The Hindu Business Line : Indian crude basket hits $74.97 a barrel

The fluctuations in international crude prices seem to be building pressure on the Indian crude basket, with the basket touching the highest at $74.97 (since April) a barrel on Wednesday. The August average of the basket stood at $69.03 per barrel. While the Petroleum Ministry has been maintaining that there are no immediate plans to raise prices of transport fuels, it has been keeping a close watch on the situation.

Price review

Meanwhile, the State-owned oil marketing companies (OMCs) – Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation – have been seeking a review of the prices of the four petroleum productions – petrol, diesel, PDS kerosene and domestic cooking gas.

To soften the impact of global crude prices on consumers, the Petroleum Ministry has sought oil bonds for the OMCs to compensate them for selling petroleum products at a discounted rate.

The Ministry has suggested that the Government bear half of the remaining under-realisation after the hike through subsidy and oil bonds, while the balance would be met from upstream firms such as ONGC, Oil India Ltd and GAIL.

The Ministry is seeking bonds worth Rs 24,000 crore for the current fiscal to be issued in three tranches of Rs 8,000 crore each. According to the OMCs at the current level of international prices, the desired increase in the retail selling price of petrol as on September 3 is Rs 2.20 per litre, diesel, Rs 4.40 per litre. The desired increase in the retail selling price of PDS kerosene is Rs 14.90 per litre and that on domestic cooking gas is Rs 185 per cylinder.

The auto fuel prices were last raised in June 2006 and have since been rolled back. The OMCs are expected to lose Rs 52,452 crore in revenues this fiscal year for selling petroleum products below the cost price.

The Petroleum Ministry has projected a revenue loss of Rs 16,120 crore on kerosene, Rs 11,088 crore on domestic LPG, Rs 6,682 crore on petrol and Rs 18,562 crore on diesel in 2007-08.

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