Govt qualifies stand on cut in oil prices

With the Indian basket of oil touching its lowest this financial year "" $51.05 a barrel "" the government seems to be diluting its commitment to review fuel prices when oil "touches" $50 a barrel.

Speaking to Business Standard, Petroleum Minister Murli Deora said oil had to be "below" $50 "for a month" for the price review to kick off, while Petroleum Secretary MS Srinivasan said the government would relook at retail prices of petrol and diesel on January 31.

The last price cut in November was triggered by an appeal from Congress leader Sonia Gandhi. Petrol and diesel prices were cut by Rs 2 and Re 1 a litre, respectively, when the basket of crude that Indian refiners buy was at $56.8 a barrel. With the price a good $5 below that level"" it dipped a sharp $1.35 a barrel yesterday "" the pitch for a price cut is being raised again. 
 

INDIAN BASKET OF CRUDE OIL                           in $/barrel
January 11	51.05
January 10	52.40
January 9	52.83
January 8	53.48
January 5	52.87
January 4	55.21
January 3	57.33

International crude oil prices also breached the $52 per barrel mark.

While talking of a relook at prices on January 31, Srinivasan also said that international prices needed to fall further before prices of auto fuels were cut. "If the current average continues, there will be no cut. For a reduction to happen, prices have to fall further," he added.

International crude oil prices have fallen to a 19-month-low this month, while there has been a dip of 10.95 per cent in India's basket of crude oil this month. State-run retailers of fuel are currently incurring a loss of 23 paisa per litre on petrol and Rs 1.43 a litre on diesel. Kerosene is being sold at a loss of Rs 13-14 per litre and domestic LPG at a loss of Rs 150 per cylinder.

Indian Oil Corporation Chairman Sarthak Behuria said the company's daily under-recoveries from retail sale of petroleum products had declined to Rs 40 crore from Rs 60 crore, with the subsidy on kerosene and LPG accounting for Rs 34-35 crore.

"The subsidy on LPG and kerosene needs to be addressed," Behuria said. He added that the falling global crude oil prices were expected to take margins on retail sale of petrol and diesel into a positive territory.

Last year, the government released oil bonds worth Rs 14,000 crore to oil marketing companies. Another tranche of bonds is expected soon, but they would be for less than the Rs 14,000 crore given earlier, Srinivasan said.