Panel may consider raising petrol price by Rs 3,will check with allies on diesel

The intent to decontrol petrol pricing was conveyed by Finance Minister Pranab Mukherjee to Petroleum Minister Murli Deora last week,the officials said. Deora met Mukherjee on June 16 to discuss fuel price hike,rising crude oil prices and inflation.

The EGoM headed by Mukherjee did not take a decision at its first meeting on June 7 as key members like TMC’s Mamata Banerjee and NCP’s Sharad Pawar were absent. The next meeting has not been fixed yet though Deora claimed today that it was scheduled for Friday.

Deora declined to comment on the possibility of a fuel price hike but officials confirmed that petrol pricing would be decontrolled as per the Kirit Parikh committee recommendation. But with inflation in double digits,diesel — used by the truckers — will not be decontrolled as it will mean a jump of Rs 3 per litre.

The EGoM,at the first meeting,had gone into the report of the expert group headed by Parikh that called for freeing petrol and diesel prices and a steep Rs 100 per cylinder hike in LPG rates and a Rs 6 per litre increase in kerosene prices.

Current under-recoveries,after taxes,on petrol are Rs 3.73,diesel Rs 3.80 and kerosene Rs 18.82 per litre and cooking gas Rs 261.90 per cylinder. This,on an annualised basis,will result in a revenue loss of Rs 74,300 crore to state-run oil marketing companies in 2010-11.

The prevailing retail prices are largely based on crude prices of $63 per barrel while current global rates are close to $77 a barrel.