No fuel hike announced yet, suspense continues

The suspense over the possibility of an oil price increase continued as no announcement on the subject was made even after Petroleum Minister Murli Deora met Prime Minister Manmohan Singh today.

Deora met Singh after Finance Minister P Chidambaram refused the petroleum ministry's and Left parties' proposal to cut duties on petrol and diesel. The ministry had proposed an alteration of the duty structure, along with some increase in petrol and diesel prices.

The ministry has been asking the government to bail out the oil marketing public sector units as they have incurred huge losses on account of selling petroleum products below cost.

These losses have shot up as crude prices have surged by more than $20 per barrel since the last retail fuel price hike in September 2005.

According to ministry figures, Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd stand to lose Rs 73,512 crore this fiscal, if a decision on price increase and duty cuts is not taken soon.

With an under-recovery nearly doubling to Rs 73,512 crore, the upstream assistance given by Oil and Natural Gas Corporation and GAIL will also jump to Rs 24,000 crore from Rs 14,000 crore in 2005-06.

While the under-recovery for petrol is Rs 9.33 a litre, it is Rs 10.43 per litre for diesel, Rs 17.16 a litre for kerosene and Rs 114.45 per cylinder of cooking gas.

The ministry has been asking for higher budgetary support in the form of more contribution from the oil industrial development board cess. Of the Rs 60,000 crore of accumulated cess amount, only Rs 902 crore have been used for the petroleum sector.