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While the government is considering a hike in retail prices of diesel in the range of Rs 2 and Rs 3 per litre, it is likely to give the go ahead to state-owned oil marketing companies (OMCs) to raise the prices of petrol by Rs 3 to Rs 4 per litre.
With the last phase of Assembly elections concluding on May 10, the Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee will meet the next day to take stock of the oil price scenario in the face of spiralling global crude oil prices, highly placed sources in the petroleum ministry indicated here.
The government’s inclination to make an upward revision in fuel prices has become distinct with the petroleum ministry officials discussing the issue with the Election Commission before the Assembly election results are announced on May 13.
The Congress-led UPA government has been resisting pressure to effect a hike in retail prices of any of the mass-consumed petroleum products.
Under the current oil pricing mechanism the government does not allow the state-owned OMCs to fix the retail prices of diesel, domestic cooking gas LPG and kerosene at par with global crude oil price.
However, they are allowed to fix the retail price of petrol as per market rates. After deregulation, the state-run OMCs had on as many as seven occasions revised petrol prices in line with international prices before deciding in the second half of January to freeze rates.
Considering the sensitivity over the issue the petroleum ministry is understood to have asked OMCs not to pass on the entire burden to consumers in one go. It is being suggested that Oil Marketing Companies MCs can raise petrol price by Rs 3 to Rs 4 per litre and then stagger the remaining hike over a period of time.
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