By IANS
New Delhi : As international oil prices touched record levels, India’s Petroleum Minister Murli Deora met with Finance minister P. Chidambaram Thursday to find ways of cushioning the consumer from what could be another inevitable rise in fuel prices.
“We came here to discuss solutions,” said Deora to reporters after the meeting, as crude oil reached $96 a barrel Thursday in the international market.
Deora later was slated to meet with Prime Minister Manmohan Singh later Wednesday as part of the meeting of the Committee on Infrastructure.
The government had been under pressure from the oil majors to devise some new mechanism for sharing of burden for the subsidies on petrol, diesel, kerosene and cooking gas.
The issue of increasing oil price is a politically sensitive decision, as it would provide further ammunition to the government Left allies as well as the opposition. Instead, the government may decide to decide to rationalise excise duties and state taxes on retail fuel that has been sought by the petroleum ministry, well placed sources said.
The government had announced on Oct 11 it would bear 42.7 percent of the total under recoveries through the sale of oil bonds, with one-third of the recoveries to be shared by upstream oil companies, like ONGC, GAIL and OIL.
Since that announcement, international oil prices have skyrocketed and are in touching distance of $100 per barrel.
A variety of events, both political and economic, have coincided to push the fuel prices, including the slow down in US industry, concern over supply shortages and rising tensions in the volatile Middle East.
Analysts also pointed out that today’s drop of 113 points by the benchmark BSE index was due to fears over the international oil prices.
Highly placed government sources said that the stratospheric price rise has “shocked” them, even though they had been warned of price hovering around $100 by ministers of top oil-producing countries like Saudi Arabia and Iran.
Earlier, when the oil bonds decision was taken, the under-recoveries for the year was projected at Rs 54,935 crore, which is now slated to increase to Rs 70,000 crore if the price remains around the $90 mark.