New Delhi: A decision to hike the prices of petrol, diesel and other products was deferred indefinitely after some key members of a high-power committee on pricing of petroleum fuels were unable to attend a crucial meeting in Delhi on Monday.
The empowered group met as scheduled under Finance Minister Pranab Mukherjee, with his colleague in the oil ministry Murli Deora, also in attendance. But with Agriculture Minister Sharad Pawar and Railway Minister Mamata Banerjee absent, a decision was deferred.
Officials said Pawar is to undergo a throat surgery in Mumbai, while Banerjee -- whose Trinamool Congress has strongly opposed any move to hike prices of fuels at this stage -- had prior engagements.
This apart, Road Transport Minister Kamal Nath was also said to be travelling. Its other members include Chemicals and Fertiliser Minister M K Azhagiri and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
On top of the agenda was to give permission to state-run oil marketing companies to hike transport fuel prices by up to Rs.3.5 per litre. This apart, the meeting was also set to discuss how to reduce the fiscal burden of such firms on account of cooking fuels.
"A decision to increase fuel prices has been postponed. The empowered group of ministers will meet soon to take a call," Petroleum Secretary S Sundareshan told reporters after the hour-long meeting.
"It has to be done," Deora, who has been pushing for petroleum sector reforms, told reporters ahead of the meeting when asked if it was the right time to increase fuel prices when price rise was one of the main concerns for the government.
"We have to do something," he added, noting that the three major oil marketing companies will otherwise lose about Rs.90,000 crore ($ 20 billion) this fiscal year, as they sell such fuels at subsidised rates, even as international prices have increased.
Both the finance and oil ministries feel large subsides on fuels are unsustainable and want action taken on the Kirit Parekh Committee report that has favoured the freeing of transport fuel products pricing for oil marketing companies, officials said.
Along with Ahluwalia and with the consent of Prime Minister Manmohan Singh, Deora and Mukherjee also want to decontrol fuel pricing, at least for petrol and diesel, despite reservations by key constituents of the United Progressive Alliance (UPA), officials said.
Monday's meeting came against the backdrop of the oil ministry's recent estimate that under-recoveries on fuels -- the industry jargon for selling fuel products below cost -- have risen to an alarming Rs 72,000 crore ($ 16 billion).
International crude oil prices rose from $ 28 per barrel in 2003 to $147 per barrel in 2008 and now quotes at around $ 75 per barrel (159 litres make a barrel), putting major burden on government resources, as also on state-run oil firms.
Oil marketing companies had to contend with under-recoveries of Rs 46,051 crore last fiscal, for which the government provided them assistance of Rs 26,000 crore, while the upstream oil companies contributed around Rs 14,430 crore.
The balance had to be absorbed by the oil marketing companies.
During this year, the government has already approved prices of transport prices to be raised twice, so that the fuel subsidy bill does not shoot up from the Rs 90,000 crore ($ 20 billion) budgeted for the current fiscal.
In the Union budget for this year, presented February 26, the Finance Minister hiked petrol and diesel prices by Rs 2.71 and Rs 2.55 a litre, respectively. Then July 2, their prices were raised by Rs 4 and Rs 2 a litre in that order.
As a result, petrol in the national capital, for example, costs Rs 47.93 per litre, while diesel costs Rs 38.10 per litre.
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