Finance Ministry calls for lowering fuel prices

Finance Ministry calls for lowering fuel prices
The finance ministry is batting for a reduction in fuel prices, a move that may come as a breather for cash-strapped consumers and the UPA government which is battling to reduce its soaring fiscal deficit.

According to reports, the Finance Ministry has called on the Petroleum Ministry to change the pricing of motor and kitchen fuel from trade parity to export parity, a move that may lower fuel prices some by 10 per cent or more.

The change in pricing of motor and kitchen fuels may help trim the government's oil subsidy burden by Rs 18,000 since a shift to the export-parity mechanism would lower the retail price of fuels and thus reduce the amount that the government pays to compensate oil marketing companies in cash for selling fuel below cost.

At present, motor and kitchen fuels are priced at an average of import and export prices in the ratio of 80:20, giving heavier weightage to imports.

While consumers and the government are expected to benefit from the above proposal, refineries may take a hit.

Read more about: economy, fuel
Story first published: Tuesday, January 29, 2013, 13:30 [IST]
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