Taking cue from his leader’s remark, Petroleum Minister Murli Deora squeezed in a proposal before the Cabinet for a cut in petrol prices by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas LPG by Rs 25 a cylinder with effect from Wednesday night.

On Tuesday, UPA chairperson Sonia Gandhi told a rally that she hoped that petrol prices would be reduced soon. “The prices of petroleum products have decreased recently and I expect that soon they will dip further.”

Sources said that though the proposal to the Cabinet Committee on Economic Affairs — which meets on Wednesday evening — provides the option of taking auto fuel pricing out of government realm, it was likely to be left for the next government that would be in place in June after general elections.

The second option, which has the political consent, for the CCEA is to bring down petrol prices by Rs 5, diesel by Rs 2 and LPG by Rs 25, they said. Deora, however, maintained that a decision on the exact reductions would be decided at the CCEA.

The pricing issue is usually decided by a smaller Cabinet Committee on Political Affairs but that was not slated for Wednesday, said sources.

The CCEA would also approve that as an interim measure, the Finance Ministry would provide Rs 44,967 crores worth of oil bonds as the government’s share of under-recoveries, upstream companies would yield Rs 25,929 crores as discounts on crude oil and LPG to oil marketing companies, and the OMCs absorb Rs 21, 957 crores in their balance sheet.

The state-run OMCs suffered Rs 92,853 crores as under-recoveries in the first half of this fiscal year as government held on to prices despite a sharp surge in global crude oil prices.

Crude oil had climbed to a record high of $147 a barrel in July, but has since come down to $40 a barrel prompting the government to cut petrol prices on December 5 by Rs 5 and diesel by Rs 2 a litre.

source: yahoo finance.

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