The Telegraph
Since 1st March, 1999
Email This Page
Left to make best of bad oil bargain

New Delhi, May 10: After consultations with petroleum minister Murli Deora, the Left parties appeared to be reconciled to a “moderate” rise in the prices of petrol and diesel, but remained strongly opposed to any revision for kerosene and cooking gas.

At the meeting, however, they told Deora they were opposed to an increase in the price of any petroleum product. They suggested that the government slash customs and excise duties instead.

On two occasions in the past, the government had raised prices over Left objections. When this was pointed out to Sitaram Yechury, the CPM politburo member who was part of the team that met Deora, he said: “Our pressure had ensured that the price hike was not Rs 11 for petrol, Rs 10 for diesel, Rs 5 for kerosene and Rs 100 per cylinder for LPG.”

This time, too, the best the Left can expect is a “moderate” increase. What that moderate amount is it did not say, but experience of the two escalations under the current government suggests a rise of Rs 2-3 for petrol and diesel.

The ministry made an unnerving presentation to the Left leaders. It said if the government were to bring domestic prices up to international levels, petrol and diesel would cost around Rs 10 more per litre, kerosene over Rs 17 more and cooking gas nearly Rs 115 more per cylinder (see chart).

Deora told Yechury, Gurudas Dasgupta (CPI) and Abani Roy (RSP) that current domestic prices correspond to a crude oil price of $51 per barrel while the actual rate in the international market is $69.06.

As a result, oil companies are projected to collectively lose Rs 73,512 crore during 2006-07 at current price levels.

The Left insisted that finance minister P. Chidambaram cut petroleum duties to lighten the impact on petroleum companies and consumers.

Roy said with surging international prices of crude, “the government should not take money out of the oil sector through higher duties merely to curb the fiscal deficit. This point should be made very clear to Chidambaram”.

The Left wants customs duty to be halved and a specific excise duty levied on products as is the case in western countries and Japan. Since excise duty is a percentage of the price, every time the price goes up, the duty also increases.

Deora said:“We are trying our best to see that price rise is avoided. That is why these consultations.”

India’s oil import bill has swelled 52 per cent to $44.64 billion in 2005-06, mainly because of high global oil prices.

Email This Page