Consumers must be insulated from oil price fluctuations: Deora

In a clear indication that de-controlling fuel prices is nowhere on the government's agenda, petroleum minister Murli Deora yesterday said that ''every effort is being made by the government to insulate the aam admi (common man) from the volatility of global crude oil prices.''

This will be ensured by not passing on the full impact of higher prices to the consumer, he added while speaking at a 'meet the people' programme in Surat after inaugurating Torrent's gas-fired power plant near the city. (See: Torrent to make Sugen world's biggest gas-fired power plant)

''Recent times have been both challenging and demanding for the oil industry. The volatility in crude oil prices over the last two years has had their impact both on the national economy and at the individual level. India imports about 75 per cent of its requirement of crude oil. Due to this, the under-recoveries on sale of petroleum products for 2008-09 were Rs1,03,292 crore,'' he said.

The minister also said the government was aware of the needs of the oil public sector undertakings engaged in the task of meeting the energy needs of the country. ''Ultimately, our endeavour is to balance the needs of the common man with the growth of the oil companies. This is indeed a challenge but we are confident that we will be able to manage this balancing act,'' he said.

He gave no indication of how this ''balancing act'' would be achieved. Economists are crying themselves hoarse that the government must loosen its grip on petroleum prices, which is creating serious economic imbalances rather than correcting them.

Deora said the government has ensured that the poorer sections of society, which depend on kerosene oil for lighting and cooking, are supplied kerosene at Rs9 a litre, which is even cheaper than a bottle of mineral water. ''The subsidy on kerosene sold under the public distribution system and domestic LPG in 2008-09 was over Rs48,000 crore,'' he added.

Calling diesel ''the backbone fuel of our economy'', the minister said, ''Nearly 19 per cent of the diesel consumption is in the agricultural sector, upon which depends the country's food security. In addition, it is used by the transport as well as the industrial sectors.

"The government has kept the prices of diesel below the market price so that the agriculture and transport sectors are insulated from the unprecedented rise of crude oil prices in the international market.''