11 Jan 2009;timesofindia.indiatimes.com:Devraj Dasgupta:MUMBAI: With international crude oil prices stable at $ 40 a barrel, the government is keen to go for a second round of reduction in fuel and gas
prices soon. Union petroleum minister Murli Deora on Saturday said it is possible to cut prices of petrol by Rs 5, diesel by Rs 3 and cooking gas by Rs 25 per cylinder. The United Progressive Alliance (UPA) government had reduced prices of petrol by Rs 5 per litre and that of diesel by Rs 2 per litre on December 6 last year.
With the nationwide Oil officers' strike withdrawn, Deora looked relieved on Saturday while reviewing the working of a petrol pump at the Bandra-Kurla Complex. He said the petroleum ministry calculations show that its possible to go in for second round of price cuts as global crude prices have come down to $40 per barrel from a peak of $ 147 a barrel in June last year. "Give us some time, we will work it out soon," he said while avoiding an exact date for announcing the cut.
But the fuel price cut does not seem to be a fallout of market economics alone. Stating that UPA partners will like to see a cut of Rs 50 in price of cooking gas, Deora said it was not feasible to reduce prices beyond Rs 25 per cylinder. "The oil marketing companies are making profit on petrol and diesel, but they are still loosing money on LPG," he said. In simple terms, the government may chip in with higher subsidy on LPG to offer reduced price on cooking gas.
As for kerosene, the fuel used by the aam aadmi, Deora said it was already available at Rs 9 per litre-cheapest in the world.
Fielding questions on oil companies, Deora said they will register profits in the January to March quarter provided crude prices stay at $40 a barrel.
Importantly, Deora said the government may allow oil companies to decide petro prices on their own depending upon market dynamics. "We can think of de-regulating the pricing mechanism. Now that international crude prices are low and stable, its the right time to think of it," he said.
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