EGoM to meet on 22 December to review fuel price hike

The government will review fuel prices next week with a number of alliance partners exerting pressure to cut excise duty on petrol to partially partly offset petrol prices. However, finance minister Pranab Mukherjee maintains that the hike is necessary given the soaring international prices of oil.

Petrol prices have already gone up by Rs2.95 a litre with the fifth and steepest rise since 26 June when oil companies were given the freedom to raise petrol rates.

This has however not gone too well with UPA coalition allies who are worried about the political fallout of higher prices, especially in states due to go in for assembly elections.

Some coalition partners favour tax cuts over raising retail prices. The central excise duty of Rs14.35 a litre, gives the government room to absorb higher crude import costs without raising retail prices, some ministers say.

The meeting of the EGoM which will deliberate on the issue has been tentatively fixed for 22 December as the FM who is EGoM chairman has yet to confirm his participation.

The finance minister said in Kolkata late yesterday that oil companies had no alternative but to raise prices with the rising international crude oil prices. Crude oil futures now reign above $91 a barrel, a near 20 percent rise following the petrol price decontrol in June.