India is expected to raise prices of petrol by about 10 percent and diesel by 6 percent on Wednesday, Indian newspapers reported, ending nearly two weeks of debate over how best to bail out state oil firms.
Two panels of cabinet ministers, dealing with political and economic issues, are considering the oil ministry’s proposal to raise regulated fuel prices as crude prices have risen sharply to record highs.State oil firms selling fuel below cost are losing millions of dollars a day and have said they may soon run out of money to buy imports, which meet 70 percent of India’s demand.
Oil ministry officials had pushed for increases of 15-22 percent for retail fuels.
But agreement on the size of the rise has been delayed by a political rift in the government, which faces several state polls this year, a general election next year, and is struggling to calm inflation at a 3-½ year high of 8.1 percent.
The price rises are not expected to trim demand.The government may also raise prices of cooking gas, which have not been raised for nearly four years, several media reports said.The Indian Express said the government may allow consumers to buy eight cooking gas cylinders a year at current rates but charge double for additional cylinders.
On its front page, The Economic Times said prices of petrol and diesel were expected to rise while duties may be reduced to cushion the impact on the consumer.The Express also said Prime Minister Manmohan Singh would address the nation after the decision on fuel prices, but a government spokesman could not confirm this.
Soaring crude costs have forced several Asian countries, the latest being Malaysia, to consider lowering fuel subsidies and raising prices, although China, which makes up nearly a third of Asia-Pacific oil demand, looks unlikely to raise prices before August.
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