By IANS
New Delhi : The government is contemplating a combination of fuel price hike and duty cuts to offset the impact of surging crude oil prices, a top official of the petroleum ministry said here Monday.
“The petroleum ministry will present before the Group of Ministers (GoM) meeting December 14 the latest updates on accumulating under-recoveries of oil marketing companies,” petroleum secretary M.S. Srinivasan said here on the sidelines a conference of the Oil Industry Safety Directorate (OISD).
“The projected under-recoveries of the state-owned oil marketing companies might breach Rs.700 billion in 2007-08 due to surging crude prices in the international market if timely action is not taken in this matter,” he said.
The GoM, headed by External Affairs Minister Pranab Mukherjee, has Finance Minister P. Chidambaram, Petroleum Minister Murli Deora, Consumer Affairs Minister Sharad Pawar, Defence Minister A.K. Antony, Railway Minister Lalu Prasad, and Road Transport, Highways and Shipping Minister T.R. Baalu as key members.
Prime Minister Manmohan Singh constituted the GoM last month with the mandate to evolve a broad consensus over the sensitive issue of raising fuel prices in the light of the hardening trend in global crude oil prices.
The government bears 42.7 percent of the total under-recoveries by issuing oil bonds while the public-sector oil and gas exploration companies share one-third of it, according to a subsidy-sharing formula worked out for the petroleum sector. The public-sector oil marketing companies absorb the rest.