Financial Daily from THE HINDU group of publications
Saturday, Oct 01, 2005
Financial Daily from THE HINDU group of publications Saturday, Oct 01, 2005 |
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Industry & Economy
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Petroleum `Petro price hike not enough to arrest oil marketing cos losses' Richa Mishra
New Delhi , Sept. 30 THE recent price hike and the proposed oil bonds by the Government may not be enough to arrest the losses of oil marketing companies (OMCs). The partial increase on two petroleum products — petrol and diesel prices — by Rs 3 and Rs 2 per litre, respectively, was not sufficient for checking the under-recoveries being suffered by OMCs in order to cushion the impact of spiralling international oil prices on the consumer, sources said. The Government had raised prices of petrol and diesel, while leaving the prices of cooking gas cylinder (liquefied petroleum gas) and kerosene untouched on September 6. Sources told Business Line that for the period September 6-30, OMCs have suffered under-recoveries of Rs 8.52 per litre on motor spirit (petrol) and Rs 4.81 per litre on diesel. Under-recoveries on kerosene were about Rs 12.85 per litre and that on LPG was Rs 96.51 per 14.2-kilogram cylinder during the period, sources added. Commenting on the level of hikes that the OMCs were looking for when the Government was about to raise the prices, India Oil Corporation had said that petrol prices should be raised by Rs 7.50 a litre and diesel by Rs 5.15 a litre. While the price of kerosene should be increased by Rs 11.50 per litre, the price of 14.2-kilogram LPG should be increased by Rs 92. The demand has changed now, and the Government needs to find a quick solution, sources said. The total under-recoveries suffered by the OMCs in the first quarter of this fiscal were about Rs 9,500 crore. As on September 30, for IOC, one of the major OMCs, under-recoveries for petrol and diesel stood at over Rs 3,500 crore. The under-recoveries for LPG and kerosene stood over Rs 4,700 crore. Meanwhile, the Government is planning to set up a special committee under the chairmanship of head of PM's Economic Advisory Council, Mr C. Rangarajan, to review the duty rates on major petroleum products. Indications are that the main mandate of the committee is to suggest a price mechanism for petroleum products. The committee is expected to discuss the subsidy sharing formula, pricing of crude for domestic oil producers among others.
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