Monday, October 2, 2000,
Chandigarh, India


M A I N   N E W S

Naik rules out cut in petro prices
Tribune News Service

NEW DELHI, Oct 1 — The government today ruled out a rollback in the prices of petroleum products, including kerosene and cooking gas.

Minister of Petroleum and Natural Gas Ram Naik, who announced the hike on Friday night, categorically ruled out a rollback. He said the issue should not be politicised given the international oil scenario. “The oil price hike should be seen in view of the changes in international market conditions. These are issues which are beyond politics.”

Asked if the government would consider revising downward prices of petroleum products in the face of opposition from the Trinamool Congress and resignation of Mamata Banerjee and Minister of State for External Affairs Ajit Panja, he said: “No roll back.”

Mr Naik declined to comment on Ms Mamata Banerjee’s resignation and said she was present at the NDA meeting last Saturday. “It is for the Prime Minister and the NDA convener to talk to her. The decision to hike prices was taken after discussions with the Finance Minister, the Union Cabinet and the National Democratic Alliance.”

Mr Naik said the prices of petroleum products would be brought down if international crude prices came down to the sustainable level of 22-23 dollars and the oil pool deficit was wiped out.

Replying to a question, Mr Naik said he did not foresee a dip in global price below 30 dollars a barrel. The government would try to meet the target of dismantling the Administrative Price Mechanism (APM) by April 2001, he added.

As per the earlier Cabinet decision taken by the United Front government in 1997, the subsidy on cooking gas was to be contained at just 15 per cent and at 30 per cent on kerosene. He pointed out that the previous government did not take any steps towards phasing out subsidies as per dismantling of the APM in a phased manner by April, 2002.

Prior to the hike in the prices on September 30, the subsidy on LPG was Rs 171 per cylinder, on kerosene Rs 8.21 per litre and on diesel Rs 5.29. Ex-storage prices of these products were estimated at about Rs 32,000 crore a year, a part of which was being managed through cross-subsidisation from petrol, according to sources in the ministry.

The remaining subsidy level of these products after adjusting the ex-storage price would still leave the subsidy at a whopping Rs 20,000 crore a year.

Petroleum Ministry officers said the government had put a price cap of Rs 5,570 a tonne on domestic crude from the Oil and Natural Gas Corporation and the measure had helped save another Rs 10,000 crore towards subsidy.

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