Mamata calls on Pranab ahead of EGoM meet on fuel hike

Last Updated: Friday, June 25, 2010 - 00:01

New Delhi: Trinamool Congress leader and
Railway Minister Mamata Banerjee called on Finance Minister
Pranab Mukherjee late tonight, apparently to discuss the
contentious issue of increasing petrol and diesel prices.

Banerjee is believed to have expressed her reservations
on raising fuel prices at a time when food prices are already
ruling high.

The meeting lasted nearly 45 minutes. Banerjee, however,
did not answer any queries from waiting journalists.

The Empowered Group of Ministers, headed by Mukherjee, is
meeting tomorrow to decide on freeing petrol prices from
government control and linking it with global markets, a move
that will result in rates increasing by up to Rs 3.73 a litre.

The panel headed by Finance Minister Pranab Mukherjee
may, however, not approve of a similar hike for diesel and
instead give the nod for a maximum increase of Rs 2 per litre.

Banerjee had skipped the last EGoM meet on June 7.

NCP supremo Sharad Pawar, too, had abstained from the
panel`s meeting on June 7.

Sources had said that with DMK leader and Fertilizer
Minister M K Alagiri onboard, the EGoM may push for freeing
petrol prices, a move that will see rates in Delhi rising by
Rs 3.73 a litre. Petrol in Delhi currently costs Rs 47.93 per

A similar decision on diesel would have resulted in rates
going up by Rs 3.80 per litre, but Banerjee and Pawar remain
opposed to any increase in the prices of a fuel that is used
by the transport and agriculture sector and has inflationary

With global crude oil trading below USD 80 a barrel,
Deora sees this as the last opportunity to usher in reforms in
the sector, which would otherwise need Rs 74,300 crore in
subsidy to bridge the gap between retail prices and the
imported cost.

In the absence of a consensus on freeing diesel prices,
the oil ministry may push for a minimum Rs 2 per litre
increase in rates, sources said.

Freeing of petrol prices would reduce the Rs 74,300 crore
deficit by about Rs 5,000 crore. A one rupee per litre hike in
diesel prices would cut the losses by Rs 3,800-4,000 crore.

Deora, who has on more than one occasion briefed the
Prime Minister Manmohan Singh and EGoM head Mukherjee on the
crisis that stares at the oil PSUs if no decision is taken,
had twice tried for the EGoM to meet last week, but failed due
to unavailability of ministers.

While there may not be any problem in freeing pricing of
petrol, there were doubts about raising diesel prices, which
many feel will add to the already high inflation.

In May, WPI-based inflation provisionally entered double
digits at 10.16 per cent.

Sources said also a Rs 25 per cylinder hike in domestic
LPG rates is also on the cards, but it, too, has to pass the
muster of Banerjee and Pawar.

State oil firms currently lose about Rs 215 crore per day
on selling fuel below the imported cost. They lose Rs 3.73 a
litre on selling petrol, Rs 3.80 per litre on diesel, Rs 18.82
a litre on PDS kerosene and Rs 261.90 on every 14.2-kg LPG


First Published: Friday, June 25, 2010 - 00:01

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