Petrol Stop - Govt to decide on fuel price hike in Feb

Govt to decide on fuel price hike in Feb

Tuesday, 19 January 2010

20 Jan 2010;economictimes.indiatimes.com:NEW DELHI: Consumers can breath easy as the government has no immediate plan to raise prices of petrol and diesel. A decision to increase fuel prices will be taken in February based on recommendations of the Kirit Parikh Committee, two senior officials in the oil ministry said. The committee, set up by the government to suggest a sustainable fuel pricing policy, is expected to submit its report by January 31. “There is no proposal to raise fuel prices as on date,” petroleum secretary RS Pandey said after the launch of Oil & Gas Conservation Fortnight-2010. Mr Pandey indicated that the decision of increasing fuel prices will be based on recommendations of the expert panel. “Let us see what decisions they (the committee) take...,” he said. The committee is expected to submit its report in less than a fortnight, he added. A fuel price hike is imminent with global crude oil prices have breached $80-a-barrel mark. State-owned fuel retailers — Indian Oil (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum (HPCL) — are losing Rs 5.40 a litre on petrol, Rs 3.65 a litre on diesel, Rs 17.23 a litre on kerosene and Rs 299 a cylinder on cooking gas. As on January 16, country’s largest fuel retailer IOC (which has over 50% market-share) is losing Rs 110 crore every day for keeping petrol, diesel, kerosene and cooking gas below the cost. “Based on the January 16 calculation, the three oil marketing companies (OMCs) may post Rs 47,400 crore revenue loss in 2009-10. The Rs 12,000 crore compensation offered by the finance ministry is far too less to keep the three OMCs financially healthy,” another official in oil ministry said requesting anonymity. The Rs 12,000 crore compensation offered by the finance ministry is for the full financial year (2009-10) and it is inadequate to cover even the Rs 20,872-crore loss the three companies incurred on selling kerosene and cooking gas in April-Dec 2009 period, he said. “The companies will require more compensation to close this financial year in profit,” he added. A large part of the compensation (around Rs 7,100 crore) will go to the largest retailer IOC. Other two OMCs, BPCL and HPCL, will get Rs 2,370 crore and Rs 2,529 crore, respectively. “Oil ministry has accepted this compensation as part-payment for 2009-10. We will ask finance ministry to pay adequate compensation as per July 2009 Cabinet decision,” he said.