Diesel, LPG price decision now expected on 9 June

A decision on hiking diesel and cooking gas prices, which has been continually put off, is now likely on 9 June, when the empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee, is expected to meet.

To the relief of the government, international crude prices are climbing down from previous highs, reducing the under-recovery of oil marketing companies due to subsidised prices.

The Indian crude oil basket averaged $110 a barrel on Wednesday, compared to $115 a barrel on 15 May, when petrol prices were increased by a whopping Rs5 a litre.

Officials said that of the Rs2,00,000 crore under-recoveries projected for 2011-12, a loss of Rs1,37,000 crore was incurred by selling diesel below cost. Currently, the three state-run oil marketing companies - Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp - incur a loss of Rs14.66 on a litre of diesel, Rs28.28 on kerosene and Rs329.73 a cylinder on domestic cooking gas.

Officials in the petroleum ministry said they had already prepared a proposal to be put before the EGoM for a substantial hike in the price of diesel. It is also pushing for hike in price of kerosene and LPG cylinder. Reports said diesel is likely to go up by Rs2-3 a litre and LPG by around Rs35 a cylinder.

However, other reports said that with global crude oil prices on the downswing, the UPA government may continue to adopt a wait-and-watch policy before taking the politically fraught decision to raise prices of controlled petroleum products -diesel, cooking gas and kerosene.