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Since 1st March, 1999
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Fuel report set to be given a quiet burial

New Delhi, Aug. 18: The petroleum ministry is set to spike the BK Chaturvedi panel’s recommendation on fuel pricing. The panel had suggested that fuel prices be raised every month till they are on a par with costs.

Petroleum minister Murli Deora is scheduled to meet the heads of state-owned oil companies tomorrow to review the financial position of the companies and discuss the implications of the high-powered panel’s recommendations.

The meeting will also review the distribution of petroleum products in the country, assess fuel stocks with the companies and deliberate on their preparedness to tackle shortages, with the festive season not far away.

Sources said the panel’s suggestion to raise petrol price by Rs 2.50 a litre per month till March 2009 and diesel by 75 paise till 2010 was not acceptable even to the Prime Minister’s Office. They said Deora was likely to give the report a burial at tomorrow’s meet.

The sources said it would also be difficult to implement the recommendation on dual pricing of diesel — one for premium cars and another for trucks and tractors. However, the petroleum ministry could ask the oil companies to sell fuel to commercial bulk buyers at a higher price.

The proposal on levying a special tax on crude produced from oilfields awarded prior to 1999, the year when the new exploration and licensing policy was introduced, is being seen as a “punitive measure” that went against the spirit of production sharing contracts signed with private firms such as Cairn.

The losses of oil companies have come down to Rs 450 crore a day from Rs 600 crore, with the decline in international crude prices from a high of $147 per barrel last month to $113-114 per barrel at present. The Indian basket of crude is trading at $108 per barrel.

“Despite the fall in global crude prices, oil companies are still losing money. The retail fuel prices are unlikely to be reviewed till the companies continue to incur losses,” a petroleum ministry official said.

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