New Delhi, Sep 12 (PTI): There will be no immediate hike in oil prices as the Congress party on Tuesday decided to take on board the coalition allies on the issue.
However, the petrol prices may be hiked any time while the decision to increase the prices of diesel, cooking gas and kerosene would await the green signal from the allies, especially the Trinamool Congress, the DMK and the Nationalist Congress Party.
The decision to defer the hike was taken at a meeting of the core committee, chaired by Congress president Sonia Gandhi, who returned from abroad after a medical check-up. Petroleum and natural gas minister S Jaipal Reddy is understood to have made a presentation on the current scenario clearing stating that the oil PSUs were incurring huge losses since international prices of crude were on the increase.
The hike, especially in diesel and kerosene prices being a politically-sensitive issue, the committee preferred to discuss it with the allies as the Congress is wary of West Bengal chief minister Mamata Banerjee rocking the UPA boat as she has always opposed any hike in oil prices. The Congress is very hopeful of convincing the other key allies DMK and NCP.
Still, raise only in petrol prices cannot be ruled out, Congress sources said, pointing out that the government had resorted to petrol price increase earlier too, without waiting for okay from the allies.
At the core committee meeting, Reddy and finance minister P Chidambaram favoured a hike, while others favoured more consultation.
Among others who attended the discussions included Prime Minister Manmohan Singh, ministers A K Antony, Sushil Shinde and Gandhi’s political secretary Ahmed Patel.
A scheduled meeting of the Cabinet committee on Political Affairs, which was supposed to discuss the issue, was deferred as the government decided that it should be a political call and discussed first at the Congress party level. In his presentation before the core committee, Reddy was understood to have pointed out that the oil marketing companies were facing a loss to the tune of Rs 1.88 lakh crore in the absence of a hike in prices.
Reddy told the Congress leaders that currently, state-run Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation were losing around Rs 15 a litre on sale of diesel, Rs 6 on petrol, Rs 347 per cylinder and Rs 32.70 on a litre of kerosene.
Reddy said the decision will be taken sooner than later. He said a hike in the prices of administered fuel was unavoidable, but he was not sure when such a decision would come.
"If price hike is not taken up today, decisions may have to postpone by few days. However, I would like to tell the people (that) the increase in price is unavoidable. We will have to perform our unpleasant duty," Reddy said. Diesel price was last raised in June 2011 by Rs 3 a litre. During fiscal year 2011-12, the three OMCs lost Rs 1,38,541 crore in revenues on selling diesel, LPG and kerosene.
To make it up, the government gave Rs 83,500 crore in cash assistance to the OMCs, while upstream firms like Oil and Natural Gas Corp (ONGC) chipped in Rs 55,000 crore and the remaining was borne by OMCS themselves.
This year the loss is estimated to be even higher as petrol prices, which were deregulated in 2010, haven't moved in tandem with the market price because of the government's efforts to keep inflation in check.