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Hike in petrol, diesel prices likely after Friday
An increase in petrol, diesel, domestic cooking gas (LPG) and kerosene prices looks “imminent” after the Finance Ministry said it has no money to provide for fuel subsidy.
“This (hike) is imminent. There is no question of holding back now,” a top oil ministry official said today.
In all possibility, prices may be increased after the current monsoon session of Parliament ends on Friday.
Diesel, domestic LPG and PDS kerosene rates have not been changed since June 2011 even though cost of production has soared 28 per cent. State-owned fuel retailers are losing Rs 560 crore per day on sale of diesel and cooking fuel, and are forced to resort to short-term borrowings to meet funds needed for importing crude oil (raw material).
Borrowings of the three fuel retailers have shot up to Rs 1,57,617 crore at end of June from Rs 1,28,272 crore as on March 31.
Besides, they are losing close to Rs 5 per litre on petrol, a fuel that was decontrolled in June 2010 but rates of which haven’t moved in tandem with cost.
“Finance Ministry says it is not left with funds to subsidise oil companies. Oil companies are jewels of India. They need to be saved at all cost. Governments come and go, but oil companies will be required to fuel the country,” the official said. Diesel is being sold at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 per litre and domestic LPG at Rs 347 per 14.2-kg cylinder.
At current rate, the three firms are projected to lose Rs 1,92,951 crore in revenues in the financial year ending March 31, 2012 The three firms reported a combined revenue loss of Rs 47,811 crore on fuel sales in the first quarter. Of this, upstream firms like ONGC made good Rs 15,061 crore by way of discount of crude oil they sell to them.
The oil ministry sought cash subsidy for the remaining Rs 32,750 crore but the Finance Ministry has not released any.
In the absence of the subsidy support, IOC reported the highest quarterly net loss by any Indian company at Rs 22,451 crore. HPCL posted Rs 9,249 crore net loss in April-June while BPCL reported a net loss of Rs 8,836 crore.
Govt’s ‘oil subsidy biz’ bound to get bankrupt: Plan Comm
Bangalore: The Government’s “oil subsidy business” is bound to get “bankrupt” sooner or later, Planning Commission member BK Chaturvedi said on Tuesday.
Speaking at an international conference on public policy and governance here, the former Cabinet Secretary said the Planning Commission has been advocating the need to cut oil subsidies, which are in the range of Rs 1.4 lakh crore- Rs 1.5 lakh crore annually, but admitted that it’s a “difficult explanation in political spectrum”.
“On the other hand, it’s being argued (by the Government) that, look, if diesel prices go (up), therefore...Then inflation (will go up) we can’t really afford it”, the member of the 13th Finance Commission said.
“Now the fact of the matter is this is a policy choice (vis-à-vis whether or not to cut oil subsidies)”.
Chaturvedi said “oil subsidy business” policy is in existence for a long time and “it’s very, very difficult to displace it (now)”.
The Planning Commission has been telling the Government that this “business will never run”, he said.
“When you are buying at $140 a barrel and selling at $130,” Chaturvedi said, giving a figure for example.
“This business sooner or later is bound to get bankrupt. Question is how later,” he said but acknowledged that these are “difficult choices”.
The Commission has been explaining to the Government that “if you don’t have subsidies, you can have more schools, more hospitals, better facilities, more roads, more villages getting energy...”, he added.
An increase in petrol, diesel, domestic cooking gas (LPG) and kerosene prices looks “imminent” after the Finance Ministry said it has no money to provide for fuel subsidy.
“This (hike) is imminent. There is no question of holding back now,” a top oil ministry official said today.
In all possibility, prices may be increased after the current monsoon session of Parliament ends on Friday.
Diesel, domestic LPG and PDS kerosene rates have not been changed since June 2011 even though cost of production has soared 28 per cent. State-owned fuel retailers are losing Rs 560 crore per day on sale of diesel and cooking fuel, and are forced to resort to short-term borrowings to meet funds needed for importing crude oil (raw material).
Borrowings of the three fuel retailers have shot up to Rs 1,57,617 crore at end of June from Rs 1,28,272 crore as on March 31.
Besides, they are losing close to Rs 5 per litre on petrol, a fuel that was decontrolled in June 2010 but rates of which haven’t moved in tandem with cost.
“Finance Ministry says it is not left with funds to subsidise oil companies. Oil companies are jewels of India. They need to be saved at all cost. Governments come and go, but oil companies will be required to fuel the country,” the official said. Diesel is being sold at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 per litre and domestic LPG at Rs 347 per 14.2-kg cylinder.
At current rate, the three firms are projected to lose Rs 1,92,951 crore in revenues in the financial year ending March 31, 2012 The three firms reported a combined revenue loss of Rs 47,811 crore on fuel sales in the first quarter. Of this, upstream firms like ONGC made good Rs 15,061 crore by way of discount of crude oil they sell to them.
The oil ministry sought cash subsidy for the remaining Rs 32,750 crore but the Finance Ministry has not released any.
In the absence of the subsidy support, IOC reported the highest quarterly net loss by any Indian company at Rs 22,451 crore. HPCL posted Rs 9,249 crore net loss in April-June while BPCL reported a net loss of Rs 8,836 crore.
Govt’s ‘oil subsidy biz’ bound to get bankrupt: Plan Comm
Bangalore: The Government’s “oil subsidy business” is bound to get “bankrupt” sooner or later, Planning Commission member BK Chaturvedi said on Tuesday.
Speaking at an international conference on public policy and governance here, the former Cabinet Secretary said the Planning Commission has been advocating the need to cut oil subsidies, which are in the range of Rs 1.4 lakh crore- Rs 1.5 lakh crore annually, but admitted that it’s a “difficult explanation in political spectrum”.
“On the other hand, it’s being argued (by the Government) that, look, if diesel prices go (up), therefore...Then inflation (will go up) we can’t really afford it”, the member of the 13th Finance Commission said.
“Now the fact of the matter is this is a policy choice (vis-à-vis whether or not to cut oil subsidies)”.
Chaturvedi said “oil subsidy business” policy is in existence for a long time and “it’s very, very difficult to displace it (now)”.
The Planning Commission has been telling the Government that this “business will never run”, he said.
“When you are buying at $140 a barrel and selling at $130,” Chaturvedi said, giving a figure for example.
“This business sooner or later is bound to get bankrupt. Question is how later,” he said but acknowledged that these are “difficult choices”.
The Commission has been explaining to the Government that “if you don’t have subsidies, you can have more schools, more hospitals, better facilities, more roads, more villages getting energy...”, he added.
