Windfall for oil marketing firms

Firms make Rs 280-cr profit by sticking to last month's prices

Oil marketing companies have made a profit of Rs 280 crore in the second fortnight of this month by not reducing prices of petrol and diesel on December 15.

The price of the Indian basket of crude oil and products has dropped 8-10 per cent since November 15, when petrol prices were last revised.

Oil companies argue that they are trying to make up for underrecoveries amounting to Rs 3,300 crore on the two products during the first eight months of the year, besides Rs 7,800 crore in losses on the sale of subsidised liquid petroleum gas (LPG) and kerosene during the first half of the financial year.

Senior oil company executives admitted that while petrol was priced well beyond the import-parity price, diesel had reached 100 per cent parity level in the past 20 days. The companies were, however, selling just at import-parity levels in November, they added.

There is scope for a reduction of 45-50 paise a litre on diesel and Re 1 on petrol this month-end even after taking normal company margins into consideration.

"But when consumers were protected during the price rise, oil companies need to be protected during the periods when they can recover losses," said an official of a Mumbai-based company.

Oil marketers are in principle still following the fortnightly price revision norm for petrol and diesel.