Oil minister Jaipal Reddy rules out petrol price hike for now

NEW DELHI: The ministerial panel on fuels is expected to examine the situation arising out of the rupee’s fall against the dollar and recent movement of oil in international market, but an immediate increase in motor or kitchen fuel prices is not on the government’s radar.

Oil minister S Jaipal Reddy on Wednesday met finance minister Pranab Mukherjee, who heads the panel, to seek the committee’s sitting in the backdrop of demand for an increase in retail prices of both motor and kitchen fuels.

On Tuesday, Hindustan Petroleum director (finance) B Mukherjee set the cat among pigeons by telling reporters in New Delhi that the companies were in discussion to raise petrol price and indicated it could happen within a week.

The government says the companies are free to revise petrol price but they do not move without an informal nod from the oil ministry since it is the majority owner. So far, the government has resisted increasing prices for fear of stoking anger from consumers feeling the pinch of high inflation and costlier loan installments.

Besides, Parliament’s Winter session is to begin from November 22 and any increase in fuel prices would give the Opposition a big stick to beat the ruling dispensation with. Such a move could also add fire to BJP leader L K Advani’s nationwide rath yatra to highlight the issues of corruption and price rise.

Naturally, the government prefers the companies wait and watch the patterns emerging from Eurozone and oil demand, both of which influence currency exchange rates and crude prices. The rupee is already showing signs of recovery and mix of oil India buys has slid to $105/barrel from $108/barrel over the last week.

Much of the problem appears to be of the government’s own making. While it does not compensate for losses on petrol, the oil marketers are supposed to get a third of the under-recovery on kitchen fuels and diesel from the finance ministry.

Though the oil marketers are losing about Rs 1.50, excluding taxes, on petrol, the finance ministry’s loathsome approach in releasing the subsidy on controlled fuels have added to their woes and forced them into the red in the second quarter.