Petrol, Diesel and LPG Price hiked by Rs 5, Rs 3 and Rs 50
Posted in Business News
Tagged Under : petroleum News
The Indian government has raised prices of petroleum products despite fears that it will worsen inflation and lead to popular protests. Petrol, diesel and cooking gas will be dearer from Wednesday midnight, federal oil Minister Murli Deora said.
India imports 75% of its oil, and spends billions of dollars subsiding fuel for its citizens. Petroleum Minister Murli Deora has announced that excise duty on HSD and petrol has been reduced by Re 1 (current rate Rs 14.35 for petrol - Rs 4.60 for diesel). Petrol prices have been hiked by Rs 5, diesel by Rs 3 and LPG price hiked by Rs 50 per cylinder.
Customs duty on crude has been reduced to nil from 5%. The duty cuts would amount to Rs 22,660 crore in revenue loss, the Revenue Secretary said. The price hike will be effective from midnight today.
The Petroleum secretary has said that the Finance Minister has agreed to duty changes to mitigate losses. The Revenue Secretary has said that Rs 65,000 crore of under-recoveries will be recovered from oil marketing companies or the OMCs and the public sector units or the PSUs. While Rs 94,600 crore of under-recoveries would be met by oil bonds and Rs 29,000 crore of losses remain unrecovered.
Petroleum Minister Murli Deora said that the government has made stipulation for oil bonds for OMCs. This is because the oil companies FY09 income loss will top up to Rs 2.45 lakh crores, he added. No increase in price of kerosene, however it is required to up diesel prices by Rs 31.58 per litre petrol by Rs 21.43 per litre, Deora said.
The oil PSUs and the government will soak up most of the under-recoveries. The Revenue desk says that Rs 21,010 crore of under-recoveries will be recovered via price hike. While the customs duty on other petroleum products will be down to 5% from 10%, the Revenue Secretary said. The Cabinet has decidedly approved the fuel price hike, said Murli Deora, Petroleum Minister.
In a broker poll behavior by CNBC-TV18, all respondents wait for a Rs 3-5 hike in petrol prices and Rs 2-3 hike in diesel prices. While 70% feel markets would react positively to the over Rs 5 hike in petrol prices. And 30% see neutral to negative collision in case of over Rs 5 hike in petrol.
Meanwhile Oil Minister, Murli Deora spoke saying that a roll back of the fuel price hike is not on the cards. He added that the price hike was inescapable. He also said that the he would ask for a SLR status for oil bonds but the RBI disagreed with the suggestion.
