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Diesel, LPG, kerosene price hiked

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Spl. Correspondent NEW DELHI, JUN 24 (NPN):
Published on 25 Jun. 2011 1:04 AM IST
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The government on Friday hiked diesel prices by Rs. 3, LPG prices by Rs. 50 and PDS Kerosene by Rs 2 per litre.
The decision was taken at an emergency meeting of the Empowered Group of Ministers (EGOM) headed by Finance minister Pranab Mukherjee on Friday evening.
The price hike was made to ease the debt burden of state oil firms.
Oil minister Jaipal Reddy said the price hike will help in reducing the under recoveries by Rs. 21,000 crore. He said the total revenue loss for the government will be Rs. 49,000 crore because of the duty rejig for full year.
At the same time the government has also decided to do away with 5 per cent customs duty on crude oil.
The new prices are aimed at helping reduce the subsidy burden of state-owned oil firms. Because prices of fuel are below market rates, they currently lose Rs. 15 per litre on diesel, Rs. 27 per litre on kerosene and Rs. 381 on the sale of the average domestic-use gas cylinder.
This translates into a daily loss of Rs. 456 crore that could lead to a record annual loss of Rs. 166,440 crore in the current fiscal. For the current quarter alone, the OMCs are estimated to incur a loss of Rs. 45,000 crore compared to Rs. 18,000 crore in corresponding quarter of last year.
The hike aim at passing on one-third of this loss to consumers in stages, while a similar amount will have to be borne by the government by way of either providing a cash subsidy or cutting customs and excise duty. The remaining would be absorbed by upstream firms like ONGC and the fuel retailers.
Meanwhile, slamming the hike, Trinamool Congress chief and West Bengal CM, Mamata Banerjee also a senior UPA partner said they don’t support the fuel price hike.
Diesel prices were increased by Rs. 2 in June 2010 and LPG by Rs. 35 per cylinder.
The EGoM headed by Finance minister Pranab Mukherjee includes Agriculture minister Sharad Pawar, Power minister Sushil Kumar Shinde, Road Transport minister C P Joshi, Chemical & Fertiliser minister MK Alagiri and Planning Commission deputy chairman Montek Singh Ahluwalia.
(With Agency inputs)

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