The government will consider reducing petrol and diesel prices once rupee-dollar parity and crude oil stabilise at levels sustainable to public sector oil companies, Petroleum Minister Murli Deora said today.
“Prime minister has already said this, and I don’t need to repeat that we cannot reduce prices just now because the oil companies are losing heavily,” Deora said.
The rupee-dollar rate and international crude oil prices continue to be volatile and it would not be prudent to cut prices during such times, he said. “We wanted to reduce prices but the rupee depreciation against the US dollar made things difficult,” Deora said. Indian rupee has depreciated 20 per cent against the greenback since April.
Prime Minister Manmohan Singh had earlier this week stated that the government would wait for public sector oil companies to break-even on fuel sales before considering a price cut.
International crude oil prices have slid from an all-time high of $147 to $60 a barrel, but public sector oil companies continue to make losses on sale of diesel, domestic LPG and kerosene.
Though Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have started making profit on sale of petrol, they lose about Rs 155 crore per day on sale of other three products.
Oil firms make a profit of Rs 4.12 a litre on petrol but lose Rs 0.96 on every litre of diesel, Rs 22.40 per litre on kerosene and Rs 343.49 per LPG cylinder.
Deora said a second tranche of oil bonds for the state oil firms was expected next week. “There were differences over calculation of revenue loss. Finance Minister P Chidambaram is very cooperative and I hope more bonds will be issued next week.”
IOC, BPCL and HPCL were earlier this week issued oil bonds worth Rs 22,000 crore to compensate them for half of the revenue loss on sale of petrol, diesel, domestic LPG and kerosene in the first quarter of this year.
Parliament had last month approved issue of oil bonds worth Rs 65,942 crore to cover for half of the losses the oil companies incurred on fuel sale during January to September period in 2008.
They were to get Rs 14,956.17 crore worth of oil bonds for selling fuel below cost in January-March quarter. An additional Rs 24,408 crore compensation for April-June quarter was to be given. About Rs 22,000 crore worth of oil bonds were expected for July-September quarter.
However, the finance ministry has issued only Rs 22,000 crore worth of oil bonds.
The government compensates half of the losses the firms incur on sale of four products through issue of oil bonds.
The three companies were given assurance of bonds issue on paper which they account in their books of accounts. Yet, IOC posted its largest-ever net loss of Rs 7,047.13 crore in July-September quarter. BPCL posted a net loss of Rs 2,625.17 crore in the second quarter on top of Rs 1,066.70 crore in April-June, while HPCL reported a loss of Rs 888.12 crore in Q1 and another Rs 3,218.92 crore in Q2.
“If prices keep on going down, we can explore these possibilities (of reducing prices),” the prime minister had said.
State-run IOC, BPCL and HPCL are projected to lose Rs 1,28,135 crore in revenues on fuel sales this fiscal.
IOC, BPCL and HPCL lost Rs 92,853 crore on fuel sales (audited figures) in April-September and they are projected to lose Rs 35,282 crore in the second half of 2008-09 fiscal.
