The Telegraph
Since 1st March, 1999
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Petrol price pledge puts govt on slippery ground

New Delhi, May 7: The government today ruled out a sharp increase in petrol and diesel prices after the polls, an announcement described by an Election Commission official as a violation of the model code of conduct.

Petroleum secretary B.K. Chaturvedi said: “The fear of any substantial increase in the prices of petroleum products is false.”

He indicated a modest increase, adding that the new government will decide the extent of revision. Oil companies are reviewing the “spurt in crude prices to take appropriate action”.

An Election Commission official questioned how the government could give such a guarantee when earlier the petroleum ministry had informed the poll authorities that petrol prices were governed by the international market.

The model code of conduct bars ministers and bureaucrats from making any policy decisions or statements that could be construed as influencing the voter.

Oil companies have repeatedly written to the petroleum ministry to raise the price of petrol by Rs 3 a litre and of diesel by Rs 5. The government has instructed them to hold off until after the elections.

With international crude oil prices shooting up in recent days, there has been speculation about a hefty hike after the polls. “There will not be any such increase in petrol and diesel prices,” Chaturvedi said.

Oil companies are supposed to revise prices every fortnight corresponding to changes in the international market. But no modifications have taken place since January 1.

World oil prices hit $40 a barrel for the first time in 13 years today on concerns over global supply security. It was the highest level since October 1990 after Iraq invaded Kuwait in the crisis that led to the Gulf War.

Last weekend’s shootings at a Saudi Arabian chemicals plant and attempts a week earlier to bomb Iraq’s Basra oil export terminal have fostered fears of a bigger attack on oil facilities in West Asia.

It is not the Indian government alone that worries about the impact of oil prices on voters. The US is calling on Opec, the oil producers’ cartel, to calm prices by stepping up output. The Bush administration fears the fallout of higher energy costs in an election year.

Backing up Chaturvedi’s comments, senior petroleum ministry officials said the profits of public sector oil companies were shooting up, providing them with the cushion to shield consumers from any sudden and sharp rise in prices. This would still mean the government regulating prices, flying in the face of dismantling control announced with much fanfare.

Whether the poll panel will take any action is not known yet, but on an earlier occasion in this election it had frowned on an announcement of tax collection figures, more innocuous than oil prices.

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