Petroleum prices should be linked to world prices: Montek

New Delhi, June 23 (PTI) In the face of rising global
crude oil prices, the Planning Commission has said that
domestic prices of petrol, diesel and cooking gas should be
linked to oil prices in the international market.

"They (prices of petroleum products) should be linked to
world prices," Planning Commission Deputy Chairman Montek
Singh Ahluwalia told PTI when asked about the global crude
prices now surging to about USD 70 a barrel.

On whether he agreed with Petroleum Minister Murli Deora,
who favoured deregulating domestic prices of petroleum
products, he said, "The Planning Commission's view, which is
reflected in the integrated energy policy, is that domestic
petroleum prices should reflect world prices."

Noting that the country imports 70 percent of its crude
oil requirement, Ahluwalia said, "I don't think it is
sustainable to delink domestic prices from import costs.

"The idea of subsidising imported products (crude oil),
which are mainly consumed by the well-off, doesn't make
sense," he said.

As regards subsidy for the poor, Ahluwalia said, "There
is a need for a targeted subsidy for the vulnerable population
to assure access to essential items like kerosene for the
poor, but that can be handled."

According to the Petroleum Ministry, India's crude oil
import basket has averaged USD 70.49 per barrel in the second
fortnight of June against the May average of USD 58.

With the recent spike in oil prices in the global market,
reports suggest, the state-run oil companies, including Indian
Oil, Hindustan Petroleum and Bharat Petroleum are losing about
Rs 135 crore per day on sale of petrol, diesel, cooking gas
and kerosene.

PSUs lose Rs 2.96 a litre on diesel and Rs 6.08 per litre
on petrol. The annual losses of the oil companies, as per
recent calculations, during the current fiscal could mount to
Rs 38,700 crore.

Asked about rising global commodity prices, Ahluwalia
said, rising commodity prices need not worry us. "If the
global economy is recovering India will do better and the
commodity prices should not cause us to worry," he added.

Noting that global commodity prices will firm up with
recovery in world economy, Ahluwalia said, "We cannot have the
benefits of the global recovery and maintain very low
commodity prices." PTI KKS
SCY