New Delhi, Sept 13: A modest increase in prices of petrol and diesel could be announced over the weekend.
Petroleum minister Ram Naik is fighting a battle of sorts with the finance ministry to reduce duties on petro-goods to the degree that would obviate the need to raise prices. Not taking things for granted, Indian Oil, Hindustan Petroleum and Bharat Petroleum have kept ready a plan that envisages an increase of 25-50 paise.
The average of the first 15 daysí global crude prices would warrant a hike of Rs 1.25 a litre on petrol, petroleum ministry officials said. Naik is against such a steep increase and has asked companies to refrain from doing so. The minister believes he will be able to prevail on finance minister Jaswant Singh to bring down duties significantly enough to absorb the rise in price, which will otherwise could go up Rs 2 a litre by the end of the month.
Naik fears a hike at this point of time will stoke inflation and cost the BJP-led government politically. This is a prospect that also spooks party managers girding up for 10 assembly polls over 20 months.
Though pricing decisions are supposed to be taken independently by oil firms after the sector was freed from controls in April this year, the actual position is that the government continues to have the decisive say with companies that are still state-owned and managed.
Crude prices peaked at $ 29 a barrel earlier this week on reports that US had geared up for a possible strike on Iraq. On August 31, petrol prices had been raised by 22 paise a litre and diesel by 29 paise.