Govt rules out increase in prices of petro products

Oil pool deficit may shoot up by Rs 4,500 crore

ENS ECONOMIC BUREAU

NEW DELHI, OCTOBER 18: The government has ruled out any increase in petroleum product prices before presentation of general budget for 2002-03 in February.

Speaking at the Economic Editors Conference, petroleum minister Ram Naik said that there is no immediate proposal to increase petroleum product prices before budget. “With enough stocks and comfortable supplies, situation does not warrant any increase in prices,” Naik said.

He, however, said the schedule for dismantling of administered pricing mechanism (APM) by March 31, 2001, by when the subsidy on kerosene for PDS and domestic LPG has to be brought down to 33.3 per cent and 15 per cent from 45 and 41 per cent respectively, would be adhered to.

Price of kerosene would have to be increased by Rs 1.20 per litre and that of domestic cooking gas by Rs 95 per cylinder to bring down the subsidy to residual levels, he said.

“It would not be possible to increase prices of LPG by about Rs 100 in one go (to meet the residual subsidy level). We are working on various ways to resolve the issue. I am hopeful that the issue would be resolved before the APM deadline,” he said. On liquidation of the oil pool deficit, Naik said “I am sure that finance minister is capable, with my help, of sorting whatever problems we face to dismantling.”

Meanwhile, according to sources in petroleum ministry, the oil pool deficit could mount to as high as Rs 21,200 crore in case India’s average crude import price touches $28 a barrel due to international volatility. The oil pool deficit was pegged at Rs 12,600 crore at the end of 2000-01, is likely to go up by at least about Rs 4,500 crore going by the present price trend.

Ministry officials said that the average import price for the first half of the current fiscal worked out to $26 a barrel, but they were keeping their figures crossed on the future trend.

In its background paper circulated at the conference here the petroleum ministry said “the estimated position of the oil pool deficit as on March 31, 2002, at average international crude oil prices of $25 and $28 per barrel and assuming that customs and excise duties continue at existing rates, is expected to be around Rs 14,500 crore and Rs 21,200 crore respectively.”