The Hindu Business Line : `Govt keeping a watch on crude price movement'

The Government is closely watching the fluctuation in the crude prices and any decision on revision of retail prices of petrol and diesel would be taken when they stabilise. Asked on a possible revision of prices, the Petroleum Minister, Mr Murli Deora, told newspersons "the market is volatile. We are closely watching the scenario."

Crude price scenario is very speculative with prices sometimes hovering at $60 a barrel and then easing to $52 per barrel, analysts said. On January 5, the Indian crude basket closed at $52.87 a barrel, down from $55.21 a barrel on the previous day, and $57.33 per barrel on January 3. The average of December 28 till date was at $56.27 a barrel. After touching a high of over $70 a barrel, the Indian crude basket closed the year 2006 on a much softer note of $57.79 a barrel on December 29.

Underrecoveries down

The downtrend in the oil prices has also brought down the underrecoveries suffered by the state-owned oil marketing companies to some extent. The January till date average stood at $55.14 a barrel. The international crude prices were hovering around $55 per barrel. The Ministry, which has been keeping a close watch on the whole scenario had earlier indicated that the international prices have to stabilise below $52-$50 a barrel before it considers any revision in retail prices.

The loss suffered by Indian Oil Corporation Ltd on sale of petroleum products — petrol, diesel, kerosene under public distribution system and liquefied petroleum gas is now about Rs 50 crore per day compared to Rs 110 crore per day the company was incurring earlier.

Under recoveries are the difference between retail price based on trade parity and price actually charged from the consumer on the petroleum products.

Currently, the OMCs were suffering an under realisation of about Rs 1.40 on diesel, Rs 14 per litre on kerosene, and Rs 150 per cylinder on cooking gas. The desired increase in retail selling price of petrol was 25 paise per litre.