Fixed prices cost oil firms Rs 5,860 cr

Public sector oil retailing firms had under recoveries of over Rs 5,860 crore in the first six weeks of current financial years due to non-revision of petrol, diesel, cooking gas and kerosene prices in line with the spurt in international oil prices and increase in duties, Indian Oil Corporation Chairman Sarthak Behuria said today.

State-run IOC, Bharat Petroleum Corporation of India and Hindustan Petroleum Corporation Ltd together lost Rs 2,560 crore on diesel and Rs 569 crore on petrol, Behuria said at a seminar held here today.

"The oil marketing companies are unable to recover even the purchase price of products, thus losing on sales. While the gross under-recovery on petrol, diesel, LPG and kerosene during first six weeks of the current year was nearly a fourth of the Rs 20,310 crore under-recovery during 2004-05," he added.

He demanded a Rs 4.59 per litre hike in petrol prices to include Rs 2.52 per litre rise due to increase in excise duty.

Similarly, diesel prices needed to be raised by Rs 4.97 per litre, including Rs 1.53 to accommodate the excise effect.

Behuria said IOC's outstanding has jumped 75 per cent to about Rs 18,000 crore over the past year as the company borrowed money to meet its working capital requirement.

He suggested that the cess on domestic crude oil (Rs 1,800 per tonne) be utilised for supporting oil marketing companies and excise duty be reduced to insulate the customers.

Even private companies supported increase in petrol and diesel prices. Reliance Industries President P Raghavendran said the current international oil price rise was long term fundamental increase due to structural changes.

"The only viable option for India is to pass this price increase to the final consumer," he said.

Raghavendran said gross refinery and marketing margins on petrol had fallen from $17 a barrel in November 2004 when crude cost was $44.50 per barrel, to $5.8 per barrel when the crude cost $52.5 currently.

The tax component, central and state taxes, have gone up from $71.90 a barrel to $ 98.1 on petrol and from $37.10 to $52.5 a barrel on diesel.

CPI leader and Rajya Sabha member, Deepanker Mukherjee, however, said consumers should be insulated against any price rise.

He added that the duty changes in the Budget was not revenue neutral and even the parliamentary standing committee had come to the same conclusion.

He said that the government should consider roll back of the increase in the excise duty on petrol and diesel and put the decision to hike the road cess inn abeyance.