told reporters in New Delhi.
The wide-ranging sanctions imposed by the US on the Russian oil sector have started to dent near-term oil flows to India with state-owned Bharat Petroleum Corporation Ltd (BPCL) saying not enough cargoes are available for March.
Faced with huge under-recoveries, Indian Oil Corporation on Saturday sought an immediate upward revision of petrol and diesel prices to the the extent of Rs 10.50 paise per litre.
Thirteen big cities, including Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore, Lucknow, Kanpur, Agra, Surat, Ahmedabad, Pune and Sholapur will move from Euro-III grade fuel to Euro-IV from Thursday.
For the first time, the government is likely to dip into the Oil Industry Development Fund (OIDF) to finance part of its fertiliser subsidy programme for 2025-26, according to official sources. The finance ministry has accounted for Rs 23,000 crore in the FY26 Budget as net additional resources to be drawn from dedicated reserve funds, including the OIDF, the Agriculture Infrastructure and Development Fund, and the Universal Service Obligation Fund.
Congress said ATF prices have been reduced by 31% while petrol only 16%.
A formal announcement is likely in Parliament on Wednesday. This will reverse half of the price hike in June, when petrol price was increased by Rs 4 and diesel by Rs 2.
Facing difficulties in daily operations due to constant increase of fuel prices by oil marketing companies, the Consortium of Indian Petroleum Dealers' Association have threatened to go on a one-day strike.
Government may raise petrol price by Rs 2 a litre and diesel by Re 1 a litre this week, but a duty rejig to minimise impact of high international crude oil prices looks unlikely. The decision on this will be taken by the Cabinet headed by Prime Minister Manmohan Singh.
The Ministry Of Petroleum and Natural Gas has ruled out a hike in the prices of petrol and diesel in the near future even as the price of the Indian basket of crude oil continues to remain above $65 a barrel.
The recent petrol and diesel price hike by the government did not go down well with the common people who expressed their\ndispleasure over this pre-Budget move. The prices were raised by as much as 10 per cent on Wednesday.
Petrol doped with 20 per cent ethanol was rolled out on Monday at select petrol pumps in 11 states and union territories as part of a programme to increase use of biofuels to cut emissions as well as dependence on foreign exchange-draining imports. At present, 10 per cent ethanol is blended in petrol (10 per cent ethanol, 90 per cent petrol) and the government is looking to double this quantity by 2025. Prime Minister Narendra Modi launched the higher 20 per cent ethanol blended petrol two months ahead of the planned rollout in April, at the India Energy Week (IEW) 2023 in Bengaluru.
According to police, CPI-M legislator K Bhimrao and other party supporters were arrested from Guindy railway station in Chennai.
India should learn to live with high energy prices for rapid economic growth, said Planning Commission Deputy Chairman Montek Singh Ahluwalia after two of the state-owned oil companies hiked petrol rates this week.
The information technology and telecom ministries spent a whopping Rs 53.14 lakh on petrol in two years, according to a RTI report.
Centre and state governments are steadily increasing excise duties and value-added tax
The government is unlikely to take up the issue of reducing petrol, diesel and domestic LPG prices on Thursday as consultations on petroleum ministry's simultaneous proposal for freeing auto fuel pricing were not complete.
State-owned oil firms on Tuesday decreased retail selling price of petrol and diesel by up to Rs 1.08 and Rs 1.18 per litre, respectively, in step with the global softening of crude prices.
Buckling under pressure, the government on Wednesday cut the excise duty on petrol and diesel by Rs 5 and Rs 10 respectively to bring down retail rates from record highs. The announcement comes on the eve of Diwali which will help bring down the skyrocketing prices of fuel and provide some relief to the common man battling inflation.
With vast disparity in fuel prices, the demand for diesel cars had reached upto 85 per cent and petrol cars had come down to 15 per cent, which otherwise usually remained at 50:50 per cent levels in India.
Diesel price hike is a tough decision and we need lot of tough decisions to get to 8 per cent growth rate," Planning Commission Deputy Chairman Montek Singh told reporters.
After slamming the Centre for the steep hike in petrol price, West Bengal Chief Minister Mamata Banerjee on Saturday hit the streets in Kolkata, leading a massive protest march to put pressure on the United Progressive Alliance government for a roll-back. Banerjee, who was accompanied by Railway Minister Mukul Roy, party functionaries and thousands of Trinamool Congress workers, marched from Jadavpur to Hazra crossing, a distance of five km in south Kolkata.
Hardening prices of manufactured items during the month may refrain the Reserve Bank of India from cutting rates in its policy review on February 8.
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