WELCOME MOVE

New Delhi, Jan. 4: The government is likely to take a decision on a fuel price cut following the submission of a cabinet note by the petroleum ministry next week.

In December, the price of petrol was cut by Rs 5 a litre, while diesel became cheaper by Rs 2 a litre.

“Consultations, perhaps final, would be held next week and the cabinet note would be sent to the Manmohan Singh government for a fuel price cut,” sources in the ministry said.

They said at the consultations the ministry would come up with its suggestions for the cabinet after weighing various options and their likely implications on the state-owned oil marketing companies.

The ministry has already taken the views of the oil firms.

Among the options are reductions in the prices of petrol, diesel and domestic LPG cylinder or cuts in their excise duties or a combination of both.

The government is believed to be considering a cut of Rs 5 for petrol, Rs 3 for diesel and Rs 20 on a domestic LPG cylinder. It collects an excise duty of Rs 13.35 per litre on unbranded petrol and Rs 3.65 per litre on unbranded diesel.

Even after last month’s fuel price cut, the three oil firms — Indian Oil Corporation, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd — have been making a profit of Rs 11.99 per litre on petrol and Rs 4.13 a litre on diesel. They continue to lose Rs 12.16 on the sale of every litre of kerosene and Rs 132.97 per domestic LPG cylinder.

A cut in the excise levy, however, can be resisted by the finance ministry, which had already cut duties on several products and was burdened with extra budgetary spending.

However, officials said, the excise duty cut will help the oil companies which suffered huge losses when the global crude price touched an all-time high of $145 in July.

Oil and Natural Gas Corporation and Oil India Ltd said they were unable to pay their share of the subsidy because of falling oil prices.

IOC, HPCL and BPCL will end the 2008-09 fiscal with revenue losses of just over Rs 100,000 crore. The Centre has issued nearly Rs 45,000 crore bonds to partially compensate losses incurred between January and September. The final tranche of Rs 20,000 crore is due in January-end.