New Delhi, Jul 5 (DHNS) : The BJP-led government has decided to take forward the recommendations of the previous regime on oil price reforms.
A draft note is being prepared by the Petroleum Ministry for the next meeting of the Cabinet Committee on Political Affairs incorporating most of the proposals of the committee headed by Kirit Parikh on fuel pricing, sources said.
The Kirit Parikh panel, set up under the UPA regime, had recommended raising kerosene price by Rs 4 a litre and cooking gas (LPG) rates by Rs 250 per cylinder.If the proposal is accepted, it would lead to a reduction of nearly Rs 72,000 crore in the revenue loss incurred by the state-owned oil marketing companies on the two fuels.
However, the ministry has argued in favour of a gradual increase in prices of kerosene and cooking gas instead of a one-time hike.
“As regards to kerosene and LPG, there is a need to progressively increase the price of these petroleum products but the timing of same needs to be decided by the CCPA,” the ministry said in a note to the cabinet panel, according to a source.
Monthly hike
The ministry is in favour of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd continuing their 40-50 paise per litre monthly hike in diesel prices.
“After possible elimination of the diesel subsidy during the course of the year, oil ministry has sought approval for deregulating the price of diesel,” according to sources.
Currently, the three companies are losing around Rs 3.40 per litre on sale of diesel and the oil ministry estimates that if the current rupee-dollar and crude oil price trend continues, price of the fuel could reach market parity in three to six months.
Separately, the ministry wants the cabinet panel to approve bulk sales of diesel to farmer cooperatives at subsidized retail rates. Such cooperatives buy around 90,000 litre of diesel every month.
The Parikh panel was set up in July 2013 and it submitted its report on fuel pricing mechanism in October 2013.
The sources said the ministry is also taking to the CCPA the expert panel's recommendation of continuation of existing pricing principles for controlled petroleum products despite the finance ministry's objections.