Business | Oil & Gas
India set to raise fuel prices soon
India is set to raise petrol and diesel prices to keep pace with crude oil's record run but the move will fuel inflation, heaping more pressure on a government struggling to calm prices ahead of elections.
- Reuters
- Published: 23:53 May 23, 2008
New Delhi: India is set to raise petrol and diesel prices to keep pace with crude oil's record run but the move will fuel inflation, heaping more pressure on a government struggling to calm prices ahead of elections.
"A fuel price hike is inevitable," Indian Petroleum Secretary M.S. Srinivasan told reporters on Friday, adding that the oil ministry was also seeking tax changes to help Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, which are forced to sell fuel below cost.
India sets the heavily discounted prices at which fuel is sold in order to help fight inflation and protect the poor from price shocks.
It partially compensates oil retailers by issuing oil bonds to them, which they can either hold as assets or sell in the market.
But with oil above $130 a barrel and losses at state energy firms mounting, the government has little option but to raise retail fuel prices.
"We need to take immediate steps to save oil companies and I have discussed the issue with the prime minister last night," Oil Minister Murli Deora said.
Later, though, he suggested that the government may take a week to act.
Business Editor's choice
-
China breaks West's solar monopoly
Some countries in the world, especially Germany and the United States, have made considerable efforts to invest in developing solar energy cells
-
Burberry store spree will cut profit
Trenchcoat maker forges ahead with investment strategy targeting emerging markets
-
Laws needed to spur region bond markets
UAE Central Bank calls for creation of a centralised Sharia board to facilitate the sale of sukuk
