Govt to share oil price burden

In an effort to reduce the burden of the oil price hike on the consumers, the government is likely to share the burden between the oil compa...

In an effort to reduce the burden of the oil price hike on the consumers, the government is likely to share the burden between the oil companies and the government.

This implies that though the government, in the third week of June, may implement a marginal hike in the prices of petrol and diesel, it would also go for a reduction in the import and excise duties while keeping some part of the burden of the international oil price hike for the oil companies.

Sources in the petroleum ministry indicated that the hike on petrol and diesel would most likely be kept below Rs 1 per litre and in all probability the consumers would face a burden to the tune of 60 to 70 paise per litre.

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The government has stated that it would like to wait for the outcome of a meeting of the oil cartel, OPEC, on June 3 for giving shape to a new pricing policy that has a “human face”.

Petroleum minister Mani Shankar Aiyar, speaking at an award function, indicated that the huge burden accumulated due to freeze on LPG and kerosene prices for the last two years and petrol and diesel prices since January despite rise in cost of raw material, would be shared by all stakeholders including government and the public sector oil companies.

“It is my task as minister to ensure in my sectors of responsibility the continuation of the reforms process while demonstratively ensuring sensitivity to the human consequences of decisions taken in the name of reforms,” he said, adding a holistic review of the policy for fuel pricing would be done keeping in mind the sensitivities of the poorest of poor.

The oil sector was dismantled in April 2002 and oil companies given freedom to decide prices of petrol and diesel every fortnight.

The next price review is due on Monday.

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“The decision they (OPEC) take would show whether the recent steep rise in international oil prices is aberrant and transitory. As also whether greater stability at more moderate prices is the more likely prospect. This is such an important parameter for determining our approach to the domestic pricing of sensitive petroleum products that it must be taken into account in determining the timing, phasing and content of these (price hike) decisions,” Aiyar said.