New Delhi, Sept. 16: A firestorm of protests that greeted the fuel price hike has shown how petrol has become nobody’s baby and those who clamour for subsidies are providing a justification for pushing up its price.
The Centre, under attack from allies such as the Trinamul Congress and the Opposition like the Left, said it had nothing to do with the price hike as it was decided by the oil companies that enjoy the right after decontrol.
“So far as petrol price is concerned, petrol has been deregulated. It is the oil marketing companies’ review,” finance minister Pranab Mukherjee said.
Mukherjee is right, technically. The cabinet no longer meets to clear petrol price hikes because it has been decontrolled since June 2010.
However, the state-owned oil companies appear to be still keeping their ears cocked for their master’s voice. The companies showed an uncanny sense of timing that suited the government by sitting tight when global oil prices surged before the Assembly polls, including in Bengal.
Perhaps, too uncanny a sense of timing. On May 14, less than 24 hours after the last Assembly election results were declared, the oil companies squirted on consumers the steepest-ever hike of Rs 5 for a litre of petrol.
“Decontrol” has other strange connotations in India. Instead of spurring competition, it spawned something that can only be termed cartel action.
The state-owned oil firms have acted in unison in raising petrol prices 10 times since June 2010. However, a difference of one or two paise is maintained sometimes, possibly to avoid charges of cartelisation. In Mumbai, petrol prices of two companies show a difference of 1 paisa.
The companies have cited the crash of the rupee (which makes imports costlier) to justify the latest hike of Rs 3.27 for a litre of petrol. But not many cuts have been announced when the rupee had soared or global oil prices had dipped.
Oil firms said they had not passed on the benefit as they had to make up for earlier losses. In other words, the beneficiaries are being told to pay the price of the government’s past and present benevolence.
The companies are allowed to sell only petrol at rates linked to the market. Kerosene, the so-called “poor man’s fuel” that is also used to adulterate the rich man’s petrol, diesel, which powers farm pumps as well as SUVs, and cooking gas, the common man’s fuel that is also diverted to commercial use because of the big price difference, are all still sold at a subsidy.
An LPG cylinder is now subsidised Rs 267, diesel Rs 6.05 a litre and kerosene Rs 23.25 a litre. The three oil companies are losing Rs 263 crore per day on selling diesel.
“The industry lost around Rs 65,000 crore in the first half of 2011-12 on the three products and for the full year, the revenue loss is estimated at Rs 121,571 crore at $110 per barrel (the price of Indian crude oil basket),” an official said.
The government apparently wanted to cut the LPG subsidy today by limiting the number of subsidised cylinders for each family to four or six in a year. But the meeting was put off, apparently under pressure from allies such as Trinamul that opposed the move.
If the plan had been cleared, a family in Calcutta would have had to pay Rs 672 for each cylinder after exhausting the subsidised quota priced at Rs 405 apiece. The government could also have cut the subsidy by Rs 12,000 crore a year.
The ostensible reason for putting off the meeting was “non-availability” of certain members of the ministerial panel. Trinamul leader and railway minister Dinesh Trivedi said: “We are not going to boycott the meeting. We will attend it and lodge our protest. It could not be done in the last meeting due to our protest.”
Trivedi demanded a rollback of the petrol price increase and strongly opposed the possible hike in LPG prices. “It (LPG) is not a luxury but essential for common man,” he said.
In Calcutta, chief minister Mamata Banerjee, who met Union minister Ambika Soni today, said: “We are against (petrol) price rise and have given our opinion to the Centre.” Mamata said she had cut local tax on LPG last time but did not say if the relief will be extended to petrol users now.
The Congress may ask states ruled by the party to cut the local tax on petrol.
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