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Fuel prices may go lower: Chidambaram

New Delhi, Tue, 16 Dec 2008 NI Wire

Government can make further reduction in the prices of transport fuels if crude oil continues to slip in international market, Union Home Minister P Chidambaram told the parliament on behalf of Prime Minister Manmohan Singh, who currently holds the finance portfolio.

The former Finance Minister, who has been shifted from Finance Ministry to Home Ministry in the wake of Mumbai Terror attack on November 26, said that government is closely watching the international oil prices and ‘further reduction is possible’.

Earlier on December 05, the prices of petrol and diesel were reduced by Rs. 5 and Rs. 2 while the prices of domestic LPG cylinder remained unaffected due to the grant of heavy subsidy.

On the other hand, the oil marketing companies (OMCs) on Monday midnight has reduced the prices on Aviation Turbine Fuel (ATF) by over 11 percent. This was the seventh reduction in ATF prices since September this year after the prices of ATF in India touched Rs.71,000 per kiloletre on the back of soaring crude oil prices.

With this, the ATF price in Delhi is Rs. 32,691.28 per kl, a reduction of Rs.4,208.37; in Mumbai Rs.40823.56, a cut of 4,383.72; in Kolkata Rs. 40,823.56, a slash of 4,383.72; and in Chennai it is available at Rs. 36436.76, at Rs. 4,551.91 cheaper.

This figures show that the ATF prices has slipped down more than 54% from the prices of August as it was at Rs.71,028.26, Rs.73,673.56, Rs.80,763.47 and Rs.77,661.18 respectively, but despite sharp fall in the ATF prices, the domestic airlines have not made any impressive announcement so far in terms of airfares except slashing of Rs.400 as the government had scrapped the levied sales tax on ATF last month.

The Union Aviation Minister Praful Patel Tuesday has appealed the domestic airlines to pass the benefit of this reduction to the customers by announcing cut in airfares. But as per sources: airline firms are willing to use this benefit to heal their heavy loss held this year that is expected to go up to Rs.10,000-crore by the end of this fiscal.

The ATF prices in India play a crucial role in aircraft operation as it shares nearby half of the operation cost. And due to higher airfares, airline firms are facing traffic crunch that was recorded 21.3% low on this November as against a year ago for the same month. This was the biggest deduction of passengers registered in the last few years, said a market expert by adding that December is also likely to repeat last month’s trend.

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