In the face of fierce opposition from both its allies the Leftists and the principal Opposition Bharatiya Janata Party (BJP), the Centre today finally raised petrol prices by Rs 2 a litre and diesel by Re 1 per litre with effect from midnight tonight. The Cabinet Committee on Political Affairs, which took up the matter instead of the Cabinet Committee on Economic Affairs due to the political sensitivity of the issue, however, decided against lowering duties to cushion the impact of surging international oil prices.

“Petrol and diesel prices will be increased from midnight tonight,” Petroleum minister Murli Deora told reporters here. The CCPA decided to raise the quantum of oil bonds to be issued to state-run oil retailers to partly compensate them for selling auto and cooking fuel below cost, he said.

Petroleum secretary M S Srinivasan said that the Rs 2 per litre increase in petrol prices would give Rs 180 crore a month additional revenue to the public sector oil companies while the Re 1 a litre hike in diesel would fetch Rs 360 crore a month. “For the remaining part of the fiscal, we anticipate additional revenues of Rs 840 crore” he added.

State-run firms now lose Rs 10.57 per litre on petrol, Rs 11.56 on diesel, Rs 19.89 on kerosene and Rs 331 on each LPG cylinder. At present, 42.7 per cent of the under-realisation on petrol, diesel, LPG and kerosene is met by the government through issuance of oil bonds. This percentage has now been raised to 56-57, Srinivasan said.

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