The government will consider fuel price revision in early November only if the crude oil prices remain low after a widely expected production cut announcement from the Organisation of Petroleum Exporting Countries (Opec), which is meeting on Friday.
The cartel, which controls 40 per cent of world’s oil output, has hinted a cut in output to prop up the crude oil prices, which have fallen by more than 50 per cent in the last three months.
Under pressure from MPs for an immediate cut in petroleum prices, Petroleum Minister Murli Deora today signaled that the government could announce some decision within a week. Replying to their questions in the Lok Sabha, Deora said, “An announcement would be made within a week.” But the entire Opposition, including the Left, later staged a walkout demanding immediate action.
From Kirip Chalia of Congress to Braja Kishore Tripathy of BJD, parliamentarians cutting across party lines demanded oil price cut as the global crude prices had fallen.
However, Deora today maintained the state-run oil marketing companies were still losing money on petrol, diesel, kerosene and LPG sales, though the price of Indian basket of crude oil had fallen to $61 a barrel, which the petroleum minister had earlier claimed as the break-even point at which oil marketing companies would stop making losses. “While the oil prices have reduced, the dollar value has gone up by almost 25 per cent. We are trying our best (to cut prices) and watching the situation. But dollar prices are coming in the way of a price cut,” he said.
Indian refiners — Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation — buy crude oil in dollars. As the Indian rupee lost value against the dollar, these companies have to fork out more money to buy the same amount of crude oil in international markets.
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However, officials are waiting to see if Opec cuts oil production. “Oil prices could again move up if the cut is significant. Opec wants to stop the slide in prices and yet not make oil so expensive that demand is destroyed,” said a Mumbai-based analyst.
According to data released by IndianOil, Bharat Petroleum and Hindustan Petroleum on October 16, the companies still continue to lose around Rs 300 crore every day as they sell petrol, diesel, kerosene and cooking gas at below the production costs.
“If fuel prices are cut, we will just extend the losses,” said an official with IndianOil.
Elections in seven states will take place in late November, while General Election is around six months away. A fuel price cut is not only popular with the people but can also bring down inflation, which fell to 11.07 per cent for the week ended October 11 from 11.44 per cent in the previous week.