<p>With a view to give boost to agriculture sector, achieve import substitution, promote effective waste management and reduce environmental pollution Government has been blending ethanol in petrol. With
Govt has permitted oil companies to increase diesel price by 45 paise a month Bulk consumers will have to pay market price, to be revised every fortnight; Consumers would get nine subsidised cooking gas cylinders a year, instead of six at present. Unwilling to announce a hike in diesel price, the government on Thursday allowed oil marketing companies to increase the price in small doses periodically and bring it in line with global rates. To begin with, an immediate increase of 45 paise a litre was announced for sales through retail outlets, while bulk consumers, which add Rs 12,907 crore to the subsidy burden, would have to pay market price, to be revised every fortnight.
The cabinet meeting on Thursday is set to consider the petroleum ministry’s proposals to increase diesel, cooking gas and kerosene prices, a move the government aims to partly offset by raising the ceiling on the number of subsidized LPG cylinders. If approved, the new prices will take effect from midnight Thursday. “The agenda on petroleum product price rise and the cap on LPG cylinders will be handed out to ministers at tomorrow’s cabinet meeting,” sources said.
In a bid to neutralise political opposition to planned fuel price hikes, the government is considering a two-step process: First, allow up to 12 subsidised domestic gas cylinders per year from the currently proposed nine and later, raise prices of LPG and diesel in a phased manner. Sources told FE that a compromise is being worked out after some Cabinet ministers termed the six-cylinder cap and the proposed fuel price hike as “politically suicidal”. A section of the ruling coalition too feels these steps could cost the UPA at the hustings.
New Delhi:The oil ministry’s proposal for a dual pricing regime for diesel — having a market price for bulk consumers and subsidized rate at pumps — would work to the disadvantage of state-run fuel retailers and spark diversion. The option is one of the suggestions made in the ministry’s response to recommendations for reducing deficit made by a finance ministry panel under former bureaucrat Vijay Kelkar.
Faced with a hefty bill of close to R1 lakh crore this fiscal towards compensating oil marketing companies on selling diesel below cost and naysaying by the finance ministry, the petroleum ministry is set to ask the bulk consumers of the fuel to buy it at market rates. Currently, bulk consumers — power plants based on diesel, companies with captive power units, the railways and road transport corporations — buy the fuel at subsidised rates but at slightly lower rates than the retail consumer, thanks to a waiver of dealers’ commission and discounts offered by the oil companies which compete to get the tenders.
The oil ministry has proposed a hike of R3-4.50 per litre in diesel price and R100 per cylinder in LPG rates, along with raising the number of subsidised cooking gas cylinders for households to nine a year from the current cap of six. The ministry has moved a note for consideration of the Cabinet, proposing options for meeting a record R160,000-crore deficit arising from selling auto and cooking fuels below their cost.
Pressing ahead with the Kelkar Committee recommendations and grappling with massive under-recoveries, the Petroleum and Natural Gas Ministry has initiated a Cabinet note to raise the cap on subsidised LPG supply from six to nine cylinders a household a year, and increase diesel, LPG and kerosene prices in phases. As the Finance Ministry refused to share the subsidy burden of the oil marketing companies, the Petroleum Ministry is pressing for a phased price increase to cut the subsidy down to the bare minimum during the next two-four years.
New Delhi: In the wake of recent power outages in the city, Delhi government on Wednesday asked the petroleum ministry to divert gas supply meant for Pragati power plant to the newly-constructed Bawana power plant as it has more efficient machinery. The proposal, which has been approved “in principal” by the petroleum ministry, will increase power supply in Delhi by upto 60 MW. Sources said the efficiency of Bawana plant is upto 25 per cent more than the Pragati plant. “Since we do not know by when other power plants like Dadri will start functioning back to capacity, we decided to use all our resources and have a makeshift arrangement to solve the ongoing power problem,” Delhi Power Minister Haroon Yusuf said.
The Union petroleum ministry has issued directives to Indian Oil Corporation (IOC) to not consider any investment in Haldia Petrochemicals (HPL) since the oil major has no room to leverage its finances with government subsidy required to post profits. IOC posted a R22,451 crore net loss in the first quarter of FY 13, though in the second quarter it came round the corner posting a R9,611-crore net profit. A petroleum ministry official told FE that IOC’s 9.6% holding in HPL already has a negative impact on its balance sheet since HPL shares are R(-)5 per share at present.
Analysts say any increase in diesel and kerosene prices will be positive for market sentiment. The petroleum ministry is considering a proposal to gradually hike diesel prices by Rs 1 per litre every month
