The Hindu Business Line : Ministry to take fuel price proposal to Cabinet

New Delhi, Nov. 26 Despite a dip in global crude prices, the Government is yet to take a decision on whether the prices of petroleum products will be cut, the Petroleum Secretary, Mr R.S. Pandey, said here on Wednesday.

``No decision has yet been taken on whether prices will be cut, on which items and when; we will be going to the Cabinet with a comprehensive picture on this issue,” he said while addressing the Economic Editors’ conference.

Mr Pandey said while the public sector oil marketing companies (OMCs) were making profit on petrol and diesel, they were incurring revenue loss on the sale of domestic LPG and kerosene. “In the case of petrol and diesel, the under- recoveries have turned into over-recoveries. As on November 16, the OMCs were making Rs 8.17 a litre of petrol and Re 0.65 a litre of diesel. On kerosene, the under-recovery stands at Rs 21.54 a litre, while on domestic LPG it is Rs 338.28 on every cylinder. But if the four products are taken together, there is still under-recovery,” Mr Pandey said.

The Chairman, Indian Oil Coporation, Mr Sarthak Behuria, who was also present, said that the under-recoveries on the four products may come down further from December 1, if the current crude and product prices prevailed.

Addressing the meeting, the Petroleum Minister, Mr Murli Deora, pointed out that despite the substantial fall in oil prices, international analysts had forecast that the prices would remain higher at around $ 75-$115 a barrel in the next year depending on how the present economic recession affects the global demand and supply of oil.

“This indicates the nature and extent of price volatility and market uncertainty that remain as challenging as before,” Mr Deora said.

The Minister said that though the Government had increased marginally the retail prices of petrol, diesel and LPG as global crude prices had hit new highs, the under-recoveries of OMCs during April-September 2008 rose to an all-time high of nearly Rs 93,000 crore. The three OMCs reported a combined loss of Rs 14,431 crore during the first half of 2008-09, up from Rs 7,283 crore reported during the previous year, Mr Deora said.

“Since then, there has been a decline in oil prices in the international market. However, the advantage of lower oil prices has been partly offset by about a 25 per cent depreciation of the rupee against the dollar since April this year,” he said.

More hiring

Later speaking to newspersons, the Secretary said that Reliance Industries is to reopen its retail business from December 1. “They did not require our permission when they closed down. So why should they require any permission when they restart,” Mr Pandey said.

Asked whether the global meltdown was affecting the job prospects in the oil industry, Mr Pandey said that on the contrary the public sector oil companies were employing more people. “This year, the PSU oil companies will employ another 5,000 people, up from 2,600 last year.”

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