Cabinet committee may look at hiking fuel prices

New Delhi: With a high-powered ministerial panel on fuel pricing being scrapped, a Cabinet committee may consider raising the prices of diesel, LPG and kerosene, Oil Minister S Jaipal Reddy indicated on Wednesday but refused to say when the issue would be taken up.

After Pranab Mukherjee quit as Finance Minister to become the President, the Empowered Group of Ministers (EGoM) on fuel prices he headed has been scrapped.

"We will have to take the matter to Cabinet Committee on Political Affairs (CCPA) as was the case before (EGoM was formed)," Reddy told reporters in the national capital.

"I'm not taking (a fuel price hike proposal to CCPA) just now. I can't say when it will go (through) I admit I should (take it up with CCPA)," he said.

Diesel, domestic cooking gas (LPG) and kerosene prices have not been raised since June 25 last year even though cost of raw material (crude oil) has spiralled and rupee depreciated against US dollar, making imports even costlier.

State-owned oil firms currently sell the fuel at a loss of Rs 13.65 a litre while they lose Rs 231 on sale of every 14.2-kg LPG cylinder for domestic consumption. Besides, they are losing Rs 29.97 per litre on kerosene.

Without a price hike, a staggering Rs 1,60,000 crore of losses on these fuel sales would have to be met by the government this fiscal.

"We will have to take many things into consideration (before raising prices). Inflation rate has to be kept in mind. We are looking at it carefully. I can't at this point make a comment (on timing)," Reddy said.

Inflation is still at uncomfortable levels and a diesel price hike, which has cascading effect on commodity prices, will become difficult in a drought year.

"But we are watching the situation closely," he said.

The oil ministry has been contemplating sending a price hike proposal to the CCPA and leaving the decision to the Prime Minister, he said.

State-owned oil firms had last month hiked petrol price by Rs 0.70 per litre on the back of rising international oil prices and depreciating rupee.

"Even after this hike, they (oil companies) are losing 71 paisa per litre. I did not want to go in for another shock (to consumer)," an official said.

The hike ended two rounds of price cuts effected in June that had partly offset the massive Rs 7.54 a litre increase effected in May.

The official indicated that it may not be possible to raise rates of diesel, domestic LPG and kerosene before the Vice President's election scheduled for August 7.