The Petroleum Ministry did not take to the Union Cabinet, which met today, the proposal to free petrol prices from government control, along with a hike in diesel, cooking gas and kerosene rates, apparently because of opposition from the Trinamool Congress and the DMK to such a move.
"No, it was not discussed... today," Home Minister P Chidambaram said after a meeting of the Union Cabinet.
Sources said both Mukherjee and Deora were in favour of Rs two to three a litre hike in petrol and diesel prices and Rs 25 per cylinder increase in LPG rates, but the allies did not want diesel, LPG and kerosene prices to be touched.
Without a hike in fuel prices, state-run oil firms would incur a whopping Rs 46,030 crore revenue loss this fiscal. Of this, only Rs 20,000 crore is coming as subsidy support and the uncovered amount is enough to erode the networth of retailers.
To find a solution, Deora will meet Mukherjee on February 14, the sources said, adding that the meeting will explore if government subsidy support can be increased so as to keep the price increase to the bare minimum.
Deora, on his part, met the Prime Minister after the Cabinet meeting and submitted a memorandum asking the government to cover the unmet revenue loss on fuel sales.
"I submitted a memorandum to the Prime Minister and Mukherjee seeking compensation for the shortfall (in revenues) on account of petrol and diesel," Deora said but refused to discuss government's perspective on fuel price hike.
The proposal of free petrol prices would lead to a price increase of Rs 4.72 a litre. A similar move on diesel, as suggested by the expert group on pricing reforms headed by Kirit Parikh, would have resulted in rates going up by Rs 2.33 a litre.
Sources said the Petroleum ministry was willing to settle for Re one a litre increase in diesel rates provided, LPG and kerosene prices were also raised.
The increase sought will however not be in the range of the steep Rs 100 per cylinder and Rs 6 a litre hike, respectively, suggested by the expert group.
Sources said it is bargaining for at least half of the price increase suggested by the panel, but may settle at Rs 25 per cylinder hike in LPG rates and Re one a litre raise in kerosene prices.
Petrol is currently sold at a loss of Rs 4.72 a litre, diesel at Rs 2.33 per litre, kerosene at Rs 18.06 per litre and domestic LPG at a discount of Rs 287.59 per cylinder.
In case the government goes for marginal hikes, the Cabinet will also have to decide on how the remaining revenue loss would be met.
After allies made their stand clear at informal parleys, a meeting of the Congress core group which includes UPA Chairperson Sonia Gandhi, did not take up the price rise issue yesterday, sources said.