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Oil cos may go in for staggered price hike

Our Bureau

NEW DELHI, April 30

WITH global crude prices ruling firm in the $24-25 per barrel band and the Finance Ministry unwilling to reduce excise duties, public sector oil marketing companies are likely to effect a staggered increase in consumer prices of diesel and petrol in the near term.

A staggered hike in consumer prices is being considered given the political ramifications of a one-shot increase and this would enable oil companies to align their cost of crude procurement with the selling price over a few months, according to oil industry sources.

Public sector marketing companies are currently losing around Rs 30-50 crore per day due to under-recovery of costs. During the first fortnight after the dismantling of the administered pricing mechanism (APM) from April 1 this year, these companies lost close to Rs 385 crore.In fact, despite global crude prices soaring by around $4 over the $20 per barrel mark - to which retail prices were aligned since February-end this year, the public sector oil companies have not revised prices, following an informal diktat from the Government.

However, with the Petroleum Ministry unable to extract duty concessions from the Finance Ministry to make good the under-recovery of costs by petro-marketing companies, the debate is now veering around to the nature and extent of hike in prices in a manner that is politically most palatable.

The Petroleum Minister, Mr Ram Naik, had early last week written to the Finance Minister, Mr Yashwant Sinha, to consider a four to five per cent reduction in excise duty on petrol and diesel for every dollar rise in crude price over the $20 per barrel mark, according to Finance Ministry officials.

He had also warned of steep increases in consumer prices of diesel and petrol in the absence of any fiscal intervention.

The Indian basket of crude purchases has averaged at around $23.50 per barrel for the first 20 days of this month.

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