The Hindu Business Line : Petro product prices unlikely to be raised now

Consumers of petroleum products - petrol, diesel, cooking gas, and kerosene - may be spared an immediate price hike with the Indian crude basket floating below $70 a barrel.

The basket on August 31 stood at $66.61 per barrel and the average of April to date stood at $68.77 a barrel.

While announcing the hike in petrol and diesel prices in June, the Government had announced that state-owned oil marketing companies would be allowed the autonomy to review the selling prices if the Indian crude basket crossed $70 a barrel.

The companies could review the prices at appropriate intervals, the Government had said.

The Indian basket represents the average crude price paid by the Indian refiners.

It is calculated as the average price of Oman and Dubai crude for sour grade and price of Brent (dated) for sweet crude in the ratio of 58:42 with effect from April 1, 2005.

According to available information, the August to date average of the Indian basket stood at $70.84 per barrel, while the average for August 11 to 29 was at $69.89 a barrel.

This is because the Indian basket had touched the highest on August 8 at $75.30 a barrel. With international prices ruling high in July as well, the average for July till date was $71.09 per barrel up from the April to June average of $67.13 a barrel.

Though the average has crossed $70 at some points, there is a feeling in the Petroleum Ministry that instead of reviewing prices every fortnight, it would be better to take a consolidated look at prices.

Sources in Indian Oil Corporation told Business Line that though the under-recovery on petrol has come down to Rs 4 per litre as on date from Rs 6.50 per litre, the under-realisation suffered on the other three products had gone up.

The decline in under-realisation on petrol is mainly due to the product cost price coming down and not because of the fluctuation in the crude price.

The under-recovery on diesel stands at Rs 8 per litre, up from Rs 6.80 per litre.

On cooking gas, it has gone up to Rs 195 per cylinder from Rs 140, and on kerosene, the under-recovery has moved up to Rs 19 per litre from Rs 17.