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Centre to review petrol, diesel prices in July

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BS Reporter New Delhi
Last Updated : Jun 14 2013 | 5:58 PM IST
The government was likely to take a decision on a hike in petrol and diesel prices in mid-July, a government official said today. The review has been necessitated by the increase in global and domestic crude oil prices.
 
Prices of the automobile fuels were last "reviewed" by the Centre in February and cut in line with softening crude oil prices. The price of the Indian basket of crude oil then was averaging $56 a barrel.
 
In June so far, the price of the Indian crude oil basket, which comprises Oman-Dubai sour crude oil and Brent dated sweet crude oil in a 58:42 ratio, has been hovering close to $70 a barrel.
 
The oil-refining and -marketing companies "" Indian Oil, Hindustan Petroleum and Bharat Petroleum "" have been pushing for a hike in prices since they have to bear the burden of under-recovery, the gap between the actual controlled selling price and the desirable selling price (which covers all costs).
 
When prices of petrol and diesel were last raised by Rs 4 a litre and Rs 2 a litre, respectively, in June 2006, the average price of the Indian basket of crude oil was $67.13 a barrel. While current prices are above this, there is some relief provided by the appreciation of the rupee.
 
"Once we have the trend for the first quarter of this fiscal, we will review the situation. In early July, we hope to get a consolidated view after consulting the industry and the Left parties," the official said.
 
"After this, we will go to the Cabinet, possibly in the second or third week of July, for a decision on the quantum of oil bonds and a possible price hike of petrol and diesel," he added.
 
The review will determine the exact quantity of under-recoveries the three government-owned oil marketing companies are expected to incur this fiscal.
 
Indian Oil Corporation Chairman and Managing Director Sarthak Behuria had recently said that at the present level of global crude oil prices, the expected under-recoveries in the full fiscal would be around Rs 50,000 crore for the industry.
 
At least one-third of this projected revenue loss on fuel sale will be borne by upstream firms like ONGC and GAIL, while the Centre will also share part of the burden by compensating fuel retailers through the issue of oil bonds.

 

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First Published: Jun 12 2007 | 12:00 AM IST

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