No proposal on fuel prices in Deora-PM meet: Oil Secy

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Downstream oil PSUs in acute distress: RS Sharma Oil recovers from 2010 lows towards $80/bbl Policy action vital to curb food inflation: Ex-Fin Secy No case for petrol subsidy in India: MS Ramachandran IOC may import some diesel in 2010-11 Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

Petroleum Minister Murli Deora and Prime Minister Manmohan Singh met on Wednesday to discuss raising prices of petroleum products. However, Petroleum and Natural Gas Secretary RS Pandey said that there was no proposal on fuel prices in the meeting. The Oil Minister is expected to meet Finance Minister Pranab Mukherjee today on fuel pricing and oil bonds.

The government sets the prices of petrol, diesel, cooking gas and kerosene to protect the poor and control inflation. However, Pandey said that rate hike could be taken up only by the cabinet.

Kerosene and liquefied petroleum gas (LPG) under-recoveries would be paid by the government, he said, adding that the Oil Minister and the Finance Minister would discuss the compensation to be given to the oil marketing companies (OMCs). "Kerosene and LPG under-recoveries for the month of December 2009 stood at Rs 21,000 crore."

Here is a verbatim transcript of the exclusive interview with RS Pandey on CNBC-TV18. Also watch the accompanying video.

Q: What transpired in your meeting with the Prime Minister (PM)? What you are going to talk about to the Finance Minister (FM) today, has it got any direct relation to a potential petrol price hike anytime soon?

A: It was a general review meeting. Prime Minister does review different sectors particularly important ones from time to time and it was one of the reviews. There was no proposal to either increase or decrease prices of products, in fact all of us should realize that such speculative news, which is released, might land all the consumers in difficulties. So there was no agenda to consider price hike. There are forums for considering price hikes, which are done by cabinet or committees. This was review of the sector by PM. There has been huge volatility in oil prices and the companies have been impacted by it. So, all the major companies' financial performances were reviewed.

Q: There is a meeting with the FM, which is also coming up, I am sure the issuance of oil bonds, which have still not been done to the marketing companies, will come up. Do you sense that the Finance Ministry is disinclined to issue oil bonds and if it is, what is the way out for these companies, which will report numbers deep in red?

A: Petroleum Minister and Finance Minister will meet and will discuss how to compensate the oil companies for the under-recoveries. This is a usual process, oil companies have been assured by the government that for kerosene and liquefied petroleum gas (LPG) the under-recoveries will be met by government and for auto fuels the under-recoveries will be met by contribution from oil companies themselves. So Petroleum Minister and Finance Minister will meet and take a call as to how much compensation will be given, when it will be given and in what form it will be given. So it is a meeting to sort out these issues.