EGoM meet on Friday to decide petrol pricing

NEW DELHI: An empowered group of ministers (EGoM) will meet on June 25 to decide on pricing of petrol, diesel, kerosene and cooking gas.“Friday is the meeting of EGoM,” oil minister Murli Deora said but refused to spell out the agenda.

The government has provided only Rs 3,108 crore towards petroleum subsidy in the current year against an estimated fuel subsidy bill for 2010-11 of nearly Rs 90,000 crore at an average crude oil import price—popularly called Indian basket—of $80 a barrel.
If the prices of petroleum products are not revised, the huge subsidy bill could easily eat up the bounty the government received from the 3G and broadband auction.

An expert panel headed by former member of Planning Commission (energy) Kirit Parikh has recommended the government to free up pump prices of petrol and diesel to reduce the subsidy burden on the public exchequer. It has also suggested to raise retail prices of kerosene by Rs 6 a litre and cooking gas by Rs 100 per cylinder.

It is expected that EGoM may allow a raise in petrol and diesel prices by up to Rs 3 a litre. If the EGoM approves this, it would be the third such price rise in nearly a year. Earlier, the petroleum ministry had raised petrol prices by Rs 4 a litre and diesel by Rs 2 a litre on July 2, 2009, and finance minister Pranab Mukherjee had raised taxes on petroleum products in his February budget this year that made petrol costlier by Rs 2.71 and diesel Rs 2.55 a litre.

Domestic retail prices of petrol and diesel are benchmarked at close to $60 per barrel crude oil price, while the global rates currently are over $77 a barrel.