July 2, 2009

India raises gasoline, diesel prices

The Indian government, only days away from presenting the budget, sharply hiked state-set gasoline and diesel prices effective Thursday.

Gasoline prices went up by 4 rupees, or about 8 U.S. cents, a liter and diesel by 2 rupees, or about 4 U.S. cents, a liter, the Press Trust of India reported. There are about 3.8 liters in a U.S. gallon.

After the increase, gasoline will cost about 93 U.S. cents a liter and diesel about 69 U.S. cents a liter in some major cities.

The government, sensitive to the needs of the common people, did not change the prices of kerosene and cooking gas, the staple of the poor and middle class people.

The prices hikes were announced by Petroleum Minister Murli Deora after consultation with Indian Prime Minister Manmohan Singh, whose Congress Party coalition was returned to power after the May general elections.

The gasoline and diesel prices hikes were blamed on rising international price of crude oil and the need to shore up loss-hit state-run oil marketing companies. Deora said crude prices had doubled to $70 a barrel since December, other media reports said.

He said domestic cooking gas and kerosene prices were left unchanged even though the state-owned oil companies were losing nearly 93 rupees, or about U.S. $1.95, per cylinder of cooking gas, and 15.26 rupees, or 32 U.S. cents, per liter of kerosene.

With hike in prices of diesel and petrol, oil companies will be able to avoid red ink in their balance sheet as they were bleeding under the burden of subsidies, discounts and oil bonds, Times of India reported Sajjan Jindal, president of the Associated Chambers of Commerce and Industry, said in a statement.