Facing opposition from key allies in the United Progressive Alliance government, Petroleum Minister Murli Deora will on Sunday meet Finance Minister Pranab Mukherjee to explore the possibility of tweaking a proposal to hike fuel prices.
The petroleum ministry did not take to the Union Cabinet, which met today, the proposal to free petrol prices from government control, along with a hike in diesel, cooking gas and kerosene rates, apparently because of opposition from the Trinamool Congress and the Dravida Munnettra Kazhagam to such a move.
"No, it was not discussed... today," Home Minister P Chidambaram said after a meeting of the Union Cabinet.
Sources said both Mukherjee and Deora were in favour of Rs 2-3 a litre hike in petrol and diesel prices and Rs 25 per cylinder increase in LPG rates, but the allies did not want diesel, LPG and kerosene prices to be touched.
Without a hike in fuel prices, state-run oil firms would incur a whopping Rs 46,030 crore (Rs 460.3 billion) revenue loss this fiscal. Of this, only Rs 20,000 crore (Rs 200 billion) is coming as subsidy support and the uncovered amount is enough to erode the networth of retailers.
To find a solution, Deora will meet Mukherjee on February 14, the sources said, adding that the meeting will explore if government subsidy support can be increased so as to keep the price increase to the bare minimum.
Deora, on his part, met the prime minister after the Cabinet meeting and submitted a memorandum asking the government to cover the unmet revenue loss on fuel sales.
"I submitted a memorandum to the Prime Minister and Mukherjee seeking compensation for the shortfall (in revenues) on account of petrol and diesel," Deora said but refused to discuss government's perspective on fuel price hike.
The proposal of free petrol prices would lead to a price increase of Rs 4.72 a litre. A similar move on diesel, as suggested by the expert group on pricing reforms headed by Kirit Parikh, would have resulted in rates going up by Rs 2.33 a litre.
Petrol is currently sold at a loss of Rs 4.72 a litre, diesel at Rs 2.33 per litre, kerosene at Rs 18.06 per litre and domestic LPG at a discount of Rs 287.59 per cylinder.
