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| EGoM meeting on fuel pricing likely on June 17 | | | Agencies
NEW DELHI, June 10: An empowered group of ministers (EGoM) may meet on June 17 to consider freeing petrol prices from government control and possibly giving limited autonomy to oil firms to price diesel closer to market rates.
Also on the cards is a Rs 25 per cylinder hike in domestic cooking gas (LPG) rate in an effort to align retail price closer to cost, sources in know of the development said.
As per the proposal, diesel prices will move up in tandem with international crude prices till it reaches USD 90 a barrel and thereafter the government would intervene.
A market alignment with prevailing international prices could see petrol price going up by Rs 3.35 a litre while diesel could rise by Rs 3.49 per litre.
Sources, however, said if a consensus at the EGoM is against even giving limited freedom to oil companies, then the government may settle for a Rs 2 per litre hike and try to build consensus for freeing the fuel prices around the budget time in 2011.
If the crude climbs to USD 90 a barrel, diesel price in Delhi could be rise by over Rs 7 per liter over the current price of Rs 38.10 going by the proposal in hand. Currently, petrol costs Rs 47.93 per litre in Delhi.
Current retailing selling price pegged at USD 60 a barrel-level of crude oil prices while the actual rate is USD 72 per barrel now, they said.
The EGoM headed by Finance Minister Pranab Mukherjee may decide to free petrol price from government control for the first time since 2004, when the UPA in its first stint had decided to price auto fuels below their imported cost to keep inflation under check.
The panel could not reach a decision at its first meeting on June 7 as key ministers like Railway Minister Mamata Banerjee and Agriculture Minister Sharad Pawar were absent.
The government would step in if crude oil crosses USD 90 and diesel prices would be moderated either through cut in excise and customs duty or through subsidy from exchequer.
Sources said there may not be any problem in freeing petrol price which is considered a fuel used by the well-off, but there are doubts on diesel which is used in transport sector and thus has inflationary impact.
Banerjee, who was away in Kolkata at the time of the first EGoM meet, had communicated that her party, the Trinamool Congress, was against "any steep hike" in diesel prices and wanted domestic LPG and kerosene consumers to be spared, the source said.
Pawar, not known for blocking reforms, could not attend the meeting because of illness, while DMK leader and Chemicals and Fertilizer Minister MK Alagiri was present.
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