Government in no mood to hike oil prices

new delhi: the government is going to ensure that there will not be any increase in oil prices for at least three months till an independent regulatory authority is put in place, say senior officials at the ministry of petroleum. "the government will await the passage of the bill to set up an independent regulator by parliament before it allows any hike in petrol and diesel price. setting up of the regulator is going to take a minimum period of three months," says a senior official. recent reports had hinted that the prices of petrol and diesel will be increased in may, following a massive hike in international crude prices. senior oil company officials have also voiced concern that the current prices of petrol and diesel are not sustainable. after the dismantling of the administered price mechanism (apm) from april 1, there is now a direct correlation between the international crude prices and the domestic prices of petro-products. "only after the regulator is set up, the three oil majors -- hpcl, bpcl and ioc -- will fix the prices in cosultation with the regulator. the regulator will also ensure that no cartelisation happens," say ministry officials. a dollar’s rise in the price of a barrel in international market leads to an increase of 55 paise per litre in petrol and 45 paise in diesel. the current price of petrol and diesel have been pegged to international crude prices of $20-a-barrel in the union budget of february 2002. since then, the price of crude has risen to over $25-a-barrel, even touching the high of $27-a-barrel. the government also has a plan in case the situation goes out of hand. "though the government has in-principle decided to wait for the regulator to effect any changes in oil prices, at the same time it will keep a close watch on the international crude prices just in case any action is warranted," say officials, hinting at a direct intervention. sources say that the move by the government to maintain price stability after the dismantling of the apm, and setting up of an independent regulator are attempts to distance itself from a move which will be highly unpopular. the bjp-led government at the centre is already under a lot of pressure to rollback certain budget announcements this year that have not gone down well with the salaried middle class.