New Delhi: To deal with mounting losses of oil companies and political opposition for oil price hike, the government is working on a formula to strike a balance between the two.

Under this, oil companies may be allowed to raise the petrol prices and the good income group will be made devoid of getting subsidised LPG. However, the government may not attempt retail diesel price hike due to anticipated political opposition.

Petroleum Minister Jaipal Reddy will be presenting this formula in front of Empowered Group of Ministers (EGoM). Under the leadership of Finance Minister Pranab Mukherjee, EGoM is expected to meet immediately after the completion of ongoing parliamentary session.

Oil companies may be allowed to raise the petrol prices from June 1, 2012. In the EGoM meet, Jaipal Reddy will be making proposal to see the response of their decision on petrol and LPG before going for diesel price hike.  

According to sources, the Petroleum Minister is in favour of implementing the proposal on experimental basis because of the present volatile political situation. It is considered that if diesel rates are not hiked then there will not be big opposition from the political parties over the price hike of petrol and LPG cylinders.

However, the amount of increase in petrol prices will be decided in the meeting of EGoM. At present, oil companies are accounting an estimated loss of Rs 9 per litre.  

Sources tell that the Petroleum Ministry will withdraw supply of subsidized LPG cylinders to consumers belonging to higher income group in a phased manner.

The Ministry is upbeat with the fact that the Parliamentary Standing Committee has recently advocated that higher income consumers should be made devoid of subsidised LPG cylinders.

Under the phased plan by the Ministry, the supply of subsidised LPG cylinders will be stopped for MP, MLA and officer ranked employee first. In the second phase, consumers earning more than Rs 50,000 per month will be paying full amount for the LPG. At present, despite getting Rs 400 per LPG cylinder in Delhi, oil companies are under a loss of Rs 570.

(JPN/Bureau)

 

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