Financial Daily from THE HINDU group of publications
Thursday, Oct 16, 2003
Financial Daily from THE HINDU group of publications Thursday, Oct 16, 2003 |
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Petroleum Industry & Economy - Petroleum Petrol, diesel prices cut Our Bureau
New Delhi , Oct. 15 THE state-owned oil marketing companies on Wednesday reduced the retail prices of diesel by around 65 paise per litre and that of petrol by 70 paise per litre. Interestingly, the prices have been reduced at a time when global prices of the products have risen over the last fortnight. Coming in the wake of ensuing elections in several States, the decision appears to be populist in nature since it reduces the scope for public sector oil marketing companies to reduce the losses incurred in the sale of LPG and kerosene. Product prices are adjusted every fortnight and the companies have, so far, been selling petrol and diesel at prices higher than international market prices to make good a portion of the losses encountered in the sale of LPG and kerosene. Recently, the Cabinet approved a proposal to spill the subsidy bill on kerosene and LPG across all companies in the oil sector like oil producer Oil and Natural Gas Corporation (ONGC), and not just the marketing companies. In the process, the subsidy burden on the marketing companies would come down as compared to that encountered last year (Rs 8,000 crore). Taking this into account, the marketing companies' need to subsidise sale of LPG and kerosene has decreased as compared to previous year's levels and hence the decision to reduce the prices. "Instead of trying to eliminate the subsidy burden of LPG and kerosene on the oil marketing companies, the Government is striking off avenues to make good the losses," a senior oil company official said. "Left to ourselves, we would have maintained this cushion and reduced the subsidy losses on LPG and kerosene," the official said. "It remains to be seen if the Government would perpetuate it (reduction in petrol, diesel prices) to a point where the reduction in subsidy on LPG and kerosene (as per Cabinet decision) is made up by the subsidy on petrol and diesel," the official said. The Government is currently working on the modalities of sharing of LPG and kerosene subsidy by the various companies in the oil sector. According to the Cabinet decision, there would be no increase in the retail price of LPG and kerosene throughout this fiscal.
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