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PM Narendra Modi's govt is not going to increase the prices of domestic LPG or PDS kerosene because of the recent spurt in global crude oil rates over the crisis in Iraq, said Dharmendra Pradhan, minister of state (independent charge) for petroleum and natural gas - he was speaking on day the Centre effected a rail fare hike in both passenger (14.2%) and freight (6.5%) rates.
BJP blamed the Manmohan Singh-led UPA govt for the rail fare hike.
Though the gradual increase in diesel prices would continue, there is no move right now to effect a sudden steep increase in the price of this fuel. Pradhan told FE that the impact of Iraq on the petroleum prices in India are under control.
“The oil marketing companies (OMCs) have been directed to be ready with a contingency plan to source more crude from existing suppliers other than Iraq in case the supply is disrupted. Even the OMCs are keeping a watch on the spot market in case any requirement arises to buy crude oil,” he said.
“The development in Iraq is dynamic. We are closely watching the situation. We should go by facts and should not be driven by speculations,” Pradhan said.
On Friday, petroleum secretary Saurabh Chandra apprised the Prime Minister’s Office of the Iraq situation. The Indian basket of crude oil has rallied 4.73% this month from $106.88/barrel on June 2 to $111.94/barrel on June 19.
The losses on diesel have now come down to Rs 1.62 a litre, thanks to the gradual price hikes of 50 paise a month over several months. The government is targeting to make the fuel’s price totally market-determined.
In 2013-14, India imported about 13% of its crude oil requirements from Iraq.
This fiscal, government-owned refiners IOC and HPCL planned to import 19.4 million tonnes of crude, accounting to nearly 20% of their requirement, from Iraq.
Of this, close to 50% of the contracted quantity has already been lifted.