To cut losses of PSU oil companies Govt hints at price hike for petro-products

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Mr Mani Shankar Aiyar
Mr Mani Shankar Aiyar

Our Bureau

New Delhi, Aug. 11

THE consumers may have to shoulder a part of the burden of the rise in international oil prices.

The Petroleum Minister, Mr Mani Shankar Aiyar, today indicated that to cut losses of the state-owned oil companies, some burden would have to be shared by all stakeholders, which includes the consumers.

Responding to a question on the losses being suffered by the oil public sector companies even after the recent hike in petrol and diesel prices, the Minister told Parliament that losses suffered by the oil marketing companies (OMCs) were on account of the continued and widening mismatch between the domestic retail prices of petrol, diesel, PDS kerosene and domestic LPG on the one hand and on the other the constant increase in the international oil prices in the current year.

``In these circumstances, consumers will have to take some burden on their shoulders,'' the Minister informed the house adding that ``we have always tried to limit the increase in prices to minimise the impact on consumers.''

On whether the Petroleum Ministry has initiated any dialogue with the Finance Ministry to check further hike in oil prices, Mr Aiyar said that even the Parliamentary Standing Committee on Petroleum and Natural Gas had recommended restructuring of duties/taxes on petroleum products keeping the interests of the consumer in mind. The recommendations of the committee were examined in detail in consultation with the Finance Ministry and other authorities concerned, Mr Aiyar said.

The recent revision in prices and changes in the duty structure on crude oil and petroleum products had been effected on the principle of equitable burden sharing and striking a proper balance among the three principal stakeholders - the Government, oil companies and the consumers, he said. However, the relentless increase in international prices had put an unduly large burden on the OMCs threatening to make them sick. "The Government is continuously monitoring the price situation with a view to taking appropriate remedial measures," the Minister added.

The OMCs such as Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd, and IBP have registered losses during the first quarter of the current year. As per the preliminary estimates, even after the recent hike in the prices of motor spirit (MS) and High Speed Diesel (HSD) effective June 20 midnight, the OMCs have incurred a total cash loss (without considering the contribution by the upstream PSUs) of Rs 1,516 crore in July 2005 with IOC's loss amounting to Rs 564 crore, BPCL - Rs 425 crore, HPCL - Rs 343 crore, and IBP - Rs 184 crore.

(This article was published in the Business Line print edition dated August 12, 2005)
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