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Oil price hike soon but won’t affect poor: PM


PM with mittal_l

In a clear indication that petroleum product prices are going to be hiked very soon, Prime Minister Manmohan Singh said India needed to rationalise the prices, but the common man would be insulated from its effects.

Dedicating the Guru Gobind Singh Refinery, owned by a joint venture between HPCL and Mittal Energy of Singapore, HMEL, at Bathinda in Punjab, he said “domestic sources of crude oil and gas are inadequate to meet the growing demands of our rapidly expanding economy”.

Singh said 80% of India’s crude oil requirement had to be met through imports and the spiralling global prices had put a strain on the country. But in order to insulate the common man from the impact of the high oil prices, the government had been subsidising diesel, kerosene and domestic cooking gas prices heavily.

The state-owned oil companies have not raised the prices of diesel, cooking gas and kerosene for almost a year despite the steep increase in the cost of the raw material — crude oil.

What’s more, the state-owned oil companies have not been able to raise petrol prices due to political reasons even though petrol was freed from government control in June 2010. The R65.64 a litre petrol price in Delhi is about R 9 short of its cost.

Since the government controls the prices of diesel, cooking gas and kerosene, the oil companies sell diesel at a discount of R16.16 a litre, while they lose R32.59 on the sale of every litre of kerosene. And a 14.2-kg domestic cooking gas cylinder is sold at R570.50 less than its cost.

Govt slow, not paralysed: Mittal

Decision making in India is quite slow, but there’s no policy paralysis, said Lakshmi Niwas Mittal, chairman of ArcelorMittal, the world’s largest steel manufacturer.

“Things are moving slowly. There is no doubt. Process approval is taking time. The biggest impediment is still infrastructure development,” he said.

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