Petrol prices may go up this week
"The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee (on fuel price hike) was to meet tomorrow evening. It has been put off," Oil Minister S Jaipal Reddy told reporters here.
EGoM was to meet tomorrow to consider raising the diesel price by Rs 3-4 a litre and domestic LPG rates by Rs 20-25 per cylinder.
"It has been postponed to accommodate some ministers…
It could be anytime on (May) 17 or 18," he said.
State-owned oil firms, however, are likely to get the go-ahead to raise the price of petrol, which they have not revised since January on informal `advice` from the government in view of Assembly elections in five states.
"Petrol prices may be raised as early as Thursday-Friday night," an official said, adding a steep hike of up to Rs 3 per litre of petrol is on the cards.
The government had freed petrol prices from its control last June, but state oil firms continue to be guided by informal advice from the government.
The hike needed to take petrol prices to international parity is about Rs 8.50 per litre, but the entire burden will not be passed on to consumers in one go.
"Oil companies will be asked to stagger the hike over a couple of months," the official said.
Reddy said the day EGoM meets on fuel prices, a separate Group of Ministers (GoM) that is vetting London-listed Vedanta Resources` USD 9.6 billion acquisition of Cairn India, may also meet.
"I think when the next date is fixed on that day itself we will deal with both questions — the question of under-recoveries of oil companies and the question of government approval to Cairn-Vedanta deal," he said.
State-owned Indian Oil, Bharat Petroleum and Hindustan Petroleum currently lose Rs 16.17 a litre on diesel and after adding local sales tax or VAT, the desired increase to make rates at par with international prices is Rs 18.19 a litre.
Besides petrol and diesel, the three state oil firms lose Rs 29.69 a litre on kerosene and Rs 329.73 per 14.2-kg domestic LPG cylinder.
Officially on the EGoM`s agenda was ways of mitigating the over Rs 180,000 crore revenue loss state-owned oil firms have projected in 2011-12 on selling diesel, domestic LPG and kerosene at current rates.
The three firms will "at current international crude oil prices lose Rs 180,208 crore in revenues on selling diesel, domestic LPG and kerosene below their imported cost in the 2011-12 fiscal," the official said.
The revenue loss, termed as under-recovery by oil firms, will be the highest ever, even more than what they lost in 2008-09 when crude touched a record high of USD 147 a barrel.
In addition, they lose about Rs 8.50 per litre on petrol, whose rates have not moved in tandem with the imported cost despite its pricing being freed from government control in June last year.
"Losses on petrol are not included in the under-recovery figures for 2011-12 as it is a decontrolled commodity," the official said.
The basket of crude oil India buys had averaged USD 83.57 per barrel in 2008-09 and calculations for the current fiscal have been done at the prevailing rate of around USD 110 a barrel.
"The average price of the Indian basket of crude oil last fiscal was USD 85.09 per barrel, higher than the 2008-09 average when the government had cut customs and excise duty on crude oil and products to check the impact of rising international rates on domestic markets," the official said.
Finance Minister Pranab Mukherjee has refused to cut customs and excise duty on crude this time to protect his projected fiscal deficit.
"The situation in the current fiscal will be worse; the three PSU oil marketing companies are losing Rs 540 crore per day on diesel, domestic LPG and kerosene sales," he said.
In 2008-09, the government had issues oil bonds worth Rs 71,292 crore to the three firms to make up for more than two-thirds of the Rs 103,292 crore revenue loss. Upstream oil firms like ONGC provided another Rs 32,000 crore.
In the 2010-11 fiscal, the three firms lost Rs 78,202 crore, but so far, the government has provided only Rs 20,911 crore in compensation. The oil marketing firms lost Rs 2,227 crore on selling petrol below the imported cost during April and June before its price was freed from government control.
They lost Rs 34,384 crore on the sale of diesel, Rs 19,566 crore on PDS kerosene and Rs 22,025 crore on the sale of domestic LPG.