Friday, July 14 2006 18:04 Hrs (IST) - World Time -

New Delhi: As international crude pricestouched a fresh record peak of 77.92 dollars a barrel, the Government is mulling options to mitigate its impact but another round of fuel price hike looks almost ruled out.

"We are closely watching the movements in international prices. The new peak means India will have to shell out more on imports as 73 per cent of the crude oil requirement is imported," a top Petroleum Ministry official said.

The Cabinet had on June 5 while approving Rs 4 a litre increase in petrol and Rs 2 per litre hike in diesel prices, sanctioned a new pricing regime wherein oil firms could raise fuel prices automatically if price of the Indian basket of crude averaged over 70 dollars a barrel over a period of 30-days.

"The July average of the Indian basket of crude (which is 4-5 dollars lower than the day's global price) was 71.11 dollars per barrel. For the new pricing scheme to come into effect, the average has to stay above 70 dollars for full month," the official said.

The Indian basket of crude oil averaged 66.80 dollars a barrel in June. It stood at 72.75 dollars a barrel yesterday.

"We just scrapped through a steep hike of Rs 4 a litre in petrol and Rs 2 per litre in diesel. Increasing pricesagain even if the Indian basket of crude breaches 70 dollars a barrel, will be a political suicide. An immediate hike looks unlikely," he said.

Petroleum Minister Murli Deora has over the past two weeks categorically ruled out any more hike in fuel prices.

"Clearly, the mandate is to protect the consumers. Public sector oil firms may be asked to bear additional burden," the official said.

As per the June 5 scheme of things, a combination of tax cut, issue of oil bonds to bridge under-realisation on petrol, diesel, LPG and kerosene, and upstream oil firms like ONGC extending discounts on crude they sell to refiners, was planned to bridge Rs 73,500 crore revenue loss expected this fiscal on selling fuel below the cost.

The Rs 4 a litre hike in petrol and Rs 2 per litre increase in diesel price contribute Rs 9,200 crore while upstream firms were to chip in Rs 24,000 crore.

The Government was to issue oil bonds worth Rs 28,000 crore this fiscal.

"The increased burden arising from rise in international crude oil prices will be borne by the oil companies. The refiners, who have been making handsome margins, would be asked to chip in some form of discounts," the official said.

Some of the additional burden may be borne by the oil marketing companies themselves.

Another option before the government is to lower import duty on crude in proportion to the increased revenue flowing from higher oil prices. However, this measure may not find favour with the Finance Ministry which had earlier said it was finding it difficult to meet fiscal targets.