Clamour for petrol price increase
Kolkata   31-May-2011


IOC Chairman R.S. Butola in New Delhi on Monday

State-owned oil firms are considering a hike in petrol prices, just a fortnight after raising them by as much as Rs 5 a litre to bridge losses from selling the fuel below cost.

Sources said the oil firms, still losing Rs 4.58 on a litre of petrol after the May 14 hike, had met oil ministry officials to press for the increase. The hike could come along with the diesel price hike, which would be considered by the empowered group of ministers on June 9.

Any hike in fuel prices needs the approval of the government, which is the largest shareholder of the state-run firms, IndianOil, Bharat Petroleum and Hindustan Petroleum.

“As the government has indicated that it would like to cut cash compensation to the oil firms in fiscal 2011-12, there would be periodic increase in fuel prices to lessen the burden of the oil marketing firms,” officials said.

R.S. Butola, chairman of IndianOil (IOC), said “the firm would take a decision on hiking petrol prices at an appropriate time”.

According to Butola, the average price of the Indian basket of crude for fiscal 2011-12 is expected to be around $121.90 per barrel compared with $113.09 per barrel last fiscal.

IOC, BPCL and HPCL lose about Rs 16.17 on every litre of diesel they sell, Rs 28.28 a litre on kerosene and Rs 329.73 per domestic LPG cylinder. The three firms will “at current international crude oil prices lose Rs 180,208 crore in revenues on selling diesel, domestic LPG and kerosene below their imported cost in the 2011-12 fiscal,” the officials said.

Profits dip

IOC on May 30, 2011 reported a 29.7 per cent drop in net profit for the fourth quarter after its losses mounted because of selling fuel at government-controlled rates. The increase in fuel subsidy sharing dragged down upstream company ONGC’s profit by 26 per cent.

IOC’s net profit in the January-March quarter stood at Rs 3,905.16 crore compared with Rs 5,556.77 crore in the year-ago period.

The oil retailer had to absorb Rs 4,845 crore of loss on fuel sales during 2010-11 fiscal after accounting for cash subsidy from the government and assistance from upstream firms Oil India, ONGC and GAIL. “But these factors, our net profit in 2010-11 would have been higher than the previous year’s” Butola said.

IOC got Rs 22,604.84 crore in cash fuel subsidy from the government and Rs 16,703.73 crore from the upstream firms.

ONGC’s net profit in the January-March quarter dropped 26 per cent to Rs 2,791 crore from Rs 3,776 crore in the same period a year ago, chairman and managing director A. K. Hazarika said.

ONGC had to pay its highest ever fuel subsidy of Rs 24,892 crore, half of it in the fourth quarter, by way of discounts on the crude oil it sells to the state-owned refiners.