The Hindu Business Line : PM takes stock of volatility in crude scenario

The Prime Minister, Dr Manmohan Singh, on Monday took stock of the situation arising due to volatility in the crude prices and the revenue loss faced by the state-owned oil marketing companies.

According to official sources, the Prime Minister held a meeting on the issue with the Petroleum Minister, Mr Murli Deora, and the Finance Minister, Mr P. Chidambaram.

Indications are that at the meeting a combination of measures, including a partial increase in petrol and diesel prices, issue of oil bonds and duty restructuring were discussed. The Petroleum Ministry has, however, maintained that a price hike is unlikely.

The Ministry has been proposing that the Government shoulder its share of burden of under-realisation by way of oil bonds. It has also suggested that the Finance Ministry could consider lowering the excise duties on petroleum products.

Given the political sensitivity of kerosene and LPG prices, the Centre is not likely to raise the prices of these two products. It may also not go for a full increase in prices of petrol and diesel given the current political situation.

With the fluctuations in crude prices and selling petrol, diesel, LPG and kerosene below the cost price, the OMCs — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — are losing close to Rs 185 crore per day.

The OMCs are losing Rs 4.34 per litre on petrol, Rs 6.90 on diesel, Rs 174 per cylinder on LPG, and Rs 16 per litre on kerosene.

The Indian crude basket on Friday closed at $76.46 per barrel up from $74.80 a barrel on Thursday. The retailing companies are expected to lose about Rs 53,000 crore during the fiscal on sale of these products.

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