Govt passes buck; oil cos defend hike
New Delhi   25-May-2012

A day after the UPA-II Government decided to celebrate the completion of its three years in office by gifting the steepest-ever petrol price hike of Rs 7.5 a litre to the hapless common man, the oil companies in their defence, resorted to playing the same old tune of having been “forced” to take the much-criticised step. They said they were burdened due to heavy borrowings and the increasing disparity between global crude prices and the market rate at which the fuel was sold.

Even as the aam admi is yet to recover from the shocker unleashed by oil companies, there are possibilities that an empowered Group of Ministers (eGoM), headed by Finance Minister Pranab Mukherjee, may meet soon to take a call on revising diesel, cooking gas and kerosene rates. The meeting — which may happen anytime soon — is shrouded in speculation that considering the depreciating rupee and spiralling global crude prices, there could a steep hike in prices of these subsidised commodities too, which ironically are associated with the lowest common denominator of the society.

Meanwhile the whole of Thursday, speculation was rife with television channels claiming through “reliable sources” that petrol prices could come down by Rs 2 to Rs 3. The oil companies, however, gave no indication of any immediate rollback.

The decision evoked strong political reactions also with Opposition BJP closing ranks key UPA ally Trinamool Congress in protesting the hike. NDA, along with Left parties, called for a nationwide protest on May 31.

Amid the chaos, IndianOil Chairman RS Butola, along with his Hindustan Petroleum Corporation counterpart S Roy Choudhury, stuck to his “no money to repay mounting debt” line, while claiming that since the petrol prices were last upwardly revised six months back, they had been trying to cope with the growing gap between international crude prices and domestic rates of petrol.

Citing helplessness, Butola said that the decision was taken as there has to be a limit as to how long they could undersell the fuel at less than market price, adding that the back-breaking borrowings creeping up on them - to the tune of Rs 6,000 crore, also forced them to take the call.

In fact in a sardonically manner, he said that the hike could have been to the tune of Rs 10 per litre, however they factored in the pressure on the common man and chose it to keep it at Rs 7.5 a litre.

The oil companies said that there was a lot of volatility in the market, therefore any decision on a price cut would only depend on the global scenario easing out in future.

Meanwhile Petroleum Minister S Jaipal Reddy, who was on a visit to Turkmenistan, returned to Delhi late on Thursday. He is said to have met Ahmed Patel, political secretary to Congress president Sonia Gandhi. However as several key Ministers like Sharad Pawar are not in the Capital, the possibility of the eGoM meeting taking place on Friday looks dim.