Across- The- Board Oil Price Hike Likely

An across-the-board hike in the prices of controlled petroleum products is imminent as the country's oil import bill during the current year is expected to register a 100 per cent increase over the 1999-2000 bill. The petroleum ministry has started an exercise to work out various alternatives to contain the oil pool deficit within manageable limits as crude oil touched a 10-year high of $ 32.75 a barrel on Tuesday. "A price increase in all the petroleum products is inevitable," a senior petroleum ministry official told Business Standard yesterday. However, the price hike is expected to be announced once Parliament adjourns after the monsoon session ends on August 25, the official said. Going by purely mathematical calculations, the government will have to raise the prices of controlled petroleum products by 1.6 times, he said. The continued increase in the international crude prices this year has put an unprecedented strain on the country's oil budget with the oil import bill threatening to touch $19 billion in case oil prices continue to rule at around $33 a barrel for the rest of the financial year. This is against the last fiscal's oil import bill of $ 9.6 billion. This estimate is based on the premise that the total demand for crude oil in the country during the current fiscal will be around 112.83 million tonne. Of this, indigenous production will be around 30 million tonne, leaving a balance of around 83 million tonnes of crude oil to be imported. The country has already imported 19 million tonne of crude oil in the first quarter of the current fiscal for $ 3.6 billion. In case the country has to import the balance 64 million tonnes of crude oil at $33 a barrel, the foreign exchange outgo will be $15.4 billion, taking the entire oil import bill lContinued on Page 10 for the current year to $19 billion. The government is also concerned over the continuing slide in the value of the rupee since in case the rupee continues to rule at 46 to a dollar for the rest of the year, the country's oil import bill will go up by 5.6 per cent on account of rupee depreciation alone. The oil pool deficit, which crossed the Rs 7,500-crore mark at the end of last month and has been increasing by Rs 500 crore a month, is now expected to gallop faster and the deficit is expected to hover around Rs 14,000 crore by the end of the current financial year in case the government does not go in for price hike and the international prices of crude oil continue to rule at around $ 33 a barrel.