Click to play videoNew Delhi: The Union government has decided to hike the prices of petrol and diesel by Rs 2 and Re 1 respectively. The hike will be effective from midnight on Thursday.
Reacting to the petrol price hike, CPI leader D Raja said his party is strongly opposed to this price hike at a time when the prices of all essential commodities have gone up drastically.
"This will burden the common man. The government has miserably failed. The government has not listened to us. We are calling our party members to immediately go on protest across the country," he said.
The increase will benefit the oil companies by Rs 840 crore. Oil bonds as percentage of all under-recoveries have also been increased to 56-57 per cent from 42.7 per cent at present.
The total under-recoveries of oil companies stands at Rs 71,808 crore. At present, 42.7 per cent of the under-realisation on petrol, diesel, LPG and kerosene is met by the government through issuance of oil bonds. This percentage may increase, the source said.
Another 33 per cent is borne by up companies like ONGC and GAIL, while the remaining has to be borne by the retailers - Indian Oil, Bharat Petroleum and Hindustan Petroleum.
The total under-realisation in 2007-08 fiscal is estimated at around 71,808 crore. The Finance Ministry was opposed to Petroleum Ministry's demand for a Re 1 per litre reduction in excise duty on petrol and diesel
The state-run firms lose Rs 10.57 per litre on petrol, Rs 11.56 on diesel, Rs 19.89 on kerosene and Rs 331 on each LPG cylinder.
Earlier, a Group of Ministers headed by External Affairs Minister Pranab Mukherjee had left a decision on fuel prices to the Cabinet after the panel was split right in the middle on the issue.
Petroleum Minister Murli Deora insisted on a duty cut rather than price hike, while Finance Minister P Chidambaram was opposed to any pre-Budget duty rejig.
Petrol and diesel prices were last raised in June 2006, when crude oil was at $67 a barrel. It is at $92 a barrel this year. LPG prices were last raised by Rs 20 per cylinder in November 2004 when crude was at $34 a barrel.
Kerosene prices have not been changed since 2002 when crude was at $23 per barrel.
The Rs 2 per litre increase in petrol price would give Rs 180 crore a month additional revenue to public sector oil companies. A Re 1 per litre hike in diesel would fetch Rs 360 crore a month.
(With inputs from PTI)
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