New Delhi, May 16: The Left parties have floated the idea of creating a price stabilisation fund to head off an increase in petrol and diesel prices ? an idea that the government has been mulling over ever since crude oil prices surged to over $50 a barrel at the start of the year.

At a meeting with finance minister P. Chidambaram, the Left suggested that a price stabilisation fund could be created out of the cess collected on domestic crude oil, which amounts to Rs 5,400 crore a year.

This cash pile goes to the Oil Industry Development Board (OIDB) but is never actually passed on to the oil companies, which have been clamouring for an increase in petrol and diesel prices to mitigate the crippling subsidy burden on kerosene and LPG that they have to shoulder.

The Left leaders also trotted out their old recommendations for a cut in excise and customs duties on petroleum products which are factored into the computation of the pump price for the two fuels.

At the meeting with Chidambaram and petroleum minister Mani Shankar Aiyar, the Left also raised the demand for withdrawing the additional 50 paise per litre cess on petrol and diesel for the road fund announced in the current budget.

The oil companies are seeking a Rs 4.59 per litre increase in the price of petrol. As much as Rs 2.52 of the hike is attributable to the increase in excise duty introduced in the budget.

Similarly, diesel prices need to be raised by Rs 4.97 per litre which includes Rs 1.53 due to the excise duty hike. The required increase also includes Re 0.61 per litre each due to the increase in the road cess.

“We have asked the government not to increase prices but consider other ways of containing the impact of global price hike,” CPI secretary D. Raja said after the meeting.

Dipankar Mukherjee of the CPM said the finance minister’s statement in the budget that the duty changes were “revenue neutral” and would not result in any increase in retail price was clearly “false”.

“It is felt the proposed changes in duty structure have actually helped the standalone private refineries, especially Reliance, while hitting the public sector oil companies.

“Import duty reduction has helped the refining sector, but the excise duty changes, applicable after refining, affect adversely the marketing sector managed by the oil PSUs,” Mukherjee said.