Diesel, LPG prices likely to be hiked
The petrol prices have been hiked by Rs 1.80 recently and the diesel and LPG prices are soon likely to join the league. While petrol had been decontrolled in 2012 June and government ideally does not have any power to make the decisions, the diesel, LPG and kerosene are still offered at a subsidised rate by the government. The Empowered Group of Ministers (EGoM) will take the decision on the diesel and the LPG price hike based on the appeal made by the petroleum ministry. The decision is likely to be made by the EGoM during the winter session of the parliament beginning from November 22nd.
The hike in the LPG and diesel prices are hoped to come into effect in another month, the current food inflation is expected to subside by then. The meeting is called by the oil minister Mr. Jaipal Reddy after consulting Pranab Mukherjee, the Fianance minister, who also leads the EGoM, to take the decision on the diesel price hike. The Petrol Ministry is trying to cut the losses of the three state-owned companies, Bharat Petroleum, Indian Oil Corporation and Hindustan Petroleum which are now loosing Rs 319 crores a day. The companies are said to lose Rs 8.58 on diesel, Rs 250.50 on LPG and Rs 28.66 on kerosene. Overall, the oil companies are incurring a loss of Rs 130,000 on the diesel, LPG and Kersones.
The discounts on the crude oil from ONGC and OIL corporation and the cash compensation from the government is making up for the current losses faced by the company. However, as the cash support from the Government is usually behind the schedule, the state-owned oil companies are forced to borrow heavily from the financial institutions. On the subject, the Oil Minister, Mr. Jaipal Reddy had commented that going forward, the Indian Banks might refuse to lend the capitals to the oil companies. He elaborated that the oil companies are so deep in debt that the companies have to depend on the banks even to meet the capital requirements as the returns on the diesel, LPG and kerosene with current pricing are unable to meet their operating needs.
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