Another Fuel Price Hike Soon.

Public sector oil marketing companies (OMC) are contemplating another hike in the price of petrol, the second in as many months.

Indian Oil Corporation (IOC), Hindustan Petroleum Corporation and Bharat Petroleum Corporation that dominate fuel retailing in India have long been pressing for another increase in petrol prices as global crude prices have risen steeply and the rupee has depreciated against the dollar, making imports costlier.

Crude prices are ruling around $108 per barrel, but at the current exchange rate, petrol price of Rs 66.84 per litre in Delhi corresponds to about $102 per barrel equivalent of crude oil price.

“The loss on petrol is currently Rs 1.50 per litre and after including local levies, the desired increase in retail prices is Rs 1.82 per litre,” Hindustan Petroleum Company Limited's director (finance) B Mukherjee told reporters on Tuesday, without detailing when and by how much will be the price hike.  

“It all depends on which way the crude prices move in another fortnight. I think a decision on revision of prices can only be taken after that,” Sidhartha Mukherjee of the country’s largest retailer, IOC, told Deccan Herald.

He, however, said the burden of under-recoveries was huge and the oil marketing companies had asked the government to share it.

The PSU oil marketing companies, which went in for a Rs 3.14 a litre increase in petrol prices on September 16, citing mounting and unsustainable under-recoveries — realising less on sales than if the oil were to be sold at market price — as the reason. Under-recoveries of OMCs have been ballooning over the years and exceeded Rs 1 lakh crore in 2009, when oil price touched $140 a barrel. In 2010, under-recoveries stayed at Rs 46,000 crore, with global crude remaining firm.

Petroleum Minister S Jaipal Reddy had stated even if the international prices drop, the oil prices cannot reduce. This was because of the depreciation of the rupee, he added. Heads of the oil companies echoed his views, adding that they had been urging the government to subsidise their losses caused by under-recovery, lest they be forced to raise the prices again.

Source : deccanherald.com